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Old 02-29-2012, 12:42 PM   #21
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It may have that label as a legacy but I doubt any savings account currently has the performance to qualify as 'high yield'.

Well, ok, in this context, by "high yield" I meant "practically no yield at all".

It's in an FDIC insured account, which might be safer than my mattress.

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Old 02-29-2012, 12:47 PM   #22
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Only 1 month. I figure I can pull money from my Roth IRA in an extreme situation.
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Old 02-29-2012, 01:13 PM   #23
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This is a great thread, thanks to the OP. I keep 18 months of living expenses in a money market account for my emergency funds. I have no mortgage and zero car payments so I am hoping that 18 months should be enough. It is also relatively easy for me to find work in my field (I am a CPA in the Wash DC area) albeit not necessarily at the same salary level.
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Old 02-29-2012, 01:14 PM   #24
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For emergencies we've got 9 months cash in a local bank savings account paying 1.5%. DH's pension covers our monthly living expenses so that's more for other/unknown emergencies.
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Old 02-29-2012, 01:22 PM   #25
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3 months of cash
1 month of I-notes (from 2002 time frame but as notes they're cashing out this year)
8 months of brokerage accounts, at 50% market loss
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Old 02-29-2012, 01:43 PM   #26
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7.77 months at the moment, although that is lower than it usually is since I am prepping for my daughter's special trip to Hawaii (which is a double-whammy, because it increases my monthly average spending amount, and it decreases the size of my emergency fund).

Thought process: I had read many suggestions, and decided that for my particular circumstances - single guy, three kids, mortgage, child support payment - I needed a certain amount of "sleep at night" factor. I also reviewed my history; since graduating high school I've been not working for at most approximately 4 months. So I set my goal at 6 months, and as noted above am almost always above that amount.

I keep it in a mix of cash and cash equivalents and I keep a portion in a taxable index fund.

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Old 02-29-2012, 02:37 PM   #27
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Over 2 yrs worth of funds in cash, plus over 1 yr worth of short term bonds/MM I can pull out in a hurry... I wanted to keep some cash in case I decide to buy a house and need the down payment fast, but then, I have been thinking like this for years... I have a feeling I end up buying a house in a rural area with this cash when I retire... So I really should invest what I have as cash more wisely... I have been spending the cash to buy more stocks/ETF's, but I need another market dip to get more.
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Old 03-01-2012, 02:07 PM   #28
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I have about 1 year of expenses in a savings account and add a small amount every month. Excess money goes into an IRA, and when I hit the max on that the excess goes into a mutual fund. There's no reason to stop putting money into your emergency fund, once you hit the amount you want you can start throwing it into something a bit more risky.
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Old 03-01-2012, 02:42 PM   #29
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9 years in CD and MM. Guess I'm a little paranoid...
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Old 03-01-2012, 04:56 PM   #30
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A little over 3mos. For now that seems plenty sufficient with two stable jobs.

As we finish paying back various debt we'll probably both gradually increase our emergency fund to 6mos and then debate on what to do with the rest of the money i.e. (more 401k, more taxable, savings for future car purchas/house upgrade etc) and see what works out as the best balance between future and current spending.
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Old 03-01-2012, 05:27 PM   #31
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I've never been a fan of such one size fits all rules; the comments pretty much show why. I'm on verge of r and never had more than a month or two in true savings account. Now I have about a years worth of needs (above pension income) in cash. I don't consider that an emergency fund, just a bucket that intend to replenish as needed and as markets would indicate is a good idea. Like right now I may sell some stuff to fill it up a bit more.

I always thought the 6 months made sense for those who were more vulnerable to job loss or would likely be in mortgage/payment trouble if they lost their job. But, wouldn't those be the very people who would have the hardest time accumulating such a fund? Then again, I'm a nut who never had a car payment and got rid of the house payment as soon as I could (think was about 45). As for Ms. Orman, I've never listened to her as I sort of find her obnoxious!
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Old 03-01-2012, 07:02 PM   #32
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I have about 1 year of expenses in a savings account and add a small amount every month. Excess money goes into an IRA, and when I hit the max on that the excess goes into a mutual fund. There's no reason to stop putting money into your emergency fund, once you hit the amount you want you can start throwing it into something a bit more risky.
Good idea, except once you start throwing money in risky assets, it's really no longer an emergency fund. I think what you're really suggesting is that once your rainy day bucket is full, you like to add more to your retirement bucket... correct?
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Old 03-01-2012, 07:12 PM   #33
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I keep about 5-6 months to pay bills, 1 month for house note cause it is paid by military retirement, I hope secure and 4 months of house note for rental house, which I'm moving to 6 months. Emergency for bills is in CD ladder.
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Old 03-01-2012, 08:32 PM   #34
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Does anyone consider severance pay? If you have been with your company for a number of years, it is likely there will be a severance payment. Some companies use 2 weeks pay for every year; others are more generous (I guess some less generous).

