The Day I Got Bullish with Money

I’m not what you’d call a risk taker. In fact, I’m more along the lines of a classic goody-goody. The worst thing my teachers would say about me on a report card was that I could sometimes get “too talkative”. The most daring thing I’d do in class would be passing notes. I didn’t lie to my parents or get trashed at parties in high school. You get the picture.

To this day I’m still an avid ruler follower. I don’t have major regrets in life based on my behavior. So why am I painting such a lame picture of myself? Because for some reason I’m incredibly risk-adverse in life, but very bullish with money.

Recently, I started chatting about money on an afternoon stroll with a good friend. I was pleading with her to move a significant chunk of her money out of savings and into an investment – any investment – just to stop earning 0.01% in interest. I tried going the common sense route and explaining just how little she was valuing her money by leaving it sitting some place earning less than inflation. Then she countered with a common response: “I’m pretty risk adverse.”

I suddenly realized how much I defied a major millennial financial stereotype. I’m not afraid of the stock market. In fact, I’m afraid not to be investing enough. It bothers me to have too much of my money sitting in my savings account.

I began to analyzing my bullish feelings towards money and came to the same conclusion I always do when it comes to my relationship with finances. It’s my parents’ doing.

The stock market crash in 2008 hShow me the moneyappened my first year in college. I rarely saw my parents during this time of my life because I lived in the United States while they lived in China. There was no going home on weekends for me. Instead, I got to head home (to China) during Christmas vacation and summer vacation. I’d get to see my Dad a handful of times in between when he’d come to America on business trips.

Suffice to say, I never had to be around tense conversations about money as everyone started to see their stocks plummet. I was almost blissfully unaware anything was happening other than hearing the occasional senior stress about finding a job after graduation.

It’s easy to tell I didn’t major in finance or business in college.

By the time I tuned into the world’s financial panic, it had probably been about a year since the stock market took a major tumble. And yet, I didn’t feel concerned about my parents’ financial state. My home had always been relatively open about money, and while I didn’t know exactly how much my Dad made, I trusted my parents would be transparent about any financial difficulties.

Still, I figured it would make sense to check in.

My Dad and I were driving along in the car one summer during my family’s home leave (when we’d all visit the States). I started to ask basic questions about investing and the panic the world seemed to be experiencing.

In his infinite wisdom, my Dad turned to me and nonchalantly said how much money he and my mom lost in the market in 2008.

My mouth dropped open.

“How are you so calm about losing that much money,” I sputtered.

“Erin, you need to learn that the stock market is cyclical,” he explained. “There have been big drops before and there will be big drops again. But what gets you in trouble is when you get scared and try to take all your money out.”

By leaving his money sitting pretty, and making some savvy buys during the crash, my Dad ended up coming out of 2008 very much ahead.

Optimized-economic crunch

[Check out my love letter to millennials from the stock market]

I didn’t start investing until a couple years after this poignant conversation (one big life regret), but my Dad’s words have made me a rather bullish investor. I don’t take major risks with my investments, but I do put far more into the market than your average millennial. Dips in the market don’t send me running for the panic button. I believe investing is not only a risk worth taking, but also necessary for financial wellness. My money certainly deserves better than a high interest savings account (even those accounts with more than one percent).

Read other stories of getting “Financially Real” and celebrate financial literacy month!

2015-carnival

Posted in Financial Literacy, Investing, Millennials Tagged with:

Why Owing Uncle Sam Made Me Smile

This post is part of the TaxACT #BeatTheDeadline blog tour which shares tips on how to make tax time a smooth and easy process before the April 15 deadline. TaxACT provides the tools and guidance to help you confidently file taxes easy and fast. Do your own taxes today at TaxACT. You got this.

For all the things I adore about finance, which I assure you are many, I just can’t get hyped up for tax time. Maybe it’s the needing to sit still for about three hours while I file or the general anxiety that I’ll massively screw something up resulting in an audit. Or that I won’t screw anything up, and still have to prove everything to Uncle Sam’s boys at the IRS. But one thing occurred this season that resulted in a little smile – I owed money back to the government (both State and Federal).
[taken from Giphy]

Yes, I’m serious.

