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Archive for August, 2009

Update on installment savings

August 16th, 2009 at 07:50 am

A few months ago I posted that I opened an installment savings account. For those of you unfamiliar with this concept, it is basically a forced savings in which you agree to deposit a certain amount over a certain amount of time. For myself, I chose to open an account for $20,000 over 3 years. The interest rate is %5.5. That means I will deposit a total of $18,331 (509.20/month). This is great if you are in a building phase of your savings and if you have job security.

So anyway, it has turned out to be a great idea. I know it's psychological but by treating it as a bill complete with a coupon book, I find saving for that account non-negotiable. On the other hand, I currently use a high-yield checking acct for the rest of my savings, interest rate %5.25. I have to confess that I am not as strict with my budget some months due to that readily available cushion. So I am supposed to have around $1600 a month left to deposit into this savings but some months I am off by a couple of hundred. I'm embarassed by that.