updated on 3rd Dec 2024
If you recall we always advocate having 6 – 12 months of expenses as emergency funds. This is like the golden rule to the basis of financial planning. If your monthly expenses are S$5k, then your emergency fund should be S$30k to S$60k.
An emergency fund is needed to cater for urgent family trips to cater to your loved ones’ needs, hospitalization fees, and any last-minute bills.
I have breached this gold rule. Hence, my wife asked me to write this article to remind myself of this.
We are currently on a margin of $94k. This is 2.9% of the portfolio. It is not overstretched.
We don’t have much free-of-obligation cash on hand, that is the problem. We need to meet the monthly mortgage requirement which is around S$11,736. The monthly rental income is around S$9,950. The cash needed is S$1,786. There is another S$4,700 for our rental expense. We need to cater S$6,486 on house-related expenses, aka mortgage and rental.
We have deployed all our funds and left minimum cash to meet monthly obligations such as mortgage, rental, and credit card expenses.
Then come the situation, we have an upcoming family trip and the little one has to attend a medical operation. This is causing some stress on my side. This article reminds us that we should never deploy all our cash.
The latest update was on 3rd December, when the little one went for operation. The bill came up to S$4186.60. Fortunately, my wife has company medical insurance that covers the medical bills. Hence, we don’t need any cash outlay. The little one recovered well. This incident taught us that the most important is for the whole family to be safe and healthy. Nonetheless, this incident is a good reminder that I have overstretched our family funds for investment. It is ludicrous of me to do this.
Furthermore, there are telltale signs that the global economy is weakening and the likelihood of recession is on the rise. Protectionism and tariffs are tapering demand for industries’ output. Retrenchment and declining property prices are a double whammy. It is prudent to have a buffer for this. I think need to accumulate another S$100k to weather any storm that may lie ahead.
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