A reader by the name of Slinky came by and left a comment on the site:

I’d love for you to post about pros/cons of storing an emergency fund in different places - online savings, money market, index, brick and mortar, etc.

The key to figuring out where to stash your emergency cash is decide what type of emergency you’re preparing for. Many people save “3-6 month’s expenses” in their emergency fund, in case they lose their income for a few months. Other people have emergency funds for sudden incidents, such as car repairs or a medical crisis. Some people keep cash in case of a natural disaster, where banks and ATMs might not be available.

What’s the difference here? “Liquidity.” Liquidity simply means “how easy will it be for me to get the money I need, fast?” Different accounts give varying levels of liquidity - and usually the less liquid your fund is, the higher rate of interest it will earn.

Cash

Under a mattress, in a fireproof safe, or in a sealed envelope on your person - cash is about as liquid as it gets. Cash is good if you’re the type that would use your fund in a natural disaster.

Pros: Instantly useable, accessible during a power outage

Cons: Loses value over time due to inflation, is inaccessible if you’re not physically near it (if it’s in your fireproof safe and you’re out of the house, for example), little recourse if it’s stolen, temptation to spend on non-emergencies

Brick-and-Mortar Bank Savings Account

The savings account at your local bank or credit union could be the place for your fund. It’s highly liquid - you can get the money out by walking into a branch, using your ATM card, or instant transfer to your checking account at the same bank.

Pros: Easily accessible, less temptation to spend than cash

Cons: Low interest rate usually doesn’t keep up with inflation (loses value over time), may be inaccessible while traveling if bank is local

Online (High Yield) Savings Accounts

One of the most popular places for emergency funds right now, online savings accounts offer the sweet spot of liquidity and interest rate. The funds can be transferred to your checking account within 1-3 days. Recommended account: ING Direct’s Orange Savings.

Pros: Interest rate usually meets or beats inflation, transfers to checking account, separation from checking decreases temptation to spend, no minimum balance requirement

Cons: Slow transfers may hinder urgent emergencies, limited by federal law to 6 transfers out of the account per month

Money Market

A money market savings account is a lot like a high yield savings account, without the “online” part. They pay a comparable interest rate to online savings accounts, sometimes even higher. Also, they let you write a few checks a month on the account, assuming the check is for $250 or more (usually).

Pros: Interest rate usually meets or beats inflation, transfers to checking account, ability to write checks for emergencies

Cons: Limited number of checks can be written per month, minimum balance requirements could be a problem if you have to use all the money in the emergency fund

Index Funds

Index funds are just a collection of stocks that follow the stock market. Low liquidity and high volatility - some people use index funds to grow the value of their emergency fund, but it’s a risky practice because your fund could take a nose-dive in value right before you need the money for an emergency!

Pros: High interest rate, low liquidity virtually guarantees you won’t spend it on non-emergencies

Cons: Really inaccessible (you have to sell the funds to get the money), could lose value when you need it most, could virtually disappear during economic crisis

Extra: Credit Cards

Many people keep a credit card around for emergencies. In my opinion, a credit card is a compliment to an emergency fund. You use the credit card to pay for the emergency, and then use the money from an emergency fund to pay off the credit card balance.

Pros: Emergency fund that is easily accessible and as big as your credit line, accepted by nearly every retailer and some medical facilities, ability to “pay now” and then pay off the balance with money from your real emergency fund

Cons: Temptation to overspend or use for non-emergencies, usually not usable in the case of a power outage

My Recommendation

Use a combination of these options to get the benefits you need. For example, If you’re in hurricane or tornado territory, having part of your emergency fund in cash is a good idea, as well as having some in a high yield savings account.

Personally, I’m using a credit card/online savings account combination right now. After I graduate from college and grow my emergency fund, I’ll move most of the fund to a money market savings account, and perhaps keep a couple hundred dollars in cash as well.

Aside from hosting the Carnival of Twenty Something Finances, I participated in a couple more carnivals last week:

The Finance Fiesta No. 3: The Spanish Money Proverbs Edition
and
The Carnival of Personal Finance #157: Third Anniversary Edition

Also this past week, Jim over at Blueprint for Financial Prosperity alerted me that Poorer Than You was mentioned in Dan Ariely’s book Predictably Irrational.

