“I have a money market that I opened online 1 year ago with $1. One year later, it still has $1 because guess I don’t know that I fully understand what a money market does for me, not to mention I forgot about it. Could you help me understand this?” – Monica
Money market deposit accounts are a lot like your run-of-the-mill savings accounts. Both will help you accumulate money in a safe, FDIC-insured (up to $250,000 per depositor) place. But there are some differences as well:
- MMAs historically have paid more interest on deposits. I say “historically” because – especially today – there’s no hard and fast rule. According to bankrate.com, right now the highest-yielding MMA is paying 1.45% annually, while the highest-yielding savings account is paying 1.50%. More…
“I am just getting started with working full time. My job offers a pension which is automatically taken out of my check. My job also offers a supplemental retirement plan. I currently have no savings. I am going to contribute to a supplemental retirement plan AND I would also like to start saving for a 6 months emergency fund, hopefully, with ING Direct. Should I contribute more to my retirement plan or a 6 months emergency account?” – A. Santos
This is a perfect question because it shows that you are thinking in exactly the right way! The answer is that your emergency savings comes before the supplemental retirement plan. Figure out how much that emergency nut has to be (six months worth of living expenses — i.e. money you’d need to sustain you if you lost your job not the amount of money you choose to spend every month), More…
Piggy banks have been around for not just years, but centuries. The term began as a reference to regular old jars, made out of a type of clay called pygg, that people used to save their pennies.
Today, you can find piggy banks in all shapes and sizes, made of ceramic, metal, porcelain, plastic – you name it. Some even have an electronic or battery feature that will count your coins as you insert them, tallying up your total so you know how much you’ve saved toward your goal.
Still, it’s clearly not the most effective way to save. Not only is it too easy to access your cash, it’s also too easy to spend your bills before they ever make it in the slot. Then there’s the little issue of interest – if you’re not earning some return on your money, you’re actually losing cash to inflation.
These days tools that will help you save automatically, and programs that speed your progress. Many are focused on saving for college, but others are multi-purpose. Here’s a run-down of the ones I’m liking right now:
Upromise is one of many programs that works by depositing money in your college savings plan when you shop at certain retailers or buy certain products. You register your credit or debit card with the company, and then they track your usage, giving you a small kickback when you make a qualifying purchase. Does that mean you should buy a new couch so you’ll get the cash back for college? No. But if you need – and can afford – a new couch, and you have a choice between a retailer that works with Upromise and one that doesn’t, you might want to spend your money at the participating retailer. The program is free, and you can invite friends and family to join as well and donate their rewards to you. Upromise partners with 600 online retailers, 8,000 restaurants and over 21,000 grocery stores.
LittleGrad. This service works much like Upromise, but your shopping must be done online. You sign up on the website, and in the process, either open a free 529 college savings plan or input the information for your existing plan. You then download a savings software that earmarks a percentage of every eligible purchase so it’s automatically transferred to your 529. Like Upromise, friends and family can sign up as well and contribute to your account. LittleGrad has partnerships with about 2,000 online retailers.
SmartyPig is an online savings account with some perks to help you reach your goals faster. You set a goal – say, next summer’s vacation, your husband’s birthday present, or that new couch – a timeframe, and an amount you need to reach that goal, and SmartyPig does the math to tell you how much you should contribute on a monthly basis. That amount will automatically be deducted from your checking account each month and placed in an FDIC-insured savings account until you reach your goal. You can set multiple goals at a time, a perk in my book because when you save for everything in one big pot, it’s too easy to spend the money earmarked for your emergency fund on your vacation instead. Once you’ve reached your goal, you have the option of receiving the cash plus your interest (accounts are now earning 2.01% APY) on a retailer gift card (a good option if you know exactly where you’re buying that couch, not so good if you don’t) or as a transfer back into your checking account. Often, retailers will kick in a bonus for putting your cash on their gift card – Kohl’s, for example, will give you an additional 5%.
ING Direct. This is another online savings account, no bells and whistles, save for one thing – it allows you to set up multiple accounts that act as sub-accounts, or pots, so you can prioritize your savings goals and keep your money separate. Each account is free, and you can set up automatic transfers from your checking account each month or even week. So say you want to save $50 a month for next year’s vacation and $25 a month for a new television – that money will be automatically withdrawn from your checking and placed in the appropriate sub account. You can track all of your accounts on the same screen and transfer money between sub accounts as needed. ING Direct is currently offering a 1.30% variable APY.
Piggy banks have been around for not just years, but centuries. The term began as a reference to regular old jars, made out of a type of clay called pygg, that people used to save their pennies.
Today, you can find piggy banks in all shapes and sizes, made of ceramic, metal, porcelain, plastic – you name it. Some even have an electronic or battery feature that will count your coins as you insert them, tallying up your total so you know how much you’ve saved toward your goal. In my family, growing up, we had a big red bull bank – but we called it The Pig.
Still, it’s clearly not the most effective way to save. Not only is it too easy to access your cash, it’s also too easy to spend your bills before they ever make it in the slot. Then there’s the little issue of interest – if you’re not earning some return on your money, you’re actually losing cash to inflation.
