What to do with your savings? Set up an automatic 50/month into an account at Ally.com which pays 1.7 percent right now. This is definitely not as great as a few go-go-go years ago when I was getting 3-5 percent on money market funds, but it will still help you start saving with interest on YOUR side!
I wish I had learned about these type of accounts earlier, as most bank accounts barely compensate you for the use of your money. Think of it in that manner, and you will be on the right track. The banks should pay you a premium for the privilege of using your money for their business.
That's right, the money sitting in your checking account (what's your balance?) is making your bank money and not you. What's the interest rate on that money? If you don't know, you may be annoyed to find out it is a paltry 0.25% or perhaps even less. Even the savings account interest rate may not be at all friendly to your savings.
Find a bank that respects your money enough to pay a decent rate. Otherwise, punch out, because there are much greener pastures out there. Minimum deposit rates may vary for the higher interest rates, but you can find a better rate no matter your situation!
Bankrate.com is a wealth of information on this subject, and more!
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Sunday, October 18, 2009
Friday, October 16, 2009
Health Insurance Rewards
Do you have health insurance?
If you do, when is the last time you took a look at your insurer's website?
I checked out mine last year and found out they offered a rewards type program for participating in an online educational program. I completed a "wellness" questionnaire, and then starting getting weekly reminders to log in to read about health topics. It does not take much time at all, as it is only once per week.
Here's the kicker, they give you a debit card for participating, and continue to load money onto the card as your participation continues.
My health insurance is through Blue Shield of California, but other insurers have similar programs.
I just used some of my "credits" that I earned through my participation, and used the card to buy $50 worth of groceries!
Maybe your insurer offers a similar program, and all you need to do is check the website!
If you do, when is the last time you took a look at your insurer's website?
I checked out mine last year and found out they offered a rewards type program for participating in an online educational program. I completed a "wellness" questionnaire, and then starting getting weekly reminders to log in to read about health topics. It does not take much time at all, as it is only once per week.
Here's the kicker, they give you a debit card for participating, and continue to load money onto the card as your participation continues.
My health insurance is through Blue Shield of California, but other insurers have similar programs.
I just used some of my "credits" that I earned through my participation, and used the card to buy $50 worth of groceries!
Maybe your insurer offers a similar program, and all you need to do is check the website!
A few years ago I picked up a book in the library by David Bach called The Automatic Millionaire. I picked it up because it sounded like a simple book. It was an enjoyable read for me, and didn't require a bunch of knowledge about financial stuff. The book tries to get you formulate a plan for yourself that requires very little thought after it is put into place. It made a lot of sense to me then, and still makes a lot of sense to me now, so I figured it could help others as well.
The basic premise is to pay yourself first. You prioritize your savings, making automatic deductions from your checking account into your savings. Preferably, you set it up so the other account is at a different place than your primary account so that you don't see the money every time you log in to your main account.
Even $50/month will add up! Once you get a bit saved up, you will be even more motivated to continue.
The numbers that get thrown around for emergency savings are 3-6 months worth of expenses. That's a pretty decent amount of cash to keep liquid, or available in your bank account, but it makes a lot of sense. If you had that much set aside, you could deal with most things life throws your way, without affecting your day to day finances.
The basic premise is to pay yourself first. You prioritize your savings, making automatic deductions from your checking account into your savings. Preferably, you set it up so the other account is at a different place than your primary account so that you don't see the money every time you log in to your main account.
Even $50/month will add up! Once you get a bit saved up, you will be even more motivated to continue.
The numbers that get thrown around for emergency savings are 3-6 months worth of expenses. That's a pretty decent amount of cash to keep liquid, or available in your bank account, but it makes a lot of sense. If you had that much set aside, you could deal with most things life throws your way, without affecting your day to day finances.
Thursday, October 8, 2009
Simple Savings
Looking for ways to save a few extra bucks? Let's look at your household expenses. Do you have cable tv? The question you could ask yourself is, why? With a few resources you could entirely replace cable tv, and save money in the process.
