Should I Use Emergency funds or Sell my Assets ?

[mvdheuvel1983]

I reluctantly followed the counsel of a financial advisor to fix my finances in order by creating a budget and tracking my expenses, inflow and outflow of cash using an excel sheet. The economy has been crazy in my country so I needed to do something urgently. My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

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Are you holding fiat? Do you not know that if you are holding fiat, it is like your government are scamming you, although it is not a scam, but it is a means to lose money as your fiat money lose value and unable to buy what you can use it to buy before.

Likely you have your emergency money in your local fiat too. You said emergency, which means it should be used for inconveniences time and for emergencies. You supposed to use your emergency money, not that you should sell you property that may increase in value, although I am just saying that because some properties like land, metals, jewelries and many others like that  can increase in value.

It is better not to hold money in your local currency, bitcoin is still not that high, you can buy it instead. Ones the price is high very well and you have gained, you can convert some to dollar or other good foreign currency which are better than many fiat from countries like Venezuela, Lebanon, Sudan, Argentina, Zimbabwe, Turkey and many other countries.

[Silberman]

I reluctantly followed the counsel of a financial advisor to fix my finances in order by creating a budget and tracking my expenses, inflow and outflow of cash using an excel sheet. The economy has been crazy in my country so I needed to do something urgently. My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

You are in a difficult situation, selling your assets during a difficult period of time is exactly what everyone which is facing major problems does, meaning that if you do so now then you will have to sell your assets for a discount, and when we add the high inflation on top of that your losses will be even bigger, if I were you I would try to solve my problems without relying on either of those two options and find a way to reduce my expenses even further, but if I had no choice I would use my emergency fund first, I will keep holding my assets and I would only sell them as a last resort.

[The Sceptical Chymist]

Are you holding fiat? Do you not know that if you are holding fiat, it is like your government are scamming you, although it is not a scam, but it is a means to lose money as your fiat money lose value and unable to buy what you can use it to buy before.

Yeah, what is that saying?  Inflation is theft, taxation is robbery?  Can't remember if it's vice versa or not, but to your point I absolutely agree that holding cash for a significant length of time (and the "significant" part depends on the inflation rate) you're just letting inflation pick your pocket.

OP, I don't know what country you're in or what the inflation rate is or what assets you hold or, most importantly, what your specific financial situation looks like, but if you need emergency cash in order to live and you're not making enough money to pay your bills, that's what your emergency fund is for.  That's my opinion and others might disagree, but selling assets can be a taxable event in addition to you losing whatever potential profit you could make from holding them.  I assume your emergency fund isn't earning enough interest to beat inflation, so that would be my first choice to tap into.

And inflation is hitting us all pretty hard, no matter what country you're in.  Unfortunately, it seems like a lot of governments have adopted the same idiotic monetary policies and are digging the world economy into the same hole.  Best of luck to you, OP.

[Lida93]

It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

Just like the word emergency implies I'll suggest you use the emergency funds as that was what the funds were meant for to fall back on as financial assistance should you face some uncertainty. Good a thing you had the wisdom of making savings for emergency issues and now is the time to make that wisdom pay off by using it now that the need has arise.

The economic situations is bewildering in every nooks and crannies of the world and no entity for sure knows when all these hardship will be ameliorated so selling your assets in a hurry would be a wrong approach to take on, instead make use of your emergency funds. Assets are value affiliated and they could fill in as security for you in the future based on their incremental value especially if these assets are tangible assets. 

If you make the mistake of selling one or more of your assets today to solve financial burden there's a probability another financial challenges may arise and you keep selling your assets till when?

[Faisal2202]

I reluctantly followed the counsel of a financial advisor to fix my finances in order by creating a budget and tracking my expenses, inflow and outflow of cash using an excel sheet. The economy has been crazy in my country so I needed to do something urgently. My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

You are quite an old member of this forum, like from 2013 and i assume you understand the finance sector and trying to make a better life for yourself. I am not judging you actually i went to see from which country you are but i found no post of yours in any of the local boards so i have to assume from which types of inflation you are passing. So i will assume it as global inflation.

Well, if the standards of the country are high and inflation hits it, it will become hard for an ordinary person to live there. as poverty is of two types, Absolute and Relative poverty, and in developed countries most poor are faced with Relative poverty and the opposite in developing countries. To face inflation, the usage of the budget in investment is necessary.

