Some people can't grasp the concept of probability when it comes to risks. I could be hit on the head by a meteor and die. But the chance of it happening is so low, and the cost of preventing it is so high, that I shouldn't really do anything about that risk.
You need to compare
(A) (The cost of having something bad happen)*(Chance of it happening)
to
(B) The cost of preventing that bad thing from happening.
If (B) > (A), then don't prepare for it. Or find a cheaper way of preparing for it. I suspect, Gregshin, that you are way over estimating the chance of that emergency happening, way over estimating the cost of that emergency, and way under estimating the cost of preparing for it.
I have between $20 and $120 in cash at all times (depending on when I last went to the bank). That cash will get me enough food for several months if I eat cheaply, or enough gas to get me at least 280 miles away ($20 buys 7 gallons at 40 mpg in a Civic). Heck, with the gas light on, I can still go 80 miles. Or with the food in my cabinets I could probably go 2 months (you do have an emergency cabinet of rations right?). I really am prepared for the PROBABLE emergencies. Credit cards (not stored in the same place), a debit card, and checks can take me a lot further or feed me a lot longer. Lines of credit, bank accounts, pawning items, selling my retirement account, or even going to friends/family will get me another 10 years at least. All on that $20 in cash.
The chance of me ever needing more than $20 in cash is quite minimal. This would all have to happen:
(1a) I'm mugged AND my house is robbed so that I can't use CCs or debit cards. or
(1b) The entire banking system would have to fail, so I can't withdraw anything or use my checks.
(2) I'd actually NEED to buy anything. Lots of emergencies don't acutally require you to go shopping.
(3) That my emergency supplies run out.
(4) That in all those horrible simultaneously occuring events that people will actually accept cash. Bad things have happened before where cash is useless (10000+% inflation in a day has happened in the past in other countries).
What is the cost of having that $1000? Well if you take $1000 in cash today and put it in a safe, you'll be able to buy something that is worth $200 now in 50 years (due to inflation). So, you lose $800 worth of stuff. But, on the other hand, you could invest it at a good return of 10% and in 50 years, you'd have $117,391. That would buy you a brand new car in 50 years (if cars follow typical inflation rates). Which would you rather have? $200 worth of stuff, or a brand new car? $1000 or $117,391?
The real risk that people ignore is the risk of living too long. The risk that you'll have no money to support yourself in retirement. That risk occurs daily to millions of people (soon to be billions?). You may very well face this yourself. The odds are quite high (compared to the SHTF odds). In that case, you are screwing yourself from preventing a real and common pain in hopes that you might avoid a rare and nearly unrealistic SHTF situation.
Plus, what if you are mugged and lose that $1000, or if a hurricane hits your home and blows away that $1000 in cash. Two events that could easilly happen, and would destroy your whole "safety" plan. In other words, even if you are willing to risk all those costs for a minimal chance of a gain, you still might not gain a thing in the SHTF scenario.
Basically, try for a compromise. Get $300 in cash, splitting your credit/debit card storage into multiple locations, access to near instant emergency cash (such as a sellable item), access to overnight emergency cash (such as a bank account or home equity line of credit), keep your car half full of gas, and an emergency cabinet of supplies. You'll be prepared for virtually every probable emergency without the tremendous costs of having that cash.
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