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CD Laddering

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IOBA
Senior Contributor

Re: CD Laddering

@Revelate - I am still here!

 

Weather delays...  Smiley Happy   This heat is uncomfortable!  It was 100 F when I left the house yesterday.

 

My 2 cents.  Laddering CD's (regardless of the interest rate the CD's are currently paying) is about being disciplined to save regularly, put the money away to build savings, being creative enough to find ways to fund your "needs" to avoid cashing out a CD, and strong willed enough to ignore the "wants" that might tempt you, especially around the time a CD matures!

 

The rates may be low now, but they will bounce back.  Leave the money be.

 

If you are able to, find a CD product that allows you to contribute as often as you like, but has the interest rate locked in.

 

Pay comes in once a month, I have money automatically transfered to all CD's that will allow it.  I do sometimes change the amounts of how much is added to a CD.  The low end - $25.  The high end - $1500.  <----- I was stretching for a goal.  And it was the CD with the highest interest rate.

 

With the regular add ins to the CD's, I now focus on what is the total of the CD's.  Set the goal for 5k in CD's.  Then set the combined total of CD's to 10k.  Keep upping the goal as your reach a goal.

 

With COVID stuff going on, personal income fluntacting, I have choosen not to open another CD that would mature in July.  However, I am still making monthly contributions to the existing CD's that I can.  The interest rate isn't great, but it's not the current low either.

 

My goal with laddering is to be disciplined to save every month in funds I don't usually touch/have easy access to, plan for my expenses (like real estate taxes, car insurance, new tires) with money to put into savings each month, and keep building my financial future.  The CD money is there for emergencies.

 

Like when there was a screw up and there was no military pay for almost two years.  Nice to get a lump sum, but that does terrible things for your tax bracket and makes month to month cash living a challenge!  I cashed out every CD but one (just reduced that to $50 to keep it open), sold everything I could (including my dining room table and couch), and literally ate all the food in the house.  The last two weeks of that was eating flaxseed.  Every meal.  There ws a lot of **bleep** going on.  Literally!  When I finished the flaxseed, I broke down and asked for loans to get me through.  Had put my place up for sale.  Sold it.  I did what I felt I had to do.  Survived it because I had discipline, savings, and CD's.

 

So don't worry about the rates.  Focus on the savings, the discpiline, the behavior.  It will all come together. 

Message 21 of 21
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