A couple months back I posted about my (our) plan for the savings account Guy and I opened together with Ally bank, which featured a weekly withdrawal from our checking accounts and should help us save just under $9,000 this calendar year, specifically for baby. (Check out the details of it here!)
Well consider this my first update. After about 6 weeks of saving, things are going well! The account is up to $1,625 and I haven’t noticed a crazy dip in my checking account, thank goodness. (I also started off with a $500 deposit off the top from my old savings account, which takes less time to transfer to my checking in case of emergency.)
I have to say I am enjoying this way of saving. Once Guy gets off the freelance track, which should be soon, he’ll be doing a weekly deposit as well and it’ll grow even faster!
In addition to this saving method, I’ve been doing research into my student loans, which I do every few months. I’m paid ahead as of now, so in case of emergency I could technically stop paying for a few months and not be penalized.
Now hear my out – my total loans equal about $17,000. Those loans are all split up into smaller loans, with interest rates anywhere from 1.5% to 6.5%. If I can’t find a savings account with an interest rate of 6%, then I’m making a mistake putting extra money into savings instead of paying off student loans. I am accruing interest to PAY faster than I’m accruing interest to EARN, which blows. But that’s why these systems exist – because banks can make money. Therefore, when I get my tax return, and if I come into any extra cash in the near future, it won’t be going into my savings – it’ll go to paying off my student loans that have a 6% interest rate. Simple as that.
It feels like such a negative way to “earn” money, but in the long run it’ll help immensely. I could end up paying thousands of dollars less in interest if this is done correctly! Do your research before you make your choice, but keep these options open – somethings paying off debt is better than saving.