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Valued Contributor
Posts: 2,717
Registered: ‎08-13-2009
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Do I have a problem? ;)

[ Edited ]

Seriously, I have  to wonder after loosing a 13 hour battle today.  I opened an Ally bank CD.  The rate is awesome.  No minimum needed, so the $100 I had in savings did the fine just fine...

 

And it's not my first CD.  It's just my first CD with Ally.   My second CD this month.  And today is only the 8th.

 

I buy a few CD's ($100 or so) each month.   Ladder them.

 

Do I have a problem?  (I do stay current with all of my recurring bills, have a little cash stashed away for a house purchase/emergency fund, and pretty much pay cash for everything.)

 

ps - yes, DH knows about the CD's all except for the last one I did today.  I have explained the ladder game to him and he understands it.  

Valued Contributor
Posts: 1,057
Registered: ‎09-29-2009
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Re: Do I have a problem? ;)

I guess I'm not sure what your 13 hour battle was? Do you have a problem because you are practicing sound financial patterns in your life and saving money on a regular basis? My response (vote) is NO.:smileyhappy:

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Valued Contributor
Posts: 2,717
Registered: ‎08-13-2009
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Re: Do I have a problem? ;)

lol - the problem - the 13 hour  battle - was the struggle NOT to open another CD.   It was my second one this month.  :smileyhappy:

 

I did it.   Told DH about purchasing another CD.   He said good!

 

My maybe problem is I love to purchase CD's.   I get (on average) two a month.   But lately, like last month, that increased to three in a month!  *gasp*   And this month, I am on target to purchase three as well.  Lol - I need help?

Established Contributor
Posts: 645
Registered: ‎03-20-2010
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Re: Do I have a problem? ;)

Hey - purchasing CDs is sure better than ringing up credit card debt :smileywink: 

 

I don't think you have a problem at all....besides - depending on when they age, you won't actually be opening new ones, just re-aging the ones you have :smileyhappy:

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Valued Contributor
Posts: 2,717
Registered: ‎08-13-2009
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Re: Do I have a problem? ;)

Yep - my CD's get rebucketed every so often.  :smileywink:     And I don't hear them complaining at all!!   :smileyhappy:

 

I have about 15k saved this way.  Easiest way to save money!

 

 

Super Contributor
Posts: 9,674
Registered: ‎01-28-2010
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Re: Do I have a problem? ;)

 

I think you're doing fine.   Some people drop a couple hundred on lottery tickets every month ( or more ), so there are worse vices you could be dealing with....:smileyhappy:

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Valued Contributor
Posts: 1,142
Registered: ‎09-01-2011
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Re: Do I have a problem? ;)

Could you explain your ladder game to me.  I'm not familiar with that "game." 



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Valued Contributor
Posts: 2,717
Registered: ‎08-13-2009
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Re: Do I have a problem? ;)

Sure!   

 

The concept of "laddering" CD's is to have one mature every year or so.   

 

I have taken it to a new level.  It could be called "Exterme Laddering".  :smileywink:

 

Every payday, I purchase a CD (for about $100).   Payday is every two weeks.

 

After doing this consistently for one year, I will have a CD maturing every two weeks.

 

If I let the CD's roll over and go for another year, great.  If I continue with the same behavior (purchasing a $100 every two weeks) for a second year in a row, then in the third year, I will have CD's maturing on different dates, but approximately four CD's will mature each month.

 

1st year - purchase $100 CD's every year, let others rollover

2nd year - purchase $100 CD's every payday, let others rollover

3rd year - purchase $100 CD's every payday, let others rollover

 

1st year - none mature

2nd year - 26 CD's mature, with a value just over $2,600.

3rd year - 52 CD's mature, with a value just over $5,200.  <---- 52 weeks in a year!

 

It's easy to let them roll over each year.   And if I get truly desperate for cash, I know that a CD will be maturing in a few days time.

 

I also purchased a few longer term CD's to mature in 2013, 2014, 2015, and 2016.   Worse case scenario, something is maturing every year.

 


Does this help with understanding the concept of "laddering CD's"?

