Where to Stash Your Emergency Cash

¿ Money-market deposit account. These are interest-earning savings accounts offered by FDIC-insured financial institutions. Money-market deposit accounts offer many of the same privileges as checking accounts, but you are limited in the number of transactions you can make in a month. These accounts have a minimum balance requirement. If you are going to use this type of account to hold your rainy day money, be mindful of any monthly fee, especially if your balance drops. Also check to see whether you get a higher rate if you deposit a larger amount.

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¿ Money-market mutual fund. Money placed in this type of account is not federally insured, and your principal is not guaranteed. But the risk of losing the principal is extremely low. Money-market mutual funds usually invest in short-term instruments. This account typically pays a higher rate than a bank money-market account. However, you have to watch the fees, which can lower your return. To find the average rates for this type of account go to http://www.iMoneyNet.com, which tracks money market funds. Click on "Retail Money Funds" for a list of the top money market funds.

And in case you don't know, your emergency fund should include not just your rent or mortgage payment but any expenses for cars, food, utilities, gas and other ordinary household needs. You might as well throw cable into the calculation and the average amount you spend eating out or for entertainment. Don't underestimate what you need in an emergency because I've found that even in a crisis, it takes several months before the average family cuts back on their expenses to accommodate a reduction in their income.

"As we close in on reaching this goal, it motivates us to look forward to starting other financially challenging ventures in our life," Swetz said.

It's such a good feeling when you finally put enough away for a rainy day, because as my grandmother, Big Mama, used to say, "It's going to rain."

¿ On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.She also has a personal finance call-in show that airs from 8 to 10 p.m. Sundays on XM Satellite Radio, Channel 169 "The Power."

¿ By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

¿ By e-mail:singletarym@washpost.com.

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