Comments on: Personal Finance Education Series: (4) Setting up an Emergency Fund http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/ The personal blog of Adam Nash Sat, 11 Feb 2012 23:08:18 +0000 hourly 1 http://wordpress.com/ By: Adam Nash http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11956 Tue, 31 Jul 2007 06:50:22 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11956 Hi Adv-Retirement,

I’m not sure I understand what an emergency fund in a retirement investment portfolio would be.

Many investment portfolios will keep a small percentage of their dollars in cash, as a way to balance risk, and to ensure the availability of funds & liquidity in a market crash.

For example, if you are pulling 4% annually out of a retirement portfolio, you might have a small percentage in cash to smooth out returns and lower risk. You might want to see my chapter on asset allocation for more information here.

For this article, I use emergency fund to refer to cash you keep outside of your primary savings vehicles for retirement, housing, or education. The emergency fund is designed to help you cope with a sudden emergency or disruption of income.

Take care.
Adam

]]> By: adv-retirement http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11902 Mon, 30 Jul 2007 05:30:23 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11902 Adam, how about setting up a emergency fund within a retirement investment profolio, are there any advice?

]]> By: Retirement Guy http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11059 Mon, 16 Jul 2007 19:57:23 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-11059 This is a well-written and hard-hitting post I think. A big problem among both young people and retiring (older) people is simply NOT PREPARING. I appreciate you giving this advice on your site because good sensible thinking is needed like this today.

]]> By: MJC http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-10088 Thu, 28 Jun 2007 17:22:54 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-10088 When currencies fail real property is a good fall back. Some forms such as bullion coin are very liquid and also hold there value against the cost of goods and services through inflation. I’m not an extremist and I’m not saying the sky is falling, but I do work with the senior population. Their stories of the depression are not lost on me. The 20′s are just around the corner and we are over due for harder times. Ajusted for inflation the dollar wouldn’t be worth the paper it is printed on.

]]> By: Ricky http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3142 Fri, 23 Feb 2007 21:45:42 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3142 Thank you for your good advice. I’ll pass it on and I’ll help her find a good credit counselors.

]]> By: Adam Nash http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3127 Thu, 22 Feb 2007 06:48:55 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3127 Ricky,

Your advice seems like a really good balance of the defensive (building the emergency fund) and the offensive (get rid of the terrible consumer debt).

The one thing I would have added here is to look into some sort of balance transfer of the credit card debt to a teaser/low interest rate, to help control the payments as she gets control of her debt.

I’m torn on the emergency fund vs. credit card debt issue. The reality is, credit card is so ridiculously expensive, paying it off is a bigger guaranteed return than anything available. However, lack of an emergency fund is just asking to “fall off the wagon” again with credit cards when anything unexpected comes up.

The last thing that you might want your friend to do is to really do a monthly budget. Usually, you run up credit card debt slowly, like a leak, because your spending more than your income every month. You have good months and bad months, but every month the debt grows. If you don’t patch the leak, then you can never really solve the problem.

There are reputable credit counselors out there that can help people make plans to pay off credit card debt. Be careful, though, there are also some less than reputable ones. I would consult with the programs recommended by local government agencies, if this sounds helpful. Don’t just do a web search for it…

Hope this helps.
Adam

]]> By: Ricky http://blog.adamnash.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3126 Thu, 22 Feb 2007 06:41:45 +0000 http://psychohistory.wordpress.com/2007/02/21/personal-finance-education-series-4-setting-up-an-emergency-fund/#comment-3126 Recent a starving artist friend of my recently ask me to give her some financial advise. She has sizable credit card debt, after paying the minimal monthly she now has some extra cash. I looked at her situation and told her to take the following steps.
1) cut up the credit cards and stop adding to them.
2) keep paying the minimal and with any extra build up the emergency funds for 1 month of expenses.
3) once you had 1 month of emergency fund then don’t touch it then just use the extra money to start payoff credit card debt as much as possible.

Any feedback? Is there a better advice?

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