Finance Challenge 2017 – Week #7

You know, looking over my last few weeks I noticed that I haven’t done a true “automation” post yet. Post 3 used an app to make finding which credit card to use to maximize rewards incredibly easy, but that didn’t make my current system of accounts and cash flows any less manual. To make matters worse, I’ve added a few accounts since starting the challenge (see post 1 & 2) and will probably be adding more into the mix. While it is nice to do everything manual since you can keep an eye on things, it is time consuming. Any time freed up on the day to day activity of my accounts can be redirected into savings or generating more income. With that, I’d like to present my first step in automation. I opened a Northpointe Ultimate Account, an American Express Serve Card and linked my Schwab Roth IRA to automatically withdraw $100 each month.I’m not proud to admit it, but I haven’t been contributing to my tax advantaged retirement account (Roth IRA) regularly for over a year now. I opened my Roth IRA during my senior year of college along with couple other accounts (more on those in a later post) with Schwab. Those familiar with my story (you can read it here) know that I didn’t have a job when I graduated from college and it took nearly 4 months to get a job and begin paying back my student loans as well as other expenses. My luckiest break was that my parents were still happy to have me at home and didn’t require nearly any compensation for my room and board. During this time I amassed a small sum in my Roth IRA, but no where close to the $5,500 IRS mandated limit. Fast-forward a few years and I had moved out of my parent’s place. Now I was supporting two people (my girlfriend and myself) and all of the costs associated with maintaining a household. I was facing a significant headwind financially though; we had moved to a much more expense “cost of living” part of the US compared with where we both grew up and we were temporarily living on a single income, mine. Fortunately, we moved because of a much better job opportunity.

While living together for the last two years, finances did get very tight. I often found myself in the situation that most Americans do, reaching for a debt based solution at the end of the month after the paycheck failed to cover all bills and living expenses. Suffice to say that the first thing crossed off the budget was savings goals and investing. The dark clouds have recently been pulled back, now that we have two incomes, but we are still facing challenges and regrets. I regret that I missed an opportunity to fully invest in a market that has marched all the way to new record-breaking highs. I didn’t miss it completely with what I built up in my Roth IRA while I was living at home. I’m uncomfortable with the decent sized hole I dug in debt to keep my household afloat. But like I mentioned at the beginning of the year, this challenge will be my opportunity to get on a better foundation for years to come.

With that, I want to regularly contribute to my retirement again. In my budget app (I promise that review is coming), I estimate that I can plow a little more than $100 in my IRA again regularly, right now. But as you probably know by now, I’m much too curious about personal finance and I need to poke around and see how I can optimize even something as simple as an ACH transfer of $100 from two personal accounts.

Enter Northpointe Bank. I’m not sure what it is about high interest bearing accounts that attracts me like a month. Most likely it’s because I can earn around 5% on my deposit, virtually risk-free and with immediate liquidity. That can’t always be said about the capital markets, even though I’m much more interested in “sexy” investments than simple bank accounts. I opened a Northpointe Bank Ultimate Account at the end of 2015, because I liked the concept and figured that eventually I’d have money to put in it. The Northpointe Ultimate Account is a terrific retail product in my opinion. The account sports a 5% APY on balances of $5,000 or less once certain requirements are met. The requirements are: 15 or more debit card purchases totaling at least $500, Enroll in eStatements, and setup direct deposit or automatic withdrawal of $100 or more. This account, in contrast to the other High Interest accounts I’ve previously spoken about, doesn’t have the 6 withdrawals a month limit imposed on it. In fact, the amount of activity on the account benefits it, since the requirement for transactions will be satisfied. The benefit of easy access to the funds in the account comes at the cost of effort. The funds in the Netspend account mentioned in post 1 just need to sit there, basically every 90 days a transaction needs to happen to avoid any inactivity fees and the interest needs pulled out. The Ultimate Account’s requirements are much more demanding. But, having my Roth IRA pull money from the Ultimate Account for $100 each month does satisfy the other requirement.

