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Old 06-21-2012, 05:58 AM   #41
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I retired involuntarily in may 2007, so the crash of 2008 was very relevant to me. And it was a big break for us. I was very lucky in that I moved out of 90% of my equities in march 2007 due to the concerns I had with the sub-prime situation in the US. Not because I was wise but because I was reading and believing Moneyweek and a couple of internet sites. I dipped my toes in the market in March 2008, which was faaaaaar to early and lost some money. So I waited another year and re-entered with all my money in March 2009, which was a very lucky timing. I more than doubled my money in 2009. But more importantly, I now had enough shares to be able to live on the dividend alone. Since 2010 I have a stable portfolio of high dividend shares and I now wait out the rest of the storm. Most of our money is invested in shares and we have a 20 month emergency buffer. We are not rich, living on about 3k a month with 2 adults and 5 kids, and living in a small house, but it is mine. The money my wife makes in addition with her business is mostly put into a college-fund for the kids and a retirement fund. And we spend some of that extra money on silly things. Happy? Yes! Bored? Never! (5 kids aged between 14 and 0 take care of that) Back to work? Never!

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Old 06-21-2012, 04:18 PM   #42
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Originally Posted by Huston55 View Post

I'm thinking of the Galeno model, which says keep 6 yrs of expenses (a little too much in my view) and wondering why you decided on 2 yrs.
Just out of curiosity, is Galeno actively posting anywhere now? I used to enjoy his posts on the old Motley Fool Retire Early Home Page years ago. He was a bit irreverent and annoy you at times, but his posts were entertaining and his financial advice pretty sound.

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Old 06-21-2012, 08:29 PM   #43
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Originally Posted by Huston55 View Post
Do you keep 2 yrs of total expenses in cash or, 2 yrs of remaining (after accounting for guaranteed income like pensions) expenses?
We just keep two years of cash on hand to cover the gap between our income (pension, dividends, net rental income, selling call/put options) and our spending.

We keep one year of that cash in a money market account, and we keep the second year of it in a five-year CD ladder. At the end of the first year, we sell off some equities to replenish the money market. If the market is down and there's no equity gains to support the replenishment, then we grit our teeth and start spending out of the five-year CD ladder. When the market comes back, then we replenish the money market and rebuild the CD ladder.

We picked two years of cash because that's the length of most (most) bear markets. We picked a five-year ladder because we figure we'll only be breaking into it a couple times a decade.

When we started this system, PenFed only had a six-month early-redemption penalty on five-year CDs. They've since raised it to 12 months, so we might cut back from a five-year ladder to three. Considering today's interest rates, the dollar difference hasn't been enough to get excited about.

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Old 06-22-2012, 04:09 AM   #44
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Originally Posted by friar1610 View Post
Just out of curiosity, is Galeno actively posting anywhere now? I used to enjoy his posts on the old Motley Fool Retire Early Home Page years ago. He was a bit irreverent and annoy you at times, but his posts were entertaining and his financial advice pretty sound.

Not that I know of. I learned of him from an old " best of" post on this site.

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