Author Topic: I probably have too much in cash... what should I do with it?  (Read 7044 times)

21runner

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I probably have too much in cash... what should I do with it?
« on: October 07, 2016, 03:05:22 PM »
Hey guys, here's a quick run-down of my situation. I'm 25 years old with a Bachelor's Degree in Finance and I have been working full-time at a bank in my local LCOL town for four years now. I make around $35,500.00 before taxes (and including 5% bonus), so not much, but I have been getting consistent raises every year at around 5%.

Growing up, I was always pretty good about saving money. I always just stuck the money into my regular savings account. After getting my degree in Finance and beginning my work here at the bank, I've become increasingly interested in investing. I recently purchased my first home and am getting settled into that now, but I currently have around $26,800.00 sitting in my cash savings account at the bank where I'm employed. I realize that is entirely too much cash for a guy to have sitting around earning essentially no interest (0.20%). There are, however, a few big purchases I most likely have coming up in the next couple of years.

Here's how I have the cash in my savings account allocated:

Emergency Fund - $6,770.00 (six months bare-minimum expenses)
Engagement Ring - $3,130.00 (haven't looked at these much yet and not really sure how much I'll be out)
Home Upgrades - $10,130.00 (have some renovations planned soon for the new (old) house that will probably take around $5,000.00 and will need a new roof in the next two to three years)
New Vehicle Fund - $6,750.00

My question is this: what should I do with this money besides keep so much in a regular savings account? I currently invest into my bank's 401k plan (2% with a 2% match) and I have a Roth IRA with Vanguard which I fund with as much each month as I can. The Roth is invested in VFINX. I've heard of people using Roth IRAs as emergency funds since you can pull out your contributions penalty and tax-free, so I'm debating on maybe putting some of my cash into my Roth to help max it this year, but I'm still debating.

I want to have quick money available for emergencies, but the more I think about it I feel like I have way too much sitting there earning nothing. I had a (semi) emergency a few months ago when a storm came through and lightning took down two large trees in my yard, but I was able to pay that $450.00 with my leftover cash-flow from the budget for the month. I've also had my truck worked on twice lately and was able to pay those expenses with my monthly cash flow. Does anyone have any advice for what I might could do with some of my cash? I feel as though I have a very stable job and have family literally five minutes away that would help if something completely catastrophic happened. Thanks in advance!



englishteacheralex

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Re: I probably have too much in cash... what should I do with it?
« Reply #1 on: October 07, 2016, 03:14:01 PM »
I tend to be more conservative than many of the people in this forum, but in my opinion the accounts you have mentioned are what I call "sinking funds". As in, they are reserves set aside and earmarked for specific purchases.

Why would you put such funds in anything remotely risky? It is already earmarked for consumption. You mentioned that you are putting money away in retirement on top of the sinking funds--so what's the problem? Perhaps the emergency fund is a bit high.

Do you do a written budget every month? That is another thing that many people on this forum (including MMM himself) don't bother with, but for us we have found it enormously instructive to start with the amount we want to put into non-liquid investments such as paying down our mortgage early and non-tax sheltered mutual funds. Sinking funds like the ones you have detailed here are part of our written budget: we estimate big ticket items that we are going to need within the next two years or so, how much we are willing to spend on them, and how much we'll need to save/month in order to do so. And then that money builds up in a savings account over time.

It makes life very predictable and our stress level about money basically nil. Sacrificing a bit of interest in order to know without any doubt that we'll be able to replace our car/appliances/etc. when it goes out is worth it to us. Just FYI, about 15% of our net worth is in cash accounts of this kind.

So (just brainstorming out loud) maybe just think of cash as one part of your asset allocation, and decide what percentage of your net worth you feel is appropriate to be tied up in cash...remembering that life happens and it's nice to be able to access money easily when you need it.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #2 on: October 07, 2016, 03:27:56 PM »
I tend to be more conservative than many of the people in this forum, but in my opinion the accounts you have mentioned are what I call "sinking funds". As in, they are reserves set aside and earmarked for specific purchases.

