Hi everyone. First post to this board. I've just gotten out from underneath a mountain of debt. I paid off almost $28K over the past 2 1/2 years and so now I'm looking for some advice. My first order of business is socking away some money for emergencies. I'd like to set aside about six months worth. Where should I be stashing this money? A savings account at the local bank or is there a better place that is readily accesible if I need it in a true emergency? After that, I'd like to start up an IRA, but first things first. I'd feel better with that cushion in case the unforeseen happens. Thanks in advance. Jim
Jim, if you have access to a good credit union you can frequently get pretty fair rates there(mine currently offers 2.52%on savings accounts) and anywhere from 3months to a year or two in it should be a good cash cushion.Depending on your situation.But it sounds like you are on the right track.Magique
I use a tax free bond fund for an emergency fund. Many of them will allow telephone transfers and check writing. So your funds are instantly available. You tend to get pretty good yield with them. But it depends on how often you dip into your emergency fund. Every check creates an entry on your income taxes. Most have $1000 minimums to open the account. There are also sometimes limitations on checks. No checks smaller than $500, etc. So you write the check to yourself and deposit it in your checking account.
Most people recommend a MoneyMarket account instead of a savings account or a bond fund for an emergency fund.Try Netbank Money Market. They allow checkwriting up to 3 per month, and they have consistently had higher rates than most other places I check on, outside of ING. (Which doesn't have checkwriting, which I like.)I've had my emergency fund there for several years now and am very pleased with the service. www.netbank.comHope this helps.Caat
Hi Jim. Congratulations on paying off your debt!This sort of thing is discussed often on the "Fools and their Money" board, here:http://boards.fool.com/messages.asp?mid=17058522&bid=100148Go back a month and read through. It's a quality board. So's this one, but here we talk mainly about retirement accounts.These links should be helpful to you:Motley Fool Savings Centerhttp://www.fool.com/savings/savings.htm?ref=PFinAgin particular this article:http://www.fool.com/savings/shortterm/03.htm?ref=smpWhere to stash your cashhttp://www.fool.com/seminars/ccportal.htm?REF=PRPFMP60-second guide to short-term savingshttp://www.fool.com/60second/savings.htm?ref=prmpgid
Howdy, congratulations on getting rid of the debt!Here's an interesting thread on the money market thing:http://boards.fool.com/Message.asp?mid=17047236A fair number of folks seem to do this kind of thing for the e-fund. Go forth and build it up, then come back and sit with me to learn at the feet of the Foolish about how to invest! ;-)Onward!Tamarian...who has lost all feeling in her feet from all the yoga-like sitting she's been doing lately on these retirement boards...
I recommend ING: http://home.ingdirect.comAt 3% interest, I haven't found anyone to beat them. As a previous poster said, it is true that they do not offer check writing, but I don't think most folks want their e-fund to be quite that accessible. Makes it too easy to dip into in for non-emergencies. You can "link" your checking account to your ING account, which means you can electronically transfer funds from ING to checking within just a few days, so it's not like it's not readily accessible.I do have my checking account with NetBank, however, again because of the interest rate. 1.51% on checking. Sweet. :-)Thanks!Joe
Joe,Let me invite you to the Online Banking board.http://boards.fool.com/Messages.asp?bid=100152In the past we've had numerous discussions about how to maximize the interest rate on our emergency fund and liquid accounts.
Thanks for the invite--great board! :-)Thanks!Joe
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