Author Topic: Where to put emergency fund?  (Read 12098 times)

Rein1987

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Where to put emergency fund?
« on: March 02, 2015, 08:03:30 PM »
My husband and I are thinking of putting 50k - 100k to low risk investment as emergency fund in case of both of us losing jobs for a year. Currently, most money is sitting in the bank account, with very little interest. We thought this is not wise, since this is a large amount of money. Now, I have two options:

- Buy short term vanguard bond fund. I believe short term bond fund has very low risk, even the interest rate is going to rise. Vanguard is also very convenient in case we need the money..3 days without transaction fee to my checking account.
- Online bank saving account. Maybe I can get something like 0.9% APY. But I have never used online bank. I do not know whether there will be a lot of transaction cost if I want to withdraw a large amount of money. I know some bank has $3000 ACH monthly limit, and high wiring fee...

Is there any better place to put the emergency money?

(p.s. besides the emergency fund, we are very aggressive in investing in stock index)

TheThirstyStag

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Re: Where to put emergency fund?
« Reply #1 on: March 02, 2015, 08:48:13 PM »
How liquid do you want your emergency fund to be?  If you want access to it within a few business days, I think an online bank such as capitalone360 or ally is the way to go.

cbgg

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Re: Where to put emergency fund?
« Reply #2 on: March 02, 2015, 08:59:07 PM »
I'm not sure where you should put the money over all, but I just wanted to chime in in favour of online banks in general (if that's what you do decide is best for you.)  In general, they are very low fee, low hassle, and have higher than industry average interest.  Ally is a good option for an online bank if you are in the USA.  If you are in Canada I suggest PC Financial or Tangerine.

MDM

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Re: Where to put emergency fund?
« Reply #3 on: March 02, 2015, 09:13:53 PM »
How liquid do you want your emergency fund to be?  If you want access to it within a few business days, I think an online bank such as capitalone360 or ally is the way to go.
+1

Another option is GE Capital Bank.  No transaction cost, money transfer to/from checking account in 1-3 business days, $250K daily transfer limit, 1.05% interest.
« Last Edit: March 02, 2015, 09:17:22 PM by MDM »

gomike

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Re: Where to put emergency fund?
« Reply #4 on: March 02, 2015, 09:25:58 PM »
My wife and I both have a Mango account, they pay 6% interest on 5k minus $3 fee per month, making net interest 5% 

GGNoob

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Re: Where to put emergency fund?
« Reply #5 on: March 02, 2015, 09:29:47 PM »
My opinion would be one of the following...

Vanguard Target Retirement Income
Vanguard Lifestrategy Income
Vanguard Lifestrategy Conservative Growth
Vanguard Wellesley Income Fund

I went with Wellesley myself. You'll have your money only 1-2 days slower than an online bank and that shouldn't matter if you have credit cards to use while you wait.



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Rein1987

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Re: Where to put emergency fund?
« Reply #6 on: March 02, 2015, 10:03:28 PM »
How liquid do you want your emergency fund to be?  If you want access to it within a few business days, I think an online bank such as capitalone360 or ally is the way to go.
+1

Another option is GE Capital Bank.  No transaction cost, money transfer to/from checking account in 1-3 business days, $250K daily transfer limit, 1.05% interest.

Wow, this sounds great. I'll check this out.

Rein1987

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Re: Where to put emergency fund?
« Reply #7 on: March 02, 2015, 10:05:55 PM »
My opinion would be one of the following...

Vanguard Target Retirement Income
Vanguard Lifestrategy Income
Vanguard Lifestrategy Conservative Growth
Vanguard Wellesley Income Fund

I went with Wellesley myself. You'll have your money only 1-2 days slower than an online bank and that shouldn't matter if you have credit cards to use while you wait.



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I am considering Vanguard fund, too. A few days are not bad for me as I will always have a few thousands at checking account to pay bills, and several credit cards available...

