Vacation and Perspective - Simplify Your Finances

Posted on May 6, 2008

The Rock Garden went vacationing this past weekend to Pocono Mountains of Pensylvania just outside of Jim Thorpe, PA. We got a great a good deal on a modern three bedroom house with a scenic view that I will post about later. Despite a wash out on Saturday and some allergies, it was a great vacation. I am not here to talk directly about the vacation though, but rather something peculiar that I noticed.

The Satelitte TV wasn’t working in the house and there was no internet. The amazing thing was that after the 36-48 hour withdrawal period, I began to notice some changes in my brain activity. The further I was removed from overloaded email boxes, must see TV, Twitter, flashing phone messages, to-do lists, and daily bustle of life my brain began to exercise areas that it doesn’t normally use. It seems like the immediacy of our daily lives keeps our brains focused on surface tasks. These surface tasks often impede us from focusing on the things that will truly bring us joy or things that will provide much greater value.

I was able to think about were I wanted to be in a year, or five years without getting overwhelmed. I was able to step back and view some of the daily grind with objective glasses. Our spending patterns became much more visible when I wasn’t focuses on the latest Target receipt. I found new oppurunities for passive income and areas for frugality, all because I had time and mental energy to devote to thinking about such things. One of the big things we realized is that we really need to tighten the reigns on the budget/spending if we want to have the type of down payment we desire to move in around a year.

So what does this means to our finances? It means that our lives and our financial systems need to be simplfied to the point that our brains can jumpstart idle areas of our brain back to life. Areas like creativity, chasing dreams, and romance. I think it will take years constant growth and changes to really understand, but I know that when I look back in five years I will be amazed out who much more my brain is alive.

Here are a few ideas that I will be doing to help simplify and set the daily tasks on auto-pilot:

Cancel Those Extra Savings And Checking And Credit Account - If I am honest, the added headache and management time just isn’t worth it.
Improve Your Bill Pay And Budgeting System - Setup up automatic reminders. Call and change the due dates on bills to be the same time.
Get Out Of Debt And Get Security- Finances are so much easier without debt and with an emergency fund. It really is night and day.
Sell Or Give Away Stuff - Furniture you don’t need. The garage full of junk. Books. You may need it someday, but it probably isn’t worth the hassle of keeping it around just in case.

» Filed Under Chasing Dreams, Personal Finance Systems

The Best Cash Back Credit Card Analysis For The Happy Rock

Posted on March 31, 2008

About a month ago, I switched my only credit card from my Sunoco Mastercard which I have had since college to the Chase Freedom card. Why? Because I was leaving money on the table since I wasn’t taking advantage of the new breed of cash back cards that have come out in the last few years.

Using my spending history I was able to quickly see how my Sunoco Card matched up to my other options. My Sunoco card offered 4% cash back on all Sunoco purchases and 0.5% up to $7,500 then 1% on everything else. It should be noted that when I called to cancel, they offered me six months of 5% back on gas and groceries. I probably should have taken that deal and waited to switch, but I was to intent on canceling. It is at least good to know that even credit card rewards can be bargained through a simple call and some competition.

The Chase Freedom Card offers 3% back on $600 a month in your three highest spending categories and 1% on everything else. They also allow you to save your cash back until you hit a $200 balance and then they will send you an check for $250, an extra 25% reward. You also gets $50 cash back after your first purchase.

The Amex Blue Cash offers 5% cash back on gas, groceries, and drugstore purchases and 1.5% on everything else after you spend $6,500 for the year. Before that you earn 1% on gas, groceries, and drugstore and 0.5% on everything. This would be the best single card if you could spend $6,500 really early in the year, but for my calculations I assumed distributed spending.

In the final analysis I chose the Chase Freedom card not only because it would earn me the most cash back for my spending habits and a $50 first purchase bonus, but it is also accepted everywhere credit cards are accepted, unlike the Amex Blue Cash. I know that I could do better using the Blue Cash or using both of them, but my general principle is to keep the system simple. I personally don’t want to waste any mental energy on trying to extract an extra few dollars in credit rewards. I would rather focus on things like income generation, family, and giving that all provide much better returns on my energy. I have been happy so far with the new card, and the $50 was quickly applied to my account. The website is solid and the Chase Freedom connects directly with Quicken to save me time. I am quite The Happy Rock with my new card. Plus it is shiny and new!

If you have COMPLETE control of your spending it is probably worth looking in getting a decent cash back credit card. I probably cost myself $2,000 in the last 5 years by not switching sooner.

