MyMoneyMinute.com

Once Upon A Time

Our Free Checking Account

We’ve been in the Dallas-Fort Worth metroplex for nearly five years now.  After we ditched Washington Mutual, we moved our accounts to a local bank, and went with their free checking option.

For four years, our account sat there making no interest.  Now that we use our prior month’s income for our current month’s budget, we typically have at least up to a month’s worth of cash in the account.

Recession Buster

Finally, about two months ago, I chatted online with a bank representative about a high-interest checking account.  The move was simple and done right online.  We immediately went from zero interest to making 4.0% on our checking account balance!

Eureka!

Find a High Interest Checking Account

I was happy with a 4.0% interest rate that came without the hassle of changing banks, but interest rates over 5% are available through other banks – local or otherwise!  Here’s a few links I found:

• High Yield Checking Deals is a blog that lists, by state, the highest-paying high-yield checking bank accounts.  There are dozens in the 5-6% range!  This site also gives statistics of the average yield & balance cap for the combined accounts.
• CheckingFinder is recommended by (and advertises on) the Dave Ramsey Show, and lists banks by zip code or by interest rate.

Requirements/Qualifications

On each of these accounts, you typically must meet certain requirements each month to qualify for the high interest rate.  Qualifications typically include the following limitations:

• Direct deposit of at least one paycheck per month, or auto-draft pay of at least one bill per month.
• A certain amount of debit-card transactions per month (usually 10-15 transactions).
• Most accounts I’ve seen apply the high interest rate up to the first $25,000.  Any money above that amount each month will earn at a lower rate (typically 0.5% or other nominal amount).

I find that after 8 trips to the gas station & 4 trips to the grocery store, it’s pretty easy to attain the necessary 10-15 transactions required to qualify.  Of course, take a look at each individual bank’s requirements.

Just Do It

The interest gained may not seem like much, but another $10, $25, $50 a month quickly turns into hundreds of dollars per year.  Bust out of this recession with a high-interest checking account!

Do you use a high-interest checking account?

Eureka! checking, checkingfinder, high interest, high-yield, recession, recession buster!

The M$M Economic Stimulus Plan

This is Part 2 of 2 in this series.  Click on this sentence to read Part 1, which covers what fundamental principles should be a part of any government stimulus plan.

Yesterday, President Obama signed the $787 billion economic stimulus into law.  I think it misses the mark and violates in many respects the fundamentals of spending taxpayer money to stimulate the economy.  My alternative proposals are below; all proposals must satisfy Fundamental #1 by being targeted, specific action to seek a particular goal.

1. Incentives

Following the guidelines of Fundamental #3, it must be government economic policy must encourage good personal financial behavior.  Therefore, instead of direct stimulus checks, I propose stimulus matching funds be used on home down payments, pre-paid tuition, and health savings account deductibles (HSAs).

The best type of government stimulant is one that provides it’s citizens incentive to save up and pay for their shelter, education, and health care.

Real Estate. For the sake of simplicity, I’ll propose that for every dollar you save for a down payment up to 10% of purchase price, the government will match your down payment.  This could also be a graduated, tiered incentive (save 10%/match 5%, save 20%/match 10%, etc.).  It can also be capped at a specific dollar amount (match up to $25,000), or the cap can vary by market depending on cost of living.  Other stipulations:

• No credit cards, cash advances, or 401(k)/403(b) withdrawals will receive matching funds — it MUST be cash earned & saved. You will not be able to rob Peter to pay Paul and expect government to support your behavior.  Do it on your own dime.
• No 80/20s, ARMs, interest-only, or HELOCs allowed.  If you want the matching funds, it must be a 30-year or less mortgage with a fixed interest rate.

Point is, you stimulate the downtrodden real estate market, and most importantly, the benefits go to those that have been fiscally sound and did not overbuy during this last real estate bubble.

• They were the victors because they DID pay their bills and WERE responsible with their finances, while most of us were not.
  
• Allow the victors in our economic crisis be the ones to bring us out of the recession.
  
• Reward their good behavior & provide incentives to the rest of us to copy it so we don’t end up down this path again.

Education. If there’s one area that’s exploded over the last decade, it’s college tuition.  The burden of student loans has grown exponentially since the early 1990s.  The education cartel increases in power with each new academic year.  If anyone knows the burden and risk it is yours truly.  Unfortunately, I have more student loan debt than anyone I know, but I also have a plan to get rid of it faster than anyone I know!

• I propose matching funds for pre-paid tuition to any accredited institution of higher education.

