Author Topic: Day-to-day cash buffer  (Read 11617 times)

boarder42

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Re: Day-to-day cash buffer
« Reply #50 on: October 30, 2016, 02:23:18 PM »
Good point. We usually have $600 stashed in the house as a hurricane emergency fund. We have also been using it as an atm and put the money back at our convenience.

Hurricanes are a great example of "stuff stops working on a regular basis."  Winter storms and widespread power outages also are solid examples of that.

Being able to ride through one of those without really noticing is a nice feature.  Cash on hand is part of that.

do you have so little of life's necessities around that you NEED cash during the 2-3 day window that this may present?  i think its an overly conservative waste of money letting it sit idle in a safe or low interest baring account.  "risky" investments.  really? you see the stock market as a "risky" investment.  the entire premise for FIRE for 90% of this forum that dont do RE investing is that its infact overtime NOT a risky investment.  its stable.  yes on a year to year basis it could be unstable but if you apply the concept of invest every dollar i have extra you will come out far ahead assuming the entire markets dont collapse completely destroying any premise that fire is based on.  two things that i never get on these forums are people trying to mathematically justify 2 very emotional decisions.

1. paying down a mortgage
2. keeping large cash buffers on hand and EF's

both of these are primarily emotional decisions that rarely make sense mathematically under current market/interest rate conditions.

the 5k on hand for a drive way replacement to save 350 bucks is laughable as that 5k invested over 30 years would make you 61k...

also how is a driveway and unexpected oops we have to replace that expense.  but thats mostly besides the point.  keeping cash on hand or EFs is largely emotionally based with very little actual math to back it up. 

nereo

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Re: Day-to-day cash buffer
« Reply #51 on: October 30, 2016, 02:24:41 PM »
Good point. We usually have $600 stashed in the house as a hurricane emergency fund. We have also been using it as an atm and put the money back at our convenience.

Hurricanes are a great example of "stuff stops working on a regular basis."  Winter storms and widespread power outages also are solid examples of that.

Being able to ride through one of those without really noticing is a nice feature.  Cash on hand is part of that.

I've had ongoing discussions about the value and amount of cash to keep on hand for emergencies and "really bad things". First (to get it out of the way) I see cash in a safe bolted to the structure a lot more secure than cash in a drawer. We also keep some cash on hand, but typically in the couple-hundred$ range.

For most emergency scenarios, both historically real (earthquake, hurricane, riots, bank runs) and hypothetical (zombie apocalypse, alien invaders) cash seems merely a bridge to get necessary items, and almost always suffers to massive inflation (a gallon of water or box of bullets suddenly costs 10x)
Either way we try to make sure we have the items needed to survive independently for a month or more. Water is always a challenge but filters and purifying tablets can help. There's a whole rabbit hole to jump down when you start talking with the prepers... and I lived with two. 

TL;DR cash is of limited value during widespread emergencies, and readily available during personal emergencies (provided you have savings to begin with). That's just my conclusion, in the end do what helps you sleep at night.

Syonyk

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Re: Day-to-day cash buffer
« Reply #52 on: October 30, 2016, 03:09:30 PM »
do you have so little of life's necessities around that you NEED cash during the 2-3 day window that this may present?  i think its an overly conservative waste of money letting it sit idle in a safe or low interest baring account.

That's fine.  You're not making my investment decisions.  My wife and I are happy with the decision, and that's what counts here.

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"risky" investments.  really? you see the stock market as a "risky" investment.

I see the stock market as reliably going up as long as growth continues.  I see that we've hit some interesting limits to indefinite growth (mostly energy related), and I don't have particularly great faith in America making it through to the other end uninterrupted.

Quote
the entire premise for FIRE for 90% of this forum that dont do RE investing is that its infact overtime NOT a risky investment.  its stable.  yes on a year to year basis it could be unstable but if you apply the concept of invest every dollar i have extra you will come out far ahead assuming the entire markets dont collapse completely destroying any premise that fire is based on.

Well, you see, I view the possibility of a market collapse as something likely enough in my lifespan that it's worth spending a bit of effort on that path - hence my interest in "investing" into productive assets on my property over index funds, given the option.  Solar, water storage, gardens, chicken coops, aquaponics greenhouse, etc.

