Seeking to save $20,000 in one year

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peterwantstosave
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Seeking to save $20,000 in one year

Post by peterwantstosave » Fri Nov 24, 2017 8:36 pm

Friends,

On November 24, 2018, I'd like to have $20,000 saved up in an emergency fund.

My problem tends to be that I can't help but touch money that is socked away in an emergency fund, so ideally I would be looking for a fund that I cannot easily touch until I reach the full amount desired.

I make $47k per year, am contributing to my 403b up to the match, have no debt and own my home free and clear. I say that to say that I'm generally good at personal finance, but something about saving that much money is hard for me to logistically do.

I could take out a personal loan or do a HELOC or a home equity loan, but those seem like using a shotgun to swat a fly. I'd like to use a simple, daily (automated if possible) fairly idiot proof (for my own sake) way of saving this money.

Thoughts? Ideas?

Thank you in advance, Peter

2stepsbehind
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Re: Seeking to save $20,000 in one year

Post by 2stepsbehind » Fri Nov 24, 2017 8:45 pm

Take on a second job. Otherwise between taxes and 403 contributions it may not be realistic to save 20k on a 47k salary--also if you have a paid in full house why do you need a 20k emergency fund? You might be better served contributing more to your 403 account and having a more modest amount of savings.

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bligh
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Re: Seeking to save $20,000 in one year

Post by bligh » Fri Nov 24, 2017 8:58 pm

That is a pretty aggressive goal on your income. I hope you are able to reach it!

If you are married, you and your wife could consider setting up an automatic purchase of I Bonds each month or so.. up to $10K / person/ year.

IBonds are great, they keep up with inflation, give you a better return than a savings account, are state tax free, compound tax deferred, and more importantly for you, every dollar you put in you will not able to touch for one year. If you are okay with that it might work for you. Obviously if you DO end up needing this money in less than a year it would be a problem.

If I needed to have the funds accessible in a true emergency in less than a year, and I didn't think I had the discipline to not touch the money.. I would setup a good online high yield savings account, and schedule it to pull from my checking account monthly. Then I would set a long complex password that I would print out and keep in a safe deposit box in the bank.

This way I would have no way of logging into the savings account to transfer funds back out. The only way to do so would be to drive to the bank to get at my safe deposit box, get the printed password and come home to use it to log in and transfer the funds out. I would imagine I would REALLY want the money to go through all those hoops.

peterwantstosave
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Re: Seeking to save $20,000 in one year

Post by peterwantstosave » Fri Nov 24, 2017 9:17 pm

Thank you both. I will think about each of these options and let you know what I decide :) Appreciate the insight

venkman
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Re: Seeking to save $20,000 in one year

Post by venkman » Fri Nov 24, 2017 9:28 pm

peterwantstosave wrote:
Fri Nov 24, 2017 8:36 pm
On November 24, 2018, I'd like to have $20,000 saved up in an emergency fund.

My problem tends to be that I can't help but touch money that is socked away in an emergency fund, so ideally I would be looking for a fund that I cannot easily touch until I reach the full amount desired.

I make $47k per year, am contributing to my 403b up to the match, have no debt and own my home free and clear. I say that to say that I'm generally good at personal finance, but something about saving that much money is hard for me to logistically do.
What do you keep spending the emergency fund money ON? You have no debt and own your home, so it seems like your spending habits aren't a problem.
If you're using the EF money for legitimate expenses that come up that you can't cover with your regular income, there's nothing wrong with that; it's part of what an EF is for. If you look at your EF and decide it's high enough that you can afford a luxury item (car, trip, etc.), that could be a problem; but it doesn't sound like that's what you're doing...

pkcrafter
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Re: Seeking to save $20,000 in one year

Post by pkcrafter » Fri Nov 24, 2017 9:34 pm

Peter, what is your age? How much is in the 401k? Answers to those questions will give a little more to go on.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

peterwantstosave
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Re: Seeking to save $20,000 in one year

Post by peterwantstosave » Fri Nov 24, 2017 9:47 pm

HI Paul,

I am 34, about 30k in the 403b.

