What Are You Using for Your Emergency Funds?

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ruanddu
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What Are You Using for Your Emergency Funds?

Post by ruanddu » Tue Jul 23, 2013 9:52 pm

Hello,

Sorry for yet another emergency fund thread but am curious as to what people are using these days for emergency funds or just short term storage for purchases (car, house down payment, etc)? I am currently using I-Bonds for a portion. I am eyeing the Ally 5 year CD for the other portion with the thought of taking the 60 day interest penalty if I did an early withdrawal. I like the idea of having a mixture of funds spread out between I-Bonds, CDs and maybe even stocks for a certain portion I can be okay risking a little. I just pulled a portion of the funds out of Capital One Interest Savings account when they reduced rates to .05%.

So, to recap, what are you using for yours - I-Bonds, CDs, Savings Account, Stocks/Bonds, etc?

Thanks.

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pusher62
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Re: What Are You Using for Your Emergency Funds?

Post by pusher62 » Tue Jul 23, 2013 9:55 pm

Just started to look into this, but buying I-bonds. Also holding money in Barclay online savings (currently 0.9%). Trying to minimize the amount that I keep in accounts essentially paying nothing.

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Peter Foley
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Re: What Are You Using for Your Emergency Funds?

Post by Peter Foley » Tue Jul 23, 2013 10:05 pm

I use a savings account. Since I'm retired I really don't have much of an emergency fund. I hold about a year's worth of cash flow in savings. I've toyed with the idea of high yield checking but I'm not sure I want the hassle of another account, changes to my monthly deposits, and using a debit card the required number of times.

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ruanddu
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Re: What Are You Using for Your Emergency Funds?

Post by ruanddu » Tue Jul 23, 2013 11:33 pm

Thx for replies. Please keep suggestions coming.

Johm221122
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Re: What Are You Using for Your Emergency Funds?

Post by Johm221122 » Tue Jul 23, 2013 11:40 pm

I consider my hole portfolio as one and depending on situation may use multiple sources, but savings bonds were my original EF
John

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jupiter_man
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Re: What Are You Using for Your Emergency Funds?

Post by jupiter_man » Tue Jul 23, 2013 11:41 pm

VMLUX: Vanguard Ltd-Term Tx-Ex Adm

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M_to_the_G
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Re: What Are You Using for Your Emergency Funds?

Post by M_to_the_G » Wed Jul 24, 2013 10:17 am

A savings account. It's an emergency fund.
"It’s basically the plot of 'Charlie and the Chocolate Factory.' If you stick around, doing nothing, while everyone around you ****s up, you’re going to win big." - John Oliver

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Toons
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Re: What Are You Using for Your Emergency Funds?

Post by Toons » Wed Jul 24, 2013 10:20 am

Checking Account :happy
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MoonOrb
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Re: What Are You Using for Your Emergency Funds?

Post by MoonOrb » Wed Jul 24, 2013 10:36 am

1. Checking account
2. Roth IRAs/Taxable accounts, should it ever come to that

We hold about 4-5% of our total portfolio in cash in our checking account. It works out to 6-9 months of regularly recurring expenses.

Every now and then when the balance of our checking account creeps up I just make a deposit into our taxable investment accounts. We could probably get slightly more out of our emergency fund by stashing some of it in a place other than our checking account, but I like the security of having the immediate liquidity and ease of access. It's a "sleep better at night" type of decision for me I guess.

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Kevin21
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Re: What Are You Using for Your Emergency Funds?

Post by Kevin21 » Wed Jul 24, 2013 10:42 am

Checking, I-bonds, and some loose change in Vanguard money market.

mass_biker
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Re: What Are You Using for Your Emergency Funds?

Post by mass_biker » Wed Jul 24, 2013 10:46 am

I use VWIUX - Vgd Intermediate Term Tax Exempt.

DoWahDaddy
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Re: What Are You Using for Your Emergency Funds?

Post by DoWahDaddy » Wed Jul 24, 2013 10:47 am

If you keep 50k+ for emergency funds, CapitalOne360 is 0.79%-0.84% for its checking account. Combo of rate and convenience is tough to beat.
"Stay the course." - J. Kirk

lhl12
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Re: What Are You Using for Your Emergency Funds?