Netflix lets you rent DVD's for a monthly fee. The plan I currently subscribe to is 1 DVD at a time for $8.99/month. We usually cycle through quite a few DVD's during a 30 day period, and we supplement our Netflix DVD's with Redbox ($1.09 per DVD/Day) when we don't get our next DVD soon enough. Between the two, we spend less than $15/month.
Hulu.com/NBC.com/Fox.com/ABC.com/Comedycentral.com/ etc.... Free television shows you can watch whenever you want. No DVR required, which means no evil extra monthly fee. The only thing you have to deal with is random commercials, which is actually...just like real TV. So no loss there. Did I mention it's free?
Remember that Netflix thing I mentioned?
If you have an XBOX360 or other Netflix enabled media player and a Netflix subscription, you have access to over 17,000 titles that can be instantly streamed to your TV. All that crazy TV action is included in your Netflix subscription, and you can watch as much streaming stuff per month as you want with that $8.99/month plan that I mentioned before.
Buy video games? I've got an answer for that too. Gamefly.com offers a 1 game out at a time plan for 15.95/month. Yes, that's some cash, but considering that games cost $60/month, it's a deal if you like buying games. I've personally saved cash on games that I would have bought otherwise. I've realized there are not really that many games that I actually want to own, but there are quite a few I'm willing to rent.
Use your cell phone? Let's take a look at that one. Is there a cheaper plan you could use? Maybe you don't actually need 3,000,000,000 minutes per month plan. Do you even use unlimited internet on your phone? If you do, would it be that much of a change to downgrade? Maybe there is an employee discount/corporate discount/loyalty discount that you could get applied to your account. I did some research and got a 22% discount on my wireless bill through my occupation. Google it, and see what pops up!
Do you have a home phone? Why? If you cancelled that and your cable, and just kept your internet, would you really notice after a few weeks? Give it a shot, and add up the money you will save. The wife and I just have our cell phones, and it works pretty well for us.
While we are on the subject of internet service, do you need the whizbang fastest? We downgraded to the lower speed and have not really noticed, even with some online gaming. Try it, and see if you can save some money there too.
Remember that $75/month I threw out as a savings amount last post? If you add up some of the things just mentioned, you are there!
Or... you could build your own HDTV antenna. I couldn't resist.
Netflix lets you rent DVD's for a monthly fee. The plan I currently subscribe to is 1 DVD at a time for $8.99/month. We usually cycle through quite a few DVD's during a 30 day period, and we supplement our Netflix DVD's with Redbox ($1.09 per DVD/Day) when we don't get our next DVD soon enough. Between the two, we spend less than $15/month.
Hulu.com/NBC.com/Fox.com/ABC.com/Comedycentral.com/ etc.... Free television shows you can watch whenever you want. No DVR required, which means no evil extra monthly fee. The only thing you have to deal with is random commercials, which is actually...just like real TV. So no loss there. Did I mention it's free?
Remember that Netflix thing I mentioned?
If you have an XBOX360 or other Netflix enabled media player and a Netflix subscription, you have access to over 17,000 titles that can be instantly streamed to your TV. All that crazy TV action is included in your Netflix subscription, and you can watch as much streaming stuff per month as you want with that $8.99/month plan that I mentioned before.
Buy video games? I've got an answer for that too. Gamefly.com offers a 1 game out at a time plan for 15.95/month. Yes, that's some cash, but considering that games cost $60/month, it's a deal if you like buying games. I've personally saved cash on games that I would have bought otherwise. I've realized there are not really that many games that I actually want to own, but there are quite a few I'm willing to rent.
Use your cell phone? Let's take a look at that one. Is there a cheaper plan you could use? Maybe you don't actually need 3,000,000,000 minutes per month plan. Do you even use unlimited internet on your phone? If you do, would it be that much of a change to downgrade? Maybe there is an employee discount/corporate discount/loyalty discount that you could get applied to your account. I did some research and got a 22% discount on my wireless bill through my occupation. Google it, and see what pops up!
