Author Topic: Where do you keep your emergency reserve?  (Read 10658 times)

buffaloe

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Where do you keep your emergency reserve?
« on: May 13, 2015, 04:11:15 AM »
I was just reading the thread about how large your emergency reserve should be and not wanting to hijack it, I am posting a new question here to ask where you keep your emergency reserves?  With savings interest rates being just abysmal, it's hard to know where to keep that fund so that it's not just sitting there being lazy... I want my money to work for me, haha!  :)  Right now I have an investment account with Ameriprise where I sell off some stock if I need cash pretty quickly (usually two weeks) but I thought I would check to see if anyone else had better options.

Cezil

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Re: Where do you keep your emergency reserve?
« Reply #1 on: May 13, 2015, 05:25:47 AM »
I keep mine in an online high yield savings account (Barclays).  It's out of sight and out of mind (except for automatic contributions each pay check, which I see happen every 2 weeks) so there is zero temptation to use any of it for little things here or there, which was a huge problem for me when the account was with my regular everyday bank.  Having that extra "layer" to get to the cash makes it less of a spontaneous-purchase crutch.

Retired To Win

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Re: Where do you keep your emergency reserve?
« Reply #2 on: May 13, 2015, 05:57:22 AM »
...With savings interest rates being just abysmal, it's hard to know where to keep that [emergency reserve] fund so that it's not just sitting there being lazy... I want my money to work for me, haha!  :)...

I don't consider my Emergency Reserve Fund(s) to be part of my investments.  So I don't agonize much about whether they are providing a return.  The job of those particular little soldiers in my financial army is to stand ready in reserve ready to act in defense of my overall stash.

So, I keep about two thirds of the funds in a so-called high-yield savings account, and the rest in a checking account and as squirreled cash in the house.

Trifle

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Re: Where do you keep your emergency reserve?
« Reply #3 on: May 13, 2015, 06:00:35 AM »
High yield checking account -- currently at 2%

minority_finance_mo

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Re: Where do you keep your emergency reserve?
« Reply #4 on: May 13, 2015, 06:12:21 AM »
Mine is mixed between my checking and savings account. I use YNAB, so my day-to-day spending is mostly planned stuff so temptation isn't much of a problem.

ADK_Junkie

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Re: Where do you keep your emergency reserve?
« Reply #5 on: May 13, 2015, 07:03:29 AM »
First, you need to determine your risk tolerance for your emergency savings... which by nature of emergency savings, it should be very risk averse.

I have 6 months of expenses. Split 50/50 between Ally Bank Online High Yield Savings and in a separate taxable investment account (all in VTI).   Both remain out of sight and out of mind.

So I have a little risk here, but I figure the worst case scenario would be a 25-30% drop in VTI (on a sustained basis, I believe a 40-50% drop could occur but would likely recover very quickly), which really means I have about 5.1 months of expenses very secure (and in the worst case scenario).  I can sleep easily with this allocation.

Side note: while I'd like to build up my taxable investments, I am trying to max out all of the non-taxable accounts (and pay off debts).

Retire-Canada

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Re: Where do you keep your emergency reserve?
« Reply #6 on: May 13, 2015, 07:24:06 AM »
I keep my EF in three places:

1. $3K in bank account
2. $30K LOC [not home equity based]
3. Fuck You Money in investment accounts

I don't get any interest on the $3K, but the $30K LOC costs me nothing when I don't need to use it.

The FU$ is there to look after some crazy unforeseen situation that has never happened. It earns me money until I FIRE or need it.

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TomTX

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Re: Where do you keep your emergency reserve?
« Reply #7 on: May 13, 2015, 07:39:40 AM »
Half in an online high interest savings account.
Half in an I bond.

Note that the I bond is an older one, paying about 3%. Not one of the best,  but not bad.

Aaron L

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Re: Where do you keep your emergency reserve?
« Reply #8 on: May 13, 2015, 08:35:05 AM »
I have a few thousand in a checking account for easy access and the rest in my Roth IRA. Since you can withdraw Roth contributions at any time without penalty, it made sense to me to have that money working for me if possible. The downsides to this approach is that it can take a couple days to get the money and you really shouldn't touch Roth money unless you really need it as you have strict limits on how much you can contribute.  Luckily I haven't needed to withdraw any yet and we can always use a credit card to float the balance (then be immediately paid off) if necessary.

kpd905

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Re: Where do you keep your emergency reserve?
« Reply #9 on: May 13, 2015, 12:40:55 PM »
This year I decided to start signing up for checking account bonuses.  So part of our emergency fund is tied up in those for 6 months.

We have $8000 total tied up (one PNC and two Chase accounts) and we received $900 in bonuses.  Probably the best return I will ever find with no risk to my capital.

mikesinWV

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Re: Where do you keep your emergency reserve?
« Reply #10 on: May 13, 2015, 01:11:41 PM »
We have $8000 total tied up (one PNC and two Chase accounts) and we received $900 in bonuses.  Probably the best return I will ever find with no risk to my capital.