Post by lhl12 » Wed Jul 24, 2013 10:49 am

1. HELOC
2. If that fails to fund, pro rata liquidation of investment portfolio

chaz
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Re: What Are You Using for Your Emergency Funds?

Post by chaz » Wed Jul 24, 2013 10:50 am

M_to_the_G wrote:A savings account. It's an emergency fund.
Me too.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

niceguy7376
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Re: What Are You Using for Your Emergency Funds?

Post by niceguy7376 » Wed Jul 24, 2013 10:55 am

When I-bonds is mentioned, is it the online version that you are buying? I thought paper version can only be bought with tax refunds. Please clarify so that I can buy some this year itself.

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Tortoise
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Re: What Are You Using for Your Emergency Funds?

Post by Tortoise » Wed Jul 24, 2013 11:04 am

Main emergency fund is in twelve 5-year Ally CDs. Each CD was started with $4k, which is more than our current monthly expenses.
"Always do right. This will gratify some people, and astonish the rest." --Mark Twain

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JoMoney
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Re: What Are You Using for Your Emergency Funds?

Post by JoMoney » Wed Jul 24, 2013 11:13 am

All budgeted spending is out of a cash-reward visa card that is then paid in full every month from checking. Any "Extra" spending money sits in the checking.
About 3 Months spending "Emergency Fund" is in Vanguard Prime Money Market (my checking is a high-yield that pays better interest, but I don't want to confuse my "Emergency Fund" with other money. Neither pay any REAL interest anyway.
About a year of extended "Emergency Fund" is in Vanguard Short-Term Bond Index
If I felt my job was unstable or was nearing retirement I would up the Short-Term Bond holdings to 2-3 years worth of spending. EVERYTHING else is fully in stock market index funds. If I was to retire or take an extended absense I would start withdrawing from the stock market using a drawdown similar to the IRS RMD Calculation for IRA withdrawls.. Taking from the standard investment account first (if I thought I would go back to work), if I did not plan on returning to work would probably initiate 72(t) withdrawls from retirement accounts as well...
If I didn't plan on returning to some sort of work in a short amount of time, chances are I'd also be receving some sort of unemployment, severance, disability, or social security in lieu of a paycheck.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Supermercado
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Re: What Are You Using for Your Emergency Funds?

Post by Supermercado » Wed Jul 24, 2013 11:35 am

I usually keep at least $20K in cash between checking and savings, which would be enough to cover 6-9 months at my current spending, which includes funding my Roth IRA, a crossfit gym membership, landscaping service, that sort of stuff. If I really needed to make my emergency fund last, I could trim that sort of stuff out and stretch it further.

For a little over a year, I've been slowly transitioning my Capital One 360 savings account, where about 2/3 of the the cash is kept into I Bonds, $300/month to minimize the amount that's tied up in the 1 year seasoning period.

I consider my Roth IRA contributions an emergency fund of last resort, but I keep enough cash on hand to make the likelihood of ever needing that limited to the truly catastrophic.

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LAlearning
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Re: What Are You Using for Your Emergency Funds?

Post by LAlearning » Wed Jul 24, 2013 11:38 am

niceguy7376 wrote:When I-bonds is mentioned, is it the online version that you are buying? I thought paper version can only be bought with tax refunds. Please clarify so that I can buy some this year itself.
Yes. They no longer sell the paper version* (see below). You can buy 10k/yr/SSN.
Yes. You can buy an additional 5k (?) with a tax refund. These are paper.
I know nothing!

travellight
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Re: What Are You Using for Your Emergency Funds?

Post by travellight » Wed Jul 24, 2013 11:41 am

2 helocs, just in case 1 fails.

avoids money sitting around not working for me.
364

MoonOrb
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Re: What Are You Using for Your Emergency Funds?

Post by MoonOrb » Wed Jul 24, 2013 12:10 pm

How do you use a HELOC as an emergency fund? Can you tap into it even if you lose your job? I've always subscribed to the view that a lender cares whether you have the means to repay your loan, not whether there is sufficient equity in your home that they can recover some value should they be compelled to foreclose.

