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!



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s