Why would you put such funds in anything remotely risky? It is already earmarked for consumption. You mentioned that you are putting money away in retirement on top of the sinking funds--so what's the problem? Perhaps the emergency fund is a bit high.

Do you do a written budget every month? That is another thing that many people on this forum (including MMM himself) don't bother with, but for us we have found it enormously instructive to start with the amount we want to put into non-liquid investments such as paying down our mortgage early and non-tax sheltered mutual funds. Sinking funds like the ones you have detailed here are part of our written budget: we estimate big ticket items that we are going to need within the next two years or so, how much we are willing to spend on them, and how much we'll need to save/month in order to do so. And then that money builds up in a savings account over time.

It makes life very predictable and our stress level about money basically nil. Sacrificing a bit of interest in order to know without any doubt that we'll be able to replace our car/appliances/etc. when it goes out is worth it to us. Just FYI, about 15% of our net worth is in cash accounts of this kind.

So (just brainstorming out loud) maybe just think of cash as one part of your asset allocation, and decide what percentage of your net worth you feel is appropriate to be tied up in cash...remembering that life happens and it's nice to be able to access money easily when you need it.

What you are saying about sinking funds makes sense. I guess I'm just not completely satisfied with the amount that I'm putting away towards retirement. It varies from month-to-month. Sometimes it's 10% of my net pay (absolute minimum I put in) to sometimes 30-40% depending on if I have any "emergencies" during the month. I have a taxable account with around $54,000.00 that was gifted to me from my parents after I graduated college, but my two retirement accounts are both only around $6,000.00 - $7,000.00 each. I feel like my Roth needs a jumpstart. At the rate I'm going I'll be a couple thousand short of maxing it this year. I didn't know if putting some of my cash (even if it's just from my $6,770.00 emergency fund) in there would be a good idea or not. Or if there were any other options that I'm not aware of.

kayvent

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Re: I probably have too much in cash... what should I do with it?
« Reply #3 on: October 07, 2016, 03:30:07 PM »
You could purchase GICs. Some people will buy GICs in a rolling fashion: every month buy an 18-month GIC with 1/18th of your emergency funds. Depending on your bank, this could be as easy as scheduling a monthly transaction.

Another strategy I have heard, and this will make people shudder, is to not keep an emergency fund but to instead have a LOC available. The rational is that not investing your money in bonds & stocks is forfeiting 2-7% interest per year whereas having a secured LOC costs 0$ while you aren't using it and will be only 3-5% in interest if you need it.

I've heard some mix the two strategies.

3K is too much for a ring. FYI.
« Last Edit: October 07, 2016, 03:38:50 PM by kayvent »

Classical_Liberal

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Re: I probably have too much in cash... what should I do with it?
« Reply #4 on: October 07, 2016, 03:36:21 PM »
Put the emergency fund in the Roth!  There is no reason not to!! (I heart double negs)

You can withdraw the principle if you have an "emergency" without penalty.  Leave it in a money market if it makes you more comfortable, but dont leave unused roth contribution space this year because you may need the money for an emergency.

englishteacheralex

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Re: I probably have too much in cash... what should I do with it?
« Reply #5 on: October 07, 2016, 03:39:17 PM »
I tend to be more conservative than many of the people in this forum, but in my opinion the accounts you have mentioned are what I call "sinking funds". As in, they are reserves set aside and earmarked for specific purchases.

Why would you put such funds in anything remotely risky? It is already earmarked for consumption. You mentioned that you are putting money away in retirement on top of the sinking funds--so what's the problem? Perhaps the emergency fund is a bit high.

Do you do a written budget every month? That is another thing that many people on this forum (including MMM himself) don't bother with, but for us we have found it enormously instructive to start with the amount we want to put into non-liquid investments such as paying down our mortgage early and non-tax sheltered mutual funds. Sinking funds like the ones you have detailed here are part of our written budget: we estimate big ticket items that we are going to need within the next two years or so, how much we are willing to spend on them, and how much we'll need to save/month in order to do so. And then that money builds up in a savings account over time.

It makes life very predictable and our stress level about money basically nil. Sacrificing a bit of interest in order to know without any doubt that we'll be able to replace our car/appliances/etc. when it goes out is worth it to us. Just FYI, about 15% of our net worth is in cash accounts of this kind.

