Kevin Mountford head of savings at ms says in Nic Cicutti’s Jekyll & Hyde article "Certainly, with loans hovering around 7.9% and credit cards at 15.9%, it's absolutely essential you have your savings in an account paying at least 6%...” (6% gross and 4.8% net)
In a perfect financial world one shouldn’t have any savings on Mr Mountfield’s figures BUT we don’t live in that world. Wouldn’t it be an idea to have an emergency plan based on leaving some space on one’s credit card instead of maxing it out, on one’s overdraft and a modest amount of cash available?
For fear of getting a tongue lashing from Mr Nic I won’t mention the assumption that one has cleared one’s credit card debt, has no overdraft and has calculated a worst case scenario for emergency funds and has that in an easy access account paying at least 6% with a modest sum being paid into that account each month for extra safety. Anything left over would be disposable income. What I will mention and I think Mr Nic and I are on the same wavelength here is if the heating system goes phut and thee five bob I have put by to replace it is about two grand out then I should have a direct line to thee FSA to instruct them to put thee frighteners on my bank.