February 2011 - Posts - Dollar Stretcher Guest Bloggers
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February 2011 - Posts

  • On-Time Rent Payments May Now Improve Credit Score

    by Bill Hardekopf

    Paying rent on time may soon improve your credit score. For the first time, landlords have incentives to report rental payment history to credit bureaus. This can be good news for many renters who need ways to boost their score.

    Experian recently purchased RentBureau, a credit bureau that allows apartment owners and managers to share rental payment history. Rental payment histories are now factored into Experian's consumer credit reports, and are one more thing that lenders, landlords, insurance agents, and even employers can learn about you.

    It seems surprising that rental payments have not been included in credit reports, but landlords avoided the stringent reporting and auditing requirements, only sending collections and evictions to credit bureaus. This could soon change because landlords will benefit from using RentBureau's database to make background checks and screen rental applications.

    This could be great news for renters who dream of owning their own home. This gives them a way to build up their credit score and qualify for a mortgage with a lower rate.

    According to the National Multi Housing Council, 33% of U.S. households are renter-occupied households. Rentals are rising as homeownership in America dropped to its lowest level in 13 years. The Census Bureau reports homeownership rate fell to 66.5% of all households in the last three months of 2010, down from 66.9% in the third quarter.

    Many of these renters are college students, recent college graduates, immigrants, victims of foreclosure and people with poor credit. It is difficult for many of these renters to get the credit needed to start building their credit score. A good rental history could help build credit and prove they are creditworthy, even if they don't have a history with a credit card or a mortgage payment.

    Experian displays the 25 most recent months of rental payment history, if it is available. It does not add negative information, such as a collection account, because this is already sent to credit reporting companies through collection agencies. Experian is the the only major credit reporting company to incorporate positive rental payment into consumers' credit reports.

    If reporting rent is successful for Experian, expect other credit reporting agencies to find ways to expand their own reports.

    Landlords Can Use Credit Scores to Screen Applicants

    Many landlords use credit scores to help pre-screen renters. However, the level of acceptable risk varies by landlord, and there is no universal cutoff score used by all landlords. They also consider other factors, such as the ratio of debt and expenses to income. They want renters to be able to pay rent, decrease debt and have enough money left to buy groceries, insurance, and pay other expenses.

    If you have a bankruptcy or a negative credit history, it may help to write a note that tells what happened and the steps you are taking to work it out. You can also include a list of references including employers or former landlords. You can even offer a larger deposit on the rental.

    Utility Bills

    On-time payment on utility bills won't improve your credit score, but outstanding bills can drag it down. If you get behind or stop making payments on your utility bills, the utility company will likely turn your account over to collections. This is a negative mark on your credit report and makes it difficult to rent an apartment or get a mortgage. If you can't pay your utilities, you are at a higher risk to miss rent payments.

    New Regulations

    New regulations are trying to help consumers understand their credit reports. If you are turned down for an apartment or utilities because of your credit report, the lender must send you a notice and information on how you can receive a free copy of your credit report. Starting in July, anyone who denies you credit or gives less favorable terms must provide the credit score. This also applies to landlords and utilities.

    Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.

  • Better Financial Management Via Prepaid Cards and Weekly Budgets

    by Jennifer Boutwell, Vice President of Marketing, InComm

    The holidays are over and the extra December spending has piled onto the regular January bills. Indeed it’s no surprise that at this time of the year, people are more focused than ever on better budgeting their money and staying true to smarter financial spending. Everyone is familiar with the usual cycle of deciding to stick to a budget, only to see their best intentions fall away as the pressures of everyday life take hold.

    But fear not! To combat this vicious circle and start better controlling day-to-day expenses, this post will take a look at a critical tool that people are aware of, but probably haven’t been properly utilizing – prepaid cards.

