Do you have $2000 in cold, hard cash?

[Jan Van]

Inspired by the thread " Half of Americans don't have $2,000" http://gyroscopicinvesting.com/forum/in ... opic=988.0 I figured I should poll the people on this board.

I'm fully expecting a 100% YES outcome...

[moda0306]

Does "cold, hard cash" mean "in hand?"

[Jan Van]

In hand, or in a checking account. Money you can use NOW, at will for whatever needed (or maybe unneeded).
Or as in mentioned in the other thread, if your car breaks down, you have the money available to write the $2000 check or you can walk up to the ATM and get it...

That thread made me think of the "Millionaire Next Door" series by Thomas J. Stanley. He mentions doctors and lawyers living paycheck to paycheck. Can't imagine that...

[Lone Wolf]

FWIW, the original study was about whether a person could come up with $2,000 in 30 days.  By this definition, the entire Cash portion of the PP would qualify.

But asking whether you could get the Federal Reserve Notes within the hour is still an interesting (although different) question.

[Jan Van]

30 days seems like a long time in case of emergency, to me. In that case my credit card would suffice :-) But I don't count those as part of my emergency reserves.

[Lone Wolf]

Yeah, I agree.  That's why I found the results so surprising (to the point of straining believability.)

[dualstow]

Sure I do, since you're counting checking accounts.
But, I rarely have more than a few hundred dollars in cash at home, and that's only because I get $1 coins from the mint.
Without them, I tend to have about $50 at home at any given time.

[Pkg Man]

HB recommended keeping enough cash on hand -- not in a bank-- for about a month's worth of necessities.  I agree with that advice.

[Jan Van]

I guess that could come in handy when those solar storms hit...

[LifestyleFreedom]

I have three months of living expenses in my checking account, with the goal of having six months of expenses in there by the end of the year.  I have additional cash resources in a separate savings account and marketable securities I can convert to cash quickly if need be.  I have lines of credit I can tap in a pinch, along with adequate insurance coverage.

I do all of my banking with either plastic (at the point of sale) or with online bill payment.  I pay off my credit card balances in full each month.  I rarely do anything with actual cash, so I don't keep a lot of it around.

I realize that under certain scenarios (e.g., solar flare, economic collapse), actual cash or precious metals (or barter goods) may be better to have than electronic money.  I may be taking a risk by not keeping more cash on hand.

[Lone Wolf]

Something that I really like (and my wife really likes) about the Permanent Portfolio is that you retain tremendous liquidity when unforeseen circumstances might arise.  Treasury Bills can turn into cold, hard cash whenever you need without any market timing risks.

If push came to shove, a PP adherent could have 25% of their investment wealth ready to rock within a couple of days.  You simply cannot say this about a stock-heavy portfolio.  A household cash crunch near a market bottom (when you are most likely to face unemployment or underemployment) would be a real mess if you're mostly in stocks.