growing_older
Thinks s/he gets paid by the post
- Joined
- Jun 30, 2007
- Messages
- 2,657
I have never maintained an emergency fund, thinking instead that my HELOC could be called upon in case of an emergency. Recently with news that many lenders were freezing HELOCs, I changed this plan and saved up a few months worth of expenses to make a real (but small) emergency fund. Now I wonder if this is enough.
My company is somewhat unstable and recently my boss and several others were "let go" unexpectedly. New management has not yet told us what the new organization will be. The field we are in is in a bit of a slump and many related companies have announced large layoffs, so the market is flooded with job seekers. I don't know that my job is in jeopardy, but if it were, finding a new one could take much longer than usual in a slumping industry.
I have plenty of equity and plenty of assets in tax advantaged accounts, but very little in taxable accounts and only the emergency fund would be easy to access for cash.
So, this makes me think I need more emergency fund. Saving up additional funds is possible, but slow. I wonder if I should actually tap the HELOC proactively while I'm still employed. It will cost me something in interest (though not much as I have a great rate) but it will buy me as much liquid emergency fund as I might want. Drawing funds now while I am employed would allow me to get some liquidity that might be impossible if I lose my job and my HELOC gets frozen, just when I really need it. If not, I just pay it back as quickly as I can and keep the emergency fund. I don't think it will make much difference in planning for FIRE, except maybe to lower potential stress from worrying about involuntary job loss.
So, any one else faced a similar situation? Any thoughts about the idea of borrowing to establish an emergency fund.
My company is somewhat unstable and recently my boss and several others were "let go" unexpectedly. New management has not yet told us what the new organization will be. The field we are in is in a bit of a slump and many related companies have announced large layoffs, so the market is flooded with job seekers. I don't know that my job is in jeopardy, but if it were, finding a new one could take much longer than usual in a slumping industry.
I have plenty of equity and plenty of assets in tax advantaged accounts, but very little in taxable accounts and only the emergency fund would be easy to access for cash.
So, this makes me think I need more emergency fund. Saving up additional funds is possible, but slow. I wonder if I should actually tap the HELOC proactively while I'm still employed. It will cost me something in interest (though not much as I have a great rate) but it will buy me as much liquid emergency fund as I might want. Drawing funds now while I am employed would allow me to get some liquidity that might be impossible if I lose my job and my HELOC gets frozen, just when I really need it. If not, I just pay it back as quickly as I can and keep the emergency fund. I don't think it will make much difference in planning for FIRE, except maybe to lower potential stress from worrying about involuntary job loss.
So, any one else faced a similar situation? Any thoughts about the idea of borrowing to establish an emergency fund.