    Often times people struggle to properly stick to a set weekly budget (e.g.$200 per week), especially when it’s so easy to walk into a store with the intent of only spending $40 and end up leaving with $90 worth of unnecessary items. Another core challenge people often face is being unaware as to how much they’ve actually spent over the course of a week. This lack of basic information about how much they’re spending can lead to their budgeting goals going out the window due to runaway spending.

    Enter the prepaid card. Prepaid cards provide users with an outstanding tool for both controlling how much they spend when they walk into the store, and monitoring how much they’ve spent over the course of a given week.

    Let’s take a look at the above situation, only this time with a prepaid card being used. As one walks around the store, they may see $90 worth of stuff that they WANT. However, they only have $40 on the card, so they have to prioritize and only purchase exactly what they NEED.

    As the week goes on, this continued check on spending helps reduce the budget-killing “impulse spending” that everyone is tempted with every time they enter the store. By only having a set amount on a prepaid card, they are forced to prioritize not only during that one trip to the store, but throughout the entire week.

    Equally as important, once they’ve spent all the money on the card, they need to reload it with more money before they can use it again. This gives them a specific record throughout the week of exactly how much they’ve put on the card, enabling them to see where they stand in relation to their weekly total, and empowering them to better plan their spending for the rest of the remaining days.

    Great; but how does one build a weekly budget incorporating prepaid cards?

    Building a weekly budget may sound intimidating to those who’ve never used one, but fortunately they’re actually simple to create.  Here are some easy tips to help build a weekly budget:

    1. Over the course of a two-week period, carry around a little notebook and make a quick entry every time a purchase is made. This can be lunch, groceries, gasoline, going the movies, etc.

    2. At the end of each week, add up the total and group them into three main categories: food, gasoline and personal expenses.

    3. Review the figures from both weeks in order to get a general idea of how much was spent in each of the three above categories, as well as how much was overspent by buying more than was needed.

    4. From that review, decide on the weekly amount for the budget.

    5. Go to any major retailer, get a prepaid card from a reliable distributor like InComm, and put $50 on it.

    6. Start using the prepaid card for your weekly expenses and then reload it with another $50 once it’s out of money. Why $50 at a time? This is done to prevent the “impulse spending” discussed earlier and helps one stick to their overall weekly budget goal.

    Using prepaid cards not only eliminates ruining weekly budgets through impulse spending, but they also provide users with the ability to track exactly how much they’ve put on the card as the week goes on.

    Despite the ongoing economic slowdown, by incorporating the budgeting tactics laid out above, anyone can get their spending under control and better budget their expenses in 2011!

    Jennifer Boutwell is Vice President of Marketing for InComm.com, a leading marketer and distributor and technology innovator of prepaid products.

  • Penny-Pinching Into Shape

    by Jim Rollince

    The Equinox, Crunch Fitness, $15 protein shakes, and fitness boot camp in the Hamptons are making the business of exercise a market economy all its own. As the endorsement of celebrities is being used more and more to sell exercise, health, and fitness related products, the products become increasingly more expensive. Gyms are no longer simply spaces to run and lift weights; they have become spas and exclusive hangouts. Yoga and fitness camps are not just about fitness. They provide expensive entry into high society. If you are interested in exercise as just a way to stay healthy and keep in shape, listed below are a few cost effective ways to maintain your fitness and keep yourself and wallet away from expensive exercise fads.

    Choose Your Gym / Work Out Studio Judiciously

    While there are a host of sports clubs with healthy cafes, spa services, and apparel facilities, in addition to top of the line work out equipment, these fitness clubs represent the future of exercise marketing and branding. However, if the expensive price is not something you are interested in or willing to pay, an oppositional fitness movement has arose. This movement is centered on principles of affordable fitness for real people. To this end, more and more affordable gyms, marketing toward your everyday person are appearing daily. Franchise gyms like Planet Fitness are marketing their facilities toward those who are financially consciousness and do not like the image-obsessed environment found at most other gyms. Other financially consciousness exercise services exist, mainly in large cities. Yoga To The People based out of cities like New York, Berkeley, and Seattle are studios where yoga classes are taught for anyone who wants to participate. Instead of charging per class, Yoga To The People operates off a donation-based platform, making it so they never deny classes to individuals based on money. So when searching for your perfect gym, sports club, or class, remember not to become frustrated; the movement toward affordable fitness is here to stay and you will be seeing more and more facilities charging reasonable membership rates and attracting clientele similar to yourself.

