Wednesday, July 18, 2007

Deals with the devil.

There's a big difference between making cookies and buying cookies.

For one, the first is a helluva lot more fun to do. Right now Katie is licking the spatula clean - and for good reason. The batch she just whipped up can't be beat. After a tough day at work, baking is a great way to take your mind off things. You lose some of yourself in the creation, and that's a good thing.

But also, in the end you save a bit of money. The cost of a bunch of sugar, flour, eggs, and chocolate chips is cheaper than going out and buying a pack of Oreos or Chips Ahoy. Plus, the homemade variety taste better. Straight out of the bowl, even.

It's thoughts like these that are helping me come to grips with the horrors of living in middle class America. Every little bit helps. Example: ING's and WaMu's free checking (check out the fun web site!) and higher-yield savings accounts. Or Citi's $100-bonus "ultimate" savings account.

In my quest for financial peace, there's a certain amount of glee that comes with pilfering $100 from some megabank. Working at a credit union builds enough animosity toward the big Bs, but giant corporations in general give me the willies. So it's with great pleasure that I will gladly take a 5% interest rate and a Ben Franklin for doing nothing more than depositing $1 to start the account.

According to the Dave Ramsey plan, your first step is to build up a $1,000 emergency fund. When Murphy's Law strikes, he says, it's good to have a grand for those just-in-cases - and it's a preventative method to stop using your credit card for things like car repairs or doctor's bills, should they strike.

Then, after you've built up your emergency fund, you tackle your debts with ferocity. Instead of saving any extra money, you use your funds to get rid of debt. After THAT, you go back to your emergency fund and save for three to six months of expenses (for things like car accidents or job loss - you know, real emergencies).

I've been looking for a good, non-CD, non-money market account to store my baby emergency fund. Well, at a 4.5-5% interest rate, I can't find a good reason not to take advantage of some of these internet savings accounts, even though they're with banks. My measly .5% rate at American 1 just can't compete.

But then I find that Citi will pay you $100 - no strings attached - to open one of their high-yield accounts. Sold. There are few better ways to earn a quick $100. The only stairs to climb are a signature you have to mail in, a 90-day waiting period for the deposit to hit, and a few personal questions about your financial life.

I have my emergency fund set, but an extra $100 added to that keeps Mr. Murphy at bay, in my mind.

These new internet savings accounts are a fairly recent phenomenon. A few months back I recieved a mailing from ING (which has really cool company colors) about their checking account that offers a 4% interest rate. Now, if you know much about checking accounts, you know they don't typically offer any sort of dividend. ING can afford to do such a thing because everything's done online. You can offer bigger incentives when you don't have tellers working in brick-and-mortar branches. No doubt they make up some of the cost from investments and fees on some of their other account. The idea is to get customers in the virtual door, and boy is it working.

Hey, they got me.

Now credit unions are trying to figure out a way to compete (by, say, requiring direct deposit, e-statements, a debit card - all either save or earn money for CUs), but I say don't bother. Something tells me these interest rates can't last forever. Maybe it's a fad. Maybe it'll all go away when the big banks get the customer penetration (pun intended) they want.

Little things along the way have boosted my financial confidence. I've waved goodbye to my 19%-interest-rate Bank of American Visa and hello to a 0% Chase card that will let me tackle my debt barrier-free. I've paid off three other credit card, and one is about to bite the dust in the months to come. I'm making money on eBay. I've got overtime at work. And I've got a written budget that I'm actually using and following.

I remember money used to be a big stress point for me back in college. It seemed my money always had control of me, not the other way around. Not any more.

The discipline I've discovered in my new workout routine has sprung up in other areas, but education and a bit of research helps.

Maybe deals with devils aren't so bad after all.

1 comment:

Andrew said...

The owner of ING Direct actually came to speak at Adrian while I was there. His big motto was that you can be a more competive bank if you don't have things like printed statements. In fact, he went so far as to say that if certain customers were asking too much of ING Direct, he would fire them, saying they weren't a good fit. One of the ING Direct buildings is right up the street from a bookstore I work at. There's no tellers there, but you can buy some coffee, or a bicycle.