Perhaps 3 months in easy access cash; less if we take our trip to Hawaii this summer Perhaps 5 months with some other funds included.
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Old 03-01-2012, 09:14 PM   #35
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Does anyone consider severance pay? If you have been with your company for a number of years, it is likely there will be a severance payment. Some companies use 2 weeks pay for every year; others are more generous (I guess some less generous).

Perhaps 3 months in easy access cash; less if we take our trip to Hawaii this summer Perhaps 5 months with some other funds included.
Sometimes severance pay just doesn't apply, for example after a natural disaster when sometimes there is nobody (and no company) any more to pay it.
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Old 03-01-2012, 09:33 PM   #36
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Does anyone consider severance pay? If you have been with your company for a number of years, it is likely there will be a severance payment. Some companies use 2 weeks pay for every year; others are more generous (I guess some less generous).

Perhaps 3 months in easy access cash; less if we take our trip to Hawaii this summer Perhaps 5 months with some other funds included.
Funny you should mention that, but yesterday SIL just got laid off. He had worked for the company for 3 months short of 5 years and has received 18 weeks severance pay.
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Old 03-01-2012, 09:56 PM   #37
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Retired now. I keep about 1-2 years in a money market or short term low risk investment. I am starting to move some $$ into preferred stocks which have a bit of risk, however, pay a decent rate of return. I have high lines on credit on my 2 credit cards which I generally use for any major purchase but never carry any balances.
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Old 03-01-2012, 10:05 PM   #38
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Only 1 month. I figure I can pull money from my Roth IRA in an extreme situation.
Roths have been a real game-changer for that, haven't they?
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Old 03-01-2012, 10:08 PM   #39
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I have about 18 months of expenses in a mix of savings account, CDs and I bonds. I also have another 4 months in some junk bonds. Add in unemployment insurance and a very stable job and I am probably overboard, but the CDs are part of my bond allocation.
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Old 03-02-2012, 02:07 AM   #40
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I'm single with no dependents, working and until last year was an apartment dweller.

From 2001-2005 I was paying off $20k of credit card debt but had money in a 401(k) and family to fall back on if things went really bad. I kept around $1k extra as a cushion more than emergency savings.

Once I paid off the debt I had to figure out where/how to save my newly freed income. I eventually arbitrarily decided on a $10k emergency fund target followed by after-tax savings for medium-to-long term but tappable in case of emergency need. Or house down payment.

I dipped below $10k after buying the house. I've had the house almost a year, but I don't think I have any equity. As I build equity I may need to rethink my emergency fund amounts.

Most of my emergency fund is in $1k PenFed CDs, but some is in a MM fund to keep Vanguard happy and some is in checking/savings as a cash flow buffer.

I recall thinking that saving 6-18 months of money would have taken me a long time, have almost zero return and skew my overall AA towards fixed income. But I did prioritize after-tax savings so I wouldn't have to pay income tax and penalties if I had to use more than my $10k cash-similar emergency funds and credit wasn't enough.

I'm a long, long way from starving or not having a roof over my head. My big semi-realistic fears during protracted unemployment are having to drain the IRAs and 401(k) while NAVs are down and taxes+penalties eat up nearly half the withdrawals. And also now losing the house. Although I put effort into regarding the house as a commodity shelter/dwelling, so while I won't flippantly walk away from it I'd have to look long and hard at how much of my retirement savings I would want to burn to avoid losing it.

But more realistically I think I could get a $10/hour job and/or spend on credit and pay minimum payments and tread water a while.

Of course if I had kids I'd probably be a lot more paranoid/protective of their interests.
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