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1. paying down a mortgage

I'll break your brain here, then.  I paid cash for a house because nobody was willing to give me a mortgage.  I bought a manufactured home ("trailer house" by mortgage standards), and I dared to take a few months off work, with a new job contract signed, so I could work on getting the house set up, the property improved, an office for myself online, etc.

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both of these are primarily emotional decisions that rarely make sense mathematically under current market/interest rate conditions.

Betterment has been a nice way to lose money slowly for me.  Lending Club gets worse as time goes on.  And I did sell off my assorted index funds to buy the house, so... *shrug*

If one believes that the markets and future are fully predictable based on a spreadsheet and assumptions about the last 50 years (which is, historically speaking, the blink of an eye), great.  Go for it.  Have fun!

Quote
the 5k on hand for a drive way replacement to save 350 bucks is laughable as that 5k invested over 30 years would make you 61k...

In dollars, sure.  In actual purchasing value?  A lot less than you imply.

Anyway, you obviously disagree with my views on investing, and I clearly disagree with yours.  We'll see how it works.  If I'm right, I'll be a good bit better off than you.  If I'm wrong, I'll have worked an extra year or two, have absurdly low retirement spending, and eat a lot of tasty food for which I know the chain of inputs.

boarder42

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Re: Day-to-day cash buffer
« Reply #53 on: October 30, 2016, 04:15:39 PM »
You building walls and buying lots of heavy guns to survive that market failure too. Bc a state of utter anarchy will ensue if a collapse of that magnitude happens without recovery.

cchrissyy

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Re: Day-to-day cash buffer
« Reply #54 on: October 30, 2016, 06:01:13 PM »
I'm not comfortable without a full month's basic expenses in my checking account at all times.

Syonyk

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Re: Day-to-day cash buffer
« Reply #55 on: October 30, 2016, 06:37:29 PM »
You building walls and buying lots of heavy guns to survive that market failure too. Bc a state of utter anarchy will ensue if a collapse of that magnitude happens without recovery.

You prepare for what you think is likely, I prepare for what I think is likely.

And if you think I'm going to detail everything I'm doing on an online forum, you're a bigger idiot than I assumed.

jexy103

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Re: Day-to-day cash buffer
« Reply #56 on: October 31, 2016, 02:10:30 AM »
DH and I keep our checking at about $5K for his 'security gland.' I'd prefer to bring it down to about $2K. I get paid bi-weekly, he gets paid more all at the end of the month. Our credit cards are set to auto pay between the 1st and 3rd of the month. After they all post (around 5th-7th of the month), we 'sweep' anything over $5K to Vanguard investments. Our primary bank is online only, so we also keep a few hundred dollars in a secondary bank account where we have brick-and-mortar access. We're stationed overseas, and we've needed that secondary account urgently twice in 18 months, so I'm okay with the small opportunity cost on $500 there.

Note: MMM's springy debt article (from 2011) states that "I keep very little money in real cash in the bank just a few thousand dollars, enough to cover a month or so of spending."

Bottom line- do what helps you sleep at night. For some, that's the least amount possible in order to invest as much as possible; for others, it's one month's expenses; and for still others, it's $5-10K. Find out where your comfort level is and go with that.

lamil

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Re: Day-to-day cash buffer
« Reply #57 on: October 31, 2016, 07:39:33 AM »

the 5k on hand for a drive way replacement to save 350 bucks is laughable as that 5k invested over 30 years would make you 61k...

also how is a driveway and unexpected oops we have to replace that expense.  but thats mostly besides the point.  keeping cash on hand or EFs is largely emotionally based with very little actual math to back it up.

I just want to make sure we're on the same page.   I keep 1-2 months expenses (~3k/mo) in a checking account. This total is around 5k.  I happened to use that money to pay cash for my driveway replacement this past month due to the benefits of paying cash for said driveway.  I will then be putting around 1-2 months expenses into a checking account again.

