Sometimes I think I should turn in my personal finance blogging card. This past week, I’ve been confronted with two different money dilemmas that have me stumped: emergency funds and found money.
I understand the basic principles of both. Emergency funds are one of the most talked about topics in personal finance. And na-na na-na boo-boo, finders keepers pretty much sums up my feelings on pennies on the sidewalk. But it turns out, I have a knack for complicating even fairly straightforward topics. Perhaps you’ve got some advice?
The Current State of Our Emergency Fund
Currently, we have one savings account. Actually, that’s a lie. We mostly have one savings account. Mr. P also has a separate account from before we were married that he hasn’t closed. Imagine cobwebs and spiders. So I’m basically breaking two cardinal rules of personal finance. Our money is all jumbled together, and my husband has a separate account for no other reason than sheer laziness*.
The reason why our money is all jumbled together is a little bit more complicated. First of all, I’ve been in a never-ending love affair with a small, local bank. They are wonderful. But they’re also small and local. So the idea of having sub-funds or accounts within an account will probably never come to fruition. So open a separate account, Penny. Exactly. I’ve gotten that far. But then I got stuck.
How much money do I move? Previously, I always thought $10,000 of our savings was our emergency fund. That would cover three months of expenses if we both lost our jobs. But then life happened. After the calamities of late 2015 and early 2016, a wind storm microburst blew apart our two-year-old shed and did a number on our roof. While the insurance is going to cover most of the expenses, we still have a $1500 deductible. When I crunch the numbers, I started to realize that $10,000 isn’t so much after all. Not when life happens.
Number Crunching
So now I’ve arrived at a new number. Our emergency fund is going to have $20,862 in it. Currently, we spend $3477 a month, including our mortgage, property taxes, and insurance. So this number would cover either six months of unemployment for both Mr. P and myself, or three months of unemployment with $10,000 for housing catastrophes. Because if the day ends in y and you’re a homeowner, there’s the chance of a disaster.
If push came to shove, I know we could trim more of the fat in our expenses. It’s also unlikely, though not impossible–as I learned the hard way–that we would both lose our teaching contracts in the same year since we work in different districts. So I’m feeling pretty confident with this amount. The question is: Should I?
The Moral Dilemma
The next dilemma of the week has to do with found money, found gift card money to be more precise. In an effort to set a positive example for my students and because I like to look out for the environment whenever possible, I pick up trash when I see it. It could be in the hallway. It could be on the sidewalk. If I cross paths with a receipt on my way into a store, I pick it up and toss it.
Last week, I attempted to do just that. Mr. P stopped at Walgreens on our way to visit my family, and I spotted a merchandise credit for a department store in the parking lot. The foil code on the back was scratched, so I was convinced that a person tossed a zero-balance card out the window at the back of the lot. Mr. P insisted that I check the numbers before tossing it, which is when the nightmare started. In addition to having to admit he was right, I also feel like a thief since it turns out there is $47 on the card.
The Options
There were no other cars in the back of the lot, so I couldn’t ask anyone. That would have been too simple. I called Walgreens to ask if anyone had reported a missing card. No dice. So now I’m stuck. When I checked the card balance on line, there is no option to register it since it is only a merchandise credit. I contemplated putting up a post on Craigslist, but I don’t want to conjure up all sorts of craziness unnecessarily. Part of me is hoping that when I check the balance next it will be zeroed out somehow. Because I love irony. There’s nothing quite like naming your blog after found money and then being wracked with guilt when you find some.
*With my luck, this will be the day he reads my blog. Hi, honey!
So Tell Me…Care to solve my emergency fund woes for me? Bonus points if you can help me decide between a Discover savings account at 0.95% with a $100 sign-up bonus or an Ally savings account at 1.0%. After you’ve tackled that issue, got any ideas for this gift card dilemma?
I don’t quite understand why your emergency fund needs a separate account. But if you want to explore something other than your local bank, why not leave the $21K where it is and use the remainder to start a new account? I’m assuming the remainder is a larger amount, but maybe I’m misunderstanding.
