Who has a cash buffer? It saved my ***!

[Bon]

I thought this topic could do with another thread, mainly because I now realise the value and importance of having a cash buffer after being unemployed for 3-4 months... EVERYTHING happened to me at once - I got fired from my full-time job for an assault charge outside of work that did not involve anyone who worked at my place of employment , I lost my security license which was my secondary form of income because of the assault charge and to top it all off, I lost my health and couldn't work any other job even though I wanted to... so I had no choice but to sit at home like an unemployed bum and regain my health.

**** me, it was the most stressful period of my life considering that I was halfway through building a house, I had just signed a contract to build a second house - fortunately, the bank valuation came back lower than the asking price so I pulled out of the contract losing a $1k deposit... that really was a blessing in disguise, as the rest of my deposit money ended up being my cash buffer while I didn't work for 3-4 months and had to keep making repayments on the IP, as well as living expenses, etc.

It really does pay to be prepared, no matter how young and fit you are! In future, I will always be keeping a cash buffer up my sleeve no matter how promising everything looks and I urge everyone else to do the same!

 

[Pushka]

We are self employed and we have a personal cash buffer that would see us through 9 months of interest payments and a business cash buffer that we can also tap into. Hope I never need it, but the next financial year is a great unknown. Our business environment is changing considerably.

 

[duckster]

cash reserve for university

I had three years cash reserve to cover the negative gearing shortfall while I was unemployed during university studies. However I had to sell the property when I came out of University and couldn't get employment that was four years ago. So I have been out of work for 7 years so I do not have much cash left.

 

[fokas]

Thanks for the reminder Bon...
Also good to note that insurance is a fantastic thing as well.

I had three years cash reserve to cover the negative gearing shortfall while I was unemployed during university studies. However I had to sell the property when I came out of University and couldn't get employment that was four years ago. So I have been out of work for 7 years so I do not have much cash left.

You haven't been able to find a job for 7 years!?

 

[Belu]

How could you not find a job for 7 years? seems strange?

I have a small cash buffer - enough for my risk mitigation. I would need to loose my job and tenants at once to be hit, low risk of that happening (safe job) so am happy with the current situation.

 

[BayView]

I had three years cash reserve to cover the negative gearing shortfall while I was unemployed during university studies. However I had to sell the property when I came out of University and couldn't get employment that was four years ago. So I have been out of work for 7 years so I do not have much cash left.

Widen the selection of jobs you will accept to do might help.

 

[lizzie]

how could you possibly be unemployed for 7 years (3 years since uni)?! every moment that goes past without a job (any job, be it stacking shelves or pumping fuel) makes you more unemployable in your choosen field.

as an employer, and had a choice of two qualified applicants, i would take someone who got off their backside and did "something" anyday over someone who sat at home on the dole.

perhaps, if there is no demand for employees in your choosen field then you should have spent the last 3 years retraining into an area that has demand.

 

[Aaron Sice]

i USED to have a nice cash buffer until i built.

now i have nix.

i have to re-save 3 years worth of savings again, in the interim i'm organising a small LOC "just in case".

 

[RedPanda]

My cash buffer (including shares) fluctuates between 1 and 6 months of my expenses if I lose my job. I try to keep a minimum 3 months buffer but it does get low sometimes.

How much does everybody else keep as a cash buffer?

 

[13910]

I have been busting my **** off trying to get me a cash buffer since getting my first property last year - so I have much respect for the extent to which some of you have protected yourselves. I managed to get up to two months salary, but I'm back to one month after my kitchen renovation project.

Saying that I bought reasonably smart and can handle a 25% reduction in property prices and still call it a day even. I'm also reasonably fortunate to have a job that's pretty secure, albeit in a very insecure sector.

I also know that I can jettison expenses in a completely back-up-against-the-wall situation to make one month salary turn in to four months of living expenses. If only I could live that way all the time!

Cheers
Greg

 

[RumpledElf]

We just exhausted ours, which is actually quite annoying as we're basically stuck at home for a few days until various pays come through. I blame the other half and and end-of-financial-year IT spending spree.

Not much use having all this equity if a) I can't get a LOC and b) noone will buy the house.

