FBG Investors, emergency savings, where? (1 Viewer)

[Dentist]

Medical could be a significant expense....especially with more and more plans having higher deductibles.

And maybe an unexpected funeral?  That could be 10k easy.

Definitely agree with medical... which has made me wonder if I could consider my HSA part of any emergency savings on some level. 

 

[Dentist]

Yea, this.  What exactly constitutes an emergency (aside from loss of job) that requires 6 months of expenses?  Someone mentioned water heater and car repair.  Those things dont come near justifying 6 months expenses in a checking account.  

That said, we keep about 3-6 months expenses in a savings account but this is also used for new car savings and vacations.  Also have a few HELOCs with available credit to cover an extended job loss, and if necessary could pull money from IRAs.

See I do wonder the same thing on some level.    Although I think part of the 6 mo. thing is so that if you had a "emergency"  that there would still be money left over in case there was a 2nd in a short time frame.

I also have wondered if it was something more designed for someone at a lower income level.   If an emergency is a 5k roof or a heater/ac  or some foundation work, or a transmission, or something...  well on some level if you make 6 figures then do you really need 6 mo. whereas someone who makes 40k a year probably does?

Job loss is probably #1 on the list....  and I'm sure there are those of us who have different levels of job security.   For instance, I'm not going to fire myself.. so I'm not going to lose my job,  but it certainly is possible to go through a really cold stretch at work and make a lot less money for a certain amount of time... 

It's gotten to the point where I keep the 6 mo.  not really for an emergency per se... but just to have cash to take advantage of an opportunity that may present itself.

 

[Random]

Medical could be a significant expense....especially with more and more plans having higher deductibles.

And maybe an unexpected funeral?  That could be 10k easy.

Also have HSA funded with 4+ years of deductibles (50% in VFIAX, 50% in checking) .

 

[DallasDMac]

I was saying that he was going to put the money in a 5-year CD.  I'm saying that if you've got money that you are pretty certain you won't need to touch for 5 years (hence why you'd put it in a 5-year CD), it's not really emergency savings and you're better off with a different investment.

I would put it in a 5 yr CD because I don't plan on having an emergency. But if I do, and if I have it broke in to several smaller amounts, I can cash one of the CDs and lose only the interest. There's zero risk to the principal. So it equates to a savings account if I have to use it, and earns much better interest if I don't. Whether it actually gets to sit 5 years seems trivial to me when comparing it to a standard savings account. In fact, at the end of a year, even if I had to pay 10 months interest in penalties, it probably still comes out ahead of my savings with it's interest rate of virtually zero. Make sense?

 

[Bob Sacamano]

I was saying that he was going to put the money in a 5-year CD.  I'm saying that if you've got money that you are pretty certain you won't need to touch for 5 years (hence why you'd put it in a 5-year CD), it's not really emergency savings and you're better off with a different investment.

I get what you're saying.  And I hate the idea of CDs at current yields, but I do believe in having that fund in something relatively risk free.  Being prepared for an emergency in the next five years is different than anticipating an emergency in the next five years.  If you're anticipating one every five years, is it because you're best friends with SLB or something else? 

Fortunately, it's been a long time since I had something I'd call an emergency. Nothing that necessitated digging into those funds.  Because of that, I'm reasonably certain/hopeful I won't need to touch that money.  But that doesn't impact the need to be prepared for the possibility.  If my biggest issue when the time comes is forfeiting some interest or realizing that I missed out on being in AAPL (Or MCP?) for the last 5 years, I think I'll be OK with it. 

 

[Peyton Marino]

All my money is in preferred shares paying ~7%. If I need cash it isn't difficult to sell them and get the money in a couple days.

call your broker #####

 

[baymen]

call your broker #####

OOF  

 

[Long Ball Larry]

There are many banks and credit unions that offer Reward Checking Accounts, although most of them are state-specific. Lake Michigan Credit Union offers accounts nationwide, though.

I see that this is still at 3% and federally insured.  How is that possible?

Counting on people not to meet the monthly requirements?

 

[SIDA!]

call your broker #####

 

[Phil Elliott]

If you are set on getting cd's , wait another month. Fed is expected to raise rates .25. Of course they have been saying this for two years.

 

[Slapdash]

call your broker #####

Not a great week for BofA Preferred stock

 

[Peyton Marino]

Not a great week for BofA Preferred stock

my favorite part is the dude is clueless enough to not only have 100% of his money in prefs in this market, but to also proudly proclaim that.  wish I had seen this prior to accepting the wager, he clearly has no clue what he's doing with his money.

 

[[scooter]]

There are many banks and credit unions that offer Reward Checking Accounts, although most of them are state-specific. Lake Michigan Credit Union offers accounts nationwide, though.

I see that this is still at 3% and federally insured.  How is that possible?

Counting on people not to meet the monthly requirements?

Yes, they are counting on people failing to meet the monthly requirements. I have to make 12 debit card transactions every month, which is difficult because I prefer to use one of my cashback credit cards for most purchases. I used to be able to buy 12 1-cent virtual giftcards at Amazon, but eventually my bank put a stop to that.

 

[Wooderson]

Yes, they are counting on people failing to meet the monthly requirements. I have to make 12 debit card transactions every month, which is difficult because I prefer to use one of my cashback credit cards for most purchases. I used to be able to buy 12 1-cent virtual giftcards at Amazon, but eventually my bank put a stop to that.

Also 15K is the max for 3%