As long as I have 3-4 months operating cash on hand the rest is all my EF. Truth is if I lost my job I’m not going to sit there and say I only have a 6 month EF, I can’t cash our my taxable account. Nuh-uh. I’m going to say I need to find a job period. But I have a minimum of 3 months cash or 4 months, since I work ahead and I have 3 years in taxable accounts.

This is why I will NEVER pay off my mortgage early, except in 100% full! You don’t own the house till it’s paid off in full. So until then if you lose your job and own 50% of it, you can’t refinance because you don’t have a job. BUT you still have to pay a mortgage note! And they will take it away even with that much equity, so no way.

I’ll pay it off early maybe, but not unless it’s 100% in full. And not a day sooner. My method mitigates risk, but paying off a mortgage early you only have your EF and whatever extra in a taxable account to live on. I might have 3-10 years to live easy. Especially if I became disabled and needed to retool my career.

@Jeremy: That’s the thing, even if you have $100,000 the difference is only $750. So it’s going to be small — but it’s still more than you would make otherwise. As I mentioned to FFB, if we start a CD ladder (buying one 6 month CD every month for example) we will still have some liquidity plus the other money in our savings accounts.

@JB: That’s a good idea to help control yourself.

@Marcus: Good idea. We do have some longer term goals out there that we could start socking money into CDs for. I am still wary of locking in for a long period of time though. I love PV/FV as well.

@Megan: Good point. The interest charge is usually pretty small to pull it out (unless it’s thousands of dollars).

@Kimberly: Haha! I am psychic… I prefer ING due to the awesome customer service.

@LAL: I guess I’m not willing to risk the emergency fund with the amount of volatility we are seeing. Unless you mean you might be investing it in bonds or something similar (which have also been brought down). You are right though in terms of some of the other savings — I just don’t think everyone has them (we save for those monthly so we’re not ‘fully funded’ but getting there).

@Steadfast: I’d love to hear about that account. It depends on the institution and the amount of money you need to have in the account, etc. I’m very happy with ING due to their awesome interface and customer service.

I wrote a post about it at SF if you’re interested.

My EF is for job loss, death, and disability. It is not for unexpected expenses. Thats in cash because I should have enough flex in my budget AND i should be budgeting for things like home repairs, car repairs, etc.

I ended up deciding to just let the idea marinate in the back of my head for awhile. I’d rather not lose the liquidity for one point, and no way would I tie it up for 60 months for 1.75 points.

I actually have an account at HSBC as well, and they’ve been giving me 3.50% for awhile, so I’ve been biased towards dumping money in that account. I’ll probably stick with that strategy while I think it over.