MikeBear

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Re: Where to put emergency fund?
« Reply #8 on: March 02, 2015, 11:43:37 PM »
My Vanguard ROTH IRA (VGSIX) is my emergency fund, along with a credit card. You can pull out your direct contributions at any time, with NO penalty. Not that you want to, except in the case of an emergency, but hey, that's what we are talking about...

It does a heck of a lot better than my former "high yield" .2% account at my credit union...

Scandium

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Re: Where to put emergency fund?
« Reply #9 on: March 03, 2015, 06:43:40 AM »
What about a CD ladder? Can get around 2%+ for 5-10 year CD. Or I-bonds. They pay zero interest now, but do give 1.5% due to being linked to CPI. Best case being you track inflation isn't great, but not the worst you can do while holding cash.

Rein1987

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Re: Where to put emergency fund?
« Reply #10 on: March 03, 2015, 12:24:25 PM »
What about a CD ladder? Can get around 2%+ for 5-10 year CD. Or I-bonds. They pay zero interest now, but do give 1.5% due to being linked to CPI. Best case being you track inflation isn't great, but not the worst you can do while holding cash.

Have never done CD ladder before, but I guess it's too much trouble for a 1-year emergency fund ? (I need to do 60 CDs for 5 years?)

Tim1965

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Re: Where to put emergency fund?
« Reply #11 on: March 03, 2015, 12:38:40 PM »
If you own a house (and especially if you have a mortgage on that house), you should think about getting a $100,000 (or whatever) home equity line of credit.

The idea being, you never touch it unless you need it--the HELOC itself becomes your emergency fund.

Now all that cash you've got sitting in the bank earning nothing goes right toward the mortgage.

MMM himself wrote about this strategy here: http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/

I used the idea myself and now the mortgage that I'd been planning to pay off in a few years I will now pay off this month.




Rein1987

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Re: Where to put emergency fund?
« Reply #12 on: March 03, 2015, 02:48:32 PM »
If you own a house (and especially if you have a mortgage on that house), you should think about getting a $100,000 (or whatever) home equity line of credit.

The idea being, you never touch it unless you need it--the HELOC itself becomes your emergency fund.

Now all that cash you've got sitting in the bank earning nothing goes right toward the mortgage.

MMM himself wrote about this strategy here: http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/

I used the idea myself and now the mortgage that I'd been planning to pay off in a few years I will now pay off this month.

We have a HELOC open, but it's still a loan...We do not like taking loan as emergency fun, especially I'm thinking of the situation both my husband and I lose jobs. It's even worse than credit card because the interest starts accumulate the first day you withdraw the money. Also, the home value may decrease in case of recession. The bank may close the HELOC if that happens.

Tim1965

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Re: Where to put emergency fund?
« Reply #13 on: March 03, 2015, 03:10:26 PM »

Quote
We have a HELOC open, but it's still a loan...We do not like taking loan as emergency fun, especially I'm thinking of the situation both my husband and I lose jobs. It's even worse than credit card because the interest starts accumulate the first day you withdraw the money. Also, the home value may decrease in case of recession. The bank may close the HELOC if that happens.

This is true, but the point is, if you have a mortgage, you're ALREADY paying, in reality, the interest that you fear you might have to pay in the hypothetical circumstance of you and your husband both losing your jobs.

Since we're on the MMM site, here's more wisdom from the man on this topic: http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Indexer

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Re: Where to put emergency fund?
« Reply #14 on: March 03, 2015, 06:26:48 PM »
My opinion would be one of the following...

Vanguard Target Retirement Income
Vanguard Lifestrategy Income
Vanguard Lifestrategy Conservative Growth
Vanguard Wellesley Income Fund

I went with Wellesley myself. You'll have your money only 1-2 days slower than an online bank and that shouldn't matter if you have credit cards to use while you wait.



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I am considering Vanguard fund, too. A few days are not bad for me as I will always have a few thousands at checking account to pay bills, and several credit cards available...

