Frugaling

Save more, live well, give generously

  • Home
  • Start Here
  • Popular
    • Archives
  • Recommended
  • Contact
  • Save Money
    • Lifestyle Downgrade
    • Save Money with Mindfulness
    • Save at Starbucks
    • Psychological Trick To Reduce Your Online Shopping
    • Best Freebies
  • Minimalism
    • 8 TED Talks To Become A Minimalist
    • We Rent This Life
    • Everything Must Go
    • Lifestyle Downgrade
    • The Purchase Paradox: Wanting, Until You Own It
    • Nothing In My Pockets
  • Social Justice
    • Destroy The 40-Hour Workweek
    • Too Poor To Protest: Income Inequality
    • The New Rich: How $250k A Year Became Middle Class
    • Hunter Gatherers vs. 21st Century Desk-sitters
  • Make Money
    • Make $10k in 10 Months
    • Monetize Your Blog
    • Side Hustle for Serious Cash
  • Loans
    • 5 Rules To Follow Before Accepting Student Loans
    • Would You Marry Me?
    • Should I Have a Credit Card If I’m In Debt?
    • $50k in Scholarships in 70 Minutes

I’m Desperate For A Financial Makeover

By Frugaling 11 Comments

Share This:

Looking at a map

A year ago I read Burton Malkiel’s seminal text on investing, A Random Walk Down Wall Street, and concluded that it made sense to invest in exchange-traded funds (ETFs). He imparted a challenging message: people are inherently poor stock pickers, but we can be better through diversification and buy-and-hold strategies. ETFs would be a quick, affordable, engaging way to diversify, too.

Despite the logic, my brain wouldn’t relent — I wanted to invest in an individual stock. Like a horse being kicked and yanked to the right but continuing left, I decided, against my better judgment, to place an investment in a risky, small cap stock. I’d been following it for quite some time, and made a small prior investment. I wanted to put more in, though.

Only two weeks after doing so, I lost $400. How could this happen? Why did I fall for this logical fallacy and bias? I was berating my brain for the errors. The company looked poised for a rapid expansion. I had drunk the Kool-Aid.

I knew better than to make this recent individual investment, and did it anyways. Humbled, I was the definition of many of the investing problems and fallacies individuals have a habit of engaging in.

Like my flawed investment, I realized much of my financial strategies had become stale. Having money to invest was a new feeling, and the do-it-yourself route wasn’t working. I needed to refresh my checking, savings, and investment streams. And I wanted to feel secure in my financial future. Here’s how I analyzed and reviewed it all.

1. Analyze current accounts

Almost all banking goes through Ally Bank. With 1% and 0.10% on savings and checking accounts, respectively, Ally is an industry leader. I’ve been with them for years, and appreciate the domestic ATM-fee reimbursements and free checks.

After paychecks are deposited into the account, about 40-50% of the money goes to regular, immediate bills. Then, another large portion gets spent on food and regular expenses throughout the month. This variable amount is something I continue to work on and struggle with. Reducing food budgets is something I’ve written about before, and will likely talk about again. It’s vital for a frugal life. But after all is said and done, there’s only about $300-400 in leftover funds.

Right now, I’ve been putting the surplus into a savings account. Additionally, I’ve been investing in individual stocks, but with mixed results. At this point, and with such little money at the end of every month, I need to be smart about what I do with any extra funds. These funds will be used to travel for job interviews, licensure, work clothes, moving expenses, and other emergencies. It’s important to have a fair amount on hand for all these moments.

After looking at the accounts, I can see that I have two piles: a checking and savings. There aren’t specific accounts for individual goals. Money is one big slush fund of fun.

Another major unaddressed part is regular investing. As mentioned it’s a weakness within my current financial management.

International travel has been also concern financially; not necessarily the cost, as I use bonus miles for most travel, but the currency exchanges. When I traveled to Colombia about a year ago, I needed local currency and had no method to get cash without fees. It cost me quite a bit to talk to a money exchange business and have them take my USD for Colombian Pesos.