Remember earlier when I said that if I can automate my system, I can use the free time in pursuit of earning or saving more. The Ultimate Account appeared to be both mixed into one. I needed to figure out a way to automate the 15 purchases to satisfy the last requirement. If I could do that, I’d have one more 5% account that I could earn interest from and I could automate my retirement savings.

Enter American Express Serve. The American Express Serve card is a pre-paid debit card, just like Netspend. The Blue Serve card has a $1 monthly fee (boo!) but it is reloadable with a debit card. The icing on the cake is that debit card reloads can be scheduled, i.e. automated. I have found my 15 debit card transactions. I scheduled a daily payment of $5.00 and for right now I am adding a higher value debit reload of $200 (the daily maximum) manually five days before the statement date for the Ultimate Account. This is only temporary though while I am testing this method out. Eventually I’d move to a daily reload of $17 (17 X 30 = $510). This means I should satisfy all requirements of the higher interest rate. There also another benefit of this method.

The Ultimate Account is great, but one thing I noticed was that sending an outbound transfer from the Ultimate Account to another external account of mine, would incur a fee. This means that if I wanted to transfer money from the Ultimate Account to my Synchrony Savings Account, Northepoint would charge me to do so. The Serve card, does give provide a work around though. Serve allows one debit card and one bank account to be connected for transfers. The key is that they don’t have to be the same account. That means that I can link my Ultimate Account debit card and my Synchrony Savings Account. So I can transfer money from one to the other through the Serve card. The restrictions on the daily load limit of $200 does hamper the utility of the account, e.g. transferring more than $200 will require a couple of days unless you are holding more than $200 already in the account. Speaking of longer time, since the money is going through two financial institutions instead of one like normal, it does take longer for the funds to transfer and settle. Still it’s better than nothing, in my experience it’s been an extra three days. Using the Serve card at an MoneyPass ATM will allow quicker access to funds and the ATM withdrawal limit is higher at $750. Non-MoneyPass ATMs have wicked fees, so they should be considered a last resort.

So in summary, another 5% account on $5000, a prepaid debit card, and regular automated deposits into my retirement account. If you’d like to know more about these accounts, check out the links below. Again, I can’t stress enough that you need to do your own research and that I’m not a licensed professional and the information provided above is for entertainment purposes.





Until next time!


Finance Challenge 2017 – Week #6

Week #6 is here! Hope you enjoyed your Valentine’s Day! This week I wanted to share a recent purchase I made and how I spent a lot less on it than I thought was possible. Instead of focusing on one app like my other posts, this involves a few apps used in combination (consider it fair, since I’m one day late in posting it this week). We begin looking for a new winter jacket.

I’ve been in the market for a new pea coat or drivers winter jacket for a couple months now, mainly because I have to look presentable at my 9-5 each day and unfortunately, my current winter jacket didn’t fit the bill. A good jacket was definitely going to set me back at least $150 and I was willing to accept that price. Now, I fully realize that this is not a lot to drop on a jacket, especially one that was supposed to be nice. My budget is tight, as I imagine yours is, too. I finally found a very nice charcoal gray Ralph Lauren wool jacket and it even passed the difficult girlfriend test as well. The cost? Only $119. I was already thinking this was a jackpot, coming a whole $31 under budget. But as I tried it on and looked in the mirror, I thought to myself, “I wonder how much I could really get off the $119 sticker?” So, from my earlier credit card post, I knew to check my Wallaby app and confirm which credit card would get the most rewards for this department store type purchase. So with 2% back, I brought the coat’s cost down to $116.62 once the cash back was redeemed. Off to a good start.

