Savings

December 15, 2007 I paid off the last of the debt I had racked up when young and stupid. I was officially debt free, I owned my vehicle outright, paid off all the collector's I'd run from, repaid my parents everything I owed them, I even settled up with friends I had burned in the past. This was monumental for me and really allowed me to start allocating my cash flow to bigger and better things.

While still paying down my debt I chose to open a high-interest saving account with ING Direct. The same day I opened a Roth IRA with $1000, I also opened an ING Savings account, also with $1000. Again I setup an automatic payment plan of $100 to be drafted weekly when I was paid. One week later I realized how 5% interest was literally 10 times more than 0.50% interest which I was earning with Bank of America so I transferred another $9000. At first I would login daily fascinated by the "Interest earned this month" growing slowly everyday. There is also a "Total Interest Paid since September 2000" spinner in the corner that spins showing the total amount paid to customers. This was the first time interest was making sense to me.

Prior to having the confidence to get into equities/mutual funds, I would send extra money to my ING account. By the end of 2007 I had almost $18,000 earning 4.20% interest in my ING savings account. I was thrilled and very proud of myself, my girlfriend and I hardly knew what to do with the money, she was very against risking money with more rewarding investments. I learned the rule of 72 and realized it would take almost 18 years to double my saved money. This was unacceptable to me, along with hearing a very profound quote from one of the greatest minds of all times: "The most powerful force in the universe is compound interest." Albert Einstein.