WHY I WANT TO OWE AT TAX TIME

For years I’d heard my Dad’s general grumblings about how getting excited about a tax return is shenanigans. You’re giving the government a free loan all year and then you’re supposed to get excited when Uncle Sam returns money that’s rightfully yours without interest?

[taken from Giphy]

This year I joined my Dad’s team. Instead of getting all excitable about a couple thousand bucks back from the IRS and New York State/City, I kept that money and invested it in the market so I could get some return on it before forking it over.

I’ve also started to owe more money to the IRS because my freelance income is steadily increasing. This is because taxes are taken out of contract gigs upfront and the amount I pay in taxes all year from my full-time job doesn’t eclipse what I owe on side hustle income (I do pay some taxes during the year, I just don’t “over pay” if you will). Yes, this means I have to start looking at quarterly estimated taxes in 2015, but that’s an entirely different topic.

Let’s get back on track and overview how I prepare for owing Uncle Sam money come tax time.

HOW I PREP FOR OWING UNCLE SAM

1. Collect all my documents – and hound a few clients for 1099s

Whether you plan to owe the IRS or have the government owe you, don’t start filing without first prepping all your paperwork. Here’s what I needed this year:

  • W2: I had two because I switched jobs in April
  • 1099: A handful from clients who hired my freelancing services
  • 1099-DIV: tax form on investments
  • 1099-SA: tax form for distributions taken from my HSA (health savings account)
  • 1099-R: tax form for 401(k) roll overs (even though I didn’t take a distribution)

I’ve never paid an accountant to handle my taxes and always use tax prep software.

2. Save 75 percent of my freelance income

Freelancing is income I make in addition to my day job salary. I don’t need any freelance income for my day-to-day living, so I elect to put 75 percent away in savings (much of which goes into investments) and 25 percent gets earmarked for my travel fund.

By saving 75 percent, I never stress about having available funds to pay off the taxes owed. Even when I need to start paying quarterly taxes I’ll be in good shape thanks to this strategy.

I know a lot of my peers see a tax refund as a great way to save or in their minds, be saving all year. I prefer to have the dedication to handle my savings and finances myself and not leave it in the hands of the government. Even if that means I owe $1,600 on April 15.

3. Max out a traditional IRA (for the tax break of course)

The IRS restricts how much you can put into an IRA when you have a company-sponsored retirement fund. In 2014 I made less than that threshold and was able to contribute to a 401(k) with a match and fully contribute to an IRA ($5,500).

While I’m a big fan of Roth accounts, I elected to max out my traditional IRA in 2013 and 2014 to take the tax break. This year, I anticipate I won’t be able to fully contribute to an IRA due to income restrictions, so I’ll put some towards traditional and the rest into Roth.

4. Invest in the stock market throughout the year

I’m all set on the emergency fund and don’t have any debt. Thanks to these two factors, I keep a significant amount of my money invested. I prefer to owe the government because I can make my money work for me all year and then cut Uncle Sam a check come tax time. Now, if you also share this mentality it’s important your money isn’t just sitting in savings, losing value to inflation, because then you might as well give the free loan to Uncle Sam.

TIME TO SWITCH YOUR MINDSET

It’s up to you, but I wouldn’t leave my money sitting in a 0.01% interest rate savings account at Bank of America, Chase, Wells Fargo or Citibank and I sure don’t plan to let Uncle Sam use it for free.

Beating the tax deadline doesn’t have to be stressful. With TaxACT, everything you need to confidently prepare and e-file your taxes is right at your fingertips. You got this. File your simple or complex federal return FREE today with TaxACT Free Edition

Posted in Taxes Tagged with: , ,

The Compromises Millennials Make to Be Homeowners

Lauren Bowling of L Bee and The Money Tree

Lauren Bowling of L Bee and The Money Tree

For millennials who head down the aisle and start decorating nurseries, a mortgage is a scary prospect to add to an already heavy debt load. It makes sense that they’ve delayed the homebuying process compared to previous generations, as only 36 percent of homeowners are age 35 and younger, according to the census.
Ultimately, if millennials want to exchange rent checks for building equity they have to make a few compromises. Here’s a look at how some millennials overcame their homeownership challenges.