Whether you’re saving for this summer’s family vacation, or getting a jump on the holidays, these days there are tools that will help you save automatically, and programs that speed your progress. Many are focused on saving for college, but others are multi-purpose. Here’s a run-down of the ones I’m liking right now: More…
Last week I was on Today with Stacy Morrison, editor of Redbook magazine. We talked about things you can do to keep that holiday budget of yours under control (the first thing, of course, is to actually have a budget. If you’re not sure what the appropriate amount is for you to be spending, use my holiday budget calculator).
I bring up this segment again because I love some of the tips Redbook collected from its readers, and I wanted to share:
“I buy sets of things and break them up. Last year on QVC, Valerie Parr Hill was selling sets of holiday candles that came with gift bags, tissue, and tags. I bought a set of five and broke them up into five individual gifts.” —Denise Gaylord, 55, New Bern, NC
“Board games make great family gifts: one gift for four people! I once gave Scrabble to a family, and they loved it because they began spending a lot more time together. Monopoly is another classic.” —La’Tonya Hocker, 34, Bowling Green, KY
You can read the rest of the Redbook piece here.
Happy Holidays!!
Hi Jean, I just read your book, “Pay It Down!” I have $15,000 in credit card debt. I am dedicated to cutting some major things in my life to cut down this debt. My question is, when I save $10 where am I putting it? Do you want me to put it in some sort of savings account, a piggy bank, or a safe?
- Antonio, Pennsylvania
First off, congrats on taking the first steps towards paying down your debts. I think that with the information you’ll find in “Pay It Down!” and your dedication to cutting down on spending, you’re on the right track to financial freedom.
Let’s talk about where to put the $10 you’re saving every day. Ideally, you should be keeping it in a high-yielding savings or More…
Did you know that the average American household spends a whopping $2,200 on electricity each year? Using a power monitor can slash your bill by nearly 20%. Watch the video below to see how much I was able to save on my electricity bill by using one.
QUESTION: “I’m a single, pre-kindergarten teacher that loves her job but I have trouble making ends meet, especially during the summer months. I get paid twice a month—roughly $1,200 each paycheck. My take home pay per year is about $24,000. What can I do during the school year so I can live comfortably during the summer and not worry about my finances?”
-Jennifer, New York
ANSWER: Summers off, lots of vacation time, a nice benefits package…being a teacher definitely has its perks. In fact, according to MetLife’s annual Survey of the American Teacher, 62% of teachers surveyed said they were very satisfied with their careers.
The downside to teaching? Once the summer rolls around the paychecks stop appearing in your mailbox, making budgeting—at least for a few months—a bit of a headache.
According to Danny Kofke, author of “How to Survive (and Perhaps Even Thrive) on a Teacher’s Salary,” “paying yourself” is the key to staying afloat during the summer months.
In your particular example, in order to pay yourself, More…
Today’s Mini Money Makeover candidate had what every financially secure person should have-a savings to fall back on in case of emergency. The problem? All of her money was going into that savings account. She was scared to invest. Her money wasn’t working to make her more money. Have the same problem? Watch the video below for some helpful tips.
Starting this week, every Thursday I’ll be dedicating my blog post for the day to answering one of your financial questions. This week’s comes from Patsey in Woodland North Carolina. She writes:
I have a 22 year-old daughter who begins work as a nurse in July. I have recommended the asset allocation (early career in your book The Difference) after she saves up 8 months in expenses in cash or money market fund. Do you have a better recommendation or did I miss the mark?
Answer: In a perfect world, we would all have 8 months in living expenses in the bank. The reality is however, that putting that much in the bank, especially when you’re starting out, can be a daunting task.
Yesterday Karen Blumenthal stopped by my radio show to discuss her new book “The Wall Street Journal Guide to Starting Your Financial Life.” Starting small, Blumenthal says, is a key thing for workforce newbies to remember. “The first paycheck you might have immediate living needs…you don’t want to run up debt. You need to commit some of each paycheck to build that fund. Start with even $25 and then increase it. In every paycheck you should aim for as much as 10%. If you can’t do that right off the bat start with what you can do,” said Blumenthal. More…
What’s $7? Enough, evidently, to get me taken to task by my pals David Bach and Carmen Wong Ulrich on this morning’s Today. This was the question from JP in Odessa, TX:
“I want to refinance my wife’s car and her current interest rate is 7.4%. I am the cosigner for her. If we refinance her car, will that lower our credit score? We only owe $15,000 which is less than the car is worth. The reason I am asking is that we plan to purchase our first new home this year.”
I said yes. A car refi is a a no brainer of a transaction. It costs about 15 dollars and takes about the same amount of minutes. I also checked with the credit bureaus to make sure that this swap would not affect JP’s credit – something I would not want to happen in light of his desire to go mortgage shopping soon. They assured me it would not as long as he did the shopping within 30 days and replaced the loan with another the same size.
The others on the panel? They disagreed with me. It’s only $7, David said and Carmen agreed.
More…