So (just brainstorming out loud) maybe just think of cash as one part of your asset allocation, and decide what percentage of your net worth you feel is appropriate to be tied up in cash...remembering that life happens and it's nice to be able to access money easily when you need it.

What you are saying about sinking funds makes sense. I guess I'm just not completely satisfied with the amount that I'm putting away towards retirement. It varies from month-to-month. Sometimes it's 10% of my net pay (absolute minimum I put in) to sometimes 30-40% depending on if I have any "emergencies" during the month. I have a taxable account with around $54,000.00 that was gifted to me from my parents after I graduated college, but my two retirement accounts are both only around $6,000.00 - $7,000.00 each. I feel like my Roth needs a jumpstart. At the rate I'm going I'll be a couple thousand short of maxing it this year. I didn't know if putting some of my cash (even if it's just from my $6,770.00 emergency fund) in there would be a good idea or not. Or if there were any other options that I'm not aware of.

Well, if it were me (and of course, it's not), if I were dissatisfied with my savings, I would look at my consumption. I have a husband, a child, and another on the way, and I would never spend $6k+ on a car. We make 140k/year and we just bought a car for $3300 in anticipation of the next child (needed something bigger, but it's not fancy!). My engagement ring was less than $1,500 (my husband bought it cash and I was actually a little horrified he had spent that much, but he said I was worth it). The emergency fund is, in my opinion, not outrageous, but the amount anticipated on the other purchases seems excessive IF you are wanting to be a super-saver kind of person.

Those purchases are totally discretionary and could be adjusted to be far lower to free up cash for investments. But if you want to spend $6k+on a car, hey, that's your choice and most people would actually call it pretty frugal.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #6 on: October 07, 2016, 03:51:17 PM »
3K is too much for a ring. FYI.

That is good to hear. I was worried it might not be enough, but like I said I had no idea.

Gin1984

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Re: I probably have too much in cash... what should I do with it?
« Reply #7 on: October 07, 2016, 03:53:08 PM »
Even for your sinking funds, you should be getting a bit better interest.  Open a high yield savings account.  I have a sallie mae bank and Capital one 360 (which if you want a referal for $25 if you put in $250, PM me) both of which are about .75%.  Ally is also popular around here at 1% but I have not bothered to switch because I like the capital one 360 checking and the sallie mae connection to upromise.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #8 on: October 07, 2016, 03:54:40 PM »
Put the emergency fund in the Roth!  There is no reason not to!! (I heart double negs)

You can withdraw the principle if you have an "emergency" without penalty.  Leave it in a money market if it makes you more comfortable, but dont leave unused roth contribution space this year because you may need the money for an emergency.

I've been leaning towards this from hearing other people talk about doing it. I could cut my emergency fund down to three months of expenses instead of six and have enough to max out the Roth for the year most likely.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #9 on: October 07, 2016, 04:00:12 PM »
Even for your sinking funds, you should be getting a bit better interest.  Open a high yield savings account.  I have a sallie mae bank and Capital one 360 (which if you want a referal for $25 if you put in $250, PM me) both of which are about .75%.  Ally is also popular around here at 1% but I have not bothered to switch because I like the capital one 360 checking and the sallie mae connection to upromise.

The only problem I have with this is that the bank where I keep my money is the bank where I'm employed. I live in a very small town, I'm pretty close to the CEO but he majorly dislikes it when the employees of the bank aren't "loyal" to the bank and keep their money, mortgage, etc. elsewhere. They don't keep us from moving our money, but I know he dislikes it. With the raises I have been getting ever since I started here I'd sort of hate to risk losing some of those. He understands that I want to invest, of course.

cchrissyy

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Re: I probably have too much in cash... what should I do with it?
« Reply #10 on: October 07, 2016, 04:32:56 PM »
$3k is quite a lot for a ring. oh wow. 
Mine was about $1k and if I could go back in time I'd want less money tied up in jewelry, not more!
Some people certainly do spend that much. People who have way more discretionary income than you do, and who are way less budget conscious.