Dealing with Debt and Homeownership

It could take a decade (or decades) for many members of the millennial generation to ditch student loans and become debt-free, but that doesn’t mean they want to delay homeownership until their late 30s or early 40s.

Instead, millennials are coming up with resourceful ways to balance the debt of a mortgage with their financial situations.

Read the full article on US News My Money!

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Find out what Allie and Josh Hines gave up in order to buy their home!

Posted in US News' My Money Blog

The Golden Egg: A Financial Easter Tale

Reading the Hunger Games brought back flashes of my childhood Easter egg hunts. When it came to neighborhood and Church hunts, my sister and I were Career Tributes. We possessed ridiculously high competitive drives and uncanny abilities to duck, dip, dodge and dive for the best eggs and find even the most deviously hidden gem. When it came to the Easter egg hunt in my home, I wouldn’t even make it to the Cornucopia before being taken down by my younger sister.

11110575_10152927107691137_2179577367266844733_nWhy am I drawing such a gory illustration of the childhood experience dedicated to snatching colorful, candy-filled eggs off the lawn?

Because in my home, Easter eggs quickly phased out of being filled with candy and instead contained cold-hard cash.

And one egg held more money than almost all the rest combined: the Golden Egg.

My parents used Easter egg hunts to teach us the harsh reality that life simply isn’t fair. A set amount of eggs would be marked with E and C to guarantee a degree of sportsman-like conduct, then the rest would be free-for-all and only one Golden Egg lay hidden. (Harry Potter’s quest for the Snitch also gave me heart palpitations).

Cailin and I would be held in the garage (or bedroom when we lived in an apartment in Japan) and then unleashed to grab all the eggs we could. Inevitably we’d pause to do an egg count and determine how many remained before running back, unconcerned with the remaining regular eggs and solely focused on the Golden Egg.

Hunt circa 2006

Hunt circa 2006

She's lethal I tell ya!

She’s lethal I tell ya!

My sister gives off a nonchalant, “I’m not competitive” vibe while I’ve been known to flip the occasional board game and debate points in mini-golf. But underneath her cool, calm façade lurks the heart of a Golden Egg seeking ninja with the ruthlessness of Frank Underwood.

For a solid five years in a row, Cailin snatched up the Golden Egg. One year even finding it buried in a container of fish food for koi. Overall, I’d say the score is something like 10-3. She’s probably made over $300 from defeating me in Easter egg hunts.

I dealt with defeat, after defeat, after defeat – but my parents never offered to hide two Golden Eggs. Never tried to sneak an extra few bucks into my basket. Never snuck me special clues to help my quest to defeat my sister. Instead, they let survival of the egg hunters play out and occasionally even mocked my completely inability to find the egg first (maybe I’m Golden Egg colorblind).

Much like the Krispy Kreme donut lesson and the paying for 50%, this became a cornerstone of my financial education.

Unlike my participation-trophy-winning peers, I learned at a very young age that when you’re not first you’re last (I think that makes five pop culture references in this post). And that money is never distributed equally – even on a relatively level playing field.

Even though I couldn't always hide my frustration.

I couldn’t always hide my frustration.

At 25-years-old, my parents still indulge me in yearly hunts. Now, my cousins substitute in for Cailin when she can’t make the cross-country trip to crush my spirit.

The Cousin Ringers

The Cousin Ringers

Somehow, I still manage lose the Golden Egg, despite being within inches of its hiding place. As my father aptly described this year, I’m the Buffalo Bills of Easter egg hunts.

The Golden Egg loss is more upsetting than Wide Right

The Golden Egg loss is more upsetting than Wide Right

One day, the Golden Egg shall be my precious. Until that day, I continue to learn how to take a beating and keep coming back. Not unlike my feelings on why it’s important to invest. I may be in a down market, but one day it’ll swing back in my favor and there will be glorious returns.

