- First the savings account emergency fund itself. I only have about two months of expenses in mine at the moment. I had about four months but I dumped a bunch of money into the stock market in March. I really do think three months of expenses is a good baseline for most people. That's enough time to figure out things in an emergency. You can pay the next month of rent and bills without a worry, and figure out unemployment or usually find a new job.
- Introductory 0% interest rate credit cards, might not be high on anyone's list, but most have 12-15 month time frames where you only have to pay something like $30 a month, and if you are confident that in 12 months you will be back on your feet, it's a great way to save actual cash. I speak from experience here, I maxed out three credit cards in 2010. While I got killed on the interest later in 2010 and 2011, I paid two of them off in 2011 within months of starting working. Although I did live in my parents basement the first three months of work, so my expenses were super low. This essentially allows you to cut your cash flow expenses temporarily to basically just rent, health insurance, and various cell phone and utility bills. You have to pay it all back eventually, but it might save you from getting evicted, and it can definitely put food on the table and gas in the tank.
- Brokerage investment account is where I would turn next. Mine is not so big, about three months of expenses, but I could sell those stocks and again be able to pay rent. I realize that relatively few of my friends have brokerage accounts or know how to use them, but again, this is the advanced emergency fund blog post.
- Sell a car. I have two cars, one worth about one month and the other about two months of expenses. If things got bad, simply sell one. In fact, I'm actually thinking about selling one anyway.
- Take out cash from my whole life insurance policy. I know I know, whole life insurance is a terrible "product" but I have a policy anyway. I bought it because I had student loans at the time and it always pays out, whether I died the month after I started, today, or in 60 years, it will pay out more nominally than I put in. Plus, with my expeditions and flying airplanes, seems like a reasonable thing to have. Not everything does that. It has a small cash value, again about two months of expenses if I took it all out.
- Take out my Roth IRA contributions. This is a tough one, only for dire emergencies. I used to contribute quite a bit to my Roth 401k at my old job and rolled it into my Roth IRA, plus I make regular Roth IRA contributions. I don't actually know how much I have in contributions, but it's somewhere over a year of expenses I believe.
For me that's it. There are many smaller things like bicycles and climbing and skiing equipment I could sell too, but all of those together are maybe a little more than a month of expenses. Frankly, if it came to withdrawing from my Roth IRA, things are pretty bad, but that's part of the beauty of the Roth IRA, it's perfect as a backup emergency fund for when things get really bad. Similarly, a whole life insurance policy is stupid financially, but in a financial emergency it might be able to keep me afloat.
I realize that all of these options might not be available to many people and that I am fortunate to have these six levers to pull. Because of what I went through in 2010, I have offensively invested and saved and defensively built up my financial options so that when I am presented with that kind of financial difficulty like I went through in 2010, I'll be able to handle it without overdrawing checking accounts, like I did in 2010. Hopefully you are employed during this difficult time, but if you aren't, hopefully you can exercise some of these options to keep yourself afloat.