Just to keep the record straight, despite my affinity for Dave Ramsey’s principals I slightly disagree with his views on credit card for those that have firm control of their spending. For those that are getting out of debt or don’t have control of their spending I would recommend canceling the card until you have complete control over your expenses, spending, and bill paying. For me, I didn’t understand the responsibility of that credit requires early in college, but I learned from my defaulted Sears card experience and have not paid a finance charge or fee in 10 years. That is the kind of spending history that I would recommend attempting to use a credit card to their benefit, otherwise it will probably costs you more than the measly rebates will gain you.

Note : For those that Drive a lot the Citi Driver’s Edge offers 6% on gas, groceries, and drugstores for the first year and 1% on everything else, plus a penny for each mile you driver. With a long commute that could add up to big bucks. The one caveat is that the cash back must be used for a car purchase within 5 years.

» Filed Under Credit Cards, Personal Finance Systems, Spending

Frugal Tool Chest Tip #1: Get Money Back On Your Purchases With Price Protectr

Posted on March 15, 2008

The Frugal Tool Chest is a recurring series covering practical tips and tools that will arm you to save even more money on your online purchases. I

The first frugal tips involves a website that will notify you when the price drops on any of your recent purchases. How does this help? Well, most stores have a price protection policy that allow you to receive a refund if the price of the item you purchased dropped before X number of days post purchase.

For example Amazon’s policy is currently this :

Post-Order Price Guarantee

Amazon.com’s prices for released items will change from time to time based on a variety of factors. If Amazon.com’s price for an already-released item decreases within 30 days after we ship the item to you, we’ll be glad to refund the difference in price if you contact us. Please click the Customer Service button on the right side of this page, and be sure to have your order number handy so we can assist you.

So how do you protect your purchases. Going back to the item listing for the next 30 days is just not feasible, so you let a site like Price Protectr do it for you. Here is my review…

All you do is supply the link to the item you purchased, verify the when you purchased it, verify the purchase price, supply your email, and click submit. That’s it! Price Protectr will snotify you that the item is being protected and then send another email if the price drops before the price protection policy expires for the site. It really is that easy. The have a large list of sellers that they support, but they don’t support every site.

Since I was reminded of the site a week ago by a co-worker, Ray of Taco Man and Burrito Boy fame, I have saved about$5. One item dropped on Amazon twice for a total of about $4.35.

A sample Price Protectr alert email looks like this :

Price Protectr saw a price drop on the Pinzon 400-Thread-Count 100% Egyptian Cotton Hemstitch Queen Sheet Set, Sand you submitted for price protection at www.priceprotectr.com.

You purchased the item for $42.34 and it’s now $39.99! The item URL is:

Pinzon 400-Thread-Count 100% Egyptian Cotton Hemstitch Queen Sheet Set, Sand

Please verify the item and price, and review the retailer’s price protection policy before requesting a refund.

To claim your refund: Visit their contact page, click the ‘e-mail’ tab, and choose ‘Refund Inquiry’ from the dropdown list. Or contact their customer service department at 1-800-201-7575. Hitting 7 should get you to a customer service rep right away.

If you collect your refund (or try to), don’t forget to log into your My Stuff account and leave a retailer review!

To change your notification settings, go to the account setting of your My Stuff account.

Thanks for using Price Protectr!

Following the instructions in the email, I sent a brief two sentence email to Amazon and had a refund back on my card in about 24-48 hours. The email doesn’t have to be anything special either…here is what I put in the email contact page :

The price of the sheets i recently purchased dropped a $2.35 cents since I bought them, I would like a refund for the difference as the price protection policy states.

Thank you for the great service and products.

Done! It is really quite gratifying to receive a Price Protectr alert! Give a try, you bank account will probably notice.

» Filed Under Frugal Tool Chest, Frugality, Money Savers, Personal Finance Systems, Spending

The Benefits Of A Decent Interest Rate In Your Checking And Savings Accounts

Posted on February 2, 2008

Hooray for ING Direct. I made $1000 dollars of income in 2007 with no effort! I just got my tax sheet for my ING accounts and saw that I made $99.77 from interest from my checking account and over $900 from our dozen or so ING savings accounts. I would have made $200 from the Electric Orange account, since my first direct deposit was the first week of June. Not bad at all.

