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If you are CD laddering that locks up your funds.
What if he locks his money in a CD for 3-6-9-12 months on Friday
and then the next Monday he gets a pink slip?
Then he cashes in one.
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He's screwed
No he isn't. It's not penalty free but at worst he loses that 3 months of gain.
And it's deductible.
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I would either keep my emergency fund in a standard savings account or a good ETF.
Good for you. You probably have more discipline than most do.
Which is the real reason to LOCK IT UP... to keep grubby paws off absent a real emergency.
i have always felt that if i have to resort to spending time to moving money and searching for banks to maximize my return on the cash portion and fractions of a point matter enough to take time to do that , i better have a good look at my total investment plan , because the cash portion should not be that much of a concern overall in the big picture .. .
i won't stuff it in a mattress but i won't go setting up accounts all over the place either and we hold a years worth of cash being retired . i much rather devote the time ,effort and energy on the other 96% of our portfolio . perhaps a better idea instead of using cash instruments would be to use an ultra conservative bond fund which holds very very short term paper . the rates are fine for what it is and there is no money to move or have to deal with another tax line entry .
i do that and just keep everything centralized in my investment/brokerage account .
Last edited by mathjak107; 01-27-2018 at 05:12 AM..
since I live in a HCOL my emergency fund is 1 year of living expenses
If you are basing your emergency fund on expenses (which seems like an appropriate plan) shouldn't it be COL neutral? One year of expenses whether in San Francisco or Mobile, the former would be a much higher amount but they'd both be one year of expenses.
nealtaylor illustrates nicely why there is no "one size fits all" recommendation for emergency funds. Variables such as security of job, how hard to find another, whether spouse has job in different industry, etc. come into play.
nealtaylor illustrates nicely why there is no "one size fits all" recommendation for emergency funds. Variables such as security of job, how hard to find another, whether spouse has job in different industry, etc. come into play.
I am also in education, which is why I don't have as much in an emergency fund.
1. My job is safe
2. IF something happens to my job, I can sub teach and make enough to survive on, but I also umpire/referee a lot
And even if you lose your job in June, you still have 2 months to find something..
What I have done is have $5K in a savings account making nothing.. and then have much more in non retirement ETF
I was living in Texas during the recession. In the 2010-11 school year the state took a cleaver to education because god forbid taxes get raised a point. All of us that were hired within the last few years were the first to be RIFed. The remaining teachers all got an extra 5-10 students in their classes.
I won't soon forget that.
Some people did get by subbing or some other gig work until over the next 2-3 years they hired most of the people back who wanted back. I was livid and left the state; good riddance. I now work in state with a MUCH more generous retirement plan.
To me, how much -- and how tied up my EF is depends on how much I keep in my local checking (or savings day-to-day).
I keep at least two month's financial pad in my local checking account as a minimum anyway. So personally I'm never so tight financially that missing. paycheck puts the wolf at my door right away.
I know some people keep just. enough. to. pay. monthly. bills. in their checking or savings account. But 1) I don't like transferring money every month, and 2) psychologically I need more day-to-day financial cushion than that. It's strictly a personal comfort level.
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