I believe what we are disagreeing on is the length of expenses buffer.  Mine is 1-2 months, yours appears to be 1-2 weeks?(huge assumption here, please correct me if I'm wrong).

boarder42

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Re: Day-to-day cash buffer
« Reply #58 on: October 31, 2016, 08:58:02 AM »

the 5k on hand for a drive way replacement to save 350 bucks is laughable as that 5k invested over 30 years would make you 61k...

also how is a driveway and unexpected oops we have to replace that expense.  but thats mostly besides the point.  keeping cash on hand or EFs is largely emotionally based with very little actual math to back it up.

I just want to make sure we're on the same page.   I keep 1-2 months expenses (~3k/mo) in a checking account. This total is around 5k.  I happened to use that money to pay cash for my driveway replacement this past month due to the benefits of paying cash for said driveway.  I will then be putting around 1-2 months expenses into a checking account again.

I believe what we are disagreeing on is the length of expenses buffer.  Mine is 1-2 months, yours appears to be 1-2 weeks?(huge assumption here, please correct me if I'm wrong).

my actual cash buffer is as close to 0 and sometimes negative depending on circumstances and how much money i'm funneling into my taxaable investments. 

i'm saying your 5k you're keeping is costing you thousands of dollars to inflation and possible investment gains over the life that it sits there. 

your "benefits" for paying cash for your driveway were around 7%.  assuming you always keep a cash buffer around 5k you're losing around 3.2% of that money due to inflation and 6-7% in investment gains annually.  so your benefit is actually a loss when compared to putting dollars to work for you. 

in your same situation i would have put that on a credit card and haulted some automated investment transactions from sending taxable money in.  if it was very large i may hault some 401k transactions.  in a sense we're doing the same thing i'm just doing it on the back end to keep every dollar i have making money for me, and you're doing it on the front end essentially devaluing your savings at the rate of inflation plus the opportunity cost of equity gains annually.

lamil

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Re: Day-to-day cash buffer
« Reply #59 on: October 31, 2016, 09:39:22 AM »

the 5k on hand for a drive way replacement to save 350 bucks is laughable as that 5k invested over 30 years would make you 61k...

also how is a driveway and unexpected oops we have to replace that expense.  but thats mostly besides the point.  keeping cash on hand or EFs is largely emotionally based with very little actual math to back it up.

I just want to make sure we're on the same page.   I keep 1-2 months expenses (~3k/mo) in a checking account. This total is around 5k.  I happened to use that money to pay cash for my driveway replacement this past month due to the benefits of paying cash for said driveway.  I will then be putting around 1-2 months expenses into a checking account again.

I believe what we are disagreeing on is the length of expenses buffer.  Mine is 1-2 months, yours appears to be 1-2 weeks?(huge assumption here, please correct me if I'm wrong).

my actual cash buffer is as close to 0 and sometimes negative depending on circumstances and how much money i'm funneling into my taxaable investments. 

i'm saying your 5k you're keeping is costing you thousands of dollars to inflation and possible investment gains over the life that it sits there. 

your "benefits" for paying cash for your driveway were around 7%.  assuming you always keep a cash buffer around 5k you're losing around 3.2% of that money due to inflation and 6-7% in investment gains annually.  so your benefit is actually a loss when compared to putting dollars to work for you. 

in your same situation i would have put that on a credit card and haulted some automated investment transactions from sending taxable money in.  if it was very large i may hault some 401k transactions.  in a sense we're doing the same thing i'm just doing it on the back end to keep every dollar i have making money for me, and you're doing it on the front end essentially devaluing your savings at the rate of inflation plus the opportunity cost of equity gains annually.

Can you help me understand how you pay your monthly bills from an account that is always hovering near or at 0?  The driveway purchase could have floated on a card for a month but I would have still had to transfer the money to the checking account to pay off the card.

What about the other bills at the end of the month? Do you just sell funds every month to pay bills? What about things that are due mid month?  Do you not keep at least 1 months cash for expenses ready to pay them?

