Author Topic: Where should I store a 6 month supply of cash?  (Read 2064 times)

Nomad18

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Where should I store a 6 month supply of cash?
« on: October 27, 2017, 11:23:30 PM »
Hi! First time poster here.

I'm 28 and I've recently come into a significant amount of money from a family inheritance. I just got into Mustachianism earlier this year, so this is definitely coming at a great time :)
I feel like I've formulated a good plan for most of the money but I need help deciding what to do with an amount that I want to keep handy for the next few months.

The plan:
-Put most of the money into my VTSAX account so that it can get to work making more money!
-Hold aside 6 months worth of living expenses and contribute 100% of my paycheck to 401K until I hit the max for the year (~18,000, which will take me about 6 months). This will give me a much needed contribution to 401K (This year I've only given about ~$1,000) and lowering my taxable income for the year.

So my question is where should I keep that 6 months worth of living expenses. It feels like a lot of money to just have sitting in a 0.01% interest savings account, but I don't want to risk loosing it in the market since I will need it in the eminent future.

Should I put it in a high interest online savings account? Like Ally Bank?

Thank you in advance for all your wise advice!
« Last Edit: October 28, 2017, 12:21:25 AM by Nomad18 »

MDM

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Re: Where should I store a 6 month supply of cash?
« Reply #1 on: October 28, 2017, 03:35:02 AM »
Should I put it in a high interest online savings account?
A very reasonable choice.

See The 5 Best Online Savings Accounts.

Jaayse

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Re: Where should I store a 6 month supply of cash?
« Reply #2 on: October 28, 2017, 03:58:51 AM »
Welcome Nomad, I would suggest the following site to look at:

https://www.doctorofcredit.com/best-bank-account-bonuses/

Sometimes you can find bonuses that will exceed the percentage you would get from interest alone.  In the last 4 months I have used $25,350 to make $1,150 (around 4.5% return for only 1/3 of a year... I'm not the best at calculating APRs so I can't tell you what that would turn into).  I did a chase checking and savings reward for $500, a capital one 360 checking and MMA for $500 and a Navy Federal TIRA for $150.  I was going to suggest the capital one 360 account but I can't see the bonus anymore on the doctor of credit site, however if you maintain a balance of over $10,000 it still pays 1.3% and under that it pays .6%. 

Roots&Wings

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Re: Where should I store a 6 month supply of cash?
« Reply #3 on: October 28, 2017, 06:18:24 AM »
+1

I'd put $20k in Discover Savings for the $200 immediate bonus, and go from there. I've used ~$20k of my emergency fund this year to earn $3.3k in bank bonuses.

BlueHouse

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Re: Where should I store a 6 month supply of cash?
« Reply #4 on: October 28, 2017, 12:07:40 PM »
I like Ally.  I use Ally for all my banking and have a brick and mortar credit union that I transfer money into for anytime I need cash transactions. 

I don't know how anybody feels comfortable churning credit cards or changing banks anymore.  My credit is frozen at all three companies due to risk of id theft. The potential difficulty is not worth the money for me. 

In addition to Ally online banking, I also ladder CDs

GizmoTX

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Re: Where should I store a 6 month supply of cash?
« Reply #5 on: October 28, 2017, 12:38:50 PM »
We like Synchrony & CIT as well as Ally for savings. Schwab for checking.

MustachioedPistachio

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Re: Where should I store a 6 month supply of cash?
« Reply #6 on: October 28, 2017, 12:41:52 PM »
Welcome Nomad, and nice to hear of your fortuitous windfall!

Perhaps one or two of your local banks offer a "rewards" checking account? There are a few in my parts that offer upwards of 3.00% interest with certain conditions, i.e., having one direct deposit and 12 debit card transactions per month.

Going for the bank bonuses is a great idea. Check brokerage money market accounts too (Etrade, Scottrade, Schwab, etc); they sometimes offer even better bonuses.

You could also just stuff a pillow case full of one's for s's and g's. ;)

Rollin

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Re: Where should I store a 6 month supply of cash?
« Reply #7 on: October 28, 2017, 04:39:59 PM »
Check Lake Michigan Credit Union with their Max Checking at 3% for up to $14,500.

GetItRight

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Re: Where should I store a 6 month supply of cash?
« Reply #8 on: October 28, 2017, 05:20:14 PM »
I use Ally. I think they're paying 1.2% these days. Easy to use and the money is accessible within a few days.

Roots&Wings

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Re: Where should I store a 6 month supply of cash?
« Reply #9 on: October 30, 2017, 05:41:00 AM »
I don't know how anybody feels comfortable churning credit cards or changing banks anymore.  My credit is frozen at all three companies due to risk of id theft. The potential difficulty is not worth the money for me. 

By signing up for the free credit monitoring from Equifax breach, and checking credit reports every 4 months. Everyone's comfort level differs.