[Music] Hot sauce. Drew has the next question. Was this the guy that sent us the hot sauce, right? Hey, and it was good hot sauce. It was very good. At what point should a percentage of your high-yield savings account emergency fund be moved into the three buckets? I've met my emergency fund needs, but I'm not sure what to do with the added interest. Do I invest it or leave it in the high-yield savings account at 4.5% interest? Can I have too much in an emergency fund? Is the emergency fund for future and added growth, or is it more of an emergency clearing account? How do you think about extra cash? Man, that's really, really interesting because I've never thought about it. I've never thought about it quite like this. So, here's what I imagine has happened for hot sauce. Drew, he knows that the emergency fund should be somewhere between 3 months of living expenses to 6 months of living expenses. So, he hit his like six-month number, right? Let's say it was $50,000.

making that up. Well, now interest rates are really, really strong. They're at like 5% plus on high-yield savings accounts. So, as he has his $50,000 sitting there that he's not doing anything with, let's assume there's no emergency, not dipping into it. That money, that interest just kind of starts adding on top. And so, $50,000 eventually turns into $51,000 and $52,000 and $53,000 and $55,000, and it gets larger. And he begins to ask the question, Okay, am I doing the stuff that I'm supposed to be doing? Well, this is what I would say to you, or this is the question that I would pose to you. Where are you in the financial order of operations? Because where you are inside Ruby... Do you almost said Brian Ruby? Do you have a thing? Can you hold up the thing? Uh, where are you inside your food? And if you want your free copy, go to moneyguide out my Roth IRA. How do I do my spousal Roth IRA? How do I get money in that HSA?

I'm not quite there. The interest that you're earning on your high-yield savings account may be a great mechanism to have spill over. There's no need to keep more than six months in there. If, however, you're out on step seven, you're in hyper accumulation, and you're already saving 25% of your gross income for the future, and you're funding your three buckets, then I am a proponent. I think it's okay even if your cash gets a little bit heavy. Brian and I have both done this in our personal lives, that even though we know we have an emergency fund that we need, we've recognized cash can be really, really valuable when stuff comes available, like a commercial building, or if we want to do something like a renovation, or if there are other business opportunities we want to pursue. Dry powder money is the thing that allows us to do that. So, if we have cash that's continuing to build up and we are in Step seven or eight or even in Step nine, you can have that cash accumulate, and that might be the thing that you're

able to use for some future opportunity. So, I think the answer to your question depends on where you are now. Is it a fixed and finite percentage? Probably not. I mean, I would probably think about it since we define an emergency fund in terms of monthly living expenses. I probably think about it in that sense. Like, if I need six months of expenses, but the interest grows to now where I have seven months of expenses in there, okay, now is the time I should probably reassess this. This is another point where it's a great idea to do an annual net worth statement. 'Cause a lot of folks, we just put that money in that high-yield account, and it's kind of out of sight, out of mind, don't look at it. If you're doing your annual net worth statement, you will see very much, Oh, wow, I had no idea I have that much cash sitting there. Okay, maybe I should think about deploying that. Maybe I should use that for my backdoor Roth. Maybe I should use that to go build up my taxable brokerage account. It will

be the thing that informs you of when you should take action and whether or not action makes sense for where you are. Yeah, that was a great answer. I feel you covered it 'cause I immediately just thought of like there, there's opportunity. It doesn't have to be three buckets. It might be, but it could be something else like investment, business investments, opportunities to come along. That's a great option to have just to have a little bit extra. Who knows what might come up? And people hear us say that and they're like, Oh, you got, I hear you guys say that. You, I hear you guys say you build up and accumulate additional cash. And yes, that's true, but that is not in lie of our 25% at the expense of the right, still doing all of the other things. And if you're in a situation where there is extra cash flow, well then you can begin to build up that powder and that can be something that can be a resource for you in the future. But don't get it twisted, don't get them out of whack or then

you'll start chasing the goals that are not your primary goals, and that's not what you want to be doing. Yeah, those were good stuff.

What Should I Do with the Interest My Emergency Fund Is Generating?

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