Would you mind sharing how you worked the PNC and Chase accounts in order to obtain that bonus?

Thanks

kpd905

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Re: Where do you keep your emergency reserve?
« Reply #11 on: May 13, 2015, 01:59:47 PM »
PNC: Put in $50 to start, set up direct deposit.  You need $5000 worth of direct deposits and one online bill pay.  Keep $5000 in for 6 months to avoid fees.

Chase: Put in at least $25 to start. Set up direct deposit.  Get $300 after one direct deposit.  Keep $1500 in for 6 months to avoid fees.

With Chase I plan to close both accounts around the 7-8 month mark and then reopen them for another bonus whenever I find another $300 coupon.

cschx

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Re: Where do you keep your emergency reserve?
« Reply #12 on: May 13, 2015, 02:23:27 PM »
And for those getting 2% or better on a savings account, would you mind sharing the name of the bank? I can't find anything close to that.

ozzage

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Re: Where do you keep your emergency reserve?
« Reply #13 on: May 13, 2015, 02:27:18 PM »
In the UK you can get 3% in a normal account for up to £20K (and you can have two of the accounts) so that's convenient for our emergency fund and all other cash needs. It's all tracked in YNAB so it's just in one lump in the bank.

TheRabbit

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Re: Where do you keep your emergency reserve?
« Reply #14 on: May 13, 2015, 04:55:15 PM »
And for those getting 2% or better on a savings account, would you mind sharing the name of the bank? I can't find anything close to that.
+1

Debts_of_Despair

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Re: Where do you keep your emergency reserve?
« Reply #15 on: May 13, 2015, 05:18:56 PM »
High yield checking account -- currently at 2%

Would be interested to hear where this is happening.

Ally for me.

Jack

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Re: Where do you keep your emergency reserve?
« Reply #16 on: May 13, 2015, 06:00:26 PM »
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(Full disclosure: I've been exploiting a series of 0% credit card balance transfer deals and one of them is about to end, so my savings account and brokerage account currently have negligible amounts of cash in them because I feel like paying it off instead of rolling it into a new card again.)

handsnhearts

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Re: Where do you keep your emergency reserve?
« Reply #17 on: May 13, 2015, 06:09:29 PM »
I like the idea of using the bank bonuses. Did you earn the $900 over time, just repeatedly doing that?


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kpd905

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Re: Where do you keep your emergency reserve?
« Reply #18 on: May 13, 2015, 06:15:53 PM »
I like the idea of using the bank bonuses. Did you earn the $900 over time, just repeatedly doing that?

I earned the $900 over the last 2 months.  I'll be able to repeat the two Chase accounts every year if I want to.  I just started and I'm looking for more, but they are hard to find.  There is a $200 offer I found but it requires 15 debit transactions which seems like a pain.  I'm probably just going to do it anyway though.

The site I check is here: http://www.doctorofcredit.com/

handsnhearts

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Re: Where do you keep your emergency reserve?
« Reply #19 on: May 13, 2015, 06:43:36 PM »
That's a good site. I've been using it lately for other things. Thanks!


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Prepube

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Re: Where do you keep your emergency reserve?
« Reply #20 on: May 13, 2015, 07:09:25 PM »
Shoebox.

okobrien

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Re: Where do you keep your emergency reserve?
« Reply #21 on: May 13, 2015, 07:23:20 PM »
Prosper lending account.   If I ever need the money I will just turn off auto invest.

themagicman

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Re: Where do you keep your emergency reserve?
« Reply #22 on: May 13, 2015, 07:49:43 PM »
And for those getting 2% or better on a savings account, would you mind sharing the name of the bank? I can't find anything close to that.
+1

Lake Michigan credit union. I have been using their checking  account. Pays 3% up to $15k

buffaloe

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Re: Where do you keep your emergency reserve?
« Reply #23 on: May 14, 2015, 12:56:29 PM »
Wow, lots of great options! :D  I would also love to hear about other higher interest checking/savings.  Unfortunately I can't use the Michigan credit unions, darnit ;)  But thanks so much for the ideas!

LLCoolDave

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Re: Where do you keep your emergency reserve?
« Reply #24 on: May 14, 2015, 02:28:10 PM »
I had this same question about a year ago. I decided to keep $5k in cash and put $15k into VWELX. This is the Wellington fund. It is a balanced fund of 66/34 asset allocation. It has averaged 8% since 1929. For this AA the most it has gone down is around 33% so what you need to do is put in an extra 33% in case you need to take out the money during a market downturn.

Of course of this is predicated on your risk tolerance. I was making $250 per year on the $15k when I had it in a CD. I made $1k last year.

themagicman

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Re: Where do you keep your emergency reserve?
« Reply #25 on: May 14, 2015, 06:59:33 PM »
Wow, lots of great options! :D  I would also love to hear about other higher interest checking/savings.  Unfortunately I can't use the Michigan credit unions, darnit ;)  But thanks so much for the ideas!

