My husband was laid off from a full-time permanent job in May, and was lucky enough to land a good seasonal job for the summer. We are anticipating that he will be let go again sometime in October. By that time we will have a $15k emergency fund (monthly expenses are about $3200/mo), and should be able to add another $5k to it before the end of the year by saving his unemployment and my end of year bonus. By December 31, we should have a good six months of expenses saved up.
My income covers our basic monthly expenses, but doesn't go much farther. Therefore, even if for some reason he is still out of a job by the time unemployment runs out, we shouldn't have to dip into our emergency fund except for, you know, emergencies.
With this in mind, where would you park that $20k? Some ideas...
25% at the credit union. I'm very tempted to keep $5k on hand at all times in our credit union savings account because it makes my heart warm. We have plenty of available credit in the form of credit cards, but for some reason having immediate cash available seems like a good idea anyway. Unfortunately, my rate of return is a stellar 0.1%. As such, I am willing to be talked out of this.
Netspend. Netspend seems to have the highest interest rates around. It's my understanding that each person can have up to three accounts in their name, and they come with a 5% savings account for up to $5k apiece. I already opened one of these accounts and am depositing my $1/month to avoid the inactivity fee, but something about it just feels off. The web interface is a bit hard to use, and I've never heard of them before I opened the account after hearing about them here. It makes me a little nervous to give them $5k. Am I being silly?
Low risk investments. I could also put the money in a Vanguard account with a high bond to stock ratio. This feels like a low risk, low reward situation, and may result in taxable income. Pros/cons?
Roth IRAs. I could take $11,000 and open a Roth apiece for my husband and myself and invest it like I am our 401ks, largely in Target Retirement funds. Helpful because there's no early withdrawal penalty, but maybe too risky? Or do I combine this with my thought above and open Roth IRA accounts with low risk investments? And what would you do with the other $9k?
Regular "high interest" savings account. I could plop it all in a 1% account with a well known bank and just be happy I have the money available.
Any other options? What would you do in my situation where you have an increased from usual likelihood of using this money, but still probably won't need to touch it. If it helps, I also keep a $1k buffer in my checking account that I'm not counting as part of the emergency fund.