Next, I looked for coupons. I don’t have a single coupon site that I use, but frequently Retail Me Not, is a top google search. I’ve had mixed results with coupon success though. This purchase was no different; no useful coupons turned up. Plan B was to check the store’s website for a promotions link at the very bottom. This time it turns out that this store had a $10 off coupon if you joined their newsletter. While I can already hear you, “is $10 worth the spam?” I argue only you can answer that question. I don’t mind and typically don’t have any issue unsubscribing after the first couple newsletters that make it into my inbox. What do you do if you already belong to the newsletter of that store? A few options would be to use another email account (if you have one), create a new email account (you could possibly dedicate this account to this types of offers), or a significant other may not (truth be told that is what I ended up doing). Now the cost of the jacket was done to $106.82 ($119-$10, then times (1-.02) for the cash back). This was great! I achieved a 10% discount on the jacket with pretty minimal effort, but I wanted to keep digging lower!

I revisited the 2% cash back I would get from the jacket and realized that the $10 off made it less than 2% off the retail price of $119 and became a little discouraged. I mean, it was a measly $2.00. What if I could get more than a 2% discount of sorts? I thought about changing how I paid, what if I bought a gift card first, and then used that to buy the jacket? Well that actually doesn’t work, because the gift card would be for the after coupon amount. What if I bought someone else’s giftcard though? Most people don’t realize this but there is a secondary market for gift cards. I think this is fascinating. If you were the unfortunate recipient of a (potentially less-than-thoughtful) gift card that you have no use for, you’re basically screwed out of that money; however, you can no list the giftcard for sale of several websites to recoup at least a portion of the face value of the giftcard. There are several services out there, but the one I find myself most frequently using is Raise. I like the user interface, the decent selection of giftcards, fast shipping, and the 1 year balance guarantee on each purchase. Another big plus is that Raise will typically have promotions of their own, like $10 off of $100 in gift cards. I just so happened to be shopping for a jacket that was on the last day of a $10 off of $100 promotion that Raise was doing. I had a minor hang-up (more on that later) but I was able to find digital gift cards for the store I was at. This meant that I could use them immediately after my order was processed. Oh yeah, and the discount off the face value of the five gift cards I purchased was 6.68%. In order to get over the $100 mark to use the $10 off of $100 Raise discount, I had to purchase more gift cards than I would have liked though. I bought five gift cards for a face value of $161.20 (which is well over the $119 mark) but I only paid $140.14, which means I locked in a 13% discount with this retailer, forever. Now the compounding starts to begin. I earned 2% cash back on the purchase of those giftcards. The final cost of the jacket at this point (applying all cash back towards the cost of the jacket) would be $106.19 (a whole $0.62 lower than above, wow), but I’d have $52.20 in gift cards left over. Again, I can’t stress that carrying this extra $52.20 in gift cards puts a heavy drag on cost savings and I realize the irony in “save money by spending more!” But I do plan on returning to make a purchase at this store, eventually.  Before I hit the checkout button the gift cards, I got another idea; use a cash-back portal online.

What helped prevent me from getting discouraged about going backwards in my cost savings was the fact I could use a shopping portal to further the cash-back on the purchase of both the giftcards and the jacket! What’s a cash back portal? It’s a website that you use to shop for things online. As long as you make the purchase while going to the portal first and having the portal redirect your browser to the retailers website, you earn an additional amount of cashback or rewards on your purchase (in addition to your credit card!). Just like the secondary market websites for discounted giftcards, there are several different shopping portals. I usually use Ebates more often than others though. Just like Raise, they may not be the best with cash back all the time, but I like the user experience and their customer service has been positive each time I’ve need to use them. Like Raise, they aren’t without their faults either, but I’ll summaries that in a later section. Ebates offered 1% cashback on my Raise purchase of $140.14 for an extra $1.40 in cashback to apply towards the remaining $106.19, for a new total of $104.79. Since I had already found my jacket on the retailers website, I checked what Ebates offered for this retailer. It ended up being an extra 3% of cashback! With this knowledge I left the store and went home to order the jacket online. To be clear, I was able to double down on Ebates, with 1% back on giftcards from Raise and now 3% on the jacket from the store’s website.

