where do you keep your EF?

Saving & investing, frugality & simple living. They're all part of the wealth equation.
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consultantjournal
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Postby consultantjournal » Sat Apr 28, 2007 2:21 pm

I've got a year of mortgage payments stashed in mutual funds. Yes, I realize that these could drop 20% or 40%. But this wasn't initially my emergency fund -- I've just made it my emergency fund after it has already appreciated 50%. Instead, I pushed my "liquid" emergency fund toward my mortgage. I can still pull that back out with a LOC, if I want. And I also have the mutual funds.
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Kate
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Postby Kate » Sun Apr 29, 2007 12:51 pm

We maintain a minimum balance of $2000 in our chequing account in order to avoid monthly charges. It doesn't pay interest but it does save me that $10 bucks each month, and it's available quickly if I need it. I have $1200 in a saving account that pays 4% interest. That's really all I have for an emergency fund right now but I'm adding to this account by about $100 per month.

We pay off our two credit cards every month so in a pinch we could use those or our untouched line of credit. It depends what the emergency was. If I lost my job, it would just be our savings that would be affected and we would have to readjust to saving from hubby's salary. If he lost his job it would be a little harder to deal with because he makes a lot more than I do. We could cut expenses quite a bit though.

If all else failed, we'd take money out of our RRSP's.

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Postby onebigmortarboard » Sun Apr 29, 2007 3:06 pm

All of my savings accounts are funded via direct deposit.

I keep $300-$500 in my credit union main savings account, which I refer to as my "overdraft" account. It's so named because I use it for instant transfers to checking or my credit cards if I have an unexpected expense that would a) put me under my checking threshold before my next pay period or b) require "clearing out" my outstanding credit balances to make room for a purchase. (I pretty much never worry about "b" anymore, as my credit limits have much increased.) If I get much above $500, I sweep the excess over to my proper emergency fund, as I just did this week.

I have my emergency fund at E-Trade. My transfers credit quickly, which I like, and there are branches if I need to speak to a person, which I also like. If you combine my holdings in my overdraft fund and my e-fund, I have about a month and a half of expenses covered. I'd like to eventually work up to three months (and beyond), but right now, I'm more focused on a full two months held in the e-fund and maintaining the $500 overdraft fund as a buffer. When I get to that point, I'll reevaluate my allotments and saving strategies.

My condo downpayment fund (held at Emigrant) is a backup emergency fund; it could cover an additional two months of expenses right now.

And as I noted this week, my leave balances at work are the equivalent of one month of paid leave. If I should "separate...for any reason," I would get a lump sum payment for my annual leave, which would still be about one month's worth of expenses after taxes.

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Postby Siobhan » Sun Apr 29, 2007 4:52 pm

We have about $10k in ING and $25k in savings bonds as our emergency funds. The ING account is on average growing but occasionally decreases, as it's also our vacation/housing repair fund.

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Postby nickel » Sun Apr 29, 2007 4:55 pm

We put $15k in CDs at PenFed around 3 years ago. We also keep a good bit on hand at HSBC. The amount fluctuates, but it's typically $15-25k. I've never viewed an of this as explicitly being our 'emergency fund' but I guess that's the role that it plays.

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benbr
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Postby benbr » Sun Apr 29, 2007 4:58 pm

Siobhan wrote:The ING account is on average growing but occasionally decreases, as it's also our vacation/housing repair fund.


We do the same thing. Our emergency fund is much smaller -- $1000. We have some mutual funds we could sell and get the cash fairly quickly. If it were really an emergency, our families might spot us a loan as well. But ING bank is the home for both the emergency fun and the vacation/home improvement fund. It takes a little mental energy to keep that straight, but not much.

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Postby Belandrew » Sun Apr 29, 2007 7:26 pm

I'm keeping a small amount in my local bank savings so it can be accessed easily in a hurry. Like many of you, the rest is combined with my other savings at ING.

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Postby plonkee » Mon Apr 30, 2007 11:08 am

Mine is in a postal access account (mini cash ISA), in an actual emergency I would use my credit cards and reimburse myself later as it takes about a week for the money to come through. The plan is to have 3 months salary (about 4 months expenses) in there, I'll be going under that amount when I buy my house, but should be back up within the year.