2. Consider other accounts, options

Based on this analysis, I will stick with Ally Bank as my primary checking and savings method. Direct deposits will continue to flow to this checking account first. The goal will be to use this to manage all regular bills and upcoming expenses. Ally has really earned my respect over the years, and I’m happy to stay with them.

Staying with Ally doesn’t mean I’ll be staying with the same strategy, though. I’ll be opening up a new savings account and calling it, “Vocational Expenses.” This will be specific for interview, moving, and other work-related expenses incurred over the next three years. Now, how much should go in here and how fast? I will likely need $4000-5000 over the next few years, but this is a rough estimate. To meet this target, I’ll deposit $250 per month automatically out of every paycheck (Ally checking account) for the next 16 months on the first of the month.

International travel currency fees have been abysmal. To remedy this problem, I’ll be opening up a Charles Schwab Investor Checking account and solely using my Capital One Quicksilver credit card. The interest-earning checking account provides most of the features that an Ally Bank affords, but includes ATM-fee reimbursements for international ATMs and no foreign transaction fees for purchases out of country. The account is widely regarded as the best travel debit card in existence. And unlike Ally’s checking debit card, Schwab’s debit card has a chip and pin. In preparation for any travel, I will place a budgeted travel amount into the Investor Checking account, but leave it at low levels, as there’s no minimum balance necessary. Moreover, I’ll use the Capital One Visa for all international transactions, as it has no foreign transaction fees.

The last revised strategy will be a regular, monthly deposit into a taxable Wealthfront account of $100 on the first of the month. Wealthfront provides low-cost (and free for those under $15,000 invested) asset management, and automates the entire process. They choose real estate, emerging markets, and domestic stocks. They reinvest dividends and provide timely updates.

Now, I don’t need to worry about rebalancing my portfolio or looking for low-load or low-fee funds. I’m exceptionally happy with their service and professionalism. Because I might need the funds sooner than retirement, I’ll be placing them in a taxable, brokerage account for now. Eventually, when I have more cash flow and income, I will place more in my Roth IRA to invest without incurring additional taxes.

3. Review decisions and new strategy

With any financial management plan, there are going to be hiccups. When you make as little as me, automating savings and investing helps, but can also hinder my plans. Sometimes, I don’t have enough money one month and can’t make the savings necessary. At the same point, the plan motivates me to earn and save more. Maybe it’ll even encourage me to save on food!

As I analyzed and reviewed my current actions and future plans, I reflected on interest rates and banking business. Today, banks are not in the business of encouraging you to save. They nickel and dime customers — especially brick and mortar banks — for every little thing. Checks? That’ll cost you. Overdraft fees? You bet. Minimum balance not met? Say hello to my lil’ fee.

Banks earn more when you spend. They profit when you’re in peril; a tragic irony that places their interests (pun intended) above yours. From car loans to mortgages to credit debt, banks increase their margins by marketing these products to their customers.

To save requires great care, forethought, and hours of hard work. To spend takes the swipe of your card.

Reviewing and updating your financial plan is one of the most important actions you can do. If anything, it helps you understand your financial fitness and maximize interest earnings. And maybe still, it challenges you to look for new ways to save and scrimp.

Filed Under: Save Money Tagged With: Accounts, automated, automation, Banking, Banks, Budget, Checking, Financial, investing, savings, Wealthfront

The Smart Home: More Productive, Efficient, Emotive, And Economical

By Frugaling 1 Comment

Share This:

Her Film Spike Jonze Smart Home Automation
Her by Spike Jonze.

The OS: Into our homes, hearts

Our brains are wired for interpersonal relations. Human-to-human contact reduces depression, anxiety, and a host of psychological concerns. When a child exhibits facial expressions that are more reminiscent of adults, there’s usually a cute relation to it. When a cat brushes up against you and purrs when you rub it, there’s a feeling of mutual connection. As adults, we connect with these as-if experiences – they’re so adult-like.

