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At the beginning of each year, fund the Current-Year Spending bucket: First, transfer the cash generated by your Yield Shield. If your portfolio is sitting on a gain, sell off some ETFs to make up the difference. If your portfolio is sitting at a loss, make up the difference using your Cash Cushion. Remember to replenish your Cash Cushion when markets have recovered. Have multiple backup plans you can implement in case of an extended market downturn: Backup Plan #1: Use your Yield Shield. Backup Plan #2: Use your Cash Cushion. Backup Plan #3: Use geographic arbitrage to reduce your living expenses. Backup Plan #4: Start a side hustle. Backup Plan #5: Temporarily return to work part-time.
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Kristy Shen (Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required)