As far as your larger question, I would keep 2-3 months worth of living expenses in your checking or savings account and invest the rest.

katsiki

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Re: I probably have too much in cash... what should I do with it?
« Reply #11 on: October 07, 2016, 05:48:56 PM »
OP, I don't have anything to add.  You've gotten some great responses!  I wanted to say awesome job at your age!  I wish I knew more when I was your age.

For the folks doing sinking funds, do you use separate bank accounts for those, or track within 1 account?  Just curious..

englishteacheralex

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Re: I probably have too much in cash... what should I do with it?
« Reply #12 on: October 07, 2016, 06:27:33 PM »
OP, I don't have anything to add.  You've gotten some great responses!  I wanted to say awesome job at your age!  I wish I knew more when I was your age.

For the folks doing sinking funds, do you use separate bank accounts for those, or track within 1 account?  Just curious..

We do separate accounts in Capitol One 360 and do transfers every month. For us, this keeps everything clean and easy to see at a glance how much we have left to save for our car, etc.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #13 on: October 08, 2016, 08:42:01 AM »
Thanks to everybody for the responses! I'm definitely going to lower my emergency fund down to 3 months instead of 6. I'll also invest anything I have leftover in the ring fund after I make the purchase, I don't plan on spending that full amount. Maybe I should just leave the rest in my savings account for now since they are sinking funds. Once those purchases are made, I can invest any funds that are leftover at that point.

If I can max out my Roth this year, that'll pretty much meet my savings goals. I'd have a maxed out Roth IRA, enough contributed to the 401k to get a full match, and also some extra paid down towards the house. Could be worse, right?

catccc

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Re: I probably have too much in cash... what should I do with it?
« Reply #14 on: October 09, 2016, 10:04:24 PM »
ditto that I'd consider most of that $$ already spent, since that is what you plan to do with most of it.

My engagement ring was just shy of $3K.  (I only know because I had to send it back to Blue Nile to have it sized down- my ring finger was just a tad smaller than I'd thought.  They gave me a very specific dollar amount at which I should insure the parcel.)  I actually advised my fella to opt for not-a-diamond, but rather a high quality CZ in a well made setting.  He didn't take my advice.  But I love the ring.  It's beautiful but quite modest compared to what some of my friends have.  They have $10K rings and would have scoffed at mine had they received it.  Hopefully your future spouse will be fine with whatever ring you select, whether is no ring, a $100 ring, or a $3K ring.

I might invest some of that cash... anything that isn't going to be spent in the next year, maybe, could go to a lowish risk investment that would likely yield more than the savings account.  So maybe 1/2 of the emergency fund, 1/2 of the house stuff fund, and maybe the car fund, depending on when you plan on buying that car.

If you can max out your Roth before the end of the year, consider continuing to save for the Roth for the following year, sinking fund style.  I've been doing this for many years now.  And every January, I take the cash saved in the prior year, and I max out my IRA for that year.  It's nice to have that done right away!  Even if you can't put it all in right away, any head start you can get is great, and if you are just a little more ahead every year, you'll be closer and closer to having it maxed early.  I might also consider getting more into the 401K after full match as opposed to paying down the mortgage.

Good luck!

kayvent

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Re: I probably have too much in cash... what should I do with it?
« Reply #15 on: October 09, 2016, 10:59:27 PM »
It's beautiful but quite modest compared to what some of my friends have.  They have $10K rings and would have scoffed at mine had they received it.

10K rings? Where I live that is basically asking for a mugging. (The sad part is they would steal the ring and pawn it for a hundred dollars. High-priced rings make new cars look like good investments.)

Metric Mouse

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Re: I probably have too much in cash... what should I do with it?
« Reply #16 on: October 10, 2016, 12:21:09 AM »
It's beautiful but quite modest compared to what some of my friends have.  They have $10K rings and would have scoffed at mine had they received it.

10K rings? Where I live that is basically asking for a mugging. (The sad part is they would steal the ring and pawn it for a hundred dollars. High-priced rings make new cars look like good investments.)

