Money To Live

July 31, 2008

Defining Moments: Katy bounces a check

Filed under: banks,defining moments — by moneytolive @ 5:00 am
Tags: ,

Defining Moments is a series about how we remember money and how it has shaped our lives.

At the end of my first year of graduate school, I stayed in the dorm one extra week before leaving for the summer, and for this I owed the housing office $110. I wrote a check to the housing office, withdrew all the cash from my checking account, and hit the road.

When I got back in the fall, there were three important letters in my departmental mailbox:

Credit Union: notice of a bounced check

Housing Office: first notice of unpaid housing bill

Housing Office: second notice of unpaid housing bill

My stomach in knots, tears welling in my eyes, I called the housing office. The receptionist told me not to worry and to pay whenever I had the money. She must have heard the worry in my voice. Or maybe she thought I was a humanities grad student.

Next I called the credit union expecting the worst: a bounced check fee, overdrawn account fee, late repayment fee, etc. The credit union, however, said there was no charge!

This is what I learned:

I was lucky. In college a friend was hit with nearly $100 in fees after overdrawing her checking account. The Federal Reserve estimates that an overdraft of $80 could lead to $75 in fees.

Obviously, be more careful when closing an account. Wait a few months before withdrawing the balance to make sure all outstanding checks have cleared the account.

Credit unions are awesome. Credit unions are not-for-profit, which enables them to offer high interest rates for savings accounts and low interest rates on loans. Also, they are not looking to make a profit off a customer’s mistake. Find one near you.

If you are hit with overdraft fees, there are a few things you can do.

Request that the fees be waived. Though this may or may not work (it often work with credit card fees), it is good practice to ask for extra fees to be reduced or removed.

Consider making a link to a savings account or switching to a bank that allows you to link to a savings account.

Write to your representative in congress asking for support of fair overdraft protection programs.

July 30, 2008

Bigger is better

Filed under: productivity — by moneytolive @ 5:00 am
Tags: ,

Bigger is better … at least when it comes to monitors.

Studies have shown that people are more productive when using larger monitors or two monitors at once, especially at tasks that keep multiple windows open (read about this in the NYT and WSJ)

Just last week I visited a friend at her office, and she showed off her new second monitor. Since she builds webpages, her boss got her another monitor so that she can work faster.

If you are looking for a new workstation set-up, two medium-size monitors might be cheaper than one larger monitor.

I write these posts on a 17″ MacBook Pro. It is a lot easier to write with this laptop than on my old 13″ iBook. I can keep a WordPress tab open in one Firefox window and in another window my list of ideas for posts in Google Docs.

How is your workspace set up? Have you tried dual monitors?

July 29, 2008

Reaching a financial goal

Filed under: goals — by moneytolive @ 5:00 am
Tags: ,

In 2007 I reached my first major financial goal, and I was not sure what to do.

The typical American way to celebrate is to spend money — either by buying something new or going out for an expensive meal. I thought about going out for a nice meal, but it seemed wrong to celebrate a larger net worth by spending money.

Instead, I made a donation to a charity I care about. Now with each new financial goal, I set a corresponding goal of donating money to celebrate.

How do you celebrate reaching a financial goal — whether it be for packing lunch every day for a week to save money, joining a carpool to save on gas (and reduce emissions), or reaching a multiple of your net worth?

July 28, 2008

Keep the Change?

Filed under: banks — by moneytolive @ 5:00 am
Tags: , ,

Bank of America offers customers an innovative incentive program Keep The Change — the “change” of each debit transaction is moved to a savings account, and Bank of America matches a percentage of your change.

This sounds like a pretty good deal, but it leaves out part of the story — what is the interest rate in the savings account? While your change earns a great rate of return, the rest of your savings will languish.

Here is my analysis on participating in this program for one year and using the savings account as an emergency fund.

I assume that 30 debit transaction are made each month. The average amount of change is $0.50. Total amount of change generated in one month is $15.

First three months

  • Change generated: $45 total
  • Match from the bank (100%): $45

Last 9 months of the year

  • Change generated: $135
  • Match from the bank (5%): $6.75

Totals for the year:

  • Change generated: $180
  • Match from the bank: $51.75

Those numbers look pretty good.

To enroll in Keep the Change, though, you need to have a qualified account, such as the Regular Savings Account, which has a minimum balance of $300 ($3 monthly fee if below), and only pays 0.2% interest.

Your “change” earns a great 100% return for three months and then a respectable return of 5% for nine months. The rest of your money, however, is earning a paltry 0.20% interest (as of July 2008). With an emergency fund of $6,000, using this account means forgoing more than $100 in interest that could have been earned in an account earning 3% interest.

Bank of America can keep its own change.

If you like the concept, set up an automatic transfer of $20/month to a high-yield, no minimum savings account where you keep your emergency fund

July 27, 2008

Maximizing frequent flyer miles

Filed under: travel — by moneytolive @ 5:00 am
Tags:

photo by Tomasz Turczyński

One way to use airline reward miles is to get a round-trip ticket between two cities in the mainland US. An easy way to get more from your frequent flyer miles is to extend the trip to one more city. For no extra miles, another city can be added to the ticket as a stopover.

On American Airlines, the small downside of this wonderful deal is that reserving such a ticket is currently not possible online. It requires calling a representative, which incurs a $20 or $30 charge.

July 26, 2008

Review: www.irs.gov

Filed under: review,taxes — by moneytolive @ 5:00 am
Tags:

Perhaps one of the most anxiety-inducing websites is www.irs.gov. But it doesn’t have to be.

These are some of my favorite features of http://www.irs.gov.

The search tool. Use the search feature to find easy-to-read information about anything related to federal taxes. When I search “deduct taxi,” the top hit is a page explaining that the cost of taking a taxi to the doctor is deductible (helpful for parents in NYC who do not want to take a sick baby on the subway).

Links to free tax prep software. A number of web sites help you prepare and file your federal tax return at no cost. Be aware that these sites will often charge you to file your state return, though. Check out your state’s taxation webpage because many states offer free web-based programs for filing.

Information about EFTPS. EFTPS is an electronic system for paying taxes. I recommend that anyone who pays quarterly taxes check this out. It keeps a complete record of the tax payments for the year.

July 25, 2008

Earn more: Ask for more

Filed under: earn more — by moneytolive @ 8:11 am
Tags: , ,

Where I worked the past few summers, there is a “summer wage cap” determining the maximum amount a person can be paid during July and August. Last summer I was making less than this cap, so I asked for and received the difference ($2,800) with no hassle.

If there is a maximum amount you can possibly be paid, ask for the maximum.

I told several colleagues about this, and, as far as I know, everyone who asked for the full summer wages got the increased wages approved immediately.

July 24, 2008

Welcome

Filed under: Uncategorized — by moneytolive @ 4:36 pm

The phrase “money to live” comes from something my mother used to say whenever I complained about spending money:
“It takes money to live.”

I used to be (and still sometimes am) shocked at how expensive things cost. “Things” could be a shower curtain, a gallon of gas, or the $5 surcharge on my gas bill. My mom has always responded patiently to my laments with a sigh and “It takes money to live.”

After supporting myself for several years, I came to understand that I use money to live the way I want.

My best friend is my sounding board for everything in life, and I knew I had the right name for this blog when she said, “I need money to live, but otherwise I don’t care.”

This blog is aimed at those who do not want to be confined by their finances but want to use money to live.

Create a free website or blog at WordPress.com.