In case of catastrophe... don't forget the pup! (me)

Ok guys and gals, yesterday I barked about the importance of a good emergency fund! Today I am going to bark about a different topic altogether. I’m going to bark about the emergency fund that you don’t know about! Woof! I call it “the catastrophe fund.” But before I discuss it, I must stress to you the importance of having a fully funded normal EMERGENCY FUND, parked in a savings or money market account! The catastrophe fund is NO substitute for your emergency fund!

What is the catastrophe fund? Simple, its all your sources of income or wealth that you could fall back on excluding your savings/money market account emergency fund. This includes your 401K, IRA, home equity, taxable investments, home’s valuables, credit card accounts, personal loans, and everything else you believe is valuable (and stuff in your home you could sell to make money if you had too!). It’s basically your assets, excluding your savings/money market account emergency fund. It’s what you would have to fall back on in the slim chance that your emergency fund runs out of money (although this is very unlikely if you funded it like I told you to in my previous post).

Here’s how to calculate your catastrophe fund, just fill in the following blanks, then add all the numbers up:

1. How much is in your 401K? _____________
2. How much is in your roth IRA? ______________
3. How much is in your traditional IRA? _______________
4. How much credit do you have available (credit cards…etc)? ______________
5. How much home equity do you have in your home? _________________
(home equity = Homes Actual Value – What you owe on it)
6. What’s the value of your current investments (mutual funds…etc)? _______________
7. What’s the value of any personal loans you have? _________________
8. If you were to sell your valuable items today, how much would you make? __________

Now add all these numbers up. That’s your catastrophe fund! That easy! Woof!
This shows you that you have a lot of sources of income to draw upon if you were to run out of money in your emergency fund!
This should help to ease your worries, don’t worry, you are probably a lot richer than you think you are!

Woof Woof! Time for me to go back to my dog house.