    Free Weights

    For many who do not have the financial resources or the space, purchasing exercise equipment for their home is not an option. Yet, just because many homeowners do not have the resources or the space does not mean that they do not want the results. Purchasing free weights are an affordable and great way to keep your body toned and tight. Believe it or not, there are hundreds of exercises that one can perform using free weights. These exercises do not simply work to tone the arm and shoulder areas. With the Internet as a highly valuable resource, one can locate exercises targeting the abdominal muscles, gluteus, and pectoral muscles and can perform these exercises using the free weights. Free weights are a wonderful way to supplement working out with expensive machines, and still achieve the same results.

    Use Groups

    Exercise in groups. Whether you take a class with friends at your local YMCA or purchase a fitness DVD to do with your friends or workout partners, it is important to remember that the more people you exercise with in whatever capacity, the more inexpensive it will be. For example, many yoga or Pilates classes offer a group discount if you are able to bring with you a certain amount of people. Home exercise videos have exploded onto the market in the last three years. Kickboxing, advanced yoga, and Pilates instructional DVDs can all be purchased now. Splitting the cost of these instructional DVDs with friends makes them a cost effective and fun way to get into shape.

    Jim Rollince is the head of creative writing for Gym Source – A supplier of home exercise equipment ranging from home gyms (i.e. – treadmills) all the way to exercise balls and gloves.

  • Take Advantage of Relatively Unknown Credit Card Perks

    by Bill Hardekopf

    Cash rebates and reward points receive most of the bold print and attention, but there are some nice perks that you could be missing from your credit card. These benefits can save money on tickets, shopping and travel, guarantee the lowest price on purchases, and provide an extended warrantee. But you can't take advantage of these perks if you don't know about them.

    Here are five perks to your credit card you may not be using:

    1. Free or Discounted Tickets to Museums and Theme Parks

    • Bank Of America's "Museums on Us" offers free admission to over 100 museums in 24 states with a Bank of America credit card or debit card during the first full weekend of every month for 2011. States include California, Florida, New York, and Virginia.

    • Discover members save 5% on in-park and online purchases for Six Flag Season Passes, VIP Tours, daily admission tickets, parking, food and merchandise.

    • Citi Private Pass gives discounts to theme parks, such as 25% off on one-day admission to LegoLand California.

    • Chase Ultimate Rewards offers cooking classes or food tours, sports tickets and outdoor adventures in selected cities. All are available with rewards or can be charged to your Chase card.

    • American Express offers pre-sale tickets and preferred seat tickets for events and concerts. Recently, American Express provided pre-sale tickets for the NBA All-Star game, Katie Perry, George Strait and Reba McEntire and certain Broadway shows.

    Credit card issuers may even be able to get you tickets to a sold-out show. Expect to pay the typical ticket surcharges and fees.

    2. Travel Perks

    • The Visa Signature card offers many reward perks for travel. It offers 15% off Luggage Forward service where your luggage is shipped to your hotel, cruise ship, or home in over 200 countries and territories worldwide. The card also offers hotel room upgrades, $25 travel vouchers for food, 20% off every $25 in movie tickets (Fandango), and  discounts for car rentals. Cardholders can also find special offers like 15% off Southwest Wanna Get Away round trip ticket (these are limited time offers). The 24/7 concierge service can help with travel, entertainment, and business planning.

    • Continental One Pass and Delta Skymiles do not charge a fee for the first checked bag on any flight booked with the card.

    • Chase Sapphire helps cover expenses for a trip delay or a baggage delay on a covered trip.

