Thursday, July 27, 2017

Simple savings plan for starting off


When I was in college I had a very simple savings plan.  I used cash for all my spending (easier then than now) and when I would get change I would throw it in a bag.  Usually by the end of the year I would have around $75.

When I started working and using plastics (credit\debit cards) to make purchases instead of cash, I had to make some changes.  First let me preface this, if you have credit card balances or student loan balances, focus more on getting those paid off first before worrying about major savings.  Once you get up to about one paycheck worth of savings then focus on the debt before you build it up much more.

The basic plan I recommend for starting off is easy.  Keep your checking account with an even amount of money.  Depending on your comfort levels you can set this to be an even $5 at the lowest up to an even $100.  I recommend starting at $10 since the math is easy.  So every time a transaction hits your checking account move an amount into savings that will make the checking balance divisible by ten.  You may want to set a minimum balance for your checking of about a weeks expenses so you always have fast money to cover.  This may not be as necessary if your savings is in the same bank as checking and can do an instant transfer.  For example you pay your credit card and now have a balance of $736.42, move $6.42 into savings so your new balance is $730.

As your income grows and you are able to budget better.  You may want to change to setting a maximum value for your checking account to around three weeks of typical spending.  When you get paid whatever is over the maximum amount move to savings.  Be sure to remember in both scenarios, if you have a big expense that requires you to dip into savings, move that money over and don't pay overdraft fees! For example if you set your max balance to $1,500 and after getting paid you have $1,732.46  then move $236.46 into savings to keep your max balance at $1,500.

There are lots of different savings strategies to do, some are better than this one, but I think it's an easy one to get started.  The most important thing is to have a plan.  I hope this helps and feel free to leave comments about savings strategies that have worked for you!

Monday, July 24, 2017

Review of

A good way to save a bit more $$$ in your daily life is to use a cashback site for your shopping.  The simple explanation of how this works is that a website works as an affiliate to drive traffic to a vendors website.  If this results in a sale then the affiliate earns a commission for driving that traffic to the retailer.  Cashback sites will pay you a portion of that commission.

There are several to choose from but in my initial research I liked Top Cashback the best and it has been a winner so far.

How do you use it?

First you go to their website and go through an easy sign up process.  You don't have to register any cards with them.  Then when you want to shop for something go to they topcashback website first, find your retailer and click the "Get Cashback Now" button and shop at the website as you would normally.  Once the transaction has been confirmed (this usually takes about a day) it will show up on your dashboard with an estimate of when it will be payable.  Overall I have found the estimate dates to be a bit inconsistent.  Perhaps over time they will become more accurate.

What's good:
  1.  The site is pretty easy to navigate. 
  2.  The cashback rates are pretty nice, you can combine these with a cashback credit card and increase the saving.
  3. Payout is easy and responsive. No minimum!
  4. You get several payout options.  Directly to you via bank transfer or paypal or to a gift card.  The gift card can be a better option as most have an additional bonus of 3-10% for using the gift card option.
  5. There is a referral program.  If you use one of the links on my page then I get a $10 referral bonus and you can too if you refer someone else.  At times there are promotions when using a referral link will also get the person signing up a gift card. 
  6. Occasionally they have a promotional event that can let you win cash without a purchase.  

What could be better:
  1. It takes a while to actually get a payable for your cashback and it varies a fair bit from the retailer.
  2.  Many of the cash backs are up to a certain percent, but what you are getting may be a lower amount.
  3. Some retailers such as Amazon only offer it for certain departments at a time.  

How I recommend using it for slow wealth building:

Don't spend more than you would normally, but use it when you were going to make a purchase anyway.

If you have credit card, student loan, or auto debt, use your earnings to pay that down quicker (if you are in a loan that does not have a pre-payment penalty).

If you have no debt or just a mortgage apply it to the mortgage or put it into a lending or brokerage account or use a robo investor such as Betterment or Wealthfront and enjoy the benefits of compounding returns!


Simple savings plan for starting off

  When I was in college I had a very simple savings plan.  I used cash for all my spending (easier then than now) and when I would get ...