Showing posts with label Saving. Show all posts
Showing posts with label Saving. Show all posts

A tip from the new guy

May 02, 2020 // by Nate // , , , , , // No comments

Hello. This is my first post, so I wanted to introduce myself. After that I will be diving into some techniques and strategies to position yourself as an investor. To be clear, this is for those of you that like me, struggle with finances. Living paycheck to paycheck? No savings? Check this out.

My Story

I'm Nate. I'm 26, married with 2 kids, and live in South Dakota in a 6 bedroom house that my wife and I purchased as a house hack. My whole life I've spent everything I had. My savings account never went above $200, and most of that was money given to me by family for birthdays. Mom and Dad would tuck the money away into my "Kid's 'N Coins" account. The only reason the balance existed is because I was unable to get my hands on the money.

Fast forward a few years, and I'm working minimum wage jobs - still living with my parents, and no savings to speak of. I had no bills, no required expenses, and still NO SAVINGS.

I always blamed my lack of savings on minimal income, that is until the past year.

Present day: Over the past year, my wife and I have become landlords. We have multiple savings accounts that don't go below the thousands. And we have investments that are also in the thousands. All of this was accomplished in approximately one year, despite having recurring expenses, 2 kids, 2 cars, and subpar incomes.

TLDR: I've gone from being broke on a couch and borrowing everything, to having a sizable savings. I never need to check my balance before filling up on gas or getting groceries. I own a house that makes me money. I have multiple paper assets that constantly make me money. It all started with a book.

I Will Teach You to be Rich

No not really, but kind of. This is the title of the book that started it all for me: "I Will Teach You to be Rich" by Ramit Sethi. This book is responsible for my financial makeover. If you want to be rich you've got to start somewhere. Success can be broken down into two steps: Learning and Applying. One without the other will not lead you to success. So learn, and apply. If you like to read, you can find copies of this book online by Googling the title. If you're like me and don't like to read - check it out on audible. The book costs $25 if you're a member (or just one credit). It's well worth it. I know, I know, the title is super spammy - but it's worth it. Trust me. Just be sure to get the format that will help you get through the book. For me, that was audio.

A free tip from the book: The Bucket System

The number one financial mistake that we all make is spending too much. I've been there. Living paycheck to paycheck sucks. And it's NOT YOUR INCOME that's the problem - it's your expenses. The only time low income is a problem, is when it's $0. Otherwise, focus on expenses first.

Budgeting

Have you ever tried a budgeting app like Mint? I did. For 3 years I used Mint budgeting unsuccessfully. Here's why Mint didn't work for me:
 1. It's a reactive budget. After you've spent too much, you get to look back and say "oh no, I went over budget again". People that find success in Mint are constantly checking their budget before purchases. I'm not that disciplined, and if you're reading this, you're probably not either.
2. It's a rigid budget. If you go over budget, you go over budget. The funds aren't taken from a different account and you're at a net loss for the period.

The Solution

If you're terrible at conventional budgeting like me, try the Bucket System. This is a flexible budget that helps you manage your finances proactively and avoid going over budget.
Your budget should contain the following categories:

Committed expenses(60%)
    Groceries, gas, monthly bills etc.
Fun Money (10%)
    Dining out, drinking, clothes, shoes etc.
Irregular expenses (10%)
    Vacations, gifts, short term savings
Retirement Savings (10%)
401k, retirement plans etc.
Long term savings (10%)
    Down-payments, large purchases, debt reduction.

To best work this system. You need to make sure that these categories don't exist on the same card. Most importantly, you need to isolate your "fun money" on it's own card/account. That way, when you reach the limit, your card will be declined. The rest of the categories can be put into one account, but they should remain separated using sub-accounts. This success of this system boils down to a simple principle - proactively limiting our compulsive nature. Don't get me wrong, it's tough to deny your compulsive side. Knowledge is half the battle, so if you haven't already, check out Jesse's post about how You're secretly hurting your financial health.

Of everything that got me from the couch to where I am today, the Bucket System is the most valuable. There it is! Now go out and apply this system to your finances. Take a snapshot of your current finances and put an event in your calendar a year from now to reflect and see your progress. For a full financial makeover, get the book and go through it at least twice. Don't forget to apply your knowledge for success!

 Thanks for reading! If you like this, keep coming back - there's more coming down the pipeline.
Nate.