Head over to my Dad’s blog to read his take The Golden Egg – A Politically Incorrect Easter Story

Posted in Random Tagged with: , ,

Hack the Cost of Healthcare with Medical Tourism

The following article is a guest post from Chelsea of Broke Girl Gets Rich.

‘Affordable’ Health Insurance = Basically Useless

Even though I was able to save almost $1,000 for my 2015 premium costs during this years’ open enrollment period, I still can’t get over what a joke it is that the “Affordable Healthcare Act” has skyrocketed my premium costs and my out-of-pocket expenses, rendering my health insurance basically useless.

I didn’t use it one single time in 2014.

The only reason I keep it is to save myself from an emergency bill of $90,000+. At least if that happens, I’ll “only” have a $6,600 bill to deal with.

There has to be a less expensive way to deal with this.

But, whether or not US politicians and health care leaders figure out how to pass an actual Affordable Care Act any time soon, there is a way to get insanely affordable, quality healthcare: fly overseas.

Yes, I’m serious. Get on a plane and go to a doctor.

No, not for a regular checkup – but for any non-emergency health procedure or surgery that would otherwise cost you an arm and a leg.

How I Reduced Thousands of Dollars to Less than $300

DSCN5233Here’s the thing, I’m self-employed, so the only “affordable” health insurance policy I could find was $140 per month, and I have to pay $6,600 out of my pocket before my insurance company so much as hands over a penny.

But I’m kind of lucky in the sense that life led me to living in India for two years, where healthcare is readily available and inexpensive.

Before moving out of India in November, I went on a doctor appointment spree: any doctor I could think of, I visited.

I knew I could never afford to do the same thing once I arrived in the US, and I was due for some check-ups.

Here’s the breakdown of my costs in rupees to dollars.

  • Dermatologist consultation & removal of four moles: ₹2,600 = $44
  • Eye exam: ₹120 = $2
  • Fling designer frames: ₹1,590 = $26.50 (normally $100+ in the US)
  • Carl Zeiss lenses: ₹1,020 = $17
  • 1 Year of contact lenses (Bausch & Lomb): ₹3,000 = $50
  • Dental consultation: ₹200 = $3
  • Dental x-ray: ₹200 = $3
  • Orthodontist consultation, teeth molds, realignment tray: ₹3,500 = $58
  • Gynecologist checkup: ₹400 = $7
  • Pap smear: ₹620 = $10
  • Infection medication: ₹65 = $1
  • Ultrasound: ₹1,305 = $22
  • 1 Year of birth control pills: ₹2,580 = $43

Pretty awesome, right? And again, that’s the costs without health insurance.

Why I Might Be a Medical Tourist Again

In my last week in India, I went to the gynecologist for a routine checkup. She discovered a pin-head-sized cyst on my cervix.

She assured me that it was nothing to worry about at the moment, but that I should get another checkup in three months—there was a tiny chance, that if it grew, it would have to be removed in an out-patient procedure involving anesthesia.

I looked it up online, and she was right—chances are high that I won’t have to do a darn thing about it.

But if I do… um… it’s costly.

My dad recently had an out-patient procedure on his eye, and his bill for just being a patient in the hospital for four hours (not to pay the surgeon or the anesthesiologist or anything) was $24,000. No, that’s not a typo. Thank goodness his company provides decent insurance, right?

So if I do have to get it removed, and I do it in the US, I’m spending $6,600. No question about it.

But if I go to India to have it removed, it’s about $1,500 for a cheap round-trip ticket, plus $160-$195 for the procedure (my doctor’s estimates of ₹10,000 to ₹12,000, maximum), plus the hotels, transport and food, which for one month can cost an average of $400 for everything, staying in a decent but simple hotel.

So that’s $2,100 instead of $6,600.

A $4,500 savings. (I don’t know about you, but that’s more than I earn in a month.)

I’d say it’d be worth jumping on a plane.

