Posted on February 16, 2010.
Should I force myself to put money on my account yield interest rates, even if I'm on the budget? I am 33, divorced, with children (10 & 12) and had very serious about saving. I put 7% into my 401K and a plan for up to 10% within 2 years.
I have a savings account and verify that I used for my monthly expenses and maintain a monthly budget and a small cushion. Four months ago, I opened a savings account high yield (5%) with the idea of my monthly income over there at the end of each month. the first three months, I filed between 300-500.
This month, I ran on the budget due to some unexpected expenses that have been raised. I still keep a cushion in my account 600-700 normal for unforeseen expenses. I think I should atleast $ 100 deposit in my account high yield this month, even if it eats into my pillow a bit. It's not like I'm spending money but I do not want to risk making a habit of not depositting atleast a little money.
Is this a good idea to do?
Your idea is very good. If these expenses "unexpected" that jump and bite us all come together again, you can always pull down on the high yield savings. I like your idea of a Roth IRA with the funds at the end of the year but it also functions as a safety net too.
Single mom raising 2 children and save for their future and yours.
YOU ROCK!
I think you are great. Cusion your money into a high yield? If it is the same high performance as your savings. I would say that you must deposit into the account cushion. While not high-performance, I would still say to deposit into the account of a cushion. Since everything you alreday impressive, and you need to plan for emergency situations (having cushion).
I guess these two accounts are linked, are the same bank, and you can easily transfer funds between the two.
However, the cushion in the current account is there for a reason, so you do not discover the current account. If you run more than one month is not a big deal. $ 100 at 5% is only $ 5.00 a year in interest.
An idea (I did) is to have your savings account is your protection against overdrafts. Tell the bank that you want to designate the high-yield savings account as overdraft protection. If you ever overdrafted on the checking account, the bank will transfer some money from savings to checking and low-cost (about $ 5) to do so. It's better than getting hit with an overdraft charge of $ 35 for each check that is uncovered.
