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Old 09-14-2013, 05:44 PM   #41
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What is cash? To me, it's real cash and cash equivalents such as funds in depository checking or savings accounts, CDs or T bills maturing in 30 days, and money market funds. Anything else isn't cash or cash equivalent instruments. I think of cash equivalents to be something you can almost immediately transform into cash or be available as legal tender for extinguishing current debt. So, not sure everyone is speaking the same language here when adding up their cash.
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Old 09-14-2013, 07:20 PM   #42
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I based my answer on cash being defined as money I can get my hands on immediately. When I sold our daughter's car a couple weeks ago, I asked them if they had cash before I agreed on the final price. If they would have needed a day or two to tap a CD or money market fund, then I would not call that cash.
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Old 09-14-2013, 09:38 PM   #43
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I intend to have my cash be mostly from incoming dividends as a goal to achieve on my path to financial independence.

But I see the wisdom in having a set amount squirreled away just in case.

I am working to plant my nuts and seeds to grow into nice fruitful dividends trees over the next couple of decades.
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Old 09-15-2013, 07:41 PM   #44
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I currently keep about 6 months worth of expenses in an online savings account ("high yield," relatively speaking). I plan on reducing that amount going forward as I fix my asset allocation and get a better idea of our current budget. We recently had a lot of changes (moved to a new state, sold a house, etc.), so monthly expenses have been all over the board.

Btw, I am nowhere close to retiring.
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Old 09-15-2013, 08:46 PM   #45
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5 years of living expenses in cash is what keeps me from checking on the market every day.
+1

Five years is my goal, currently at four years in MM, savings, and cash balance pension plan that follows the five year treasury return but guarantees at least 2.8%. Megacorp allowed me to retire with a very nice buyout (thanks guys!).

If you look at the returns on the S & P 500 over the past 43 years, the number of times we've lost money over a five year period is relatively small, and almost never have we lost money on a ten year period.
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Old 09-15-2013, 08:58 PM   #46
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Although I have a large percentage in cash & cash equivalents (cash, MM, i-bonds), I tend not to think of the number of years of cash but rather the number of years of fixed income . My fixed income proportion of my portfolio is roughly about 10 years of living expenses. Note I do not have anything terrible risky in FI (from credit perspective riskiest would be short-term corporate).
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Old 09-15-2013, 11:52 PM   #47
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I'm cash heavy right now but only bc a lot of my trailing stops crossed in August. Normally I only keep 6 months liquid reserve.
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Old 09-16-2013, 01:13 AM   #48
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About 8 years worth of cash, which I intend to use for expenses until I'm 70 in order to minimize income and maximize rollover from IRA to Roth before MRDs kick in.
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Old 09-16-2013, 12:26 PM   #49
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5% cash, 25% bond indexes. (Domestic and international)
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Old 09-16-2013, 12:36 PM   #50
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Shasta

when you say 'bond index' is this an index you created or do you use a MF or ETF? I am getting out of PONDX -- was doing great but not anymore
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Old 09-16-2013, 02:03 PM   #51
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We have $1200 coming in on deferred comp plan, $1200-2000 in PT w*rk and $1500 in divy's. All per month. Our expenses are $2k on a good month & $3k on a bad one, so we're covered.

We have a rewards checking that earns 2.5% & have 4-5 months there. Bunch of various 5yr CD's averaging 2.5% that will start renewing (or not) in a year or so. $90k in stocks for the really bad emergency...all in all, a bunch of years...
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Old 09-16-2013, 02:57 PM   #52
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....If they would have needed a day or two to tap a CD or money market fund, then I would not call that cash.
Both are cash equivalents for all intents and purposes. Most MM accounts have checkwriting privileges and the CD you can walk in the bank at anytime and walk out with cash (albeit perhaps after an early withdrawal penalty).