Medical Tourism is Expanding Popularity

It turns out I’m not the only one who’s stumbled upon this incredible money-saving hack. Centers for Disease Control estimates that 750,000 Americans go abroad every year for some kind of medical treatment, mostly for the purpose of saving money.

Patients Beyond Borders has a little higher estimate, guessing that 1.2 million Americans went overseas for medical treatment in 2014, and that the medical tourism market is worth up to $55 billion.

This money-saving thing is a real deal: MedicalTourism.com has a chart of cost comparisons for different countries on a procedure-by-procedure basis. The prices are from 2013, but they can still give you a great idea of what you’d end up spending.

For example, Lasik eye surgery (which usually isn’t covered by health insurance at all), costs $4,400 for both eyes in the United States, $1,800 in Costa Rica, and just $477 in Malaysia.

Choosing the Right Doctor

I realize some people claim that health standards may be lower in some of the places people travel to for medical tourism, especially the cheaper countries—and that may be true, to a point.

But I was in one of the cheapest places, where you can save up to 90% on a medical procedure, and I had nothing short of an incredible experience with all of my doctors. The offices were clean and the treatment was very thorough. (Though I would suggest avoiding public hospitals in India, opting for private care instead.)

To make sure you get the best care possible, all you need to do is contact a few doctors ahead of time and ask for a consultation. These meetings are not expensive and will help you find the doctor (and office) you feel most comfortable with. I saw two dermatologists before choosing the one I liked the best to remove my moles, but other than that, I had no problems with the first doctor I went to throughout my entire stay in the country.

Posted in Guest Post Tagged with: , ,

I Now Pronounce You, In Debt

282691_10150928398131137_1869860170_nA wedding should be a joyous occasion filled with love, laughter and maybe some anxiety about everything going according to plan. But when two millennials exchange vows, it comes at a much higher cost than the price tag of a wedding.

The average millennial carries an unprecedented debt burden: an average $29,400 in student loans, according to the Institute for College Access & Success.

It’s no surprise then that the Pew Research Center reports only 26 percent of the millennial generation between ages 18 and 32 got hitched in 2013 – 10 percent lower than when Generation X was in the same age range and 22 percent less than baby boomers.

If the marriage of two millennials could result in nearly $60,000 in debt from the start, what’s a newlywed couple to do?

Read on to find out how to handle being married and in debt at US News and World Report

Posted in Debt, US News' My Money Blog

Frugal Find Friday: FeeX

Today I bring you a very quick review of a new way to see if you’re getting the best deal on your investing platforms. It’s amazing how much money you can lose in just fees, which add up incredibly quickly over the long run.

FeeX* offerFeeXs investors – both rookie and established – a free way to analyze and reduce fees by identifying cost-effective investment alternatives.

After signing up with FeeX, you select your brokerage, and login as you would to check investments. FeeX, which uses bank-level encryption, pulls investment data and offers you an overview of how many fees were found per investment, estimated losses over 30 years and other investment options to reduce fees. If you’re wary about security, then at least take some time to compare fees the hold fashioned way — by hand. It’s important for you to make sure your investments aren’t bleeding money in fees.

You can “test drive” an investment but inputting the amount you plan to invest and the symbol/keyword. FeeX provides details on cheaper options – if one exists.

FeeX actually showed me that Fidelity’s Spartan 500 Index Fund beats Vanguard’s S&P 500 Index Fund, which honestly “bogled” my mind (investing pun!).

Vanguard charges an expense ratio of 0.17% on its S&P 500 Index Fund (VFINX). $5,000 in VFINX would cost $9.04 in annual fees. FeeX pulled Fidelity’s Spartan 500 Index Fund (FUSEX) as a comparable index fund with an expense ratio of 0.1%, charging $5.32 in fees. To the relief of Bogleheads, FeeX couldn’t find a cheaper alternative to Vanguard’s 500 Index Fund Admiral (VFIAX).

Now, will I personally be switching these accounts? Not today because less than $4 isn’t enough incentive for me at the moment to switch, but it does make me think twice about the research I’ll be doing to find the cheapest funds on my next investment move.