I say you should use some funds to meet your living expenses which are most necessary (Absolute poverty) if you want to compete with others in Fashion, culture, etc. (Relative poverty) then you should avoid the usage of your savings whether they are in fiat or in BTC. It depends on the intensity of the situation, if you are like in less trouble then i hope it might pass. But do not hesitate to make a better living and avoid dying in pain while you can live a better life by using that money in savings.

[Accardo]

If your emergency fund is enough to take care of your expenses for 6 months then it's a good choice to hold on to to it and spend it carefully, while looking for other opportunities to argument your budget. Selling your assets isn't advisable yet. Unless you'll invest the money into a more profitable business that can change your financial status, no need giving out the asset for fiat that'll get to finish and you'll be left with nothing. You can hire the asset out, and make money from it, as it seems the asset is not yielding you enough money.

[EarnOnVictor]

I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

What I deduce from your narration before giving you my suggestion is that you have an income problem. Perhaps you should consider finding a better job or doubling your hustle. I've always advocated for more income streams no matter how much you are earning, this is unless you don't have time with your current job. And if that is the case, then you should know you are in the wrong job.

A good job should measure up in terms of earnings with the time and energy invested in it and also give you a little time to do extracurricular. If yours isn't, then it's time to say goodbye and find another adventure in your life.

[Solosanz]

What do you think the reason you create emergency funds? it's used when you in a bad financial and anything that you must to spend your money for your important needs. If you already don't have any money including your emergency funds, the last way is sell your assets or ask a loan without need to pay the interest e.g. with your friend, boss, family etc.

However I prefer to not have any emergency funds and just invest all to few commodities, if someday I need money ASAP, I can just sell my Bitcoin and withdraw it from bank ATM.

[tabas]

I reluctantly followed the counsel of a financial advisor to fix my finances in order by creating a budget and tracking my expenses, inflow and outflow of cash using an excel sheet. The economy has been crazy in my country so I needed to do something urgently. My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

Don't you have cash flow like coming from active and passive income and you can just opt to keep all of it? But I guess you're in a very dire situation and you've got no option so you're opting to choose any of it. I think if you're in this situation and your assets have grown over time, it's best time for you to benefit from it and that's your choice to make. By the way, what's the purpose of you're in need of money? Is it that you're gonna need to spend a huge amount or you just want to have something in your hand for spending purposes like your daily stuff and monthly obligations? We need more info about that because if it's all about the economic situation deteriorating, you know what's best for yourself because you're the one in need and experiencing it and you know better based on the situation that you're dealing with.

[vv181]

What your advisor suggests is a good first step to collect and analyze your financial situation. Unfortunately, with the limited information you provide, such as, how your current exact cash flow looks like, the inflation rate, what your current urgent needs are, how many emergency funds you have, and what kind of assets, is hard to be carefully considered. Incomplete information might give someone bad advice.

One suggestion that I have for you is to contact again your former advisor, either asking for suggestions or consulting your current condition. It seems the only safe option, considering you have something to do urgently, unless you might want to give further information, but it could also potentially reduce your privacy.

[Issa56]

I reluctantly followed the counsel of a financial advisor to fix my finances in order by creating a budget and tracking my expenses, inflow and outflow of cash using an excel sheet. The economy has been crazy in my country so I needed to do something urgently. My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

You just said you are having emergency fun, then why do you have to sell your assets when you are having emergency fund. If you can sell your assets then your emergency fund is not serving its purpose. Since you are having emergency funds then i will recommend you make use of it, that's why its called emergency fund, you finished your emergency fund and you haven't balanced yet then you can start selling your assets to sustain yourself. It wont make sense that you are having emergency funds but you are not touching it when you are financially down, the purpose of emergency fund is for you to have something to fall back to when you are financially down.

[Zaguru12]

However I prefer to not have any emergency funds and just invest all to few commodities, if someday I need money ASAP, I can just sell my Bitcoin and withdraw it from bank ATM.

It is actually preferable to invest emergency funds in assets that have stores of value so that inflation doesn’t affect their value. But I would advice him to invest everything into bitcoin Atleast he needs to hold some assets or fiat time to time. Because if at every moment of emergency you turn towards the assets like bitcoin which is volatile then due to the situation of emergency you might be selling at a way lower price than it should be. Imagine having bought bitcoin at $30k and when emergency arises the price then is below $20k then you might be selling way too low. But with other assets at hand you can actually sell those that aren’t going to cause loss. So in all honesty even if we want all our funds in bitcoin just to get away from devaluation we need to hold some fiat too but certainly not for way too long

[Yogee]

[....]I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation.

