What is your Cash Buffer in case your Income Slows or Stops?

[Rhinsor]

Hey all,

Just getting an idea on what people have as a cash buffer for security in case you lost part or all income and why did you choose to have that amount.

I could live for about 6 months paying interest on properties, buying food, fuel etc.

What is your cash buffer?

How many months could you survive with no income from work or rent?

What do you consider safe, moderate and dangerous as a cash buffer?

 

[Rixter]

This search is what you are looking for... enjoy the read.

 

[Rhinsor]

I've had a good read of most of them but most are over 6 months old to 5+ years.

Seeing most of the country is performing good these days, peoples circumstances might of changed and they could have are adjusted there cash buffer to suit the current market.

I like to compare what other people have done and why they choose this method.

 

[mikezen]

I'm 34 well paid w no dependants car loans cc etc, I have all the nessasary insurances etc, for me personally I would never haven6 months worth of dough in my account just for that unless I was saving, but I guess it depends on your risk profile

 

[Alex P Keaton]

Single, secure public service job. Don't want kids

I'd like to have $50,000 as savings for SANF.

I still need to save another $20 k to get there. I wasn't planning to invest until I'd saved $50 k but Im thinking i might invest sooner rather than later. Im visiting a mb in feb and a good deal may come up.

Anyhow I'll still be able to save if I buy again soon as I'm currently living with my parents. Well as long as I don't get anything too ng I'll able to save.

So that's the latest with me. I'm gonna re read those old threads Rixter posted, thanks Rick. I'm curious to see what my old replies on the topic were.

Check out skaters buffer thread, that is a good one.

 

[sash]

Currently sitting on a 20 year buffer....

 

[Ace in the Hole]

We've been pushing it recently, it's been a week by week basis at times over the past 3-4 months.
Even had to take out a short term private loan.
Not worried though, can't imagine income taking a hit anytime soon.
Worst case would be sell a property or 2.
Don't consider this the danger zone yet, but as close as we've ever been.
If my wife were in charge, she wouldn't have let me get this deep.
Lucky she doesn't look too hard when I get her to sign all the loan docs...

 

[redwing]

Currently sitting on a 20 year buffer....

Equity Buffer?

 

[Colin Rice]

What do you consider safe, moderate and dangerous as a cash buffer?

This would vary depending on your personal circumstances.

Young, single foot loose and fancy free with a half decent income could ride on the edge, assuming income protection is in place.

Married, children, highly leveraged you could still ride on the edge (to a degree) if you have income protection in place but if not then two years buffer would be my comfort zone.

 

[EN710]

What do you consider safe, moderate and dangerous as a cash buffer?

Like others said, "safe" depends on your risk profile.

I'm risk averse.

My moderate is 12 months living cost buffer for 2 people (including interest and some small holiday).

Kind of safe is 24 months buffer. Working toward this

Super extra safe is well, 60 years and more assuming most healthy ppl will live until their 80s.

 

[geoffw]

It's almost exactly 12 months since I sold the business. And my wife was made redundant in June.

We had enough income from rents and from vendor finance in the business that we have been able,to continue while I studied full time. We could survive for quite a while like this, but the upcoming job (if I get security clearance) will make things a bit more comfortable.

 

[china]

I think the cash buffer is interchangeable with passive income. So what you are really asking is how long can I survive on passive income along with government benefits. Probably right now, if I were to sell my PPOR, I should have passive income to survive for the term of my natural life, living very frugally in a rented dodgy studio in the back of boondocks.

 

[sash]

No cash in offsets

Equity Buffer?

 

[Ace in the Hole]

I think the cash buffer is interchangeable with passive income. So what you are really asking is how long can I survive on passive income along with government benefits. Probably right now, if I were to sell my PPOR, I should have passive income to survive for the term of my natural life, living very frugally in a rented dodgy studio in the back of boondocks.

I take it a bit different.
The OP asks "How many months could you survive with no income from work or rent?"
So that means no relying on rent if that makes up part or all of your passive income.
If you own 10 or 20 different properties and something causes all of them to generate zero cashflow we will all be doomed.
I'd say many of us would be doomed pretty quick if all rents were to stop if you hold many properties, but full expenses were ongoing.

This question on buffer just has too many variables because nobody has the same current situation and goals, and risk profiles as mentioned.

 

[china]

I take it a bit different.
The OP asks "How many months could you survive with no income from work or rent?"
So that means no relying on rent if that makes up part or all of your passive income.
If you own 10 or 20 different properties and something causes all of them to generate zero cashflow we will all be doomed.
I'd say many of us would be doomed pretty quick if all rents were to stop if you hold many properties, but full expenses were ongoing.

This question on buffer just has too many variables because nobody has the same current situation and goals, and risk profiles as mentioned.

Hence passive income needs to come from multiple sources, fixed interest, dividends, super, etc. Diversification must be the best cash buffer

 

[Ace in the Hole]

How do you get passive income from Super?

 

[china]

How do you get passive income from Super?

For those who reach the appropriate super accessing age.

 

[BayView]

We poured a decent chunk of our PPoR equity into a business, which I draw a wage from as the Director.

If I broke my leg falling off the bed tonight during a typical wildly passionate lovemaking session with my wife, and couldn't go to work for a week or two, the staff would run it for me (run it better too, probably ).

So, I would class this as passive income investment, and my time for receiving it is basically infinity.

Does this count?

 

[china]

We poured a decent chunk of our PPoR equity into a business, which I draw a wage from as the Director.

If I broke my leg falling off the bed tonight during a typical wildly passionate lovemaking session with my wife, and couldn't go to work for a week or two, the staff would run it for me (run it better too, probably ).

So, I would class this as passive income investment, and my time for receiving it is basically infinity.

Does this count?

I guess it does. But then why would you ever go to work if your business is fully automated and generates an income even if you are not there?

Shouldn't you then be moving on to another business or another income generating activity? Or more lovemaking?

 

[Richard Feynman]

Single, no dependants.

At present, I could carry on for 12 months if I became jobless and I lost all rental income.

In 12 months, I can build 6 months of buffer.

I'll be utilising > half my current buffer for my next IP purchase, rebuilding and repeating.