However, it’s worth considering that while the difference in expense ratios may seem negligible to some investors, a small difference can add up to thousands of dollars being kept in the market. So if you aren’t too worried about your data being stolen, check to see if FeeX can help reduce fees and put money back in your portfolio. You can always deactivate after you check!

*No referral links here. Just spreading the word.

In case you don’t feel like reading 360 words…you can just watch this video:

 

Posted in Frugal Find Friday Tagged with: ,

Why We Need to TALK About Money

I detested math class in high school, especially calculus. In fact, I understood more of what was going on in my Mandarin class than my math class. I used to sit at the desk in my room doing homework and bury my head in my textbook. I’d yell and throw a pencil at frustration at the floor. No matter how many times I read the formulas and explanations or studied the notes I took in class, I just couldn’t seem to grasp how to translate the information into something my brain wanted to understand. But when a teacher or peer took the time to walk through a problem step-by-step, it suddenly made sense.

Personal finance is no different.

For plenty of people, dealing with money is their calculus class. Reading about personal finance can only do so much. They need to talk about it, hear aspects of finance broken down into digestible, actionable pieces.

10570531_10152874896886137_5781994198288362618_nYesterday, I had the great privilege of giving a presentation and then speaking on a panel at NYU. The talented and wonderful Mr. and Mrs. Frugalwoods were the other members of the panel. (Yeah, that’s right. I know what they look like!)

The Frugalwoods covered the early retirement sector while I gave a presentation on learning to love personal finance and actionable ways to pay down debt.

Regular readers know I’ve never personally carried debt, so giving a presentation on handling debt may seem a bit odd. Thanks to my work at MagnifyMoney, I’ve become something of an expert on understanding consumer debt and have expanded my knowledge on personal loans.

I’ve had a few opportunities over the last couple of years to speak to groups and individuals about personal finance, but there was something unique about this experience.

For one, everyone in the room stayed incredibly engaged. Students ranged from sophomores to seniors and clearly were thirsty for information on handling debt, understanding credit scores and figuring out how financial independence is a viable option.

But most of all, I was inspired by watching the flashes of inspiration and understanding happening throughout the room during our conversations. You could see it on a person’s face when a realization about compound interest, or living frugally, or paying down debt or switching banks to earn more interest or building a credit score or opening a retirement account suddenly just clicked.

Opening a dialogue about debt, spending intentionally, living frugally, financial empowerment, picking the best financial products, saving for retirement (and all other personal finance topics) is simply better in spoken word. Reading provides a great foundation, but a conversation with the ability to ask follow up questions does so much more.

After our presentations and Q&A panel session, the Frugalwoods and I were both surrounded by students asking more questions. It not only made me want to do a personal finance nerd happy dance, but gave me so much hope that 19 to 21-year-old college students wanted to take control of their financial lives early.

One woman shared with me that she’d saved up $13,000 in college working odd jobs and already received a job offer for after graduation. This woman saved more in college than plenty of American households with two earners currently have to their names. But she couldn’t seem to relish her accomplishments because they were eclipsed by panic she felt about her student loan debt.

Sitting on $13,000 dollars with a job set for after graduation, and this intelligent woman was crippled about what to do next.

This is why talking about personal finance is so important.

Talking through options, weighing scenarios and feeling the motivated to make a move does so much more than reading personal finance books, blogs or even listening to radio shows, podcasts and watching TV programs.

It’s the reason life coaches exist as a career option. Talking it out is important.

So, I have a challenge.

I challenge you to take some time this week to talk about money with someone in your life. If you’re struggling with money, try to book time to speak with a professional or a less expensive resource you feel can offer guidance.

Even the most hardcore personal finance enthusiast can gain important perspectives from talking about money. I certainly took a lot away from the Frugalwood’s presentation (and our subsequent conversation) on early retirement and spending your money intentionally.

And if you want to talk to me about money, let me know by emailing brokemillennials@gmail.com!

