Author Topic: WWMMMD - Credit Union Savings Account Question  (Read 3566 times)

HairyUpperLip

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WWMMMD - Credit Union Savings Account Question
« on: May 05, 2014, 04:56:06 PM »
Hello,

My wife and I both have a special savings account that pays 5% on $500. After that, it's less than Ally. I forget the rate on the over $500 amount.

The payout is every quarter and hardly feels worth it to me anymore. I don't touch the money, so I feel like it would serve me better elsewhere.

I was debating closing both accounts and using that $1000 towards stocks.

Note - initially the $1000 was our Emergency Fund but we've since built up $5000 as an Emergency Fund in an Ally savings account. The interest on there is minimal of course.

So - What Would MMM Do?  :)

Argyle

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #1 on: May 05, 2014, 06:53:46 PM »
Surely it's useful to have $1000 or even $500 in emergency funds handy?  What happens if an unexpected expense comes down the pipeline?  You don't want to have to sell stocks, maybe disadvantageously, just to pay for a root canal or a leak in the roof.

HairyUpperLip

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #2 on: May 05, 2014, 07:14:38 PM »
Surely it's useful to have $1000 or even $500 in emergency funds handy?  What happens if an unexpected expense comes down the pipeline?  You don't want to have to sell stocks, maybe disadvantageously, just to pay for a root canal or a leak in the roof.

if that happened I would tap into the $5000 Emergency Fund

Are you suggesting I maintain 2 (technically 3) emergency fund accounts?

Argyle

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #3 on: May 05, 2014, 08:41:29 PM »
Why wouldn't you keep $4000 in the Ally account and $1000 in the high-interest-paying credit union account?  Or if the interest on the Ally account is minimal, why not move it all to the credit union?  That seems obvious, so maybe I'm missing something.

The bottom line is: you need some emergency money handy.  If there's an account that will pay good interest, keep it in that account.

HairyUpperLip

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #4 on: May 06, 2014, 05:36:13 AM »
Why wouldn't you keep $4000 in the Ally account and $1000 in the high-interest-paying credit union account?  Or if the interest on the Ally account is minimal, why not move it all to the credit union?  That seems obvious, so maybe I'm missing something.

The bottom line is: you need some emergency money handy.  If there's an account that will pay good interest, keep it in that account.

The credit union only offers 5% on $500
we have 2 accounts with $500 each

I have $5000 in a different savings account


that total is $6000


I'm debt free - not currently paying any rent or mortgage. I'm okay with $5k to cover any emergencies.

HairyUpperLip

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #5 on: May 06, 2014, 10:47:39 AM »
Any other opinions or thoughts?

My $1000 in stocks would be lumped into my current portfolio which is only at $2100 right now.

Let me know if I need to clarify anything else? Thanks guys!

Heart of Tin

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #6 on: May 06, 2014, 11:46:17 AM »
Surely it's useful to have $1000 or even $500 in emergency funds handy?  What happens if an unexpected expense comes down the pipeline?  You don't want to have to sell stocks, maybe disadvantageously, just to pay for a root canal or a leak in the roof.

if that happened I would tap into the $5000 Emergency Fund

Are you suggesting I maintain 2 (technically 3) emergency fund accounts?

Sure. Why not? That's $50 in interest you can transfer to your investment account every year. A guaranteed 5% interest rate is incredible.

seattlecyclone

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #7 on: May 06, 2014, 11:48:35 AM »
Keeping the credit union accounts open adds a little bit of complexity to your financial life, but it also nets you $50/year (before taxes). Only you can decide whether it's worth the trade.

HAULIN3

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #8 on: May 06, 2014, 01:32:00 PM »
I consider my emergency fund for expenses to get me by for 3-6 months... I will have $12,000 in an emergency fund.

HairyUpperLip

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Re: WWMMMD - Credit Union Savings Account Question
« Reply #9 on: May 06, 2014, 02:07:14 PM »
Sure. Why not? That's $50 in interest you can transfer to your investment account every year. A guaranteed 5% interest rate is incredible.

That's true. I never even really think about transferring it due the small amounts. I guess if I did it once a year it doesn't seem like such a large chunk.

Keeping the credit union accounts open adds a little bit of complexity to your financial life, but it also nets you $50/year (before taxes). Only you can decide whether it's worth the trade.

The complexity is minimal... They are open and funded. Only "work" I do is log the interest payments on my spreadsheet, haha. Otherwise it's completely hands off. Thanks for the input. I believe I will let it be. :)

I consider my emergency fund for expenses to get me by for 3-6 months... I will have $12,000 in an emergency fund.

My bare minimum to live right now is only about $1500 a month. I'm living rent/mortgage/debt free currently. This is only until we save enough to purchase our house. Once we get into the home, I plan to reevaluate the emergency fund and adjust it accordingly.  Thanks for the advice.
« Last Edit: May 06, 2014, 02:12:01 PM by HairyUpperLip »