Since I started budgeting, I found that keeping 1 months bills was just necessary to not worry about paying a bill and finding out there wasn't enough cash in the account to pay it.  Adding to that, occasionally I will make some cash purchases that range from $200-$1000 so I keep a bit more on top of that.  This led to my 1-2 months cash buffer in an account so I wouldn't have worry about funds clearing transfers which can take up to a week in my past experience before they're available.

boarder42

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Re: Day-to-day cash buffer
« Reply #60 on: October 31, 2016, 10:49:24 AM »
All my bills are paid on credit cards. While my checking account has a balance it is usually less than what is owed on credit cards. Essentially a 0 to negative balance.

NoStacheOhio

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Re: Day-to-day cash buffer
« Reply #61 on: October 31, 2016, 10:52:49 AM »
All my bills are paid on credit cards. While my checking account has a balance it is usually less than what is owed on credit cards. Essentially a 0 to negative balance.

I think that's an important distinction that we missed. You're accounting for liabilities in your balance before they're taken out. So it's "net 0" but not "actual 0." Right?

boarder42

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Re: Day-to-day cash buffer
« Reply #62 on: October 31, 2016, 11:13:56 AM »
All my bills are paid on credit cards. While my checking account has a balance it is usually less than what is owed on credit cards. Essentially a 0 to negative balance.

I think that's an important distinction that we missed. You're accounting for liabilities in your balance before they're taken out. So it's "net 0" but not "actual 0." Right?

Correct a "cash buffer"  should be net of any liquid assets minus floating credit liabilities.

lamil

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Re: Day-to-day cash buffer
« Reply #63 on: October 31, 2016, 11:24:52 AM »
All my bills are paid on credit cards. While my checking account has a balance it is usually less than what is owed on credit cards. Essentially a 0 to negative balance.
I think that's an important distinction that we missed. You're accounting for liabilities in your balance before they're taken out. So it's "net 0" but not "actual 0." Right?
Correct a "cash buffer"  should be net of any liquid assets minus floating credit liabilities.

How often do you find yourself needing to adjust your automatic transfers to turn them down when you need more cash on hand for a given expense?  What happens when there is a delay in any part of this process?  Does that turn into a mess? Say a 2k cash deposit was delayed into your checking and you were planning on paying off the card from the prior months purchases and now you have to reset your auto transfers from your employers DirectDeposit to move more cash from your next check into the checking account instead of an investment account. that may take 1-2 pay periods as well.  What happens then? Do you pull cash from a different account?  Do you pay a CC with another CC?

I feel like I would be a nervous wreck hoping that nothing went wrong knowing again that each paycheck was critical for making sure paying things off went smoothly (just like when I was living paycheck to paycheck in the past).

boarder42

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Re: Day-to-day cash buffer
« Reply #64 on: October 31, 2016, 11:56:31 AM »
All my bills are paid on credit cards. While my checking account has a balance it is usually less than what is owed on credit cards. Essentially a 0 to negative balance.
I think that's an important distinction that we missed. You're accounting for liabilities in your balance before they're taken out. So it's "net 0" but not "actual 0." Right?
Correct a "cash buffer"  should be net of any liquid assets minus floating credit liabilities.

How often do you find yourself needing to adjust your automatic transfers to turn them down when you need more cash on hand for a given expense?  What happens when there is a delay in any part of this process?  Does that turn into a mess? Say a 2k cash deposit was delayed into your checking and you were planning on paying off the card from the prior months purchases and now you have to reset your auto transfers from your employers DirectDeposit to move more cash from your next check into the checking account instead of an investment account. that may take 1-2 pay periods as well.  What happens then? Do you pull cash from a different account?  Do you pay a CC with another CC?

I feel like I would be a nervous wreck hoping that nothing went wrong knowing again that each paycheck was critical for making sure paying things off went smoothly (just like when I was living paycheck to paycheck in the past).

maybe 1 - 2x a year i have to skip my taxable transfer.  there are ways around delays i do a ton of MS'ing to get travel points - probably 100k this year.  so i'm often leveraged out with money and if i get paid later for some weird reason i can just MS some money(which i currently profit off of) and leverage that out til the money is due.  with floating credit there are many games that can be played in multiple situations.  but my system forces me to continually come up with ways to make extra money.  b/c as i said i push more money into taxable than i actually bring in with my base job and some months i'll push it and let the automated transaction go when really it probably shouldnt.  but that helps me figure out how to make more money.

