Where do you keep your Emergency Fund?

[oneil]

At the moment, my emergency fund is in a "regular" savings account and receiving effectively 0% interest. Where do you keep yours? Higher interest online bank savings account? Invested conservatively? Under the mattress?

My husband and I each have good jobs with stable income, we have low expenses and a high savings rate. We are not worried about loss of income. However, we own two rental properties. (two duplexes) We have never had any vacancies for more than a few weeks between leases. We have always been able to cover repairs through either cash flow or our separate real estate related account (rent in and mortgage, insurance, taxes, repairs, maintenance come out of it.. but the account is gradually building up) So we aren't overly concerned about an emergency. Just trying to be responsible and have a few months expenses set aside (apart from the real estate $) , just in case!

I am open to suggestions/recommendations!

[rantk81]

I use ally.com
It pays 1% currently

[seattlecyclone]

We try to keep $5-10k in our checking account at any given time. That's the closest to an "emergency fund" that we have. It's plenty to cover any automatic payments to credit cards or other things, and could generally pay the bills for a couple of months if necessary. The rest gets invested. The checking account earns essentially no interest, but shuffling money back and forth from a 1% savings account to a 0.01% checking account in advance of known bills doesn't exactly seem worth my time.

[HBFIRE]

Consumers Credit Union.  Their checking pays 4.6% (with a few hoops) up to 20 K.  Also refunds any ATM charges from other banks.  This is my "emergency"/opportunity fund.  Essentially I keep 20 K in here and another ~ 10 K in ally to cover any potential emergency but mainly for opportunities like for a down payment on an investment property deal that comes up.  I always like to keep some liquid cash available for opportunities, and essentially just combine it with my emergency fund.  I also have ~ 50 K in credit card limits (from travel hacking) that I could draw upon if necessary as another backup.  Since my income is 100% from my business, I like to have a little more cushion than a typical person with a stable job (i.e., if I worked for the government, I would try to not have any emergency fund, and just use savings rate to cover an emergency).

[TomTX]

Small buffer in checking, "high interest" savings for half, i-bond for half.

[Frankies Girl]

I use ally.com
It pays 1% currently

+1

[Ricky]

In a pillowcase under a mattress that sits in a pre WWII bunker that's concealed by foliage that's poisonous to touch.

[k-vette]

In a pillowcase under a mattress that sits in a pre WWII bunker that's concealed by foliage that's poisonous to touch.

In gold and rare jewels.

[Systems101]

Small buffer in checking, "high interest" savings for half, i-bond for half.

Very similar here.  My "working funds" are in a money market (~1%), my "emergency funds" are in i-bonds.  Of course, that was done years ago when the premium was over 1%, the i-bonds lately aren't nearly as good.

[Zikoris]

I stopped calling it an emergency fund when I realized I don't actually have emergencies that require massive amounts of money all at once, but I keep $500-$1500 in a regular savings account that's easily accessible. For such a small amount, it honestly does not seem worth it to try to make an extra few percent in interest, especially at the cost of easy access.

[Slee_stack]

Generally in available credit on credit cards.

I do maintain a crappy 1% account to cover potential rental property expenses but even then a CC would probably cover 90%+ of billable events.

[rantk81]

Consumers Credit Union.  Their checking pays 4.6% (with a few hoops) up to 20 K. 

That rate seems ridiculously high to me.  it is higher than my fixed rate mortgage by a whole percent! What's the catch?

[TomTX]

Small buffer in checking, "high interest" savings for half, i-bond for half.

Very similar here.  My "working funds" are in a money market (~1%), my "emergency funds" are in i-bonds.  Of course, that was done years ago when the premium was over 1%, the i-bonds lately aren't nearly as good.

Yeah, mine are paying ~3% now - not the best of all the i-bonds, but a lot better than today!

[Mr Dorothy Dollar]

Lake Michigan Credit Union 3% max checking has a few hoops.

[HBFIRE]

Consumers Credit Union.  Their checking pays 4.6% (with a few hoops) up to 20 K. 

That rate seems ridiculously high to me.  it is higher than my fixed rate mortgage by a whole percent! What's the catch?

