Emergency Fund Question

**ri*smom** · 02-25-2010, 11:01 PM

Where is the best place to store your 3-6 month EF? Roth IRA?? That is my first thought, but I figured I would ask to see if there is some place wiser. Could it also be a double dip of the steps--EF and retirement savings at the same??

**dcompton** · 02-25-2010, 11:46 PM

Your EF, however long it is, should be available, so that means some kind of savings arrangement or investment where it would not be locked up in like an IRA. Some could go in CD's laddered so it would be sequentially available at the time you needed it. But right now, CDs don't seem any better than my online savings.

Others, I'm sure, will have other suggestions.

I did both at the same time, but I am playing catch up on retirement, and didn't even consider not working on that, and my job was secure while I was doing it. I think what you do about that would depend on your individual situation.

**DJ1972** · 02-26-2010, 01:13 AM

We keep ours in a traditional savings account. That way, if we have an emergency, it is accessible without penalty.

**a.nonymous** · 02-26-2010, 06:37 AM

The emergency fund isn't there to make money. It's there to be available immediately if an emergency occurs.

I doubt you can tell the emergency to wait a tad until your CDs mature, so I wouldn't put that money in there (apart from the fact that CDs are performance-wise terrible investment vehicles).

Keep it in a savings account. Interest rates are a secondary thought only. If you lose punch by inflation (which will likely happen over time) you can add to the fund.

**mauimagic** · 02-27-2010, 02:17 AM

I keep ours in an online ING account - easily accessible, earns some interest - works for us. Automatic deposits are another bonus too!!

**Russ** · 02-27-2010, 07:12 AM

what she said

**jas** · 02-27-2010, 08:37 AM

Originally Posted by mauimagic

I keep ours in an online ING account - easily accessible, earns some interest - works for us. Automatic deposits are another bonus too!!

same here ing acct.

**Denvergirlie** · 03-01-2010, 11:09 AM

I have the bulk of mine in an ING account, however of late, I'm not as comfortable with having it all still unaccessible for the 3-4 days it takes to transfer to ING. However, in just the last month I've had to make some larger unplanned expenses, those funds were pulled from ING, and I hated having to wait for it.
On the other hand, we are done with the current level of new purchases and thus, I think ING will still serve my purposes of an actual emergency fund.

On a side note, I keep $1K in my checking account as well as a buffer for immediate emergencies, but it's not calculated in my check legar balance, when my check leger says "0", I really have $1K in there.

You do not want your emergency fund locked into an IRA or CD. This is not an investment category, this is a savings category. Savings and investments are two very different things. You want this "cash" to be accessible, not locked into various accounts.

**JoJoBean8** · 03-01-2010, 11:43 AM

I keep mine in ING. I also have a checking account with them so if I need money for an emergency I can transfer it to my checking and use my debit card.

**Greebo** · 03-01-2010, 12:30 PM

Our EF is with Schwab - easy access if needed, but out of the ordinary so we don't mix it with our regular funds.

**maipenrai** · 03-25-2010, 11:30 PM

I was just about to make a post about emergency funds but saw this post.

I hope you don't mind me adding to the questions but, is there a way to avoid or defer tax payments on the money set aside for an emergency fund for those that do not have taxes taken out before they receive there pay checks?

**Ceashels** · 03-26-2010, 07:57 AM

Originally Posted by maipenrai

I hope you don't mind me adding to the questions but, is there a way to avoid or defer tax payments on the money set aside for an emergency fund for those that do not have taxes taken out before they receive there pay checks?

yes, but sadly, it isn't legal

**Josephhgoins** · 03-26-2010, 08:16 AM

My bank offers a rainy day fund. At the end of the day they transfer all of the cents in my savings and checking into it. They also give me a higher rate of interest to it (I think 2%, so WOOHOO) I keep my EF in there. I can easily transfer it to checking if I need it instantly, but it still out of the way.

When I had a ING account the transfers would sometimes take 3 days and when you must have the money now (i.e. for an emergency) 3 days dosen't work for me.

**frugal is fun** · 03-26-2010, 08:49 AM

I keep my EF in my credit union savings account. Its not tied to my regular banking (savings, checking, debit card). Its completely independent, and easily accessible.