Whoa, look at this, a post that’s not just a net worth update! Haven’t done one of those in a while. It’s been busy around here this summer, what with all the canning/preserving and with my having some big projects at work coming to completion this fall — and what with all the presidential election stuff going on, though we probably shouldn’t start talking about that on our PF blogs, really 🙂
But I have a quiet moment and I want to talk a little bit about my cash savings accounts. I have three. One is for travel, though I’ve been using my budgeted travel money at a pretty good rate, so I haven’t actually bothered to transfer cash into that account in a while.
The second is for emergency savings. My emergency fund currently consists of roughly $1000 in a taxable account at Vanguard, which I’d rather not touch but which I do consider part of my EF, and a savings account at Capital One 360 (<–referral link, just in case there’s anyone in the universe who doesn’t already have one.) Longtime readers of this blog will recall that for about a year I worked on getting this account up to $5000, by dint of putting in $500 every month. I succeeded, but I found the whole process amazingly boring. Then I raided it and put $3000 in my Roth IRA and $1000 into that taxable account, leaving only $1000 in cash. This year, I decided to try to make the savings more interesting by doing the 52-week savings challenge (that thing where you save $1 the first week, $2 the second week, and so on until you get up to $52 in the last week of the year, for a total of $1378 over the course of the year.) I’ve actually been doing a transfer every month instead of every week, but so far I’m on track to complete the challenge and it is actually more fun than just moving $120 over every single month, which would result in about the same amount of savings, but is boring.
By the end of the year, I’ll be up to about $3500 between the two accounts — plus or minus $100 depending on how the taxable account is doing. My intention is to do another 52-week challenge next year, except in reverse, so I save $52 in the first week of January, $51 in the second, etc. Just for some variation. If nothing intervenes and I don’t have to use the money, by the end of 2017 I’ll be back up to nearly $5000, which for right now I consider fully stocked. It doesn’t really bother me that I’m re-growing this account slowly, since I also have a pretty healthy stock of cash in the third savings account that obviously I could draw on if necessary.
That third fund is what for a while I was calling the down payments fund, and then switched to calling the “Life Fund.” It was up over $13000 briefly earlier this year, but I decided to start filling up my Roth IRA for 2016 since I hadn’t touched that yet, so right now it’s at $10120. I’m trying to add about $500 a month to it for the foreseeable future, but since at the moment I don’t have a specific goal in mind for it, I’m not as motivated to hit that number every month. Last month I ended up putting in $300, and this month I think I’ll put in about $350-400 — saving during the summer is difficult for me since I love buying fresh produce and going to festivals and whatnot. Once things cool off and the farmer’s market isn’t so abundant anymore, I shouldn’t have trouble hitting that $500 figure again.
So, what is it for? Like I say, I don’t exactly know right now. I can envision several uses for $20,000 (the figure I envision getting up to with this fund, although circumstances could change that.)
–I could buy a car
–I could put a down payment on a house after all
–I could move somewhere and fund my basic expenses for a while as I get established, get a job, etc
–I could put down a security deposit on an apartment and buy furniture
–I could buy a bunch of stock if the market crashes (on top of what I invest normally every month through my retirement account)
You know, life.
What I don’t want to do with this money:
–basic medical expenses, car expenses, clothing, entertainment
I just want it to sit there until I want to do something really big — I don’t want to put it down on smaller expenses, even though they might be worthy in and of themselves.
For the moment, I’m keeping it in another Capital One 360 savings account. I could envision moving all or part of it into a CD ladder, except the CD rates are so awful right now that there’s just no point. Of course, I could also put all/part of it in the market. But I feel like I’m probably going to want to use it for one or more of those big things within the next few years, and so it would be more risky than I want to move it into my Vanguard account. So unless I can think of anything better to do with it, it’s just going to plug away earning $7ish a month for now.
Curious: do any of you all have an analogous account that’s not for emergencies but also not in the market? Are there any big life expenses I’m missing that you’ve spent on?