You can take the money out of an ibond with a small penalty after a relatively short time. So it's not a huge risk if you have enough short-term credit, etc, for an emergency before the time comes when you can cash the iBond.
Seriously, what the hell. Acting like this guy is blowing his future on a roulette wheel by getting some savings bonds.
Is anybody else just sick to death of the term "emergency fund"? If you go to /r/personalfinance, every other comment is reminding people to stock up their emergency fund. Towelie says, "Don't forget to bring a towel!"
I'll tell you about my real "emergency fund": In an actual, living emergency, every single dollar I have, in every account, even my IRA, and all my credit lines combined, are my emergency fund. That's the nature of an emergency. If I empty out some specially earmarked emergency fund, I don't tell the doctor to quit taking the bullets out of my spleen because I'm tapped. "Sorry, can't touch my HYSA!" (HYSAs are another butt bug of /r/pf)
What people mean by "emergency fund" obviously is their "don't stupidly overdraft your checking account fund", but they never spell that out.
It doesn’t sound like you understand the purpose of an emergency fund or what it is. It’s for when a random virus takes down society and you lose your job, but you and your family still need to pay for rent and food for 6 months. That’s why you save x months worth of expenses in cash.
If you’re young and don’t have family/debt you can just use your ira as an emergency fund. If you have a family and kids you need cash available for unexpected events. Most people don’t have tech jobs where they make 5k every two weeks. A car accident with no emergency fund means many people can’t get to work, lose their job, etc. They need safe cash for emergencies.
I agree, I get downvoted merciless on r/personalfinance when I say that my only conceivable true “emergency” is a job loss. Anything else I can use credit to income smooth and cash flow. I keep one month of bills in savings
More specifically, I have a HELOC and I’m always getting low and no interest balance transfer options from my bank.
It is also worth understanding when you situation is far more stable than most people. If you've got a stable job and considerable assets then you can basically self insure. Yes, if you surprise need $40,000 and the market is down it will suck to sell a bunch of investments from your taxable brokerage account or rapidly get a HELOC but that case is rare enough that you are willing to eat the loss in that case for additional expected growth.
Almost nobody has this. The r/personalfinance memes exist largely as "the very basics for people who don't have the first idea how to plan for their financial future."
This is just another one of those benefits of being wealthy. On average, self-insuring saves money. But for a lot of people an emergency fund is a critical thing because they don't have access to liquid assets without gargantuan 401k penalties.
This was my same thought process when I was making $80K and trying to dig myself out of bad real estate decisions post 2008 and had less than $100 in savings. Yes I know $80K isn’t a bad income in the grand scheme of things. But it is when you have five mortgages on three properties totaling a half a million dollars during the worse real estate crash in years.
Even then my focus was to always be employable and to be able to find a job quickly.