Here is all the info and the "hoops" that need to be met to get the 4.6%:  https://www.myconsumers.org/personal/checking/free-rewards-checking.html

I use their credit card to maximize, but even without it you can get the 3.1%.  Keep in mind these returns are taxable as full income tax.  Still, I havent found a better way to hold short term flexible liquid funds.  Beating inflation is a win I think.

[ShortInSeattle]

It's in our brokerage account, in a money market fund, serving as the cash portion of our asset allocation.

SIS

[oneil]

I stopped calling it an emergency fund when I realized I don't actually have emergencies that require massive amounts of money all at once, but I keep $500-$1500 in a regular savings account that's easily accessible. For such a small amount, it honestly does not seem worth it to try to make an extra few percent in interest, especially at the cost of easy access.

This is kind of how I'm feeling. We have what I consider to be a lot of liquid cash available. It's enough to cover all real estate expenses for 6 months OR personal living expenses for 11 months OR both for 4 months.

The odds that we have 0% occupancy, lose both our jobs, the market tanks, and have a major repair all at the same time seems unlikely.. Plus we could honestly cover any "emergency" with cash flow or credit cards if absolutely needed. Or if something truly catastrophic happened we have family to fall back on, but I highly doubt we'd ever need that safety net.

Are we holding too much cash? use some to max out our Roth IRAs for 2016 then towards taxable brokerage accounts?

[katsiki]

I would definitely max both roth's.  You can always pull back the contribution if you need it (it doesn't sound like you will though).

[golfreak12]

Mine is a "ME" emergency fund. None else knows about it except of course you guys.
I have $50K cash sitting in a safety deposit box. I've had this right before I got married.
Its still there almost 5 yrs later. Ive been thinking about telling my wife but I think i'd just keep it to myself.
I know its wasting away but I know I'll always $50K no matter what happened.

[Bateaux]

Cash in a mason jar.

[faramund]

Available credit on a mortgage offset loan, with a ... and if worse comes to worst, I could always (sadly) sell some shares.

But no money just sitting around doing nothing.

[oneil]

I would definitely max both roth's.  You can always pull back the contribution if you need it (it doesn't sound like you will though).

We are on track to max out all tax advantaged accounts (Roth 401k, Roth IRA, HSA) However, we are contributing monthly to each. Just clarifying that we will be maxing out both my and my husbands Roth IRAs this year, it's just a matter of when. I didn't fully realize how much cash we had on hand until I wrote the post. I definitely understand the advantage of maxing out early. Thanks!

[poorboyrichman]

I keep £1000 buffer in my current (checking) account to avoind overdraft fees, plus a little cash dotted around the house in case of a banking holiday, that equates to about 3-4 months FU money.

I don't own my home so have no expensive repairs to consider, nor do I have a car to fix (just a couple of bicycles), so I typically don't go over budget, unless its well planned.

[MrsDinero]

I use ally.com
It pays 1% currently

+1

+2

[HAPPYINAZ]

Capitalone360 money market pays 1% as well. 

[Rubic]

Through July 1st, $10K split between NetSpend and Brink for an effortless 5% return, sadly to be discontinued.  I also have some minimum balances used to obtain bank sign-on bonuses in a few checking accounts.

I looked into Consumers Credit Union, but without manufactured spending (for my churnable cards), I don't naturally spend $1000 in credit card expenses per month.

I may consider Lake Michigan Credit Union for the 3% as it's a lower effort to hurdle, though capped out at $15K, if my recollection is correct.

[Paradoxically]

For another month - 10k at 5% split across two netspend accounts and the rest of my cash (saving for a downpayment - so accumulating cash) at Ally's 1% savings.

In the future.. Probably will just sit it in Ally

[HBFIRE]

Through July 1st, $10K split between NetSpend and Brink for an effortless 5% return, sadly to be discontinued.  I also have some minimum balances used to obtain bank sign-on bonuses in a few checking accounts.

I looked into Consumers Credit Union, but without manufactured spending (for my churnable cards), I don't naturally spend $1000 in credit card expenses per month.

I may consider Lake Michigan Credit Union for the 3% as it's a lower effort to hurdle, though capped out at $15K, if my recollection is correct.