In the end, I’m proud of my haul.

  • $119 jacket
  • $52.20 in giftcards
  • $7.48 from cashback
  • Final out of pocket cost was $140.14

This means the jacket cost me $101.52 after using the $10 coupon and all $7.47 of cashback towards the cost. That’s about 15% the jacket alone.

You’re probably thinking, “damn, that’s a lot of work for $17.48 off” and you would definitely be right, but now that I have the framework for a process to squeeze nearly all of my purchases for even more savings. I know it’s not like 50% off, but it’s definitely a good result, given I had to make something out of nothing. There’s also nothing stopping me from using this framework with a bigger discount coupon or using this on larger purchases (e.g. if this scenario was for $1,500 vs $150). I’m also proud that I stayed under my initial budget of $150. I could make this appear to be a better deal if I count the mark down on the jacket from full retail, but let’s be real a) God only knows what the full retail for Ralph Lauren is, and b) who would pay full retail? Oh, and I qualified for free shipping online since the order total was over $100.

There is definitely room for improvement:

  • Higher rewards (than 2%) from the credit card used to purchase the giftcards
  • Raise potentially could have had a higher discount on the giftcards
  • Ebates potentially could have had a higher cash back rate
  • Potentially higher discount coupons from the retailer
  • The competitors to Ebates and Raise could potentially have higher rewards/discounts

There is also a few pitfalls to this framework though

  • Increased time and effort
  • Potential for giftcards to be out of stock
  • Potential to have to purchase a giftcard that costs more than the original purchase and to have to either hold that value or resell the excess at a loss
  • Potential for giftcards to only be available via physical mail, delaying the purchase
  • Going online could mean additional costs like taxes and shipping
  • Increased complexity and thus a chance for something to go wrong

As far as my review of Raise and Ebates, while I use both nearly exclusively I have had minor issues in the past. Raise, emails me discount codes (e.g. $10 off $100) and while this is good, I’ve had maybe one work on the first time of me entering it at checkout. The codes seem to expire on Raise’s system days before the expiration date listed in the email I receive. Luckily, Raise features a live chat feature and their support staff is able to correct the situation immediately. Ebates will also offer sales,coupons, increased rewards via email regularly. The issue I have with Ebates is that I need to babysit my transactions. Sometimes the retailer doesn’t report the transaction to Ebates and this requires manually entering the information along with providing a copy of the emailed receipt. Ebates support staff has been very helpful in sorting these situations out though and I have never missed an opportunity to earn cash back. As a side note, the fastest way to get paid cash back from Ebates requires a paypal account.

As always, individual experiences may vary, but hopefully you can start thinking about squeezing more savings out of your own purchases!




Finance Challenge – Week #5

Week #5 is here, nearly 1/10th of the way through the Finance Challenge! First, I apologize for letting those of you down this Saturday that were expecting a new post. I’m releasing this article on a Tuesday, since it appears that my posts seem to get the most views on Wednesdays since the challenge has started. I’m still getting used to blogging and all of the data analytics available, so this change in posting date may be subject to change. Anyway, on to what I’ve done over the last week to improve my financial situation. The last week of January and first two weeks of February are a special time in the USA. Most of us will be getting waves of tax documents during this time period, something that most of us won’t bother with until April 14th. I must confess, this has been the strategy I’ve used for the last decade. I’ve even waited until April 15th two years in a row while in college. So the change I’ve made this week (an year) is to file my taxes early. As I get ready to e-file my returns, it dawned on me that I have produced a few different benefits by filing in February versus filing in April.