So I did the completely rational thing and told my parents about it, who immediately ran out to buy a copy of the book. I’ve been interested in reading the book since it came out, but since the last borrower never returned it to the library, I never had the chance to have the “OMG MY WEBSITE IS MENTIONED IN THIS BOOK” moment while reading it.

I’m not sure whether I feel that it was a “good” mention or a “bad” one. Ariely says, of this site and other debt bloggers:

Blogging about overspending is important and useful, but … what we truly need is a method to curb our consumption at the moment of temptation, rather than a way to complain about it after the fact.

I’m not sure I’d ever classify my blog as a “complaint” about my debt, although I can see how some debt blogs do fall into that category. In point of fact, I believe a blog can act as a way to curb consumption - mine has kept me accountable and focused on personal finance, which has done wonders for my situation.

Still… SWEET!

Hello, and welcome to the Carnival of Twenty Something Finances for June 16th, 2008! I’m Stephanie, and I’ll be your host as we highlight articles and posts from around the web-o-sphere that pertain to money matters for Generation Y.

And I have to tell you, this opportunity to act as host has sent me on a POWER TRIP!

That’s right, I’m hijacking the power given to me as the Editor of the carnival, and using it to rank the submissions sent in to me. Normally, you don’t see this level of competition and favoritism in a blog carnival. But I feel that by ranking the posts and weeding them out to the good, better, and best, I’m doing a service both to the writers of the articles, and to the readers of the carnival. So let’s GO!

WINNERS! (Editor’s Picks)

In the winners circle we find posts that cover and interesting topic, and cover it with style and good writing. Congratulations to the following:

GBlogger presents Early Savers: $69,000 Saved By Age 23 posted at CAN I GET RICH ON A SALARY.

Mark Butler presents You Control the Money or The Money Controls You posted at The Butler Project.

Writer’s Coin presents Three Ways Falling in Love is Good For Your Budget posted at The Writer’s Coin.

FIRE Finance presents Sneaky Credit Card Trick #1 - Over The Credit Limit Fees posted at FIRE Finance.

Lars presents Fix Your Credit Report - Simple Fixes You Can Easily Do Yourself posted at InsightsandAdvice.com.

2nd Placers

Good articles on interesting topics that piqued my interest. These posts are to be congratulated as well:

Mr Credit Card presents How to Stop Getting Credit Card Offers By Mail posted at Ask Mr Credit Card.

Raymond presents Why College Students Should Apply For Student Credit Cards posted at Money Blue Book: Personal Finance Blog.

Silicon Valley Blogger presents Credit is King in an Emergency posted at The Digerati Life.

Brooke presents Groundhog Day Goals - 6 June (late) posted at Dollar Frugal.

Katie Gregg presents Frugal Fabulous: Frugal Faucets posted at Frugal Fabulous.

Steve Faber presents What is The Highest Gas Mileage Car? - The Top 10 Real Cars for $4.00 a Gallon Gas posted at Debt Free.

Dorian Wales presents The Personal Financier: Actively Manage Your Career to Stay On Top of Your Game posted at The Personal Financier.

Hank presents The Wife And I Are Bumping Up The 401k Contributions to 15% - How Much SHOULD You Be Putting In Your 401k? posted at My Investing Blog.

Garret presents 7 Ways To Save Money On Your Fuel Bill posted at Personal Finance Basics.

Helen Anderson presents 5 Ways to Start Your Business With No Money! posted at Bankaholic.

Heather Johnson presents 5 Ways to Save Money in College posted at Grad Money Matters.

Steve Faber presents One of the Best Reasons to Quit Smoking - You Could Save a Half a Million Dollars! posted at Debt Free.

Margaret presents Dealing with Higher Gas Prices posted at Greener Chic. AND Deluxe: How Luxury Lost its Lustre posted at The Earthly Paradise.

James D Braush presents Another Thought Exercise posted at Internet Business Blog. [Editor's note: You'll have be familar with the recent news regarding the Fundamentalist Church of Jesus Christ of Latter Day Saints in order to understand this article.] 

David Carter presents Bring Your Lunch to Work Day posted at David Makes Cents.com.