Hope this helps, Peter

pepperz
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Re: Seeking to save $20,000 in one year

Post by pepperz » Fri Nov 24, 2017 9:50 pm

WHY do you you need to have 20K saved within a year?

If it was for your child who needed a life saving operation I guarantee you will do it even though it’s a significant chunk of your salary.

I would like to lose 15 lbs of fat and gain 10 lbs of muscle by your target date but if I don’t decide I “need” to do it then I won’t.

peterwantstosave
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Re: Seeking to save $20,000 in one year

Post by peterwantstosave » Fri Nov 24, 2017 9:54 pm

venkman wrote:
Fri Nov 24, 2017 9:28 pm
peterwantstosave wrote:
Fri Nov 24, 2017 8:36 pm
On November 24, 2018, I'd like to have $20,000 saved up in an emergency fund.

My problem tends to be that I can't help but touch money that is socked away in an emergency fund, so ideally I would be looking for a fund that I cannot easily touch until I reach the full amount desired.

I make $47k per year, am contributing to my 403b up to the match, have no debt and own my home free and clear. I say that to say that I'm generally good at personal finance, but something about saving that much money is hard for me to logistically do.
What do you keep spending the emergency fund money ON? You have no debt and own your home, so it seems like your spending habits aren't a problem.
If you're using the EF money for legitimate expenses that come up that you can't cover with your regular income, there's nothing wrong with that; it's part of what an EF is for. If you look at your EF and decide it's high enough that you can afford a luxury item (car, trip, etc.), that could be a problem; but it doesn't sound like that's what you're doing...
I meant to reply to this earlier, but perhaps I forgot to hit submit. I try to be really careful with the EF. Last thing I used it for was Hurricane Evac in AUG. All was well, the hurricane ended up turning. I have about 5k in the EF now, and like the idea of adding another 15 to 20 over the next year. Appreciate the interest.
pepperz wrote:
Fri Nov 24, 2017 9:50 pm
WHY do you you need to have 20K saved within a year?

If it was for your child who needed a life saving operation I guarantee you will do it even though it’s a significant chunk of your salary.

I would like to lose 15 lbs of fat and gain 10 lbs of muscle by your target date but if I don’t decide I “need” to do it then I won’t.
I appreciate the emphasis on the why element. I think my why is that, if I were able to accomplish this task, I would feel confident in my ability to save, budget, spend, give and invest money. I am good at four of those five, but I want to get as good at saving as (I feel) I am at the others.
Peter

Dottie57
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Re: Seeking to save $20,000 in one year

Post by Dottie57 » Fri Nov 24, 2017 10:12 pm

Trying to save 20k seems unrealistic. Set an amount from each paycheck that is reasonable and put it into savings. Have the bank do it automatically. Or if you can, have your employer put paycheck into 2 accounts so you never see it in checking.

The key is a reasonable amount.

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badbreath
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Re: Seeking to save $20,000 in one year

Post by badbreath » Fri Nov 24, 2017 10:29 pm

by Dottie57

Trying to save 20k seems unrealistic. Set an amount from each paycheck that is reasonable and put it into savings. Have the bank do it automatically. Or if you can, have your employer put paycheck into 2 accounts so you never see it in checking.

The key is a reasonable amount.
I generally agree with this but I would put it into a separate bank like Ally to make it harder to get to
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

peterwantstosave
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Re: Seeking to save $20,000 in one year

Post by peterwantstosave » Fri Nov 24, 2017 10:33 pm

Thank you all

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Watty
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Re: Seeking to save $20,000 in one year

Post by Watty » Fri Nov 24, 2017 10:53 pm

peterwantstosave wrote:
Fri Nov 24, 2017 8:36 pm
My problem tends to be that I can't help but touch money that is socked away in an emergency fund, so ideally I would be looking for a fund that I cannot easily touch until I reach the full amount desired.
A long time ago when ATM's and automatic payroll deposit was limited but I saved up the downpayment for my first house by having part of my paycheck automatically deposited into a credit union that was on the other side of town. The only way to withdraw money from it was to go over to the credit union during my lunch hour, which I could just barely do since it was so far away.