Skeptical Baby Meme Smart Home
Skeptical Baby Meme

Automated devices can be adult-like, too – mimicking that human-to-human experience and connection. In the recent film, Her, a lonely man falls in love with an operating system (“OS”). The OS predicts his needs, sends and organizes emails, and offers romantic companionship. The main character, Theodore, loves the anticipatory brilliance and personality of the device. Suddenly, this inanimate object becomes a vital part of his life – personally and professionally.

After watching the movie, a friend of mine asked if that predictive, assistive, and somewhat convivial system could ever exist. It made me chuckle. Frankly, these capabilities are nearly a reality and they’re going to lead to tremendous savings.

Beyond suggestions, you’ll find automation

If you ask Apple’s Siri (personal assistant software) how long it takes to drive from point A to point B, it’ll plainly explain how long and offer a map. The directions will account for changing traffic patterns, as well. Looking for the latest showtimes and reviews? Just ask Google Now and it’ll give you all the local theaters, films, and reviews. They all are at your service, waiting for your questions, concerns, and comments.

If an application can predict what you might like next (and is incentivized to offer paid suggestions), you’ll likely hear about some special deal at your favorite local restaurant. This could lead to budgetary problems from predictive advertising for some consumers, but there’s another side that is far more positive, environmentally friendly, economical, and a true productivity booster.

The power of smart homes, technology

Nest Thermostat Smart Home Appliances
The Nest Thermostat

If you’re a discerning automation expert, you may realize that asking a question and getting a simple response aren’t quite the same as engaging in full-length dialogue (back and forth) with a software package. This Her-like capability is coming to many devices. It’s going to completely revolutionize our homes, heads, and hearts.

Imagine walking up to your apartment/house, seeing the lights turn on, feeling the heat match your immediate needs, seeing the oven beginning to preheat (knowing that you got your favorite type of take-and-bake pizza); all the while, a virtual assistant checks in with you to see how your day went. This is the not so distant future.

By automating the simple tasks and leaving them to computers, we can appreciate from electricity, heating, and gas savings. Have you ever left your house’s air conditioning or heating on too high while away? How many times do you accidentally leave lights on in your house after you leave? These forgetful moments can seriously hurt your bottom line. Smart homes can predict and prevent these errors.

A few devices are already leading to serious savings. For instance, Nest has created a thermostat and smoke detector that can communicate with each other. Used in conjunction, these devices can tell when you’re presently in your home – changing the temperature to something more economical when you leave. All of it is automatic – no more adjustments. The thermostat can even be locked to prevent tampering. By properly controlling your thermostat, you can save $173 a year.

By allowing these devices into our home, we can actually be safer and more prepared if anything happens. The Nest Protect (smoke detector) sends alerts if it senses smoke and/or carbon monoxide. This is just the beginning of a serious technological evolution. The future will bring these systems in unison, and give them a voice.

The future looks frugal

There are many players in the smart home market. This has led to fractured, expensive devices. Companies are investing billions to create automation technologies with sharp designs, but they aren’t universally connected – they can’t necessarily communicate with other systems. This is where competition can hurt innovation.

These tech stalwarts and startups are battling for space in your home. Google has been on a buying spree – getting everything from Nest Labs to Boston Dynamics (a robotics company). Apple is developing and modifying Siri constantly – aiming to make it more interactive and available. Each of these iterations will further a sci-fi reality that includes a smarter home.

As the leaders emerge and prices begin to fall, the demands that technology and regular household devices ask of us will swiftly decline. We should have more time for work, family, and enjoying what’s really important in life. This the essence of frugality and it’s coming to fruition one smart device at a time.