This is what I do.  I keep 3k in savings at CapitalOne 360 and then the rest in a conservative Vanguard fund.  I personally use the lifestrategy income fund. 

80%bonds/20% stocks normally gives you a better risk/reward trade off than 100% bonds, but you are still very safe in a crisis.  The Lifestrategy income fund was down about 10.5% in 2008, and that is the only year it has been down.  One way to look at that is if you have a 6 month emergency fund, or 180 DAY emergency fund you would lose 19 days worth of expenses if it went down 10.5%.  The cash in your savings will probably cover that if you have low expenses, or just keep a 6 1/2 month emergency fund.

Dimitri

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Re: Where to put emergency fund?
« Reply #15 on: March 07, 2015, 08:51:17 PM »
The thread about where to keep an emergency fund seems to come up relatively frequently.  Really the question is where to keep liquid/near liquid assets.  You know, the funds you will need to deal with life’s little problems sooner or later.  And there are lots of good choices.  A lot of it just depends on how soundly you like to sleep.  But none of them are appropriate for an emergency fund.

In a real emergency whether your FRNs are three days away or a half hour away won’t matter.  A real emergency necessitates real money – not pieces of paper.  That is when you will want to be able to place your hands on Sovereigns, Krugerrands, Eagles or some other recognizable bullion coin.

Think last plane out of Saigon type of emergency (and you don’t work for Citibank Saigon).  FRNs will be good for few things.  Buying your ticket out won’t be one of them.

xenon5

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Re: Where to put emergency fund?
« Reply #16 on: March 07, 2015, 09:32:55 PM »
My Vanguard ROTH IRA (VGSIX) is my emergency fund, along with a credit card. You can pull out your direct contributions at any time, with NO penalty. Not that you want to, except in the case of an emergency, but hey, that's what we are talking about...

It does a heck of a lot better than my former "high yield" .2% account at my credit union...

I wouldn't say there's no penalty to withdrawing from your Roth IRA.  The penalty is that you can't put the money back in after it's been taken out.  Your potential contribution is a fixed amount every year adjusted for inflation, so you lose the potential tax-free gains.

xenon5

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Re: Where to put emergency fund?
« Reply #17 on: March 07, 2015, 09:54:17 PM »
My wife and I both have a Mango account, they pay 6% interest on 5k minus $3 fee per month, making net interest 5%

What are some of the catches with this service?  It sounds good but their website is a bit vague.  For example, they say that you must set up direct deposit to get the 6% interest and meet a "minimum amount" for DD in the agreement, but I don't see any indication of what the minimum amount is on a monthly basis (beyond the $50 in 90 days for the $20 promotion).  Also, what options do you have for withdrawing the money?
« Last Edit: March 07, 2015, 09:59:48 PM by xenon5 »

Indexer

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Re: Where to put emergency fund?
« Reply #18 on: March 08, 2015, 09:25:57 AM »
My wife and I both have a Mango account, they pay 6% interest on 5k minus $3 fee per month, making net interest 5%

What are some of the catches with this service?  It sounds good but their website is a bit vague.  For example, they say that you must set up direct deposit to get the 6% interest and meet a "minimum amount" for DD in the agreement, but I don't see any indication of what the minimum amount is on a monthly basis (beyond the $50 in 90 days for the $20 promotion).  Also, what options do you have for withdrawing the money?

I saw something about this in another emergency fund topic, and just opened an account myself.  I'm waiting on bank verification so I haven't funded it yet.  I looked over their website in detail.  It looks like...
* You have to open the prepaid debit card.  Costs $3/month.
* Set up direct deposit of $50 in first 90 days, and as a side bonus it looks like they give you a $20 bonus when you do that.
* Once the debit card is funded you can start transferring to the savings account.  It starts off at 2% interest, but they bump it to 6% once you have direct deposit.

Looks like interest net of fees assuming a 5k balance is around 5.58% in the first year(thanks to the $20 bonus), and 5.28% going forward.