    3. Shopping Perks 

    • Many cards have merchant partners that offer free shipping and discounts on purchases made with the designated card. Partners may include WalMart, Macy's, Sears, Pottery Barn, Home Depot, and Apple Online Store.

    • Discover offers 5% or 10% cashback bonus for online purchases made with its merchant partners. Earn 5% cashback from WalMart.com, or 5% cashback when you buy an Apple iPhone 4 or iPad from ShopDiscover.

    • Bank of America WorldPoints and Citi ThankYou offer an online shopping mall full of merchandise that you can purchase with reward points. Merchandise includes flat screen TVs, lawn equipment, and kitchen appliances.

    4. Consumer Protections

    • Price Protection. Price protection helps you get the best price for your purchase. If you find a lower price on that item in the designated time period (typically 60 days), many issuers will refund the price difference on the same item from the same manufacturer. Issuers may set a refund limit. For example, Citi refunds the price difference up to $250 per item. Internet purchases and close out sales are excluded. Price protection does not cover airline and transportation tickets. To get the price protection, save the printed advertisement and contact the program administrator for claim forms and filing procedures.

    • Purchase Protection. Purchase protection guards eligible purchases against accidental damage or theft for up to 90 days from the date of purchase. Your credit card issuer can repair, replace or reimburse for up to the amount charged. For example, American Express coverage is limited to $1,000 per occurrence, and up to $50,000 per cardmember account per policy year. If a retailer will not accept a return within the first 90 days of purchase, some cards, like Chase Sapphire, will reimburse you for the cost of the eligible item purchased on your card.

    • Extended Warranty Protection. This protection extends the length of the free repair period under the original manufacturer's U.S. warranty for up to one additional year. The warranty must be three years or less. Capital One doubles the original warranty time period and duplicates the coverage of the original manufacturer's warranty up to a maximum of twelve months on most items you purchase. To receive Extended Warranty Protection, you must submit the store receipt, the credit card receipt and a copy of the manufacturer's warranty.

    5. Car Rental Loss/Damage Insurance

    Using your credit card for a car rental may cover damage incurred when renting the car, so it may not be necessary to purchase extra insurance coverage from the car rental company. Before renting, check the description of this coverage in your Cardmember Agreement. To be covered, you must be the primary renter and use your card to pay for the entire rental. You must decline the collision damage waiver (CDW) or similar option when you are reserving and picking up your rental car. Coverage applies for the first 30 days, and is in excess to your other sources of insurance. Coverage may not be available in some countries.

    All of these perks can save you money and hassle, but you have to know they are available," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "The description of the perks and benefits can be found in the card's welcome packet. Some issuers also post these benefits online, but you have to dig to find them. If you can't find a list of benefits for your card, contact your issuer and they can re-send the information to you."

    Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.

  • A Small Investment in Time Can Result in Large Return in Savings

    courtesy of A New Horizon

    When was the last time you comparison shopped for your automobile insurance? Most of us ignore our insurance policies once we get them until we are forced to replace them or buy a new vehicle. Are you getting all the discounts you are entitled to? Do you have the right deductible? Do you have more coverage than you need? With a little knowledge and some caparison quotes free from the insurance carriers, you could snag some nice savings.

    First off, comparison shopping is easy; if you already have a policy, just fax the declaration page to the insurance company or, better still, to an agent that you trust to get you better coverage and/or cheaper premiums. The declaration page gives them almost everything they need to accurately quote a price. A good broker is a wealth of information on how you can save, but be careful, as a bad broker will urge you to buy more coverage than you need. The entire comparison process can be done on the phone or through email, lessening the stress and time needed to visit a broker’s office.

    Here are several different ways to save hundreds of dollars on your car insurance if you simply take a few minutes to follow these recommendations:

    1. Compare Often

    Insurance companies are always competing for your business and so insurance rates change often. At least every 12 months, you should compare the policy you have with at least three other companies. A good place to learn more about competitive rates is here. If you save, you win; if your present company is cheaper, you still win.

