Cash Management

Are High Interest Checking Accounts Worth It?

by
high interest checking account

There are a lot of high-interest checking accounts out there these days, but is a high-interest checking account worth it? The answer depends not only on how you use your checking account, but also the details of each account. As is so often the case with personal finance, the devil is in the fine print details. Be sure to understand all of the fine print before rushing off to transfer your checking accounts. Check out my Acorns review. High-Interest Checking Account Qualifications The first thing you want to look at is how to qualify for a high interest checking account. At most banks, getting the highest interest rate on your checking account requires you to make a minimum number of debit card transactions. That is because the bank earns money on each one of those transactions. In a way, with every debit card purchase you make, you earn the money the bank uses to pay you the higher interest. You also are usually required to get a direct deposit into the checking account each month. For many people, the only direct deposit they could get on a monthly basis is their paycheck. The idea is that by requiring a direct …

Read More

Powerball Annuity vs Lump Sum

by
powerball lump sum annuity

Without diving too far into business math, let’s take a look at whether you should take the annuity or lump sum Powerball payout. Which Is Better Annuity or Lump Sum? Should you take the Powerball annuity or lump sum? Which one is better? As is so often the case in finance and economics, the answer is that it depends. What Is Powerball Annuity? Before we can know whether lump sum or annuity is better, we need to understand the terms. First and foremost, when they say the Powerball jackpot is $900 million what they mean is that the lottery people will buy an annuity for you guaranteed to pay you $900 million in equal payments over the course of 30 years. In other words, the lottery will buy you a 30-year annuity paying out $900 million. Check out the Grifin review and then the Acorns review. Next, we need to understand that it does not cost $900 to buy a 30-year $900 million annuity. Why? The easiest way to understand this type of annuity is to think about a home mortgage. You borrow $500,000, but you pay back far more than $500,000 because of interest. Most people understand that concept. …

Read More

Fidelity Youth Account for Kids $50 Bonus

by
fidelity youth account

Now that the economy is no longer awash in free money, financial companies, banks and brokerages are in customer acquisition mode. New customers tend to stay customers, especially when scary stories on TV or scary circumstances trigger the impulse to stay put. $50 Fee for Fidelity Youth Account You probably started seeing postcards and letters in the mail with local banks trying to seduce you with offers of $200 cash for opening a new account, or something similar. This is a version of that. The idea from Fidelity’s end, of course, is that your child is getting older and if they already have a Fidelity account when they leave and go out into the world, there is a much better chance that they will keep that account than there is that they would find their way back on their own. How Do I Get $50 For Fidelity Kids Account? Fortunately, since this is for a kids account, there are kid sized requirements to earn the $50 bonus. First, the parent must be a Fidelity account holder. If you already are, then you can move to the next step. If you aren’t you have to make a choice about whether opening …

Read More

Use Accounts to Save and Budget

by

I talk a lot about the psychology of money. The reality is that no matter how much something makes sense mathematically, it just may not work for most people because money isn’t just something we move around on a spreadsheet. One of the most common questions I see are in the form of “What should I do with $5,000,” or “How should I invest $3,000?” The answer is to put it in your savings unless you currently have enough money saved for your emergency fund and short-term goals, otherwise, put it in one of your investment accounts. People don’t like this answer. Why? Money psychology. Use More Accounts to Save One of the problems with money on a personal financial level is that it comes and goes so easily, often without really noticing or appreciating it. Consider a man (or woman) age 35. He earns $120,000 per year, has a mortgage, a car payment, some nice hobbies and he puts money away for his kid’s college and his own retirement. Honestly, that’s pretty great and he should be (and is) pretty happy. Financially speaking, this means that each month he earns $10,000. His company takes out $5,000 for taxes, insurance premiums, …