Firstly, I am not a Tax Account, nor do I play one. Please consult a CPA with your tax related queries. Also, if you are self-employed, different rules will apply, versus what is described below from the employee perspective. I have; however, always filed my own taxes. My father instilled this virtue in me after my first summer job. I don’t follow the tax code updates that are released each year and thus I rely on a software based solution each year. I’ve never used a free service, since I believe you get what you pay for in the end. I do research what seems to be the best software offering each year though. I’ve consistently purchased TurboTax each past April, due to it constantly being ranked in the top slot for a ton of software reviewers. It’s not to say other products are bad, it’s just that I’ve come to trust TurboTax with each passing year. The pricing for features has definitely tempted me to consider other options though, since TurboTax in recent years has been notorious for removing more advanced features at base offerings, thus requiring users to pay up for pricier versions to use features that their situation dictates.  This isn’t  review of TurboTax though. This is a public service announcement that TurboTax is never cheap in April. The deals seem to evaporate come March. So for the past 10 years, I have paid ~$10 more than I should have, if only I would have had the foresight to start looking for the software in January. This year was different and I was able to purchase the software from during a promotion TurboTax ran until the end of January. I saved $20 this year! That only leaves me some $80 in the red.

So $20 is already a small victory that I’m proud of, but I realized another benefit of filing earlier. We all know that taxes are taken out at each paycheck. In April of the following year, when we file our taxes, we are essentially tallying our tax liability against what was gradually taken out in taxes from each and every paycheck. When you signed on with your current employer, you had to file a Form W4, which, depending on your specific situation, determines the amount of tax taken out of each paycheck. The Form will walk you through picking the right number of “allowances” which determine the amount taken from each paycheck.Your W4 is supposed to get you close to what your tax liability is at the end of the year. If the cumulative amount of taxes taken out of your paycheck is more than what your actual calculated liability is, you receive a refund. The opposite is also true, if not enough is taken out, you’ll end up having taxes due by April 15th.

Hopefully, you’re eyes haven’t glazed over yet. Taxes and Economics seems to always have that effect. If you remember, one of the goals of the Finance Challenge is to earn more money. Getting a big refund is earning more money, isn’t it? Actually, it probably is not. You’re paycheck happens gradually over the course of a year. This process has been called, “an interest free loan to the government” by many internet prognosticators. They’re definitely not wrong. This is the realization that I had, what if I had deposited that same amount of taxes into an interest bearing account over the course of one year? I’d earn the interest instead of the government. Keep in mind that come April 15th, this means you’ll be paying Uncle Sam your fair share, instead of getting that juicy refund. It’s not that bad of a proposition though, since you keep the interest. Ironically though, you will have to and pay taxes on that interest when your Form 1099-INT comes in the mail. It’s a case of something being (much) better than nothing.

In my opinion, this practice of paying the bare minimum each pay check and saving the rest to be payed by April, builds some good financial habits. You’ll have to fight the urge to spend that money that you deposit and if you don’t deposit a sizable amount all at once, you’ll have to discipline yourself to save each paycheck.

The combined cost savings for the software and what I could have earned in my Synchrony Optimizer Plus account would have netted me $50 last year (before taxes). I’ll be modifying my W4 to help me achieve this result for tax-year 2017!

While this sounds good, again, I can’t emphasize enough that I’m not a professional and your W4 should accurately reflect your situation and making changes to it is done at your own risk. There are plenty of resources online to help you walk through your W4 and how to tailor it to your situation. If you have TurboTax, you might even be able to ask their dedicated support staff.

Until next time!




Finance Challenge 2017 – Week #4

Week #4 is here! Firstly, the budgeting component for the Finance Challenge will need to be delayed for a couple of weeks. As one can imagine, it takes more than one week to test out a budget, especially since it is a monthly budget. Don’t worry though, that write up is definitely coming soon! This is a similar situation to last week, where I racked my brain to see what I could possibly do to positively impact my financial situation with minimal effort on my end. Since last week was about maximizing credit card rewards and cash back, a logical thought to have is, “where do you put the cashback?” This week I’m introducing Acorns!

