Thursday, November 4, 2010

Tri-level Emergency Fund - Tweak or Rebuttal?

Frugal Dad, which I blogged about earlier has a pretty good post based on a good idea of how to arrange one's emergency funds. And I use the terms funds because I believe you should have multiple funds because there are different types of emergencies. FD goes into a good discussion about this but I don't necessarily agree with all of his reasoning.

FD's List:

  1. In House E Fund
  2. Local E Fund
  3. Mega E Fund
*** ok after rethinking this and trying to write it out I don't think I really disagree that much with FD, because I actually kind of do this with my own money and didn't realize it. I will actually lay out the accounts I have and just not tell you the amounts ;)

I have:
  • 1 checking account that is local to Nola, a brick and mortar establishment that I go to if I have cash or check in hand I want to deposit and I think I could go to if I needed a loan.Think #2 Local E Fund. I also deposit 1/4 of my check every pay period into this account b/c I do write a few hard copy checks for things like church tithing and bar dues.
  • 1 checking account with my old bank in Jackson, a brick and mortar that I plan to close completely when I sell the house and no longer have those MS ties. I currently keep $500 in there as a emergency, emergency type deal
  • 1 ING checking account - This is my work horse, my debit card, where I pay bills out of with internet withdrawls and checks they write and mail for me
  • # 1 ING savings account - This is my base Emergency account, I keep it at $1,000 because I always want that cushion, its baby step #1, don't mind telling ya about it :)
  • #2 ING savings account - This is my true savings (if you want to call the other an emergency). This is where I save for a couple of different things such as a future car, vacations, and for my 2010 Roth. I'm not in love with the market still so I've been holding out on just buying the Roth as the year goes along. At one point in time I had different accounts for each big thing I was saving for (1 for car, 1 for vacations, etc.) but I did away with that b/c with the divorce and house buying and moving and then house selling I got short enough that it just made sense to combine them all.

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