The fine print from their website:
Quote from: MangoMoney
† The Annual Percentage Yield (APY) and the APY comparison as advertised are effective as of July 15, 2014. Rates are subject to change at any time and may change after accounts are opened. The APY advertised applies only to the portion of your savings account balance, which is $5,000.00 or less; or 2.00% if you are not on Direct Deposit Service. An APY of 0.10% will be paid on the portion of your savings account balance that exceeds $5,000.00. Fees could reduce the earnings on your savings account. Please see the Savings Account Customer Agreement for full disclosures.

Retire-Canada

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Re: Where to put emergency fund?
« Reply #19 on: March 08, 2015, 09:36:36 AM »

Is there any better place to put the emergency money?

(p.s. besides the emergency fund, we are very aggressive in investing in stock index)

Yes. Put the EF in the stock index. Get a line of credit that covers 3-6 months of minimal expenses.

The likelihood of both of you losing your jobs at the same time and neither of you being able to get any paying work after several months is so unlikely do you want to punish yourself with the lost investment growth you get from being out of the market?

The LOC is free until you need it and should have a low interest rate for those rare occasions when you might need it.

-- Vik

khizr

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Re: Where to put emergency fund?
« Reply #20 on: March 08, 2015, 02:41:58 PM »
We keep 30k of our emergency fund in cash, and 50k in betterment with 60% stocks / 40% bonds.

GGNoob

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Re: Where to put emergency fund?
« Reply #21 on: March 08, 2015, 03:09:11 PM »

We keep 30k of our emergency fund in cash, and 50k in betterment with 60% stocks / 40% bonds.

Why not just invest it all with a more conservative allocation? With what you have above, your EF is 37.5% stock.


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MrSpendy

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Re: Where to put emergency fund?
« Reply #22 on: March 08, 2015, 09:30:05 PM »
I am a big proponent of i-bonds held at the US Treasury via treasurydirect.gov. You can buy $10K / year. 

I-bonds are the world's best relative value in fixed income. They are TIPs that don't have duration risk or any mark to market risk since they are not a security. No credit risk either. I use them as my emergency fund and also consider them my bond allocation.

Interest/Coupon:
nominal rate ( currently 0%) + official inflation rate

Liquidity: None in year 1 (locked in), 3 months interest penalty in yrs 1-5, no penalty thereafter

Term: 1-30 yrs (you can hold them for up to 30 yrs).

Taxation: deferred until redemption

After year 1, this is "inflation linked cash". They earn a pre-tax real return of 0% with no duration or credit risk; this is very good in today's bond world. They are both an inflation hedge and a deflation hedge because their principal can never go down; unlike a seasoned TIP you can't lose principal and interest if deflation happens.

http://blogs.wsj.com/wallet/2008/12/12/how-deflation-would-affect-tips-and-i-bonds/

New issue 5 yr TIPs yield about 0% so almost the same as i-bonds, but they have a little more duration (since the principal payment is 5 yrs away, rising interest rates would still affect them a little, and worse tax treatment.

I also don't need more emergency savings than what I already have built over the past few years with the $10k/yr limit.

Bicycle_B

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Re: Where to put emergency fund?
« Reply #23 on: March 09, 2015, 04:43:18 PM »
I am a big proponent of i-bonds held at the US Treasury via treasurydirect.gov. You can buy $10K / year. 

I-bonds are the world's best relative value in fixed income. They are TIPs that don't have duration risk or any mark to market risk since they are not a security. No credit risk either. I use them as my emergency fund and also consider them my bond allocation.

Interest/Coupon:
nominal rate ( currently 0%) + official inflation rate

Liquidity: None in year 1 (locked in), 3 months interest penalty in yrs 1-5, no penalty thereafter

Term: 1-30 yrs (you can hold them for up to 30 yrs).