You may use emergency funds now but what's going to happen next? The inflation in your country is probably not going to slow down and you'll still face the same problem so how about finding ways to increase the source of your cash inflow? You can sell some of your assets if you have the intention to roll it over. You can also have extra jobs that would only take 2-3 hours.

[Tony116]

Are you holding fiat? Do you not know that if you are holding fiat, it is like your government are scamming you, although it is not a scam, but it is a means to lose money as your fiat money lose value and unable to buy what you can use it to buy before.

Likely you have your emergency money in your local fiat too. You said emergency, which means it should be used for inconveniences time and for emergencies. You supposed to use your emergency money, not that you should sell you property that may increase in value, although I am just saying that because some properties like land, metals, jewelries and many others like that  can increase in value.

It is better not to hold money in your local currency, bitcoin is still not that high, you can buy it instead. Ones the price is high very well and you have gained, you can convert some to dollar or other good foreign currency which are better than many fiat from countries like Venezuela, Lebanon, Sudan, Argentina, Zimbabwe, Turkey and many other countries.

If he's not from high inflation countries like Venezuela, Türkiye... the emergency fund is fiat, what's wrong? You need to differentiate between an emergency fund and an investment fund, what happens when you have an emergency fund in bitcoin and when it is at $69k, and now you need to use them? Bitcoin is not suitable for use as an emergency fund because of its volatility, I recommend using local currency or USD as savings, not bitcoin.

OP, this is considered an emergency for you, and it is perfectly appropriate to use an emergency fund instead of selling another asset.

[Z390]

Inflation only affects me when I am holding fiat in my bank account, no Fiat, no inflation problem I believe, but I understand that we are not from the same country, but why is the emergency funds for if not for periods like this?

If your emergency funds are enough to solve all these problems you are facing well I am glad that you plan to store some funds for emergencies because if not, selling your crypto assets will be the only option left right now, this is why emergency funds are important.

Only you knows what will be best for you, but I see no reason to sell your assets to battle inflation when you already have emergency funds saved somewhere,  if you sell your asset to fix the problem, where is money going to come from in the future?

[Iadegbola34]

Considering the impact of inflation on your budget, it might be worth considering a combination of strategies. First, re-assess your budget and see if there are any areas where you can make adjustments or cut back on expenses. Next, evaluate your assets and determine if selling some of them would provide immediate relief without jeopardizing your long-term financial goals. And finally, if the situation is urgent and you have emergency funds specifically for unexpected situations, it might be worth using them temporarily.

[kryptqnick]

I don't want to give financial advice, so I'll just share my reasoning for what I would do in that situation. To me, emergency funds exist for an emergency, and struggling to stay within my monthly budget because of the inflation is not an emergency. So I would sell a small amount of the assets as a temporary measure, but the goal is still to ensure that the earnings cover the monthly expenses, so neither emergency funds not selling some assets would count to me as a good solution. If there isn't enough in earnings, I'd consider looking for another job or just doing something in addition to what I already do. I would also consider if there are areas where it's easy to cut spending and do that.

[TheUltraElite]

Emergency funds are those that would keep you afloat during a crisis period. Use them cautiously. On the other hand the inflation may not end so easily so you might have to do both of selling assets and using the funds. You might be a better judge of the situation yourself but talking to your local community members might do you good, after all most of us come from a similar society structure and with similar income tabs.

We can only hold it out and cope with the increasing cost of stuff. Cut down on things that you don't need, though I guess you already did some of that.

[gantez]

My greatest realization after this is that inflation all round is destroying my budget. It's been  five months now. I am torn between using my emergency funds or selling some of my assets to cushion the effect of this economic situation. What do you suggest I do?

The simple suggestion is don't sell your assets, make use of your emergency fund. It is called emergency because of some reason and that is what it is for. Your assets depend on what it is, if land or physical properties it should appreciate high with the inflation, land is not affected by inflation depending if not in swamp area or flooding area. If you are having asset in cryptocurrency be patient for the halving next year but fiat is going to be taken out by inflation you can use it as emergency fund also for your resolving of your emergency problem. Inflation in every country and affect average people more than rich people.