Plan Bs, Redundancies, and Contingencies

I woke up to a cool house a couple weeks ago. Not the “hey man, cool house!” type of cool (well, actually, yeah, it is) but I’m referring to the air temperature in this instance. It wasn’t ice cold, but rather chilly, so I put on another layer and waited for the furnace to do its thing.

The furnace did not do its thing.

It was 10 a.m., the thermostat was set to 69° F, and it was 61° in the house. Air was coming out of the registers. Cool, 61 degree air. The furnace was out.

I didn’t freak out. First, I called my Dad to see if he had any quick and easy troubleshooting ideas. He had some thoughts, but there was nothing I could really do safely on my own. Then I called a professional heating and cooling place.

Five hours after I was told “one of the guys would give me a call,” none of the guys had given me a call. I wasn’t too concerned, and I figured I’d call again in the morning if I hadn’t heard anything by then.

My wife suggested I might want to call back yet today. That’s her way of saying “Call now or I’m gonna freak out!”

So I called.

I was pretty nonchalant about the no heat in January thing, because we had already implemented our first backup plan. After I called the pros, I started fires in our two woodstoves. One on the main floor, and one in the basement. By mid-afternoon, the house was 71°, and I have enough wood stacked alongside the house to heat the place for a couple weeks. That’s right; we have redundant heating options.

 

redundant and wonderful heat

 

We also have contingent plans. If we ran out of firewood, couldn’t get more, and the furnace was still out, we have friends and family nearby. We could stave off frostbite and stay with someone else if necessary.

Well, we didn’t have to do that, because the furnace was fixed the next day. It was a simple fix. But even if it hadn’t been, it would not have been an emergency, because we’ve got our Plan Bs.

There are many aspects of life that benefit from redundancies and contingencies. Since this site is first and foremost a personal finance site, I’d like to address two that fit nicely and are frequent topics of discussion: emergency funds and early retirement.

 

You May Not Need an Emergency Fund

 

Do I have an emergency fund? Not in the traditional sense. A standard emergency fund is three to six months worth of expenses sitting around doing nothing, earning next to nothing, waiting for they day when I might need to access $20,000 to $30,000 pronto.

I don’t have that. I keep $1,000 to $2,000 in checking and savings at a local bank branch, and at least enough to cover a month’s worth of typical credit card bills in an online savings account with better interest rates.

How do I plan to cover a money emergency? You guessed it — we’ve got redundancies and contingencies, including:

  • Plenty of headspace under our credit card spending limits
  • Biweekly paychecks that exceed our monthly spending
  • A taxable account with 15+ years worth of expenses that can be easily accessed

 

We could also take out a home equity line of credit against our paid-off homes. The bottom line is, although we don’t have a pile of cash languishing in a savings account, we do have redundancy (taxable account) and contingencies (credit card, next paycheck) that would help us come up with the need funds in an emergent situation.

I’m in good company. A number of my comrades have weighed in with similar thoughts on why several months’ worth of cash may be overkill for people like you and me.

The cool kids think along the same lines. By kids, I mean millennials. Sorry, kids.

You Don’t Need the Perfect Plan to Retire Early

 

If you’ve been reading half as much as I have about early retirement, you’ve probably come to some of the following conclusions:

 

Frankly, there’s nothing untrue there, and I’m doing my best to check all the boxes before checking out. But that doesn’t mean I’m doing so without redundancies and contingencies.

First, I’ll address redundancy. When I do step away, I won’t go around telling everyone I’m 42 years old and retired. I’ll treat it as an extended and potentially permanent sabbatical from clinical medicine.

My redundancy, and part of what I’ll be “retiring to” is what you’re looking at.

While it was not necessarily the crux of my plan when I launched this site, it appears more and more likely that site revenue will provide some meaningful income, while allowing me to donate many dollars. Writing for you also gives me a different sense of purpose and way to occupy some of that newfound free time.

 

maui brewing signs

oh, the places we’ll go

 

I’ll have contingency plans, as well. In the year that I resign, I plan to update my ACLS, BLS, and PALS certifications, which will remain in effect for two years. I’ll continue to earn enough CME to maintain a medical license, and might even consider a little locums work early on to see how it feels to go back to work after many weeks or months away.

