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How much CASH or liquid do you have?
Old 10-04-2012, 08:07 AM   #1
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How much CASH or liquid do you have?

Forget about NETWORTH. It is so misleading and sometime useless information for someone current situation.

If I have mortgage to pay and bills pilling up NOW then $0.5 million dollar of networh that sitiing in my house, my cars, my 401k, my IRA doesn't really help.

People that has $5000/mon. from retirement and has zero networth is better of than people that has $300k networth but zero cash. :-)

enuff
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Old 10-04-2012, 08:09 AM   #2
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Originally Posted by Enuff2Eat View Post
Forget about NETWORTH.
OK, forgotten.

Anything else on your mind this morning?

PS - In response to how much liquid I have, my well has a 2,500 gallon water storage tank...
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Old 10-04-2012, 08:27 AM   #3
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Old 10-04-2012, 08:32 AM   #4
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I used to keep 6 months liquid in a money market account (the so-called emergency fund). But in 20 years, including various downturns, job losses, house repairs and other unexpected needs for short term funds, I never touched it. I could always find some way to pay for what I needed or sell an investment if necessary. So, with rates as low as they are, I've just swept the "emergency fund" into the rest of my asset allocation now. I have a month worth of expenses on hand (earning almost nothing) because I couldn't talk myself into going without an "emergency fund" entirely.
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Old 10-04-2012, 08:39 AM   #5
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If I have mortgage to pay and bills pilling up NOW then $0.5 million dollar of networh that sitiing in my house, my cars, my 401k, my IRA doesn't really help.
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I used to keep 6 months liquid in a money market account (the so-called emergency fund). But in 20 years, including various downturns, job losses, house repairs and other unexpected needs for short term funds, I never touched it. I could always find some way to pay for what I needed or sell an investment if necessary. So, with rates as low as they are, I've just swept the "emergency fund" into the rest of my asset allocation now. I have a month worth of expenses on hand (earning almost nothing) because I couldn't talk myself into going without an "emergency fund" entirely.
I don't think he is just talking about an emergency fund. If you had a situation as described in the OP I'm sure all your money is not locked up in property and IRA's that is difficult to realize.

For the scenario he describes I would count mutual funds and ETF's etc that could be liquidated in a matter of days as liquid assets.
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Old 10-04-2012, 08:41 AM   #6
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750ml...

Everything I have is liquid, in the sense that I'm old enough to draw from my 401k if necessary. But, cash wise, I have about a years' worth of expenses.
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Old 10-04-2012, 08:52 AM   #7
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I have various tiers, or layers, of investments in my portolio. They also reflect different levels of liquidity or ease and speed of gaining direct access to them.

I keep a small cushion or surplus in my local bank's (non-interest bearing) checking account. This cushion is over the minimum balance needed to avoid monthly fees. If something arises in a given month in which I need some quick cash or to cover some small, unforeseen expense (anything under a few hundred dollars), I am just fine. This cushion also covers me in case my monthly big bond fund dividend (see my signature line) is a little lower than usual.

My next layer is a larger balance in an intermediate-term muni bond fund. While its principal can go up or down a bit, it still gives me about 3-3.5% tax-free return. I have checkwriting privileges on this account so I can use it to cover larger, unforeseen expenses or simply use a check or electronic transfer to bring funds into my local bank's checking account. I can tolerate the downside risk of this type of account (i.e. loss of principal) in return for a decent, tax-free dividend every month. This is the closest thing to my "emergency fund" which I have had even back in my working days.

My next layer consists of a stock mutual fund which I leave alone unless I really, really need to tap into it for a much larger expense (such as when I bought a new car 5 years ago). No checkwriting on this fund but I have electronic transfers available so the money is in my local bank's checking account in a few days which is fine.

After that is my TIRA which I do not expect to tap into until I am at least 59.5 years old, 10 years from now.
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Old 10-04-2012, 09:42 AM   #8
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Enuff2eat, right now I have about 6 years' living expenses in cash, assuming that I would continue to spend as much as I am spending now.

And then, I have bond funds which some regard as the same as cash. Basically, I am not worried. I could liquidate enough to live for the rest of my life, if I was willing to sell my funds and take a tax hit.

I agree with what you are saying about net worth. My paid off house lowers my living expenses but does not add to my income.

I am 64 so access to my retirement accounts is no longer an issue for me.
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Old 10-04-2012, 09:42 AM   #9
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Quote:
Originally Posted by Enuff2Eat View Post
Forget about NETWORTH. It is so misleading and sometime useless information for someone current situation.

