Im a self employed electrician with a solid cash reserve in the business and no business debt and low overhead. The business has weathered economic downturns well in th past so my question is about my household emergency fund.
I averaged just under 100k take home over the last few years, but because I'm aggressively paying off my mortgage (only debt) I'm really only living off of 50-60k. If there is a downturn and I made 40% less next year I could change nothing and just stop the extra mortgage payments.
I have about 20k in my emergency fund. That's all sitting in my USAA savings account doing literally nothing. In my entire life, I've never had anything amounting to anything close to a 20k emergency. The max out of pocket on all my insurances COMBINED is less than 20k. So even if I totaled my cars burned down my house and broke my leg I don't think I'd need 20k.
I was thinking of reducing the cash position to 10k in the savings account, and throwing 10 in Admiral shares of Vanguard VTSAX in a non retirement (taxable) account. I'm also in the process of selling a boat and should net around 5k cash with no plans to replace the boat. I was thinking of putting that in the safe so I'd have 5k of CASH, 10k in savings and 10 doing its thing in an index fund. Even if the market tanked 50% I'd still end up with about what I have now. And even if I spent the safe cash on another flip project I'd still have a bigger emergency fund than I've ever needed.
Thoughts?
In the last two weeks I've re-read The simple path to wealth, the Millionaire next door, and Goodbye Things. I have been working on investment, retirement and minimalism for a while. Re-reading these books has caused me to wonder if a HUGE emergency fund isn't the best idea.
Submitted June 23, 2018 at 02:28AM by robinson217 https://ift.tt/2luD8dl
