One of No Credit Needed's posts asked people about what exactly constituted six months' worth of expenses, which led naturally to a discussion about emergency funds. The last of four questions he asked his readers to respond to:
What is the smallest emergency fund with which you would be comfortable?
I said “75 years” with a wink. But I knew that I wasn't winking on the inside.
Embracing a cover-all-contingencies mentality isn't productive and that's what I was doing in part with that comment. It All I can do — or all anyone can do, really — is prepare for what we can, because there's no way to cover for all contingencies.
Forget it. Next question!
That realization hurts. It can immobilize, like after I read Kunstler's The Long Emergency. I was depressed for a couple of weeks after finishing that book.
As it turns out, peak oil is just one Really Bad Thing that's going to turn our lives upside down. How about these?
- Peak water
- Insolvency of the banking system
- Irreversible climate change
- Food shortages and disruption of distribution
- Recession or depression
- War with Iran
- AIrborne anthrax
- Cats and dogs living together, mass hysteria
A 75-year emergency fund doesn't do a darn bit of good if I'm dead, or if I can't buy the food I need to keep from becoming dead.
Worrying about all of these things is insane, and I don't worry about all of these things. I know they exist, and I know how to prepare for some of them. I shuffle my investments around based on this information. I lose weight. I plan to buy a little extra food. I save to snap up bargains.
I'm not willing at the moment to prepare for all of them, but that's just a calculated risk. I plan for what I can, accept the rest, and pray, because ultimately God is in control. Being thankful that things are still as good as they are helps, too.
An emergency fund is good to have, but a 75-year emergency fund is overkill. Fifty is plenty. 😉