Sizing Your Real Exposure

The number under the buffer

Emergency Buffer Sizing sized the buffer for ordinary shocks; this chapter sizes the extraordinary one: the worst-case gap — what a genuine income interruption actually costs per month, for how many months, against what resources. Not to fund it all in cash (for most households, impossible and unnecessary) — to know it, because the known gap drives every real decision: coverage levels (Protection), the HELOC's standby role (The HELOC as a Buffer), and the crisis sequence itself (15.6).

Computing the gap honestly

The floor is coreFLOW (coreFLOW vs. lifeFLOW) — the obligations that protect shelter, credit, and coverage — crisis-adjusted: some obligations compress in a real crisis (the discretionary layer vanishes; some subscriptions and services go immediately), some expand (health coverage after job loss — the employer subsidy disappears exactly when income does, Job Loss Navigation's COBRA problem), and some can be negotiated or deferred under hardship programs that exist for exactly this (forbearance structures — 15.7). Against the monthly floor: the resources stack, in order of reach — the cash buffer, then unemployment insurance's partial replacement (15.6 — typically 40–50% of prior wages on average, varying significantly by state, capped at 26 weeks in most states)¹, then severance where it exists, then the standby line (The HELOC as a Buffer's written-emergency definition: this qualifies), then the tax-expensive retirement raids that are almost always the wrong early move. The output: months of survivable gap — the household's true runway, at crisis spending, through the resource stack. Most households have never computed it; the computation changes behavior calmly, before any crisis: it sizes the disability coverage (Protection's most underbought protection), justifies the standby line's existence, and converts "how bad would it be?" from dread (The Stress Tax's 2 a.m. arithmetic) into a number with a plan attached.