Do you have a home phone? Why? If you cancelled that and your cable, and just kept your internet, would you really notice after a few weeks? Give it a shot, and add up the money you will save. The wife and I just have our cell phones, and it works pretty well for us.
While we are on the subject of internet service, do you need the whizbang fastest? We downgraded to the lower speed and have not really noticed, even with some online gaming. Try it, and see if you can save some money there too.
Remember that $75/month I threw out as a savings amount last post? If you add up some of the things just mentioned, you are there!
Or... you could build your own HDTV antenna. I couldn't resist.
Two important ideas to help you save.
How many people have a daily coffee, energy drink, or some other beverage "fix"? I know at work I drink my fair share of coffee, and I'm sure many others do the same on a daily basis. How many people put the same amount of money into a savings plan for retirement? The number of hands probably just plummeted. The line I hear a lot is "I don't make enough to save!"
The thought you have to get into your head is "I have to make myself save."
If you added up the cost of a daily coffee habit, or energy drink habit, or tobacco habit...you might quickly realize where your money is going. Check out this calculator and play with the numbers a bit. You may be surprised to see how much you spend on your daily fix.
Imagine if you instead put that toward a savings plan...
If you saved that $2.50 a day by drinking office/home brewed coffee, you could end up with $75,000 after 30 years.
This is based on a starting savings of $0 with the $2.50/day for 30 days in a month which is $75/month and at a rate of return of 6%, and never increasing your contributions. (You could increase your savings significantly if you rachet up your amount as you get raises/bonuses/part time jobs etc.)
At the end of the 30 years you would have "spent" $27,000 on your "coffee" to end up with 75,000. With this example, by just drinking the coffee and not saving, your opportunity cost (which means what you lost by not saving it instead) is $48,000.
That's an expensive $27,000 coffee!
Hopefully this sounds good to you so far...let's add one more level to it.
What if you made that savings automatic? What if you had your bank account setup to automatically withdraw $75 every month and put it into savings? It's much less likely you would even notice the money if you set it up this way. This is why credit card companies allow you to put stuff on "auto-pay", and now you can use the same concept for your own savings plan.
Even a small amount per month can add up to huge $$$ after 30 years! The keys are to start early, save more, and make sure you prioritize your savings before your spending!
The thought you have to get into your head is "I have to make myself save."
If you added up the cost of a daily coffee habit, or energy drink habit, or tobacco habit...you might quickly realize where your money is going. Check out this calculator and play with the numbers a bit. You may be surprised to see how much you spend on your daily fix.
Imagine if you instead put that toward a savings plan...
If you saved that $2.50 a day by drinking office/home brewed coffee, you could end up with $75,000 after 30 years.
This is based on a starting savings of $0 with the $2.50/day for 30 days in a month which is $75/month and at a rate of return of 6%, and never increasing your contributions. (You could increase your savings significantly if you rachet up your amount as you get raises/bonuses/part time jobs etc.)
At the end of the 30 years you would have "spent" $27,000 on your "coffee" to end up with 75,000. With this example, by just drinking the coffee and not saving, your opportunity cost (which means what you lost by not saving it instead) is $48,000.
That's an expensive $27,000 coffee!
Hopefully this sounds good to you so far...let's add one more level to it.
What if you made that savings automatic? What if you had your bank account setup to automatically withdraw $75 every month and put it into savings? It's much less likely you would even notice the money if you set it up this way. This is why credit card companies allow you to put stuff on "auto-pay", and now you can use the same concept for your own savings plan.
Even a small amount per month can add up to huge $$$ after 30 years! The keys are to start early, save more, and make sure you prioritize your savings before your spending!
Saturday, October 3, 2009
Why isn't personal finance taught in public schools?
This is a question I have asked myself many times since learning more about my own finances. I don't have the answer, but I do have some ideas.