You're secretly hurting your financial health

May 01, 2019 // by Jesse Crypto Backer // , , // No comments

I'm sure you've done it; I have done it myself. We use our voice of reason to justify spending. "This jacket has seen better days" or "Guests need to see that I have the newest stuff." I just know you have a good excuse you've come up with.

As it turns outs a behavioral expert, Daniel Crosby, Ph.D. call this the "junk food of personal decision making." Easy in a pinch, but detrimental for long-term health. Of course the first step is admitting there is a problem.

Here are four common ways we justify our spending:

1. It's for a good cause.

After we meet our financial goals and priorities, we may find that spending money on others makes us feel happy. Well there is most certainly a time and place for this, don't cause yourself stress by doing it prematurely. Your financial well-being is definitely a worthy cause in of it's own right.

2. I'll start to save or save more when I make more

This thought process is completely wrong. In fact, I can't think of a way better way to hurt your financial health. Think of investing and saving as muscles; use them or lose them. Get yourself used to saving a portion of your income now. Do you really think you're going to start later? Even if it's $10 or $50 per paycheck, you need to start.

3. I had a bad day or a great day!

Not surprisingly, it goes both ways: comforting the pains of a lousy day or celebrating the ups of a good one. I'm guilty, myself, of going out to eat on pay day. You can make a list, that doesn't involve spending, to combat this. Often times, free things can be more gratifying than splurging.

4. I work hard - I deserve it!

You're not alone, though. A lot of people work hard, everyday... day after day. You may even start to think after saving for a while, that you've shown you capable and deserve something for it. Instead, start rewarding yourself for saving and not spending.


The first year has been my, and probably yours, hardest journey for starting to save and invest your money. Stick with it and when your money starts working for you, you'll know what to do.

Recurring bills: Let's take a look

March 26, 2019 // by Jesse Crypto Backer // , , // No comments


Any of these look familiar? Of course they do! Do you have Netflix, Hulu, or even cable? Having these services can add up to hundreds of dollars every month. This is especially true for the cable or satellite bill. 

 Paying for cable or satellite is paying to watch ads, that they're getting paid to show you. The future really is streaming, but you don't need all of them.

 TIP: YouTube Premium comes with Google Play Music at no extra cost. Also, Spotify comes with Hulu and Showtime subscriptions. 

 We need to take a close look at our bank statement. Add up all the services you pay for and REALLY consider what ones you can do without.

 Now, let's invest that extra money every month! Our main goal here is to make our money work for us, instead of working hard for a little money. That starts with saving it.

Don't let the government have an interest free loan

March 24, 2019 // by Jesse Crypto Backer // , , // No comments

Very simple concept: Don't give the government an interest free loan. Instead let your savings or investments grow faster. The government uses that tax refund you get every year, interest free, until it's time to pay you back. Put it to work for you instead!

 My thought here is to get that money sooner and get it saved or invested. This includes putting this money into your IRA or 401K. A refund of just $1200 is an extra $100 a month in your paycheck. If you get that invested right away, it could end making you more money overall.

 It may take a little time to do, but adjusting your W-4 correctly is important. You also don't want to pay in at the end of tax season. Our goal here is get $0 back. 

 Use the link below to use a withholding calculator provided by the IRS.

Please read and follow the instructions provided. In the future I will be making a walk-through video and instructional post on how to use it.

Part 2: Does it spark joy? Before you buy...

March 12, 2019 // by Jesse Crypto Backer // , , , // No comments

I cannot stress enough how important it is to put at least $100 away every paycheck. As a minimalist I pay my utility and cell phone bills one check and rent the next check. As you can see, I get paid every two weeks. Sometimes that means I get three paychecks in a month.

 I hide it from myself. Just like my tax refund, I instantly put it into Acorns.

 If you're terrible at saving money, like I am, you need to actively hide money from yourself. Sounds silly right? But if you see that extra money, you'll think it's OK to eat out "just one more time."

 So, to recap:

 1. Get paycheck from work.
2. Pay bills and buy necessities.
3. Fill gas tank back up.
4. Put remaining balance or $100 into unseen account.
Hopefully your next big purchase will be an asset. Having to finance a little or nothing at all will save you the most money in the end. Here's an snippet from Acorns:



Part 1: Does it spark joy? Before you buy..

March 09, 2019 // by Jesse Crypto Backer // , , // 2 comments






"How you spend your money is just as important to your financial success as your decision to save or get out of debt."