Since a lot of situations that would trigger the need for emergency funds involve job loss, how does this work exactly?

KyleAAA
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Re: What Are You Using for Your Emergency Funds?

Post by KyleAAA » Wed Jul 24, 2013 12:19 pm

ING Direct errrr I mean Capital One 360. I think it pays 0.75% right now. High enough for me not to bother rate chasing.

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ejvyas
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Re: What Are You Using for Your Emergency Funds?

Post by ejvyas » Wed Jul 24, 2013 12:20 pm

Various easily accessible CDs and savings

scrabbler1
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Re: What Are You Using for Your Emergency Funds?

Post by scrabbler1 » Wed Jul 24, 2013 12:25 pm

mass_biker wrote:I use VWIUX - Vgd Intermediate Term Tax Exempt.
In my tiered system of keeping funds, I use an intermediate-term muni income fund as my next layer after a small cushion (about $750-$1,000) in my local bank's checking account, enough to meet fee-avoiding minimum balance requirements and provide me with some quick money to cover small, unforeseen expenses. This has been my plan before I retired early and after I retired early in 2008. I don't like keeping any significant sums of money in accounts giving me next to zilch for interest.

dad2000
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Re: What Are You Using for Your Emergency Funds?

Post by dad2000 » Wed Jul 24, 2013 12:35 pm

Months 1-5: savings/checking accts
Months 6-15: I-bonds

pobox2001
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Re: What Are You Using for Your Emergency Funds?

Post by pobox2001 » Wed Jul 24, 2013 12:38 pm

CIT Bank - 0.85%

rkhusky
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Re: What Are You Using for Your Emergency Funds?

Post by rkhusky » Wed Jul 24, 2013 12:42 pm

We keep a few months' worth of expenses in cash (savings/checking), 1 year's worth in short term bond fund and 1 year's worth in intermediate bond fund.

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ursineogre
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Re: What Are You Using for Your Emergency Funds?

Post by ursineogre » Wed Jul 24, 2013 12:59 pm

I realize this is a basic question, but what is the progression of the types of Treasury securities? The wiki shows bills, bonds and TIPS and Treasury Direct shows bills, notes, bonds, TIPS, E bonds, I bonds and H bonds. We used to use VNG money market then switched to ING, which is now Capital One. I don't want to chase a minimally better return, but which Treasury vehicle would be the first to use once I fgure I have enough cash in my EF?

jbell3124
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Re: What Are You Using for Your Emergency Funds?

Post by jbell3124 » Wed Jul 24, 2013 1:06 pm

High Yield Checking Through Farmers Citizens Bank 1.8% as long as I satisfy a few conditions that are easy.

www.checkingfinder.com

Streptococcus
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Re: What Are You Using for Your Emergency Funds?

Post by Streptococcus » Wed Jul 24, 2013 1:25 pm

I keep 10K in cash and savings account. The rest is part of my fixed income allocation as IBonds. I know most bogleheads separate their efund from their portfolio but after thinking it through a lot, considering that for me a year worth of monthly expenses is 75K, I decided not to keep such a large sum in a <1% interest saving/checking account. My efund is part of my fixed allocation.

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dphmd
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Re: What Are You Using for Your Emergency Funds?

Post by dphmd » Wed Jul 24, 2013 2:09 pm

Tiered approach:

1. Online savings.
2. Ally CDs
3. I-bonds
Discipline is freedom.

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pennstater2005
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Re: What Are You Using for Your Emergency Funds?

Post by pennstater2005 » Wed Jul 24, 2013 2:26 pm

I use a savings account. Sure, it doesn't pay anything but I like the convenience of being able to switch monies from checking to savings and vice versa instantly with no waiting period. I know there are better options out there but I am lazy.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

madhav
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Re: What Are You Using for Your Emergency Funds?

Post by madhav » Wed Jul 24, 2013 4:37 pm

Onle Discover Money market account.. It used to be 1% pa but now 0.7%..

eonny
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Re: What Are You Using for Your Emergency Funds?

