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November 03, 2008


Dean Weber

Great suggestions. I can't say that I am happying at my cursory fuse estimations. Fuse 1 has hit 0 months for the first time in my life. Fuse 2 obviously is at 0 as well. Lastly Fuse 3 I'm too frightened to even calculate. The recent stock meltdown and mortgage mess have wiped out a lot of my value. Why does this have to happen at such a bad economic time? Oh, I guess that's why it's bad. This has to be going on with many others as well. Time to start pinching all the pennies and building up liquid assets as quickly as possible.


Investment people usually recommend that the second fuse be 6-12 months. I forget which term they commonly use for it. (Interestingly, I seem to remember 12 months being more common back in the day while 6 has been more common this decade - possibly because recent recessions have been mild enough that 6 months is thought enough to get a job?)

Why does the Armageddon scenario include liquid funds in the market (retirement savings, presumably in stocks)? Why not 10% of their value, as was (I believe) the low point of the DJIA in the 20's-30's crash?

Why include your house? I don't see a scenario where you could apply its value to monthly expenses. My family could pay off the remaining balance easily, but we'd keep it and live in it. People seriously underwater would likely walk away from their house - it wouldn't be an asset. For people in the middle, the house would be part of their monthly expense, as it is now - practically, another form of rent.


Your second scenario is what is recommended that you keep awareness of, and you should keep an emergency fund of 6 to 12 months for it.

In your third scenario, money doesn't really matter. In failed economies, staples and commodities become more important. A pair of levi's is better than a bar of gold.

Chris Harbert

Plenty of financial advisers recommend having an emergency fund, but this is the first time I've seen it represented as three different numbers. It's a neat way to think about it.

I have a fourth fuse: my camping food/gear. I must really be a pessimist... :)

Jason Yip

Regarding zombie attacks, remember that axes and swords don't run out of ammo.

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