StarBright

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Re: Day-to-day cash buffer
« Reply #65 on: October 31, 2016, 12:25:27 PM »
Am I the only one that has 10k+ in checking earning 0 interest?  Bills including mortgage and CC spending total several thousand a month.

It's just part of my emergency fund that wouldn't earn much anyways.  I consider it a small cost of simplifying my life.  I never worry about not having enough in checking to cover a bill.

You are not alone. We've been floating around 8-12k in checking for the last several months. We're keeping ours in that range for the next few months as we will likely have larger than usual expenses in November and December and then we've talked about moving it down to 5k. I'm like you - I like the ease of not worrying about transferring money.


boarder42

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Re: Day-to-day cash buffer
« Reply #66 on: October 31, 2016, 01:15:54 PM »
If you drive an older car, isn't it reasonable to assume that a big repair or replacement could be in the near future?  Do you liquidate stocks to pay for that expense?  I prefer to keep a decent chunk of cash to cover these expenses.  I guess it depends on the size of your stash as well...

yeah i drive a car with 225k miles.  if it breaks down i'll finance a new(to me used) one rather than pull out money from my stocks.  have you seen the current interest rates?  why would you sell stock and pay capital gains taxes on it when you could easily finance it.

MilesTeg

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Re: Day-to-day cash buffer
« Reply #67 on: October 31, 2016, 01:21:25 PM »
Big wads of cash stored in a fire "proof" safe? No thanks. The ones you buy at big box store are typically only rated for ~30 minutes at relatively low temperature. The odds of them working in a house destroying fire are not nill, but they aren't high.

You're better off just making sure you have sufficient real supplies (food, water, ammunition, etc.) in the even of an emergency. And to keep alternative access to banked money "off site" such as a bank card with family/etc.

In addition to the likelihood of theft/loss of lots of money in your house,  if there's a major disturbance in markets, your cash isn't going to be worth anything but TP anyway so you are still better of with real supplies.

AK

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Re: Day-to-day cash buffer
« Reply #68 on: October 31, 2016, 01:24:27 PM »
I like having 2-3 months expenses on hand, roughly 10K, for peace of mind and not having to worry about transfers and other issues items. I have thought about letting it dip since we have springy debt to cover sudden expenses but recently it did dip to about 9K and it weighed on me a lot.

For those who like larger buffers, did your buffer increase as your assets increased? For me it has stayed the same for about 8 years while our assets have grown considerably. I think I will be able to lower it once our debt is paid off and 10K becomes a 6 month buffer.

boarder42

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Re: Day-to-day cash buffer
« Reply #69 on: October 31, 2016, 01:25:24 PM »
Big wads of cash stored in a fire "proof" safe? No thanks. The ones you buy at big box store are typically only rated for ~30 minutes at relatively low temperature. The odds of them working in a house destroying fire are not nill, but they aren't high.

You're better off just making sure you have sufficient real supplies (food, water, ammunition, etc.) in the even of an emergency. And to keep alternative access to banked money "off site" such as a bank card with family/etc.

In addition to the likelihood of theft/loss of lots of money in your house,  if there's a major disturbance in markets, your cash isn't going to be worth anything but TP anyway so you are still better of with real supplies.

reminds me of people who buy gold.  gold isnt worth anything in a market crash where the dollar is devalued either.  food water and shelter are worth something thats it - then bullets.

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Re: Day-to-day cash buffer
« Reply #70 on: October 31, 2016, 01:38:50 PM »
For my own mental relaxation, I keep 10k in a savings account as a emergency fund. There is nothing that I can foresee that I cannot secure myself from with that amount of money. Which for me is realistically would be for a car, be it for massive down payment or to buy it outright. Though given current finance and lease options I have seen, this seems like an unnecessary amount to keep. But I still keep it around because it makes me feel invincible.

In another checking account I keep money for this coming years ROTH IRA and for a trip I have planned for Japan in March. It is mostly meant for saving money for big purchases that will happen within a year. For 2017 it is trips and my ROTH IRA right now. Other than that it is very occasionally used to reinforce my primary checking account in case I need to pay off my card at a inopportune time. It also is an intermediate account for my investment accounts for when my IRA and trips have enough I examine and move to Vanguard.

