To do the same today, I'd probably be inclined to use I bonds instead, since I don't consider fixed rate EE bonds particularly attractive. Of course I bonds aren't so attractive right now either because the fixed portion is so low.

There is a downside to having your funds in savings bonds, and I discovered that when I had a quick land purchase to get together. If you are like most people, you'll defer your taxes until you cash your bonds rather than track the paperwork from year to year. What that means is that just when you need your emergency money you will owe extra taxes (on the interest income).

After I bought my land, I decided to keep more of my emergency fund in online savings accounts so my tax is paid from year to year. I accept that there is going to be a delay of a few days to get access to that part of my emergency fund.

I try to keep a fair amount of cash on hand, and I don't even feel bad about that with the low interest rates we enjoy right now. There's no cash faster than that.

I also keep $500 in an NRA savings account (http://www.nrabankingcenter.com/nra/). It doesn't have as good a rate as my other online accounts, and is mostly inferior to them in every way really. But it does come with ATM cards. Since $500 is the typical daily limit on an ATM, that's what I keep in the account. It's sort of my "I need cash in hand right now" cash. I think I got a $25 bonus for signing up.

The fact that it's a margin account means that everything deposited into it becomes available for use instantly; even large transfers (which would normally take a full week). It also means that overcharges act merely as margin charges, changing them from $25 emergencies (plus a possible bounced check, depending on how mean your bank is about it) to just a few cents margin cost plus no bounced check.

The only problem I have is that all the online financial planning sites (Wesabe, Mint, etc) seem to assume that because it's a brokerage, the only thing I'd EVER want to track in it is stock prices (grr); they refuse to download transaction data (Quicken used to work fine, but I didn't upgrade and Intuit doesn't allow old Quickens to access online bank data). Buxfer works with my broker's CSV downloads, and perhaps some other broker has more convenient downloads (I encourage you to do your own comparison shopping, which is why I'm not naming my broker).

And, of course, the money is swept into a money-market fund, which during better economic times puts at least a few dollars in my pockets every month. (Now it's pennies — this ain't a 5% account.)

-Wm

This is mind expanding. I always thought of my emergency funds as money for either (1) a long-term emergency like job loss, or (2) a big unforseen emergency like needing a new hot water heater. In neither of those situations do I require *cash now*.

Perhaps it would be instructive to develop a typology of emergencies. A "cash now" emergency puts the greatest burden on one's personal finance infrastructure. I think that's the situation you're contemplating. It is not one to which I have given much thought.

Usually when I've been in a "cash now" situation I saw it coming. When I needed a large certified check for a closing (as you did) I knew in advance. When I was overseas I brought some travelers checks.

What if I have a "cash now" that I can't see coming? Well, up to a certain size I'd be fine. After that I'd have to scramble, as you did. I could prepare in advance as you suggest. That's a good idea.

This comes back to a fundamental problem I would love to see addressed by someone: what is the risk/reward trade-off for various emergency fund set-ups. That is, in general, the more liquid the less risk and the less reward. But maybe it is sensible to invest one's emergency fun in less liquid assets and to suffer high interest borrowing in the rare case one has an emergency. If emergencies are sufficiently rare then this is better.

I have not seen sufficient empirical work on such things.