If I have mortgage to pay and bills pilling up NOW then $0.5 million dollar of networh that sitiing in my house, my cars, my 401k, my IRA doesn't really help.

People that has $5000/mon. from retirement and has zero networth is better of than people that has $300k networth but zero cash. :-)

enuff
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Old 10-04-2012, 09:53 AM   #10
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I consider all my mutual funds and ETFs as LIQUID because I can sell and get cash in day or so. That means stocks, bonds, and other traded sequrities are LIQUID.

Yes, homes and perhaps if any folks have annuities with early redemption penalties, then I do not consider them LIQUID.
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Old 10-04-2012, 10:20 AM   #11
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Cash - enough for roughly 5 years , total liquid investments that I could sell on any given day- probably/maybe more than I'll need.
Not to brag but on top of that I have 11 cans of Miller Lite in the fridge.
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Old 10-04-2012, 10:22 AM   #12
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I would also define liquid as my taxable account balance. So I have roughly 7 years of expenses in there.
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Old 10-04-2012, 10:26 AM   #13
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I don't think he is just talking about an emergency fund. If you had a situation as described in the OP I'm sure all your money is not locked up in property and IRA's that is difficult to realize.
So, that would make about 1 month in cash. About 4 years in taxable investments that can be sold without penalty and accessed in a matter of days. Almost enough to last the rest of my life in IRAs that would require 72t paperwork or penalty to access. Plus a house I could sell (not too liquid) if I had to, but that would take more than just a few days probably.
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Old 10-04-2012, 10:28 AM   #14
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Bonds & Cash Equivalents, (not including equities), about 20 years*, based on our current rate of expenditure.


*I should live so long.
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Old 10-04-2012, 10:54 AM   #15
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Liquid, as in anything I can sell today without penalty and have the money available in my checking account within 3 business days: 20 years worth of living expenses.
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Old 10-04-2012, 11:39 AM   #16
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I've got about 1 year in cash at this point. Then several years in bond funds, lifestyle fund, Wellesley, and then index funds for the long term "no touchy" money.
I will be harvesting more cash soon - I like to have at least one years worth of cash on hand (2 even) - it takes the sting out of downward trends. It's worth the loss of some potential income to sleep well and not worry for me personally.
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Old 10-04-2012, 12:04 PM   #17
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Using the 3.5%WR (that I am currently spending), what I have is the following, measured in years of living expenses. Note that we have no pension.

Cash (bank accounts/money market/I-bonds): 3 years
After-tax brokerage accounts (mostly equities): 6 years
Before-tax accounts (mostly equities, some bonds): 20 years

So, even if I get no dividend nor interest incomes, I have more than enough to live on until I get to 59-1/2, when I will be able to tap my before-tax accounts. And then later, of course I will get my grubby hand on the SS.

If push comes to shove, I will sell my houses for whatever they will fetch, which will get me many more years, then move into my RV. Of course before it gets to that, I would be reducing my expenses below where they are now, like to sell one house, cut travels, go back to work, or all of the above.
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Old 10-04-2012, 12:22 PM   #18
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OK, so let's talk about the other liquid, H2O.

So, I do not have a well with 2,500 gal tank, and only about 40 gal of fresh water. Oh wait, darn it, I already drain the tank of my motorhome. So, only a few gallons of drinking water.

Can I count my 25,000-gal pool in the back? It's loaded with chlorine and a bit salty, but still, if in a bind one cannot be choosy, right?

And then, and then, do I get to count my 50 wine bottles? OK, OK, most are under $10/each, but they quench my thirst fine.

And the stronger stuff that is 80-proof? And how about the beers my loving wife stacks for me in the utility room?

Man, I feel pretty smug.
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Old 10-04-2012, 12:28 PM   #19
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OK, so let's talk about the other liquid, H2O.

So, I do not have a well with 2,500 gal tank, and only about 40 gal of fresh water. Oh wait, darn it, I already drain the tank of my motorhome. So, only a few gallons of drinking water.

Can I count my 25,000-gal pool in the back? It's loaded with chlorine and a bit salty, but still, if in a bind one cannot be choosy, right?
We live not too far from Lake Ontario.
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Old 10-04-2012, 12:32 PM   #20
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Oh man! I know I can count on people here for one-upmanship.

But, but, I thought the Great Lakes had pollution problems, no? Not like it's sour grape or anything, but I did read that somewhere. My chlorine-laden water seems so much safer.
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