Capital One has raised my savings rate a few times in the past few months.
It's still only 1.85%, but that is more than it has been for a few years.
I used to purchase CDs and have savings accounts that paid 4% or 5%. Back before I spent so much money on college and took my family to Disney World six freakin' times and began Paying Ourselves First every month, I had about sixty grand that I would shuffle from CD to CD or Money Market accounts back before and during the early Recession years.
Believe it or not, I paid for a majority of one of our Disney World trips, each of which cost us within ten percent of five grand, with the proceeds from one of the CDs.
By my foggy recollection, I parked fifty grand in a one-year CD around five percent with a bank about ten miles from my place of work. I had thoroughly scoured the Internet for "highest one year CD rates" in my area quite a few times.
I recall spending about a half hour driving to the community bank in the downtown area of this other town, spending about fifteen minutes opening the CD and another half hour or so driving back to work.
Cashing it out a year later took far less time.
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| We stayed at POFQ six times. |
The sting of the cost, especially at a time when some people who I knew were losing their jobs and/or getting foreclosed on, made me feel irresponsible. It was hard for me to enjoy myself with the thought that I would have "wasted" all this money when I might be struggling to make our mortgage or other payments in the coming months.
In retrospect, all of us enjoyed those family vacations immensely and if you look at our family's digital and printed photos, many of the ones where we are all together and smiling in the sun are from our Disney vacations.
Not to say that we have not gone to other destinations, but we certainly have not traveled as much as most of our friends and relatives and I certainly do not prioritize saving for vacation over paying for college and Paying Ourselves First while striving for that mythical thing that some people call retirement.
Nonetheless, I currently have some funds parked in a Capital One savings account and after much reading, thinking and writing about personal finance, I have come to the conclusion that it is better to collect more interest from your savings account than less.
My Capital One Money Market account currently pays me about fifty bucks per month in interest, and that is up from the forty per month that it paid last year and the thirty that it paid before that. You can do the math and figure how much I have in it as of now.
I should note that when I write of Paying My Wife first every month as well as myself, I transfer some money from this savings account before I send the check to Vanguard. I know. It feels a bit like robbing Peter to pay Paul, but as I have learned while traveling on my own personal finance journey, it is better to have money growing tax free in one's Roth IRA than sitting in a taxable savings account.
For those of you who file the FAFSA on behalf of your child or children (I have not but will), you also know that money in your IRA is not listed as an asset, while money sitting in bank accounts are.
I cannot take back my thirties and early forties when I sent every dollar that I could to my children's college savings account. I sent a lot of it over a period of fifteen years, and I still automatically contribute $400 per month to our daughter's 529 account. Her college will probably cost even more than our son's.
As unbelievable as this may seem, I looked up the amounts that I sent to their accounts so I could have a better grasp of it, myself, and to explain how it came to be that I was able to save over two hundred grand in these accounts while supporting my family in our suburban middle class lifestyle and with my wife mostly a stay-at-home mother. All the while making slightly higher than average salaries.
I was astounded to find that I sent $32,000 to my children's accounts over a two-year time span between 2010 and 2011. That was the most that I sent over that amount of time and included sending $8,500 to each of their accounts in 2010 and $7,500 to each of their accounts in 2011. Every one of those dollars was invested in my favorite all-time fund, the Vanguard Wellington fund.
For those of you saving for your child's or children's college accounts currently, that number still sounds pretty high, don't you think?
If you are very wealthy already or make a considerable income, say $200,000 or more, that might not sound so impressive. But for a guy who earned a total of about $170,000 over that two year time span and supported his family, made car payments, took vacations, paid for music lessons, dancing lessons, tennis lessons and occasional horse riding lessons, that is a shitload of money.
I suppose that I could have been driving a Bimmer or Jaguar and purchasing new iPhones and TVs, buying nice clothes and going out for fancy dinners throughout those two years, but I did not. I could have Paid Myself First and funded my retirement better than I have, but I did not.
I opted to feel some pain and continued sending dollar after dollar to these accounts, one of which is helping us pay the thirty grand that we are paying this year for the privilege of our son completing his third year of college.
Have I ever mentioned that my son is a smart kid who entered college with seven AP credits (4's and 5's on seven AP tests!) and a 33 on his ACT?
Anyway, as we often say and I occasionally write, he would not have been able to attend the college that he does without the substantial academic scholarship that knocks the price down from the low fifties to about thirty grand per year.
We joke around that had he pursued an "easy" major like physics or math, he could have easily graduated in three years and I would be writing as the father of a college grad next May. But as a music major, none of those math, science or English credits do him much good at all.
But I digress.
The bottom line is that as Capital One and other banks begin to offer slightly higher interest rates for savings accounts, it provides savers with another means of generating additional income.
Personally, I am light years away from where I want to be in many respects, particularly in generating additional income from all this online writing that I have been doing.
There are only one hundred days left in this year as of this writing: eight more days in September, thirty-one in October, thirty in November and another thirty-one in December. I realized that I will not achieve most of my New Years resolutions a few months ago, but there is another new year waiting just around the corner.
It is becoming less of a want and more of a need for me to generate significant income online or otherwise next year and the years after that. Our family's expenses cannot continue surpassing our income month after month and year after year.
If Capital One or any other bank wants to pay me an extra five or ten bucks per months on my savings, who am I to say no?
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