Finally my main checking account which receives my paychecks, pays my rental property expenses, receives the rent, and pays the card. I usually just keep enough money in it to pay the next bill plus $1000. Other than that extra goes into the "back up" checking account.

Syonyk

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Re: Day-to-day cash buffer
« Reply #71 on: October 31, 2016, 01:45:03 PM »
reminds me of people who buy gold.  gold isnt worth anything in a market crash where the dollar is devalued either.  food water and shelter are worth something thats it - then bullets.

Why would you say gold isn't worth anything if the dollar is devalued?  It's playing on a global market.  Gold/silver/etc hold value, generally speaking, over the long run.  It's not an investment, but it's certainly a reasonable hedge against currency change.

Debts_of_Despair

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Re: Day-to-day cash buffer
« Reply #72 on: October 31, 2016, 02:05:57 PM »
Really surprised about so many "money under the mattress" responses to this topic.

Anyway, for me, the target is $800.  Wife and I get paid biweekly.  After all the bills are paid, anything over $800 gets shipped off to investments and savings.  The only time I ever remember almost not having enough cash on hand was for a craigslist transactions.  Bought a bike that nearly wiped out all of the checking account but it was quickly backfilled from savings.  I can complete transfers from my savings account in two business days.

marielle

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Re: Day-to-day cash buffer
« Reply #73 on: October 31, 2016, 02:25:21 PM »
I'm currently paying down student loan debt as fast as possible, so I was initially trying to keep very little money in my bank. This ended up being a mistake because I had work done on my car that cost me $1250. The mechanic does work at his house for cheap labor so I had to pay check or cash. It was fairly regular maintenance/tune up type of stuff that had been neglected on the car for a long time (timing belt, water pump, spark plugs, various sensors and leaks, new hood latch, etc). I ended up having to borrow money to pay this. At the same time, my roommate told me he was moving out. Meaning I could potentially have to pay the $1020 rent by myself if I don't find a roommate fast enough. I CAN pay my rent with a credit card, but that's a $15 convenience fee on top of CC interest if I can't pay the balance off in full. Luckily I get paid the day before rent is considered late so everything will be okay.

 So...stuff can turn around quickly. I may keep a larger buffer now.  My car is 13 years old so it's entirely possible it breaks down despite just having the tune up. Unlikely, but it could happen.

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Re: Day-to-day cash buffer
« Reply #74 on: October 31, 2016, 03:06:40 PM »
reminds me of people who buy gold.  gold isnt worth anything in a market crash where the dollar is devalued either.  food water and shelter are worth something thats it - then bullets.

Why would you say gold isn't worth anything if the dollar is devalued?  It's playing on a global market.  Gold/silver/etc hold value, generally speaking, over the long run.  It's not an investment, but it's certainly a reasonable hedge against currency change.

It think it's questioning the utility of carrying around gold or silver coins in your pocket when an apocalyptic situation arises.  There comes a point on the disaster scale when currency of any form won't matter much anymore.

Syonyk

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Re: Day-to-day cash buffer
« Reply #75 on: October 31, 2016, 03:27:06 PM »
It think it's questioning the utility of carrying around gold or silver coins in your pocket when an apocalyptic situation arises.  There comes a point on the disaster scale when currency of any form won't matter much anymore.

That's fine.  And for some variety of possible futures, in which the hyperinflation demons come home to roost, it is useful.

It's also useful for person to person transactions when one doesn't wish to deal with cash or electronic transfers for whatever reason.

I entirely accept that I'm off in the weeds here, and have a weird path to "retirement" - but I hope it's much more robust than many people's paths.

MilesTeg

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Re: Day-to-day cash buffer
« Reply #76 on: October 31, 2016, 03:45:47 PM »
reminds me of people who buy gold.  gold isnt worth anything in a market crash where the dollar is devalued either.  food water and shelter are worth something thats it - then bullets.

Why would you say gold isn't worth anything if the dollar is devalued?  It's playing on a global market.  Gold/silver/etc hold value, generally speaking, over the long run.  It's not an investment, but it's certainly a reasonable hedge against currency change.

