emergency fund

[q-school]

at the rate i'm prepaying property taxes and state income tax and paying off christmas gifts, i might actually have to dip into the emergency fund.  we tend to keep plenty of cash on hand for emergencies since we are the bailout for several families.   however, in more than twenty years, i've never actually not been able to cash flow everything.  but one year's worth of property tax and a quarter of state income tax is actually a lot of money.  plus we wrote a pretty big charitable check.

lol

worst thing would be if we did all this and then dropped into AMT land.

 

[MPMD]

eh, that's why you have it.

we tap ours probably once a year.

I don't view it so much as a bug-out fund that can only be used in dire situations so much as the amount of cash on hand that makes me feel personal peace when I login to my bank account.

[hightower]

Wouldn't sweat it.  You made the choice to prepay taxes and the consequence is you drained your cash reserves.  You'll get it back in no time

[Hatton]

I dipped into mine this year.  I guess this will be how it is since I work 3 days per week.  It is harder to cash flow things like cars and taxes.

[VagabondMD]

q-school wrote:

at the rate i’m prepaying property taxes and state income tax and paying off christmas gifts, i might actually have to dip into the emergency fund.  we tend to keep plenty of cash on hand for emergencies since we are the bailout for several families.   however, in more than twenty years, i’ve never actually not been able to cash flow everything.  but one year’s worth of property tax and a quarter of state income tax is actually a lot of money.  plus we wrote a pretty big charitable check.

lol

worst thing would be if we did all this and then dropped into AMT land.

 

Click to expand...

At some point over the years, the Emergency Fund has morphed into the “cash position” for me. (Please note the lower case title.) I still contend that as we near the ends of our working careers (maybe), I want to make sure we have five years of cash around in case the bosses want to cut ties with us before we are ready.

[MochaDoc]

Tangentially related but how are you all estimating 2018's property tax? I called both my mortgage company and the property tax department in my city and neither one could give me a firm answer because neither one knows/will know until late 2018. I'm planning to overpay 2017's amount by about $20 and call it a day.

[ajagannathan]

I thought the new tax bill precluded prepaying state income tax and taking the deduction on 2017 taxes?  :?:

[ajagannathan]

MochaDoc wrote:

Tangentially related but how are you all estimating 2018’s property tax? I called both my mortgage company and the property tax department in my city and neither one could give me a firm answer because neither one knows/will know until late 2018. I’m planning to overpay 2017’s amount by about $20 and call it a day.

Click to expand...

Are you prepaying one year (2017) or two (also 2018)?  I was going to do two, but was going to get minimal benefit from the second year due to AMT, so I'm doing one and just estimating by adding $500 to my 2016.

[q-school]

MochaDoc wrote:

Tangentially related but how are you all estimating 2018’s property tax? I called both my mortgage company and the property tax department in my city and neither one could give me a firm answer because neither one knows/will know until late 2018. I’m planning to overpay 2017’s amount by about $20 and call it a day.

Click to expand...

prepaying property taxes is not a new thing.  most counties have systems in place.  some allow electronic payments, some do not.

my local county does not allow electronic payments for prepay and also it only allows you to pay 10% over your previous year's payment.  difference will be refunded for us after second payment of the year.

 

[q-school]

iradoc wrote:

I thought the new tax bill precluded prepaying state income tax and taking the deduction on 2017 taxes?  

Click to expand...

i hadn't seen a final determination, but my recollection of articles i had seen were surrounding prepayment of state income taxes, not so much property taxes.

 

[Peds]

cash flow issues count as an emergency. i do it every year to fund IRAs usually more for book keeping issues.

[ENT Doc]

I disagree. These are self-induced cash flow issues. It was not essential to pre-pay anything or write a big check for charity. Sounds like many are using the emergency fund as a working capital account, which kind of defies the purpose, no?

[MochaDoc]

 

iradoc wrote:

Are you prepaying one year (2017) or two (also 2018)?

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Using funds from my escrow account, 2017 property tax was just paid by the mortgage company so I would be prepaying for 2018.

My plan is to add $20 to the known 2017 amount and assume that will cover the tax for 2018.

[MochaDoc]

q-school wrote:

prepaying property taxes is not a new thing.  most counties have systems in place.  some allow electronic payments, some do not.

Click to expand...

Prepayment is easy to do. The amount I will owe in 2018, and am trying to pay prior to Jan 1, 2018, is what is currently unknown.

[MochaDoc]

q-school wrote:

my local county does not allow electronic payments for prepay and also it only allows you to pay 10% over your previous year’s payment.  difference will be refunded for us after second payment of the year.

Click to expand...

Simply paying 10% over the previous year's amount makes sense but was not suggested as a common approach. The person I spoke to at the city office simply said, "We don't know and won't know until late 2018." Far from helpful.

There are clearly a variety of approaches. I simply wanted to know what most on this forum were doing.

Thanks for your contribution.