Rainy day funds and how much cash to have on hand

[Provincial]

"Like it or not, we are the only indispensable nation."

For now.

 

[StacattoP]

This is a divorce thread as far as anyone knows we only have money for bills

 

[The Heretic]

The interest rate is applied to the total amount in the account; not the amount spent.

For my credit card it is the amount spent, for my checking account it is up to $25K in the account, then the amount above that is paid at less than 0.1% - as long as I make 12 debit card purchases. In general, if I do that every month, I make about $350 in interest per year.

 

[GrayGoose]

Banks are not offering squat for interest so better to keep your cash on hand or put some of it in precious metals.

The problem with precious metals is 1) you pay more than it's worth when you buy it, 2) you get less that it's worth when you sell it, 3) if you sell a lot of it at once, the transaction triggers a notification to the IRS.

 

[Longwalkhome]

Errrr what kinda rain are we talking about?

 

[The Heretic]

Errrr what kinda rain are we talking about?

Cats and dogs and frogs

 

[Soli]

Smells like MMT.

Because we're stuck living in the physical world deficits do matter. The only question is when. All debt can be called; if it can't be then it's not debt. The idea that a debt that isn't being called (because such would upset a system in place) will never be called, "can't" be called, is wishful thinking.

We'll see how long the system in place is maintained. I'm leery of new paradigms. COuld be wrong of course. But the history of creating wealth by creating money (rather than creating consumable/durable value in the world) hasn't ended well before.

 

[Longwalkhome]

Forgive me for having fun here but I am old and near senile so just tolerate me.

A normal rainy day you seek shelter

If you must go into the rain you may use an umbrella

Or you may use a raincoat to stay dry

Possibly just rubber shoes to keep your feet dry but in all cases its to weather the storm.

To quote one of my favorite westerns, Open Range, "looks like a big ones comming"

 

[pogi]

The problem with precious metals is 1) you pay more than it's worth when you buy it, 2) you get less that it's worth when you sell it, 3) if you sell a lot of it at once, the transaction triggers a notification to the IRS.

Depends the source of purchase/sale. Anything purchased or sold below $10K is not reported. With interest rates crashing and inflation going up PM sure beat worthless greenbacks (except when burning to keep warm).

 

[P7M13]

Neighbor used to have wads of cash around the house and boast of credit cards where he could get up to $50K in cash advances. He and his wife would say, "you never know when you have to skip town in a hurry!"
Turns out, he was an extremely sketchy dude. I think he wound up using much of that for defense in criminal court.....

 

[Longwalkhome]

As the 15 days of lockdown has turned into 250 its obvious its not a rainy day but a storm of hurricane size. When the flood of inflation hits it won't be whats in your pockets that keeps you afloat in my opinion. Inflation is here and it can empty everyone's pockets really quickly.

Your guns and ammo are another bank account you keep at home and like all things of value that you own they can keep you afloat. They are a good nest egg.

 

[The Heretic]

Depends the source of purchase/sale. Anything purchased or sold below $10K is not reported. With interest rates crashing and inflation going up PM sure beat worthless greenbacks (except when burning to keep warm).

I don't think PMs would be worth much for very much longer (if at all) than "worthless" paper currency, except maybe much later after civilization/normalcy/etc. has returned to replace SHTF, and at that point it would be anybody's guess as to what that worth would be. In short, if SHTF, which PMs would have any practical use in a SHTF situation? Today's worth for most PMs is their use in industry (especially high tech and some other industries like vehicles and industrial metallurgy that would not be operating during). If SHTF that is of the level where gov backed currency is worthless, it is unlikely that industry would be operating at a level where PMs would be intrinsically useful.

In a TEOWTAWKI SHTF scenario, the true PMs would be lead, tin, zinc, steel, iron and other industrial metals that are intrinsically valuable.

Finished goods - like guns and ammo - will have even more value IMO.

 

[cigars]

I don't see the connection. Weimar Germany printed money to pay off war debt and created crippling inflation, but presidents don't print money, they spend it if congress lets them. I'm guessing its not about deficit spending and the national debt since no mention of Trump, In any case, I too thought deficit spending during the Obama years might cause runaway inflation, but it didn't happen. Then I discovered the secret that, as Dick Cheney famously said, "deficits don't matter" not as long as the US

When you pour trillions and trillions willy nilly into the economy it has an effect. How much does it cost to build a deck right now compared to two years ago? Food is going up, gas is going up, etc. Supply and demand? That's a canard.
If it was a niche sector that was experiencing inflation, sure but we're getting hammered across the board. Now the fed is exploring going to a block chain dollar. Makes it more convenient to pull money out of thin air and turn it into one's and zeroes.
Interesting article just popped up. The real world numbers are reflected in the comment section.

Summer's about to start in America. So is sticker shock.

Rising prices are on the way.

www.foxbusiness.com

 

[RedRover]

For my credit card it is the amount spent, for my checking account it is up to $25K in the account, then the amount above that is paid at less than 0.1% - as long as I make 12 debit card purchases. In general, if I do that every month, I make about $350 in interest per year.

I have a similar checking account. Interest rates are obviously super low at the present, but the interest rate(which has been better in year's past) is still better than what is currently offered for a 1 yr. CD. A primary positive is that one's cash is liquid in a checking account, and not subject to early withdrawal penalties that are often imposed by those that offer CDs.

This option is much better than a checking (or savings) account that collects (essentially) nothing at all. It aids a little on negating inflation on one's spending cash.