• Reward parents with 529s, and reward students that are working while putting themselves through school.

• Again, no credit cards, cash advancements, or 401(k)/403(b) withdrawals will be matched.

Health Care. Medical bills are the leading cause of bankruptcy, and a drain on our economy.  Health Savings Accounts are becoming vastly popular, because it can be obtained outside the employment environment at a decent cost.  I propose matching funds for deductibles on HSAs.

• Provides incentives to save money for when emergencies happen.
• Reduces the amount of bankruptcies caused by medical bills.
• Provides incentives toward the HSA and away from COBRA & the employment-based health care model.

2. Direct Investment

In compliance with Fundamental #2, direct government investment should have long-term benefits.  My answer is to (a) build and improve infrastructure & (b) invest in our children’s future.

Infrastructure. If we’re going to spend hundreds of billions of dollars on a stimulus, do it with specifically-targeted projects that will provide long-term benefits, that get people working immediately.

• Fix bridges, overpasses, and roads.
• Build & expand light rail systems. I know here in the Dallas-Fort Worth metroplex, our light rail network could be extended into the suburbs to ease traffic congestion.  This would be money well-spent, because it is near-term jobs with long-term benefits.

Children’s Future. Each child that is born in the U.S. receives a one-time $2,500 investment into a personal retirement account at birth.

• 4 million children are born in the United States annually = $10 billion investment/year.
• Unlike 401(k)/403(b), no withdrawal allowed for any reason until person reaches retirement age (65).
• An 8% annual growth rate = $445,000 retirement account for each citizen at age 65.
• Parents allowed to match initial $2,500 investment + $1,000/year into each individual account until age 25.

This promotes both parents & children to save for retirement, and shifts our paradigm to thinking about the future.

3. Tax Cuts

We also need to provide incentives to our businesses and those with entrepreneurial spirit.  Ideas & small business are the true backbone of the American economy.

• $10,000 tax write-off to businesses for each new employee hired in 2009 (net gain).  The amount of a cut can vary, but this will encourage those who are on the fence about hiring another worker to go ahead and hire someone.
• Provide tax breaks or government-initiated loans for wind farms to implement aspects of the Pickens’ Plan to reduce our dependency on foreign oil.

NOW IT’S YOUR TURN.  THOUGHTS/SUGGESTIONS?  ADDITIONS/DELETIONS??

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The My Money Minute Stimulus Plan (Part One)

Politics down payment, economic, fundamental, matching, Pickens Plan, pre-paid, recession, saving, stimulus

Congress has passed a $787 billion economic stimulus bill, much to the disapproval of many Republican leaders.

In my humble opinion, this stimulus package, due to be signed by President Obama today, misses the mark.  Lots of money is being spent on projects that either (a) provide only temporary jobs or (b) provide no employment whatsoever.

“So what would you do, Jason?”  Well, glad you asked..

Part One:  Fundamentals

Before any specific proposals are given, a stimulus plan should first begin with basic, fundamental philosophies.

Fundamental #1

This is the taxpayer’s money.  Be efficient, not frivolous.

If it’s one thing we can learn from government spending, throwing money at a problem without a clear objective will not solve the problem.  For a Republican “I told you so”, bring up our education bureaucracy.  For a Democratic “I told you so”, point out no-bid contracts in our War on Terror.  Money is needed for both education & defense, but the point remains we are often inefficient with how we spend it.

Fundamental #2

Short-term cash injections must have long-term benefits.

I understand that unemployment is rising and near-term jobs would help significantly.  Even if the jobs do not last forever, the money should be invested in projects that help our nation & economy long-term.

Fundamental #3

Economic stimulus funds must reinforce & encourage good financial behavior.

In other words, no more blanket stimulus checks where we send $600 to every taxpayer.  You know what I did with my stimulus check?  Paid off debt.  So did many others.  Those that did spend their stimulus check only contributed to a temporary fix to a long-term problem.  Now the money’s spent and our economy is still sluggish.  Worst of all, the government reinforced bad financial behavior by giving people money and telling them to spend it instead of taking care of their household first.  Encouraging the citizenry to buy a flatscreen instead of paying down a credit card is not sound financial policy.

Come by tomorrow and see specific proposals in Part 2 of The MyMoneyMinute Economic Stimulus Plan!

The Big Fundamental

Are there other fundamentals you would add to a government stimulus plan?

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The My Money Minute Stimulus Plan (Part Two)

Politics down payment, economic, fundamental, matching, pre-paid, recession, saving, stimulus