Now, because of the Fed’s willingness to tinker with rates at the drop of a hat, the interest rate on the checking is currently 2.25% and 3.4% for savings. The rate when I signed up was close to 4% for checking and closer to 5% for savings, so I won’t expect to make nearly as much this year. I still can’t argue, since I had been earning nothing on that money for years.

The other side benefit is that transfers between Electric Orange Checking accounts and ING savings accounts are instant, rather than the 2-3 days that it took when I had a linked checking account. So not only am I making money while the deposit sits in my checking account, I am also making money during the 2-3 days while the money used to change hands.

ING Direct is awesome. Best account interface that I have used, perfect stability and a reputable name with a long history. Some people like to chase the best rate; I prefer the simplicity and stability of sticking with a competitive trusted friend.

On a side note, if you have any questions about my ING setup or ING directly, just leave a comment. Also for those that do not yet have an account at ING, you can get $25 free dollars just for opening an account with at least $250. I will also get $10 for the referral. Just Email Me, and I will send you a referral email.

» Filed Under ING Electric Orange, Personal Finance Systems

ING Direct Lowered Their Interest Rates on 9/19

Posted on September 25, 2007

In case you missed the emails and the news like I did, ING Direct lowered there interest rates effective 9/19.

ING Savings accounts went from 4.5% to 4.3%.

Electric Orange Checking rates took and even bigger hit from 4.0% to 3.5%

$0-49,999.99 earns a 3.50% APY

$50,000.00-$99,999.99 earns a 4.90% APY

$100,000.00 or more earns a 5.00% APY

Finally, Business Savings rate went from 5% to 4.75%.

For the $12,000 we have in emergency fund and our average checking account balance, the loss will be about $50 a year. Not a huge loss in the scheme of things. I don’t plan on changing my checking or savings account from ING anytime soon as I love their service, reputation, and interface. I also suspect other companies will follow suit.

*If you would like a free $25 dollar for opening a new brand new checking or savings account at ING direct, contact me for more information.

» Filed Under ING Electric Orange, Personal Finance Systems

Recovering From The Microsoft Money Server Upgrade

Posted on August 10, 2007

I cleared a hurdle I had been putting off for about three weeks now; I spent about two hours tonight bringing my Microsoft Money records back up to date. It was two hours I didn’t have, but two hours that were sorely needed. In mid July Microsoft decided that their Money servers need a complete overhaul. Since that time I haven’t been able to download my transactions for my ING Electric Orange checking, savings, or my one credit card. With the July Cash Spending Experiment in full swing, I wasn’t too worried about it since my normal way of operating wasn’t needed. Now with July over, I finally needed to bite the bullet and fix what they broke.

To be honest I did spend about 20 minutes searching for better personal finance software options, and thought about upgrading from Money 2005 to 2007. I didn’t switch or upgrade, because I honestly don’t have the time and energy to invest in learning a new tool. Plus I have three years of budgeting and finance information in Money format. I would love to entertain any reader suggestions about possible good transition software from Money. With that said, Money suites my needs fine.

After some minor frustration and keyboard pounding I was able to trick Money into being able to access my accounts again. The big tip was to go to the financial institutions and download the transactions manually to help Money learn. Believe it or not, it really helped. Once that was done, I had probably 100 transactions to reconcile and categorize. That is my favorite feature of personal finance software. It really helps my conceptualize and track how much money we are spending and were it is going. Money can also do some simple charts which not only look pretty, but can serve as good marriage communication tool. I finally finished up by taking care of some bills.

I could have really used the two hours for other activities, but it really feels good to have that squared away again. The next big task is to square away the pile of receipts from all the July cash spending, and see if we actually saved any money.

» Filed Under Experiments, Finance Software, Personal Finance Systems, Productivity(Financial)

Save $271.23 by Moving to ING Electric Orange

Posted on May 30, 2007

I ran some numbers and here are the savings that we will receive in the next year by migrating our checking accounts to ING Electric Orange checking. It is not a ton of money, but it comes from a change that will also simplify our personal finance system. Two for one deal.

» Filed Under ING Electric Orange, Personal Finance Systems

ING Electric Orange here we come

Posted on May 29, 2007

With the previously posted guidelines in mind, we set out to come up with positive changes to our financial system that would increase our freedom and support the things we truly want to focus on. Here is the link to the previous system.

And without further adieu, here is the map of the updated system :

_{Note: On some screens the map appears off center, you can click and drag it to center it. Sorry.}

As you can see the main change the move from our Wachovia free checking to the paperless ING Electric Orange Checking as our primary checking account. The push was to get the money in our checking account working for us.