Posted in Debt, Financial Literacy, Student Loans Tagged with: ,

Frugal Find Friday: Digit (The New Way to Save)

Medium-term savings goals: frankly, these should be all the rage right now for millennials. We constantly hear reporters and financial gurus harping about retirement, emergency funds and paying down student loans. All valid topics to be harping on, but the intense focus on these are to the detriment of other life milestones: buying a home, paying for a wedding, having children, traveling.

Two of my favorite personal finance blogging ladies (Stefanie and Shannon) recently started the conversation about medium-term financial goals and it got me thinking about my own goals.

In order to reach my rather lofty goals (which I’ll share at a later date), I’ve been looking for every opportunity to save money. Well, let’s rephrase that. I’ve been looking for ways to increase how I save. I still indulge in travel (I’ve been to Texas, North Carolina, and upstate New York in February alone and heading to California and Hawaii in March). I’ve gone to the movies (and actually paid full price * gasp*). You know what, I’ll just confess it all: I’ve even bought my lunch instead of brown bagging, purchased a few lattes and gone out to dinner (more than once!).

The theatrics aside, I legitimately have been figuring out ways to trim the fat in my budget and put more money towards my medium-term goals.

The easiest way to scale back how much you spend is by simply reducing the amount of accessible money. The out of sight out of mind mentality is great when it comes to saving (as long as you do check ups on your investments). I put my money in savings or investments and then put a mental block on spending it. The only money I’m allowed to spend is the money in my checking account.

Courtesy of J. Money, I recently discovered a new way to put my money out of sight: Digit.

digit-logo-branded.f49fc955Digit is your free robotic financial advisor. You link Digit to your checking account, it analyzes your spending and then begins pulling out small amounts of money to put into savings. In my experience, Digit takes small sums of money out. It’s like having a budget leak that works for you instead of against you.

Digit functions as a savings account and holds your money until you request to have it transferred back into your bank (or credit union) account. In my opinion, Digit is really is more of a checking account because you don’t earn any interest on your funds and there are unlimited transfers – savings accounts are subjected to a maximum of six transfers a month. Regardless, it’s a great way for you to be saving without really noticing you’re saving.

IMG_1492COMMUNICATING WITH DIGIT

You can access your Digit account online, but I personally love how it communicates via texts. I receive a daily update with the amount in my checking account, which will mention if Digit saved any money that day and occasionally how much I have saved total. You can also cash out, pause transfers and ask about updates all via text message.

HOW MUCH DOES DIGIT TAKE?

My largest transfer was for $6.44. Of the eight transfers Digit has performed since I opened my account in late January, only three have been above a dollar. The average amount I’ve had transferred is $2.28.

I’ve had Digit for three weeks and it’s saved $18.25 for me. This doesn’t sound like much, but even just pulling $250 a year I likely wouldn’t have saved can fund a flight, help pay for the upkeep of this blog or get me closer to my medium-savings goals.

This will obviously vary between people. I don’t keep a bunch of money in checking, so Digit’s analysis of my income and how I spend isn’t totally accurate. Digit will have a better analysis if you tend to keep more in checking and make most of your transactions with a debit card linked to the account.

Note: Digit can link to over 2,500 banks and credit unions and it’s currently only US-based.

Screen Shot 2015-02-19 at 6.19.06 PM

HOW DO I KNOW IT’S SAFE?

Digit uses the same type of encrypted security measures your bank does. It also is FDIC insured up to $250,000.

I’m completely paranoid about giving anyone or anything access to my financial life – and I trust Digit.

HOW IS DIGIT POSSIBLY FREE?

Well, they don’t offer you any interest on your savings. Digit is pocketing the interest being earned on your money.

WAIT, THEY DON’T GIVE ME INTEREST?

If that makes you made – then don’t use it. But be realistic. If you’re using any of the big four banks (Chase, Bank of America, Wells Fargo or Citi) to hold your savings – you earn a whopping 0.01% interest rate on savings. That’s $1 for $10,000 in savings. I’m willing to bet Digit would save you more than that in a year.

WHAT IF I WANT MY MONEY BACK?

You can withdraw whenever you want, as frequently as you want. This does make it different than a standard savings account, which limits you to six transactions per month.