Post by eonny » Thu Jul 25, 2013 6:44 am

Is a short term bond fund too risky for emergency funds? It is frustrating to see my monthly interest on my emergency fund, $.18!

Johm221122
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Re: What Are You Using for Your Emergency Funds?

Post by Johm221122 » Thu Jul 25, 2013 7:00 am

eonny wrote:Is a short term bond fund too risky for emergency funds? It is frustrating to see my monthly interest on my emergency fund, $.18!
Not really, it should work fine.If you tell us which one you'll get better answer
John

camaro327
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Re: What Are You Using for Your Emergency Funds?

Post by camaro327 » Thu Jul 25, 2013 7:05 am

I-bonds and on-line interest savings account.

CDs with a small break penalty would be good too.

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N1CKV
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Re: What Are You Using for Your Emergency Funds?

Post by N1CKV » Thu Jul 25, 2013 7:41 am

I'm using Ally CDs. My "emergency fund" is in 5 yr High Yield (2 of them). My "wanna buy a new house fund" is in a no-penalty 11 month and savings, with intention to move money from savings to more CDs incrementally. I chose that route because I intend to evaluate my situation and possibly buy a house sometime next year, depending on my position, but if a wrench gets thrown in my plans it could be up to two years beyond that. My goal is to keep funds as liquid as possible but maximize gains. If I lose 2 months of interest in penalties from the 5 yr CDs it's a drop in the bucket, and really as long as I held them for at least 4 months I'm still ahead of keeping it in savings even after the penalty.

One thing to note: I broke up my emergency fund in to 2 separate CDs, they both mature at the same time. This strategy will allow me to "break" only one of them if I don't need the full amount, leaving the other untouched and still growing. Ally has no minimums for their rates, so in theory I could have broke these up even smaller in to $1,000 increments to break only what I needed if the need arose, but I felt that was getting a little too aggressive.

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gnosis
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Re: What Are You Using for Your Emergency Funds?

Post by gnosis » Thu Jul 25, 2013 8:37 am

5-year CD ladder of five accounts in our credit union. They are all now getting 5-year rates of 2% or greater.

IlliniDave
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Re: What Are You Using for Your Emergency Funds?

Post by IlliniDave » Thu Jul 25, 2013 8:49 am

ruanddu wrote:Hello,

Sorry for yet another emergency fund thread but am curious as to what people are using these days for emergency funds or just short term storage for purchases (car, house down payment, etc)? I am currently using I-Bonds for a portion. I am eyeing the Ally 5 year CD for the other portion with the thought of taking the 60 day interest penalty if I did an early withdrawal. I like the idea of having a mixture of funds spread out between I-Bonds, CDs and maybe even stocks for a certain portion I can be okay risking a little. I just pulled a portion of the funds out of Capital One Interest Savings account when they reduced rates to .05%.

So, to recap, what are you using for yours - I-Bonds, CDs, Savings Account, Stocks/Bonds, etc?

Thanks.
Emergency funds: 1/4 cash in a bank savings account (3 mos worth), 3/4 in short-term bonds (9 mos worth). Any sinking funds I do for near-term purchases/expenses are in a bank savings account. The only item I've have in that category at the moment is money for my property taxes due in October.
Don't do something. Just stand there!

RNJ
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Re: What Are You Using for Your Emergency Funds?

Post by RNJ » Thu Jul 25, 2013 8:55 am

jupiter_man wrote:VMLUX: Vanguard Ltd-Term Tx-Ex Adm
+1

Allocated to short-term bond portion of my portfolio.

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hand
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Re: What Are You Using for Your Emergency Funds?

Post by hand » Thu Jul 25, 2013 9:08 am

I use a tiered approach and don't really draw a line between where my emergency fund ends and my taxable investing starts:

Credit card with high borrowing limit
Checking & Savings Accounts
Vanguard taxable Money Market Accounts
Paper I-Bonds
Individual Stocks / Stock funds
Roth Accounts / 401(k) borrowing options

Investing is boring
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Re: What Are You Using for Your Emergency Funds?

