how much do you really need in a savings acct

[Anonymous]

Been saving for a long time. Actually getting tired of it. Got 200k and want to make some home improvements. Shouldnt cost more that 20k to remodel the kitchen and bathrooms. Thoughts?

[Anonymous]

I have no idea what your question regarding $20k in home improvements has to do with a savings account and $200k in savings?

[kxkxkxx]

Great question for Angie's list.

[Anonymous]

Many people say emergency fund should consist 6 months worth of living expenses, I like to give it 1 year. Either case, 200k is probably way over that so I don't see a problem spending that 20k on home improvement.

[pipeguy]

I'm assuming that you are asking if you should finance or spend cash for the remodeling. 

That depends but does not entail paying any interest. Current saving rates are in the 2-3% range assuming the funds are in money-market or CD funds rather than investing in stocks or such.

Using a 2% cash-back credit card would net you a $400 "discount" opening a new card or two plus that offered a signup bonus for spending x-amount within the first 90 days. Taken to the extreme you could open 4 new 1.5% cash back cards and put $5k on each one with a $200 SUB on each plus the 1.5% which would net 4x$200 (SUB) plus $300 in cash back (1.5%) for a cash discount of $1100 - note you would pay in full at the first statement date due so you would pay no interest (apr). 

Another option would be to use Lowes (Credit Card) for the project and either take the 5% cash back and pay in full after 30 days (statement due date) which is a $1000 discount off the $20k, or 12+/- months same as cash (no 5%) where you would "gain" earned interest on the amount left in savings. Lowes/Home Depot are not always the best choice since they sub-contract these jobs out and you might not get the lowest bid using either company (Lowes or HD). 

[Thomas_Thumb]

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@Anonymous wrote:
Many people say emergency fund should consist 6 months worth of living expenses, I like to give it 1 year. Either case, 200k is probably way over that so I don't see a problem spending that 20k on home improvement.

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^ agreed. The OP should have a year's worth of expenses available in readily accessable after tax funds. I suspect $180k remaining after remodeling would be sufficient unless OP has higher than typical expenses.

[xaximus]

I would do the remodel. It's great that you have a large savings but I would recommend possibly investing that into a money market or investment fund. Something where it can grow over time rather then the 1%-2% in a savings account. I've seen some long term funds that have averaged anywhere between 5-10% returns. Definitely something to think about.

[arkane]

200k in savings is way overkill. Once you're put aside 6-12 months of living expenses, I recommend looking into investing the remaining sum. Or at the very least move the remainder into a high yield savings account (at least 2% interest), otherwise all that cash is losing value every year due to inflation.