Sagar Satapathy presents 10 Surprising Implications of the Global Rise in Food Prices posted at Currency Trading.net.

Joy Harrison presents Debt management… personal budget, debt consolidation, or counseling? posted at Money Sense.

Livingalmostlarge presents Compromising a couple’s wants posted at LivingAlmostLarge.

Brice Hogan presents Fund Retirement Early posted at Financialzip.com.

Shamelle presents Money And Processions: Breaking Free From The Materialism Trap posted at Enhance Life.

Runners Up

Don’t forget about the guys at the back of the race - although these articles did not resonate with me, you might find one of these to be a diamond in the rough:

Thank you to the participants, and if you didn’t get the “rank” that you were hoping for, take heart, keep writing, and submit to the next edition of Twenty Something Finances using the carnival submission form. Past posts and future hosts can be found on the blog carnival index page. Better luck next time!

Photo credits: Mr. Thumpz, Bukutgirl, and Patrick Mayon

Back in September, I applied for a Citibank student card, and had a terrible time verifying my student status. After a solid month of trying and getting the runaround, I dropped it and ended up getting a different card.

Times may have changed, though. A friend of mine applied for the student version of Citibank’s Driver’s Edge card, and was approved without having to submit any of the insane paperwork that I was asked for. Has anyone else applied for a Citi student card in the last few months? Did they make you verify your status as a student?

If this actually has changed, that changes my opinion on whether Citibank’s student cards are worth it or not!

Mmmm…. classes finished, grades are in (three As and a B, thanks!), and it’s time for me to kick back, relax, and take it easy for the summer.

Not.

Meet my list of goals for Summer 2008. Some are financial, some are not. But I want to get them all done before classes start up again on Labor Day (my school is anti-holidays, it would seem).

Goals for the Summer of 2008

• Juggle daily
• Stretch daily
• Read a book a week, at least
• Organize my whole room, including papers
• Pay off my credit card debt
• Save money for textbooks
• Clean out my email inboxes
• Organize and backup the files on my laptop
• Watch all the episodes of Buffy again (I blame this one on Lazy)
• Watch West Wing season 7
• Learn to knit using the Continental Method
• Learn to rollerblade
• Convince my parents to buy a Wii Fit
• Find 20 caches
• Write an ebook

I’m stopping here! Anything more, and I run the risk of not getting very many of them done! So we’ll see how I do with this list over the summer.

The “Graduating?” series is wrapped up and I’ll admit - I’m kinda tired. Actually, I’m tired because I stayed up late last night discussing supernovas! (This conversation on supernovas may or may not have been sparked by a discussion on the end of the world or the reimagined Battlestar Galactica series.)

Here are the blog carnivals that I participated in last week:

Moolanomy hosted the 155th Carnival of Personal Finance - Time With Family edition. My post Graduating? Calculate Your Tax Withholding was included. A taste of the post I really enjoy from this carnival:

29 Free Or Low Cost Ways To Save Energy & Money.
Stop complaining about Gas Prices!
Five Things Indiana Jones Can Teach Us About Personal Finance

Girls Just Wanna Have Funds hosted the Carnival of Debt Reduction 142nd Edition: Sex And The City Style! My post Graduating? Plan Your Attack on Federal Student Loans was a “Carrie’s Pick.” Some other great articles:

Surviving Student Loans
Looking for Extra Money to Pay off Debts? Here Are 10 Things You Can Do Today to Free Up Money
Are These People Crazy?

Master Your Card hosted a brand new blog carnival, and my post Graduating? Evaluate Benefits for Job Offers was in the first ever Finance Fiesta! Some more good posts from the piñata:

Into the Wild… Without spending a lot of money
How Much is a Dollar Worth? How About $53.70
Should You Invest in a Non-Matching 401K?

I just want to give a big THANKS to all of the blog owners that posted these carnivals! It’s a lot of work, so I hope you readers check them out and find some awesome articles!