Taxation: deferred until redemption

After year 1, this is "inflation linked cash". They earn a pre-tax real return of 0% with no duration or credit risk; this is very good in today's bond world. They are both an inflation hedge and a deflation hedge because their principal can never go down; unlike a seasoned TIP you can't lose principal and interest if deflation happens.

http://blogs.wsj.com/wallet/2008/12/12/how-deflation-would-affect-tips-and-i-bonds/

New issue 5 yr TIPs yield about 0% so almost the same as i-bonds, but they have a little more duration (since the principal payment is 5 yrs away, rising interest rates would still affect them a little, and worse tax treatment.

I also don't need more emergency savings than what I already have built over the past few years with the $10k/yr limit.

+1

Saving in Austin

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Re: Where to put emergency fund?
« Reply #24 on: March 09, 2015, 06:30:11 PM »
I have used Reward Checking Accounts for the past 10 years:
https://www.depositaccounts.com/checking/reward-checking-accounts.html

I am currently receiving 2.5% - 3.25% on three different accounts in Texas.
Each account has a limit of up to 15K or 25K at the reward interest rate.
Each comes with a debit card that must be used 10 - 12 times per month.
6 or 7 years ago these account paid 4% and higher.
These accounts are completely liquid and I am currently getting around $130 per month in interest.

Doulos

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Re: Where to put emergency fund?
« Reply #25 on: March 09, 2015, 07:00:09 PM »
My advice is sorta half on topic.
$50-100k?  Seriously?
You are still paying a mortgage and you want to keep 50-100k liquid?

What you need is an emergency budget.  If you both lose your jobs; you should not be spending 50-100k over the next year.
And as previously mentioned here...

Quote
...here's more wisdom from the man on this topic: http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

zurich78

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Re: Where to put emergency fund?
« Reply #26 on: March 09, 2015, 07:39:21 PM »
To me, my emergency fund is designed to cover me for unexpected events that could happen.  Not the absolute worst case scenario that will in almost all likelihood not happen.

That's why I think your EF should be liquid.  Keep just enough to get you through MOST of life's emergencies.  Invest everything else.  For me, I keep one year of mortgage payments in my EF and everything else invested.

DavidAnnArbor

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Re: Where to put emergency fund?
« Reply #27 on: March 09, 2015, 10:16:23 PM »
The I-Bonds are great and I also use them as my bond allocation as well as conceivably an emergency fund. Fortunately, I bought them back in 2002/2003 so there's a fixed rate component of between 1% - 1.5% above the inflation rate.

Online bank accounts can get you 1% interest and I use this too.

I also have bond index funds with Vanguard which are very stable.

Rein1987

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Re: Where to put emergency fund?
« Reply #28 on: March 10, 2015, 10:00:43 AM »
My advice is sorta half on topic.
$50-100k?  Seriously?
You are still paying a mortgage and you want to keep 50-100k liquid?

What you need is an emergency budget.  If you both lose your jobs; you should not be spending 50-100k over the next year.
And as previously mentioned here...

Yes, we are still paying mortgage, which together with property tax is about 50k a year (Bay area crazy house market..), so I think I need at least 50k emergency fund..And for emergency case, we want to be conservative.


Scandium

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Re: Where to put emergency fund?
« Reply #29 on: March 10, 2015, 11:05:24 AM »
Maybe I'm an worry-worth idiot, but I think I'll ignore all the advise here to invest all your money and to take out a loan if something bad happens. I'd like to check back on this tread after the next downturn, vs now after 6 years of soaring stocks.. :/

So maybe I loose out on $15k in gains over 10 years by having that cash in the bank (assuming 7.2% pa). But that's less than one year of 401k contributions! Not really that much to pay for 100% safety. And a tiny part of my portfolio at that point too

Doulos

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Re: Where to put emergency fund?
« Reply #30 on: March 10, 2015, 11:55:03 AM »
Scandium, I am on the same side there.  But it is the amount, and the timing.
1) 6 months for me.  with an emergency budget.  That totals $12k.
2) we keep cash on hand in the bank and expense accounts to ensure we do not have to worry about when a pay check or bill hits.  So that is roughly $8k.
That is $20k total.  Which I think is very reasonable.