If you want to hoard metals for the apocalypse, horde useful ones like brass and lead. ;)

More seriously though, gold and silver can be a good store of value in the event of economic turmoil. It can help mitigate long term loss _after_ the turmoil, but it's completely useless for surviving that turmoil. If things get so bad that food and water are scarce, you're not going to be trading chunks of metal, no matter the type, for those necessities. You need real, pragmatic things. Food, water, transportation, property, security, etc.

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Re: Day-to-day cash buffer
« Reply #77 on: October 31, 2016, 03:52:32 PM »
I'm confused why some people are treating this like the only two options are collapse of society (or all financial systems) versus business as usual.

I'm sure I'm not the only one here who has lived through a local or regional natural disaster - flooding, hurricane, etc. - that has destabilized power, fuel, or easy access to cash reserves.

It is easy to take for granted that you can put things on your cc unti the cc reader is simply not available. It is easy to take for granted that you can draw money out of an ATM until the time that your whole neighborhood is trying to do the same thing and new trucks full of money can't access the area. That's not even getting into the greater potential for technological based "attacks" or glitches, like the ones that have knocked out an entire airline for 24 hours.

Sure, there are limitations to cash as well. But having enough money to do business at all or get the f- out of town when systems are not all a go is not really crazy prepper stuff.





MilesTeg

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Re: Day-to-day cash buffer
« Reply #78 on: October 31, 2016, 03:56:42 PM »
I'm confused why some people are treating this like the only two options are collapse of society (or all financial systems) versus business as usual.

I'm sure I'm not the only one here who has lived through a local or regional natural disaster - flooding, hurricane, etc. - that has destabilized power, fuel, or easy access to cash reserves.

It is easy to take for granted that you can put things on your cc unti the cc reader is simply not available. It is easy to take for granted that you can draw money out of an ATM until the time that your whole neighborhood is trying to do the same thing and new trucks full of money can't access the area. That's not even getting into the greater potential for technological based "attacks" or glitches, like the ones that have knocked out an entire airline for 24 hours.

Sure, there are limitations to cash as well. But having enough money to do business at all or get the f- out of town when systems are not all a go is not really crazy prepper stuff.

What about stocking up on food, water and other necessities (of which would just be tedious to list) is not preparing for emergencies like hurricanes, etc.? I mean, if you are flooded, snowbound or otherwise trapped in your house, no amount of cash is going to help you get through that.

Travis

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Re: Day-to-day cash buffer
« Reply #79 on: October 31, 2016, 04:01:03 PM »
It think it's questioning the utility of carrying around gold or silver coins in your pocket when an apocalyptic situation arises.  There comes a point on the disaster scale when currency of any form won't matter much anymore.

That's fine.  And for some variety of possible futures, in which the hyperinflation demons come home to roost, it is useful.

It's also useful for person to person transactions when one doesn't wish to deal with cash or electronic transfers for whatever reason.

I entirely accept that I'm off in the weeds here, and have a weird path to "retirement" - but I hope it's much more robust than many people's paths.

To each their own. Whatever your strategy I hope it works for you. 

We have the TV on here in the office and once an hour we get one of those "Gold and silver coins are awesome! Economic Armageddon is near! The stock market is about to collapse, so buy our precious metals today!" 

Those commercials bug the hell out of me because they're simply going to take your money which they insist is about to become worthless and invest it in the market themselves.  It seems like they can't simply say "buying precious metals securities is a good part of an investment portfolio and you might even find some practical uses for holding physical coins as well." They can't help but denigrate the rest of the economy to sell their product.

FIFoFum

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Re: Day-to-day cash buffer
« Reply #80 on: October 31, 2016, 04:54:14 PM »
I'm confused why some people are treating this like the only two options are collapse of society (or all financial systems) versus business as usual.

I'm sure I'm not the only one here who has lived through a local or regional natural disaster - flooding, hurricane, etc. - that has destabilized power, fuel, or easy access to cash reserves.

It is easy to take for granted that you can put things on your cc unti the cc reader is simply not available. It is easy to take for granted that you can draw money out of an ATM until the time that your whole neighborhood is trying to do the same thing and new trucks full of money can't access the area. That's not even getting into the greater potential for technological based "attacks" or glitches, like the ones that have knocked out an entire airline for 24 hours.