Acorns is an app designed to increase the amount of money you invest each week. It does this by investing your spare change. How does it determine what spare change to invest? Well, you link your credit and debit cards to the Acorns app, along with a checking account. The app monitors the purchases made on the credit and debit cards. The app rounds of the cents of purchases to the nearest dollar, for example if you bought a $2.95 coffee, then Acorns would record a nickel, rounding the transaction up. At the end of each week, Acorns adds all the transactions up to a sum of money, which is then withdrawn from your checking account. In my experience, this tends to be around $5 to $12 each week that is invested.

In full disclosure, I have had the Acorns app since it’s launch in 2014. I’m including it in this week’s post because I have been neglecting my account for quite some time now. I only have one credit card linked to it, despite having several others that get more use. I now have nearly all of my credit cards linked and changed my checking account to one I use more frequently. I did have an issue trying to link my Capital One and Fidelity credit cards that I will follow back up on after reaching out to the Acorns support team. I would advise against linking the Acorns app to withdraw from a savings account, as discussed in week #2, savings accounts are limited to six withdrawals per month and with four weeks in a month, that’s four of the six allowed.

The money deposited with Acorns is invested in a portfolio of Exchange Traded Funds (ETFs). This is also called a robo-advisor. When you set your account up with Acorns, you’ll need to decide on your investment goals (what the money is for and when do you need it) and whether you are willing to take on high (aggressive), medium (mild), or low (conservative) risk to meet those goals. Acorns does all of the investing for you, so there’s no need to pick individual securities. The robo-advisor technology also re-balances the portfolio back to it’s target allocations of each security you are invested in that is in line with the answers you provided about your risk appetite during account opening. Keep in mind that investments are not FDIC insured and can lose value.

The market has been roaring for the last couple of months. In fact, the Dow Jones Industrial Average just hit an all time record high price of 20,068.51 on January 25th, 2017. To put that in perspective, one year to the date prior, it was 15,5885.22, which is a really tremendous rally. My fellow millennials that will actually chat about investing with me are even more discouraged to invest now, since most fear that a market crash is a certainty. No one wants to invest right at the very top. Unfortunately, no one knows where to top actually is though. I like the Acorns app because it teaches and automates some basic investing fundamentals with very little money at risk. Firstly, the old saying goes, “the best time to plant a tree was 20 years ago, the next best time is now.” The point being that the best time to start is now. Start small and build up gradually, especially if you are skeptical or unsure. It is wise to be cautious of the market, but it’s not wise to be paralyzed with fear. Other than getting comfortable with putting real money at risk for investment profit, Acorns also teaches and automates the process of dollar-cost averaging. In short, this concept constantly puts cash to work by investing no matter what the cost of the instrument, or what the market is doing. That means investing a fixed amount (or very close to fixed) and buying a share of stock when it is priced at $10 or $100, it just means that more shares are purchased at $10 than at $100. This is the coolest part about dollar-cost averaging, in the long run it usually produces the lowest average price paid for your position in an investment. If you’re interested I highly check out the results from a google search of “Dollar-cost Averaging Harmonic Mean.”

On a final note, let’s talk about fees. The good news is that students can use Acorns for free. Hopefully, that will encourage younger people to invest earlier on, (I certainly wish I had started when I was in college). Everyone else will be charged, $1 per month to use the service. Eventually, when you’ve accumulated $5,000 in your Acorns account, you will be switched from the $1 per month fee schedule to a 0.25% fee on the balance of the account. This is the only part of Acorns that I am sour on; until the $5,000 level is reached the $1 per month fee is a large drag on portfolio growth.

Speaking directly to the non-students, the $1 fee can have a very large impact on the growth of your portfolio.Referring back to the $2.95 coffee example a few paragraphs up, the round up amount is only a nickel ($0.05). If that was the only transaction during that month, you’re technically in the red by $0.95, once the service fee is charged. A higher number of transactions each month would likely produce more round-ups that would sum to an amount greater than $1, but even if you had 100 transactions and each ended in $0.99 (like $4.99, $10.99, etc) that is still only $1 in round-ups, which would then be wiped out by the fee. In reality, both of these scenarios are very unlikely, but they do exist. To match the same fee 0.25% fee that $5,000 accounts are charged would require $400 in round ups invested per month. As I stated above, I averaged about $5 to $12 per month in round-ups that were deposited. That works out to be about 20%-8% fee for a robo-advisor. Unfortunately, there are cheaper robo-advisors out there.

