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The Savings Playground for June, 2017 -- summer break!

[ Edited ]

Welcome Playground Players!

 

Welcome all new players to our little stress-free park of "saving for a rainy day".

 

What is The Playground?  In the fewest words, The Playground is about starting a savings account for when trouble or emergencies arise.  The idea is that a lot of us are here at MyFico Forums because a good percentage of us has blown our credit into the dirt from previous mishandling of credit.  In my opinion, the #1 reason many of us were in trouble wasn't just high debt but no ability to pay when some life tragedy came our way -- maybe it was a job loss or illness or accident, but we didn't even have the money to make minimum payments during the emergency, and that's when things slide out of control quickly.

 

In my opinion, rebuilding a better financial future isn't just about getting great accounts with big credit limits, but also about having the foundation that if a tragedy happens we will always be able to make at least the minimum payments to live until the tragedy is over.  I know in my past the emergencies took only a month or two to pass, but that was enough time for my credit to get pummeled by The Bully of having no cash in the bank to make even a $25 payment on one credit card.

 

Playground Rules

 

There really are none, but no taunting or bullying others because they aren't at the same place as you!  The goal is to be able to find what works for your income and expenses and then aim to save up enough to reach your goal.  There are many milestones here, each designated by different pieces of playground equipment you'll be playing on.  As you reach your next milestone, you can hop on the new equipment and focus on your next step.

 

If tragedy should strike, you won't be booted out of The Playground but you'll end up having to tussle with The Bully -- this happens any time you have to dip into that savings account, even if it's only for $50.  Until you repay your account back, The Bully is who you'll be dealing with.  For some of us, this means entering "poverty mode" which may mean calling some of your unnecessary utility companies (say Netflix or cable) and putting your account on vacation hold.  For others, it may mean having to sell some assets in order to get our payments back under control, but even if you have to empty your savings account to take care of the emergency, we're still here to help you battle The Bully and try to get back on track, without judgment or ridicule.

 

Playground Equipment

Since this is our first thread, these things will likely change as folks offer opinions.  I'll make up some nice graphics for sig lines for those who want to show others they're playing in the Playground and helping to relieve stress that carrying a balance of any kind can bring those of us who blew away our FICO scores before.

 

Sandbox: this is the first place you can hang out and spin around on as you enter The Playground but haven't done much yet.  At this stage, you're going to be "lurking" and reading what others are doing.  You will want to whip out your spreadsheet application and start reviewing your past year of spending and make a realistic minimum budget -- the minimums being what it would cost you to live if you shut down all unnecessary spending.  This is an important figure to know if The Bully comes into your life again.

 

See-Saw: the See-Saw is available to you when you leave the Sandbox and open your savings account.  This is a special savings account and others will share which bank or CU they used for this.  This is not a 401K or a CD.  It is not a savings account to be used for vacation spending or a new TV.  This is the savings account you keep aside specifically to spend on a credit card payment you can't afford from checking/income, or to make a rent or mortgage payment.  This savings account should never go down in balance -- if it does, you have to deal wth The Bully until you've paid the account back.  This balance should grow over time and allow you to play on better equipment here.  More fun, less stress!

 

Swingset: the Swingset is yours to laugh on when you get your first $50 into savings.  This number is flexible, but it should be a number that is a multiple of a minimum payment on a credit card or loan.  For some people, $25 might be enough.  If you carry a lot of balances on credit cards, you may want to make your goal $200.  You don't have to share the actual value you saved, just mention "I'm on the swingset because I saved enough to cover minimum payments on 2 credit cards I use."  NOTE: Even if you PIF your cards every month, you absolutely need to review old statements to see what your minimums might have been if you didn't PIF.  This is important because if The Bully shows up, you may not be able to PIF as you usually do!

 

Slide: the Slide is a big step in the right direction!  If you want to play on the Slide, you have to have reached a significant goal of either being able to cover all your minimum living costs (rent/mortgage, utilities, insurance, food) for a month or have reached the goal of being able to pay for an entire month of minimum debt payments (credit cards, loans, etc).  The Slide is the big deal because it means an entire month of payments for debt or living is covered.  For a lot of savers, this is when the stress level really drops!

 

Monkey Bars: the Monkey Bars is available to you when you actually have an entire month of minimum payments AND living expenses socked away.  That's huge!  It means if The Bully shows up, you have about 30 days to work hard at finding a solution to nixing The Bully from your life.  

 

Trampoline: the Trampoline is when you have doubled your savings from the Monkey Bars -- you now have 2 months or 60 days of minimum debt payments and super thin living expenses in your savings account.  Talk about a stress reliever!

