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Old 02-15-2009, 04:20 PM   #81
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Originally Posted by Moemg View Post
The thing that seems to be missing from your plan is extra money for large unexpected items ( Such as a new air conditioner which took $6,000 of my budget last year ) or will they come out of your monthly allowance ?
The large unexpected items will normally come out of my monthly allowance. If nothing like that comes up, I'll still spend less than the whole monthly allowance and save the rest for when something like that comes up. Life being as it is, something always seems to happen eventually. If something happens early in the year, I can take it out of savings, reduce my monthly "paycheck", and presumably still have plenty to live on for rest of the year. This is how I handle such expenses now, when I am working and get a paycheck.

Then there are years like one I had a few years back, when my TV cratered (and I had always wanted a plasma!), my computer cratered, my air conditioner cratered, I had two unexpected root canals, my car needed new tires, many other unexpected huge expenses, all within just a couple of months. At the time, I had enough in my savings account to cover it but with my ER withdrawal plan I might not have that much in savings at all times. If things get overwhelming like that, I can "borrow" from my emergency fund in Vanguard money market to pay for them. Then I can pay myself back. Sort of my own personal version of HFC, without the high interest rates.

Originally Posted by dex View Post
Will you only have 1 year of expenses in cash equivalents in Jan?
I will always have an emergency fund of at least 1 more year of expenses in money market, maybe more. Right now I have 10 years' expenses in money market but that is temporary and due to the recent market collapse.

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Old 02-15-2009, 09:48 PM   #82
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Join Date: Sep 2007
Location: Houston/Texas
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For what it is worth, we adopted a modified bucket approach. We retired in August 2007, right into the maw of the recession. This has wrecked havoc with our bucket 3 portfolio of stocks, mutual funds, etfs, and some fixed income(designed to mitigate volatility of bucket 3).

It should be noted that we have the somewhat traditional 3 (keeping up with that motif) legged stool of pensions-current, savings and investments-current, and social security (in 5-6 years.)

We tapped into bucket 1, savings and cds 18 months ago, now expecting to have another 3 years worth. Bucket 2 has been pulling in 12%, although the return may decrease in the next year or so. That is expected to get us to social security around 2014-15, with some left over. So we estimate having another 7 or so years to weather the bear before needing to tap into bucket 3. It should be noted that #3 was 2/3 of our oringinal nest egg. We will soon be rebalancing # 3 for the 2'nd time since its inception.

To hedge our bets we are downsizing for the second time since 2007. But that is another story in and of itself!

"Live Free or Die"- from a slow agonizing demise within corporate America

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