This article marks the end of the “Graduating?” series here on PoorerThanYou.com. I hoped you’ve enjoyed this series and maybe learned a thing or two. Here are all the posts in the series:

• Start the Job Hunt
• Evaluate Benefits for Job Offers
• Calculate Your Tax Withholding
• Plan Your Attack on Federal Student Loans
• Repay Your Private Student Loans
• 7 Survival Skills Every College Graduate Should Know
• Make a Budget Without Hurting Yourself
• Top Ten Free Money Tips for Grads

To wrap things up, I want to give you access to some more great articles and resources about life after college. If you know of anything else on the web (or any books) feel free to leave a link in the comments!

Ask the Readers: Advice for College Grads? - JD Roth asked his readers at Get Rich Slowly to share their words of wisdom for college grads. The resulting 157 comments show a variety of insight into the triumphs and pitfalls that can occur in life after college.

More from Get Rich Slowly:
Career Advice for the College Graduate
Life After School: Advice for New Graduates
The New Graduate’s Guide to Financial Freedom

The Hartford’s Playbook for Life [PDF] - One of the very best ebooks I’ve read: it covers everything from budgeting to apartment renting to retirement contributions. A fantastic read, and the basketball theme draws understandable analogies without being too “sports-y” for those of us that can’t make a free throw!

Banker Girl’s Advice for Fledging Financial Professionals actually applies to many professional fields - if you’re planning on climbing a corporate ladder, you should give this a read.

8 Frugal and Cost Cutting Tips for the Newly Independent is a fantastic set of tips - most of which, I never would have thought of! (Does the picture look familiar?)

Inexpensive Tips For A Greener Life After College - “green” doesn’t have to mean “expensive” - in fact, many things that are good for the environment are good for your wallet. Start your new life off with these tips, and you’ll be eco-friendly with money in the bank! Bonus: this article is part of another series of advice for new college grads, so be sure to check the bottom for links on finances, job interviews, furniture, and more!

Last, but far from least, Jim just released the College Grad Money Guide Book on Blueprint for Financial Prosperity. This short ebook is jam-packed with actionable personal finance tips - meaning stuff you can actually take a bite out of now and see some results!

I hope you’ve enjoyed this series and the links in this wrap-up. Still have questions? The nice thing about this blog is that it lives on! Ask your question in the comments or send me an email - even if you just need someone to talk to as you shift to the next stage of your life.

Congratulations!
Photo by CarbonNYC

This article is part of a series called Graduating? which focuses on personal finance advice for fresh college grads. This particular article is a guest post written by Pamela Grundy.

Remember that scene in the movie “The Graduate” in which a bewildered Dustin Hoffman is poked in the chest by a martini-wielding know-it-all uncle who has just one word for him? Plastics! What I mean is, “Plastics!” is the word the obnoxious uncle has for Dustin Hoffman in that movie.

Just that one word.

OK, so you don’t remember that. Of course you don’t. “The Graduate” came out in 1967, and if you are just now graduating from high school, college, or even graduate school; chances are you weren’t even a gleam in your father’s eye in 1967. Probably you remember 1967 as the year your Mom’s hot Swedish masseuse Ilsa was born. So fine, forget it. Just never mind about any of that ancient history, what you need to be watching right now is your future, (with or without Ilse).

So, with that in mind, I’m going to give you way more than one crummy word of advice. No plastics for you. I’m giving you ten words here, and they’re all free:

10) Save. Almost certainly there are tons of things you need to buy right now, and even more thing s you want to buy. Don’t buy them yet. Save as much money as you can, while you can. If you can mooch off the folks while you wait for inspiration or a real job, save every drop you make from the temporary one you take while waiting for your ship to come in.

9) Work. If you don’t find an entry level professional job right away, take some kind of job. If you can’t get a paid job, volunteer for something you care about and work hard. Education is great, but in corporate America people are more interested in what you have done, not what you have learned. So start doing some things right away.

8 ) Write. You probably did more writing in school than you wanted to do, so now that you’re out, do some more! Set up your own website and blog, and make it all quite excellent, something your friends and family can read, but something you wouldn’t mind if a prospective employer read either. If you have an idiotic or offensive MySpace or FaceBook page, get rid of it and put up something that makes you sound less like Bart Simpson and more like Steve Jobs.