The credit card is for the max (4.6%).  Without it, you can still get the 3.1% return.  That said, I've been churning cards as well, so occasionally i will forego the 4.6% so I can focus on churning where I get a much higher return.  But I'm not one of these guys who is constantly churning and I don't do the MS thing - the companion pass was really my main focus, along with some miles for traveling abroad.  The credit cards they have arent too bad, as they have a reward on them as well in combination with hitting the 4.6% (I just got their simple 3/2/1% one for categories).  That said, churning is like a 20% return, so its always more lucrative if you want travel miles.

[Serve&Volley88]

I keep $5,000 in a Goldman Sachs Bank savings account that pays 1.05%. I'm tempted to increase that but I have a highly secure government job, a lot of debt, and recently renovated a home which included replacing/repairing high dollar items like the roof, driveway, siding, and foundation wall.

[Jeremy E.]

my "emergency fund", is that I have a HELOC open and can withdraw up to $10,000 from it if needed. Afterwards I would have to pay it back with 3.75% interest.
I'm considering getting a Netspend account to hold a $5,000 emergency fund, the first $5,000 has a 5% interest rate, but I know there are a lot of fees that go along with it that I haven't researched yet.

[21runner]

My Emergency Fund of $6,770.00 is around 6x my required monthly expenses. I keep it in my savings account at a local bank, but it's only earning 0.2% interest, so essentially 0%. I've been thinking lately that I may invest the money into my Roth IRA so that it won't be sitting around doing nothing, and then I could pull it back out if I absolutely had to in an emergency without incurring a penalty. Hopefully that won't be the case. I'm still debating on what to do.

[onlykelsey]

I stopped calling it an emergency fund when I realized I don't actually have emergencies that require massive amounts of money all at once, but I keep $500-$1500 in a regular savings account that's easily accessible. For such a small amount, it honestly does not seem worth it to try to make an extra few percent in interest, especially at the cost of easy access.

I envy your self-control, haha.  I keep a small slush savings (for months where a paycheck gets messed up or I have to pay an annual tax or insurance) at my main bank, and I deplete it all of the time for bullshit reasons.

I keep the biggest chunk of mine at capitalone360 online, which used to be ing (and pay 5% when I opened it).  It at least takes a few days to show up in my account now.

[El Marinero]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

[onlykelsey]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

This point hasn't been made on this thread, so I'll make it: HELOCs can be shut down on no or very little notice, and many were in 2007-8, through no fault of the borrower.  You can only draw on it at any time for so long as the bank feels like it.  I don't think you should value it at 100% of its face. 

[protostache]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

This point hasn't been made on this thread, so I'll make it: HELOCs can be shut down on no or very little notice, and many were in 2007-8, through no fault of the borrower.  You can only draw on it at any time for so long as the bank feels like it.  I don't think you should value it at 100% of its face.

It's true that the bank can cut your credit line at any time if they think your home value has dropped enough to affect your equity. This is what happened to all of those people in 2007-08: they took out a HELOC against equity that subsequently evaporated and the bank partially or completely cut their line.

The cure for this is to not over-extend yourself. If for some reason we ever max the HELOC we are in the process of getting we'll be at 86% total LTV, which still leaves quite a bit of breathing room. We will strive to stay at 0% utilization except for very specific purposes, and even then the only reason we'd go above 10% utilization is for something huge like a new roof.

[Jeremy E.]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

This point hasn't been made on this thread, so I'll make it: HELOCs can be shut down on no or very little notice, and many were in 2007-8, through no fault of the borrower.  You can only draw on it at any time for so long as the bank feels like it.  I don't think you should value it at 100% of its face.

I have a contract with the bank, and it can only close my HELOC in certain situations. I'm guessing why some of them were shut down in 08, is because one of the situations is if you owe more on a house than it's worth, they can close your line of credit. Some of the other stipulations are, if you miss a payment, you don't live in the home, or you take out another mortgage, then they can also close your line of credit. So as long as I have some equity in my house, live in it, don't miss payments, and don't take out another mortgage, they can't close my HELOC. I'd guess in most situations, even if those things occured they wouldn't close it, definitely good to point it out though. If someone thinks they might not abide by those stipulations, or lives in an area with a big housing bubble that could potentially pop, they should probably find an alternative emergency fund.