The 4% interest on the checking account balance should bring us an extra $100+ a year.
The other big benefit is that it streamlines our main finance accounts into one hub of savings, checking, and mortgage.
Transfers between all of the ING accounts are INSTANT, instead of the normal two do waiting period that it used to take.
Debit card use is fee free.
No more stamps for bills.
Electronic transactions downloaded to Microsoft Money are free.
They have the reputational capital of a large established financial institution, despite a few recent hiccups.
The only drawback that I see is that the Electric Orange account does not allow accounts to have an paper checkbook.

The final point will add some inconvenience, but what they do offer is the ability to fill out an online check that will be printed and sent snail mail at their expense. My wife and I talked it through and decided that even though it will be a little added inconvenience at first, it would eventually become habit. Here is why we came to that conclusion:

I sent e-paper check to myself and it took about three days to get to me. The process was easy enough and was an acceptable speed.
If needed you should be able to send a check to yourself that is made out to someone else.
Finally, we will keep our Wachovia checking for access to an occasional check and counter services.
We will not have to use another stamp on bills again.

I will post a review or two on how we are managing with this account as we get a better handle on the experiential benefits and drawbacks.

As for other changes we decided to make, we are adding an Educational Savings Account(ESA) or other college savings vehicle to the to do list. My son is a top priority, but our finance system was explicitly excluding him. Looking at our finance map reminded us to make him a priority. I will also post my research on which account we will open.

We will close the NJM checking account and have the Happy Rockette’s check deposited into the Electric Orange account. This will simplify the system and allow that money to be working harder for us.

Finally, we will search for a new rewards credit card that matches our spending habits to maximize the returns. Currently we probably get $100-$150 a year cash back, but I know we can do much better than that. Already the Chase Freedom or the Blue Cash card look promising. We may wait for a big $250 signup bonus or triple points, but they come around often enough.

Overall, we are excited about the changes. The fact the the system will be more tailored to our habits, work harder for us, and better support our freedom from finances is invigorating.

» Filed Under ING Electric Orange, Personal Finance Systems

What should our personal finance system “buy” us?

Posted on May 25, 2007

Before I post on how we are going to change our current system, I wanted to discuss what I am looking for in a good finance system. Note, I am using personal finance system to mean the accounts and tools that your money flow through from paycheck through payment and/or savings. As always, the purpose of analyzing this and the overall theme of The Happy Rock is to continually simplify our lives in order to create more freedom for the goals and people we truly value in life.

Here are five areas that should be analyzed when creating, tweaking, or assessing a personal finance system. A personal finance system should be :

Simple - First and foremost, I am convinced that a good system needs to be simple. If it is not simple, it can rob us of the motivation to use the system to our best advantage, or waste time that could be spent on other areas. Simplicity is a broad term, but here I am mostly talking about number of accounts. With each extra credit card, bank account, and savings account in the system, comes add complexity(even if the accounts themselves are ’simple’). Complexity breeds more rules to juggle, more points of failure, more time investment, and ultimately more stress. Complex schemes seem easy when everything is running smooth, but throw in a lost job, unfortunate death or injury, or even a mistake and the system can collapse. One late fee or bounced check can quickly wipe out all the benefits we thought we were receiving from our schemes.
Freedom is usually sacrificed as complexity increases. If you really feel that you ‘need’ added complexity, make sure that you get a premium for the extra time, stress, and complexity. For me, 40$ or even 100$ dollars a year in interest isn’t worth the negative side effects of too much complexity.
Finally, simplicity is crucial for facilitating good financial patterns in marriage. If one spouse creates a system that is inaccessible to the other, it creates an imbalance of power and destroys communication. The system should foster sharing of stress/responsibility, ideas, workload, and accountability. Without the ability for each spouse to ‘do their part’, the system loses the bulk of its effectiveness.