The emergency fund is about reducing stress.

But here is the But.  No-debt.
It is absolutely crazy to carry debt and then an emergency fund to fund your debt payments.
Just use that extra money to pay down your debt.

Mortgage included.  Just look at Rein here.  So worried about this debt hanging over their head that they want to keep 50k-100k in cash just in case they both simultaneously lose their jobs to maintain debt payment on that house.
If that does not show you the stress this debt slavery is putting on you, I do not know how to better explain it.

Keep a reasonable emergency fund to survive.  But That debt is an emergency; Attack!  with everything you got.

Scandium

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Re: Where to put emergency fund?
« Reply #31 on: March 10, 2015, 12:12:46 PM »
Credit card debt yes, but a mortgage is not the same. A ~4% mortgage is government-subsidized, tax advantage inflation hedge. A leverage shorting of the dollar, with help from uncle sam! I'm not paying that back any faster than I need to. Perhaps only the day I FIRE if I have to cash, just to reduce my expenses. Throwing my $15k cash at my $300k mortgage does me very little good at this point.

And having cash on hand for mortgage payments give me liquidity, for example for other emergencies. A paid off house is no help with a huge medical bill..

GGNoob

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Re: Where to put emergency fund?
« Reply #32 on: March 10, 2015, 01:18:04 PM »
Credit card debt yes, but a mortgage is not the same. A ~4% mortgage is government-subsidized, tax advantage inflation hedge. A leverage shorting of the dollar, with help from uncle sam! I'm not paying that back any faster than I need to. Perhaps only the day I FIRE if I have to cash, just to reduce my expenses. Throwing my $15k cash at my $300k mortgage does me very little good at this point.

And having cash on hand for mortgage payments give me liquidity, for example for other emergencies. A paid off house is no help with a huge medical bill..

Exactly.

Doulos

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Re: Where to put emergency fund?
« Reply #33 on: March 10, 2015, 02:22:45 PM »
Every $1k sitting around in an emergency fund getting you 1% + 1k debt losing you -4%
is 3% worse than just paying it.

And the point there is really the stress reduction of deleting that house payment forever.

Your regular old emergency fund can handle giant medical bills even with high end HSA deductibles.  And you should be putting tax free money aside to that anyway.
If you do not have an HSA, then this huge medical bill is a complete myth.

We have a high HSA deductible and our combined max is only 8k per year.  Anyone talking about putting money like 50k into an emergency fund is way way outside the worry about huge medical bills.

Scandium

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Re: Where to put emergency fund?
« Reply #34 on: March 10, 2015, 02:35:16 PM »
I feel no "stress" from having a house payment. If I had a portfolio equal to my mortgage and paid it off I'd feel much worse for having not a single liquid dollar to my name! But this is money we're talking about so we should strive to keep emotions out of it in any case. Min/max ftw..

And I'm talking about a $15-20k fund (in an expensive area). Not 50k. I consider that a small drag even for my modest portfolio ($200k or so), that will rapidly become a smaller percentage. Just to keep me from having to take on CC or HELOC debt if I need some cash at a bad time. Worth it to me. If it's not to you then good for you.

Rein1987

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Re: Where to put emergency fund?
« Reply #35 on: March 10, 2015, 02:49:15 PM »
Scandium, I am on the same side there.  But it is the amount, and the timing.
1) 6 months for me.  with an emergency budget.  That totals $12k.
2) we keep cash on hand in the bank and expense accounts to ensure we do not have to worry about when a pay check or bill hits.  So that is roughly $8k.
That is $20k total.  Which I think is very reasonable.

The emergency fund is about reducing stress.

But here is the But.  No-debt.
It is absolutely crazy to carry debt and then an emergency fund to fund your debt payments.
Just use that extra money to pay down your debt.

Mortgage included.  Just look at Rein here.  So worried about this debt hanging over their head that they want to keep 50k-100k in cash just in case they both simultaneously lose their jobs to maintain debt payment on that house.
If that does not show you the stress this debt slavery is putting on you, I do not know how to better explain it.