Post by Investing is boring » Thu Jul 25, 2013 9:14 am

1: Credit Cards
2: Checking
3: Short term bond fund in Taxable
4: iBonds
5: Other assets in Taxable


Its about $150k in purchasing power, accessible within a few days.

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Sunny Sarkar
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Re: What Are You Using for Your Emergency Funds?

Post by Sunny Sarkar » Thu Jul 25, 2013 9:46 am

We use a combo of Prime MMF & VFSTX (Short-Term Corp) in a taxable account with check writing facility. We're aware of and comfortable with the risk posed by the VFSTX portion.
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

thx1138
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Re: What Are You Using for Your Emergency Funds?

Post by thx1138 » Thu Jul 25, 2013 10:12 am

I am blessed with a TSP so I keep much of the emergency fund in the magical G-Fund (2.125% at the moment) with a fair chunk of equities in my taxable account. If I need to tap the emergency fund I sell the amount of taxable equities I need and then in the TSP move an equal amount of G-Fund to a corresponding equity position (e.g. I-Fund if I sold international equities in the taxable account). This indirect storage of an emergency fund in a tax-sheltered account is very sensible, but it assumes you have a appropriately sized taxable equity account. This scheme is well described in the wiki.

I kind of wish I had more in the TSP part of my portfolio but I didn't work for Uncle Sugar for very long and at present I have no practical mechanism to roll over other accounts into my TSP (though that is high on my list if I ever change jobs).

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Re: What Are You Using for Your Emergency Funds?

Post by z3r0c00l » Thu Jul 25, 2013 10:32 am

Chase savings and checking is the real emergency fund, that one that could get me cash right away via ATM, credit card, debit card - about 9 months of normal spending plus $15,000 of credit. Ally CDs and ibonds are the second tier and they could get me cash within the week at minimal loss of income and no loss of initial investment - another 9 months at this time. Intermediate bonds in taxable are the third tier and are used in an extended emergency or sudden unexpected cost like buying a home or medical emergency - a third nine months of living if needed. Everything else is on a 20+ year horizon and so is more or less untouchable.

island
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Re: What Are You Using for Your Emergency Funds?

Post by island » Thu Jul 25, 2013 10:39 am

gnosis wrote:5-year CD ladder of five accounts in our credit union. They are all now getting 5-year rates of 2% or greater.
Gnosis when you say ladder, do you mean you open an additional one the next year for 5 years total?
Can you please share what credit union you're using. I haven't seen 2% or more.
Thanks.

gkaplan
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Re: What Are You Using for Your Emergency Funds?

Post by gkaplan » Thu Jul 25, 2013 11:04 am

Roth IRA
Gordon

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Re: What Are You Using for Your Emergency Funds?

Post by technovelist » Thu Jul 25, 2013 11:21 am

Checking account, which generally has 4-5 months mandatory expenses, then margin loans on my securities held at my broker, then loans from my own corporation's profit sharing plans.

In another 18 months I'll be able to collect Social Security whether or not working, so I won't need as much of a cushion. At present, if I lost my job midway through the year I would be over the income limit, so I wouldn't be able to collect until the next year.
In theory, theory and practice are identical. In practice, they often differ.

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BolderBoy
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Re: What Are You Using for Your Emergency Funds?

Post by BolderBoy » Thu Jul 25, 2013 11:28 am

RNJ wrote:
jupiter_man wrote:VMLUX: Vanguard Ltd-Term Tx-Ex Adm
+1

Allocated to short-term bond portion of my portfolio.
+2, exactly this way.

letsgobobby
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Re: What Are You Using for Your Emergency Funds?

Post by letsgobobby » Thu Jul 25, 2013 12:52 pm

Investing is boring wrote:1: Credit Cards
2: Checking
3: Short term bond fund in Taxable
4: iBonds
5: Other assets in Taxable
We also have a layered EF

1. rewards checking account (earns 2.25%)
2. I bonds
3. cash value of life insurance
4. taxable investments (all of them have capital gains so not in a rush to incur taxes when selling).

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