Eric's Money Talk.

[ercarta]

You know. I don't know squat about how to make my money work for me. Right now I'm receiving about 1/5 of 1% annual yield with Bank of America. :( Pretty pitiful huh?

In any event, I know that you know that I know that there are some people reading this board that can tell me how to earn more moolah shmoolah on my hard earned American pesos.

So don't hold back ladies & gentlemen. Let the info just roll...

Question:
How does one earn the very best interest on the dollar in today's complex financial enmeshment?

[Matt]

I keep only about $200 in checking. All other cash is in ING Direct, which currently pays 2.25%. After my paychecks are direct deposited into checking, anything I don't need immediately is transferred over to ING. Whenever any bills are coming up, the money is transferred from ING back to my checking account a couple days before the bill is paid. By keeping as little as possible in checking, I squeeze a bit extra out of ING's much better rate.

I also purchase everything on credit cards (well, except for a few things like rent that won't take credit cards). My credit card pays 1% cash back. This doesn't sound like much, but it adds up. I'm also going to school, which costs quite a bit. It all goes on the credit card and really makes the cash back build up. I also buy a lot of stuff from Amazon, and they offer a credit card that gives 3% of your purchase value back to you as gift certificates.

Buying on credit card also also means I know every withdrawl from my checking account at least several weeks in advance. This makes it easy to keep the balance minimal, as described in the first paragraph. I only need a slight bit of wiggle room to account for variances in electric bills and in ATM withdrawls.

For long term savings, buy some stocks or at the very least a mutual fund.

The Motley Fool (http://www.fool.com/) is a great place for advice... They are also where I got the 1% cash back credit card.

Finally, a program like Microsoft Money is very useful to track things. I don't know how people live without this sort of thing. One of the most interesting features is it trends my purchases and uses that to forecast account balances into the future. Assuming I don't make any major changes to my purchase habits, I can tell you (within a few percent accuracy) how much money will be in each of my accounts months into the future. When a paycheck comes, I can look into the future and see that I need to transfer only XXXX dollars of that paycheck into ING savings in order to maintain my $200 minimum at the low point 2 weeks into the future.

[ercarta]

Matt,

You know that's funny. Is that like a guy thing? I pinch my checking account too, and I'm not just saying that for the sake of saying it.

I used an Excel spreadsheet to organize every aspect of the ins and outs of my money and realized the amount I needed to keep in my checking account was so trivial that I set up automated recurring transfers right into other accounts. I also keep about 2 hundred at a time in this account.

So my direct deposit authorization hits my account on Friday and the recurring transfers get pulled on Saturday. The only difference is that I don't shift the money back and forth. I have a separate account for monthly bills and again, I used a spreadsheet to determine how much needs to be fed into this account by the end of the month to pay bills w/ some slack left for bills that fluctuate.

So here what is boils down to...

Primary Checking - Floating $200 and gets direct deposit. All recurring transfers leave from this account.

Monthly Bills Checking - Receives recurring deposits for monthly bills from Primary CK. Checks are written from here.

Basic Savings - Receives recurring deposits from Primary CK. 13% Gross Income

I was able to determine the 13% savings commitment using Excel. I created all these formulas all over a spreadsheet and that's all that seemed reasonable to allocate, so I stash it. Trouble is that all I get for it is 1/5 of 1% in interest. That's a disgrace. :o

I've been streamlining trying to give myself a raise in my savings percentage but I figure if I was getting a better rate then I wouldn't have to work so hard at it. It's just so hard to make these accounts grow, man.

BTW, I get some good financial info off www.bankrate.com

[Matt]

Yeah, bankrate.com is where I found ING. I was going to open a money market account and looked around at bankrate, but found that ING's savings account was comperable to money market rates, so I went with that.

Oh, and to stretch things out and keep the money in savings as long as possible, the credit card bills are paid only a day or two before the bill is due. So, if I buy something on October 1, the bill comes on Nov 1 and isn't due until Nov 20, so I pay on Nov 18. Gotta sqeeze every penny out of the measly interest. :)

[downtown]

i remember when i opened an ING account if someone refers you to ING, he gets $25 and you get $25 for opening an account...free money....

[ercarta]

If that was the case why not just open a money market account. You get the same interest, you can pay your bills earlier, and you have the liberty of sending checks out of a money market. Right?

