Emergency Funds!! Have they ever been so vital?

[countrygirl2]

Our big hurt is insurance in retirement. If it keeps raising as it is in the next 10 years its eating up our SS. Last year mine raised over $40 my SS didn't.  Unless people have other income it will get bad. Also I can see inflation taking off. I know here our property taxes are going to raise. We are losing a powerplant and a coalmine closed down. Someone will have to pay it and the farmers won't.

[CCL]

May 29, 2020 17:55:38 GMT -5 countrygirl2 said:

Our big hurt is insurance in retirement. If it keeps raising as it is in the next 10 years its eating up our SS. Last year mine raised over $40 my SS didn't.  Unless people have other income it will get bad. Also I can see inflation taking off. I know here our property taxes are going to raise. We are losing a powerplant and a coalmine closed down. Someone will have to pay it and the farmers won't.

Aren't your property taxes capped at 1%? If you are paying less than that, you're already getting a better deal than most of us.

[countrygirl2]

No we don't have any cap. Only if you make something like less then $25k in Indiana.  They are going to have to raise here with the loss of assessed properties. They have given the farmers in the state a huge cut over 5 years. It will have to be made up by someone. Our personal house is $2k a year.  The have also had to do a local option tax because of the decrease they gave the farmers.  We aren't complaining about that, we need the money locally. I'm more worried about our health insurance getting out of hand.  We also pay pretty high amounts for license plates, the vehicles are taxed at that time also.

[Deleted]

May 25, 2020 14:46:01 GMT -5 WannabeWealthy said:

May 25, 2020 7:28:28 GMT -5 @bamafan1954 said:

I'm not arguing with you in particular.  Your system works for you.

But this is what I mean by you make it sound so simple.  3-4% isn't really interest-free.  Interest-free usually is for a limited amount of time.  A little over a year is the most I've seen although there are no doubt longer ones since I don't go looking for them.  You do have to pay it back with either sizeable monthly payments or a minimum payment with a balloon at the end.  And although I have several cards with $10,000 and even $16,000 credit limits, none of them will let me take that much out in cash.  That's usually capped at around $5k.  So for that "BIG loan," I would have to get these 0% offers from 3 or 4 different credit cards.  And while stock definitely make more than 3-4%, you cannot count on that happening in the short period of time that you have the CC loan.

I have a 0% loan from Synchrony for the flooring I bought at Lumber Liquidators.  With installation, the total came to over $13k.  I had that in the bank in cash, but I didn't want to spend that much.  So I paid $7800 and put $6000 on their credit card.  Why?  To pay the loan off within 2 years, I would have had to pay over $500 a month.  That was too much of a commitment for me.  If I fail to get it paid off, the rate of retroactive interest is 29.9%.  I've made 6 payments already and accumulated $800 worth of deferred interest.  That scares the crap out of me.  So I did it both ways.

One thing about that LL loan that was interesting.  According to the statement, it would take 24 years to pay off that $6000 if I made just the minimum payment!  And the minimum payment isn't dirt cheap.  Right now I think it is $164 a month whereas I am paying $250 for the interest-free option.  That potential interest is  frightening.

Yea, it's more of preference for me.  I do have CCs that have very high limits (>$35k) with 0 balance. It would be a way of delaying having to pay a large bill before I am forced to spend money out of my stocks.  But what I would do is pay the monthly payment for this loan term (until it ends in 12months or so) with my stock money.  That way I'm trickling the money down to the loan to buy me some time to get a handle on everything.  It's better than just pulling that money out from the stocks at one time and it buys me a LOT of time to get my emergency under control (whether it's finding a new job or whatever).

In my opinion, it's better to have $30k in stocks than to have $30k sitting in a money market or cash.  Waiting for that emergency to show up could be a long time missing out on the money working for you.

Credit cards as an emergency fund is risky.  Besides the high rates, they can cut you off at any time.  I read today that Chase is slashing people's limits due to the current state of the economy.  

[WannabeWealthy]

May 31, 2020 11:14:21 GMT -5 minnesotapaintlady said:

May 25, 2020 14:46:01 GMT -5 WannabeWealthy said:

Yea, it's more of preference for me.  I do have CCs that have very high limits (>$35k) with 0 balance. It would be a way of delaying having to pay a large bill before I am forced to spend money out of my stocks.  But what I would do is pay the monthly payment for this loan term (until it ends in 12months or so) with my stock money.  That way I'm trickling the money down to the loan to buy me some time to get a handle on everything.  It's better than just pulling that money out from the stocks at one time and it buys me a LOT of time to get my emergency under control (whether it's finding a new job or whatever).

In my opinion, it's better to have $30k in stocks than to have $30k sitting in a money market or cash.  Waiting for that emergency to show up could be a long time missing out on the money working for you.

Credit cards as an emergency fund is risky.  Besides the high rates, they can cut you off at any time.  I read today that Chase is slashing people's limits due to the current state of the economy.  

Not really when you actually have the cash in a portfolio.  I would guarantee not getting a high rate before I use it.  And slashing the credit limit would just force me to pay it off immediately and still get the points for the expense.

[bean29]

May 31, 2020 11:14:21 GMT -5 minnesotapaintlady said:

May 25, 2020 14:46:01 GMT -5 WannabeWealthy said:

Yea, it's more of preference for me.  I do have CCs that have very high limits (>$35k) with 0 balance. It would be a way of delaying having to pay a large bill before I am forced to spend money out of my stocks.  But what I would do is pay the monthly payment for this loan term (until it ends in 12months or so) with my stock money.  That way I'm trickling the money down to the loan to buy me some time to get a handle on everything.  It's better than just pulling that money out from the stocks at one time and it buys me a LOT of time to get my emergency under control (whether it's finding a new job or whatever).

In my opinion, it's better to have $30k in stocks than to have $30k sitting in a money market or cash.  Waiting for that emergency to show up could be a long time missing out on the money working for you.

Credit cards as an emergency fund is risky.  Besides the high rates, they can cut you off at any time.  I read today that Chase is slashing people's limits due to the current state of the economy.  

Last week they offered me a new Credit card.  I just paid one off with them though, and I wondered if they were offering me a new card with the intent of taking another one away (We have two with them RN).  When 911 happened though, we had our HELOC with them.  I told DH we needed to draw on the line of credit and save the $$ for our remodeling and DH told me we did not have to worry about it.  Famous last words.  They closed our line of credit - we couldn't get any more credit with out reappraising our house.  I did not try - we probably would have gotten the credit extended, but we figured we could go ahead without a loc.