Read More

Budgeting Extra Money vs Extra Income

by

As a former financial planner in Denver, I get involved in a lot of interesting personal finance discussions. Recently, a writing colleague was remarking on the difference between getting money one time, and having a new stream of money. In particular, he noticed that while the latter should be better, the former is actually the more fun of the two. Psychology of Money One of the interesting things about money is that it is so concrete a mathematical concept, and yet, so nebulous as an actual artifact in our lives. On the first hand, money is easily understood as an exact match of mathematical numbers. For any decision, a spreadsheet-type answer is easily obtained. Higher interest rates are better for savings, worse for borrowing. Saving more is better than spending more, and so on. However, the reality is that the higher interest rate from an online bank that is less convenient and useful might not actually be better. And, is having an extra $5,000 in the bank really better than having spent a week seeing the great museums in Italy? Which brings us to the freelance writer‘s incongruous concept of steady income versus unreliable, extra income. Most people have a steady …

Read More

Is Paying Off Debt Better Than Investing?

by

As a former financial planner I know that not all finance is just about the math. The truth is that earning money, spending money, and saving money is a highly emotional thing. While it is fine to suggest that people eliminate emotion when dealing with money, that’s a little bit like telling people to eliminate hunger when dealing with dieting, it just won’t work in the long run. Is It Better to Save Money or Pay Off Debt? One of the things that gets thrown around like a solid, no-exceptions, rocket science idea from time to time is the concept of paying off debt as a high, guaranteed return. The theory goes a little something like this: If you pay off a credit card with an 18 percent interest rate, then that is like getting a guaranteed 18% return on your investment. Obviously, a sure thing 18 percent return is probably the best possible investment in the world from a risk/return perspective. But, is it really that simple? Mathematically, paying off higher interest debt is always the right move. However, that isn’t necessarily always the best move for real life, particularly if your finances are not in very good shape …

Read More

Is Extreme Couponing Worth It?

by

The extreme couponing fad hit its high water mark a few years ago. That doesn’t mean it’s gone away, and every time someone shows up on TV or a magazine article is published, the race is on again to figure out how to do extreme couponing. If you’re wondering how using coupons can get extreme, consider this hypothetical example. You see a coupon in the newspaper for $1 off of something. For our sake, let’s say it’s $2 off of a bag of cookies. Now, let’s say that the grocery store is having a sale where those cookies are 2 for $4. Bam! You’ve got yourself some free cookies. That’s not really extreme, yet. Now, imagine that you go through the recycle bin at your office building and find eight of those coupons and you get eight bags of free cookies. That’s a little more extreme. Now, imagine that you build your entire shopping list around this sort of deal and you roll home with $300 worth of groceries for just $23. Now, that’s extreme. Is Extreme Couponing Right for Me? Coupons can save you money, there is no doubt about that. If you have a coupon for something you …

Read More

Some Banks Not Charging Monthly Debit Card Fee

by

It turns out that not all of the big national banks will be using overt money grabbing fees to boost their revenues like Bank of America is by charging a $5 fee to use your debit card even once per month. Wells Fargo and Chase Bank have both announced that they will not be gouging their customers by charging a $5, or even $3, monthly fee for customers using their debit cards. It seems that even Bank of America, home of the screw-our-customers mentality to profits, is blinking a little bit by offering the dolts who are still its customers more ways to dodge the fee, but will still gladly yank $5 per month out of your account if you dare to use your debit card without meeting one of the bank’s other conditions. Banks are trying to find more ways to charge higher fees to their customers because they are no longer capable of actually making money on banking and lending, which is bad news for investors and customers. If you are sick and tired of all your bank’s fees and charges, the answer is pretty simple. Just find a credit union in your area and join. For a …

Read More

How to Save Money

by

There are a lot of how to save money articles going around these days.  I guess that is what people think about during tougher economic times.  I stumbled across a pretty great one today. SooperCard For those of you not from one of the mountain states, King Soopers is a grocery store.  The chain is owned by Kroger whom you may know better.  Anyway, way back in the day, just like all the other grocery stores, King Soopers started a shopper card program where you got savings by using your card.  The card is called a SooperCard.  Now, like a lot of other people, I gave them fake information when I signed up because I was suspicious and didn’t want them selling my name or tracking how many Pop-Tarts I buy. Several years later, I’m a financial professional and much more astute on how the world of business works, and I now know that at best I was being naive.  After all, the three credit bureaus gladly sell not only your name and address, but your credit score (not the exact score, but you can buy a list of people with over a 700, for example) and how you use …

Read More