If you have Uncle Dave on one side and the majority of pf bloggers on the other, you’ll have the words “emergency fund” being plowed into both ear holes.
You probably haven’t heard me mention having one. There is a reason for that.
Until recently, I didn’t have one. My finances weren’t really stable enough to make it happen. I had debt to pay and personal projects to work on. Now that these projects are going full-throttle and my credit cards are under control, it’s time work on my emergency fund.
The woes of freelancing
Any freelancer will tell you that paying your own taxes is the single biggest pain in the ass that this game can offer.
Luckily, this year I only have to pay for 5 month’s worth and I’ve got cash set aside.
A couple of months ago, I started thinking about how I can use my tax money to make me money.
Sounds a bit weird, doesn’t it?
For those of you who are unaware, several online banks offer slightly less shitty interest rates than brick and mortar banks. One of these options is Discover, who I have a credit card with, and I’m super happy with their service thus far.
Their savings account has a 1.3% interest rate The above link says 1.4, but I’m pretty sure that’s inaccurate. Compared to the 12% I’m hitting with Acorns, this doesn’t sound like a great option.
But we aren’t talking about investing. We’re talking about my taxes.
Right now, I’m taking a third of the money I make and transferring it from my checking account to my Discover savings account. I figure since it has to just sit for three months at a time before I pay quarterlies, I may as well jam it into an account that makes me a little cash in interest. Also, a full third of my income going towards taxes is probably a hair too much.
I’m hoping that eventually, I can build a sizable emergency fund with this method. I’m not too excited about it.
- There is nothing exciting about taxes
- There is also nothing exciting about 1.3% interest
However, I cannot think of a better idea. And if I have to contribute my fair share so Air Force One can have a $24 million refrigerator, I might as well get something out of the deal.
If I’ve learned anything from being a pf blogger for the last year, it’s that you need to kill as many birds as you can with the least amount of stones. I think this is the best option.
I’m curious, dear readers. Do you guys do anything special with tax money you set aside? Does anyone have a better idea than what I’m currently concocting?
Please share your thoughts on this. If I can kill even more birds with fewer rocks, I’ll gladly do so.
Thanks for reading. If you think my idea sucks, do me a favor and explain to me why I should look into better options as well as what they are.