Emergency Fund vs. Savings Account: Do You Need Both?

There are so many great articles on PF blogs about emergency funds, and I can’t stress enough the need to have one. But how exactly do you go about creating one? Is it just a savings account that’s off-limits, or do you set up an entirely new account in addition to your savings and checking accounts?

Investopedia‘s definition of an emergency fund:

An account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as credit cards, as a last resort.

We have a savings account that we only touch in times of emergencies. It’s a simple bank account, separate from our retirement savings accounts (which are also hands-off until that blessed day we say “adios” to our jobs… you know, when we’re 80). So that savings account is our emergency fund. We make deposits when we can, and do not take any money out of it unless we have to.

We’ve been lucky enough to never have had a true emergency, but we have used money from the account for large purchases, such as for our upstairs carpeting job. I only had to “borrow” a bit from it when I was on my six-month maternity leave, which I repaid as soon as I could when the paychecks started coming in again.

But I’ve always replenished it, and it’s continued to grow. Worst-case scenario, there’s enough to cover about 8 months of expenses — mortgage, bills, car insurance — if we ever find ourselves without jobs or in dire financial straits.

J.D. Roth of Get Rich Slowly has this take on emergency funds:

I think it’s wise to keep your emergency money someplace that’s not too easy to access. (Ignore this piece of advice if you know you’re disciplined enough not to use the money for other purposes.) You might, for example, open an account at a bank across town. Or deposit the money with an internet bank. Don’t carry a card tied to the account. You’ll still have access to the cash when you need it, but you will be forced to consider your actions before making a withdrawal.

When CDs were paying 4-5% interest, I had some of our money in those. But now, I could only get 2% interest — if I tie it up for 5 years. Thanks, but no thanks.

So we’re happy with using our savings account as an emergency fund. I don’t know how other people do it, but this method works for us. If you aren’t good at keeping your paws off your emergency fund, it might be better to look into putting it into a CD — that way, it’s harder for you to access it.

Recycling Everyday Items

Recycling plastics and other materials such as aluminum and paper has been an ingrained behavior since I was a kid. I remember our school celebrating the 20th anniversary of Earth Day in 1990, and that’s the year I learned all about recycling. So I do my best to reuse and recycle as often as I can – whether reusing old clothes for projects, re-upholstering old chairs or simply putting aluminum and plastic containers in the recycle bin.

Some of the items I recycle:

  • Tin cans. These are from canned goods like vegetables, chili, diced or crushed tomatoes, and any other foods that come in this type of container.
  • Baby food jars and plastic containers. We go through three of these a day (breakfast, lunch and dinner) for Baby Frugalista, so I’m happy to recycle them.
  • Aluminum cans. I usually drink one can of Coke Zero a day, sometimes two, so they also get tossed into the recycle bin.
  • Plastic bottles. Lest you think I’m a huge soda addict, I also go through one liter of seltzer a day during the week while I’m at work. Occasionally, my husband will drink a Snapple, in either the glass bottle or the bigger plastic container.
  • Shower items. Shampoos, conditioners and body washes mostly come packaged in recyclable plastic bottles.
  • Plastic Ziploc bags. This one depends on what was in the bag– if it’s a non-residue-leaving snack, I’ll turn the bag inside out and wash it, letting it air-dry for another (non-food) use, such as storing rubber bands or paper clips.

Other items that can be recycled are plastic food containers such as Gladware or Tupperware, plastic hangers, plastic and paper bags, newspapers, magazines and books. We reuse plastic bags at least once, mostly when cleaning out the cat little. Paper grocery bags can be reused at the grocery store on the next shopping trip for a 2-cent credit; sometimes, I put the extras out with the paper recycling at the curb.

If we didn’t recycle, we’d be contributing a good amount to landfills. I know a number of people who don’t bother to sort their recyclables from their regular garbage, and honestly, it drives me nuts if I think about it.

