Giving the Middle-Finger to My Emergency Fund

I am a big proponent of having an emergency fund. In fact, one of my medium term goals is to have a $10,000 emergency fund (about 4.5 months of living expenses). So you may be surprised to hear that I recently took $4,000 out of my emergency fund (balance was at $6,200 at the time) and used it in a way that I feel is much more productive.

Where did it go?

That $4,000 went right into my Roth IRA. With my goal of maxing my 401(k) for the year, I knew it was going to be tough to max the Roth in 2010. However, I know that these early years are the most important for the growth of my Roth. Somehow, someway, I was determined to make sure I was able to contribute the full $5,000 for the year.

With both retirement accounts getting maxed for the year, I know my investment accounts are going to grow at a faster pace than I could have ever hoped. A little bit of sacrifice now (and it really is only a little bit) will set me up for that boat and house on the beach that J. Money and I always talk about for our early 40s.

What happens if an emergency occurs?

Well I am glad you asked. I still have an emergency fund of about $2500. So, I am covered for at least a little bit. I also have additional cash savings (set up for specifics savings goals) that I can spend if I am really in a tight spot. There is also a $1500 cash buffer that I keep in my checking account. All in all, I am at about the same place I was cash wise prior to the $4K being yanked out.

You then ask, what happens if I burn through all of that cash?  Well I am glad you asked, because that was a legit concern of mine as well. I consulted with a financial advisor (someone who is 30 years my senior and specializes in retirement accounts including the Roth IRA) and found out an interesting aspect to Roth’s. Now, we already know you can take out your principle investments at any time without penalty. We also know you can’t put that money back in until the next tax year if you have already maxed your contribution for the year. BUT, you CAN take out principle funds from your Roth for a maximum of 60 days and return them in full without penalty once over the course of a year. If you return the funds within those 60 days, it’s like it never happened.

This was all the reasoning I needed to make that jump.  If I can have a 60 day loan from my Roth with no stipulations, I know all my financial bases are covered.

Why did I do it?

Well, I explained what I would do if an emergency occurred above, but that doesn’t get to the fundamental logic for me making this bold move. While I embrace an emergency fund, I do so begrudgingly.

Cash is cash, and having ample cash reserves is important. Does it matter if it’s in an ING sub account labeled as “emergency fund”?

While having that $10,000 e-fund is important to me, it is only a mid-level priority. Maxing out my investments in mutual funds (especially my Roth in my mid 20s) takes priority over almost all other financial decisions I make.

It certainly also helps that I have diversified my income over the past two years and that I have a position with my employer that I feel is extremely secure.

What do you think?  Have I made another personal finance sin?  Have I gone absolutely mad because I feel the emergency fund isn’t the holy grail of my personal finance life?  Let me know your thoughts below.

9,192 Responses to Giving the Middle-Finger to My Emergency Fund
  1. Diane
    February 15, 2019 | 5:13 pm

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  2. Danilo
    February 15, 2019 | 5:18 pm

    Schwab Intelligent Portfolios invests in Schwab ETFs.

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  7. Carmela
    February 16, 2019 | 12:33 am

    All sorts of investments come with certain risks.

  8. Willis Sappah
    February 16, 2019 | 2:10 am

    It’s actually a nice and useful piece of info. I am happy that you shared this helpful info with us. Please keep us informed like this. Thank you for sharing.

  9. consumers
    February 16, 2019 | 2:39 am

    I do consider all of the ideas you have introduced in your post.
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    Thank you for the post.

  10. source
    February 16, 2019 | 4:28 am

    Thanks very interesting blog!

  11. This is a topic close to my heart cheers, where are your contact details though?

  12. advertiser
    February 16, 2019 | 5:57 am

    This design is steller! You definitely know how to keep a reader amused.
    Between your wit and your videos, I was almost moved to
    start my own blog (well, almost…HaHa!) Wonderful job. I really enjoyed what you had to say, and more
    than that, how you presented it. Too cool!

