Comments on: Emergency Fund, Anyone?

By: Mapgirl’s Fiscal Challenge / Alternative Carnival of Personal Finance #90

Mapgirl’s Fiscal Challenge / Alternative Carnival of Personal Finance #90 — Tue, 06 Mar 2007 14:50:49 +0000

[...] Office Blog on the old subject of Emergency Funds. The post is short and not very insightful, but the one true gem in it is the notion that your [...]

By: Grant

Grant — Tue, 06 Mar 2007 04:10:37 +0000

Mossy, I like the Vanguard MMF idea. I’ll look into that one a bit more.

Jon, I agree, the HSBC route does look attractive, but I think HSBC might be in a bit of hot water with some subprime notes going south.

I agree, ntguru, your insurance costs will skyrocket if you’re ever out of work, been down that road before. That’s why our “cushion” needs to be a bit thicker. Not that I plan on losing my job, but who does?

Also, I look at an emergency fund as a cushion IN ADDITION to a “oh crap I lost my job fund”. Six months salary should be the minimum in this case, but I think $10,000 or so would provide a solid emergency cushion should the car break down, the water heater go out, the furnace quit and the air conditioner blow up all in the same month…

By: Smarty

Smarty — Mon, 05 Mar 2007 00:30:48 +0000

How are you going Grant? I try to have about 5K to 10K in short-term savings accounts. If I need more money, I would just sell off stocks to free up funds.

By: ntguru

ntguru — Fri, 02 Mar 2007 00:12:20 +0000

Don’t forget in your calculations that health care costs can go way up if you lose your job. Fortunately my wife has access to healthcare benefits in case I lost my job, but I have access to our benefits and the cost for two goes from about $100/mo now to around $600-700/mo if you are paying the full amount.

Don’t underestimate the security of having a nice big cushion. Sometimes knowing that you could walk away if you needed to without worry makes a job a lot more tolerable.

By: Jon

Jon — Thu, 01 Mar 2007 10:54:56 +0000

Getting a high yield online savings account for emergency funds is just a good idea. ING Direct is a great starter account, particularly if you plan on taking advantage of the referral bonuses. Another option is the 6% apy new money promo at HSBC direct.

Most of the horror stories I have heard have been nothing worse than difficulties with opening an account.

A general rule of thumb about the amount your emergency fund should be is three to six months worth of living expenses.

By: MossySF

MossySF — Thu, 01 Mar 2007 08:02:56 +0000

I have more money that I should in my “emergency fund”. Basically, I’ve been rate chasing so I have significant amounts spread across multiple accounts. At my current spending level, it would easily last me 18 months — in cutback mode, probably 24+. Where my cash is:

Citibank eSavings: 4.75% APY (was 5.00% when I signed up)
E-Trade Savings: 5.05% APY ($25 signup bonus)
Vanguard Money Market: 5.22% APY
11mo CD: 4.68% APY
6mo CD: 5.5% APY
13mo CD: 5.83% APY

Certainly better than mattress returns. The CD rates have dropped a lot so once my current ones mature, I will roll them into Vanguard MMF and start trimming off the top to go into my equities portfolio.

By: Kim

Kim — Thu, 01 Mar 2007 03:40:50 +0000

I’m like you grant I have a fund by not enuf in it. I think you should have more than 5k too. 10k sounds better, but I agree that money might as well be stuffed in a matrress than put in a bank.

nice blog, been reading a while and finaly commented