EPISODE 8 - MINI TALK: THE BABY EMERGENCY FUNDSep 05, 2019
Enjoy this mini-episode about the baby emergency fund while Tiffany attends FinCon 2019! Emergency funds are so important to protect you from a detrimental financial crisis. Tiffany uses Ally Savings to house her emergency fund to take advantage of their higher-than-average interest rates.
Do you have an emergency fund? What are you waiting for? Let's get it done!
Welcome to Money Talk with Tiff, a podcast where we discuss everything money – from tips and tricks to current events. Follow me on my journey to become debt-free, and meet other cool people along the way. I'm your host, Tiffany Grant, now let's talk money.
Hey, so I wanted this episode to be about the infamous Emergency Fund. Emergency funds are so important, and I can't stress that enough because you need to have some money saved before you even start tackling debt.
And the reason for that is, let's say, for instance, you don't have any money saved, and you pay off your credit card, and an emergency comes up, you're going to have to run that credit card back up to where it was, or worse in some cases. So, it's best to go ahead and have emergencies funds set up, at least partially.
"Being the highly trained investment mogul that I am, I could certainly find places to put that money where it would earn more. Or would it? Remember, personal finance is personal. I have come to realize that Sharon's peace of mind bought with the oversized emergency fund is a great return on investment. Guys, this can be a wonderful gift to your wife. An Emergency Fund Can"
– Dave Ramsey
I go by the Dave Ramsey Rule, and I'm doing air quotes right now, but I like to have at least $1,000 saved before I start tackling anything else. And I feel like $1,000 is safe; I think that's sound advice because most emergencies aren't going to cost over $1,000. So, I think that's a good starting point.
Now, once you get out of debt and get closer to your goals, you can move up to the 3-6 months emergency fund, which is the industry standard for a fully-funded emergency fund.
Best Bank for Emergency Funds
Now, I keep my emergency fund. I still have the baby emergency fund, so I still only have about $1,000 in a savings account, and I house it over at Ally Bank, and I do that because online banks carry higher interest rates. So, it doesn't have to be Ally; it could be Marcus (bank) which is owned by Goldman Sachs.
You know, there's a variety of different options out there, but I highly recommend holding your savings account there (Ally bank), and there are a few reasons why I say this. well, you can get a better interest rate than you can from a local bank or a national bank. And when I say higher interest rate, I'm talking about a lot more in interest.
For instance, my card at Ally savings is at, I believe, 2.2%, and at a national bank, your averages savings account is probably going to be like 0.15%, or I'm at a credit union so that one is 0.75% and that's generous for brick and mortars. So, it would help if you looked into an online savings account. s
Another reason why I use online (bank) is because it takes a little bit more to get your money. So, I may put in a request, and it may take maybe a couple of days or so to get the funds deposited into my account. That's good because I'm not instantly dipping in whenever I run into an emergency, and I'm using air quotes again; it's not as easy to get to.
"We buy things we don't need with money we don't have, to impress people we don't like."
– Dave Ramsey
So, I have to sit there and think about that thing, like is this really an emergency, or is it just an emergency in my mind? You know, is this pair of shoes really an emergency? Or is this new gadget thing really an emergency? So, make sure that you are looking at that, you know, it would be an excellent investment.
It breaks my heart that these banks are only giving us 0.15% in interest. That's not even keeping up with inflation; it's not even close. So every day, you're practically losing money.
Anyway, make sure you have some savings saved up before you do anything else because it will save you some heartache down the road.
Alright, I'll keep this short and sweet. You have a good one. See you next time.
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