I've heard of some people doing multiple CDs with a staggered start so that once they start maturing, one matures every 3 months or so.

It sounds like a good idea, and it's more liquid than putting it all in one CD, but I'd still be concerned with an emergency hitting just after rolling over one of the CDs and not having three months to wait for the next one.

If you don't mind the penalty for early withdrawal then I guess it's fine, but I thought some make you forfeit the interest accrued?