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Emergency Fund
Posted on 2/25/10 at 2:49 am
Posted on 2/25/10 at 2:49 am
What is an appropriate emergency fund for someone with poor job security? I currently have approximately 3 months of income sitting in a Roth account, but the rest of my savings is tied up in my 401. What is the rule of thumb in this situation?
FYI, I am in my late 20's, married, one kid, no car notes but mortgage is in the $1750 neighborhood.
FYI, I am in my late 20's, married, one kid, no car notes but mortgage is in the $1750 neighborhood.
3
Posted on 2/25/10 at 5:58 am to Cantstandya
General rule is 6 months. For someone with poor job security, personally, I'd go 12.
I am at 6 months now, and have great job security, and am working on 12 months. Just cut back on more unnecessary spending and altered my budget to reflect the changes.
I'm 32, married, 3 kids, mortagage and one truck note. Besides normal bills (gas, food, electricity, cell phone, etc.) I've got no bills, and no debt, except for truck and house.
I'd work on getting it up to 6 months. Why is job security poor, if you don't mind me asking?
I am at 6 months now, and have great job security, and am working on 12 months. Just cut back on more unnecessary spending and altered my budget to reflect the changes.
I'm 32, married, 3 kids, mortagage and one truck note. Besides normal bills (gas, food, electricity, cell phone, etc.) I've got no bills, and no debt, except for truck and house.
I'd work on getting it up to 6 months. Why is job security poor, if you don't mind me asking?
Posted on 2/25/10 at 7:29 am to BROffshoreTigerFan
I wouldnt consider my retirement accounts emergency funds at all.
Posted on 2/25/10 at 7:40 am to jmtigers
quote:
I wouldnt consider my retirement accounts emergency funds at all.
My retirement is my 401K, which I will not touch unless armageddon is upon us. My "emergency fund" currently resides within a couple of Roth accounts that I opened in order to earn a decent return while maintaining liquidity. I think it's better than putting it in a CD or low yield savings account. Right?
Posted on 2/25/10 at 7:47 am to BROffshoreTigerFan
quote:
Why is job security poor, if you don't mind me asking?
I work for a consulting firm in the oil/gas industry.
Thanks for the advice. 12 will be hard for me to attain, but I think I can get to 6 if I try hard enough.
Posted on 2/25/10 at 8:13 am to Cantstandya
Yes you can get better returns that way, but personally i wouldn't invest my emergency fund. Emergency fund is separate from investments always.
Posted on 2/25/10 at 8:15 am to Cantstandya
quote:
Roth accounts that I opened in order to earn a decent return while maintaining liquidity. I think it's better than putting it in a CD or low yield savings account. Right?
I'd consider Roth a retirement tool. Emergency funds should be separate. I wouldn't invest my emergency fund in mutual funds, just in a savings account/money market.
Posted on 2/25/10 at 8:22 am to Ric Flair
Check into local credit unions.. you can find some with decent rates by just using the debit card and bill pay etc...
Posted on 2/25/10 at 8:48 am to Cantstandya
id go so far as to say that your ROTH should priority #1 when it comes to retirement .... i'd :
Fund your ROTH in full each year
Fund your 401 less and with the money you don't put in that
Fund your ER fund....even cash is fine or do the credit union thing
Fund your ROTH in full each year
Fund your 401 less and with the money you don't put in that
Fund your ER fund....even cash is fine or do the credit union thing
Posted on 2/25/10 at 9:16 am to Cantstandya
Your roth is your most valuable retirement tool. You just need to park 3-6 months(I recommend 6) in a money market fund and leave it alone.
Posted on 2/25/10 at 9:27 am to Zilla
quote:
id go so far as to say that your ROTH should priority #1 when it comes to retirement .... i'd :
Fund your ROTH in full each year
Fund your 401 less and with the money you don't put in that
Fund your ER fund....even cash is fine or do the credit union thing
This.
Except number one should be anything you can do to get a company match.
Posted on 2/25/10 at 9:31 am to Zilla
quote:
id go so far as to say that your ROTH should priority #1 when it comes to retirement
Raise your hand if you think Congress won't change the tax laws regarding the tax-free feature of Roth's before a twenty-something year old starts taking withdrawals from his account 40 years from now.
Posted on 2/25/10 at 9:39 am to LSURussian
it's a risk for sure, but even the tea party movement would be nothing if they did that...but at the same time you say that, you could also say they might one day try to seize our 401s...so that risk is there, but it covers everything
Posted on 2/25/10 at 9:41 am to LSURussian
quote:
Raise your hand if you think Congress won't change the tax laws regarding the tax-free feature of Roth's before a twenty-something year old starts taking withdrawals from his account 40 years from now.
Which is one reason why I just dump my money into CD's and roll them over treating them like a retirement account. Sure the interest isn't as good as I could make in the market but I will never go negative and my taxes are paid yearly. When it comes time for retirement that is my money and there will be no taxes taken out when I draw from it and there is no limit to how much I can add yearly.
Posted on 2/25/10 at 9:44 am to bayoudude
quote:
Which is one reason why I just dump my money into CD's and roll them over treating them like a retirement account. Sure the interest isn't as good as I could make in the market but I will never go negative and my taxes are paid yearly. When it comes time for retirement that is my money and there will be no taxes taken out when I draw from it and there is no limit to how much I can add yearly.
Whatever floats your boat....
Posted on 2/25/10 at 9:47 am to TheHiddenFlask
quote:
Whatever floats your boat....
I guess I just know too many people that have been unable to retire because of the way the market has done in the last 10yrs.
Posted on 2/25/10 at 9:51 am to Cantstandya
quote:
I work for a consulting firm in the oil/gas industry.
Thanks for the advice. 12 will be hard for me to attain, but I think I can get to 6 if I try hard enough.
I have friends that are land men/women and they always are worried about their jobs. Great pay while you are working though
Posted on 2/25/10 at 9:52 am to Zilla
quote:Totally different. Withdrawals from 401-k's will be taxable as current income. Congress loves that!
you could also say they might one day try to seize our 401s
I fully expect Congress to kill the deductability of contributions to 401-k's for higher income taxpayers (meaning anyone who pays taxes) within a few years.
I can also foresee withdrawals from Roth IRA's being fully taxable (on their earnings) for higher income taxpayers (ditto) by the time someone in his 20's starts taking money out in 40 years.
It's why I always caution anyone about putting a high concentration their savings into any bucket.
Posted on 2/25/10 at 9:54 am to TheHiddenFlask
quote:
id go so far as to say that your ROTH should priority #1 when it comes to retirement .... i'd :
Fund your ROTH in full each year
Fund your 401 less and with the money you don't put in that
Fund your ER fund....even cash is fine or do the credit union thing
This.
Except number one should be anything you can do to get a company match.
$ for $ company match, do this first, then Roth.......
Posted on 2/25/10 at 9:54 am to LSURussian
quote:
It's why I always caution anyone about putting a high concentration their savings into any bucket.
i agree with this for sure
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