Anyone can join for a $5 or $10 fee! I live in GA!

Retired To Win

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Re: Where do you keep your emergency reserve?
« Reply #26 on: May 15, 2015, 02:04:59 PM »
Shoebox.

Hah, hah!  BUT it just so happens that my "home cash" is tucked away inside DVD covers, and my silver coins are in a bag inside a BIG oatmeal container on the pantry shelf.

buffaloe

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Re: Where do you keep your emergency reserve?
« Reply #27 on: May 15, 2015, 02:23:44 PM »
Haha, those are great ideas since my shoebox is worn out :D 

And that's pretty interesting about being able to join MI credit unions from anywhere, thank you! 

I'm a red panda

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Re: Where do you keep your emergency reserve?
« Reply #28 on: May 15, 2015, 02:24:54 PM »
Guess it depends what the emergency is.  I have some in a checking account, but after that I would just withdraw from my investments. Just have to pay taxes on it.

Nudelkopf

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Re: Where do you keep your emergency reserve?
« Reply #29 on: May 15, 2015, 05:06:04 PM »
Shoebox.

Hah, hah!  BUT it just so happens that my "home cash" is tucked away inside DVD covers, and my silver coins are in a bag inside a BIG oatmeal container on the pantry shelf.
I was bored once and did the whole cut-out-book thing. So I have a book hidden on my bookshelf that I've cut out, and it's got cash inside. Only a few hundred though, just in case.

I keep $10k in a 3% account (Australia) as my emergency fund, and I have "holiday savings" building up in a 2% account.

ontario74

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Re: Where do you keep your emergency reserve?
« Reply #30 on: May 15, 2015, 05:54:25 PM »
Emergency funds split between a GIC (not a great rate but we all know that) and a savings account, which gets topped up every pay. It's a good chunk of money and I was advised to consider buying my own stocks with some of it, however I want to keep part of what I have liquid.

I move funds from the GIC and checking to my TFSA and RRSP to make sure they are maxed each year.

And yeah, I'm so grrr about the low interest rates.

Maxman

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Re: Where do you keep your emergency reserve?
« Reply #31 on: May 15, 2015, 06:01:46 PM »
I keep my emergency reserve at Betterment in a 40/60 equity/income account.

Vilgan

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Re: Where do you keep your emergency reserve?
« Reply #32 on: May 16, 2015, 11:40:02 PM »
a couple months in a CD, a couple months in my checking account, and more in my 401k traditional after tax that I can withdraw w/o penalty if I really need it.

Indexer

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Re: Where do you keep your emergency reserve?
« Reply #33 on: May 17, 2015, 05:13:49 PM »
MangoMoney:  6% savings account.

That rate is only good on 5k, but if your monthly spending is 2k then that is 5/6s of a 3 month emergency fund. ;)

The other 1k is just in the checking account. 

I only have the 3 month true EF, but I do keep another 3 months in pretty conservative investments 'just in case'.

Thrillhouse

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Re: Where do you keep your emergency reserve?
« Reply #34 on: May 18, 2015, 12:04:26 PM »
I'm the first?
http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

What this means for DW and I is we keep way more than 1 yr expenses in a taxable Vanguard acct (VTSAX & VTIAX), and meanwhile have way more than 1 yr expenses in my 401k - VBTIX and Stable Value.  The latter is paying 2.89 currently...so both are noticeably more than online savings paying 0.75.  Combined with us now being solidly in the 25% tax bracket (15% capital gains tax < 25% income tax on interest), and I'm trying to have almost nothing in our checking/online savings on principle. 

If SHTF, withdraw from the taxable account (VTSAX) and have it in two business days, and if I'm hand-wringing about moving out of the market, buy similar funds (Largecap & Mid/Smallcap CITs) within my 401k from VBTIX/stable value funds. 

Recommending similar to my mom with her Vanguard IRA/taxable accounts and the fact that when she starts drawing SS she'll be solidly in the 25% tax bracket as well. 

dess1313

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Re: Where do you keep your emergency reserve?
« Reply #35 on: May 18, 2015, 02:59:24 PM »
I have mine in a moderate savings account paying 1.05%, there's not a lot better in many places around me here (canada)  Its in a TFSA Savings account right now

I am getting near 5k in savings, and would like to gather another 5k before i call it sufficient for now.  I was thinking of using the Tangerine Balanced Income fund for the next 5k and the fund offers 70%bond/30%stocks and overall has been fairly stable.  This could also be in my TFSA.

Was thinking what others thought of the idea.  I would have 5k readily accessible via the savings account, which is about 2 months, plus i have a month of float in every account to keep the bank fees away.

buffaloe

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Re: Where do you keep your emergency reserve?
« Reply #36 on: May 20, 2015, 03:15:34 PM »
Wow, lots of things here that I have never heard of, thank you guys!

Hah, Nudelkopf that's hilarious that you made a cut out book... what shape did you make it into? :)  You should start a side project making those for people, I bet they would sell :)