 

Carousel: the Carousel is when you are at 90 days or 3 months of savings to cover minimum debt payments and living expenses.  For many. this is PROBABLY enough to cover 70-80% of our past dealings with The Bully -- enough time to find a new job or a few part time jobs, or to get past a health or injury emergency.  Of course, this won't cover 100% but it's better than we've been in the past.

 

Merry-go-round: the Merry-go-round is where you will reach the highest tier for yourself.  There's no set goal here, some folks may want 6 months of emergency savings, others may want a full year.  It's up to you to decide, but once you get there make sure you continue to analyze your living expenses and minimum debt payments in case either or both go up enough to boot you back down to another piece of playground equipment.

 

The Bully: If you dip into your savings account, you now have to deal with The Bully, which is your bully to deal with.  We're not here to taunt or tease you, we're here to help you fight The Bully down.  If you lost your job, talk about it here and maybe we can offer some advice on finding some side work while you look for a full replacement income.  If health issues come up, I bet there are folks here who dealt with them in the past and can offer advice on how to avoid putting doctor bills on credit cards when many hospitals and clinics may offer payment arrangements for those who ask -- and not everyone asks!  

 

Signature image links will go here, eventually.

 

Welcome to The Playground, and please make sure to share your goals, thoughts, criticisms of the equipment or goals, or whatever else connects with having a savings account!  Do you have your own horror story of being $500 short on keeping up for a few weeks and blowing your FICO score over the equivalent of a TV or video game system?  Do you have a story about how your emergency savings account helped you fend off FICO destruction and now gives you peace of mind?

 

Some things to discuss:

  • What credit union or bank do you lilke for a savings account?  Interest rate?  Ease of transfer?  Fees?
  • What things have you cut from your spending habits to increase your Playground savings account?  How much has it helped you save over time?
  • Have you ever considered tapping into savings for non-emergency related spending, and how did it affect your stress and goals?
  • What's the biggest mistake you've made in overspending and how do you work to avoid it now?
  • If you got into credit trouble before and can analyze it now, how much savings would have saved you the FICO destruction from your past dealings with The Bully?
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Re: The Savings Playground for June, 2017 -- summer break!

[ Edited ]

I'm so happy to have this forum for savers!  Especially since I'm just starting to save for my 6 month emergency fund (Job Loss Fund).  I was on the Dave Ramsey pay off mode and only had $1k save and pummelled all my extra cash towards my student loans.  I always felt a little uneasy about only having $1k, but I hate having student loan debt so I dealt with it.  But now that my student loan debt is under $10k, I feel like it's time to build my emergency fund and circle back to the student loan payoff next year.  I'm going to take the remaining 6 months of this year to fully fund my emergency funds - one for Job Loss and one for other emergencies.

 

So, I'm on the SWING SET. SLIDE!! (Read it too quickly) MONKEY BARS!  

 

  • What credit union or bank do you lilke for a savings account? Bank of America  Interest rate? Low, but not a concern right now  Ease of transfer? Super easy, as this is my primary bank  Fees? None
  • What things have you cut from your spending habits to increase your Playground savings account? I cut out credit card debt and stopped my aggressive student loan pay down.  How much has it helped you save over time? With no payments to credit card and student loan pay down, I have more money to funnel over to my savings account.
  • Have you ever considered tapping into savings for non-emergency related spending, and how did it affect your stress and goals? No, I am fortunate enough to have plenty of income to cover non-emergency related spending.
  • What's the biggest mistake you've made in overspending and how do you work to avoid it now? Biggest mistake is having credit card debt - never again will I go down that path.  
  • If you got into credit trouble before and can analyze it now, how much savings would have saved you the FICO destruction from your past dealings with The Bully? Savings would have prevented me from using credit cards and therefore I would not have had debt. I ended up filing CH13 after being sued by a creditor for none payment.  If I could do it all over again, I could have avoided the BK  but everything happens for a reason. I am grateful that my debt was not a significant amount and the CH13 allowed me to pay it back.  And it also helped me to jump off the hamster wheel and start to view my money and career differently. Now I focused on being totally debt free, when before I thought I was going to take my student loan debt to the grave!  And now I can pay off my auto sooner than the amount of time I financed it for.  And now I can plan for and HAVE a 6 month emergency fund!

Once I have my entire 6 month emergency fund, I will move the funds to my Merrill Lynch investment account and invest in a Vanguard fund.  This money will only be used for JOB LOSS only.  In the meantime, I have a small fund set aside for non-Job Loss emergencies. 

 

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Re: The Savings Playground for June, 2017 -- summer break!

YAY, ABCD! I loved the idea of the playground when were were just discussing it. Your way of kicking it off is even better. You and the people who suggested ideas for the Playground have really created something great. Can't wait to see and display the playground graphics.

 

I now need to set my goals and get my emergency savings plan started. I'll be back to chip in as soon as I've thought about how much to save each month and how to save it.

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Re: The Savings Playground for June, 2017 -- summer break!


luxeprw9 wrote:

 

Once I have my entire 6 month emergency fund, I will move the funds to my Merrill Lynch investment account and invest in a Vanguard fund.  This money will only be used for JOB LOSS only.  In the meantime, I have a small fund set aside for non-Job Loss emergencies. 

 


That sounds like a great plan!  A good buddy of mine is in his very early 30s and has 12 months of living expenses in a trust account he put together.  That trust will only pay him or his kids on his retirement BUT it's allowed to loan him money at prime + 1% or something, so if he is ever in a bind, he can get a loan from his own future and pay interest towards that retirement.  It an interest system, not sure how it works in various states but I am checking into it myself.  Borrowing from myself and paying myself interest seems like a great idea if I ever screw up again.

 

Welcome to The Playground!

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Re: The Savings Playground for June, 2017 -- summer break!


Gunnar419 wrote:

YAY, ABCD! I loved the idea of the playground when were were just discussing it. Your way of kicking it off is even better. You and the people who suggested ideas for the Playground have really created something great. Can't wait to see and display the playground graphics.

 

I now need to set my goals and get my emergency savings plan started. I'll be back to chip in as soon as I've thought about how much to save each month and how to save it.


I'm working on the graphics already, same size as the ones from the garden and should work nicely together.

 

I will work to make a spreadsheet to help people figure out their expenditures (based on past 12 months, lowest and highest figures) so we don't miss a particular category.  It'll also have all credit card minimum payments to add in plus installment loans so you have a good idea of how much you need to survive 1-6 months with no income.

 

Welcome to The Playground!

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Re: The Savings Playground for June, 2017 -- summer break!

Looks like this thread finally took off. Let's play.

 

- What piece of playground equipment I am: by the definitions above, I guess I'm merry-go-round. There should be those little animals on the big springs somewhere - they were fun.

 

- What CU or bank do I like for savings? I keep $750 in DCU for the interest (5% on first $750) then funnel the excess into a Barclay's Online Savings (1.05%), and any excess over $20,000 gets funneled over to E-Trade to sit in stocks. 

 

- What things have you cut from your spending? Aside from dining and travel, there isn't much spending going on in the first place. I just looked at my end-of-year summary for 2016 on Chase and between my cards less than $400 went to non-grocery merchandise last year. Amazon got $4.56. Utilities (phone/cable/electricity/sewer/trash/water/etc) total less than $150/month. We each do have $60/month gym memberships, so I guess we could cut those along with dining/travel.

 

- Have you ever considered tapping into savings for non-emergency related spending? Any vacations we take, I'll pay the CC bills from Barclays then refill it from checking over the next 2-3 months.I could technically break my savings into separate accounts for vacations and emergencies, but it's just easier for me this way. That said, my wife *does* break hers out into different savings accounts for emergencies, vacations, and the like.

 

- Does tapping into savings stress you out and/or affect your goals? It stresses me out because it sets me back on my retirement goals (less money going to E-Trade!), but unless it was a very high expense, it's just a ripple that's replenished in a few months.

 

- Biggest spending mistake: My first marriage. We'll leave that one at that.

 

- How much needed to get out of my past dealings with debt: About $200,000. And she's still up to her eyeballs in debt, but not my problem now.

 

- Other random comments: My stress is over whether or not I'll ever be able to retire, not the next 6 months. When I sit down and analyze it, the amount I need for retirement is one that, even if my balance sheet grows by $120,000/year every year for the next 30 years, I still won't reach. As it is today, it's only growing by about half that number. That's discouraging.

 

I don't know how so many people retire at all, let alone early.

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Re: The Savings Playground for June, 2017 -- summer break!

Welcome to The Playground and thanks for sharing!  That's great data for sure -- are you in your 40s or 50s?  I passed my retirement goal when I turned 41, but my needs are minimal since I own my homes and have rental properties now that are never vacant and need almost no upkeep.  If I lost my income, I would probably be fine forever, but if I lost my income AND my rental incomes, my playground fund would kick in.  My first (and only) marriage cost me 7 figures in 2-3 years total.  That's money gone forever, and a reminder that I am not the kind of guy to make good marriage decisions, lol.  So I know your pain there.

 

$200,000 is massive, was some of that negative home equity?  I can't imagine a playground savings account big enough to cover $200k!

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Re: The Savings Playground for June, 2017 -- summer break!

I'm glad we got this started. I've opened a PenFed Savings account that I never touch. This is my true emergency account. I can shuffle it over to checking and get to it with my debit card or a check and I'll be good. I plop 5% of each paycheck in there. 

