Thread: Question on holding Emergency Fund in tax advantaged account

4.25%!?! Thats an incredible rewards checking account. I wish I lived where you live.

Scorpion wrote: Livesoft, do you really have no savings, checking or any other liquid funds that can be used on no notice? My spouse works. I work. With 4 paychecks a month, the cash flow through our checking account is liquid enough. Credit cards would be used after that. Next tier in taxable are ETFs. They are reasonably liquid. I can sell when the market is open and transfer to checking 3 days later. I have another brokerage account that...

Hi Scorpion: Quote: Taylor, you mentioned having the Prime Money Market Fund in taxable. Don't you have an emergency fund, then? If that fund were part of your AA, I would think you would hold it in tax-advantaged. Or do you keep like $50 in it and just use it for emergency transfers? We use a relatively small Vanguard's Prime Money Market Fund in a taxable account for several reasons: 1. A source of funds when are checking accounts...

livesoft wrote: We bought our last car with a loan with an interest rate of 0%. No down payment. No cash exchanged hands. I do have an outstanding credit card loan of about $23K which is enough for car. It also has an interest rate of 0%. I'm in no hurry to pay it off. If you have to buy a car without at least 3 days warning, there are probably other issues in your life that need to be taken care of before an emergency fund. Even if you...

[quote="digit8"] danbek wrote: RedTail wrote: Danbek, Oh, of course! So to replenish the "emergency fund", each time you have $1000 more saved you buy $1000 of stock in taxable, at the same time selling $1000 of stock in tax-advantaged and moving it into money market/bond fund/whatever. Very cool, why isn't this advice more known? What is the drawback? There is a choice which can cause problems. You...

RedTail, Have you considered I-bonds for your emergency fund? They are paying 3.36% now and you can postpone the taxes for up to 30 years and avoid state taxes altogether. Seems pretty tax efficient to me and you can keep it simple that way and keep up with inflation. The downside is you have to hold them for at least a year before you can cash them so I would ease in a little at a time, and there is a 3 month penalty if you cash within 5...

Amplifying Taylor's post, I think it is important that one have multiple sources of ready cash (credit cards, checking accounts, savings, MMF's, or fancier constructions like livesoft's trick of holding emergency money in tax-advantaged accounts). As an example, recall what happened on 9/11/2001. I believe that the financial markets were closed for a week. While I wasn't a Vanguard customer in those days, and had no...

It comes with a long list of caveats . Thankfully, I didn't have to modify my transaction behaviour: Reward Rate Qualifications Each Cycle: > 12 signature-based Check Card transactions (posted during qualification cycle) > Direct Deposit of $500 and one ACH Auto Debit or Bill Pay (posted during qualification cycle) > Enroll in and receive eStatements (It’s Free!) Other Benefits: > Free Visa check card...

Scorpion wrote: Can one buy a car using credit cards? It does seem like there are certain bills for which credit cards don't work and an emergency fund is useful. I see that certain folks (like livesoft and Taylor) are getting through life without no "true" emergency fund, though, and getting their interest/dividends tax-deferred. I guess you just don't worry about the absence of checkwriting and do your stock...

jameson71 wrote: Scorpion wrote: Can one buy a car using credit cards? It does seem like there are certain bills for which credit cards don't work and an emergency fund is useful. You can buy a car using a credit card. You could even pay your child's tuition for the semester with one. I know people who have done both for the reward points and paid the bill off the same month with cash. You can usually pay insurance bills with a...