I did it! I finally have six months of savings in an emergency fund!
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Anonymous
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We gave up on this once we realized it would be $90k locked up in cash.
Most of you are much more wealthy than us, are you really tying up $300k in HYSA? |
Anonymous
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If OP is a teacher or work for a state agency, I think 6 months of emergency is enough. 6 months emergency (which is arbitrary by the way because why not 14/18/24 months) is more crucial for those who work in the private sector or federal government.
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Anonymous
When I was living in NY I put 100k in a CD, but when tax time came out I didn't anticipated that NY wanted it's cut. I should have known lol because if NY can tax the air you breathe they would do so |
Anonymous
Good luck to you and CONGRATS op. |
Anonymous
No. Do not do this. You should put money in SGOV so it actually grows a little and somewhat keeps pace with inflation. With any other ones you save behind the emergency cash you should invest in VTI and VXUS. Keep adding money to those. You’re welcome. |
Anonymous
This. Invest it you idiots. Bread index funds. Global ones now like VXUS or VWO. You can make 15% a year. |
Anonymous
You don’t understand the concept of emergency funds. |
Anonymous
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Congrats! Such a good feeling!
In addition to a 6 month emergency savings, I also have a "life happens" account. Life happens is for when the car needs new tires, or something breaks down (like you need a new dishwasher), or there's a big vet bill - biggish ticket items that would blow / stress your monthly budget. You pay for the new dishwasher or the cat's operation or whatever and it's not stressful because the money it there, and every pay check you're adding a same steady amount. This way you don't touch the "6 month account" but you have money to cover those things that come up. Psychologically, it was really helpful for me to separate those two categories and always keep the emergency fund full. |
Anonymous
Really what are the chances you will be laid off AND immediately the stock market crashes? Thats the scenario where you need EF in cash equivalents. It made sense back when trading stock cost $10 a pop, because converting equity to cash had high transaction costs. |
Anonymous
+1 Put it in a high interest savings account, not even a CD. Index funds are NOT for emergency fund money. |
Anonymous
So people are putting $200k into a savings account? |
Anonymous
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If it’s a true emergency fund, you may need it quickly so I wouldn’t recommend a CD.
HYSA for some of it, and SGOV/MMF for the rest. VMFXX or VUSXX for a money market fund. I have mine split half between a HYSA (local credit union) and SGOV. Check the taxes issue in your state to decide. |
Anonymous
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I dont really see the benefit of putting money in a HYSA or other safe place that is going to get eaten up by inflation. If I have 6 months of emergency funds thats opportunity cost that im losing, maybe 5+% annually.
If i lose my job I could cash out roth contributions, HSA funds for COBRA premiums, and use a CC, worst case 401k woth penalty. If the market stays strong I am way better off using funds that I can access without penalty. Let's say the market tanks. Well If job loss is 6 months or less its probably a wash between market drop and lost opportunity cost of not investing those bank funds. If job loss is 1-2 years or longer I am F-ed no matter what i do because I have nowhere near enough income to pay my bills and will have no choice but to eat up my retirement, and nobody says to keep that much cash anyways. |
Anonymous
You don’t understand the concepts of inflation and dollar devaluation. |
Anonymous
| Yeah for you! |