what happens when you need to pay for $TragicLifeEvent and are forced to liquidate your ETF position in a downturn?

Tragic life events that need you to liquidate your savings are very rare. Personally I used charge cards (they had a zero balance) while I waited for the market to come back (2 months) and then I pulled out as little as possible. When the market was much better I paid off Charge Cards.

I should have probably said that I also keep 6-9 months of living expenses in a traditional savings account for emergencies. It didn't even occur to mention it since it's a minuscule portion of my net worth (< 2%), compared to the amount that's invested in the market, but that's definitely a good observation and I should have specified that to begin with.

>6-9 months of living expenses in a traditional savings account for emergencies

Geez seeing comments like this make me wonder if I'll ever be debt free enough to have nearly a year of living expense to fall back on. I've barely got enough in my savings account for 2 months of bills and loan payments.

If it makes you feel any better, I had to travel 6k miles from my home country to Silicon Valley in order to reach this level of financial stability, so I had to do some significant sacrifices (e.g. not being able to stay close to friends and aging parents, ...).