    2. Drop Coverage You Don't Need

    By shopping every 12 months, you may also discover that you are paying for a part of your auto insurance policy that you no longer need. If your child is at college and no longer drives your car, or you have moved to a new zip code, or park your car in a garage instead of on the street, or you have a second car and no longer need car rental coverage, you may be paying for coverage that you no longer need.

    3. Increase Your Deductible

    No one can predict when an accident will happen, but if you have history of safe driving, consider increasing your deductible, the amount that you have to pay to repair your car before the insurance company has to pay. The higher the deductible, the lower your premium will be.

    4. Take a Defensive Driving Course

    Nearly every insurance company offers a discount for taking a defensive driving class, and the discount will be applicable to each of the drivers on the policy. Defensive driving classes are inexpensive and the discounts more than make up for the cost; and they are good for the lifetime of the policy. Check with your car insurance company as to what type of courses and course providers they will recognize for a discount on your policy.

    5. Ask for Discounts

    Insurance companies have all sorts of discounts and new opportunities for saving money with a car insurance discount program pop up all of the time. Most of us already know about the discounts for alarm systems, antilock brakes and multiple car coverage, but did you know that some companies offer a discount on car insurance if you also have a small life insurance policy with them too?

    6. Good Credit Earns Good Rates

    A better credit score will result in better car insurance rates. If you have been working hard to improve your credit score and your credit report reflects your efforts, now is the time to shop for insurance. If you have been on a debt management program like the one offered by A New Horizon for at least six months, your on time payment history may have had a positive effect on your credit bureau report. You can get more information on a debt management plan here. When you see an increase in your credit score, don't miss the opportunity to see if this will lower your insurance rates.

    7. Take Your Own Discount; Pay With a Credit Card

    With the popularity of cash back credit card options, changing the way you pay for the premium can earn you another discount. Some credit cards offer a 1% to 5% cash back option so if you pay the insurance premiums with this type of credit card. It’s like getting a 1% to 5% discount on the bill. But be careful. Using credit just to get a discount can create other problems, so be sure to budget for this expense and don’t pay it off in time. Otherwise, the interest you pay may be greater than your savings.

    8. Ask Your Kids to Help by Getting Good Grades

    Good student discounts are offered by all of the major car insurance companies. The logic here is that good students make good drivers and good drivers are less risky. Either way, you can’t go wrong if you qualify for this discount.

    Now that you have these tips, don’t forget the first rule. Comparison shop often so that you are always getting the very cheapest automobile insurance possible.

    A New Horizon Credit Counseling Services is a nonprofit debt consolidation organization that has been helping consumers since 1978. For more information about their programs, contact 1-800-556-1548. They can also be found on the web at ANewHorizon.org or reached via email here.


  • Financial Pitfalls of Smart Phone Payment Apps

    by Bill Hardekopf

    Like cursive handwriting, paying with cash is practically obsolete due to technological advances. A greater number of cell phone manufacturers are now adding NFC (near field communication) chips to their handsets, allowing consumers to use their phone like a credit card at various retail stores.

    Shifting to a system of virtual money is convenient, but it could have significant consequences for consumers and their family budgets.

    There is a lot of excitement about making payments by simply waiving the smart phone. This can be an even easier way to pay than swiping a credit card. However, overspending is the dark side of this convenience. We have seen this with consumers spending too much with credit cards.

    According to a Consumer Reports study last year, consumers who used credit cards for gift purchases during the 2009 holiday season spent an average of $896 on gifts, 10% more than the overall average of $811.

    Psychological studies and research papers compare the effects of credit cards and cash payments. The universal conclusion shows that consumers spend less with cash because cash is the most vivid and transparent method of  payment. The more transparent the payment, the higher the pain of paying and the greater the resistance to spending.

    The pain of handing over hard-earned cash is actually a good warning signal that makes you think twice about your purchase.

