financial discussions with the girl next door

The Beginning of My Savings Journey November 12, 2008

Filed under: Uncategorized — girlnextdoorfinance @ 10:24 pm

Once upon a time, I decided to attend a State University in my hometown, because I received full scholarships and wanted to graduate from college debt-free. After my Junior year, I decided to take a semester off from school to do full-time volunteer work, with the knowledge that I would lose some of my scholarships. When I returned to school, I paid my tuition bills as they came in. I was working full-time (at a paying job!) at that point, and I still had some of my scholarships. The total I paid for the semester was a little over $1000. In May, my father realized that he hadn’t seen any tuition bills and asked me about them. When I replied that I paid them, he said he wanted to help with my college expenses and wrote me a check for $1000.

Since I had survived just fine for the semester without that money, I decided to save it. I had never incurred debt – I didn’t even have a credit card at that point – but I had never bothered to save money either. I won’t lie – the idea of not having immediate access to my money freaked me out a little. I talked to a personal banker and learned that if I put the money into a 1-month CD, I could make a little interest (not much, but significantly more than the .09% my savings account was making!), and still have penalty-free access to my money for 10 days after each month’s maturity date. If I didn’t withdraw my money during that 10 days, the CD would automatically be renewed for another month. After about 4 or 5 months of being separated from my money for a month at a time, I decided it would be safe to leave it invested for a while longer – emergencies didn’t seem to be popping up too frequently! (Actually, I hadn’t had reason to take money out of my CD at all.) I put half of the money ($500 + all the interest I had earned) in a 30-month CD with a 4.97% interest rate. I decided to check out retirement savings at that point.

Even-further-back-story: When I was 19, my father had surgery and used most of his retirement savings to pay off medical bills. My father has never discussed finances with me, so I don’t know much about the details of his retirement (or how much his medical bills were) beyond this fact. Since I saw how quickly retirement funds can be wiped out, planning for retirement has been vaguely in the back of my mind for a while.

I really didn’t know where to go for retirement savings, so I simply asked the personal banker (whom I had just met with to set up my new CD) who I should talk to, and she sent me down the hall to the investment area. The investment adviser explained various options to me and gave me some information about retirement plans. She recommended a Roth IRA. I took a few weeks to read through the materials she had given me, decided that the Roth IRA did seem best for me, and came back to open one. I started my Roth with the other $500 from my CD and an additional $200 I thought I could spare from my “savings” (AKA cash laying around my house for paying bills etc., since I was waiting tables at the time). I also set up monthly contributions of $50 to come from my savings account. I did this for 2 reasons – first, so that I would be contributing to my Roth without having to think about it, and second, so I would get in the habit of putting money in my savings account!

I’ve come a long way since then, but I am still learning every day! J.D. at Get Rich Slowly likes to remind his readers (like me!) that “the perfect is the enemy of the good.” Take this to heart! I probably could have found a better place to open a Roth IRA than my bank, but if I hadn’t made the decision as I did, I likely would have spent months (possibly years) trying to learn everything and find the best possible deal. And guess what? My money would have been sitting in that savings account making .09% this whole time.

As a final note, I have a challenge for you, my lovely readers! (I know, you’re probably thinking, “She’s had this blog for one day and she thinks she can already issue challenges?!” Well, yes, yes I do.) I challenge you to do something savings-related within the next week. If you don’t have a savings account, open one. If you have a normal savings account through your bank, open a higher-interest online account, or a CD, or a Roth IRA. If you have all of those, throw an extra $25 into one of them. (And while you’re at it, go ahead and leave a comment letting me know what you did!)

And just to make it really easy for you, here’s a link to ING Direct, where you can open a savings account online in 10 minutes or less. As of today, the Orange Savings Account rate is 2.75% APY.


2 Responses to “The Beginning of My Savings Journey”

  1. wendy j Says:

    I found a great online savings account that pays 4% APY. It is with a reputable bank that is FDIC insured. The website is and the people there are very nice and professional. In today’s environment, 4% yield is terrific. I moved $$’s from my low interest money market account to and have been very happy.

  2. girlnextdoorfinance Says:

    That’s excellent, wendy j! Thank you for sharing!

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