Where do put extra EF??

**Mamaof2rugrats** · 01-11-2011, 01:00 PM

We currently have an EF of about 5k in a checking acount. I also have 30k in a money market account. The interest isn't very much. 1.5% or something like that. We are considering putting part of this into an IRA or TSP. How does this affect our taxes? Is that considered federal with holdings? I don't really understand how all this works. What would be the smartest account to put this money in?

**a.nonymous** · 01-13-2011, 11:51 AM

The emergency fund's job is to be available immediately for emergencies. It is not its job to generate wealth.
The money market account is just fine.

I personally find the size of your fund excessive but that is none of my business - it's your money and your choice.

**Greebo** · 01-13-2011, 12:20 PM

Originally Posted by Mamaof2rugrats

We currently have an EF of about 5k in a checking acount. I also have 30k in a money market account. The interest isn't very much. 1.5% or something like that. We are considering putting part of this into an IRA or TSP. How does this affect our taxes? Is that considered federal with holdings? I don't really understand how all this works. What would be the smartest account to put this money in?

Debt:
02 Volvo Convertible-12,000 to go!!!! UGH!!!

Emergency Fund-5,000/ Goal of 10,000

What is the 30k in the MM for? Just there?

Looks to me like you could be debt free TODAY *and* have your fully funded Emergency Fund in place.

As for where it should live - the money market is JUST where you want it to be. Do NOT put EF money in an IRA or TSP - you will not be able to use it for emergencies without penalties and then you just won't want to.

The point of an EF is NOT FOR INVESTING - it's for INSURANCE. You take the loss of interest to ensure you do NOT end up paying MORE interest later when an emergency happens - and it WILL happen sooner or later.

**Mamaof2rugrats** · 01-13-2011, 01:44 PM

Yes the 30K is in the money market account. It's basically our extended EF. The 5K is in a regular savings account. I also pd off the volvo several mths back after I recieved money back from a loan I had given some family. I'm just sort of debating what to do with the money in the MM. Several years back( read siggy) I won a settlement after my kiddo passed which was just enough to pay off bills,buy a small home and have the MM account so that's what that is from. Just debating where would be smartest to keep it. We make about 2500mth and pay 1k mth CS(Dhs 1st marriage) so we live off of very little but with everything paid off we don't have to touch any savings at the moment.

**Greebo** · 01-13-2011, 01:47 PM

Ok so you need to fix your sig. Good job on that.

So you really have a fully funded EF in the MM account - and then some - since 6 months of 2,500/mo is only $15k.

If you want to take half the 30k and invest it in something less liquid, by all means, do - but keep at LEAST the 15k in the MM.

Whatever you do leave as EF - just leave it alone in the MM. Walk away. Don't touch it. You'll sleep better knowing you have a nice big pile of cash sitting there "just in case".