Is My Philosophy Bogleheadish?
Some distinct points about what I do:
- I max out my traditional 401(k). That is in Fidelity's SP500 fund
- I max out my Roth IRA. That is in Vanguard. VTSAX/VTIAX in 90/10 split
- I have zero debt
- I invest all spare $ after bills, fun, food, travel, etc. into my brokerage. That is in Vanguard and VTSAX
- My savings rate month-to-month is usually between 45-50%
That probably aligns, but this is where I stray:
I do not have a fat emergency fund of 6+ months. I have maybe $1000 in my checking account after all my bills are paid.
My thoughts are that if something goes wrong, I'll throw it on a credit card, stop investing into my brokerage for a little bit, and use those funds to pay off the credit card in time. My company was formed 50+ years ago and has never had a mass layoff event. People getting fired is very rare and it is usually because legal/ethical issues. If my credit card and cash buffer idea doesn't solve the issue, then I would start using brokerage funds which are over a years worth of living expenses. If that was exhausted, that would be a pretty bad problem, and then I would start using 7 years of Roth IRA contributions. If at that point the issue is getting worse, I would be in truly catastrophic territory, and I imagine my car, laptops, etc. would start being sold. Then I would have to eat the 401k 10% withdrawal hit + tax hit.
Yes, a cash buffer would stop me from touching the brokerage. I know that. But I cannot think of any probable/likely $2k+ issues that could not be solved in a credit card's billing cycle where I could just stop investing into the brokerage for a little bit.
I have no interest in buying a house. I live in one of the highest cost of living areas in the country and have had the flexibility to live in 6 states in the last 15 years. I like having the ability to leave and go wherever I want whenever I want with very little stress. Right now owning a home in my area would be $1200-1700 more than my rent with the prices, taxes, and often times HOA fees that come with it. That is just on the payments and has nothing to do with the utilities, maintenance, etc. This to me is the easiest pass of all time. I just invest that $ into my brokerage.
Where am I thinking poorly about this?