Just text ‘Withdraw’ to Digit and your money will be in your checking account the next business day.

DIGIT MADE ME GO OVERDRAFT!

NOOO! Overdraft is the worst, especially if you bank with one of the Big Four and you get charged over $30 or $12 for overdraft “protection.” But don’t worry Digit has a no overdraft policy. If you end up going overdraft due to a transaction Digit made, it’ll pay the overdraft fee.

I CAN’T AFFORD TO SAVE THIS MONTH

Some months are tighter than others. That’s okay. You don’t have to deactivate Digit just because every penny makes a difference in your budget. You can just text ‘Pause’ or go online and hit ‘Pause Saving’ on your dashboard. Digit won’t take out money until you activate it again.

WHAT ARE YOU WAITING FOR?

It takes about 4 minutes to set Digit up*. Try it for a month and see how much it saves you. Maybe it’ll help kick start a fund to take a trip or pull together money to make an extra debt repayment. I know the money Digit saves me is going into my “Wedding Fund.” No – not mine. I’m 25 and averaging 4 weddings a year. Those suckers are expensive to attend – not to mention be in!

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*Yes, if you click through my link to Digit, I’ll get a $5 referral fee. But then you can refer someone and make $5! We both win.

Posted in Frugal Find Friday Tagged with: ,

Higher Schoolers Can Get Paid for Learning How to Budget

A PSA to All High School Teachers and Parents of High Schoolers Looking to Unearth Money for College

Despite the name of this site, I’ve never actually been “broke” a day in my life. A fortunate fact I can directly correlate to my parents taking the time to educate me about finances and teach me the almighty lesson of how to budget. They taught me by making me use my own money for purchases at a young age (we’re talking like 7 years old). Nothing makes you start to evaluate the ROI of a toy quite like your own money being on the line.

While I think most young men and women should learn how to budget with their own money, I do love the concept of the H&R Block Budget Challenge. Why? Because while high school students are playing with fictional money, real money is on the line.

HRB Budget Challenge Logo Horizontal w No Box

Simulating Grown-up Life with A Big Cash Out

The Budget Challenge is open to high school students and only teachers can register students to participate (helicopter parents everywhere are writhing in pain).

Teachers sign up their classes (sounds like a great built in lesson plan to me) and then each student is given a fictional job and salary and then set up accounts with the same vendors you would in real life – like cell phone companies, internet and cable providers. It’s sort of like when you had to carry around a flour baby to simulate being a parent a health class, except now students are handling monthly income, paying bills, and 401(k) contributions.

H&R Block scores students based on the amount in a student’s 401(k), the ability to pay bills on time and results on short finance quizzes sent out every few days. It almost sounds like a budget version of credit scoring.

Winner, Winner…Scholarship Money Instead of Chicken Dinner

The top 20 students in the simulation (across all schools) will receive $20,000 in scholarships for high education and the top five classrooms will win up to $5,000 in grants. Then one lucky girl or boy with the highest score will be deemed valedictorian of the entire budget challenge (which kicked off in October 2014) and receive $100,000 in scholarships for $120,000 total.

The simulation lasts approximately two months from February 13 – April 16, 2015

How Teachers Can Sign Up

Teachers have until February 6, 2015 (so Friday) to register their classes. It may not be part of the Common Core (even though I think it should be), but this lesson can pay off financially for both you and your students. Teachers can win up to $5,000 in grant money for their classroom. Plus, you’re provided with lesson plans, educational videos and additional resources you may need.

You can register by going to http://www.hrblockdollarsandsense.com/.

How Parents Can Encourage Teachers to Sign up

Parents can send emails, snail mail, tweets or Facebook message to their high schooler’s teacher to encourage him or her to sign the class up. Well, maybe just email would be the best approach. I’d just encourage you not to be too annoying about it. Teachers are really overworked and drastically underpaid. Play up that grant money!

 

 What are you waiting for? Go make it rain with you budgeting skills. 

Posted in Budgeting Tagged with: , ,

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Mr. Rebates

Broke Millennial

Ebates Coupons and Cash Back

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