No ring at all is clearly superior in your case. Any flashy piece of useless jewelry is not worth the danger of a mugging.

catccc

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Re: I probably have too much in cash... what should I do with it?
« Reply #17 on: October 10, 2016, 10:59:29 AM »
It's beautiful but quite modest compared to what some of my friends have.  They have $10K rings and would have scoffed at mine had they received it.

10K rings? Where I live that is basically asking for a mugging. (The sad part is they would steal the ring and pawn it for a hundred dollars. High-priced rings make new cars look like good investments.)

I know, it's nuts.  In their circles, it is normal.  I think it is crazy.  Also, even if you do like diamonds, my friend's 1.5 ct stone doesn't even look that much bigger than my .65 carat stone.  The top of her stone is just a smidge over 1 mm bigger across than my stone; both are ideal cut.  To spend so much more and get just a teensy visually larger thing doesn't make a lot of sense.  I mean, getting a diamond in the first place doesn't make a lot of sense, which is why I suggested DH go for CZ.  But like I said, I really love my ring.  I always wear it, and still 9 years later I think it's loveliest thing I own.  (Sorry to perpetuate the slightly off topic ring talk here...)

nobody123

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Re: I probably have too much in cash... what should I do with it?
« Reply #18 on: October 10, 2016, 11:11:39 AM »
Even for your sinking funds, you should be getting a bit better interest.  Open a high yield savings account.  I have a sallie mae bank and Capital one 360 (which if you want a referal for $25 if you put in $250, PM me) both of which are about .75%.  Ally is also popular around here at 1% but I have not bothered to switch because I like the capital one 360 checking and the sallie mae connection to upromise.

The only problem I have with this is that the bank where I keep my money is the bank where I'm employed. I live in a very small town, I'm pretty close to the CEO but he majorly dislikes it when the employees of the bank aren't "loyal" to the bank and keep their money, mortgage, etc. elsewhere. They don't keep us from moving our money, but I know he dislikes it. With the raises I have been getting ever since I started here I'd sort of hate to risk losing some of those. He understands that I want to invest, of course.

If you think it's in your best interest to move your money elsewhere, do it.  If you want to placate him, keep a couple thousand in your bank and still have your paycheck deposited in a checking account there.  Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

Mother Fussbudget

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Re: I probably have too much in cash... what should I do with it?
« Reply #19 on: October 10, 2016, 11:43:12 AM »
Add to the Roth.  No question.  Any contributions can be withdrawn penalty free at anytime.  I would also suggest the "Investment Order" from the Case Study spreadsheet  (see below).

Welcome to the forums, and good luck.  You're doing the right things.

+  +  +  +  +
'Investment order' - copied from the "Case Study spreadsheet".

Here is the "usual advice", current as of the posting date.  See the 'Investment Order' tab in the case study spreadsheet for the latest version.   
"Max..." means "contribute up to the maximum allowed for..., subject to your ability to pay day-to-day expenses."   
   
It is up to you whether to consider "saving for a house down payment" as a "day to day expense", vs. lumping the down payment savings in with "taxable investments" at the end.   
If you are renting, you may not be throwing away as much on rent as you might think.  See   
   http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/ for some thoughts.
   
In the lists below, thinking "first your 457 (if you have one), then your 401k and/or 403b" wherever "401k" appears is likely correct -   
   unless your 457 fund options are significantly worse than those in the 401k/403b -
   due to penalty-free access to 457 funds at retirement, even if younger than 59 1/2.
   
Differences of a few tenths of a percent are not important when applicable for only a few years (in other words, these are guidelines not rules).   
   
Current 10-year Treasury note yield is ~2%.  See   
   http://quotes.wsj.com/bond/BX/TMUBMUSD10Y
   
WHAT   
0. Establish an emergency fund to your satisfaction   
1. Contribute to 401k up to any company match   
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
3. Max HSA    
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level   
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)   
6. Fund mega backdoor Roth if applicable   
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.   
8. Invest in a taxable account with any extra.   
   