As for the merchandise card, you’ve already done your due diligence. But if the guilt won’t subside give it to charity, or throw a party at school. I would not waste personal time on Craigslist, where you also risk inviting crazy into your life.
Our savings currently includes our efund (whatever that amount actually is), property tax money, insurance money, and all of our other savings (non-retirement investments). There’s a lot of in and out, which makes my skin crawl a bit. I think what I actually need to do is take some of the non e-fund money and open another investing account. Like five years ago. 🙁
You’re e-fund number sounds good to me, but if you’re feeling uncertain you can always build it to that level and then reevaluate.
As far as the found money, I think you’ve done your due diligence and there’s just no way to trace the owner. If using it yourself really feels wrong to you, you could donate the certificate or use it to buy things for donation. That way it doesn’t go to waste but you don’t personally benefit.
That’s a great idea, Emily. Two great ideas, actually. 🙂
What I was going to say! I say buy something to donate with the found, and get that sign-up bonus with your e-fund! 🙂
Have you ever thought about having a line of credit instead of an emergency fund (or in addition to a small emergency fund)? It seems like you’re missing out on a lot of investment potential by having so much money in a low-interest savings account.
I am missing out on SO MUCH investment potential…because I don’t know what I’m doing. My plan is to actually move money into investment account(s) after I commit to something with this savings. We have a fully funded Roth and two pension plans (theoretically, until our state implodes). But yeah, I need to make some decisions fast.
Have you ever spoken with a financial planner? I’m lucky to have a great one who used to work with my Dad (prior to that my Dad was my financial planner), and I find it very helpful to have someone who can look at my entire financial picture (huge piles of debt!) and advise me on how to move forward. Apparently there are financial advisors who work for an hourly salary instead of commission, so that might be a way of getting financial advice that you can trust.
It’s so silly that I’m so opposed to working with a planner. I know that’s costing me infinitely more money in the long run. After I move my savings, I’m going to open a Wealthfront or Betterment account. But then you’re right. I probably also need to speak with someone else. Or keep reading. Or both! 🙂
I don’t think it’s silly at all to be reluctant to work with a financial planner. The costs are generally prohibitive. If you have your basic foundation (budget, emergency fund, retirement accounts) established and the underlying investments in your retirement accounts are low-cost index funds, what do you need a planner for?
If someone has very specific questions or needs, particularly as they close in on retirement, there might be a need to engage a planner/adviser. At such times, I always suggest that people look for a fee-only, vice a fee-based, advisor. The difference? Fee-only advisors have no inherent conflicts of interest, they don’t accept fees or compensation based on product sales, and they generally provide more comprehensive advice. Many also carry professional designations which hold them to strict codes of professional and ethical conduct. Conversely, fee-based advisers can charge a one-time or ongoing fee, depending on the types of services they provide. The fees may be hourly, flat or based upon a percentage of assets under management. Also, fee-based advisers may charge both fees and commissions based on the products they sell.
Better to keep and manage your own money.
Running the numbers, Discover would be the better choice I think. Assuming the savings account stays stable, because life circumstances happen and then subsequent replenishing, it would take 10 years to earn back that $100 with the interest difference.
Also, take the $47 bucks. You went a lot further than most people would have to help it find its owner!
Thanks, Femme! I think Discover is the winner. That’ll be my first priority Monday morning. What a spring break. 🙂
I’d vote for putting the money in Discover for as long as it takes to get and keep the bonus and then move it all to Ally for the higher interest 🙂
As far as the gift card, you’ve done a good job trying to find the owner, but there aren’t a lot of good options left to try. Maybe it can go towards your donations!
Oooh. I like that idea. I believe Discover is only thirty days. If this switch isn’t too painful, I think I will look into switching to Ally. Good call!
