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Savings account?

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Paxx
Contributor

Savings account?

Hey guys,

 

Not sure where this belongs so I am posting here!

 

I just read a post about having your emergency funds account separate from your savings account you have at the bank you do your usual checking/savings with and only using this money for true emergencies. The post further explained to put most of your money your saving in the emergency fund account while still contributing to your regular savings. Then you can use your savings for stuff like paying credit cards in full, vehicle break down etc but you will still have the emergency funds available it something serious happens.   I think this is a great idea because it would hold off any temptations we may have to dip into our emergency funds.  My wife and I just got married and bought a house so we're just started. We realize the first and most important step is to get a goose egg saved up just incase.  We have a head start with around $3500 in the savings right now and we're working to build that back up.

 

My question is does anyone have a suggestion on a good bank with decent interest rate? Should we look into local credit union's or the major banking companies?  What about online banks?  

 

Thanks guys!

 

Message 1 of 9
8 REPLIES 8
thedaveytrain
Valued Member

Re: Savings account?

I'm getting 1.39% from INGDirect right now. That's pretty high considering what most banks are offereing. My regular savings at the cu is only 0.20%.
01/25/10 - TU 709, EQ 729, EX 705
Message 2 of 9
wmarat
Valued Contributor

Re: Savings account?

I use high yield checking account.

 

http://www.highyieldcheckingdeals.com/

IN VINO VERITAS.
Message 3 of 9
DI
Super Contributor

Re: Savings account?

I'm with Discover Bank.  I use to save with EmigrantDirect until the rates reduced significantly. 
Message 4 of 9
cobra19
Valued Contributor

Re: Savings account?

Don't believe in savings acccounts or "emergency" accounts. IMO, you are giving your money to a bank for their use, and you get virtually nothing in return.

 

I make maximum contributions to my 410k, and anything extra goes into stocks and futures. There are soooooo many good opportunities out there, seems a shame to keep cash in a savings and/or emergency account. We are now witnessing the beginnings of a new bull market.

 

 

 

 

 

 

 

New York Yankees - 2009 World Series Champions. 27... and counting.....
Message 5 of 9
Paxx
Contributor

Re: Savings account?

I agree the time to invest in stocks is now but honestly I don't have a whole lot of history with stocks and frankly I'm not 100% sure how they work.  I do know however, in this economy my job could  go poof with very little (if any) notice and that scares the crap out of me.  Before when renting and having only a few small bills we were responsible for, a savings account wasn't that big of a deal. After all if things went south we could simply buy out of our lease and then go live with family if it got that bad. Now that we're in a mortgage and trying to get pregnant it's hitting home. I need to know we have at least a year of secure readily available funds available to us if we need more so if we have a baby on the way. It just seems irresponsible to bring a baby into this world without the security there to afford one. Like I said I'm not completely sure how stocks work but if I lose my job tomorrow and need to pay the mortgage next week it's nice to know that I will only have to move some money around to be able to cover the note.  I'm not sure how long it would take to dump all your stock to get the money - maybe it's as easy as moving money from your savings to yoru checking.

 

thanks for the reply all, gave me some stuff to think about and banks to research!

Message Edited by Paxx on 11-09-2009 07:02 AM
Message 6 of 9
OonaMission
Regular Contributor

Re: Savings account?

It is pretty easy to dump stocks and have the money transferred into your bank account within 24-48 hours. The only thing that is difficult is selling that fast at the price that you want. You can sell something instantly at the price that the stock is going for at that moment. You should definitely start researching investments. I say that especially if you're trying to get pregnant and aren't 100% secure in your job (who is these days?) that it makes sense to have 6 months of living expenses saved. Work on learning more about the stock market while you work on 6 months of savings, and then start putting additional money into the market. Check out sharebuilder.com. You can set up an account there almost like a 401K where you choose stocks or ETF's (they'll even help you choose a portfolio) and then automatically deduct from your bank account each month and invest proportionately in your porfolio. Especially if you're not hugely versed in the stock market, it's a great way to set money aside and ride the ups and downs of the market rather than trying to constantly trade.

Message 7 of 9
Anonymous
Not applicable

Re: Savings account?


@Paxx wrote:

Hey guys,

 

Not sure where this belongs so I am posting here!

 

I just read a post about having your emergency funds account separate from your savings account you have at the bank you do your usual checking/savings with and only using this money for true emergencies. The post further explained to put most of your money your saving in the emergency fund account while still contributing to your regular savings. Then you can use your savings for stuff like paying credit cards in full, vehicle break down etc but you will still have the emergency funds available it something serious happens.   I think this is a great idea because it would hold off any temptations we may have to dip into our emergency funds.  My wife and I just got married and bought a house so we're just started. We realize the first and most important step is to get a goose egg saved up just incase.  We have a head start with around $3500 in the savings right now and we're working to build that back up.

 

My question is does anyone have a suggestion on a good bank with decent interest rate? Should we look into local credit union's or the major banking companies?  What about online banks?  

 

Thanks guys!

 


 

Personally, I think that having less than 3 months expenses in an emergency fund is unwise.  And yes I believe that it is the first order of priority, before long term savings and investments.  And yes, IMO it should be separate from the other accounts as the best option and is only touched in emergency and not considered discretionary use money.

 

There are high yield checking and some savings accounts that pay between 2% and 6% (the higher the yield, the lower the max account value). 

 

I believe that the emergency fund should be liquid, not investments.  Investments can lose value, become less liquid at times, etc.  Many financial crisis, ruined credit and the like could be avoided with proper emergency planning and funding.

 

And emergency fund is a "self insured" fund that pays those "unexpected and unplanned" yet unavoidable circumstances.  It is no wiser to fail having emergency funds than it is to fail having proper coverages in other areas, such as home, auto, life and health.  It is for the unknown and areas that cannot be planned for, yet we know can very likely occur.

 

3 months, IMO, is the minimum.  6 months is better.  12 months is very comfortable.  As a part of that plan, my family also participates in a food storage plan in which we store (rotate in our normal use) from 6 months to 12 months of non-perishable, personal care and other consumable items.  Some perishable items that can be stored 3 to 6 months frozen we also keep.  We wait for the "steal" buys and then stock up.  Then we use this storing as our day to day use shopping, and just restock as we can get the best buys.  Every so often canned vegetables go for 3 cans for a dollar.  Other times pasta is clearanced.  Other times shampoo, toothpaste and personal care.  We save thousands per year this way and have it in addition to our cash emergency fund, which means our cash needs in a crisis are reduced because we can "dip" into the storing.

 

Anyway, whatever you do, good luck and good that you are thinking and planning, because not doing so never leads to good outcomes.

 

Smiley Happy 

Message 8 of 9
MattH
Senior Contributor

Re: Savings account?

I strongly agree with TXJohn that everybody should have an emergency fund in something other than stocks, because as he points out a forced sale of stocks at a time when the market is down can be very costly.  Any good book on basic personal finance will explain that stocks are good for long-term investment, but you must be prepared to wait some years in the event of a market slump.  As many people have learned the hard way in the recent downturn, even retirement funds should be moved from stocks into other types of investment years before one's anticipated retirement so that one can control the timing of stock sales.  Millions of people are working extra years right now because their 401K dropped too much for retirement to be possible, and millions of others who were laid off are finding job loss especially challenging because they had too much of their wealth tied up in volatile asset classes like stocks and real estate.  Yes stocks and real estate are still the a good invesment over the long term, but that long term is measured in decades not in years.

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 9 of 9
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