Friday, November 11, 2005

How I got $160 FREE - part 2

So, I received $125 from Bank of America for opening a new checking and savings account. Where did I get the remaining $35? ING.

I've had an ING savings account for about a year, but I didn't notice that ING offered referral bonus' until I read this at My MoneyBlog.

The article linked above is great information for anyone thinking about opening an online high-yield savings account. Instead of trying to remember what is offered at each bank, Jonathan lays it all out for you in one place. Thank you, Jonathan!

Anyway, back to my free $35. When I was investigating what was required for the referral bonus at ING, I read - in the small print at the bottom of the page - that ING accepts joint accounts for their referrals as long as the primary account holder is a new customer.

This meant that I could open another account myself and receive both the referrer's bonus and the referred's bonus, as long as the primary onwer of the account was a new customer.

So, I opened a new account with my partner's name as primary owner and my name as joint owner, and we received the $25 for the new customer account and the $10 for the referral. $35 Free! Easy as pie!

If you are interested in opening a new ING savings account (currently 3.5% apy) and receiving a free $25 bonus, please contact me with your first and last name and email address. You could open an account in your name and receive the $25 bonus with this referral, then open a second account with your partner/spouse/friend as new customer and you as joint owner and receive another $35 Free. Potential of $60 in FREE money just for opening a great savings account earning interest far above what local banks offer!

How I got $160 FREE - part 1

I mentioned in the Debt Snowball Article that I had found some easy ways to make $160 (that I used to pay down my credit card balance). Here's how I did it.

The banks in my area are in a competition war. Well, it seems like a war, because every day something else arrives in the mail to tempt you to change banks. So far, the local county bank has offered to give away free digital cameras, free cordless screwdriver sets, and free online billpay. They also offer to buy your left over checks and debit cards from other banks (up to $25).

I was seriously considering changing to this bank, even though it was going to be a hassle. Having to order new checks, change direct deposit destination (which can take up to 3 weeks), and leaving a good relationship with the local credit union wasn't my idea of fun, but it was beginning to look like a good deal.

As much as I like the credit union, I can't say much for their website or their hours, and the branches were a bit inconvenient to get to. I also wanted the billpay feature that the county bank was offering free. There was a $4.95 a month charge for online billpay at the credit union.

So, I was nearly convinced to change banks for the convenience of better banking hours, free online billpay, and a free screwdriver set when I received a promotional offer from Bank of America in the mail.

Bank of America was offering $100 for opening a checking account and $25 for opening a savings account. Now this was a deal! My eyeballs bulged as I read the fine print searching for restrictions or bait and switch tricks. There didn't seem to be any, but I'm suspicious of banks giving away free money, so I went to their website to sleuth out any fees or catches.

Aha! they do have fees, and none of the banks in this area have fees anymore. This wasn't looking too good until I saw that there were ways to avoid the fees. Monthly direct deposit (which we use anyway) waived the fee for the checking account and a monthly transfer to savings (or a balance of $300) waived the fee for the savings account.

Now I can't say that Bank of America has much better hours than the credit union, but they are open on Saturday for half a day, and they do offer free online billpay plus a very good website. So, I would be getting most of what I wanted plus $125. I can't turn down free money, so we now have new accounts with Bank of America and we're $125 richer!

Bank of America has a referral program in which both the referrer and the referred receive $25 if a new account is opened on a referral. If you are interested in opening a new account with Bank of America and want $25 free please contact me with your name and email address.

Wednesday, November 09, 2005

Debt Snowball ... You want me to do What?!

Here's my dilemma. We had some money saved, about $6000, and I knew from reading Dave Ramsey's Total Money Makeover that all but $1000 should go to our credit card debt ... but I just couldn't bring myself to do it!

I knew that we were upside down financially. I knew that we were paying much more in interest to the credit card company than we were receiving in interest from the credit union savings account, but I had an emotional/psychological block to sending most of that money to the credit card company.

That money was our safety buffer. It wasn't just money for emergencies, it was an emotional safety net. It felt like much more than it actually was. Intellectually, I knew it was just money for emergencies, but emotionally, it felt like Freedom, Safety, and Security.

Dave Ramsey's concept of debt reduction made sense to me. (Loosely paraphrased)

Put your debts in order of smallest to largest. Pay the minimums on every debt except the smallest. Pay every spare penny, excluding $1000 for an emergency fund (which meant $5000 of the $6000 we had saved) toward the smallest debt. Once that was paid off, take the payment from that one (plus every spare penny) and add it to the next smallest debt. And so on...
(end of paraphrase)

The 'Debt Snowball' was fast, effective, and designed to quickly put you back on the right track financially. It had a built-in psychological reward. Paying off the smallest debt first was quickly done, in most cases, and sure to reward you emotionally. But my emotional security zone was sending up red flags when I just thought of sending that money to the credit card company.

