re: How do you store non-emergency savings?

quote:

---

Why on God's green earth anyone would use a Roth as a savings account is beyond me

---

Nobody should use a Roth as a savings account. It is however a viable option for emergencies in certain situations.

To the OP:
Here's how I plan for unexpected situations or opportunities. I have a checking and savings account, Roth, and 401k. I have my paycheck direct deposited into my savings. Twice a month I transfer enough money to cover my monthly expenses into my checking account. The money left after the bi-monthly transfers I let grow in my savings. This allows me to plan for big purchase items or vacations. When I want to plan for a vacation or buy something expensive I look to my savings to see whats affordable or to get an idea of how close I am. I make sure to always keep an amount equal to 3-4 months of living expenses in my savings for unplanned major expenses. Unplanned minor expenses are part of my monthly budget.

My 401k and Roth will give me the money I need at retirement. My savings, checking, and credit cards will provide me with the money I need now.

This is kind of a basic plan and could be adjusted to an individual's preference. I think if anyone wants financial peace of mind they must have a structured savings plan.

quote:

---

That is, potentially high dollar, sometimes unexpected, non-routine expenses that will nonetheless occur inevitably.

---

You can do that, obviously, with a savings account or separate (separate from your operating account, anyway) checking account and your very question is a common use of the savings account.

CD is another good option - very little incentive to dip into that, especially if you automatically roll it over - and it will, in fact, grow a little bit over time. However, timing is sometimes tricky - if you get into the 30 day CDs, you can still plan these "non-emergency" expenses to coincide with a CD maturity - and it gives you a cooldown period.

I don't like the credit options - unless it is a house (or an investment that will more than pay for the finance charges over time), if you cannot pay cash for it, you cannot afford it. If you don't like that, make more money, sell something or save up for it longer.

That first page was entertaining.

quote:

---

Chevron
Proctor and Gamble

---

both are great along with Exxon Mobil. I have them in a high dividend yield ETF. Nice compilation.

quote:

---

Actually purple and gold is right.
Only certain exceptions let you withdraw from ROTH.
Death being one, 1st time home buyer of up to 10,000 is another, and i forgot the third.

---

really? Then why was I able to withdraw contribution money from my wife's ROTH IRA without any rhyme or reason?

Sorry I'm late to the game boys.

A great deal depends on how big something has to be before consider it an emergency. If a sudden $300 car repair bill is a major deal, then I respectfully suggest it doesn't matter much how you get the cash because the biggest problem is increasing your income, not your savings. Don't worry about what kind of account you save in, increase your ability to save.

IMHO we don't need to even begin discussing this question unless we're talking about the loss of your job. If you only need to raise a thousand or two on short notice it doesn't much matter. But if you need to come up with 30-40 grand, now we're talking. For sums like this, tapping your HELOC is a great idea given today's rates. Given tomorrow's rates, who knows?

But one thing you should never do is set money aside in a taxable account if you haven't maxed your Roth. Withdrawals from Roth contributions (not earnings) are easy and penalty-free. No, you don't *want* to withdraw, but holding back money from a Roth that you can contribute amounts to the same thing. Go ahead and contribute now and get the tax-free earnings.

quote:

---

I know dick about finaces and retirement accounts, but even I know you can withdraw contribution to a Roth penalty free

---

Same here. That is the sole reason why my financial adviser suggested I start contributing to a Roth to use as my future kid's college fund. If I end up not needing it for that, it will be a supplement to my 401 as a retirement fund

quote:

---

No you don't, you only pay penalties on the earnings....

---

This is correct, you can withdraw your contribution amounts at anytime with no penalty.

quote:

---

The peace of mind of having the money in a savings account, and not having to fill out paperwork/jump through hoops if I need they money outweighs the opportunity cost, which isn't very much for 5K, unless you're willing to lose money investing it.

---

I dabbled with a Roth IRA my senior year of college. I was just kind of messing around. In any event, I had to pull it all out (all contributions), and didn't fill out any paperwork.

Of course, I was 22, so I was probably responsible for something but didn't care.

Obviously, this time around, its all staying in.