Author Topic: Where you keep short term savings  (Read 1001 times)

KYFIRE

  • 5 O'Clock Shadow
  • *
  • Posts: 98
Where you keep short term savings
« on: October 26, 2021, 08:39:17 AM »
Wondering what others are doing.

Where do you store short term financial goals?  I'm looking at appliances all hitting 15 years old this year, I know they will start breaking.  I want to keep some money aside specific for this.  Additionally, I took control of my escrow for the house.  It's usually ~$4,800/yr spending between insurance and taxes.  I usually just pay out of checking account but I want to put that money to work if possible (hopefully better than the .5% savings right now).

Curious, do you even bother keeping money allocated this way?  If so where do you usually keep this kind of money?

-Savings Account?
-Betterment Account?
-Other?



svosavvy

  • Stubble
  • **
  • Posts: 214
  • Age: 46
  • Location: Western NY
Re: Where you keep short term savings
« Reply #1 on: October 26, 2021, 09:06:35 AM »
Yeah, unfortunately I don't have any good ideas for <1 yr money aka "emergency fund".  I think I am down to .4% in online savings account on mine.  I do pickup the occasional bank account churn for the promotion here and there.  Those are kind of tasty.  Just got a $500 Bofa savings one here recently.  They usually require you to deposit a chunk for 3 months and not touch it.  Nice thing is there is no penalty if you do touch it (emergency).  You just forfeit the bonus, oh well if it is a true emergency. 

I keep my 1-3 yr liquid and cash equivalents in Vanguard short term corporate fund VCSH in brokerage. Yields 1.7% right now and it feels to me we will start getting an upward trajectory in rates eventually here.  I like short term b/c they will rollover approx 30% or so of their bonds through maturity, so you will have less interest rate risk instead of chasing the longer bond.

Yield sucks these days.  A few years ago purepoint (Mitsubishi) bank sent me a tea forte ceramic mug and a tin of gunpowder tea fancy gift box for my birthday.  Now I don't even get an email on my birthday.  Haha

Omy

  • Handlebar Stache
  • *****
  • Posts: 1738
Re: Where you keep short term savings
« Reply #2 on: October 26, 2021, 09:12:05 AM »
Series I bonds are great right now. You can't touch them for a year, but if you have a low or no interest credit card you could use it to cover the emergency then pay it off with the bonds at the one year point.

Edited to add that you can ladder bonds. Buy some every year and use the oldest or the ones yielding the least to pay for emergencies or finance your first few years of FIRE.  I bought a lot of EE bonds in the early 90s that started off paying 6% and are still paying 4% for another year or 2 until they mature. I probably would have made more in the market, but I like the security of having a large, fairly liquid "emergency" fund.
« Last Edit: October 26, 2021, 09:39:32 AM by Omy »

yachi

  • Handlebar Stache
  • *****
  • Posts: 1153
Re: Where you keep short term savings
« Reply #3 on: October 26, 2021, 09:21:31 AM »
Chiming in to say I don't really bother setting aside money like this.  My taxable investing account I use as an overflow of my checking account.  I think it gets interest, but it's not much. 

Also chiming in to say in 2020 I replaced a dishwasher that was built in 1985 (35 years), but I did things to it in 2012 or so that most people wouldn't bother.  I put the new on a credit card, and more or less cash flowed it.  Actually I think by the time the CC bill hit, our stimulus covered it.  Our refrigerator is from the mid 90's, so 26 years old?

Assuming your appliances will need replaced every 15 years is great for budgeting, but actually setting that money aside in a low-earning account for theirr eventual replacement seems suboptimal to me.

KYFIRE

  • 5 O'Clock Shadow
  • *
  • Posts: 98
Re: Where you keep short term savings
« Reply #4 on: October 26, 2021, 10:15:36 AM »

Assuming your appliances will need replaced every 15 years is great for budgeting, but actually setting that money aside in a low-earning account for theirr eventual replacement seems suboptimal to me.

HA.  I don't think you're wrong but in the last 2 years I've replaced:  Patio door, HVAC, hot water heater, washer/dryer, and a roof!  Now as I replace things I don't buy the cheapest and hopefully better installed than original.   Still coming up though are 6 windows, front door frame apparently has warped, chimney needs repairs, oven doesn't heat to right temp anymore, and the range top has a massive crack in it.  All this on a house that was built in 2006.

Basically, even though I bought a "nice" house, it seems the people who build them do so like they're throwing together a cheap starter home.  *Example:  So far I've found 2 windows that were only held in with caulking.

Anyhow, thanks for the other responses.  I of course am not expecting to make a bunch of money, just wasn't sure if anyone had a way that's worked for them.  Really I already set aside money in Betterment for escrow and "emergency" but usually just pay from my bonus (comes right at tax time) or checking account.  So it really just becomes indirect savings of my surplus income at this point.

FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1792
  • Age: 47
  • Location: Canada
    • Chop Wood Carry FIRE
Re: Where you keep short term savings
« Reply #5 on: October 26, 2021, 11:12:32 AM »
We are using Series I Bonds for medium term, and "high" interest savings for regular emergency fund.  Here (in Canada) I can get 1.25% on CAD and 1% on USD in HISA.

Roots&Wings

  • Handlebar Stache
  • *****
  • Posts: 1555
Re: Where you keep short term savings
« Reply #6 on: October 26, 2021, 11:27:28 AM »
We are using Series I Bonds for medium term, and "high" interest savings for regular emergency fund.  Here (in Canada) I can get 1.25% on CAD and 1% on USD in HISA.


Hi @FLBiker do you mind sharing where you're getting those rates?

FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1792
  • Age: 47
  • Location: Canada
    • Chop Wood Carry FIRE
Re: Where you keep short term savings
« Reply #7 on: October 27, 2021, 09:59:20 AM »
We are using Series I Bonds for medium term, and "high" interest savings for regular emergency fund.  Here (in Canada) I can get 1.25% on CAD and 1% on USD in HISA.


Hi @FLBiker do you mind sharing where you're getting those rates?

Sure thing -- I use EQ Bank.  Let me just log in to confirm I'm telling the truth...  Yep, currently earning 1.25% on CAD and 1% on USD.  Here's a referral link if you're interested: https://join.eqbank.ca?code=DAVID6381
« Last Edit: October 27, 2021, 10:01:57 AM by FLBiker »