I also need to consider contingency plans for the rest of my family. While a life of adventure appeals to my wife and I in theory, the reality might that we’re natural born homebodies. It’s easy to focus on the positive aspects of family travel and discovery (the Facebook version of life), while not giving enough consideration to the challenges that a partially nomadic life will invite.

We’ve got boys to think about, too. I don’t know how they’ll respond to an abrupt change in lifestyle. They’ve been resilient and excited to travel so far in their young lives, but we need to ensure their intellectual stimulation and overall contentment remain a priority. If our plans don’t work for them, we can go to Plan B and revert to a more traditional existence.

I’ve only scratched the surface.

 

It would not be difficult to compile a more comprehensive list of topics in personal finance and life where a little preparation and flexibility can go a long way. I try not to make too many definitive statements regarding our plans, our beliefs, or our future. It’s best not to be too rigid.

Plan for the worst, hope for the best, and enjoy the ride.

 


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52 comments

  • I think more and more people are coming around to the idea of no emergency fund. It’s like FI matures your understanding of money. As a young earner/investor with debt, the biggest goal is to get enough stash to avoid a debt-creating scramble, but not many mature beyond that level. Learning to plan and even engineer your life is key. Good luck with your stealth retirement plans!

    • It’s good to have an emergency plan, but it doesn’t necessarily have to be a pile of cash that fails to keep up with inflation.

      I also don’t know that “Emergency” is the right word. Unless you’re coming up with ransom money, it’s not often you’ll need to come up with money in a matter of minutes or hours, which is the timeframe that comes to mind with I think of a true emergency.

      Best,
      -PoF

  • VagabondMD

    Hi, POF,

    I am glad to hear that your furnace did not need to be replaced.

    My approach to the emergency fund is the complete opposite. Even though we are cruising toward our not-quite-early-but-not-quite-later retirement in our mid-50’s in three years and three four months, give or take a couple, I choose to keep a relatively substantial emergency fund (cash position).

    How substantial? Well, last I checked it is close to five years of living expenses, nearly 10% of our investable net worth. My rationale is that if my wife and I both lost our jobs tomorrow, we would have a five year cushion of time to launch the teens into the real world, figure out what to do next, perhaps sell the house, etc., all without touching the long term investment portion of our nest egg.

    So, if we lose our jobs and the very next day the stock market takes a typical nosedive into a bear market, there will be no need to panic. I admit that this is a very conservative approach, bordering on paranoid, but I have seen firsthand the financial devastation that can occur with recessions and market meltdowns, and this is my way to shield our family and sleep better at night.

    • Thanks, Vagabond! I was glad the furnace didn’t need to be replaced, too. They came back yesterday to replace a couple hoses, and all is well.

      When you’ve got a surplus, you can afford to have that cushion, and while it is conservative, you know what helps you sleep, and you’ve got to do what works for you.

      One of the authors I mentioned above is an economist who wrote up a detailed analysis of the cash cushion that you might want to review, although I think you already know what it will say.

      Cheers!
      -PoF

      • Hatton1

        I guess as I get older I agree with Vagabond. I have about 2 years of expenses in short term bond fund and a mm fund. My taxable account pays enough dividends and interest to more than support me. When I was a young girl of 41 or 42 I really never had an efund. I have read having anywhere between 2-5 years expenses allows you to ride out anything.

  • Gotta love alternate forms of heat!

    I agree on the emergency fund thing. I don’t understand why anyone needs a pile of cash sitting around if they could keep it elsewhere earning even more money. I think, as long as one has access to a stockpile, that should satisfy the emergency fund requirement.

    I also like your thinking regarding extensive travel after early retirement. Even though the idea is romantic, the practicality might not live up to the fantasy – especially with children. We have a young daughter and I don’t think she would eagerly sign on for a nomadic existence. She’s the queen of homebodies and typically has a big say in which way we sail. But again, she’s a big reason we’re doing all of this, so we’re okay with that. 🙂

    Mad Money Monster

  • Excellent! Glad to see you’re on the same bandwagon. I think the emergency fund concept originated with financial personalities in the 1990s that were trying to keep people from getting into credit card debt. For people with significant assets, I’ve yet to see an example when you absolutely must have access to $20-$30K in cash on 1 day’s notice.

