I am working on a $12,000 emergency fund right now. It will all be kept a couple of clicks away in a Money Market account. I do carry travellers cheques when I travel which serves as an additional emergency fund. For day to day activities, I have cash on hand, but it is not really an emergency fund per se.

Half is in laddered CDs at my credit union, with one month in the MMkt saving account attached to my check book and four months in ING. There is some cash on hand and I budget based on last month’s wages, so most of the time, there is about a month’s worth in my interest bearing checking account.

My biggest issue with the efund is my reluctance to dip into it. I HATE it when I do. I’m trying to get around that by setting up some ‘future spending’ sub accounts in ING and funding them now that the e fund is more than flush. Probable categories are “household improvements/appliances/repairs” and “auto repair/replace”. Knowing that they are accrual accounts that are MEANT to be spent should help me actually be able to spend them.

I know people highly discourage non-discretionary, non-retirement money being kept in stock, but some of my emergency fund is there, too. I figure if I have no source of income I’m not going to burn through my money market in a week. That would give me enough time to sell the securities I needed to pay the bills – this money is fairly liquid unlike equity in my home, as an example. This money is also not in speculative securities at all. If the stocks I own go bankrupt we’re all in for a world of hurt, not just me. But I certainly wouldn’t recommend keeping any emergency funds in securities unless you have thoroughly researched the companies you’re buying AND you have enough money in them to take a drop in the market like we’re experiencing now.

I just recently opened up an Emigrant Direct savings account to start saving for a future car (like 6+ years away). So far I have to say I’m really happy. I look at ING but since the services I needed were offered by both I went for the extra interest. I didn’t need a debit card since speed of transfers didn’t matter to me since I won’t be taking any money out for years to come. I do have to say it takes about 3 days or so for transfers to register, but I just account for that with my automatic transfers by doing them a few days before I want it debited from my regular checking.

Over all I’m pretty happy. Let us know if who you decide to go with and why. I’m curious myself, since I just embarked on the internet banks.

Like I said earlier, I prefer to have the debit card from the ING checking, since transfers are immediate.

Everyone,
While we’re talking about all this, I was wondering if anyone is using EmigrantDirect? They appear to provide similar services to what ING does but with better interest rates. Anybody?

The last 6 months though, the return has dropped considerably to mid 3%’s, so I’m considering moving to something like ING or eTrade instead.

Jay & Odnal,
Paypal doesn’t seem like an overwhelmingly great deal to me. You can get the exact same rate in an ING Electric Orange account that includes a debit card. You could keep a small portion of your emergency fund there and keep most of it in an ING Orange savings account and get an extra 1% APY over the Electric Orange and PayPal rates.

PayPal: 3.35% – 1.1% = 2.25%
ING Electric: 2.25%
ING Savings: 3.40%

It also is invested in a money market, which, as mentioned earlier has declined in interest rates. Today my account shows 3.35%, and paypal charges a 1.1% annual fee much like a mutual fund would, so the adjusted rate after the fees are somewhere just barely past inflation.

This is fine by me as I am more concerned with being able to get to the money quick as emergencies love to sneak up on us.