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Old 10-08-2013, 08:46 AM   #41
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A large (untapped) HELOC is our emergency fund although would probably put on a credit card first if possible That'd give us at least a month (until cc payment due date) to decide whether we'd want to tap the HELOC and incur interest payments (currently 3%) or withdraw from ROTHs or other investments.
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Old 10-08-2013, 09:08 AM   #42
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A large (untapped) HELOC is our emergency fund although would probably put on a credit card first if possible That'd give us at least a month (until cc payment due date) to decide whether we'd want to tap the HELOC and incur interest payments (currently 3%) or withdraw from ROTHs or other investments.
A HELOC is good tool, but some folks discovered their shortcomings during the recent financial crisis. With home prices down, the HELOC didn't do them any good because they had none of the "E". In some cases, even with available equity, the bank had enough questions to spawn the requirement for a new appraisal, etc, which slowed things down a bit (not what anyone wants in a true "emergency"). If a person has a lot of equity in their home then this is much less of a concern.
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Old 10-08-2013, 09:54 AM   #43
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With our house paid in full, equity was never an issue. Having a HELOC with our local credit union for over 20 years for only half the value of our home, there was no problem and no need for appraisal even when values tanked. We did have a problem proving "income" when it came up for renewal right after my DH retired. Too young for SS or pension, we lived on savings, leaving our retirement funds untouched. They had never seen that before. :-)
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Old 10-08-2013, 12:46 PM   #44
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Glad this topic came up because it made me look again at my cash levels. Turns out I have about $27K in the local credit union, $34K cash in Vanguard and about $60K in short term bond funds at Fidelity.

That covers us for at least 2 years, maybe 2.5
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Old 10-09-2013, 06:11 PM   #45
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Why would this "cash reserve" be anything other than just withdrawals from the portfolio?

I don't want to be liquidating $10K in stocks/bonds at the wrong time when DW decides that we need to "update" both of our bathrooms or stairway this month. If it's in cash, no problem.
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Old 10-09-2013, 10:44 PM   #46
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I don't want to be liquidating $10K in stocks/bonds at the wrong time when DW decides that we need to "update" both of our bathrooms or stairway this month. If it's in cash, no problem.
All she has to do is keep her hands off it until equities double. Then you're safe for a 50% drop.
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Old 10-10-2013, 07:32 AM   #47
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I keep five months worth of emergency fund cash in a KASASA account. It pays 2%.
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Old 10-10-2013, 10:52 AM   #48
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I consider as emergency cash my holdings in money markets, I-bonds, stable value funds, etc..., or in short anything that is not adversely affected by the stock market or the Fed fund rate.

As I do not own much bonds currently (5%), I have 28% in cash, and that's 8 years of living expenses. That percentage may go down if I find compelling reasons to put it in some other assets. However, I never went below 10-15% in the past.
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