WHY   
0. Give yourself at least enough buffer to avoid worries about bouncing checks   
1. Company match rates are likely the highest percent return you can get on your money   
2. When the guaranteed return is this high, take it.   
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.   
4. Rule of thumb: traditional if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between (or see   
   http://forum.mrmoneymustache.com/investor-alley/deciding-between-roth-and-traditional-ira-based-on-marginal-tax-rate/
   if you want even more details on that topic).  See also
   https://www.bogleheads.org/forum/viewtopic.php?f=2&t=182081,
   http://forum.mrmoneymustache.com/ask-a-mustachian/case-study-overwhelming-student-loan-debt-how-would-you-get-started/msg868845/#msg868845
   and other posts in that thread about exceptions to the rule.
5. See #4 for choice of traditional or Roth for 401k   
6. Applicability depends on the rules for the specific 401k   
7. Again, take the risk-free return if high enough   
8. Because earnings, even if taxed, are beneficial   
   
The emergency fund is your "no risk" money.  You might consider one of these online banks:   
   http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001
      
If your 401k options are poor (i.e., high fund fees) you can check   
   http://forum.mrmoneymustache.com/investor-alley/to-401k-or-not-to-401k-that-is-the-question-43459/
for some thoughts on "how high is too high?"   
   
Priorities above apply when income is primarily through W-2 earnings.  For those running their own businesses (e.g., rental property owner, small business owner, etc.),   
   putting money into that business might come somewhere before, in parallel with, or after step 5.
   
See http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html for some data on historical returns.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #20 on: October 11, 2016, 11:27:42 AM »
(Sorry to perpetuate the slightly off topic ring talk here...)

I will probably need advice on ring buying as well so it is fine!

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #21 on: October 11, 2016, 11:31:08 AM »
Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

I've thought about that too, kind of sad that he might be thinking of it that way but it's completely possible. 

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #22 on: October 11, 2016, 11:35:23 AM »
Add to the Roth.  No question.  Any contributions can be withdrawn penalty free at anytime.  I would also suggest the "Investment Order" from the Case Study spreadsheet  (see below).

Welcome to the forums, and good luck.  You're doing the right things.

Thank you! And thanks for the bit from the Case Study Spreadsheet. That is extremely helpful.

dcozad999

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Re: I probably have too much in cash... what should I do with it?
« Reply #23 on: October 11, 2016, 03:07:02 PM »
Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

I've thought about that too, kind of sad that he might be thinking of it that way but it's completely possible.


I think it'd be extremely unethical for the CEO to even look at the personal accounts of his employees, and I'm not sure I'd want to work there if that's going on.

nobody123

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Re: I probably have too much in cash... what should I do with it?
« Reply #24 on: October 12, 2016, 06:35:06 AM »
Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

I've thought about that too, kind of sad that he might be thinking of it that way but it's completely possible.


I think it'd be extremely unethical for the CEO to even look at the personal accounts of his employees, and I'm not sure I'd want to work there if that's going on.

I agree it's crappy.  But OP is also a customer of the bank, and I can't believe there are any rules against them looking at the balance of a customer's account.  Since OP said the CEO holds a grudge if you don't do your banking there, I would assume he routinely monitors that stuff.

ender

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Re: I probably have too much in cash... what should I do with it?
« Reply #25 on: October 12, 2016, 06:54:03 AM »
3K is too much for a ring. FYI.

That is good to hear. I was worried it might not be enough, but like I said I had no idea.


I should be a salesman for moissanite rings.

https://www.moissaniteco.com/

Moissanite is superior in almost every way to diamond for a ring. You pay a fraction of the cost for a much higher quality gem stone, which is much more shatter resistant than diamond is.

Enigma

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Re: I probably have too much in cash... what should I do with it?
« Reply #26 on: October 12, 2016, 06:56:09 AM »
I will probably need advice on ring buying as well so it is fine!
Nashville/Clarksville areas have a ton of pawn shops.  I recall getting my ex-wife's wedding ring at a pawn shop for around $400.  It was an expensive design whereby the engagement and the wedding ring came together as one ornate ring.

Buying a wedding ring can be as expensive as you want (thousands) or as cheap as you want (hundreds).  I think with such a high divorce rate pawn shops are worth the consideration.

NoStacheOhio

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Re: I probably have too much in cash... what should I do with it?
« Reply #27 on: October 12, 2016, 06:57:40 AM »
Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

I've thought about that too, kind of sad that he might be thinking of it that way but it's completely possible.


