About Those Savings Accounts

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:

–travel

–donations

–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?

10 thoughts on “About Those Savings Accounts

  1. Matt says:

    It was interesting to read that your “Emergency Fund” is invested in a Vanguard account. I personally don’t expose my emergency fund to any risk. It sucks, because I’ve got $15,000 just sitting in a tax free account and it doesn’t grow more than 1% per year. But, that is the purpose of it – for emergencies. It’s in a separate account and the card has been cut up so I can never use it unless it’s an emergency. It took me a while to get there and now I can focus on paying off a small debt of $2,500 and then I can really focus on budgeting to save my own “Life Fund” like yourself which I will call my “House Fund” to put a down payment on a house, etc. I would reconsider your emergency fund principles and keep it out of the market!

    1. thesingledollar says:

      Well, actually only about 1/3 of it is invested — as I said, the rest is in a savings account. I agree, I wouldn’t want it to be totally subject to the market. Good luck getting on to your own savings fund!

  2. Mariana says:

    This past week I kinda combined all my accounts. For some reason I thought it was a good idea to keep savings / investments in several places but after all it seemed more all over the place rather than anything.
    So I closed my Wealthfront and Betterment accounts this past week (I had less than $10k in each) and once the money is back in my checking account I will just move all to Vanguard to have all in one place. To simplify and track easier.
    Believe or not, I may be one of the last people on this planet without the Capital One 360 Savings account 😉 I may sign up if it’s better than any other account. What do you think?

    1. thesingledollar says:

      Yes, I go back and forth on simple v. complex arrangements — right now I really like having all my investment accounts in one place at Vanguard, and all my banking at Cap One 360. I do like them, to answer your question. Their rates are a tiny bit lower than the best you can get online, but not enough to make a difference. They do fast transfers to/from other accounts, and they have a wide network of free ATMs, which is important to me because I travel. Because of that, I don’t even have a brick and mortar account anymore, though for a long time I maintained them side by side. So I think they’re a good choice if you’re looking for a high-interest savings account that has good service in other ways too.

  3. ARBM says:

    We have a bunch of savings accounts for planned spending funds. We have a travel fund, a home reno fund, an education fund and an emergency fund… So, I don’t really have a general savings account… but instead I just keep a lot of extra money in my chequing account. Which of course is silly because it would at least be working more for me in a high interest savings account… And my savings could probably be making more by being invested… but I had a bad experience where it took a long time to get money out of investments when we needed it for a down payment, and so I am hesitant to invest money that I want to use in the relatively near future…

    1. thesingledollar says:

      I hear you. I didn’t want to invest this money for exactly that reason! I figure that I have investments, and this is separate.

  4. Jason says:

    Because of you I am taking the 52 week challenge. Excellent idea.

    1. thesingledollar says:

      Cool! Enjoy! I really find it a good way to enjoyably save.

  5. I have a similar sort of account that is for like, short-medium term goals separate from my emergency fund, and separate from my long term savings. Until a couple of days ago, I’d use it to save for my husband’s upcoming tuition costs I’d have to pay at the start of each semester. Now that his last semester is paid for, I’m going to start saving for a new car. I want to be able to pay for it all in cash, or at least most of it.

    1. thesingledollar says:

      Cool. Congrats on the cash tuition and good luck on the car!

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