  13. I love your blog.. very nice colors & theme. Did you create this website yourself? Plz reply back as I’m looking to create my own blog and would like to know wheere u got this from. thanks

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  24. Leandro
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    Schwab Intelligent Portfolios invests in Schwab
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  32. Nakia Nitsche
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Trackback URL http://mynextbuck.com/giving-the-middle-finger-to-my-emergency-fund/trackback/

Giving the Middle-Finger to My Emergency Fund

I am a big proponent of having an emergency fund. In fact, one of my medium term goals is to have a $10,000 emergency fund (about 4.5 months of living expenses). So you may be surprised to hear that I recently took $4,000 out of my emergency fund (balance was at $6,200 at the time) and used it in a way that I feel is much more productive.

Where did it go?

That $4,000 went right into my Roth IRA. With my goal of maxing my 401(k) for the year, I knew it was going to be tough to max the Roth in 2010. However, I know that these early years are the most important for the growth of my Roth. Somehow, someway, I was determined to make sure I was able to contribute the full $5,000 for the year.

With both retirement accounts getting maxed for the year, I know my investment accounts are going to grow at a faster pace than I could have ever hoped. A little bit of sacrifice now (and it really is only a little bit) will set me up for that boat and house on the beach that J. Money and I always talk about for our early 40s.

What happens if an emergency occurs?

Well I am glad you asked. I still have an emergency fund of about $2500. So, I am covered for at least a little bit. I also have additional cash savings (set up for specifics savings goals) that I can spend if I am really in a tight spot. There is also a $1500 cash buffer that I keep in my checking account. All in all, I am at about the same place I was cash wise prior to the $4K being yanked out.

You then ask, what happens if I burn through all of that cash?  Well I am glad you asked, because that was a legit concern of mine as well. I consulted with a financial advisor (someone who is 30 years my senior and specializes in retirement accounts including the Roth IRA) and found out an interesting aspect to Roth’s. Now, we already know you can take out your principle investments at any time without penalty. We also know you can’t put that money back in until the next tax year if you have already maxed your contribution for the year. BUT, you CAN take out principle funds from your Roth for a maximum of 60 days and return them in full without penalty once over the course of a year. If you return the funds within those 60 days, it’s like it never happened.

This was all the reasoning I needed to make that jump.  If I can have a 60 day loan from my Roth with no stipulations, I know all my financial bases are covered.

Why did I do it?

Well, I explained what I would do if an emergency occurred above, but that doesn’t get to the fundamental logic for me making this bold move. While I embrace an emergency fund, I do so begrudgingly.

Cash is cash, and having ample cash reserves is important. Does it matter if it’s in an ING sub account labeled as “emergency fund”?

While having that $10,000 e-fund is important to me, it is only a mid-level priority. Maxing out my investments in mutual funds (especially my Roth in my mid 20s) takes priority over almost all other financial decisions I make.

It certainly also helps that I have diversified my income over the past two years and that I have a position with my employer that I feel is extremely secure.

What do you think?  Have I made another personal finance sin?  Have I gone absolutely mad because I feel the emergency fund isn’t the holy grail of my personal finance life?  Let me know your thoughts below.

9,192 Responses to Giving the Middle-Finger to My Emergency Fund
  1. Diane
    February 15, 2019 | 5:13 pm

    And this is an funding threat price taking.

  2. Danilo
    February 15, 2019 | 5:18 pm

    Schwab Intelligent Portfolios invests in Schwab ETFs.

  3. Carmella
    February 15, 2019 | 5:42 pm

    A financial advisor is your planning associate.

  4. Jeapatt
    February 15, 2019 | 6:44 pm

    Where To Order Macrobid Kamagra Faq Isotretinoin 10mg Overseas Low Price viagra Accutane Venta Online Cialis Viagra Unterschied

  5. Used trucks in hudsonville
    February 15, 2019 | 10:30 pm

    I cannot thank you enough for the blog article.Thanks Again.

  6. Eleonor Pullian
    February 15, 2019 | 11:53 pm

    “I think other website proprietors should take this site as an model, very clean and fantastic user friendly style and design, let alone the content. You’re an expert in this topic!”

  7. Carmela
    February 16, 2019 | 12:33 am

    All sorts of investments come with certain risks.

  8. Willis Sappah
    February 16, 2019 | 2:10 am

    It’s actually a nice and useful piece of info. I am happy that you shared this helpful info with us. Please keep us informed like this. Thank you for sharing.