Acorns does allow users to round-up the change of a transaction plus a whole dollar amount, e.g. if set to a whole dollar round up of $1, the coffee example would actually deposit $1.05 (3.00-2.95=0.05, +1.00=$1.05). This may help to minimize the negative effects of the $1 fee on growth, but this will not make the fee or it’s impact go away completely.

In conclusion, Acorns is great for students since the $1 per month fee is waived. At the $400 per month in round-up deposits level, it is on par in cost with competitors like Betterment and Wealthfront, without the minimum balances that these competitors charge. The performance of the actual portfolio was intentionally left out of this post since my crystal ball is no better than anyone else’s at making predictions. Acorns allows us to start investing now and to start investing small, but not without some fees. Besides, what would you have done with that change at the end of the month anyway? Putting it to work is probably a better option than any alternative.

If I haven’t scared you away and you’d like to learn more, you can click the link here for Acorns.

Remember, investments are not FDIC insured and may lose value. Investing involves risk and investments may lose value. Please consider your objectives and Acorns fees before investing. Past performance does not guarantee future results. Investment outcomes and projections are hypothetical in nature.




Finance Challenge 2017 – Week #3

Week #3 is here! Last week I hinted that I would be creating a budget for this week. Unfortunately, I didn’t have sufficient time to test more than one product and in essence more than one strategy at budgeting. I tried to rack my brain for something “quick” that I could use for the challenge. I looked at what I was doing regardless of being on the challenge or not, and the idea of purchasing things really stood out. Think about it, whether this blog benefits you or not, you will still go out and buy things, even if it is just to merely survive another week. How can you save money on the purchases you have to make? Enter credit cards.

According to a recent Market Watch article, debit cards are used twice as often as credit cards here in the USA. What’s great about using a debit card instead of credit card, is that if you don’t have the money, you can’t make the purchase. With a credit card, obviously, you can take on debt and finance a purchase, which might not be necessary.  If you remember from my week #1 post, I mentioned Dave Ramsey and how I don’t always agree with him; credit cards are an issue where we part in thinking. Dave would have everyone buy everything in cash if possible, but a debit card is just as widely accepted. The issue is that credit cards offer a rebate to the purchases you make on them. If you had to buy a new set of boots to get through this winter for $100, you would pay $100 with a debit card. If you made the same purchase with a flat 2% cash back credit card, you would still pay $100, but you would get a whopping $2.00 back, effectively making the purchase $98.00. Imagine for a minute if every purchase you made, even most bills, cost you 2% less, how much could that save you at the end of the year? I can see why debit cards are popular though, because credit cards do have a hellish down side.

Credit cards charge interest that is well beyond the rewards or cashback received. An interest rate of 25% is very common. Make no mistake, if you fail to pay your statement balance each and every time you get your bill, that interest rate charge will wipe out any cost savings and make you regret that purchase, possibly for the rest of your life. The thing to notice though, is that if you do pay your balance off in full each and every month without exception the benefit is two fold. First, you earn rewards or cash back, and second you are getting a short-term interest free loan. The loan component is pretty neat, because it means that the money in your interest earning checking or savings account (like what was mentioned last week) will earn interest, until it leaves your account to pay your bill.

The main argument for debit cards over credit cards is usually the ease of over spending money. I’m not a psychologist, nor do I play one on the internet, but through my anecdotal research it appears that humans will make an unaffordable purchase more frequently with a credit card. But overspending isn’t limited to just credit cards, it is just as easy to spend money with the swipe of a debit card. The difference is knowing what you can and cannot spend each and every time you make a purchase, especially because a credit card will delay the monetary impact until a later date (i.e. your bill at the end of the month) versus a debit card where the impact is within a business day or two. And that ties us back into why having  a budget is so important.