Sure, there are limitations to cash as well. But having enough money to do business at all or get the f- out of town when systems are not all a go is not really crazy prepper stuff.

What about stocking up on food, water and other necessities (of which would just be tedious to list) is not preparing for emergencies like hurricanes, etc.? I mean, if you are flooded, snowbound or otherwise trapped in your house, no amount of cash is going to help you get through that.

Of course you should get food and water and necessities to prepare for emergencies. I wasn't commenting that you should have cash instead of these things.

In ADDITION, there are some emergencies or disasters for which it really makes sense to have cash around. People act like the ability to use credit cards and computers is guaranteed unless society collapses, at which point, who cares what currency you have. That's simply not true.

MilesTeg

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Re: Day-to-day cash buffer
« Reply #81 on: October 31, 2016, 05:14:53 PM »
I'm confused why some people are treating this like the only two options are collapse of society (or all financial systems) versus business as usual.

I'm sure I'm not the only one here who has lived through a local or regional natural disaster - flooding, hurricane, etc. - that has destabilized power, fuel, or easy access to cash reserves.

It is easy to take for granted that you can put things on your cc unti the cc reader is simply not available. It is easy to take for granted that you can draw money out of an ATM until the time that your whole neighborhood is trying to do the same thing and new trucks full of money can't access the area. That's not even getting into the greater potential for technological based "attacks" or glitches, like the ones that have knocked out an entire airline for 24 hours.

Sure, there are limitations to cash as well. But having enough money to do business at all or get the f- out of town when systems are not all a go is not really crazy prepper stuff.

What about stocking up on food, water and other necessities (of which would just be tedious to list) is not preparing for emergencies like hurricanes, etc.? I mean, if you are flooded, snowbound or otherwise trapped in your house, no amount of cash is going to help you get through that.

Of course you should get food and water and necessities to prepare for emergencies. I wasn't commenting that you should have cash instead of these things.

In ADDITION, there are some emergencies or disasters for which it really makes sense to have cash around. People act like the ability to use credit cards and computers is guaranteed unless society collapses, at which point, who cares what currency you have. That's simply not true.

Well, I can't speak for others but I'm mostly arguing against very large sums of cash held on hand. Of course having some cash around and not relying on computers is important in case you have a need you did not anticipate. But what are you going to do, try to keep paying your mortgage and bills (for services you probably are no longer receiving!) if the shit hits the fan in whatever type of scenario you are thinking?

Personally, we keep 2-3 months of necessities on hand. If there's a problem for even that long, we're probably already on to plan b, which if GTFO to some place that is functioning. And if the problem is nation/world wide for that long, society is already well past the stage where paper currency is useful.

Mariposa

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Re: Day-to-day cash buffer
« Reply #82 on: October 31, 2016, 08:42:31 PM »
We also float about 2x monthly expenses between a 0 percent checking account and nearly-0 percent savings account. We are probably have around a 1-1.5x monthly expenses net cash buffer, after subtracting our credit card / mortgage balances. I'm not anticipating any disaster; this is purely for the convenience of our cash flow.

We have irregular expenses month-to-month, and the cash buffer is also our:
-vacation fund (3-4 trips a year)
-home repair fund (anticipate at least one $500-$1000 event yearly, if not more)
-car replacement fund for a relative we're supporting
-replacement fund for our extremely old phones and laptops
-donation and gift fund

Having separate accounts for all that stuff would be micromanaging for us.

I can see how for those who have a really high savings rate, you could simply sweep less into your taxable account each month to account for irregular expenses, but, as a percentage of our monthly spend, we are not yet contributing all that much into taxable.

my2c+61

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Re: Day-to-day cash buffer
« Reply #83 on: October 31, 2016, 09:16:48 PM »
I have never been a fan of credit cards. More of a cash type person.
Back when I had a mortgage, I always had 10/15k in the mortgage offset account. A little bit of self insurance as I was the sole breadwinner.
These days it's down to 2/3k for when the banks or telcos go down and all forms of plastic are useless.