I think you just gave me an idea. I should make money on my Monthly Bills checking account also. I may just convert that into a money market account.



Yeah, bankrate.com is where I found ING. I was going to open a money market account and looked around at bankrate, but found that ING's savings account was comperable to money market rates, so I went with that.

Oh, and to stretch things out and keep the money in savings as long as possible, the credit card bills are paid only a day or two before the bill is due. So, if I buy something on October 1, the bill comes on Nov 1 and isn't due until Nov 20, so I pay on Nov 18. Gotta sqeeze every penny out of the measly interest. :)

[ercarta]

So is ING's 2.25% interest the best percentage people like us can earn on our money. I was hoping for something closer to 10%. How do people earn this type of interest, I've heard of it done. I'm just not sure how. :confused:

[coveman]

ING is the best safe liquid rate out there. Obviously, CDs (which ING offers as well) have higher rates, but they're not liquid. Mutual and bond funds have higher returns, but less liquidity (and especially with mutual funds) higher risk. You might be able to get higher interest on bigger dollar value deposits, but that's REALLY big numbers.

[ercarta]

What do you mean when you refer to liquid and liquidity? :confused:

[coveman]

Your ability to transfer money in account into readily available cash. With a CD, your money is "locked up" for a period of time, and you can't touch it unless you pay a penalty fee. With mutual funds, you're free to buy or sell at any time, but you have to accept the consequences of doing so, both from a profit/loss standpoint and from a tax standpoint--it also takes time to sell stocks and bonds on the market.

[wishiwas]

I keep next to nothing in my checking account too. So it's not a guy thing at all.

My advice: Join a credit union. The interest rates at my credit union are rather attractive.

[ercarta]

So what are the rates & what's the credit union? We are in search of a rate better than 2.25% annual yeild. Whatcha got? ;)



My advice: Join a credit union. The interest rates at my credit union are rather attractive.

[ercarta]

A buddy of mine just took out an equity line of credit against his house. We were talking and he said that he did it to have some extra money to "play" with.

That sounded suicidal to me. Does anyone know how exactly an equity line of credit works? Is it what is sounds like? What are the benefits over a standard home equity loan?

[ercarta]

To anyone who can answer,

How do dividend cards pay you back? Do they send you a check in the mail at the end of the year or do they credit your account?

Are there any fees to have these cards?

[sanity]

A lot of cards give you an option of a credit or a check. However, most cards only pay you once you hit some arbitrary amount, which can be annoying if that amount is rather high... and you're only getting 1%.

There are a lot of cards without fees.

[ercarta]

Really? So if you don't spend that minimum amount than you never get the reimbursement? Ill, I'm not sure I like the way that sounds.

Now assuming you do spend the given amount, do you get your credit at the end of each billing cycle or once annually?


A lot of cards give you an option of a credit or a check. However, most cards only pay you once you hit some arbitrary amount, which can be annoying if that amount is rather high... and you're only getting 1%.

There are a lot of cards without fees.

[Matt]

I have two different cards with cash back, plus some other methods too.

The first is from fool.com and gives 1% cash back. There's no minimum, and off the top of my head I don't believe there's a maximum either. They send a check once a year.

The second card is from USAA, and is giving 1.5% cash back until Dec 31st as part of a promotion. They give me credit right in my statement every month for 1.5% of the charges on that statement. Again no minimums.

I also have an Amazon.com card, which gives 3% back from Amazon purchases as gift Amazon certificates. After every $833 (roughly) spent, they mail me a gift certificate for $25.

Also of similar use, www.fatwallet.com will give cash back for many online sites. They send you money to your paypal account when you request it, and I believe have a minimum withdrawl of $25. The nice thing about this is I get fatwallet cash back AND credit card cash back. :)

[sanity]

Really? So if you don't spend that minimum amount than you never get the reimbursement? Ill, I'm not sure I like the way that sounds.

Now assuming you do spend the given amount, do you get your credit at the end of each billing cycle or once annually?

Their rationale for the minimum amout is actually to reduce hassle. Say the minimum amount was 100. The card will send you a check for 100 whenever your reimbursement total hits 100. The transaction might be the next day, or the next billing cycle.

The problem is that waiting around for the 100 at whatever rate might get annoying.

It's always important to check the fine print for such things.