I have a CD with NFCU that I add 5% of each paycheck to and a regular savings account i put my cash rewards in as well as any odd numbers from my checking balance. i.e. if i get on in the morning and I have a balance of 4523.67 then .67 gets swept. I like pretty round numbers. I have a ways to go to get to my two months expenses worth of savings, but I'm on the way

 

Can't say enough how good it is to have this forum and all the others as well. ABCD this was an awesome idea! someone should make you a mod or something (but I still want my tricycle lol) 

Starting Scores 03/17/2017 EQ 491 TU 495 EX465 Currently 09/01/2017 EQ 569 TU 564 EX 551

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Re: The Savings Playground for June, 2017 -- summer break!


ABCD2199 wrote:

Welcome to The Playground and thanks for sharing!  That's great data for sure -- are you in your 40s or 50s?  I passed my retirement goal when I turned 41, but my needs are minimal since I own my homes and have rental properties now that are never vacant and need almost no upkeep.  If I lost my income, I would probably be fine forever, but if I lost my income AND my rental incomes, my playground fund would kick in.  My first (and only) marriage cost me 7 figures in 2-3 years total.  That's money gone forever, and a reminder that I am not the kind of guy to make good marriage decisions, lol.  So I know your pain there.

 

$200,000 is massive, was some of that negative home equity?  I can't imagine a playground savings account big enough to cover $200k!


Just turned 40 in April.

 

As for the marriage, the $200,000 was not home equity - that was just to clear her CC bills and other debts, plus alimony. I've since recovered and am better off financially now than I was at any point during that marriage, but I see it as almost $800,000 (since it would have grown over the next 30 years) less I have toward my retirement number.

 

On the bright side, our playground savings is now much larger and could cover even that size of problem. Not that I ever want to.

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Re: The Savings Playground for June, 2017 -- summer break!

[ Edited ]

I would consider myself at Carousel level as I haven't quite met all of my "early 30's" goals yet. My current saving goals are:

 - Max out 401K and employer match: On track

 - Max out HSA fund and employer match: On track

 - Build up $30K in emergency savings: I'm at $27,000 now

 - Max out $5K contribution for individual IRA: Not there yet, will contirubute monthly once I get to $30K emergency savings

 - Put $1,000 per month away in stocks once $30K emergency savings and $5K individual IRA goals are on track. 

 

  • What credit union or bank do you lilke for a savings account?  Interest rate?  Ease of transfer?  Fees? I currently have my nest egg with BOA as this has been my primary checking account for years. Eventually I would prefer transferring funds to an online account with 1.0%+ APY as mine is now only 0.06%, but the ease of access of funds and ability to transfer funds around is difficult to pass up. 
  • What things have you cut from your spending habits to increase your Playground savings account?  How much has it helped you save over time? I haven't cut any one particular cost, however setting up a detailed budget and tracking every single one of my expenses every single day has helped hold me accountable. I built out and actively manage a rolling 6 month cash flow to determine how to spread out expenses, time payments and when to safely allocate funds to my savings. My goal is to save $1,000K monthly to put directly into my emergency savings fund, however with a couple of expensive vet bills and doctor bills that hit last month, it looks like I may have to skip a month or two. Luckily with my cash flow plan, I can control my expenses to ensure I don't dip into my savings. 
  • Have you ever considered tapping into savings for non-emergency related spending, and how did it affect your stress and goals? Yes, I have done this and may have to do so again in the next couple of months. I don't enjoy doing this, but so long as I have a solid plan to quickly replenish what I removed (like in a month, maybe two), I don't beat myself up too much. The reason I may have to dip this summer is I may be selling my rental property and will probably have to pay a couple grand to get the place into sale shape. Because I won't have rental income coming in for a month or two, I won't be able to cash flow this expense with my existing income stream. That being said, the sale of the unit will quickly replenish what I had to spend, leaving the remainder for a nice down payment on my next property. 
  • What's the biggest mistake you've made in overspending and how do you work to avoid it now? I've been lucky to have avoided financial crisis. That being said, I made some really stupid small mistakes in my early/mid 20's that destroyed my credit for awhile. Stupid stuff like missing a payment here and there, lending money out to familiy and friends when I shouldn't have, etc. To avoid it I track all of my spending and DO NOT LEND OUT MONEY! I will be the first to assist anyone in building a financial plan of their own, but will not lend money. No exceptions. 
  • If you got into credit trouble before and can analyze it now, how much savings would have saved you the FICO destruction from your past dealings with The Bully? Back in my 20's when I made the stupid mistakes, it would have been helpful to have had at least $5K to help float expenses. That being said, I probably would have "lent" out the money anyways. 

Beginning 6/1/2014 - low 600's - Current: EQ: 764/ TU: 769/ EX: 742 - Goal: 800+ by 6/1/2018
Gardening until 6/1/2018, Total CL $110K + NPSL

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