[wenchsenior]

I use ally.com
It pays 1% currently

+1

+2

When we had tight cash flow and no taxable investment accounts, I'd keep 5K in my credit union savings, and 15K in Ally.com. 

Now we have a more flexible cash situation and about 55K of accessible invested cash. My RothIRA wouldn't do me any good if the market crashed because it is 90% stocks. But I have 15K in Vanguard's Life Strategy Income Fund.

If interest rates ever rise notably or our cash flow situation gets tight, I'd probably switch back to Ally.

[El Marinero]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

This point hasn't been made on this thread, so I'll make it: HELOCs can be shut down on no or very little notice, and many were in 2007-8, through no fault of the borrower.  You can only draw on it at any time for so long as the bank feels like it.  I don't think you should value it at 100% of its face.

I actually had my HELOC closed by a big bank during the 2008 credit  crunch, which had nothing to do with my credit.  So I know this is a real risk. But I have other resources I could draw on - perhaps just a bit less flexibly.

[Jeremy E.]

my "emergency fund", is that I have a HELOC open

This.

I have plenty of liquidity, but minimal amounts of cash. I think there is a substantial opportunity cost to having six months of living expenses in low-interest savings.

My HELOC costs nothing to keep open since there is no outstanding balance, but it gives me a warm felling knowing that I can draw on it at any time.

This point hasn't been made on this thread, so I'll make it: HELOCs can be shut down on no or very little notice, and many were in 2007-8, through no fault of the borrower.  You can only draw on it at any time for so long as the bank feels like it.  I don't think you should value it at 100% of its face.

I actually had my HELOC closed by a big bank during the 2008 credit  crunch, which had nothing to do with my credit.  So I know this is a real risk. But I have other resources I could draw on - perhaps just a bit less flexibly.

like 3 posts above I showed the ways in which a HELOC can be closed above, after the housing bubble popped you probably owed more on your house than it was worth?

[Nothlit]

I don't have anything that I specifically call an emergency fund, but I routinely keep a buffer of around $5k in checking and presently have around $100k in taxable investments (80/20 VTSAX/VWITX) that could be liquidated if necessary.

[Digital Dogma]

I try to always keep 10k in my checking account, but I'll take it down to 6k if I see a sale on VTSAX.

[Zoot Allures]

my "emergency fund", is that I have a HELOC open and can withdraw up to $10,000 from it if needed. Afterwards I would have to pay it back with 3.75% interest.
I'm considering getting a Netspend account to hold a $5,000 emergency fund, the first $5,000 has a 5% interest rate, but I know there are a lot of fees that go along with it that I haven't researched yet.

The NetSpend 5% deal is dead. As of July 1, only the first $1k earns that rate.

[Indexer]

I keep 5k at Mango Money earning 6%.


It's been stated a few times but HELOCs and credit cards aren't good emergency funds. Some people had them closed down in 2008, but what was more common was to have the limit drastically decreased to the point they were basically frozen.

[aFrugalFather]

Available credit on a mortgage offset loan, with a ... and if worse comes to worst, I could always (sadly) sell some shares.

But no money just sitting around doing nothing.

+1

[faramund]

Available credit on a mortgage offset loan, with a ... and if worse comes to worst, I could always (sadly) sell some shares.

But no money just sitting around doing nothing.

+1

+1 = +2

[HenryDavid]

Using the Papillon method. (As in the novel.)
So far so good.

[TheOfficeLady]

I signed up for the Barclay Dream Savings account when it was at 1.05%. The majority we put there and then I have a little buffer in my normal savings account. i also have a 529 for if I go to grad school that I put some money into.

[protostache]

Using the Papillon method. (As in the novel.)
So far so good.

Is this similar to the pocket watch method in Pulp Fiction?

[Jeremy E.]

I keep 5k at Mango Money earning 6%.


It's been stated a few times but HELOCs and credit cards aren't good emergency funds. Some people had them closed down in 2008, but what was more common was to have the limit drastically decreased to the point they were basically frozen.

MY HELOC is a good emergency fund for me.

[NorCalMK3]

Just moved our emergency fund & targeted savings accounts from Capital One 360 (0.75%) to Barclay's (1.0%)