    I understand arguments like @vagabondMD above for keeping cash in case of a double-whammy job loss during a market crash, but you’re much more likely to lose your job during a period of market stability or upturn, so it seems like planning for a true edge case. I think it’d be more prudent to adjust your asset allocation to include a higher amount of bonds since the reality is that the cash position is part of your overall allocation (i.e. move from 70/20/10 stock, bonds, cash to 70/30 stocks and bonds). You could then sell off bonds first should the worst happen. BUT, whatever makes it easier to sleep at night is the most important. If your family is protected and you sleep well, I wouldn’t change it.

    • VagabondMD

      @Biglaw Investor, thank you for reading my post, recognizing my situation and offering an alternative. I also consider the cash to be part of the FI portion of my allocation, 65/25/10, as it were. With interest rates at record lows and possibly on the rise, it is my opinion that the cash (as CDs. Money markets, Savings accounts, etc.) provides a more favorable risk/return profile than bond funds. Perhaps ol’ POF would indulge me on a guest blog post– “5 reasons why I keep a half million dollars in the bank”– or something like that.

      • I would love to see that post. I certainly think you know what you’re doing based on your WCI forum posts.

        I’m curious if that means you agree that your emergency fund money is rolled into your overall asset allocation such that if you felt bonds had a more favorable risk/return profile than cash that you would switch your allocation to 65/35?

      • I’d gladly indulge you in that guest post, Vagabond. It would be interesting to explore the psychological and financial aspects of the cash cushion.

        Maybe you could spread a bunch of bills around the bed and do a photo shoot for the post a la Demi Moore in Indecent Proposal.

        Or not.

        Cheers!
        -PoF

        • RocDoc

          We’re at a similar age to Vagabond MD and in full agreement with him over bond risk/return issues. Like Vagabond, our portfolio contains several years worth of cash. Our thought process is that since we have enough in equity index funds and stocks to fund our living expenses at a 3 % withdrawal rate, that we could afford the peace of mind that a large multi year cash cushion provides. We also have several years worth of expenses in bond funds and our asset allocation is pretty close to Vagabond MD’s.
          Maybe, it’s an age thing. I’ve seen several friends and relatives have to substantially cut back on travel and retirement activities due to bear markets occurring shortly after they retired. The last thing I want to do is be retired and have to seriously curtail fun plans to ride out a bear market.

          • Maybe it is an age thing, or a change in perspective that comes with actually having more than Enough.

            To me, the peace of mind comes from having enough to live well on a 3.5% withdrawal rate. That’s all I need to sleep at night. Money in excess of that is money I can afford to lose. I don’t speculate with it, but I’m more than happy to invest it in index funds and let it ride.

            There’s no right or wrong answer here. We all have different risk tolerances and preferences.

            Cheers!
            -PoF

          • Hatton1

            Interesting that all of the senior doctors (50+) want a cash cushion. I am really close to calling it quits and am only working 3 days/week. I am keeping more dollars in a mm because at some point I will need a new car etc and the cash flow working 3 days per week will not support that.

  • Good post, PoF. We agree on no need for a separate emergency cash fund. Investments, especially those that throw out periodic positive cash flow, along with immediate access to credit (card or HLOC), is more than sufficient. But this maturity usually comes much later, long after FI is reached.

    While redundancies and contingency plans are good, the problem with those is there is no end to that. Our mind plays tricks such that after one redundancy is arranged or one contingency is planned for, another one pops up to worry us. At work, this leads to “OMY” syndrome. At some point, we have to realize ‘enough is enough’ and voluntarily downsize our work (and accept lower pay) or just simply retire to something better that matters to us. Finding this inflection point is critical and unique to each individual.

    • I hear you, TFR.

      I’m not exactly an overplanner, but I do like to have a Plan B for when things don’t work out. It saves me at work, on vacation, and throughout life.
      At our last house (and our second home), when we lose power, we have no ability to heat the home. That’s problematic up north!

      I’m guilty of OMY syndrome (several times over) but have identified my Enough point, and I think that’s enough links for now.

      Cheers!
      -PoF

  • I do keep an emergency fund, but it’s in the form of a cd ladder returning 3 percent. Those cds have low cash out penalties. It covers about 6 months of needs. Something to consider, if something happens you may not be able to get that home equity line of credit. I.e. You suddenly lose your job. You could cash out your taxable account as an option. Or use cards as well. Both have downsides. I view my emergency account as along with my mortgage part of my safe account allocation. Since I’d have it in bonds or cds anyway there is no impact on our savings.

  • We keep a decent Emergency Fund on hand (about 2 months of normal spending) in an online savings account – I don’t plan to add to it at all and consider it fully funded.

