Emergency Cash "Rules"

[MachineGhost]

How come we never hear from people in such countries on this forum?  Are they all just clueless about the PP?
PP seems kinda elitist in that only the Anglo-Saxon citizens seem to be true believers.

Tal vez el problema es la barrera del idioma.

Perhaps some of them who would otherwise join us don't speak English.

Pero hoy en día, hay traductores de fantasía todo los Internets!

[Tyler]

I personally really enjoy having a cash emergency fund, as it contributes to my sense of security and personal freedom.  Before I became a PP convert, I would keep about 1 year of cash outside of investments to keep me sane.  One thing I love about the PP is that it keeps a full 25% of my money in cash.  That's taken the pressure off to segregate emergency money from investments.  Now I still keep about 3 months of cash in my VP (which works fine for us but others may need more depending on their personal circumstances) but feel confident that I have plenty of cash easily accessible when I need it.

Hoost -- thanks for bringing up MMM.  My wife and I are big fans as well.  I agree completely that having F-you money (with a portion in cash just in case you exercise it  ;D ) is amazingly liberating when it comes to work.  Even when you love your job, the knowledge that work is a choice and not an obligation is reassuring during the inevitable down times.  

[Tortoise]

What is the minimum amount of money that you guys (and gals) would need in order to feel comfortable calling it "F-you money" and not just an emergency fund? And would you feel comfortable allowing your emergency fund to double as F-you money?

It seems to me that if the point of an emergency fund is to cover sudden unpredictable expenses, then allowing it to double as F-you money kind of defeats the purpose since quitting a job is a predictable choice, not an unpredictable circumstance. In that sense, it seems to me like F-you money should be separate from--i.e., in addition to--an emergency fund. What do you think?

Also, how many of you would consider quitting (or have quit) a job before having another one lined up? I imagine the whole point of having F-you money is to give you the freedom to do just that, but quitting a job before lining up another one, or at least another income stream, strikes me as an emotional and somewhat irrational decision.

Maybe the "F-you" in F-you money comes not from the ability to quit your job at a moment's notice, but rather from the less tangible psychological satisfaction--the "inner F-you," if you will--that comes from knowing you can be more forthright at work without fear of the consequences of termination?

[Greg]

What is the minimum amount of money that you guys (and gals) would need in order to feel comfortable calling it "F-you money" and not just an emergency fund? And would you feel comfortable allowing your emergency fund to double as F-you money?

It seems to me that if the point of an emergency fund is to cover sudden unpredictable expenses, then allowing it to double as F-you money kind of defeats the purpose since quitting a job is a predictable choice, not an unpredictable circumstance. In that sense, it seems to me like F-you money should be separate from--i.e., in addition to--an emergency fund. What do you think?

Also, how many of you would consider quitting (or have quit) a job before having another one lined up? I imagine the whole point of having F-you money is to give you the freedom to do just that, but quitting a job before lining up another one, or at least another income stream, strikes me as an emotional and somewhat irrational decision.

Maybe the "F-you" in F-you money comes not from the ability to quit your job at a moment's notice, but rather from the less tangible psychological satisfaction--the "inner F-you," if you will--that comes from knowing you can be more forthright at work without fear of the consequences of termination?

I agree with you regarding your "Yuck Fou" money should be separate from your emergency fund because that would be a predictable event. Ideally, you would have a reasonable idea of your next job but that might not be necessary considering how large your Yuck Fou pot of money is. I would think to account for not even thinking of another job, you would want 2+ years of living expenses saved up. That way it gives you a lot of margin of error for how long it takes you to find another job as well as if there are moving costs to find a new home if you can't find a job near you, etc.

If you already have another job that could be semi-lined up/in the ball park, I'd think around a year's worth of expenses would suffice for a means of feeling safe that the decision you made was okay to do.

[Tyler]

Maybe the "F-you" in F-you money comes not from the ability to quit your job at a moment's notice, but rather from the less tangible psychological satisfaction--the "inner F-you," if you will--that comes from knowing you can be more forthright at work without fear of the consequences of termination?

^ That.  

In the extreme, if you can save about 30x your annual expenses then at that point you can live off your investment income indefinitely and work truly is optional.  Even with much less than that, you can feel free to do somethng "drastic" like try a career change that could take time.  Easier said than done, of course. But that's where ERE/MMM comes in as reducing your expenses both increases your savings rate and also reduces the necessary nest egg.

FWIW, I've quit a job before with nothing lined up.  My wife had my back so I wasn't exactly jumping without a parachute, but I would have done it even if I was single. Some jobs really aren't worth the compensation.

[foglifter]

Tal vez el problema es la barrera del idioma.

Perhaps some of them who would otherwise join us don't speak English.

Pero hoy en día, hay traductores de fantasía todo los Internets!

I was going to throw in my 2 cents in a non-Latin-based language, but it turned out the forum software doesn't understand Unicode. 
Anyways, FoxLingo for Firefox is a great plugin to quickly translate a block of text or the whole page. Of course, there is also Google Translate.

[Figuring It Out]

I posted an update to my post above about the use of the Merk fund for cash in the portfolio. Hope it helps:

https://web.archive.org/web/20160324133 ... -for-cash/

A belated thank you!

[bree09]

I just saw this thread and I think, this is a very helpful thread for me. Almost all the information here is what I need. Thanks.