 

[joanmc]

We always had about 3 months expenses sitting spare ( on occasion it was a large credit card) but now we have at least a years worth as available LOC that we don't touch.

 

[sue78]

i agree. having a cash buffer is really important. no point in equity if you can't even refinance since you have no job and it could take months to sell a property to raise cash.

cash or highly liquid assets like shares is good. I have an equity loan that I can tap into if I ever need it and a savings account. I think I also have re-draw facility to a few loan accounts.

we have very high expenses and i'd feel edgy if my buffer went below $50k. even if i have loc and credit cards with $50k credit limit as back ups.

if i was really dead set broke, i know my family would always be there to help. my bro has told me that help is available anytime.

 

[jaycee]

how could you possibly be unemployed for 7 years (3 years since uni)?! every moment that goes past without a job (any job, be it stacking shelves or pumping fuel) makes you more unemployable in your choosen field.

as an employer, and had a choice of two qualified applicants, i would take someone who got off their backside and did "something" anyday over someone who sat at home on the dole.

perhaps, if there is no demand for employees in your choosen field then you should have spent the last 3 years retraining into an area that has demand.

Perhps there was a need to say that, in that way, when we don't really know the story and I missed it

 

[Trogdor]

Buffer is key. I reckon I could stretch further than 3 years with offset and shares if it came to that.

I reckon everybody without a buffer and with multiple IPs should take a few months to put one in place.

 

[joeExpat]

10-15 years buffer if I stopped working.
Still got property and stocks but heaviest weighting in cash at the moment than I've ever had.

 

[skater]

how could you possibly be unemployed for 7 years (3 years since uni)?! every moment that goes past without a job (any job, be it stacking shelves or pumping fuel) makes you more unemployable in your choosen field.

as an employer, and had a choice of two qualified applicants, i would take someone who got off their backside and did "something" anyday over someone who sat at home on the dole.

perhaps, if there is no demand for employees in your choosen field then you should have spent the last 3 years retraining into an area that has demand.

Only one word to add to that post.......YEP!

 

[daniellee]

Cash buffer... oh yes.

Found out in early May 09, just a day before signing on contract for first IP, that my position will be made redundant by mid Aug 09. Decided to go ahead as we could get the property at a possible slight negative gear or neutral gear situation with a small reno. Settlement is this Friday 3rd July.

Wife is also 5 months pregnant with first child. Got 6 wks of paid work left. Been applying for work elsewhere but had little luck. It is a sign of the times. We had some cash reserve some time back, but had to allocate them for the IP reno and other investments like insurance policies.

Good thing wife is saving up for her unpaid maternity leave, I have been squirreling away my pay since knowing about the redundancy, and my redundancy payout will cover our + baby's living expenses for roughly 6 months. Hopefully, I can get some contract work on and then. There is also family as a final line of defence.

Regards
Daniel

 

[sparky23]

Hmmm the last year and a half took care of all of our buffers cash or otherwise, the comeback trail will be long and hard but we are definetly on it!

 

[skater]

Hmmm the last year and a half took care of all of our buffers cash or otherwise, the comeback trail will be long and hard but we are definetly on it!

Been there! Still recovering!

We had one thing after another & used up many $1000's of reserve cash. Local PM went bust and almost took us with him. Bonds not registered, rent monies kept, no statements, you name it, he did it and we paid for it. Outcome was a loss of around $15000 with no way to get it back. Then there was the problem of getting rid of the dodgy tenants that he had installed in our properties that were all behind and damaged property. Two had to be evicted. Another regional PM who wouldn't put tenants into our properties because they favoured locals and in an area where we had already tried most of the other PMs with no luck. This cost 6 months with 4 vacant properties. That nice little mess sorted out nicely now, thankyou.

Then Hubby had a job with no income for 3 months. Long story that one. End result was nada, not a cent.

We sold 2 dogs. One was in the Regional area and made a little profit from it. The other a local one that would get vandalised every time it was vacant. Got to love the druggy neighbours with that house. Not my problem any more.

We've now got a small amount sitting there once again for a rainy day. Not as large as it once was, but slowly getting there.