    Here are several ways credit cards increase spending, according to psychologists and researchers. These can also apply to smart phone payments:

    • Credit cards are much less transparent and make it much easier to follow through on a transaction. This reduces our psychological barriers and makes it easy to ignore the warnings of our inner voice.

    • Paying with a credit card separates the purchase from the actual payment. Since actual payment occurs long after the purchase, it dulls the pain of payment. The pleasant feelings you get from the purchase and immediate gratification are almost disconnected from the reality of the payment.

    • Credit cards combine a month of purchases into one payment. It is easy to look at the final number and overlook how much you really spent on specific purchases or categories like clothes, groceries, dining or entertainment.

    • An individual expense is viewed as much bigger on its own than when it is part of a bigger payment. Adding a $50 purchase to a $1,000 credit card bill makes the purchase feel smaller and can result in increased spending.

    • No pain, no memory. If there was little pain or deliberation at the point of purchase, it is easy to forget what you have charged on your credit card and to underestimate past spending.

    Retailers and credit card issuers understand this psychology and use it to increase spending. It is the reason retailers are willing to pay credit card companies approximately 2% of their revenues on credit card purchases (even though they have fought many years for the regulations for lower interchange fees). Many retailers offer and aggressively promote their own credit card because the interest payments further increase revenue.

    Consumer tips for managing spending with a credit card or smart phone:

    • Consider each purchase paid with credit card or a smart phone. Think of it as cash leaving your account or the hours of work it will take to pay for the item.

    • Set up account alerts for notification when pre-set spending limits are reached.

    • If you have a MasterCard, take advantage of InControl that allows you to set up budgets and limits for particular types of spending and purchases with your credit card. It helps give you discipline to manage your spending.

    • Analyze your credit card bill. Group similar items together to follow the real flow of your money.

    • Test cash for yourself. Pay for everything with cash for a week. See if you think more about every purchase. Do you remember more about the purchases made during that week?

    • Teach your children the pain and pleasure of money and use cash for allowances. Make them spend their own money and actually count it out when making purchases.

    Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates.

  • Living Well on a Student Loan

    by Mark Hooson

    For many of us, going away to college is our first taste of financial independence. University can be a social learning experience as well as an academic one, and learning to live on a budget is part of that educational process.

    Let’s face it; the life of a student is a privileged one. Though it may feel like a struggle to get by on a limited budget, as a student in a developed country, you are privileged in having access to educational institutions and the lifestyle which accompanies them.

    It’s not all work though, and the social life of a student can put serious strain on the finances.

    Contrary to popular stereotypes, however, being a student doesn’t mean living on lentils and ramen noodles in order to make ends meet. In fact, there are a number of things you can do to live well on a student loan.

    Eat Well

    As I said, there’s no reason for you to eat poorly, even on a budget.

    The best thing to do is to make a plan of your meals for the week and stick to it. This stops you from being tempted into constantly eating out, which can be far more expensive than cooking for yourself.

    Chilli with rice is a relatively cheap meal that is filling and often results in leftovers, which you can keep for lunch the next day!

    Simple, fresh foods are better for you and often cheaper than processed and packaged foods. You’ll also have more meal options if you buy ingredients, and it’ll make you more likely to learn to cook different meals.

    The freezer is your friend! I’m not talking about frozen foods, but if you do end up eating out despite having your meals for the week planned out, stick the unused food in the freezer while it is still in date.

    Rice, pasta and potatoes are cheap and hearty foods, which can be used for a huge variety of meals.

    Also, if you are shopping in supermarkets, you could shop with friends to take advantage of multi-buy deals, making it cheaper for everyone involved.

    Grocery shopping online is also a great idea as you get a running total of your spending as you add each item to your basket. It also potentially saves you on the travel costs of getting to the store.

    Spend Wisely

    You don’t need to be a math student to work out a robust budget for yourself; it’s all a matter of division and spending caps.