If you open up an account at someplace that is inconvenient to you and don't you don't have an ATM card that could help prevent you from using that money.

pkcrafter
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Re: Seeking to save $20,000 in one year

Post by pkcrafter » Fri Nov 24, 2017 11:07 pm

peterwantstosave wrote:
Fri Nov 24, 2017 9:47 pm
HI Paul,

I am 34, about 30k in the 403b.

Hope this helps, Peter
OK, 30k invested is good. I agree, you need an EF, but getting 20k in it in a year is a big order.
I could take out a personal loan or do a HELOC or a home equity loan,
That is a really bad idea. It's also bad if you don't have an EF and you can't work, so the EF is a top priority. I don't think I like this idea to much, but you could forgo 403b contributions for awhile, and that will enable you to get committed and start toward the 20k.

Does your job offer some way of automatically putting part of your pay into some kind of saving account each month? Automatic savings would make the task a lot easier.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

AlohaJoe
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Re: Seeking to save $20,000 in one year

Post by AlohaJoe » Fri Nov 24, 2017 11:13 pm

You can put them in a certificate of deposit. Then there is a penalty for using it. But in a true emergency the penalty is worth paying. If you can find a CD with a low minimum then just open a new one every month with whatever you have saved. Yes, you'll have 12 of them by the end but...meh, so what? After a year you can consolidate the 12 into 1.

JBTX
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Re: Seeking to save $20,000 in one year

Post by JBTX » Fri Nov 24, 2017 11:45 pm

You could put half of the money in a separate account like ibonds or CDs which aren’t quite as immediately liquid and put the other half in a Roth IRA which would allow you to pull out principle if necessary but only something you do as a last resort. Have these amounts automatically withdrawn and deposited each pay period.

WL2034
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Re: Seeking to save $20,000 in one year

Post by WL2034 » Sat Nov 25, 2017 12:37 am

If the problem is spending money that you have earmarked for savings / emergency fund, consider opening an online savings account with Ally. Don’t open a checking or money market account. Don’t order checks or atm cards. Transfer the amount you hope to save at each pay period ($20k / # of yearly pay periods) out of each paycheck to the Ally savings account. You can still access the money easily, but it will require transferring back to your other bank (2-3 business days), which should help prevent impulsive spending of the money.

pepperz
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Re: Seeking to save $20,000 in one year

Post by pepperz » Sat Nov 25, 2017 12:50 am

Sounds like those are not new reasons for you and you already said you failed before even with those reasons.

I don’t know you but the reasons you gave do not sound strong to me. Besides you saying “I think” (instead of “I KNOW...”), they are not even clear and you already admitted 4/5 of them have been achieved and “covered”.

Forgive me if it sounds like I’m betting against you because I am not. I just don’t see a real “need” here for you to change your behavior but a vague “want”.

Everyone “wants to feel confident” when they look in the mirror but that’s not enough to wake up at 5am and go to the gym every day and change your eating habits throughout the day.

I don’t think a tactical answer will give you what you need here.
peterwantstosave wrote:
Fri Nov 24, 2017 9:54 pm
pepperz wrote:
Fri Nov 24, 2017 9:50 pm
WHY do you you need to have 20K saved within a year?

If it was for your child who needed a life saving operation I guarantee you will do it even though it’s a significant chunk of your salary.

I would like to lose 15 lbs of fat and gain 10 lbs of muscle by your target date but if I don’t decide I “need” to do it then I won’t.
I appreciate the emphasis on the why element. I think my why is that, if I were able to accomplish this task, I would feel confident in my ability to save, budget, spend, give and invest money. I am good at four of those five, but I want to get as good at saving as (I feel) I am at the others.
Peter

peterwantstosave
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Re: Seeking to save $20,000 in one year

Post by peterwantstosave » Sat Nov 25, 2017 7:50 pm

Thank you all. I appreciate the feedback.

Here's what I did: I opened a checking account at a new (to me) bank in town. Plan is to only use that account for deposits and only use that account for this EF. I'll check back and report my progress. I realize finance is about 95% percent behavior, so I'm hopeful that I'll give myself the kick I need. Thanks to those in the forum who told me to get my priorities straight, you're exactly correct

P

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