Sunday, November 05, 2006

There is a total of $465 in my ING account. I moved $400 of that into a 6-month CD that matures in May 07. This will cover part of the insurance payment on my car that comes due around that time.

the regular e-fund is now back to $65 with $50 being deposited this Wednesday and $100 next Thursday etc...etc...etc...

I decided to move into a CD because:

1. The interest is higher on ING CD's than the regular savings account.

2. I will not be tempted to transfer it into checking.

3. Part of it is psychological. I am so happy to get my savings going again, that a CD is a real accomplishment.


Save Sheila said...

I have an ING account, too; they have great interest rates. Congrats on getting your savings going again! I have a savings account with a credit union, but the amount in it is ridiculous! I make about 10 cents a year in interest!

ambellamy said...

Congrats on the CD

i opened one 5 months ago and i was glad i did... the 400 bucks that i couldn't spend was great and it motivated me to put more money into a savings account there too

you might want to check out EmigrantDirect...

their savings account is about the ING cd rate.

Tired of being broke said...

Thanks! It feels good looking at both accounts in ING. It is quite a sense of accomplishment.

Single Ma said...

With the financial challenges you've had lately, I'd be hesitant to put my money in a CD. You've had quite a few emergencies where you needed to drain your e-fund, and for good reason. They were not frivolous purchases.

With a CD, if for whatever you need your money before May '07, the bank will revoke some of the interest earned AND apply a penalty. Then your $400 isn't quite $400 anymore.

Further, to address your reasons:

1 - There are many online banks who have interest rates for a regular savings account equal to or higher than ING's CD rates.

2 - If you're concerned about impulse transfers, the 2-3 day transfer period will give you some time to think about it.

3 - Building a solid emergency fund IS a HUGE accomplishment. Until you have one in place that is accessible (without penalty) if/when needed, I don't think a CD is a good way to go for now.

What you can do is build your e-fund to an acceptable level of your choice, then invest in CDs using the ladder method that I discussed here. This way, you're investing for higher returns in a safe instrument but you ALWAYS have some liquid in case of a real emergency.

Either way, congrats and good luck!

Tired of being broke said...

Single Ma once again you have given me something to think about. I thought about the fact that I am tying up that money for a few months. The emotional response of achieving that much in a short period of time after the emergencies I have had won over the interest /penalty argument I made. Also, the other reason is that the money is ear marked for car insurance which is due around that time. Am keeping my fingers crossed and knocking on wood that there are no more mishaps in 6 months.

Stardust said...

I found your blog yesterday and have been reading from the beginning. I had to comment on this particular post. I am so rooting for you! I'm so happy about the CD!!!!