topic Re: Do I have a problem? ;) in Relationships and Money

Do I have a problem? ;)

IOBA — Thu, 08 Dec 2011 20:08:02 GMT

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.

Re: Do I have a problem? ;)

Anonymous — Thu, 08 Dec 2011 21:21:26 GMT

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.

Re: Do I have a problem? ;)

IOBA — Thu, 08 Dec 2011 22:43:34 GMT

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

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?

Re: Do I have a problem? ;)

Anonymous — Thu, 15 Dec 2011 17:20:29 GMT

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

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

Re: Do I have a problem? ;)

IOBA — Fri, 16 Dec 2011 01:35:45 GMT

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

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

Re: Do I have a problem? ;)

pizzadude — Mon, 19 Dec 2011 18:39:10 GMT

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....

Re: Do I have a problem? ;)

Anonymous — Mon, 19 Dec 2011 19:01:06 GMT

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

Re: Do I have a problem? ;)

IOBA — Tue, 20 Dec 2011 00:25:52 GMT

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".

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"?

Re: Do I have a problem? ;)

timmis1127 — Thu, 22 Dec 2011 14:53:48 GMT

@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".

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?

Re: Do I have a problem? ;)

IOBA — Thu, 22 Dec 2011 16:31:37 GMT

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.

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

Re: Do I have a problem? ;)

Anonymous — Mon, 06 Feb 2012 15:19:36 GMT

Is that 4.76% a remnant from the early 2008 era? A 5 year CD?

Because I don't remember the last time I saw a CD rate that high in over 2 to 3 years that wasn't under 3 years.

I do have a question, how do you keep up with all those CDs? That's about 26 CDs opened a year?

I'm very, VERY curious how you keep up with them.

And Ally lets you get $100 CDs? I might need to check this out.

Although, is this just something mental you are doing to save 100 bucks? Because wondering if .85 cents is worth the trouble. Although if you have 26 CDs, I guess that's 22.10 a year?

You're driving my math crazy right now.

Re: Do I have a problem? ;)

Anonymous — Tue, 07 Feb 2012 03:52:50 GMT

I love the idea in theory - basically a revolving savings account, but would dread the maintenance... I prefer a savings acount that I set to be inaccessible from ATMs and hidden from me online...

Then again, I dreaded credit scoring for the longest time, and it may now be the healthiest addiction I have

Kudos for having a healthy habit!

Re: Do I have a problem? ;)

IOBA — Tue, 07 Feb 2012 04:07:55 GMT

SynnDiesel - I do an Excel spreadsheet - well actually two tables on one sheet.

The first table looks like this:

CD Bingo	2011	2012	2013	2014	2015	2016	2017	2018
January			N 20, 21	I 01
February					Annuity
March		U 02
April
May								Annuity
June	U 01	U 03, 04				A 01
July		N 01 - 03			AM 01	A 02
August		N 04 - 08
September	P 01	N 09 -12
October		N 13, 14				A 03
November		N 15, 16				Am 02
December	P 02, U 01	N 17 - 19			AY 01, 02

It shows what CD's mature in what month, in what year. I have just taken the first letter of each bank where the CD is at. I number each CD at each place. ie - AY = Ally. I have two CD's at Ally, so AY 01, AY 02.

The other table looks like this:

CD	Amount	2012	2013	2014	2015	2016	2017	2018
A 01	$523.14					$523.14
A 02	$596.94					$596.94
A 03	$579.19					$576.95
AM 01	$973.66				$973.66
AM 02	$100.27					$100.27
AY 01	$100.08				$100.08
AY 02	$100.22				$100.22
I 01	$1,041.12			$1,041.12
N 01	$3,050.66	$3,050.66
N 02	$3,047.35	$3,047.35
N 03	$3,047.35	$3,047.35
N 04	$111.51	$111.51
N 06	$100.33	$100.33
N 08	$145.87	$145.87
N 09	$145.79	$145.79
N 10	$172.78	$172.78
N 12	$123.69	$123.69
N 13	$102.97	$102.97
N 14	$107.78	$107.78
N 15	$102.14	$102.14
N 16	$103.67	$103.67
N 17	$102.03	$102.03
N 18	$100.08	$100.08
N 19	$108.39	$108.39
N 20	$100.39	$-	$100.39
N 21	$100.01		$100.01
N 22
U 02	$444.58	$444.58
U 03	$359.46	$359.46
U 04	$251.14	$251.14
Total	$15,942.59	$11,727.57	$200.40	$1,041.12	$1,173.96	$1,797.30	$-	$-

Re: Do I have a problem? ;)

IOBA — Tue, 07 Feb 2012 04:24:04 GMT

Part two.

SynnDiesel - with both tables, it's really easy to update and keep track of what I have.

At a glance, I can see what month & year CD's will mature.

At a glance, I can see how much money will be "maturing" in a year. The goal is to have at least 10k a year mature. Then I will grow that to 20k a year. And so on.

And so things don't get way out of hand, once I have about 4 CD's a month maturing, I will start adding paycheck money to them instead of opening new ones.

Some of the CD's have more money in them than just a $100 --- when I find that I have a stash of money, or can gather something together, I will open an "oddball CD" somewhere - whoever has the highest rates for that amount of money.