Every little bit helps, but I still think I could be doing more. What other items do you reuse and/or recycle? Am I missing anything in particular?

Back to Work After Baby

T-minus two days until I return to my full-time job, and I have mixed emotions. I absolutely LOVED being home with Baby Frugalista for nearly 6 months, but I’m also anxious to get back into the workforce. And since I have a condensed four-day workweek, I’m hoping our separation won’t be too hard on me. I really think the baby will be fine, since she’s so happy and wonderful with everyone she meets. Me, on the other hand… that’s a crapshoot.

I’m glad she’ll be in the care of someone we know, who will take care of her like she was her own. I’m going to be doing the drop-off in the morning, and Mr. Not-So-Frugal will be doing the pickup after work. My hours vary and so do my husband’s, so Baby Frugalista will be with the babysitter anywhere from 6 to 10 hours a day (10 hours will only be those Mondays that I go into work early).

I feel like a kid anxious about the first day of school. What should I wear? Will I remember everyone’s name? Will I remember how to use the computer program? Will I make mistakes? Will it be overkill to plaster my cubicle with pictures of my baby? Will I cry because I won’t see my sweet daughter’s face for 10 hours?

It’s only normal for me to feel this way, I know. And I find comfort in knowing that most moms these days are working mothers. But it doesn’t make it any easier!

Anyone have any tips for making the transition easier?

Tips for Staying Cool During a Heat Wave

We’re in the middle of a heat wave here in the Northeast. It’s been in the mid-90s for days now, and it’s going to top 100 degrees for the next three days, if the weather forecasters are to be believed. I know lots of folks deal with this hot weather for much of the year (Nevada and Arizona, I’m lookin’ at you), but that’s out in the fabled “dry heat” area of the country.

Come to New Jersey, and enjoy our famous high-humidity summers. July and August can make you feel like you’re in a sauna 24/7. For all the attitude we throw out at you, we’re total wusses when it comes to dealing with the heat.

Unless you don’t mind inside temperatures soaring into the 80s, scorching temperatures mean scorching electric bills. I don’t know anyone who refuses to put on their air conditioner once it regularly reaches the upper-80s around these parts (even a cheapskate like me). But there are a few things I do to stay cool and to keep from losing my mind when the electric bill comes in each month.

1. Keep the air conditioner on — but at a higher temperature. It doesn’t have to be set at 60 degrees all day and night. I find that I’m comfortable at night with the temperature set to 76 degrees (yes, you read that right). That’s because the air conditioner counteracts the humidity in the air, making it feel even cooler in the bedroom. The air conditioner in Baby Frugalista’s room is also at 76 degrees at night during these warmer summer months.

2. Close the blinds and curtains. Why let in all that unwanted heat? I draw the drapes and pull down the shades in my house most mornings in the summer to keep the sun from shining into our rooms. This works especially well if you have heavy and/or energy-efficient curtains that are better at keeping your home cool in the hotter months.

3. Skip hot meals. Don’t add to the heat by using the oven or the stovetop. Microwaves throw off less heat, but hot food makes you feel hotter. Stick with cold foods such as sandwiches, gazpacho, or fruit.

4. Go find some “free” air conditioning. Walk around a mall or a local big-box retailer and enjoy THEIR air conditioning while getting some exercise (just don’t spend a ton of money while you’re there, because you won’t be saving ANY money). Be sure to shut off your home A/C before heading out of the house!

5. Try a cool washcloth. Run cold water over a washcloth or soak it in a bowl of ice water. Put it on your forehead or on the back of your neck to temporarily bring down your body temperature.

Do you have any other tips for staying cool during a heat wave?

The Business of Being a Mom

Being a mom is a lot like running a business. There are bills to pay, budgets to adhere to, prep work, cleanup, managing employees (spouses, babysitters, even doctors). And the startup costs — yikes! Don’t get me started. At least you can buy items secondhand or get lucky enough to have gently used baby clothes handed down to you.

