I’d start with some of my wife’s nice purses (shhh, don’t tell her). I’m decently adept at selling things online (Ebay, Craigslist, FB) and if it really came down to it, I could sell some of my possessions.If I had to use it in a pinch, this could cover 10-12 months of expenses. Home equity line of credit – I opened up a HELOC that is maintained for only $75/year.I’m earning passive income from other sources, which currently covers over half of my expenses. Passive income – Of course, this is a big one for me.If I experience a drop in income of more than 15% due to a disability or injury, after a period of 90 days, my insurance company will start paying me to compensate for the difference. Disability insurance – Not only does it cover 30% of my current income tax-free, but I’ve also added a partial disability rider.So I know that if something comes up, I’ll still have a paycheck coming in for the work I’ve already done. There is almost always a lag between service, billing, and collection. For example, on March 1st, I get paid for what I did in all of January. Delayed payment from work – In terms of billing, I am paid on a two-month lag.My wife is a doctor and although she only works part-time now, I know that in a pinch we could both work more. We are a dual income family – I work a little less than full-time.So, here are the considerations that went into my decision: Why I Feel I Don’t Need an Emergency Fund I decided to do a deeper analysis, and spoiler alert, I decided against the emergency fund altogether. I began asking myself whether having an emergency fund was truly the right thing for me. All I could think about was how it was wasting all of its potential. Then… I watched as that cash sat there and did nothing. Having read it when I initially finished my training, I built up a sizable emergency fund and I was confident in my ability to weather any storm. In fact, I recommend that most people should read it. Now, I’ve read Dave Ramsey’s Total Money Makeover. Exactly how many months depends on the stability of your job, whether you have dual incomes, and how healthy you are. Suzie Orman even advocates for 8 months of full expenses! Given how devastating unexpected events like these can be to the unsuspecting family, most financial experts (like Dave Ramsey) recommend that your emergency fund should be able to cover 3-6 months of full expenses. Job loss (I actually haven’t experienced this, but I know it’s a reality for many people). Unexpected pet costs (my dog inhaled a foxtail and it required a $1200 procedure to remove it).Unexpected house issues: roof leak, broken pipes & subsequent flooding.Car issues: blown tire, broken windshield, etc.Unexpected health care costs, like an ER visit for broken bones, suspected appendicitis.These might include the following (all are things I’ve experienced): What Exactly Is an Emergency Fund?Īs you probably know, an emergency fund is meant to be a buffer for unexpected costs or bumps in the highway of life. Will it be the same for you? That’s what you’ll have to decide for yourself. I’ve crunched the numbers and found that an emergency fund isn’t best for me. As always, this post first appeared on WCI Network partner site Passive Income MD.īefore we get started, I wanted to include a small disclaimer: every situation is different, and what works for me may not work for everyone. Let’s see what the good doctor’s reasoning is. There are certainly a number of good reasons to hold a traditional emergency fund, but there are also arguments to be made against them for people with the means to fund an emergency without subjecting your dollars to significant cash drag. He and I see eye to eye when it comes to this topic. Today, we have a Saturday Selection from Passive Income MD.
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