7) Freelance. Go to www.elance.com, www.guru.com, or www.odesk.com and bid on some freelance projects in web design, programming, artwork, writing, advertising, or sales. Then, when you get a project, do your very best on it and then bid all over again on another one. Pretty soon if you keep at it you will have enough material to create a…

6) Portfolio. Build one online then create a portable one to take on interviews. Touch up your resume to include all the fascinating things you’ve been doing since graduation, and make sure it looks visually compatible and terrific alongside your portfolio.

5) Network. Drop your name and stories of your interesting post-graduate life everywhere, and when someone responds by mentioning so-and-so who is soooo very into the same exact thing, get so-and-so’s number and an introduction from that person you just met and follow up by calling and asking if you can have a few minutes of time to ask for some advice. Everybody likes to be asked for advice. You’ll meet some new people and you might even find a job. If you get good at this, you’ll need some…

4) Business Cards. You should have a good idea of what makes you cool by now, so blow $50 on some incredible cards that announce to the world who you are, where your web-site is, and how you can be reached by e-mail, phone, or cell. Don’t be too flippant but do be classy and creative.

3) Read. Graphic novels are great, but pick up a New York Times once in awhile and subscribe to something your parents read like The Atlantic or The New Yorker so you will have conversational material to use when surrounded by grownups.

2) Cook. I mean cook real food, not Kraft macaroni and cheese and ramen noodles with peanut butter. If you are a guy, this skill is one of only two will you need to meet great, gorgeous girls, so learn at least four or five fabulous impressive dishes that will make any girl think you are Uber-Euro-Man. If you are already a great, gorgeous girl, do not underestimate the power of food. You know the old joke about how to make a man happy? It’s true! Show up naked. Bring food.

1) Get a Great Dog. Listen, life is hard, and it is going to make you cry, a lot. You will sometimes be broke for no good reason. You will be rejected when you deserved better, you will be treated unfairly, you will even be lonely once in awhile. A dog will get you through all of this, and more. A fabulous dog will make sure you get your exercise and never eat alone. Oh, and remember those two things guaranteed to get you great, gorgeous girls? A dog is the other thing (besides cooking).

Take your dog for a walk in the park. Dress nicely. Be clean. Be confident. Make sure you have the makings of a great meal at home for the great girl (guy) you will meet while walking your adorable dog. Carry some of your cards in your shirt pocket. Smile.

Life can be hard, yes it can. Living well, however, is easy!

And one more thing: Congratulations!

This is a guest post by Pamela Grundy, writer for Personal FInance Analyst. Personal Finance Analyst is an online community of bloggers dedicated to taking the mystery out of money and helping you to live a happier, more successful life with the money you have.

This article is part of a series called Graduating? which focuses on personal finance advice for fresh college grads.

I hate the word "budget." Not because I think budgets are bad, but because of the images that the word conjures. A massive spreadsheet with dozens of categories, and the whole thing is just yelling at you, telling you all the things you can’t spend money on. Of course, a budget doesn’t have to be like that, but that’s what people think of - which is why I refuse to call what I do "budgeting."

Still, if you’re leaving the hallowed halls of academia, and entering into "The Rest of Your Life," you’re probably thinking that you need a budget right about now. But… uh… where do you start?

Give Yourself Time

No one says you have to come out of the gate with a detailed, perfect budget. In fact, I don’t think you should even try at first. Instead, take 6-8 months and just track how you spend your money - every penny. Let your instincts guide you.

Don’t make any major purchases during this tracking period. Why? A few reasons: first of all, how will you know what your typical spending is if you’re making a bunch of extraordinary, one-time purchases?

Secondly, it’s just smarter not to blow your money yet. A lot of people sign on to a new real-world type job, and they run out to buy a brand new car and fill their apartment with expensive furniture - thinking they can "afford it now." But how do you know that until you know what your expenses are? Once you’ve got a handle on what you spend on food, entertainment, utilities, and all of the other basics, you’ll know what kind of monthly payments you can afford.

And as a side note on the furniture, you don’t want to drop a ton of money on stuff for an apartment that isn’t going to be your end-all-be-all living space. What if that giant bed or kitchen table you buy don’t fit in your next place? Just get the basics, and get them from Craigslist or Freecycle.