If all young people started life much more knowledgeable about their own finances, what would the credit card companies do? Talk about a market loss! I look at all the mistakes I have made financially (and still do make!) as well as my peers and it baffles me. Many times credit cards were mentioned to me in an offhand way, without stressing responsible usage. Why couldn't there be some actual coverage in the education system? It seems it would be a perfectly good spot to make math "relevant" which I personally found myself struggling with when I was younger. Heck, I still don't like math that much, but I understand the power of compound interest now! The earlier someone can learn that lesson, the better.
Think about the thousands in interest payments that could be saved by just encouraging people to "live within their means." As a concept, that just means don't spend more than you earn. I definitely struggle with this concept, and I know many of my friends do as well. There is a pervasive "keep up with the Joneses" mentality in much of our culture in America, and this attitude should be questioned. Who really wants you to spend more money than you earn and keep yourself in debt? This is what the financial industry is fantastic at! The problem (as we have seen recently) is when people become so indebted that they can't even make their payments.
Is this what America is about?
Wouldn't the other side of it be a more productive road? What if more people took their own finances seriously, and made it a priority instead of an afterthought?
The bankers might not like that very much, but I think you would!
If all young people started life much more knowledgeable about their own finances, what would the credit card companies do? Talk about a market loss! I look at all the mistakes I have made financially (and still do make!) as well as my peers and it baffles me. Many times credit cards were mentioned to me in an offhand way, without stressing responsible usage. Why couldn't there be some actual coverage in the education system? It seems it would be a perfectly good spot to make math "relevant" which I personally found myself struggling with when I was younger. Heck, I still don't like math that much, but I understand the power of compound interest now! The earlier someone can learn that lesson, the better.
Think about the thousands in interest payments that could be saved by just encouraging people to "live within their means." As a concept, that just means don't spend more than you earn. I definitely struggle with this concept, and I know many of my friends do as well. There is a pervasive "keep up with the Joneses" mentality in much of our culture in America, and this attitude should be questioned. Who really wants you to spend more money than you earn and keep yourself in debt? This is what the financial industry is fantastic at! The problem (as we have seen recently) is when people become so indebted that they can't even make their payments.
Is this what America is about?
Wouldn't the other side of it be a more productive road? What if more people took their own finances seriously, and made it a priority instead of an afterthought?
The bankers might not like that very much, but I think you would!
Alcohol and your wallet
Beer, I love beer.
The wife likes wine, and we both enjoy mixed drinks from time to time.
Groups of friends usually go out to bars/clubs and spend gobs of money on alcohol without really thinking about it. I'm guilty, but I've tried to grow more aware of how much money I'm actually spending on these "vice" items.
I found this calculator that I found enlightening on how much your alcohol consumption actually costs you. Try playing with the different numbers and see what numbers you come up with.
I realized sometime ago the benefit of "pre-partying" (having a beverage or two before going out) but this calculator really shows the benefit if you take a drink or two out of your weekly/biweekly/monthly social night.
Maybe you go out more than you realize and are literally drinking your dollars away!
Don't worry, this post is not meant to mean that you can't go out and have a good time...it's just meant to bring up the cost of a night on the town, and also what those nights costs you over the year. It's up to you to decide if you have better things to spend your money on!
The wife likes wine, and we both enjoy mixed drinks from time to time.
Groups of friends usually go out to bars/clubs and spend gobs of money on alcohol without really thinking about it. I'm guilty, but I've tried to grow more aware of how much money I'm actually spending on these "vice" items.
I found this calculator that I found enlightening on how much your alcohol consumption actually costs you. Try playing with the different numbers and see what numbers you come up with.
I realized sometime ago the benefit of "pre-partying" (having a beverage or two before going out) but this calculator really shows the benefit if you take a drink or two out of your weekly/biweekly/monthly social night.
Maybe you go out more than you realize and are literally drinking your dollars away!
Don't worry, this post is not meant to mean that you can't go out and have a good time...it's just meant to bring up the cost of a night on the town, and also what those nights costs you over the year. It's up to you to decide if you have better things to spend your money on!
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