I think it'd be extremely unethical for the CEO to even look at the personal accounts of his employees, and I'm not sure I'd want to work there if that's going on.

I agree it's crappy.  But OP is also a customer of the bank, and I can't believe there are any rules against them looking at the balance of a customer's account.  Since OP said the CEO holds a grudge if you don't do your banking there, I would assume he routinely monitors that stuff.

Is there any way for CEO to know if you hold accounts elsewhere? Simply keep a checking account with some auto BillPay activity and a small-to-medium savings account for buffer. Move your leftovers somewhere else at the end of the month. If you're really paranoid, use a check instead of ACH.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #28 on: October 12, 2016, 01:30:13 PM »
I should be a salesman for moissanite rings.

https://www.moissaniteco.com/

Moissanite is superior in almost every way to diamond for a ring. You pay a fraction of the cost for a much higher quality gem stone, which is much more shatter resistant than diamond is.

Thanks for the link, I'll definitely check those out!

CheapskateWife

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Re: I probably have too much in cash... what should I do with it?
« Reply #29 on: October 12, 2016, 01:35:18 PM »
I should be a salesman for moissanite rings.

https://www.moissaniteco.com/

Moissanite is superior in almost every way to diamond for a ring. You pay a fraction of the cost for a much higher quality gem stone, which is much more shatter resistant than diamond is.

Thanks for the link, I'll definitely check those out!

How about instead of buying her a ring that you can't recover value from (seriously...look at diamonds resale and tell me that's an "investment") talk to your intended about what she wants.  Would you consider an alternative like a simple band and fully funding each of your IRA's?  I mean it's not romantic or anything but how better to gauge your intended's motivations than to ask her to consider something other than the popular and very wasteful engagement ring route?

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #30 on: October 12, 2016, 01:37:54 PM »
Frankly, how do you know that those 5% raises wouldn't have been 8% raises if he didn't know how much money you had?  After all, a young kid with that much in their savings obviously doesn't need as big of a raise...

I've thought about that too, kind of sad that he might be thinking of it that way but it's completely possible.


I think it'd be extremely unethical for the CEO to even look at the personal accounts of his employees, and I'm not sure I'd want to work there if that's going on.

I agree it's crappy.  But OP is also a customer of the bank, and I can't believe there are any rules against them looking at the balance of a customer's account.  Since OP said the CEO holds a grudge if you don't do your banking there, I would assume he routinely monitors that stuff.

Is there any way for CEO to know if you hold accounts elsewhere? Simply keep a checking account with some auto BillPay activity and a small-to-medium savings account for buffer. Move your leftovers somewhere else at the end of the month. If you're really paranoid, use a check instead of ACH.

There's no way for him to know as far as I'm aware, but there could be. He's actually a really good boss, he just wants employees to be loyal to the bank that employs them.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #31 on: October 12, 2016, 01:48:51 PM »
How about instead of buying her a ring that you can't recover value from (seriously...look at diamonds resale and tell me that's an "investment") talk to your intended about what she wants.  Would you consider an alternative like a simple band and fully funding each of your IRA's?  I mean it's not romantic or anything but how better to gauge your intended's motivations than to ask her to consider something other than the popular and very wasteful engagement ring route?

I agree with you, I don't think of an engagement ring as an investment whatsoever. I could bring something like that up to her, but I'm not really sure she would like it too much. I actually got her to read some MMM articles a while back and I think she has read a few on her own but she hasn't ventured to the forum yet. I'm hoping she reads something that helps her with her mindset with things like this soon. She's not overly-spendy, but could do a little better with it. It's the meaning behind the ring that's important.

I'm a red panda

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Re: I probably have too much in cash... what should I do with it?
« Reply #32 on: October 12, 2016, 02:23:58 PM »
(Sorry to perpetuate the slightly off topic ring talk here...)

I will probably need advice on ring buying as well so it is fine!

$2-3k is pretty "normal" for a diamond ring (.75-1 carat in that range), though anyone here will tell you it is way too much.   You're going to want to make sure your expectations are inline with the person who will be getting the ring.

