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I keep my checking account with a cushion of a month or two expenses above the minimum balance. I use etrade, because I've had the account forever and there's few fees. It can take 2-3 days to transfer money to/from checking unless you wire it, which costs a minimal amount. Additional cash I transfer to etrade and into VYM (medium term) or MINT (short term cash that still earns more than a 0.01% checking account interest). Longer term (i.e. stash and forget about it), VTSAX is fine. Maybe an additional 6 months expenses in VYM/MINT and the rest start shoveling into VTSAX.
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May 29, 2020 07:13
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I personally prefer to have a full year of an emergency fund, but you are right about investing once you hit your comfortable emergency target.
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May 29, 2020 07:33
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I'm risk averse (class of 2009 reprezent) so I like to keep way more cash in HYSA than that. We are probably keeping about 10-12 mos of our true expenses. I get paid monthly. We try to make sure that there's about a month in expenses in checking before I get paid, and then cover expenses and and allocations, and dump the rest to HYSA house slush fund after that.
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May 29, 2020 14:27
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I went on a little bit of a different direction with it: We set up a shared household checking account so wife can be more integrated into the finances. I've stuck $30,000 (6 months of baseline expenses) in there and deposit 70% of my pay (min $8k/m). So that will grow and fund vacations and big home improvement expenses. My personal account now has just $12k in it and gets 30% of my pay. Once this gets over $15k I'll set up a brokerage account for all the excess. Wife is currently in a coding bootcamp but once she goes back to work she will do the same 70%/30% household/personal split on income deposits. And for some visual content! I was looking in Mint at my net income over time and noticed that the different periods in my life had pretty noticeable financial patterns. So I tagged them and though it would be fun to share here. A couple facts not easily put on the graphic: Although the most recent 2 years look like lifestyle creep for the most part they are not. Rather that's a binge of paying off cars, buying working appliances, sending wife to coding bootcamp to switch careers, and the mortgage being more expensive than rent (of course I've seen the home value go up by more than the entire mortgage expense...). Basically fixing all the "it's expensive to be poor" parts of my financial life. I know you guys wanted me to fix these earlier. But I still maintain my strategy of "fix income first" was the right one for me. 2009-2011 look better than they were. I wasn't using Mint frequently enough to pull all transactions in this period. So there are often missing expenses (but not missing income as the look-back for mint on checking accounts is much longer).
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Oct 10, 2020 20:35
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