Find Something That Works

Everyone has an opinion on how you should budget - but all that really matters is that it’s something that works for you. Just remember, budgeting is just continuing to track what you spend, but now doing it with goals and targets in mind. There’s a lot of free software to do this, so I suggest you try out all of the free stuff before you plop down any cash on fancier software.

Do It Yourself: Paper or Speadsheet - Simple, easy, clean. I’ve tried a bunch of other stuff, but for now, I stick with my self-made Excel spreadsheet. If you’ve got no idea how to make a budget on your own, there’s a great tutorial in Chapter 10 of the book Debt is Slavery.

Pearbudget - the new version of Pearbudget is online, and carries a monthly fee, but the old downloadable spreadsheet is still available on the website, and it’s free! This is one of best budgeting spreadsheets I’ve ever seen. I definitely recommend it, especially if you aren’t too confident in your Excel skills, and you want something where you just plug in the numbers.

Mint - it doesn’t get much easier than Mint. Put in the usernames and passwords for your online banking, and Mint downloads it all and spits out some awesome graphs on how you spend your money. And it lets you set budgets for the categories. If you feel like tracking your spending yourself is way too much of a chore (and therefore you’ll never do it), Mint is for you.

Save

It’s easy to get caught up in what you’re spending, and forget about putting something aside. But there’s always something worth saving for! No matter what system you use, make Savings a category in it.

The key to saving is to always have a definite goal in mind. Your next car, a down payment for a house or condo, or even smallish things - you have to decide for yourself.

The other thing that tends to trip people up is irregular expenses - the things that come up once or twice a year. Car maintenance, Christmas spending, medical expenses… the nice thing about your 6-8 months of tracking is that about half of these will have come up in your "data" already. Try to think of all the things like this, and just put aside some money each month for it. You’ll be glad you did.

Seem too simple to really work? Well, you’re free to keep on reading - here are some good articles to continue your journey:
The Simple Dollar - Budgeting 101
CNN Money - Money101: Making a Budget
Get Rich Slowly - Making Your First Budget

This article is part of a series called Graduating? which focuses on personal finance advice for fresh college grads. This particular article is a guest post written by Jonathan of Master Your Card.

So you finally finished college, eh? Nice one! Welcome to the real world™. The following tips should help to reduce the culture shock a little…

• Get serious about Personal Finance. Paying your bills on time and learning to live on a budget won’t ruin your non-conformist image, trust me. On the other hand, there’s nothing particularly ‘alternative’ about getting your electricity cut off and having to subsist on uncooked ramen noodles until your parents bail you out.

• Keep in touch with your college buddies. Remember that girl you threw up on at the kegger? She’s going to help you land an awesome job some day - but only if you drop her a line once in a while. Remember, it’s not what you know – it’s who you know. Note: This is not an excuse to spend 17 hours a day trawling Facebook.

• Pay off the plastic. College is a time for experimentation, and it’s only natural that you tried some pretty shady things – like charging things to your credit card. But that period of your life is over now. It’s time to put all that stuff behind you and start paying off your high interest revolving debts as quickly as possible.

• Start planning for the future. One of the strange things about college is that despite all the newfound freedom, to a large extent your goals are set out for you. Study for your English test. Start working on that marketing paper. The real world™, on the other hand, is a little less linear, and to some extent you’ll need to find your own way through. As liberating as living day-to-day might sound, having a 5 or 10 year plan in place will provide you with far more freedom in the long-term.

• Don’t start spending what you don’t have. Just because you’ve started climbing the corporate ladder and are (hopefully) on your way to earning the big bucks, don’t start spending like you’ve already reached the top. Base any purchases you make on what you earn today, not on what you think you’ll be earning 12 months from now.

• Be prepared to work with morons. On occasion, you are going to have to take orders from an idiot (and pretend to like it). In addition, you’re almost certain to be in close proximity with at least one or two people who give you homicidal tendencies. Remember the big picture, and don’t let the petty stuff get you down.
• And lastly (but most importantly): Don’t let your dreams die. They say experience kills idealism. They’re full of it. The real world will only break your spirit if you let it. Don’t let life’s trials and tribulations turn you into a cynic. After all, the sweet is only as sweet as the sour.

Jonathan writes about the tricky world of credit cards at Master Your Card. Check it out, and subscribe to his RSS feed.

Photo by jrossmanjr