Originally Posted by
GMK35
There’s also the intrinsic value of living life to the fullest now vs. the mindset of “when I’m 60 I’ll do XYZ.” “Fullest” does not mean financially stupid, but spending money to enjoy life and make memories can be a lot more satisfying and “worth it” than dumping tons of extra money into a low rate mortgage.
This is someone who actually read the book "Die with Zero" and follows the concepts instead of overreacting to the title.
Originally Posted by
ShyGuy
What say APC about mechanism for the 6 month emer fund?
Mine is Ramsey, pure cash in a high yield interest account at 3.35%.
But honestly, what emergency can’t be put on a credit card? Broken HVAC? Medical bill? Throw it on a CC. And you have until the next month bill due date to pay (I don’t ever carry CC debt).
If you breathe in the market, why not invest the 6 month fund in a mutual/index fund. If you need emer cash, liquidate the amount you need and the cash equivalent deposit is available in ~3-5 days.
Thoughts?
For those who had to tap into a 6 month emergency fund, what was it for? And was it a situation where you needed cold hard cash immediately? Or could have put on a CC and then sell some stock or fund and pull money that way after it settles account in 3-5 days?
USFR, SGOV or a high yield savings account are all good cash options. Over the last two decades in two different houses and multiple investment properties, I've made only the minimum mortgage payment and invested excess cash. That cash pile has created a stream of dividends and rental income that largely make an "emergency fund" unnecessary. I've even done a couple cash out refis to access capital and lower my interest rates. Over two decades, your approach of paying off in 3.5 years and investing heavily will yield similar results.
HVAC, medical bills, estimated tax payments and property tax payments go on the CC for the float and cash back. Robinhood Gold is 3% which more than offsets the CC fee that the IRS charges. I also use the CC spend to play the CC sign up bonus game.
Originally Posted by
khergan
Investing in market tracking ETFs, especially with a balanced approach of large/mid/small cap stocks mixed with international and bonds, is hardly "maxing out on debt". An argument can be made about risk tolerance, but a smartly-balanced portfolio is a much more accessible form of wealth than extra equity in your primary residence. My money is not only more accessible but also grows faster and is better insulated from shocks than someone with all their eggs in one basket.
This is so true. The other part people miss is that you don't have to sell, you can get a SBLOC, PAL or execute a short box trade on SPX to access the capital. In a down market it saves you from taking the L and in an up market you access capital without paying taxes. Liquidity matters. I've borrowed against securities instead of selling to access cash multiple times in the last decade.