I think the first step in starting to actively manage your finances is sitting down and writing a budget. Learning good spending habits cannot be done by "winging it." Let's start by looking at your monthly bills, then a transaction statement from a prior month. An easy way to do this is by downloading Mint and connecting your accounts. You need to add together all the categories you find. If you're anything similar to me, food will be your biggest expense.


We need to set a cash limit every month, or better yet, every week. When you do eat out, another possibility to save is by drinking only water. That $5 Starbucks every morning is $25-30 every week, or $100-120 every month and $1200-$1400 every year!


This is self-discipline. It probably won't feel good at first. But I think that having saved up enough to make big or emergency purchases will feel good when you don't have to borrow or finance money!



So, to recap so far -

1. Find your current budget.

2. Modify your current budget.

3. Live on that budget.

Top 5 Highest APY Banks

March 05, 2019 // by Jesse Crypto Backer // , // No comments

1. CIT Bank – 2.45% APY


Pros:
CIT isn’t as big as those mentioned below, they’re currently offering a very healthy APY. Online only base banking, no monthly maintenance fees and interest compounds daily. Deposits are FDIC insured, that means up to $250,000 will be covered. With over $50 billion of assets, CIT makes primarily make loans to middle market companies and small businesses.

Cons:
Two requirements are in place to get this high rate: Make a monthly deposit of $100 and maintain a daily balance of $25,000 or more. This amount can be a lot for some people that are just starting their savings.

2. Synchrony Bank – 2.25% APY

Pros: 
There is no minimum balance requirement and no monthly fee. In addition to the great rate, you can get an ATM debit card. Most internet-only banks require you to transfer funds electronically, which can take a few days. If you ever need quick access to your funds, the ATM card makes access easy. You might not recognize the Synchrony brand in the banking space, but it is a large, well-capitalized business. This bank is used by PayPal for their credit cards.
Cons:
Unfortunately, the digital experience is not the best and there is no app. I have personally used the customer and it met all my expectations.

3. Goldman Sachs Bank USA – 2.25% APY
Pros:
There is no minimum balance and there are no transaction fees. You can deposit funds via electronic transfer, wire transfer, or deposit by check. Goldman has been investing heavily in Marcus, its online consumer bank. The savings account has consistently been paying one of the highest rates in the market and it expected to expand. The maximum deposit is $1,000,000 and deposits are FDIC insured up to the $250,000 limit.
Cons:
You can only get access to your funds via electronic transfer or wire transfers, no debit ATM cards. 

4. Ally Bank – 2.20% APY * my pick! 


Pros:
While Ally may have not have had the First "high APY" savings accounts, I like to think they got the ball rolling for others to follow. Ally is a bank without branches that has consistently been paying high interest rates on savings accounts since it's beginning. No minimum balance, free checking accounts (which are also eligible for 1% cashback bonuses), checks and debit cards. Transfer funds via their easy to use apps.

Cons:
Actually, the only downside I can find is they don't have the highest APY rate.

5. Barclays Bank – 2.20% APY

Pros:
The online savings account has a 2.20% APY with no minimum balance to open and no monthly fees. Your deposits are FDIC insured, up to $250,000. Website has a great look and easy navigation. Your money will be with one of the world’s largest and oldest universal banks.

Cons:
Barclays is a large, old British bank, based in London. I didn't see an app for smart devices.
There are more banks with different rate available, so keep shopping! Leave a comment sharing your favorite bank! 

Your Tax Refund

February 15, 2019 // by Jesse Crypto Backer // , , // No comments



Thinking of getting that new car? Or, maybe that new T.V.?  Yes, new things are great! But, why don't you put that money to work? Did you know putting $5,000 into a saving account with 2.00% APY will make you $101.00 that year? Five years your balance will be about $5,525! Without doing anything but sitting on it!

Another option is actively investing your hard earned cash! You could let Acorns do the investing for you! 
Acorns portfolios are developed with help from Nobel Prize-winning economist, Dr. Harry Markowitz. 
Use Acorns to invest change!

Acorns - How it's transforming my spending

February 13, 2019 // by Jesse Crypto Backer // , , // No comments


I've been using Acorns for two weeks now. I like one thing it's done: Made me realize my spending. Every time I purchased something, I found myself thinking about my Acorns account. It's making me buy in bulk and spend less often. That in turn saves money!


 
And, that's OK. Saving any kind of money is great! Actually thinking about how you're spending money is better!

 Really, it comes down to self control.

Sign up and get $5 today!


Tax season is upon us and don't let your money be dumb money. Put it away and do not think about it. You need to let your money work for you and not the other way around!

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