This fund also doubles as planned expenses fund, except that they are above the emergency fund level, if that makes sense.
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Angie
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Postby Angie » Mon Apr 30, 2007 5:50 pm

Our emergency funds are in savings accounts and (roughly) laddered CDs at our credit union.

We've got about $7K in the CDs earning 4 to 5.5%, and $3K total in our savings accounts (his, mine, joint) with maybe 1.25% interest.

The saving acct monies are our 'slush funds', when there's an unplanned necessary expense of intermediate cost (say $500 to 1K). Those withdrawals get reimbursed within a few months. These liquid funds are also useful when there's a cash flow hiccup on our rental house, like if we can't get to the bank with the rent checks before the mortgage gets withdrawn. That gets reimbursed within days.

The CDs are the real emergency stash. They'd pay the mortgage outright for ~5 months and would fund maybe 3 months of all household expenses if we tightened our belts a bit. Utterly conservative so they won't evaporate, hard enough to get at that there's no temptation to use them for something else. If we have to break the CD we'll be docked 3 months of interest--not a huge penalty.

I think Dylan's idea of having a few hundred in cash squirreled away in case of systemic emergency is a good one.

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tinyhands
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Postby tinyhands » Tue May 01, 2007 7:40 am

plonkee wrote:Mine is in a postal access account (mini cash ISA), in an actual emergency I would use my credit cards and reimburse myself later as it takes about a week for the money to come through.

This is an excellent illustration against the argument that credit cards are "evil" as some personalities would have you believe. I believe there are few true emergencies where you must have immediate cash, so keeping an emergency fund a little illiquid (such as rolling 3-month CDs, for example) seems like a safe bet to me.
Read my 'fiscal fitness' financial disclosures <a href="http://www.getrichslowly.org/forum/viewtopic.php?t=176">here</a>.

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Postby MikeVx » Tue May 01, 2007 8:09 pm

I am still building my emergency fund, having started all of a month and a half ago. I expect to be at $1000 by the end of June. I keep the money in an ING account, with the rest of my savings. I use a spreadsheet as an "account" manager, with each line of the sheet being an "account" dividing my ING savings up into a series of accounts without the problems caused by sub-account logic as supported by ING.

In the unlikely event that I need my emergency fund so fast that I cannot wait the two business days to put it in one of my regular accounts, I can transfer it to my Electric Orange and either pull out of an ATM or use the debit card directly.

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tinyhands
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Postby tinyhands » Wed May 02, 2007 8:08 am

MikeVx wrote:I keep the money in an ING account, with the rest of my savings. I use a spreadsheet as an "account" manager, with each line of the sheet being an "account" dividing my ING savings up into a series of accounts without the problems caused by sub-account logic as supported by ING.

Also good logic, for those persons still trying to get started. An emergency fund doesn't have to be separate from your other savings. In fact, if your account has tiered interest rates that vary with the amount deposited, it makes more sense to keep it aggregated. Having an emergency fund should imply the discipline required not to drain it, even if it's lumped in with your other funds.
Read my 'fiscal fitness' financial disclosures <a href="http://www.getrichslowly.org/forum/viewtopic.php?t=176">here</a>.

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Postby MikeVx » Wed May 02, 2007 8:01 pm

tinyhands wrote:
MikeVx wrote:I keep the money in an ING account, with the rest of my savings. I use a spreadsheet as an "account" manager, with each line of the sheet being an "account" dividing my ING savings up into a series of accounts without the problems caused by sub-account logic as supported by ING.

Also good logic, for those persons still trying to get started. An emergency fund doesn't have to be separate from your other savings. In fact, if your account has tiered interest rates that vary with the amount deposited, it makes more sense to keep it aggregated. Having an emergency fund should imply the discipline required not to drain it, even if it's lumped in with your other funds.


We'll see how good my discipline is as time goes on. So far I'm only pulling money out of my ING account under 2 circumstances. I keep money destined for my primary debit card account in ING to generate interest, then transfer the next few planned purchases worth of funds to the primary debit card account every other week. Some bills are attached to that card. (VOIP phone, Japanese language training, on-line storage, etc.) The second case was when I bought clothing with money set aside for the purpose. I simply transferred it to my Electric Orange and used the Orange debit card to pay for my clothing.

Also, I am crediting the interest on the account to the emergency fund line. Not much, but more than zero.


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