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Author: FemGeek One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308887  
Subject: Re: Student Loan v. E-fund Date: 8/20/2003 1:38 PM
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Fred (aka buckmizer) wrote:

> I don't disagree with you, but I am starting to wonder if someone could have too much
> e-fund.

I would tend to think that depends on the person's attitude.  I'll elaborate in a
bit...

> I know that sounds crazy, but when I think about the main reason for an e-fund, which
> is unemployment, does someone run the risk of getting laxed in their job search or hunt
> for income if they are sitting on a big nest egg?

I think that's entirely possible.  I know one person who coasted along on unemployment
(very low expenses), then lived off his savings till they were almost completely gone.
It was only then that he started feeling any urgency about finding work.  By then, a
lot of things had happened since he'd been layed off:  September 11, the war in
Afghanistan, war in Iraq, and the continuing worsening of the economy and loss of tech
jobs.  If he'd gone out and seriously looked for work in the beginning, he might have
found something...and who knows, it might even have been one of the jobs that's still
out there.  But he's the type that only seems to take action when he has to, and as
long as he had enough to pay his bills, he preferred sitting around.
 
> Should one assume that the e-fund is
> their only source of revenue or should they have more of a plan in place to have income
> to at least supplement expenses while they try to make their e-fund last as long as
> they can?

I'd definitely vote for the latter.  My plan is this:  I've calculated my expenses,
and I can pay them all on what I'd get from unemployment.  So that would carry me for
6 months, assuming I didn't find a job before then.  If unemployment runs out, I've
got about 10 months' expenses in ING.  But, if I'm still unemployed after 6 months,
I'll be climbing the walls. :-)  So I'll be off to Quik-Chek, or Starbucks, or wherever.
Anything I can find, if it pays for my insurance and gives me some income.  Even at
minimum wage (assuming I cut back on some discretionary items) I could make almost
half my expenses.  So that would stretch out my efund twice as long.  And, since I've
already committed to selling my horse if I ever get in that situation, my expenses
would go down, so it'd stretch out even further.

> With a plan, they might make a three month e-fund last for six months or
> more, at the same time, not get used to watching Magnum PI reruns or Oprah.

Despite the fact that I could get into watching Magnum PI reruns (Hey!  I love
Dobermans - it's Zeus and Apollo I drool over! :-) ) I think this last point is very
true.  Dunno if it's accurate, but I remember catching a few minutes of Dr. Phil
while channel surfing one afternoon, and he was saying something about how only about
5% of people who go on disability for a year, ever return to gainful employment.  He
didn't break that down to how many are ever able to work vs how many just get too
used to not working.  But his implication was that a lot of the reason is that people
just get too fond of playing couch potato, and they'll keep it up until they're
forced to change.

Personally, I don't think I'd fall into that rut - at least, I hope I wouldn't - since
I'm extremely Type A.  I'm also developing a real hatred of touching money once it's
been transferred to savings.  I think those 2 attributes would get me out looking
for work, in earnest, very soon after being layed off.  I've even found myself thinking
along the lines of "Let's see, they're giving 30 days' notice, so I'd have my pay
coming in for that long, then I've got 3 weeks vacation saved up that they'd pay me
for, so that's like 7 weeks of income after I'd walk out the door.  It'd be nice to
take a little vacation, but if I get a job right away, I could have 2 salaries for
that period of time..."  That may be a bit too miserly;  the opposite extreme of the
friend I mentioned earlier.  But that's me, and I have the advantage of being a
dual-career person.  I've been working in telecom for years, but I've also kept my
nursing license current.  And, given the nursing shortage these days, I expect I could
find something in fairly short order.  But it's nice to know I don't have to;  I
really can afford to look for the *right* job, not just something that'll pay the
bills.  Did that once, and it was the Job From Heck.  But, on the bright side, it
was that job that gave me the nudge I needed to go to nursing school, for the very
reason that I wanted to have something else to fall back on, if need be.

Okay, now that I've rambled so far from the original question, I'll return you to
your regularly scheduled discussion. :-)

FG
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