Just like running your own business, it’s hard work, but I love every minute of it.

Dealing With Clientele

Sometimes the client is overly demanding. If I can’t pick up Baby Frugalista in a specified amount of time (maybe I’m in the shower or washing dishes), she lets me know her displeasure, just like a customer waiting impatiently for a waitress to take her order. She may nod off on her own, or I might have to give her her pacifier (which Mr. NSF has dubbed a “bup-bup”) and rock her to sleep.

Baby Frugalista might want to eat 4 times a day, or she might want a bottle 8 times a day. I never know what I’m going to get. There’s definitely no monetary compensation involved and the hours are long, but in my book, a gummy grin is worth a million bucks.

Scheduling Feedings, Naps & Playtime

Staying home with a baby isn’t all fun and games. Well, now that Baby Frugalista is 5.5 months old, playtime is becoming more important. On any given day, the baby wakes up, and I change her and we play on her activity mat for a bit. Then it’s time for a bottle of yummy milk. I’m still sterilizing our filtered tap water for her bottles by boiling a full teakettle in the morning, which lasts all day.

As she gets older, Baby Frugalista’s naps and nap times continually change. She’s been taking 20-to-30-minute naps 3, 4 or 5 times a day for months now, with the occasional hour-long nap. If we nap together, she’ll sleep over an hour. Go figure! I need to get some things done around the house during her naps, so I can’t always sleep with her. Naps are usually in the morning, at noon, in the late afternoon and at dinnertime. There are many sessions of play and tummy time sprinkled in between. Feedings generally happen after naps. Now, with solids in the mix, that’s two more feedings that need to be scheduled.

Managing Employees

Not only do we have to deal with babysitters and daycare providers, many of us have to deal with our significant others. Training Mr. NSF to help take care of the baby has been an adventure, to say the least. But he’s now a pro at changing dirty diapers, giving bottles and changing her clothes. We’re still working on his “soothing” techniques, though!

Leaving the baby in the care of someone else involves lots of details. The babysitter needs to know what she eats/drinks and how often, her napping and sleeping patterns (okay, “patterns” might be the wrong word at this point). She’ll also learn our baby’s quirks and cues, hopefully much faster than Daddy and I did.

Preparing for a New Day of ‘Baby Business’

The end of the day is when I clean up and prepare for the next day.Some of the things I do after the baby is asleep for the night:

  • Clean up after bathtime.This involves scrubbing the the baby tub and the big tub, putting away the rubber duckies, removing the pillow I use when I kneel next to the tub (a lifesaver!), and rinsing out washcloths.
  • Put the baby’s laundry (clothes, towels, bibs, burp cloths, washcloths) in the hamper or do a load (or three).
  • Wash and sterilize the bottles, rubber-tipped spoons, dishes and bowls. Scour and bleach out the countertops.
  • Make sure there are enough supplies for the next day or two. This involves refilling the diaper stacker and wipes containers as necessary, and getting a new tube of diaper cream if the current one is about empty.

Oh yeah — I still have to do the usual chores to keep our house looking its best. Which, right now, means presentable and as clean as possible. I’m sure I’ll be forgiven if I don’t wash the baseboards every week anymore!

Defining Success

Despite all the hard work that goes into the business of being a mom, I wouldn’t change a thing. I’m hopeful that Baby Frugalista grows up knowing how much Mommy and Daddy love her, and turns out to be a happy, well-adjusted child. That will be success enough.

7.5 Weeks With No Pay, 4.5 to Go

When it came to maternity leave, I’ve always wanted to be able to spend as much time as I could with my newborn baby. That’s why, when I found out I was pregnant nearly one year ago, my husband and I decided that I should take 6 months, if possible. My employers amazingly agreed to the time period when I proposed it, for which I will be forever grateful. But I knew that I would only be getting disability and family leave pay for a total of 12 weeks – the other 12 weeks would be unpaid (I’ve taken 24 weeks off, rather than 6 straight months, a slightly longer time period).