[bonacera]

I love the Discover cashback program. It pays you upto 2% if you have a platinum card. Also, you get to choose how to get your cash back.. You can ask them to send you a check, to credit to your account, to donate to cherity, or to send you a gift certificate.

I love the gift certificate option a lot because they will double the cash back amount for you. Let's say you have $120 cash-back balance, and you want to buy a digital camera from Sharper image. You ask Discover cards to send you a sharper image gift certificate in the amount of $120; then they will send you $240 worth of gift certificate. These gift certificate can be used with other gift certificate, can be used in any Sharper image. This is how I purchased a digital camera from the Sharper image. :)

[Katie_Scarlett]

[QUOTE=bonacera]

I love the gift certificate option a lot because they will double the cash back amount for you. Let's say you have $120 cash-back balance, and you want to buy a digital camera from Sharper image. [QUOTE]

So what you're saying is, you spent $6K on a digital camera?

I'm obviously joking. I think cashback is great, I have discover too. I wish more places accepted discover.

[ercarta]

I am loving all this cash back talk. Until this dicussion, I didn't even know that you can do that. I have a SonyCard by BankOne that gives me points towards things in their catalog. I use it to get free movie tickets, but that is nothing in comparison to all the money back that you guys are getting. :)

[ercarta]

So far what we've gathered is that Money Market accounts are the way to go if you want to earn higher interest (2.25%) than a current savings account.

Also, that signing up for the right credit card can put money or credit back in your pocket from your own regular purchases.

Can we find any more money that we can pocket, anyone? :D

[ercarta]

GMAC Bank is offering 2.31% APY on a Money Market. That is highest I've seen yet. That beats ING's 2.25% offer.

Here is the link, click on interest yields to review the current rates....
http://www.gmacbank.com/savings.do ;)

[bonacera]

GMAC Bank is offering 2.31% APY on a Money Market. That is highest I've seen yet. That beats ING's 2.25% offer.

Here is the link, click on interest yields to review the current rates....
http://www.gmacbank.com/savings.do ;)

Wooo!!! Sweet!!! I want to change the bank right now!!! Is there a branch in Manhattan? I've found a branch in DE so far..

[ercarta]

I've seen a GMAC Bank branch right on Newark Ave in Jersey City. I don't know the cross st. however.


Wooo!!! Sweet!!! I want to change the bank right now!!! Is there a branch in Manhattan? I've found a branch in DE so far..

[Juli B.]

Ercarta--

If you shop at all online, check out ebates.com first. They have a bunch of stores that participate in a cash-back discount. For example, I shop a lot at B&N online, so I get onto their site thru Ebates in order to get a 4 percent cash-back discount.

If you do sign up for Ebates, don't forget to tell them that Juliann Barbato sent you! :D

[PHXguy]

Valley National Bank at Liberty Towers offers 2.5% for money market. Plus they have grand opening goodies for opening new account. :p

[ercarta]

Does anyone know how the bank handles the money in a Money Market account? Is you money guaranteed or is there a risk of losing money? It sounds like the bank puts your money out on the market but I don't know how this effects the account holder. The accounts are FDIC insured but that is against theft, what about risk? Is there any risk?

[Juli B.]

My bank--North Fork, near the mall entrance--was hyping a 2.5% interest-bearing checking account. Check the fine print first, though!

[ercarta]

I think these interest checking accounts offer these rates for an introductory period then taper the rate back down to nil. I had a similar deal w/ Etrade Bank and in no time I was under 1%.

I've spoken to quite a few people on this interest matter and what seems to be rule of thumb is... if you want to borrow then borrow from a large bank and if you want to save w/ higher interest long term then private banks may be the way to go. Does anyone agree or disagree? :D

[ercarta]

Did you know that you can buy bonds right from your living room and earn up to 3.67% via US Treasury certificates?

Log on to Treasury Direct and read about I-Bonds & EE Bonds...

Treasury Direct
http://treasurydirect.gov/indiv/indiv.htm

Sounds like a great opportunity to stash some money away and earn decent interest on it. :D

[ejm]

You may want to try emigrantdirect.com for a good savings account

3% , no fees, no minimum balance, backed by a 150 year old bank. transfers are ACH and quick.

[ercarta]

Did you know that on average you get taxed 20% on money earned in a standard money market savings account? Gosh, that really blows! As if the rates aren't low enough the government still dips into the little earnings that we yeild. :confused: