Who’s Going to Bail You Out?

by Jared Dillian

Three million pets are euthanized every year for economic reasons.

It’s one of the saddest things you will ever hear. People put down their dog or cat because they can’t come up with $500 to take care of them.

If you don’t have at least $10,000 set aside for emergencies, it’s time to change that.

Everybody needs emergency funds. Your car breaks down, your roof leaks, or you tear your ACL. And there isn’t always going to be someone there to bail you out.

I like to say you need six months of expenses or $10,000, whichever is greater. If you spend $3,000 a month, you need to set aside at least $18,000 in cash.

People ask me all the time about what financial books they should read, where they should open a brokerage account, and what to invest in.

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I’ll tell you what I tell them.

If you have credit card debt… non-mortgage debt… and/or less than $10,000 in emergency funds, don’t think about investing until you are financially secure.

Yet, a lot of people on the internet say you should invest your emergency funds. There are guys on Twitter right now telling everyone to buy Tesla (TSLA), SPACs, and Bitcoin.

What they don’t tell you is that’s an easy way to turn $10,000 into $6,000.

When Moby released his “Everything Is Wrong” album in the mid-1990s, he said 80% of USDA chicken inspectors no longer eat chicken. That’s kind of how I feel about the stock market. I’ve seen how the chicken is made. It’s gross.

Put your emergency funds in a bank account instead.

Let’s say a tree falls on your house and the power goes out. If you have cash in your hand, someone will take the tree off your house.

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If you only have $500, you should be using that on food. When you have $10,000, you are dealing from a position of strength.

Stocks are where you put money you can afford to lose. If you can’t afford to lose it, don’t invest it.

Use it on your sick cat, not on stuff where it can get vaporized.

Jared Dillian is an investment strategist at Mauldin Economics, a former head of ETF trading at Lehman Brothers, and the author of The Awesome Portfolio. Subscribe to his weekly investment newsletter, The 10th Man, and listen to his daily radio program, “The Jared Dillian Show.” You can follow Jared on Twitter @dailydirtnap.

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