In case you haven’t seen Her, here’s the trailer:

Filed Under: Save Money Tagged With: Apple, applications, automated, automation, connection, emotions, Google, her, ios, nest, now, os, play, remote, saving money, siri, smart home, wemo, wireless

Follow

  • Facebook
  • Google+
  • Pinterest
  • RSS
  • Twitter

Subscribe

Best Of

  • The New Rich: How $250k A Year Became Middle Class
    The New Rich: How $250k A Year Became Middle Class
  • 5 Tricks To Save Money At Starbucks (Updated)
    5 Tricks To Save Money At Starbucks (Updated)
  • Destroy The 40-Hour Workweek
    Destroy The 40-Hour Workweek
  • The Real Reason Poor People Can’t Save
    The Real Reason Poor People Can’t Save
  • Was Albert Einstein A Minimalist?
    Was Albert Einstein A Minimalist?
  • My Low-Income Lifestyle
    My Low-Income Lifestyle

Recent Posts

  • How To Find A Reliable Service Provider For Currency Exchange
  • First-Time Landlord: Know Your Rights to Protect Yourself from Bad Tenants
  • Increase Your Revenue Simply by Being a Great Manager
  • How to Earn Extra Income During the Lockdown
  • 4 Ways That Residential Replacement Windows Will Help

Search

Archives

  • January 2021 (2)
  • December 2020 (2)
  • October 2020 (2)
  • September 2020 (1)
  • August 2020 (3)
  • June 2020 (1)
  • May 2020 (2)
  • April 2020 (1)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (1)
  • November 2019 (5)
  • September 2019 (4)
  • August 2019 (1)
  • June 2019 (1)
  • May 2019 (1)
  • April 2019 (1)
  • March 2019 (3)
  • February 2019 (1)
  • January 2019 (3)
  • December 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • June 2018 (2)
  • May 2018 (1)
  • April 2018 (5)
  • March 2018 (6)
  • February 2018 (4)
  • January 2018 (1)
  • December 2017 (10)
  • November 2017 (3)
  • July 2017 (2)
  • June 2017 (5)
  • May 2017 (2)
  • April 2017 (8)
  • March 2017 (4)
  • February 2017 (3)
  • January 2017 (2)
  • December 2016 (2)
  • November 2016 (4)
  • October 2016 (2)
  • September 2016 (1)
  • August 2016 (4)
  • July 2016 (1)
  • June 2016 (3)
  • May 2016 (3)
  • April 2016 (4)
  • March 2016 (5)
  • February 2016 (2)
  • January 2016 (2)
  • December 2015 (3)
  • November 2015 (5)
  • October 2015 (5)
  • September 2015 (4)
  • August 2015 (6)
  • July 2015 (8)
  • June 2015 (6)
  • May 2015 (14)
  • April 2015 (14)
  • March 2015 (13)
  • February 2015 (12)
  • January 2015 (15)
  • December 2014 (10)
  • November 2014 (5)
  • October 2014 (6)
  • September 2014 (7)
  • August 2014 (12)
  • July 2014 (11)
  • June 2014 (12)
  • May 2014 (16)
  • April 2014 (13)
  • March 2014 (13)
  • February 2014 (9)
  • January 2014 (20)
  • December 2013 (9)
  • November 2013 (18)
  • October 2013 (15)
  • September 2013 (11)
  • August 2013 (11)
  • July 2013 (27)
  • June 2013 (18)
  • May 2013 (16)

Best Of

  • The New Rich: How $250k A Year Became Middle Class
  • 5 Tricks To Save Money At Starbucks (Updated)
  • Destroy The 40-Hour Workweek

Recent Posts

  • How To Find A Reliable Service Provider For Currency Exchange
  • First-Time Landlord: Know Your Rights to Protect Yourself from Bad Tenants
  • Increase Your Revenue Simply by Being a Great Manager

Follow

  • Facebook
  • Google+
  • RSS
  • Twitter

Copyright © 2021 · Modern Studio Pro Theme on Genesis Framework · WordPress · Log in