Author Topic: Emergency fund. Where?  (Read 1312 times)

stachestache

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Emergency fund. Where?
« on: October 15, 2017, 04:42:09 PM »
Sup ya'll,

I'm wondering where everyone keeps their emergency savings?

One of my financial goals this year was to hit my target for emergency savings ($6500). I met that goal early in the year and put it in a CD at my local credit union earning 1.0% (about 5 bones a month). I know it isn't the most liquid of liquid buckets to hold funds but my thought has been in a bind I could use my credit card and then take the penalty (90 days interest) on the CD to pay off the credit card.

Should I just put the $6500 in my after tax Vanguard account? (VTSAX) Or one of Vanguards money market funds?

EngineeringFI

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Re: Emergency fund. Where?
« Reply #1 on: October 15, 2017, 06:04:36 PM »
I used to keep my emergency fund in a savings account at my local credit unit but this month I moved it to a savings account at Ally bank (1.2% interest rate). My emergency fund is $10k, so that's $120 / year in interest. It's not much, but its more than it was earning in my local credit union. A CD works as long as there isn't a penalty for an early withdrawal. The point of an emergency fund is to be able to get to it when you need it.

stachestache

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Re: Emergency fund. Where?
« Reply #2 on: October 15, 2017, 06:58:57 PM »
EngineeringFI, thank you for your input. The penalty is the previous 90 days interest, so that is not bad.

MDM

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Re: Emergency fund. Where?
« Reply #3 on: October 15, 2017, 08:07:46 PM »
See the part about emergency savings in Investment Order.

Paul der Krake

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Re: Emergency fund. Where?
« Reply #4 on: October 15, 2017, 08:14:56 PM »
The current best savings accounts pay 1.3%. Your CD is suboptimal.

https://www.depositaccounts.com/ is the one stop shop for everything FDIC-guaranteed.

Gone_Hiking

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Re: Emergency fund. Where?
« Reply #5 on: October 15, 2017, 08:42:12 PM »
Ugh, your CD's yield coupled with 90-day interest early withdrawal penalty makes me cringe a bit.  Online banks now pay more interest and offer liquidity on savings account.  When your CD matures, consider moving the money elsewhere.  You will earn more interest and keep liquidity - which is the point of emergency savings, no?

stachestache

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Re: Emergency fund. Where?
« Reply #6 on: October 15, 2017, 08:50:42 PM »
Thanks MDM, that is a great thread.

Gone-Hiking, the yield is low. 90 days interest is also low, about 15-16 dollars. In the case of an emergency, I don't think I would mind giving those earnings up. It is not liquid which is why my plan has been to use my credit card and then pay it off after accessing the CD funds (a few days later). Anyhow, I'd like to use the credit card for points on an emergency worthy expense. I will be looking to move the money elsewhere for sure and possibly before it matures (May 2019).

birdie55

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Re: Emergency fund. Where?
« Reply #7 on: October 15, 2017, 10:17:07 PM »
I keep mine in an Ally savings account.  1.2 % interest, easily accessible.