    If you are living on a student loan, it is likely to come in installments with each semester. Work out how many weeks you have before your next installment and divide the loan amount by the number of weeks.

    This is your weekly budget, and you must not exceed it if you want to stay out of the red. Think about any bills you might have and things like travel costs if you are taking a trip home and factor those into the budget.

    I spent a lot of my university days number-crunching to make sure all expenses were recorded and taken into account as part of my budget.

    If you have an overdraft on your bank account, you would be wise to only ever use this as a fall-back for emergency/unexpected expenses you cannot account for.

    As a student, you will probably be a key target for credit card companies, and although they are not suitable for everyone, a credit card can have legitimate uses.

    For security, you might want to use a credit card when making purchases online, as you will be protected if the merchant goes out of business, or you fall prey to a scam or credit card fraud. You can easily transfer the sum you paid from your bank account to the credit card immediately afterwards, so that you don’t have the balance hanging over your head.

    For example, if you are presented with a huge reading list, you’ll want to get the textbooks for as cheap as possible, which generally means buying online. You might find a great deal on the books you need, but if the site was to disappear before the books reached you, you would be able to claim the money back.

    And, of course, in case of emergency, a credit card can be a useful short term solution to surprise expenses, especially if it has a low or even 0 percent rate.

  • Stage of Life – A Young Adult’s Bank Accounts

    by Brandon Glanzer

    Opinions about how to store and use your money can range from keeping it in an envelope in the freezer (to keep it safe in a fire) to turning it all into gold and locking it in your safe (to keep it safe in a fire). When it comes to handling your money and using your money, everyone has his or her own opinions. Of the many potential options for your money there is one system that stands above the rest, the "three-account approach." With this system, you will have one basic checking account, one savings account at the same bank as your checking account, and another savings account at a separate bank from the other two accounts. In the end, you will have three accounts to store and organize your money and spending habits.

    Checking Account

    Open a basic, free checking account at a local bank. Most people already have this account by the time they reach eighteen years of age. This type of account is simple and comes without any additional charges if you use it correctly. This is the main account that will enable you to access your money. Order paper checks and sign up for a debit card that withdraws from this checking account. Although paper checks are beginning to be used less, some businesses still only accept a personal check.

    Savings Account One

    The first savings account is to be opened at the same bank in which the basic, free checking account is located. This enables you to save money directly from your source of income. You are able to quickly and easily transfer money back and forth as needed between the checking account and savings account. The easy transfer from a savings account to your checking account will help you keep your checking account balance above zero and keep you from paying overdraft charges.

    Savings Account Two

    Once you have established your checking account and main savings account at a local bank, get in your car and drive across town to a completely different bank and open a second savings account. Do not attach this account to a checking account; do not get paper checks or a debit card to this account. You want this account to be inconvenient for you to access. Although it may sound counter-productive to have a savings account that is completely disconnected from your checking account, it is set up to benefit you.

    This account should serve as a reserve account, or a last resort account, for using your money. With an account that is inconvenient to withdraw funds from, you are less likely to withdraw funds. The intention of this account is for long-term savings that is easy to access if the need arises.


    Three accounts help keep your money organized, accessible, and, by choice, inaccessible. Your main checking account will enable you to spend money freely with your debit card, paper check, or cash withdrawn from an ATM. Your savings account, at the same bank as your checking account, will allow you to easily transfer money to and from the checking account for short-term savings and emergency cash withdrawals. Your savings account across town will enable you to save money for long-term simply because it is less easy to access. A savings account that is less easy to access will be visited less often and, therefore, the money in it will stay longer.

    Brandon Glanzer and his wife, Carrie, spend their days in Bellingham, Washington. Brandon has a bachelor's of arts in sociology and a master's degree in education. When he is not educating young people or writing, Brandon enjoys having tea parties with his two daughters, Kaatri (4) and Maealie (2). Brandon Glanzer has recently begun to blog at moneyhandbook.blogspot.com.

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