    I do like knowing it’s there if we need it, but I agree with your thoughts on the credit card, next paycheck and taxable accounts. We have those buffers built in as well – and that’s the reason we didn’t even save 3 months worth.

  • I think kids require an added degree of flexibility when it comes to early retirement. While you may want to avoid the peak travel season when heading to Europe or elsewhere, they have school and extra curricular activities that can’t be missed.

    That’s one thing I think about quite a bit and why we will think long and hard about where we’ll retire. It’ll need to be a place with good schools etc but also a place with plenty to do nearby for quick long weekend trips etc. We have time but those are things we’ll think more about.

    • Yes, the kids are a huge consideration, and they have a lot to do with my desire to retire early — to do more with them and for them.

      I think we can educate them pretty well for a few years of vagabonding, but would like to be settled when they’re high school aged. Fortunately, we won’t be tied to any particular place for work, so we can go wherever is best for them.

      Cheers!
      -PoF

  • Emergency funds may make sense for medical students or residents, but I don’t think it is necessary for attendings, for the reasons you mentioned.

  • We typically don’t have a load of cash on hand, maybe $10k or less. Last year, we ramped that up significantly expecting a double layoff. Since that didn’t happen we now have a pile of cash to invest and aren’t sure what to do with it. Mrs. SSC is leary about putting it all into the market currently, even though we’re still dumping $4k/mo into the market, and we haven’t found a nice alternative we both like yet.

    I think it’s funny that we’ve essentially swapped roles on cash savings. When we first married I was like, “We need at least $20k in cash, always!”No reason other than that was my “secure feeling” number. Her argument was that it was losing value and not worth it, so we compromised.

    Now I’m like, “It’s losing value, let’s put it anywhere else” and she’s like, “Eeehhhh… I kind of expect some craziness to happen, I’m comfortable keeping it in cash for now.”

    Plan for the worst, hope for the best and enjoy the ride indeed. Glad your furnace was an easy fix. Those things can get spendy quickly.

  • Redundancies are second nature to me. Professionally I deal with storage of data. The golden rule of being entrusted with customer data? The system you design should never, ever lose that data. So I’ve spent a lot of time building redundancies for highly available systems. I find that that creeps into my personal life too. We even have backup countries (2!) planned – countries where we know we would be comfortable and have a plan for how to get work permits.

    • Backup countries — you’ve really thought this through, Mrs. BITA!

      And thank you for the reminder to back up my data. I’m overdue and I’d hate to lose so many pictures taken in recent years!
      -PoF

  • Thanks, PoF, for the shout-out! Glad to see there are more FIRE folks who haven’t warmed up (pardon the pun) to the classical emergency fund.
    Also, notice that the good Dr. PoF never even mentioned the size of the repair bill in the post (unless I missed it somehow). Sure, a repair bill is an emergency but it’s probably small enough that PoF doesn’t even have to sweat it (pardon the pun again, must be cold there now) with a high enough income and savings rate well above 50%.
    Have a great Tuesday everybody!

    • Big ERN sure is punny, isn’t he?

      I haven’t mentioned the bill because I haven’t seen it yet! I do know those guys can charge pretty close to the same hourly rate as me. They made two trips and spent maybe an hour in total, but I’ll bet I pay about as much as I would for a cord of firewood. Of course, I can pay that bill in multiple ways. You know… redundant ways.

      Cheers!
      -PoF

  • I’ve always thought that most millennials don’t really need to keep a huge emergency fund on hand. If you’re in your 20s, you probably have so many natural contingency plans. You have no one you need to pay for. You can probably find some sort of job to cover you, even if it doesn’t pay as much. And absolute worst case scenario, you probably have parents that you can lean on if necessary. I know for myself, I know that, if I absolutely had to, I’d just sell everything I have and move back home.

    One thing I do with my emergency fund is to store it in 5% interest FDIC insured savings accounts. It takes some work to set up and it’s not for everyone (probably more geared for dorks like me), but it makes me feel less bad having that cash sitting when I know I’m getting 5% guaranteed return on that money each year.

    • It seems like the high interest offers I’ve seen have significant limitations — either short term or only on the first few thousand dollars.

      Care to share where you’re getting your 5%, Financial Panther?

      Best,
      -PoF

      • I actually wrote a pretty lengthy tutorial about how I get 5% on my emergency fund in a post here. (apologies for the link spam, but you asked for it!).

