The Minimum Amount of Emergency Money needed – Are You Ready?

We have all heard the old saying, “Prepare for the worse, and expect the best,” it sure does resonate at a time like this global 2020 pandemic.

Running EViROCKS.COM, a private risk adverse Hedge Fund – we here it all the time. “You simply can’t predict the future”

To that we say Hog wash.

Having emergency cash available can protect you when things go bad. The question we are often asked, is “How much money should we have saved – what do you suggest?”

Financial Advisors – which we gladly are not – will say that you should save roughly 3 months worth of your average living expenses.

Recent data shows that over 56% of Americans have less than $1,000 USD in savings, and that’s nothing when it comes to their average monthly cost of living expenses; especially when the average monthly expenditure per family is approximately $5,100; and 38% of those are subsidizing their monthly expenses with credit card debt.

A recent survey showed that roughly 28% of the American population is considering using up the remainder of available credit, and filing bankruptcy; this in part - because of the recent pandemic and loss of jobs.

If even a fraction of these people follow through, the implications to the banking industry and to the economy will be significant.

When we get through this pain, and as a wise old woman once said “The world only ends when we die”; those that adapt, those that prepare will be stronger the next time around.

Mentoring hundreds of individuals that want to retire early, we suggest that you look at a country with a lower cost of living, and save six months of your monthly expenditures.

When asked “what is the best way to assess the cost of living of another country?” the Expat community suggested that we teach our followers this method.

Assume that your country of residence is the USA.

• Take the average minimum wage of the USA; in this case it is $7.25 per hour, or $1,160 per month; Times 6 months equals $6,960 that you should save.

Now, assume that your bug-out country is Colombia South America.

• Take the average minimum wage of Colombia; in this case it is 5,175 Colombian Pesos per hour, which is the equivalent of $1.84 USD. Or better said - the cost of living in Colombia is roughly 74% cheaper than the cost of living in the USA. The monthly salary in Colombia is 828,000 Colombian Pesos or roughly $295.00 USD per month.

So our recommendation is to save between $1,770 USD ($295 USD of Colombia’s monthly minimum wage, x 6 months) and preferably $6,960.00 USD ($1,160 of USA’s Monthly minimum wage, x 6 months).

It is crucial for all of us to prepare for “what if” scenarios, and create an emergency fund. Learn to lower your expenditures, and try to increase your income at your main employer or add small gigs, to contribute and save more. And always invest in your education and keep learning new skills.

Our followers at EViROCKS.COM have shared some of their tips. The tip that won the day was to make a bullet list of all of your normal monthly survival expenditures; and focus on one line item at a time, until you reach 6 months of savings for that line item.

Example:

• Monthly Water Bill: $100 USD. (Save $600 USD & move on to the next item)
• Monthly Electric: $200 USD. (Save $1,200 USD & move on to the next item)
• Monthly Cell Bill: $100 USD. (Save $600 USD & move on to the next item)
• Monthly Propane: $100 USD. (Save $600 USD & move on to the next item)
• Monthly Car Fuel: $200 USD. (Save $1,200 USD & move on to the next item)
• Monthly Food Bill: $400 USD. (Save $2,400 USD & move on to the next item)
• Monthly Internet Bill: $200 USD. (Save $1,200 USD & move on to the next item)
• Monthly Miscellaneous: $400 USD. (Save $2,400 USD & move on to the next item)

As you save the amounts above, check off each line item. Once done, you will be in a much better place financially. Of course, add your car payments, rent payments, and the other monthly expenditures that you might have, or that you might anticipate.

Once you complete the emergency fund, start a new fund and use those dollars to begin an investment plan or have EViROCKS.COM manage your funds for you.

When we started EViROCKS.COM, we started off trying to predict Black Swan Events and being better prepared, than most. We were told that predictions are impossible and here’s our take on that comment…

If we placed a young man 50 feet away from the front of jewelry store, and gave that young man a brick; then told him in 1 minute throw that brick as hard as you can towards the jewelry stores window. How many of us could predict with a near 99% probability that the window will shatter? The truth is – most of us.

In order to predict Black Swan events, in order to predict a positive or negative move in the stock markets – we simply need a method of analyzing huge amounts of data. Because the markets, and unknown events are much more complicated – our probabilities of success are not 99% such as the Brick and the Window; but our models give us a huge edge.

How much of an edge? Let’s just put it this way, our critics lost over 36% during the 2020 pandemic and market crash and we were so prepared that we only lost 4.84%, and while hundreds of companies are starting to file bankruptcy & many others are laying off tons of good solid employees, we at EViROCKS are on solid financial footing, and continue hiring while others are not.

Be ready and be safe for you, for your family and for those that around you.

“Never give up, never surrender – but be wise and anticipate what’s coming next! Because it's going to be another big surprise"