  9. consumers
    February 16, 2019 | 2:39 am

    I do consider all of the ideas you have introduced in your post.
    They’re really convincing and can definitely work. Nonetheless, the posts are too quick for newbies.

    May just you please extend them a bit from subsequent time?
    Thank you for the post.

  10. source
    February 16, 2019 | 4:28 am

    Thanks very interesting blog!

  11. This is a topic close to my heart cheers, where are your contact details though?

  12. advertiser
    February 16, 2019 | 5:57 am

    This design is steller! You definitely know how to keep a reader amused.
    Between your wit and your videos, I was almost moved to
    start my own blog (well, almost…HaHa!) Wonderful job. I really enjoyed what you had to say, and more
    than that, how you presented it. Too cool!

  13. I love your blog.. very nice colors & theme. Did you create this website yourself? Plz reply back as I’m looking to create my own blog and would like to know wheere u got this from. thanks

  14. www.miyou.hk
    February 16, 2019 | 8:11 am

    You’re so cool! I don’t think I’ve truly
    read something like this before. So wonderful to discover another person with a few unique thoughts on this issue.
    Really.. thanks for starting this up. This website is one
    thing that is needed on the internet, someone with a
    bit of originality!

  15. Tremendous things here. I’m very happy to peer your
    post. Thanks so much and I am looking forward to touch you.
    Will you please drop me a mail?

  16. Biblioray.Pusku.com
    February 16, 2019 | 8:42 am

    I could not resist commenting. Perfectly written!

    My web blog – Biblioray.Pusku.com

  17. bbs.fytxonline.com
    February 16, 2019 | 9:19 am

    Everything is very open with a really clear description of the issues.
    It was really informative. Your site is extremely helpful.
    Thank you for sharing!

  18. fake News websites for students
    February 16, 2019 | 10:05 am

    Hey There. I discovered your weblog the use of msn. That is
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  21. best portfolio Websites 2018
    February 16, 2019 | 4:37 pm

    Genuinely no matter if someone doesn’t know afterward its up to
    other people that they will help, so here it occurs.

  22. Magda
    February 16, 2019 | 5:45 pm

    Investors do pay direct and indirect costs.

  23. Independent Book Publishing Company
    February 16, 2019 | 6:50 pm

    Looking forward to reading more. Great post.Thanks Again. Keep writing.

  24. Leandro
    February 16, 2019 | 8:37 pm

    Schwab Intelligent Portfolios invests in Schwab
    ETFs.

  25. Merle
    February 16, 2019 | 8:51 pm

    Thank you on your interest in Funding Advice.

  26. 네임드사다리
    February 16, 2019 | 10:04 pm

    we came across a cool web page that you just may appreciate. Take a appear in the event you want

  27. Oliva
    February 16, 2019 | 10:25 pm

    Schwab Clever Portfolios invests in Schwab ETFs.

  28. Buy essay cheap
    February 16, 2019 | 11:29 pm

    Hey just wanted to give you a quick heads up. The text in your content seem
    to be running off the screen in Chrome. I’m not sure if this is a format issue or something to do with browser compatibility but I thought I’d post to let you know.

    The layout look great though! Hope you get the issue solved soon. Kudos

  29. Betting Online
    February 17, 2019 | 12:01 am

    My spouse and I absolutely love your blog and find most
    of your post’s to be what precisely I’m looking for. Do you offer guest writers to write content for you personally?

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    my homepage … Betting Online

  30. We are the fastest towing service in Little Rock.

  31. Lady Emmert
    February 17, 2019 | 1:07 am

    Hi, I think your site might be having browser compatibility issues. When I look at your website in Safari, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, fantastic blog!

  32. Nakia Nitsche
    February 17, 2019 | 1:23 am

    Having read this I thought it was very informative. I appreciate you taking the time and effort to put this article together. I once again find myself spending way to much time both reading and commenting. But so what, it was still worth it!

Trackbacks/Pingbacks
  1. plastic dial hand
  2. church building contractors
  3. Alternatif Tuandomino
  4. clock motor suppliers
  5. investment advisors
  6. asset management whitefish
  7. money management
  8. seo services
  9. Learn More
  10. Betting Online
Leave a Reply


Wanting to leave an <em>phasis on your comment?

Trackback URL http://mynextbuck.com/giving-the-middle-finger-to-my-emergency-fund/trackback/