        By no means is this for everyone. I’d say it’s more for the travel hacker and optimizer types like myself. It does require you to manage up to 10 accounts total. But once set up, everything is completely automated, so I don’t have to do anything to keep my emergency fund system running smoothly. I literally look at the account 4 times per year in order to pull out the interest I accumulate each quarter. My fiance pulls out her interest once per year just because she’s lazier with it. I do link these accounts with my Mint account so I can see it with all my other bank accounts.

        The good thing is that each person can open up 5 accounts and put $1,000 in each one. If you have a two-person household, that’s 10 total accounts wth $1,000 in each one. For many people, a $10k emergency fund is plenty. Even at a $60k per year spend, that’s two months you’ve got covered.

        I recently opened up another account as well with a company called Insight, that still lets you put away $5k at 5%, and my fiance and I are both funding that one to the max. That means most households can put away $20k per year at 5% interest, spread out through 12 accounts. Again, plenty of emergency money for your typical household. And if you’ve automated everything, you never have to look at the account.

        They’ve been offering 5% for something like half a decade, so I’m not too concerned about them taking the 5% completely away. At its peak, they actually used to let you fund $5,000 in each account, which meant a two-person household could put away $50k earning 5%!

        Again, not for everyone. Definitely a next level type emergency fund hack. If you want to do it, you’ll actually spend the most time reading about it and trying to understand how it works. The actual process of setting it up takes minimal time. Mainly just waiting for cards to arrive in the mail.

        • I see. Thanks for the link, FP!

          I’ll agree that it’s not for everyone. Not for me, anyway. At a different stage in my career, it might have been, but at this point, I don’t want to track 5 or 10 accounts to get a better rate on what constitutes a very small percentage of my portfolio. Still, I can see the benefit for those who want to optimize everything in their financial world.

          Best,
          -PoF

  • Glad your house is nice and toasty again.

    We do have an emergency fund, and while we’re probably losing money overall, it does have some benefits: in addition to the peace of mind, the bank is just down the street and with this minimum balance we get a free safety deposit box, free notary service, refunded ATM fees, free checks, etc. I’m sure these could all be had elsewhere and some of them even with online banks, but the convenience factor is worth something too.

    • I hear you on the convenience, Julie.

      We keep $1,000 or so at a branch three blocks from our house. There’s a Redbox across the street, too, and a great sandwich shop in the same area. All very convenient.

      Cheers!
      -PoF

  • The whole emergency fund concept is so ingrained in personal finance circles. I think it’s been generalized too much. I think many people should have emergency funds available, but most of the people I’m referring to are nowhere near contemplating early retirement. Once you have enough to cover expenses from various sources, having an emergency fund is counterproductive.

  • I keep 6 months of expenses in cash. I call it an emergency fund, but what it really has become is my liquid nest egg to live off of for if/when I pull the plug for corporate America. My new plans have me doing this much earlier than I originally planned, but it’s still early.

  • PoF I am always surprised at the number of comments that keep growing on this site. And a MMM shout out on twitter. Well done. I was also psyched to see you are on Financial Samurai today.

    I wrote about this topic recently too here: https://www.dadsdollarsanddebts.com/blog/2017/1/24/for-physicians-is-an-emergency-fund-really-necessary

    For us, we bought a home warranty (post to come out Thursday) which covers my furnace at least….still it does not mean the serviceman will get out quick but in California that is less of an issue.

    I think a back up plan is good. The blog seems to provide that and I would say a few weeks to months of locums work would help also. I agree with sticking with outpatient stuff. The less inpatient you do, the more difficult it becomes. I would not want to be dealing with acute arrhythmia if I was not seeing one every few weeks.

    • I’ve added your link in the bullet points above, DD&D. Does that get me a pint of Pliny from you when I make it west next?

      It has been a good week for the blog, and I believe there are more good things to come!
      -PoF

  • That’s what I love about “personal” finance, it’s Personal! We do tend to keep some cash reserves on hand, but reading your post makes me question the approach.

    As someone who’s 18 months from FIRE (sound familiar?), I do think it’s sensible to take advantage of the strong market to liquidate some equities and start filling “Bucket 1“. In reality, most of my “Bucket 1” will be in cash, as the security of “loss avoidance” (e.g., bear market) trumps the loss of earned income on the $$.