Working for you - The ability for the system to provide returns on the money you earn is a key component. It boils to down to more freedom. The more your system earns for you, the less you need to focus on earning. When drawn out over the years(retirement), the importance of this factor becomes even more apparent. Here the main components to look for: interest rates in your savings account and checking accounts, credit card rewards, and performance on retirement vehicles. Performance needs to always be balanced against risk. The higher the risk, the better return you need to earn. As a guideline line, savings should earn above 4%, checking above 2%, credit cards rewards from 1%-5%, and retirement performance would hopefully be 10% or more over for those with a long time before retirement.
- Fees/Rates - I also want to lump in fees, because they will detract from you earning power. Late payment fees, service charges, overdraft fees, mortgage rate, credit card rate, and ATM fees will effect your bottom line. For example, $20 a month on ATM withdrawal fees would probably warrant a close look at new options.
Easy to Use - Ease of use speaks to the complexity and convenience of the tools that the system offers you. Instead of breaking this into categories, I will throw out some questions that I think about are relevant: Is the website straightforward and easy to use? How hard is it to transfer money? Check card options? What does it take to deposit? Is customer service easy to contact, friendly, and efficient? Do I have access to branch services? Easy payment options? Do I have to wait in long lines? What happens when the internet is down? Good training materials? Remember, each person may have different requirements here, so balance the questions I posed with the particular questions you need to ask.

Provide Protection from Mistakes - The idea here is that when we inevitably make a mistake(and we will), how badly with the system penalize use? A large part of this requires doing business with companies with solid reputations that aren’t out to ‘get you’. Other than fee structure, this is based mostly on the experience of others. Research really helps, and the internet and blogosphere provide a plethora of relevant material. Most people bounce their first check, and don’t realize that they can call the bank and be given fee reductions. For example, the other day I emailed Wachovia to see if they could do anything about the Microsoft Money service fee. Although they couldn’t help long term, they did remove May’s $5.95 monthly fee.

Supports your Goals - Your whole financial system should be setup up to support your values and goals, but what does that really mean outside of helping me earn the most money. For me, I noticed that a college fund is noticeable absent from my system. Since my family is of the utmost important, I decided to pursue an ESA as part of our system. This support could even be more personal. If one of your values is earth friendliness, then maybe you would choose companies that are more environmentally aware. When a system aligns with your goals, using it will provide a sense of fulfillment that will help propel you forward. I know this may seem like overkill, but a little forethought and planning can go along way to creating success and achieving freedom from in your personal finances. So what does your financial system look like, and how does it stack up? Next post I will tie these criteria into the changes that we are making to our finance system.Does any one have any other criteria they use? Feel free to drop a note in the comments.

» Filed Under Favorites, Marriage(Communication), Personal Finance Systems

Map Out Your Personal Finances With Bubbl.us

Posted on May 22, 2007

For just under a year we have been saving to fund our emergency fund. During that period our finances have been on auto pilot. Monthly budget meetings were taking five minutes, and there weren’t many decisions that needed to be made. We finally have our emergency fund to $12,000 or about 5 months expenses and now it is time to attack the retirement and college savings. Seems like a perfect time to shake things up and create more simplicity and freedom in our finances.

Before we get there though, I wanted to thank Wachovia for graciously providing the impetus to simplify our financial system. The final straw was when an unexpected $5.95 charge showed up. I later found out this was a new monthly service fee for electronically downloading account information to Microsoft Money. We were ready to change. I decided it would be helpful to map out the flow of money through our current financial system. I decided to use a Web2.0 mind mapping tool, because it is easy to use, free, and provided a nice interface for wordpress. Here is a the map of our current personal finance system using the very cool bubbl.us interactive wordpress plugin. Feel free to drag and zoom the diagram for your viewing pleasure.

Please email or comment, if you are having problems seeing the clickable diagram.

I did this for a couple of reasons : first, it is hard to keep track of all of the money movement in my head. Second, I tend to be a visual learner. Third, it is would be a nice reference for the family. Finally, I thought it would be neat to share in the blog.

Here are some things that I noticed as I thought about each piece of the system and the money flowed between them.

Complexity. The system worked not because it was a great system, but because we had developed good habits. There is significant time being wasted when shuffling between all of the accounts.
The NJM account is pointless. As soon as money is transferred in, I transfer it to savings. Even though all of our finances are joint accounts and managed together, there was needless separation of the accounts. The account happened to be left over from a half-hearted switch to the internet friendly NJM Bank years ago.
Our main checking account was not giving us any interest. A brief check in Microsoft Money revealed that we carried an average balance of $2,500 to $3,000 in our checking account last year. This could earn us an extra $100+ a year in interest.
The two day settle period to move funds between checking and ING savings is very cumbersome.
My credit card is really outdated. There are much better options that have come along in the last few years.
I liked having access to branch services like counter deposit,bond cashing, change cashing, and international money exchange, etc.

In my next post I will share how we are updating the system to create more freedom for the things we truly. value.

» Filed Under About Me, Personal Finance Systems, Productivity(Financial)