Keep a reasonable emergency fund to survive.  But That debt is an emergency; Attack!  with everything you got.

I'm on a 7/1 ARM with only 2.375 interest, so I do not want to pay off the mortgage now. With tax benefit, it's less than 2% interest. Maybe, after 7 years, if the interest rate go up to 5% and above, I'll more aggressively pay down the mortgage. We also have a car loan at 0.9%. I do not think I need to worry too much about these debt with such low interest, but invest all the money.

I totally agree with you that having a mortgage makes me feel not very safe that I have to put a large amount of emergency fund. But with current low interest rate, I prefer to invest the money now and maybe one day pay off the mortgage by a lump sum (at the FIRE date or interest rising date).

Doulos

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Re: Where to put emergency fund?
« Reply #36 on: March 10, 2015, 02:57:39 PM »
Scandium, This topic is specifically for Rein1987's situation.

It is about a $50-100k emergency fund.
That fund is specifically to cover mortgage debt.

Thus the advice is about that situation.  "Where to put emergency fund?"
Which is why I am saying to drop that emergency fund down to or under the $20k range.  Where to put that?  Bank.  Capital360, etc.
Where to put the other $30-70k?  Pay off mortgage debt.

And Car debt too!  Pay that off!
Please Tell me you at least paid off your credit cards.

If you absolutely want to play Russian Roulette with that debt; just invest that extra money. 
        Extra liquid emergency fund sitting around worried about a possible mortgage payment is just a bad plan.

Rein1987

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Re: Where to put emergency fund?
« Reply #37 on: March 10, 2015, 03:19:29 PM »
Scandium, This topic is specifically for Rein1987's situation.

It is about a $50-100k emergency fund.
That fund is specifically to cover mortgage debt.

Thus the advice is about that situation.  "Where to put emergency fund?"
Which is why I am saying to drop that emergency fund down to or under the $20k range.  Where to put that?  Bank.  Capital360, etc.
Where to put the other $30-70k?  Pay off mortgage debt.

And Car debt too!  Pay that off!
Please Tell me you at least paid off your credit cards.

If you absolutely want to play Russian Roulette with that debt; just invest that extra money. 
        Extra liquid emergency fund sitting around worried about a possible mortgage payment is just a bad plan.

No, we do not have any credit card debt at all :)

A 16k car loan @ 0.9% and a 2.375% mortgage loan is all debt we have.

Scandium

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Re: Where to put emergency fund?
« Reply #38 on: March 10, 2015, 07:51:21 PM »
Ok, sure. I would not pay off mortgage. How is debt "Russian Roulette"? Pay of the car though, that's a pointless loan.

The rest? Like I said before buy five 5 year CDs or something (you don't need 60 like you said before). Just find some you can break. Or $20k in I bonds each year.

Rein1987

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Re: Where to put emergency fund?
« Reply #39 on: March 10, 2015, 11:02:10 PM »
Ok, sure. I would not pay off mortgage. How is debt "Russian Roulette"? Pay of the car though, that's a pointless loan.

The rest? Like I said before buy five 5 year CDs or something (you don't need 60 like you said before). Just find some you can break. Or $20k in I bonds each year.

I feel there's no need to pay off loan with lower interest when there's high interest loan...

I misunderstood CDs...so yes, 5 year CD does sound a great plan...(I do not fully understand I bond though. I'll do some study myself)

Schaefer Light

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Re: Where to put emergency fund?
« Reply #40 on: March 11, 2015, 06:06:08 AM »
In the event that they both lost their jobs, I can see why they'd want to have $50k in an emergency fund.  Finding a new job can take quite a while.  They could use some of their EF to pay down debt, but that strategy could backfire if they both got fired tomorrow.  I like to keep at least 6 months worth of current monthly expenses (including mortgage and any other debt payments) in our EF at all times.  And we keep our EF in savings accounts.