One of No Credit Needed's posts asked people about what exactly constituted six months' worth of expenses, which led naturally to a discussion about emergency funds. The last of four questions he asked his readers to respond to:
What is the smallest emergency fund with which you would be comfortable?
I said “75 years” with a wink. But I knew that I wasn't winking on the inside.
Embracing a cover-all-contingencies mentality isn't productive and that's what I was doing in part with that comment. It All I can do — or all anyone can do, really — is prepare for what we can, because there's no way to cover for all contingencies.
Forget it. Next question!
That realization hurts. It can immobilize, like after I read Kunstler's The Long Emergency. I was depressed for a couple of weeks after finishing that book.
As it turns out, peak oil is just one Really Bad Thing that's going to turn our lives upside down. How about these?
- Peak water
- Insolvency of the banking system
- Irreversible climate change
- Food shortages and disruption of distribution
- Hyperinflation
- Recession or depression
- War with Iran
- AIrborne anthrax
- Cats and dogs living together, mass hysteria
A 75-year emergency fund doesn't do a darn bit of good if I'm dead, or if I can't buy the food I need to keep from becoming dead.
Worrying about all of these things is insane, and I don't worry about all of these things. I know they exist, and I know how to prepare for some of them. I shuffle my investments around based on this information. I lose weight. I plan to buy a little extra food. I save to snap up bargains.
I'm not willing at the moment to prepare for all of them, but that's just a calculated risk. I plan for what I can, accept the rest, and pray, because ultimately God is in control. Being thankful that things are still as good as they are helps, too.
An emergency fund is good to have, but a 75-year emergency fund is overkill. Fifty is plenty. 😉
It is actually not a bad way of thinking if you redefine "emergency fund" from some savings accounts somewhere to "liquid assets". I have never had a classic emergency fund and I did not open retirement funds until I was financially independent (mostly because I lived in several different countries). However, I have continuously been calculating just how long my savings would last me if I were to lose my job. I remember that after two years of saving that I had an "emergency fund" of more than 10 years. After that it went went. Four years after setting the goal, the emergency fund stood at 25 years and shortly thereafter it was infinite (around the crossover point it shoots up like a rocket).
I don't think you should worry too much about some of the issues you have no control over, although you can do your part-conservation, etc. I think the key is planning for what you can-as you mention.
Sweet Ghostbuster's reference!
I don't think you should worry too much about some of the issues you have no control over, although you can do your part-conservation, etc. i do think that man has the ability to solve many of these problems- just over 100 years ago we did not have the modern internal combustion engine-much less computers, etc. I think the key is planning for what you can-as you mention.
Sweet Ghostbuster's reference!
Whoever came up with the idea of "peak water" should go get their tuition money back from whatever school last attempted to teach them the barest rudiments of basic science. The lesson was a complete and utter failure.
By far the more plausible future problems involve food shortages, collapse of banking and commerce, and war. While I'm not sure stocking up with ten years' supply of Bachelor Chow is realistic, it would probably be a good idea for most folks to learn the basic agricultural concepts in case they literally do have to "grow their own" at some point.
Who you going to call?
Ghostbusters!
LOL
@ Mike – I don't think "peak water" works like "peak oil", but certainly water security is an issue to consider in parts of the world that are already a bit unstable…
Great post! Don't forget the duct tape and plastic sheeting…
MBH,
For me, a 75 year emergency fund would be convert to "retiring in my thirties." No need to work if my emergency fund can sustain me to over 100 🙂
Dude, Ghostbusters has GOT to be one of the top five best comedies EVAR! And certainly one of the most quotable.
I can just see Bill Murray delivering that line.
BTW, I don't have a 75-year E-fund.
While a 75 year emergency fund may not be feasible, I think everyone should sit down and consider whether "six months of expenses" is appropriate to their own situation.
I commented on another blog recently, that an emergency I faced a couple of years ago involved several international flights and hiring a lawyer in another country. That may be extreme, but I can see family emergencies coming up that would involve myself and/or my spouse having to fly to his country or my own, and spend an extended period there. Paying the gas bill would be the least of our worries. So I don't do "six months of expenses" and think everyone should work out where there comfort level is at.
Dude, Ghostbusters has GOT to be one of the top five best comedies EVAR! And certainly one of the most quotable.
I can just see Bill Murray delivering that line.
BTW, I don’t have a 75-year E-fund.