Yes, Ally lets you open up CD's for a $100. They have two of mine right now. Ally's best deal at the time I opened mine were to do a 4 yr, change your rate CD. During the course of 4 yrs, I can up my rate to whatever is current two times. A thing to note about Ally's CD's - they deposit interest quarterly, not monthly BUT you can see what you are earning as it accrues before it's deposited quarterly.

85 cents is more than or equal to any savings account out there. So why not put it into a CD.

One of the perks to my having done CD bingo is I had two CD's that equaled about 4k at maturity that I cashed out and put into my house account. I was soooo close to reaching a 20% down payment, plus closing costs and those CD's made it possible. (House deal - no go, but those CD's certainly helped out!). So now I am scouting for a really good rate (hahaha) to reinvest that 4k I had cashed out.

With the varied interest rates, I am earning substainally more than $22.10 a year. I know it's hard to calculate just how much.... If you really want to know, PM me. I will tell you how much I earn in interest. It may only seem like pennies and nickels initially, but those guys turn into dollars and add up!

And I LOVE my excel tables - it does the math for me.

cassembler - I love the idea of a hidden account. I actually have one called a secret savings account that I look at once or twice a year. I don't do ATM cards or check visa cards. So all of my bank accounts are protected that way.

Knowing in the back of your mind that you will have access to emergency cash every one to two weeks is an amazing security blanket. And being able to go to the bank and have them print off a sheet showing all accounts (this includes CD's) to show to lenders helps lenders have confidence that you are financially responsible, can save, and definitely have reserves if things go wrong.

Maybe I shared too much information.

I just find it easy to save money this way and the rate is better than most savings accounts. And it adds up quickly. The CD's and the interest. Use a table or two in excel and it's easy to track when, where, and how much will mature.

Questions?

Re: Do I have a problem? ;)

IOBA — Tue, 07 Feb 2012 04:26:38 GMT

Ally and Navy let you open CD's with as little as $100. (with restrictions, Navy has one you can open with as little as $50.) AND Navy lets you add as little as a penny to each CD.

USAA lets you open CD with as little as $250. AND you can add to the balance in increments of $25.

Amex lets you open a CD with as little as you want. Yes, you can open up a CD for a $1.00

Re: Do I have a problem? ;)

IOBA — Tue, 07 Feb 2012 04:30:41 GMT

I know, I am on a roll...

Think of a CD as a renewable resource. It keeps growing and growing and growing. It rolls over.

A savings account can be depleted in a day, money gone forever...

Re: Do I have a problem? ;)

haulingthescoreup — Tue, 07 Feb 2012 05:12:25 GMT

@IOBA wrote:
Ally and Navy let you open CD's with as little as $100. (with restrictions, Navy has one you can open with as little as $50.) AND Navy lets you add as little as a penny to each CD.

USAA lets you open CD with as little as $250. AND you can add to the balance in increments of $25.

Amex lets you open a CD with as little as you want. Yes, you can open up a CD for a $1.00

Hey, I was looking into this a few weeks ago, inspired by your thread.

Does Ally let you open repeated, separate CD's? In other words, is it practical to use Ally to open a new and independent CD every two weeks? Or do they get snippy at you?

There are a lot of cranky responses on their website, and I don't know if it's justified, or if they just have a lot of confused new members.

Re: Do I have a problem? ;)

Anonymous — Tue, 07 Feb 2012 14:59:35 GMT

IOBA, I'm going to have to save this thread for myself.

I'm putting down 100 a month into my emergency fund while I get my CC balance down to 0.

Once the CC balance is down to 0, I'm going to put that extra monthly money towards this idea. I really like it a lot and thanks for being so explicit about the details.

The spreadsheet definitely is a must with a system like this.

Awesome, awesome set-up.

Re: Do I have a problem? ;)

IOBA — Tue, 07 Feb 2012 20:18:31 GMT

haulingthescoreup - no, Ally doesn't get snippy. None of them do. If they ask questions, (which is unlikely since you can do everything online) then when you explain to them the system, how you want to build your relationship with them AND build up reserves to so that every week or two weeks, you know you could access emergency fund (cd's maturing), they think it's really cool. There are quite a few bank employees that are doing the same thing now.

SynnDiesel - that's a great idea. Are you banking with Ally or Navy or any other bank that would allow you to open a CD with a small amount of money? If they would, maybe you can put $25-50 into a CD per month and keep the rest in savings. It's important to have both - cash savings, as well as a revolving CD door. NOT that you would cash out the CD's, you want them to roll over, but it's great to have that security blanket.

If the CD idea is seen in print - that was me - I didn't steal the idea (it was published).

Re: Do I have a problem? ;)

Anonymous — Tue, 07 Feb 2012 20:26:15 GMT

@IOBA wrote:

SynnDiesel - that's a great idea. Are you banking with Ally or Navy or any other bank that would allow you to open a CD with a small amount of money? If they would, maybe you can put $25-50 into a CD per month and keep the rest in savings. It's important to have both - cash savings, as well as a revolving CD door. NOT that you would cash out the CD's, you want them to roll over, but it's great to have that security blanket.

If the CD idea is seen in print - that was me - I didn't steal the idea (it was published).

The only banks I bank with do a $500 minimum and right now, that'd put a huge dent in my emergency fund. But doing something like 50 to 100 every month is a little more plausible, specially after the way you explained it.

But I'll look into Ally.