So while I am fiddling with a budget, monitoring what exactly can and cannot be spent, I’m also trying to save money or earn more money. What I decided on for week #3 was to maximize my credit card rewards and cash back. This was made unbelievably easy with an app called, Wallaby.

The Wallaby app has a lot of features, but I only use one. It allows you to pick the credit cards you have and it lists off which card to use when making a purchase. As an example, I have the Discover It card, which rotates through categories earn 5% cashback. During Q1 2017 it earns that bonus cashback rate at “Gas Stations, Ground Transportation, and Wholesale Clubs.” Anything outside of those categories, it only earns 1% cashback. If I go to a supermarket and make a purchase, using the Discover It card may not be the best choice if I want to maximize rewards. I can use the Wallaby app and see which card would be the best to use in this situation.


My goal is to always you the card that will have the highest cash back percentage. I haven’t run any hard figures yet, but saving an average of 2% per transaction for an entire year should at the very least help keep up with the pace of prices increasing for things I buy (see: inflation).

As a word of caution, the reviews for the Wallaby app have been turning negative lately with a lot of the features being packed into the app not working correctly. I haven’t run into any of those issues, because I only use this one feature. I also haven’t given up any of my personal credit card details as I try to keep that information off of third-party servers as much as possible.

As a final reminder, use credit responsibly or not at all. I don’t accept any responsibility for your credit usage.

Until next week!





Finance Challenge 2017 – Week #2

Week two is here! On a similar note as last week, I’ve opened another savings account with Synchrony Bank. The rate for the savings account is higher than the average at 1.05%. Unlike the Netspend account I talked about last week, this account does not have a limit on how much I can have deposited. While just opening an account isn’t exactly noteworthy, I have an unorthodox plan for this account. I plan to have my direct deposit sent here, instead of my checking account. I’m going to test the theory that I can earn interest on the idle cash between deposits and bill payments (like rent). If I can have my $1,000 of rent money sit in an account earning 1.05% for the majority of the month, versus 0.01% in a checking account, I should be able to accumulate an additional $10.50 a year. A small victory, but a victory nonetheless! This should be doable, considering that most banks calculate your accumulated interest based on a monthly average balance (e.g. the longer the money for bills sits idle in the account, the better). The only concern that I have with this experiment, is that federal law only allows 6 withdrawals from a savings account per month. This is definitely a problem if each bill is paid individually, since it’s very likely to have more than six bills each month.That leads to another interesting part of this experiment though. If I can only access money six times a month, is there a chance that I will not be tempted to spend the money? I’m very interested to find out!

Some other useful information:

  • Synchrony was formerly GE Capital (General Electric).
  • There’s no minimum balance requirement or monthly service fee.
  • The website is easy to use, but in all honesty it looks a little dated.

This account was found just like the Netspend account from the last post, a quick Google search. There are other HYSAs at the 1.05% rate, but I chose Synchrony for their high reviews on and the fact that I have a credit card with them as well.

The account can be found here. If you’d like to see other options, Bankrate has compiled a pretty comprehensive list here and you can see how the account stacks up against nation wide competition.

Finally, just like with Netspend make sure to thoroughly check the FDIC insurance and fee schedule before, just in case the information provided here is no longer relevant.Also, don’t forget the six withdrawal limit.

Now that I have this account in place, a budget will be more critical than ever. That sounds like a great place to start for week three!

Until next time!

UPDATE: Ensure that your brick and mortar bank originally used for Direct Deposit, does not charge any fees! Most checking accounts now appear to have a maintenance fee that is typically waived by direct deposits during the statement period. Switching to the Savings Account, may eliminate the fee waiver and consequently charge a fee to the checking account. I will be reviewing which accounts do not charge these fees in a future post.