Regular Contributor
Posts: 159
Registered: ‎03-02-2008
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Re: Do I have a problem? ;)


IOBA wrote:

Sure!   

 

The concept of "laddering" CD's is to have one mature every year or so.   

 

I have taken it to a new level.  It could be called "Exterme Laddering".  :smileywink:

 

Every payday, I purchase a CD (for about $100).   Payday is every two weeks.

 

After doing this consistently for one year, I will have a CD maturing every two weeks.

 

If I let the CD's roll over and go for another year, great.  If I continue with the same behavior (purchasing a $100 every two weeks) for a second year in a row, then in the third year, I will have CD's maturing on different dates, but approximately four CD's will mature each month.

 

1st year - purchase $100 CD's every year, let others rollover

2nd year - purchase $100 CD's every payday, let others rollover

3rd year - purchase $100 CD's every payday, let others rollover

 

1st year - none mature

2nd year - 26 CD's mature, with a value just over $2,600.

3rd year - 52 CD's mature, with a value just over $5,200.  <---- 52 weeks in a year!

 

It's easy to let them roll over each year.   And if I get truly desperate for cash, I know that a CD will be maturing in a few days time.

 

I also purchased a few longer term CD's to mature in 2013, 2014, 2015, and 2016.   Worse case scenario, something is maturing every year.

 


Does this help with understanding the concept of "laddering CD's"?


How much interest do you actually earn on each CD for one year? 

 

And

 

Is it worth it to go through the headache of opening a CD and waiting for it to mature to make a few dollars and having to pay the interest you earned on your taxes?

Valued Contributor
Posts: 2,717
Registered: ‎08-13-2009
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Re: Do I have a problem? ;)

How much interest do you actually earn on each CD for one year?   The interest rate varies, depending on how much I put in and where it is stored.   The lowest rate is .85% and the highest is 4.76%.

 

And

 

Is it worth it to go through the headache of opening a CD and waiting for it to mature to make a few dollars and having to pay the interest you earned on your taxes?  Yes, for me, it is.  

 

*  If the money is in savings, I am much more likely to give myself permission to be less frugal with my money.   

*  Saving the money in CD's has turned into a game (CD Bingo) for us.

*  Saving is fun.

*  The amount I earn on each CD varies (depending on how much and where it is), but on average (about 19k in CD's), I am earning about $50 a month in interest.  The interest is higher  than I what I am earning on savings, even with the high yield savings accounts.    On savings (about 65k) I earned $43 this month in interest.   This does not include what I am earning on my retirement account.

*  It's easier to part with a smaller sum of money and lock it away (for me) that it is for me to save it up in the bank account.   By putting a small amount away each payday, I feel good about saving.   And I know if there is an emergency, I will have a CD maturing within days I can use.  When DH deployed last time, it was on short notice to replace a person.   We had less than a week's notice and all kinds of things happened.   I had one CD at the time - one for 10k.   I had to beg the bank to release the funds early and not penalize me for doing so.   While they took their time doing this, a lot of other things happened.  I don't want to go through that again.  

 

Do I really earn any money after taxes?   Yeah, it's not much, but do we really earn much after taxes?

 

Is it worth buying a CD every two weeks?  Takes me about 30 seconds (start to finish) to purchase one online.  Easy.

 

Is it helping us save up?  Oh yeah!   We have saved about 19k just this year doing this.   The 65k in savings is a down payment for a house we may or may not get (still on hold for that).

 

And the best part --- our young adult children (I know, it's an oxy moron) see what we are doing and are doing the same.  Our youngest now has 5 CD's that he has opened up this year, since August.   He use to try to save up for those minimum requirement CD's of $500 -- it was always just out of reach for him.   But doing it this way - when he gets money - he's been able to save up just over $560.   Our youngest definitely earns more money from the CD's than he does from the savings account.

 

The plan is to let each CD roll over each year.   Rates will eventually go up, so I will be earning more eventually.  :smileyhappy:   

 

I hope this answers your questions and helps with understanding why this works for us.   I know it may not work for you.

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