    Curious, how do you think about your “bucket strategy” as it relates to an “Emergency Fund”?

    • RocDoc

      Fritz,
      I read and enjoyed your website post on bucket allocations in retirement. I’ve also organized our portfolio to have several years worth of cash. We also have several years worth of bonds but I still like having the large cash cushion due to bond risk/return issues referenced by Vagabond MD above.

  • Just like you, I don’t have that big of an emergency fund and most of my “emergency fund” is a part of my taxable account if something really does go wrong.

    I do keep about $5-10k in a checking account mainly to pay off credit card bills because I float a lot due to credit card churning (for the free points and miles).

    I’d say that keeping an emergency fund is hugely personal preference and can vary from person to person.

  • Count us among those with a minimal emergency fund. We use mostly credit cards with plenty of room to charge more if needed. Cash from selling assets in taxable accounts can be accessed in a couple of days, and we don’t anticipate any emergencies that need money faster than that.

    It is a good plan to have contingencies. Even if we have enough investments to cover our expenses based on a 3% or 4% rule, we still like to have some form of income coming in. And if we decide to completely cut loose and only subsist on our investments, there will always be ways we could start making money again if we really needed to.

    You’re doing it right, and I’m even getting excited for your “sabbatical” 🙂

  • We keep an emergency fund of maybe 3-4 months of expenses. It’s sort of a compromise between my wife and I… I wanted less, she wanted more. We met in the middle. And although it is rather unlikely that we both would lose our jobs at the same time, our fund does help us sleep better at night.

    In our case, we still have fixed expenses that we would have to pay, mainly our mortgage AND my student loans. Those two alone amount to almost $5k a month. Plus we’d have to cover other essentials like food, electricity, water. Maybe we’ll cut back on our e-fund once my loans are off the books and our fixed expenses decrease, but as it stands having an emergency fund is not affecting our ability to save for early retirement.

  • I agree, once a financial plan is in place and someone has resigned themselves to an early retirement that does not include supercars and hookers, the rest is pretty flexible.

    I always find it ironic that the early retirement police are okay with half the population stumbling through life with credit card debt and unable to come up with $1,000 if their life depended on it, then require the one group of people who do have a financial plan to map out every aspect of their lives for the next 15 years. It’s all about flexibility, which is exactly what reaching early financial independence is all about.

    PS – glad us kids and you old farts can finally agree on something. 😉

  • Interesting that you have so many backup plans PoF. I think along the same lines.

    Maybe I’m too used to things not going right…I now plan for most things to go wrong. Yes, wrong!

    How about a stock market crash for a decade and no dividend payments in the same time period?

    Yeah, I got a backup plan for that!

  • Joe

    You can always get a space heater too. 🙂
    You don’t need an emergency fund because you have good income. I think once you retire, you’ll give more value to cash.
    We have 3-4 months of expense in our bank account. That’s because there are a lot of potential expenses for us. If a tenant moves out, we’d need to give him the deposit and pay for vacancy. Home repair always seem to pop up at the worse time. etc…
    The cash is good when you don’t have a lot of income.

  • David Knuff

    30k in paper Ibonds….guess that is my “emergency” fund but I can pay most things with CC or next paycheck

  • I’m not a big fan of e-funds either. Like you, I have a steady high paying job. I also have an after-tax portfolio that can be tapped in case shit hits the fan. I just hate having so much money sitting around doing nothing. Maybe if we get back to the days of 4-5% interest rates on money market accounts I’ll consider stocking away more in the bank, but for now, I’m seeking higher returns than the 1% in my Ally savings account.

    Three to six month e-funds make sense if your income or job status is more volatile. If you work on 100% commission or don’t have a steady job, then yes, it definitely makes sense to have a reliable e-fund you can tap. For others, I think it’s a bit overkill.

  • Ping-Pong-Champ

    Opinions really do vary on this subject. I will venture an anaology.

    Seatbelts and airbags are but a fraction of the cost of a vehicle. And you RARELY use them. However, when you really do need to use them their value is revealed. Same can be said for cash reserves, they are a protective hedge.

    My .02, until you need cash, its useful value is taken for granted. Bankruptcy, Divorce, Lawsuits, Taxes, Midnight Bailbonds (don’t ask), Banking Issues and Illiquidity are some of the best teachers of this lesson.

    What is the harm in keeping some cash around? Hedging is not for fools.

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