Note that technically, a CD is not a cash equivalent if it is subject to penalty, but for the purposes of this thread, it is near enough to be considered cash.
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Old 09-16-2013, 03:01 PM   #53
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I have about 3.5 years worth of expenses in cash (savings accounts and money market funds). I also have about 4 years worth of living expenses in CDs and i-bonds. That's the way it is right now, but I can deploy the cash very rapidly if I see an opportunity and I sometimes find myself very cash-poor.
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Old 09-17-2013, 01:31 PM   #54
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Planning on ER in 3 years, and want to have money set aside for expenses 4 years in advance. Thus, we began the purchases for that income ladder (using I-bonds and short-term munis) this year.

Plan is to have 1 year's expenses in cash and the following 3 years in bonds.
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Old 09-17-2013, 05:37 PM   #55
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To answer the OP question, if cash includes CDs and munis, the answer in my case is 50 + years
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Old 09-17-2013, 06:17 PM   #56
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I don't think munis qualify as 'cash' ... they're definitely fixed income investments. CASH would be cash / savings accounts / CDs bought on primary or secondary market .... things guaranteed via FDIC.
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Old 09-29-2013, 02:23 AM   #57
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Currently 1 1/2 years in MM and 5 additional years in VG Short Term Muni-Bond Fund. (assuming $100K per year budget).

This may be too much. However, we just retired and my wife has recently been diagnosed with aggressive (triple negative) breast cancer. So, although this would normally be too conservative of an investing strategy for me, I feel like this gives me some much needed safety, flexibility and cash on hand for unexpected medical expenses or emergencies.

In 2014 I may adopt more risk, but only to the extent of investing 4 years ($400K) in VG Intermediate Term Bond Fund (VWITX). If anyone has contrary or supplemental advice I'm happy to listen. Thanks,
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Old 09-29-2013, 05:01 AM   #58
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Cash it varies but typically 2-3 months
1.5 years in CD ladders which is actually 2-3x that long since it would supplement my dividend income after being slashed by 25-40%. A precaution I put in place after 2008/2009
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Old 09-29-2013, 06:58 AM   #59
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Currently 1 1/2 years in MM and 5 additional years in VG Short Term Muni-Bond Fund. (assuming $100K per year budget).

This may be too much. However, we just retired and my wife has recently been diagnosed with aggressive (triple negative) breast cancer. So, although this would normally be too conservative of an investing strategy for me, I feel like this gives me some much needed safety, flexibility and cash on hand for unexpected medical expenses or emergencies.

In 2014 I may adopt more risk, but only to the extent of investing 4 years ($400K) in VG Intermediate Term Bond Fund (VWITX). If anyone has contrary or supplemental advice I'm happy to listen. Thanks,
My budget is the same as yours, also recently retired at 59, and I have five years of what I would call cash - assets that will not go down in value and can be accessed immediately or within a few weeks. I feel the same way you do - it's too much cash. But for different reasons, I feel I need the same safety as you note. As time goes on, I will probably reduce my cash to four years or less, when I feel more comfortable with my plans.

(Rest of assets (around $1.3 M) are all equities, mostly dividend payers.)

Best of luck to you and especially to your wife. Hang in there!
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Old 09-29-2013, 09:11 AM   #60
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Hi. I was just wondering, for those of you in FIRE, and those of you approaching FIRE, how many months/years of living expenses do you keep as cash or cash-equivalent. I imagine you would do that so that you have the certainty of having the money needed to pay your monthly fixed expenses.

Also, do you keep a separate amount in cash to deal with unexpected emergencies. If so, how do you determine how much to keep in the unexpected emergencies account?
Unexpectedly retired 2 months ago, collecting UE for 8 months then on my own. No pension, 57 yo, wife works pt. I have at least a years $ in savings acct from severance. Have about 1 year in I bonds and another 5 or 6 years in GIC (US version) in my 401k that I can withdraw any sum from once a year before 59. So depending on what you call cash, I have between 1 and 8 years worth.

For unexpected emergencies I could tap into one of our Roths or any of the above, so I'd say that I do not have a separate acct for emergencies.

I also need to go through this and get it nailed down, I haven't touched a thing since I left work. I'm good with the idea of not needing an emergency fund, I can always use a credit card till I can get $ from an account somewhere. I do like the idea of about a years cash in savings and a couple years in something that doesn't fluctuate like the GIC's or the I bonds. I'd say I currently have too much as such.
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