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Yeah, you actually broke it down really well. I like how you separated emergency funds from reserve funds and float, that alone makes it easier to think straight about money instead of just saving blindly.
One way to stay poor is to have a bunch of cash sitting around, especially when it starts getting to be 6 months or more of your expenses.. It starts to add up to being a lot of money, and it might even start to lose value faster than you can add to it.. So the larger it is, then the more of a stockpile that a person has that is losing value.
There is nothing wrong with having 3-6 months in cash, and even 6 months is a lot for a poor person, so it is more practical to just have 3-4 months - which be 3 months in months in emergency funds and a month or two in reserve funds.. and the reserve funds are flexible.. They can be used for anything,
Just to make clear. I don't really consider float funds to be something that a guy stockpiles up. Instead float funds would just be extra money that might be available from month to month when the income and/or expenses have not been resolved.. and let's say you are not sure if the utiliities are going to be $50 or $150.. so then you keep $150, and then once you know how much the utilities are, then whatever is left from the float would go into the discretionary funds and become available for spending for consumption or for investing or for putting in the reserves.
Likely the emergency funds are never touched because if they are depleted to fall below 3 months, then they should be replaced right away.
Having at least 3 months of expenses in emergency funds is especially important once the amount invested in bitcoin is 3-4 months or more of the expenses. Surely the dollar value of the bitcoin will likely go up and down with the changes in the price, but likely there are needs to both consider how much had been put into it along with its spot price value and probably also keep track of its 200-WMA value (which is the bottom price) These kinds of valuation can be good to help a person to focus on keeping on building his bitcoin fund and to realize that he is not going to be in a good place to be fucking around trying to trade or sell higher and buy back more.. especially when the guy is trying to accumulate and build up his bitcoin stash. It does not really help to be selling when your goal is to accumulate more bitcoin... especially for probably at least a whole cycle and many guys might take a couple of cycles before they really start to feel like they might be able to lessen their focus on ongoing accumulation of bitcoin through persistent buying.
And honestly, you are right, saving up a full year of expenses in cash sounds good in theory but doesn’t really make sense for most people. That is just money sitting there doing nothing, especially in this time.
I think people get used to something like that, and it can contribute towards their never getting ahead since cash ongoingly loses value in its purchasing power. Of course, for short term holdings it might not matter very much, but holding cash for years and years its purchasing power is lost, and governments seem to do that on purpose to create disincentives to save money...at least the loss of purchasing power is a known side-effect from the government's irresponsible and ongoing printing of money.
The part that really hit me was what you said about guys with unstable income or spending habits, like yeah, that is not even an emergency anymore, that is just your reality. So you gotta plan for it ahead of time or will basically creating your own problems.
Many of us likely know folks who are always having emergencies, and part of it likely has to do with their spending more than they earn, but also that they are not keeping money aside for known unknowns that are going to come up each month. So they spend too much of their income too soon, so if some kind of an "unexpected" expense comes up they are having an emergency. Many times those kinds of drama from monthly expenses should be able to be avoidable so that "emergencies" are not happening all the time..and it can become worse if you are trying to invest into something like bitcoin that is very volatile, and so we have to be able to continue holding and even continue buying even though the value of our bitcoin is likely bouncing all over the place, but we should learn to keep on buying it and not get caught up upon thinking about its short-term fluctuations.
This kind of thinking is what more people need. Simple, practical, and balanced not fear based. Just being real with your situation and planning smart.
Sometimes we have a lot of bad habits, but we can also learn good habits, and frequently it will take quite a bit of practice and even going through extensive tests to be able to make sure that whatever systems we are putting into place and into practice are solid practices and that they are suitable to our finances and our psychology.. and it can take time to learn such balance, especially if we have a new kind of investment (namely bitcoin) that will likely challenge our perceptions of value or how to deal with not getting overly emotional about our investment, so we choose our position size in such a way that we are not going to get emotional about it or at least we learn how to have systems that help us to not get emotional about our bitcoin or any other aspects of our cashflow management systems.