EF too big

[littleroc02us]

I'd think it would be wiser to lump your savings accounts together so that you can chase higher interest rates.

(These days may be kind of moot, but historically is more what I have done - when rates are higher).

My EF fund isn't for the purpose of making an investment off of it, it's there for emergencies only. I don't care if it makes any money, an ING account making 1.1% won't make me rich. My savings are for large purchases and it comes and goes based on purchases. All of our money is tied up in our house and investments, we don't keep a large savings account sitting around because what would we do with it?

[MonkeyMama]

I'd think it would be wiser to lump your savings accounts together so that you can chase higher interest rates.

(These days may be kind of moot, but historically is more what I have done - when rates are higher).

[disneysteve]

When I run a business for example, I wouldn't lump in my personal money in an account with my business income and use the same account to pay both personal and business liabilities. That's just me..

That's totally different and I completely agree. You should always keep business and personal finances separate or you can cause all kinds of tax and accounting and potential liability headaches. But we're talking about strictly personal money.

I don't compartmentalize everything into separate accounts. I see no need to make things that complex or have that many accounts. But I'm able to keep it all straight in my head.

[cypher1]

I'm really not bothered by merging those funds since I never take from them (*knock on wood*). My car fund is only 6k, so its really not difficult to keep track for a balance minus EF. My error was contributing more cash here, than somewhere else.

[littleroc02us]

I see nothing wrong with combining them as long as you know that a certain amount is your EF and you don't dip into that for non-emergencies. What's the difference if I have $20,000 in an account for my EF and $10,000 in an account for a car or I have $30,000 in one account and spend $10,000 of it for a car, leaving $20,000 remaining? Ultimately, it is the same thing.

Many people don't have the discipline to do this, but for those who do, I see nothing wrong with it.

Again this is just my opinion (IMO) everyone can do what they want, I just like the be organized in detail. When I run a business for example, I wouldn't lump in my personal money in an account with my business income and use the same account to pay both personal and business liabilities. That's just me..

[BuckyBadger]

Steve -- we must be in tune today. We even picked the same hypothetical values for our hypothetical EF and hypothetical car accounts!

[littleroc02us]

Why have one account with $20,000 EF, one with $10,000 savings for a car, and one with $2,000 savings for a vacation when you can have one account with $32,000 in it?

Pure organizational!


littleroc, you definitely have very strict rules for how you think an EF should be handled, but I think a lot of people are capable of keeping their ER money mixed in with other money. Money is money -- and as long as your liquid balance doesn't drop below what you would need in an emergency you'll do just fine.

I think a lot of people borrow from their EF and pay it back, kind of like lending services or something. For me, it helps to organize accounts by need. At my bank I have the following.

1. Daily spending account
2. EF fund
3. Mortgage account
4. Big ticket savings account
5. Credit Union Dividend account

*For me being detailed=Success!

[disneysteve]

So, you keep an ING fund that includes an EF fund, a car fund and hobby account? I can see why it would grow, IMO seperate them.

I see nothing wrong with combining them as long as you know that a certain amount is your EF and you don't dip into that for non-emergencies. What's the difference if I have $20,000 in an account for my EF and $10,000 in an account for a car or I have $30,000 in one account and spend $10,000 of it for a car, leaving $20,000 remaining? Ultimately, it is the same thing.

Many people don't have the discipline to do this, but for those who do, I see nothing wrong with it.

[BuckyBadger]

As long as you are aware, there isn't any reason that your EF can't sit in the same savings account as other money. The money doesn't know what you've named the account.

Why have one account with $20,000 EF, one with $10,000 savings for a car, and one with $2,000 savings for a vacation when you can have one account with $32,000 in it?

If you aren't responsible enough to not accidentally buy a $30,000 car rather than the $10,000 you planned just because you looked and saw that you had $30,000? Well, then, you have bigger problems than separate accounts can fix.

littleroc, you definitely have very strict rules for how you think an EF should be handled, but I think a lot of people are capable of keeping their ER money mixed in with other money. Money is money -- and as long as your liquid balance doesn't drop below what you would need in an emergency you'll do just fine.

[littleroc02us]

OK, since I don't agree with the EF method, all I could help you with is what to do with the extra cash. If you have no debt and your investing around 15% of your income, then why not apply it towards the mortgage?

[cypher1]

So, you keep an ING fund that includes an EF fund, a car fund and hobby account? I can see why it would grow, IMO seperate them.

Separating them is an option, but still doesn't help with the already large EF sum regardless. As for car fund and hobby, the reason I included them is I really don't buy much of anything so I merged them a year ago with EF. Additional rent income is used for buying Wants (if any) IE tools, which I don't really include this list for savings.

[littleroc02us]

That is correct. My ING account initially had 6mo. But I was putting more into it over the last year, including for my car fund/hobby. So I wasn't withdrawing money out it, mainly depositing. I don't know how much more there is to be confused with besides the fact that I kept a little extra in my reg checking/savings.

So, you keep an ING fund that includes an EF fund, a car fund and hobby account? I can see why it would grow, IMO seperate them.

[cypher1]

I'm even more confused now! An EF fund is a seperate account that you don't touch unless you have an emergency.

That is correct. My ING account initially had 6mo. But I was putting more into it over the last year, including for my car fund/hobby. So I wasn't withdrawing money out it, mainly depositing. I don't know how much more there is to be confused with besides the fact that I kept a little extra in my reg checking/savings.

[disneysteve]

Nothing is too big when it comes to EF.

If by EF, you mean money held in cash accounts in case of emergency, I would disagree. Having too much in cash accounts would throw off your asset allocation, tilting it more conservative than might be appropriate for your age and goals.

[littleroc02us]

My main cash/EF is in ING with a small % being auto deposited from check, but I hardly ever check the balance (maybe 2-3times a year). Otherwise I already keep 1month EF in my reg checking/saving for additional cash resources. Due to recent taxes/additional cash from hobbies, I realized it was double the balance. So I upped my 401k to 10% and want to educate myself on where to invest without being too aggressive for risk.

I'm even more confused now! An EF fund is a seperate account that you don't touch unless you have an emergency.