I would recommend a slush fund and emergency fund. Your slush can be for all of the going in and going out. You could keep it at your current small bank. Then I would leap for that $100 sign up bonus at Discover and put my entire ER fund in it. That way it remains untouched. As far as the gift card, since there is no way to get it to its owner, use the funds to make kits with toiletries and snacks and give them to the homeless perhaps:)
Thank you, Latoya. I think Discover is the way to go! If it was a Walgreens gift card, I’d do that in a heartbeat. It’s a clothing store 🙁 I’m thinking maybe I can score some really inexpensive towels for my animal shelter!
Oh, okay, gotcha! That is a good idea you have so I say go for it!
I think it’s totally fine to use the gift card. If you found that amount of cash on the street, you’d use it, right? It sounds like you’ve done everything you can to find out who the owner is (more than most people would have, by the way), so at this point it is essentially cash. Use it. Or, as Latoya suggests, use it to buy something you can donate.
I googled this Discover card and learned that you need to deposit at least $15,000 to get the bonus. So I guess I won’t be opening one anytime soon. However, I can definitely recommend Ally. I’ve been using them for about a year and I’m always shocked when I open up my account and see the interest that has accrued — it’s great. They also have really reliable customer service by phone, and I have never had to wait.
That’s a great point about finding cash. Since all I ever seem to find is a few loose coins, I guess I never thought of it like that! Once, my grandma (the blog is named after her!) found a roll of quarters. She told that stories for years 🙂
Thank you so much for your insight about Ally bank. The Discover bonus seems like a great deal, but I don’t know anyone who ever had a Discover savings account. I’ve heard lots of positives about Ally!
I don’t think it’s silly at all to be reluctant to work with a financial planner. The costs are generally prohibitive. If you have your basic foundation (budget, emergency fund, retirement accounts) established and the underlying investments in your retirement accounts are low-cost index funds, what do you need a planner for?
If someone has very specific questions or needs, particularly as they close in on retirement, there might be a need to engage a planner/adviser. At such times, I always suggest that people look for a fee-only, vice a fee-based, advisor. The difference? Fee-only advisors have no inherent conflicts of interest, they don’t accept fees or compensation based on product sales, and they generally provide more comprehensive advice. Many also carry professional designations which hold them to strict codes of professional and ethical conduct. Conversely, fee-based advisers can charge a one-time or ongoing fee, depending on the types of services they provide. The fees may be hourly, flat or based upon a percentage of assets under management. Also, fee-based advisers may charge both fees and commissions based on the products they sell.
Better to keep and manage your own money.
I love the irony. I also love Ally bank. They’re online platform isn’t as snazzy as I would like, while I love my Discover dashboard, but Ally’s customer service is incredible. I don’t know about Discover because I haven’t asked. Can you turn in the card to Walgreens? I would do that if I couldn’t get past the guilt to spend it.
We tend to keep our emergency fund on the larger side, too. I like to be able to sleep at night without worry!
We like to have 6 months’ expenses in the emergency fund. We only have one separate savings account, our car fund, since we drive old cars and don’t consider needing to purchase a vehicle a true emergency since we can plan for it. Anyway, I think your number sounds good. And congrats on your found money. I understand the dilemma but if you can’t find the owner, what can you do? Maybe donate some of what you purchase with it?
Well, I love the idea of a much larger emergency fund. It’s making me rethink my own number. I think the bank bonus is good, too. Those interest rates could change at any time, right? But that 100 bucks will help that fund grow!
As for the found money, I like Our Next Life’s idea. I also think that you can just use it flat out. It is found money. I mean, the other options – Craigslist ad, Walgreen’s lost and found, a poster – all seem like a lot of trouble for nothing. If it were a bag of $100 bills, then maybe try to find the owner, but not through Craigslist. I love Craigslist for odd jobs and furniture, but it does seem like that you could open a can of worms.
I think the found money is just that found money. The pastor’s wife at church found a gift card in a used couch she bought at Goodwill. It was worth $100.00 -Pastor got a new suit. They considered it a blessing.. I would too!
What a terrific anecdote, Vickie! My husband just lost a merchandise credit, so I figure this is the universe’s way of evening things out 😉 He claims he will find it in a pant’s pocket. Not holding my breath!