What do you do with your emergency fund?

[Haku]

Let's say you have 10k saved up as your emergency fund. What do you do with this money? Just let it sit in a high interest online bank? Or do you have it split or laddered somehow with bonds or CDs? What would you do to get the most out of it while still maintain its ability to protect you in case of an emergency?

[Fern]

You can do any of the things you mentioned above with it. Mutual funds might not be the best choice since, altho they are liquid, you might be forced to sell at the wrong time if you needed quick access to that cash. Having said that, i keep my 'emergency $' in domestic stock funds only becus i know the only reason i'd need that $ is 1. to buy a new car, which i can plan ahead for or 2. in case i lose my job.

ladderings not a bad idea if you have the time to keep watching them when they get ready to roll over, tho last time i checked, CD rates were pretty bland.

Maybe it'd be best to first identify in what scenarios you might end up using your emergency stash, then shape an investment plan around that?

[Fern]

Well, i guess i just lost all my credibility cus i just noticed in another response to your post, Haku, about money market funds, that i said i keep my emergency $$ in an online bank and a checking acct.

To clarify: I do have about $5K in the online bank acct at present (i had to dip into it to pay the IRS $3K earlier this year); but i have other 'cash' that could be treated as emergency $ (cus it has no other special designation) in domestic stock funds. The checking acct is really not what i consider emergency $$, just $$ to pay day to day bills.

[sweeps]

Fern, do you really keep emergency money in stocks?

[Haku]

Fern: I didn't notice until you mentioned it. And nah, you're credibility is just fine in my book. I'm not here to judge people. I'm here to learn.

[mrvirgo]

I opened a Citi e-Savings last month because it's paying 4.5% and I can transfer money into my checking account instantly at an ATM machine should I ever need some real emergency money. I have on-line savings with Ing but that would take two days to get the money. Useless in a true emergency.

[Ima saver]

I keep a large sum of money in a local money market that pays almost 4% and a local savings account that pays over 4.1% I know I could get higher in GMAC, but we use that money not only for emergencies but to build a spec house and I never know when I need it. I can write a check and get it instantly.

[Haku]

Ima: Your Savings pays more than your Money Market?

[lrjohnson]

I'm trying to decide what to do with my Emergency fund, too. Is everyone else aiming for 6 months expenses? Just like I don't want not enough in an EF, I don't want to much in there either.

Right now I've got $3K each in ING and ED, which I just opened very recently to get the bonuses and increase my interest from one point something to over four. I'll be watching this to see what others have done.

My emergencies would most likely be job loss (unexpected, since I'm civil servant and do my best to perform well) and illness/accident befalling my dad or his wife.

How much do you guys keep in your "regular" checking/savings, before it goes to EF or investing/IRA/etc/? One month expenses? More?

Once I figure out what to keep in "regular" accounts and then in EF, I have to take the rest and Roth IRA it. That's my plan, I'm gearing up, watching a bunch of threads to learn more.

[PRICEPLUS]

Liquidity is very important and so ING was my choice.

[Haku]

What about tax-exempt money market funds? Are they worth considering?

Originally Posted by lrjohnson

I'm trying to decide what to do with my Emergency fund, too. Is everyone else aiming for 6 months expenses? Just like I don't want not enough in an EF, I don't want to much in there either.

This is true, but I think 10k is reasonable for me. It means that even if my car dies tomorrow, I can pay one with cash if I really had to. 10k would also cover me for 6 months in case of job loss. More than likely, an emergency will cost less than that, so it also means that when it does happen, my safety net isn't completely depleted. 10k also has the aesthetically-appealing feel of a nice round number.

How much do you guys keep in your "regular" checking/savings, before it goes to EF or investing/IRA/etc/? One month expenses? More?

I have very little in my checking. Most of my cash is in my money market, and I'm hoping to move to that account exclusively some time in the near future. But I pay debit/cash on almost everything and rarely write checks, so I can get away with that.

[Fern]

Sweeps, yes, i keep emergency designated $$ in taxable stock mutual funds. Only becus i know i really would rarely have need to tap that $$.

I keep about $5K in my non interest bearing checking acct, just enuf to cover monthly expenss on an ongoing basis.

[TBH]

I keep a LOT of cash. Probably too much--it's about 25% percent of our net worth.

With this year's tax refund, we got up to that elusive 6-month figure at last. Right now 80% of our E fund is in savings with ING and 20% is in a CD set to mature in July. My plan is to take half of the total and put it into a CD ladder. I think with ING you can set up a ladder to happen automatically (but I'd have to check on that). The other half of the E fund will stay in cash.

There are a lot of shapes emergencies could take:
Job loss (not completely unlikely, but we're diversified by having 3 jobs between us)
Medical crisis for one of us, our son, or my mother
We own an old house and need to expect the unexpected
12-year-old car might give up the ghost

Also, I'm saving for a major expense 3-5 years from now, so now that I've gotten up to my goal of 6 months' expenses, I'm going to keep plugging money into CDs and savings as much as I can.

[Bluezy]

I've worked out two types of emergent accounts - (1) the immediate emergency account and (2) the backup emergency account.

#1 is simply in a 5% savings account linked to all other bank and CU accounts. #2 is in an add-on CD for 12 months @ 5.38%. I might ladder the CD next year.

[JBinKC]

Currently staggered in 4 week t-bills.

[Ima saver]

I have two local accounts. I have a money market paying 3.8% and a bank savings account paying 4.10% I know i could get more using the internet, but I am using this money to build a spec house and I need fast access.

[thriftymom]

It's in Savings at >4%. Keeping it liquid in case of an emergency,

[jodi]

Mine is in savings at 4.5% - HSBC, because we have several nearby so I oculd get it if needed, plus I can still have online access.

I don't have a plan for when to put money into savings. Right now I am at the point where we have enough in the EF, so all extra money goes to pay down debt or to invest. If the checking account gets over $1000 or so, then I write a big check toward the car payments or student loans.

[jmjj215]

Um, I just go with ING. I guess it's not too exciting really!

[Duchesse]

My monthly expenses are high because I own two properties. A one family which I live in and a 3 family which I rent out. I have to have money available for the unexpected. I am a single parent. I have a minor child in private school, I have two mortgages. two light bills, two gas bills, two phone bills, two tax bills, and two homeowners insurance bills, whew! I keep 8 months worth of expenses in the highest yielding MM account I can find. Do you blame me?LOL