The emotional part of me was saying things like, "I know our debt has to be paid, but once that money is gone, it's gone. It'll take forever for us to save that much again!"

Well, I stewed about it, talked about it with my partner, searched the internet for help, and read everything I could find to help me get past the emotion of doing what was probably the right thing to do, financially. But I just couldn't.

So, what did I do? I found some easy ways to make $160 (more on how I did that here) and sent it, along with $550 of that $6000, to the credit card company.

Yeah, I cheated on the Snowball Debt reduction plan. I only took 9% of a baby step (Dave Ramsey's Baby Steps), but I am knocking out my credit card debt and keeping my emotional safety net all at the same time. No Regrets and Contentment with my decisions ... are my first priorities.

David Bach: Hype or Bait and Switch?!

I'm reading David Bach's The Automatic Millionaire. I think this book is a fun and easy read, and although I'm only about half-way through it, I had to stop and blog because I also think it's sneaky and closer to what I would call a bait and switch than it should be.

Let me explain.

The Automatic Millionaire does a really good job at pumping you up. It shows you ways to find those bits of money you are wasting and makes you feel like you can really save! This book gets you motivated and excited about 'paying yourself first', and then tells you how to save those bits of money tax-free so that you can watch it grow into a million dollars with compound interest.

Sounds great doesn't it!

OK so he's got you. That's the bait part. He has you baited on the hook ready to dive into the water and save all those bits of money tax free. Then comes the switch part of this hyped up book ... you are saving for your retirement and can't touch that money until you're 65.

NEW FLASH: The only way to save tax free is to save in a government sanctioned retirement account.

So, what's wrong with that? Well, nothings wrong with saving for retirement, but if our debt and savings problems were only about having money for retirement, don't you think people would have already been contributing to a retirement account.

Problems with debt and lack of savings are so widespread because, in most cases, people are trying to appear wealthier than they really are ... not because they just haven't thought about how much money that $3.50 daily latte can grow into if it's saved tax-free in a retirement account.

I mean, cmon, people know they need to save for retirement. But that isn't the problem (and saving for retirement isn't what was on your mind when you bought this book either).

The real problem is that people are so inundated with marketing messages that tell them they must appear as though they are affluent ... even if they aren't ... that they feel shameful, poor, and pitiful if they don't spend the money to keep up with everyone else. So they spend and spend and when their money is gone they charge and charge. Making their lives miserable with no relief in sight.

Bach does mention that many people who appear wealthy are really in debt up to their eyeballs, but he slides past this pretty quickly and goes on with his hype about how you can be a millionaire no matter how much money you are making. And you don't even need a budget to do it (more on this later).

I assume he will go on to tell you how to become debt-free, and pay off your mortgage, and save for a rainy day ... but where will you find the money for that? Since, according to Bach, budgets don't work, and you've already used all your latte and cigarette money to fund your retirement, where will the money come from?

Don't bother trying to explain (or even think) that you just can't find anymore money to save, because as Bach writes in reply to just such an assertion, "Oh, come on. Hit yourself in the head (gently) and just keep reading. What you're saying is just not true."

My point in this blog is that David Bach sells hype and misleads people with The Automatic Millionaire. He makes you think that by following his ideas, you make your life better today, and that just ain't so.

Tuesday, November 08, 2005

I don't want to be a Millionaire.

OK, I wouldn't mind being a millionaire, but that's not my goal. This is the point of my blog. Goals must be realistic or they will not be achieved.

How many times have you read or heard something that got you so excited and motivated that you quickly scribbled out a lofty plan and set right to work on changing your financial life ... only to realize a few weeks or months later that not only have you not reached your goal, but now you are so discouraged that you give up completely?

I think this happens fairly often, and I believe it occurs because we set our sights too high.

I know, I know. I've heard it too. "Think bigger!" "The sky is the limit." "Keep your dreams alive!" "The Universe is Abundant and you can have everything you want!"

Well, all those motivating phrases may be true, but I've found that I do much better reaching my financial goals by keeping my feet on the ground and my head out of the clouds.

Now, don't get me wrong. I enjoy reading books, websites, and articles that encourage me and lift my spirits. These are wonderful resources and I wouldn't have gotten as far as I have without them.

But, sometimes, I get discouraged when I read that the Smiths have a combined net income of $84,300 a year. Based on most of the examples used in these resources, one might get the impression that there is no hope for someone who makes under $50,000 a year.

I mean, if someone making that kind of money is having trouble paying off credit card debt and can't save money, what sort of head-way can I make when I bring home less than $25,000 a year.

At least that's what I used to think. But not anymore.

Since I've made my goals more realistic, based on my income (not some income I think I should be making) and decided on a plan to reach those goals, I see real progress.