Beating Broke

Personal Finance from the Broke Perspective

Emigrant Bank Announces 3.75% Dollar Savings Direct

By Leave a Comment

Emigrant Bank announced their newest high yield savings account today.  Called the Dollar Savings Direct account, it will pay out what they claim to be an industry high 3.75% on all balances over $1000. I believe that there is at least one account that pays higher than 3.75% and the WaMu account is paying out 3.75%.  Still, a pretty good rate that is hard to beat.

If the name Emigrant Bank starts ringing bells for you, it’s because they run the Emigrant Direct savings accounts.  The Emigrant Direct savings accounts are a no minimum account that currently are paying 3.00% on all balances.  Neither account charges any fees and link directly to your current checking account.

It’s beginning to look like the Online Savings market is starting to heat up again.  With the current financial turmoil, people are starting to look for the highest yield they can find.  And quickly overcoming any qualms they have on using a online account to do so.  It’s a good thing for savers.

Choosing an Online Savings Account is Easier Than You Think

By 1 Comment

If you really want to over simplify things, you can choose online savings accounts by no other requirements than the interest rate that the account is paying out.  If that’s all you care about, then the current high yield king is WaMu with 3.75% (current as of 8/5/08).  The rest fall behind, but most all of them stick in the 3-4% range with only a few outliers in each direction.

So, unless you really, really want to chase rates, you’ll want to pick a savings account with some other things in mind.  Each person is going to have different things that they like and require, so I’ll share how I selected my accounts first.

When I was looking for a high-yield savings, I was looking for something to hold our emergency savings.  A lump of money that wouldn’t get touched for quite some time (hopefully). Because the money was just going to sit around interest rate was one of the most important factors.  At the time, I had narrowed it down to three accounts.  ING Direct, HSBC, and e-Trade.  e-Trade was paying 4%, HSBC was at 3.75% and ING Direct was at 3.3%.  They were all pretty close.  I decided that the interest difference was fairly minimal.  I chose ING Direct.  The deciding factor was the $25 bonus I got for opening an account with more than $250.  Even at 4%, that was well over a years worth of interest up front.

I’ve since moved our account over to e-Trade for the higher interest rate.  I still hold our account at ING Direct (several actually including a Orange Checking) for other household savings accounts such as a home improvement fund.  It really is just a matter of accounting now, so I could easily move the money from one to another.

When you go to choose your account, be sure to take into effect some of these factors.

  • You’ll want to make sure that the account will let you transfer to another savings account.  ING Direct doesn’t.  I get around that by pulling the money from my e-Trade account.
  • Is there any risk involved to the bank?  With a few banks being shut down, this is more of a factor than it should be.  Remember to make sure that wherever you put your money, it’s FDIC or NCUA insured.  As long as that is in place, you won’t lose your money up to $100,000.  And don’t be afraid to double check insurance claims with third parties.
  • Do you need a Debit Card?  Many of the accounts don’t give you a debit card.  ING direct does, and that was another important factor in my choice.
  • Are there any bonuses involved?  As far as I know, ING Direct is the only one that currently has a bonus program.  All you need is a referral code and you’ll get $25 with a new account of over $250.  (If you need a referral, let me know and I can get you one.)
  • Do they require other accounts?  Will they make you open other accounts to hold the savings account?  WaMu, for instance, requires a online checking account in order to have an online savings account.  Not a huge deal, but can be a bit of a nuisance.

I’m sure that there are other factors to take into effect when you select your account, but those are the big ones.  With interest rates as competitive as they are in this niche of accounts, you’ll be hard pressed to make your selection on interest rate alone.  And keep in mind that just having a high yield account puts you well on your way to debt freedom and financial independence!

Beating Broke Rules: Budget

By 3 Comments

If you’ve ever been involved with a company’s financials or been an investor researching a company, you likely know that they all have budgets.  In fact, they would have a pretty big problem if they didn’t have budgets.  And even with budgets, they still have problems when those budgets are unbalanced at the end of the quarter.  An unbalanced budget that is in the red can cause a paper loss of millions (or billions) in stock price.  That makes for a lot of unhappy investors (read owners).

Why shouldn’t those same rules apply for your personal finances?

Beating Broke Rule: A budget is a must.

Let’s face it.  Only the Government gets away with an unbalanced budget.  If you or I were to take up similar fiscal actions, we’d be declaring bankruptcy every year.  The bottom line is this; If you want to be fiscally responsible and be in control of your finances, you’ve got to have a budget.  And it must balance.  Must!

Let me finish by finishing the analogy.  Think of your personal finance situation as a “business”.  You and your Wife (or partner and any children you may have) are the shareholders.  When the “business” does poorly (i.e. runs in the red) the shareholders lose value.  Only, instead of being able to sell the stock and find a better performing “business”, you have preferred stock that is non-saleable.  What’s more, you’re the CEO, CFO, CIO, and mail room attendant.  There is nobody you can fire for poor performance and you can’t trim your labor costs with layoffs.

The only way for your “business” to perform well is to have a budget that balances.  If you really want to make your “shareholders” happy, you’ll find a line item in there for savings as well.

Analogies aside, a budget can really help you see where your money goes and helps you get in control of your money.  Instead of trying to find a few dollars at the end of the month to pay bills, you might just find a few extra for an ice cream cone or two.  If you’re curious how to create a budget, read my article on building a simple budget to learn how we created our first budget.