That’s why, even while pregnant, I worked my ass off doing side gigs in order to further build up our savings. I also knew the baby would come around the time we’d be getting our tax refund. As much as I planned, the baby had other ideas, showing up 5 weeks early. Luckily, she was healthy as a horse, and the upside was that I could spend all of my maternity leave time with her, as opposed to going out of work at 38.5 weeks as scheduled, then waiting around for the baby to show.

For the past 7.5 weeks, we’ve only had Mr. Not-So-Frugal’s paycheck coming in. While I know many readers can make it work on one income — even with a mortgage — it’s something that’s almost impossible here in Northern New Jersey, in the shadow of New York City. We bought a home at a good price, put 20% down, and it’s still tough. It appears that I’ve planned out our cash flow perfectly, but now we’re getting down to the wire — there are just 4.5 weeks left until I return to work!

It’s difficult watching our checking account dwindle now that we’re in the sunset of my maternity leave. We’ve been watching our spending to a point, but now I’m going to be bringing the hammer down. It would be even easier if I could get Mr. NSF to stop smoking (he smokes outside, as he’s always done), as we’d save an easy $300/month right there. But if my calculations are correct, we won’t even have to dip into our savings account.

Although there’s one thing I didn’t consider — when I’ll get my first paycheck when I return. I think I’m going to have to wait two weeks for my pay when I go back, which really means it’ll be another 6.5 weeks without a paycheck coming in, not 4.5!

I’ve cherished this time home with my little one, and I can’t believe it’s coming to an end. Watching her grow from a teeny 4-pound preemie to the chunky baby she is now (13-plus-pounds at almost 5 months!) and hitting all of her milestones despite her early entrance into the world has been amazing. But as much as I love you, Baby Frugalista, I’m actually ready to go back to work! It’ll be hard, putting you in daycare, but we’ve got a great babysitter lined up, someone I’m comfortable with. I know you’ll be in good hands.

I’ve always believed I wanted to be a stay-at-home mom, but I’m ready for a paycheck again! Unless we hit the lottery, I’ll be a working mom, just like most of the people I know. I know that despite being away from my baby during the day, I can still guide her, teach her and love her just as much.

Posts That Piqued My Interest: Long-Overdue Edition

Between pregnancy and taking care of a newborn, I haven’t had a whole lot of time to give this blog the attention it deserves — never mind all of the other fantastic personal finance blogs out there.

So now it’s time for a long-overdue “Posts That Piqued My Interest” post!

— One of my favorite PF blogs, Consumerism Commentary, discussed Reverse Foreclosure: Man Seizes Bank of America’s Assets. The short version: The bank went after a couple who it claimed hadn’t made payments on their mortgage, initiating the foreclosure process. But the husband and wife had PAID THE ENTIRE COST OF THEIR HOME IN CASH. There WAS no mortgage. Bank of America owed them their legal fees and refused to pay, so the husband showed up at a local Bank of America branch and turned the tables on them. Love it.

— A very belated – but just as hearty — congratulations to Death to the Mortgage. He and his wife paid off their mortgage far, far ahead of schedule, thanks to a final lump-sum payment in April. After refinancing their loan, they decided to pay off their 10-year mortgage within a five-year window. They SMASHED that goal, finishing up in just 3 years, 4 months, saving $28,431 in interest on their nearly $189,000 mortgage.

Frugal Dad has a very comprehensive list, 62 Money-Saving Tips to Help Survive Another Recession. There are some new gems in addition to the usual ways to cut expenses.

— A sobering story over at Funny About Money, Why Everyone Needs to Learn How to Manage Money. Ladies, especially, take (and keep) control of your finances!

Microfiber Cloth Uses at Ultimate Money Blog offers some great ideas for using these little fabric wonders. I’m going to try Mrs. Money’s glass cleaner recipe, too, now that I’m almost done with our bottle of Windex.