Cash-Back/Points credit cards can also be effective tools to combat inflation when utilizing one's spending money on every day expenses; especially cards that offer healthy introductory sign-up bonuses.

 

[The Heretic]

I have a similar checking account. Interest rates are obviously super low at the present, but the interest rate(which has been better in year's past) is still better than what is currently offered for a 1 yr. CD. A primary positive is that one's cash is liquid in a checking account, and not subject to early withdrawal penalties that are often imposed by those that offer CDs.

This option is much better than a checking (or savings) account that collects (essentially) nothing at all. It aids a little on negating inflation on one's spending cash.

Cash-Back/Points credit cards can also be effective tools to combat inflation when utilizing one's spending money on every day expenses; especially cards that offer healthy introductory sign-up bonuses.

Yup - layered defenses in order of preference and/or ease/speed of access:

1) Cash on person. Small (ones, fives, twenties) and large denominations (50s and 100s).

2) Cash from an ATM (often limited to $500 per business day or weekend). ATM might not be functional. Network might not be functional.

3) Case from checking/savings account via teller - often limited to cash on hand in office, for me it was about $2K once, not sure now with online virtual teller and $100 in cash machine - maybe more.

4) Cashier's check from financial institution. Can be forged but usually accepted - might require verification via phone/computer. Automatic bill pay.

5) Credit card. Pros: often considerable sums accessible. Charge back for fraud/etc. Rewards programs. Automatic bill pay. Online use. Fraud protection. Additional warranties. Cons: for large sums, most retailers dislike fees. Also, can be charged back - but that is limited.

6) Personal check - often not accepted or on hold until cleared. I do not use these anymore - I do not have any. I get either cash or a cashier's check, or I have a cashier's check sent to a business for bill pay, but that can take 5-10 business days.

7) Cash from Roth IRA, regular IRA or 401K or CD. Might take some time (probably at least a couple of days, possibly a couple of weeks), some red tape, possible tax consequences and/or early withdrawal fines (not for me though). Benefits: Large amounts. If managed correctly, over a period of time (years), on average, the balances grow faster than inflation.Possibly tax free until withdrawn. Risks: at any given time, the balance may be taking a hit and cashing out could result in a loss or at least a less than optimum result. It is best to keep some diversity in something like a Roth so as to minimize the possibility/impact of that risk.

With the exception of #6, I have each of these levels. I use automatic bill pay for all bills. I have my SS income direct deposited and that pays all bills except the CC bill and sometimes that too if I am careful to not spend $ on guns and ammo.

 

[Longwalkhome]

That rainy day gets here i suspect the people who weather the storm best will have a needed skill, tools to work with and materials to use. Everything else is barter.

 

[wired]

I used to keep no more than 20K in checking .Now I keep 20 K in cash in the safe. I dont bother keeping a large amount in checking. Gold is worthless in a non gold standard economy if SHTF. My money is in stocks. If they go away I have guns and lead.

 

[The Heretic]

I used to keep no more than 20K in checking .Now I keep 20 K in cash in the safe. I dont bother keeping a large amount in checking. Gold is worthless in a non gold standard economy if SHTF. My money is in stocks. If they go away I have guns and lead.

I recently transferred $7K into my Roth from checking. If I do not get another non-contract job before the end of the year, then I will put what I earned earlier this year (about $10K) into a Solo 401K. I keep at least $25K in my checking account for emergencies such as unexpected medical bills, roof repairs and such (more than once in the last 15 years I have had to dish out $10-$15K for such). Behind that is my credit card and behind that is my Roth, IRA and 401K.

It used to be that I kept significant cash in my checking in case of job loss, but last year I started SS so that pays the bills that the checking reserve was meant to pay. Just the same, if I die tomorrow, then SS will cease and the kids will need to pay the mortgage until such time as they can sell the property, or sell theirs and move - so that reserve is still needed.

 

[sunuvaB]

When you pour trillions and trillions willy nilly into the economy it has an effect. How much does it cost to build a deck right now compared to two years ago? Food is going up, gas is going up, etc. Supply and demand? That's a canard.
If it was a niche sector that was experiencing inflation, sure but we're getting hammered across the board. Now the fed is exploring going to a block chain dollar. Makes it more convenient to pull money out of thin air and turn it into one's and zeroes.
Interesting article just popped up. The real world numbers are reflected in the comment section.

Summer's about to start in America. So is sticker shock.

Rising prices are on the way.

www.foxbusiness.com

2008 showed us something we should have learned in 1929, that if you let bankers bet other people's money they will bet until we're all broke. They only way to survive that debacle was to spend trillions and trillions. It worked . . . sort of. By 2010 the economy start to grow again, but very slowly and the lack of inflation also meant interest rates so low, there was no point in saving. We were at full recovery which is when it was time to put on the breaks, but then an election and the national debt increases four times more in 4 years than in the previous 8. Add a trade war and you get massive market distortion. So, yeah, nothing works now like economist think they should and the Fed is spitballing. But, if we go down, the whole world goes down because they're all drowning in our paper and they'll keep lending us money no matter how big the debt gets because they no choice. Yes, ultimately a collapse is inevitable because nothing made by man lasts forever, but with those kinds of stakes, it's in everyone's interest to not let inflation will get out of control. If I were looking for signs of the apocalypse, I'd look for attitudes and situations reminiscent of Rome's collapse (of which there are plenty).

 

[wired]

I'm not into the gloom and doom thing. Prices are high right now because people were paid to stay at home for a year and the pipleine emptied. A year from now it will have corrected itself but it WILL be a year of high prices as demand outstrips supply.