As for the cash, that isn't too much, IMO.  But I'm more conservative in my cash stores than other people here. I don't earmark a separate "emergency fund" though.

nobody123

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Re: I probably have too much in cash... what should I do with it?
« Reply #33 on: October 12, 2016, 02:52:12 PM »
$2-3k is pretty "normal" for a diamond ring (.75-1 carat in that range), though anyone here will tell you it is way too much.   You're going to want to make sure your expectations are inline with the person who will be getting the ring.

+1 on the ring needing to please your future wife.  If she wants a $3K ring, so be it (assuming you can afford it).  Assuming you'll be married like 40 years, that's $75/year.  And trust me, that $75/year is an "investment" in the fact that your future MIL won't complain about you being cheap at every family gathering, your wife won't want to upgrade her ring after a few years once you have more money, etc.  My wife's engagement ring was just over 1 ct., and within a year of her having it both her mother and her sister nagged their husbands into getting them bigger stones.  Just make sure if you're spending that much on her ring, you get the $89 simple gold band for yours.

NoStacheOhio

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Re: I probably have too much in cash... what should I do with it?
« Reply #34 on: October 13, 2016, 06:07:24 AM »
There's no way for him to know as far as I'm aware, but there could be. He's actually a really good boss, he just wants employees to be loyal to the bank that employs them.

The idea that banking at multiple institutions is "disloyal" is pretty unreasonable. In 1950, yeah sure, banking and finance were a lot simpler, most people weren't really investing, you probably didn't need more than checking, savings and a mortgage account. They also greeted you by name when you walked in the door, and went out of their way to help you out.

Unless he's going to match the interest rates at Ally or Capital One, it's unreasonable to expect 100% of your business.

Enigma

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Re: I probably have too much in cash... what should I do with it?
« Reply #35 on: October 13, 2016, 07:49:03 AM »
Tennessee is still a good-boy state and a right to work state that can fire without reason.  I am not one bit surprised that the CEO takes note of whom does business with the local small bank.

I would leave my checking account and maybe even a small eFund savings account with the bank.  Even max out the company match and keep it in their retirement accounts.  After all it may directly effect the way the CEO perceives you and can affect your bonuses/merit raises.  After that I would move everything to a online checking account where you do your day-to-day purchasing and investing.

That is actually what I do...  I have my online USAA military checking account and have accounts with Regions (in TN) and Legendsbank in Clarksville.  Since I have a wealth of investments I know the bank managers of both branches who think the world of me.

nexus

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Re: I probably have too much in cash... what should I do with it?
« Reply #36 on: October 13, 2016, 02:39:24 PM »
I don't know if anyone mentioned this already, but you said you had a truck. Are you going to sell your truck once you purchase the new vehicle? If your target car fund is 10k and you can sell your truck for 5k, you're pretty much already there.

As long as you don't go fixing the house, buying the car, and the ring all at the same time, you could buy your new car now, sell the truck, and then funnel the proceeds into the next project (house or ring). That's the tricky part about multiple earmarks all comes down to the expected timing of the consumption.

+1 on the LOC idea too. I'm not yet brave enough to do it, but have the option if I want it.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #37 on: October 14, 2016, 01:42:23 PM »
I don't know if anyone mentioned this already, but you said you had a truck. Are you going to sell your truck once you purchase the new vehicle? If your target car fund is 10k and you can sell your truck for 5k, you're pretty much already there.

As long as you don't go fixing the house, buying the car, and the ring all at the same time, you could buy your new car now, sell the truck, and then funnel the proceeds into the next project (house or ring). That's the tricky part about multiple earmarks all comes down to the expected timing of the consumption.

+1 on the LOC idea too. I'm not yet brave enough to do it, but have the option if I want it.

Yes I plan on selling the truck when I purchase a new vehicle. I plan on driving it as long as possible though, so I'm not sure how much it'll be worth once it's said and done. I think right now it's worth around $4,400.00.

21runner

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Re: I probably have too much in cash... what should I do with it?
« Reply #38 on: October 14, 2016, 01:46:58 PM »
Thanks to everyone for all of the advice. It's greatly appreciated!