Are you an account whore?

So the motivation for this post came from J’s post yesterday about about ING’s sub-accounts. I am a very happy customer of ING, especially after switching from evil Bank of America.  I shamelessly promote ING to anyone that asks where they should keep their money. You’d think ING was paying me to say all these wonderful things, they aren’t, but I wouldn’t mind it if they did (ya hear that ING…hook a ninja up!).

With ING, you can have multiple accounts, and label them different things. For example, I have an Emergency Fund, a Wedding Fund, and an “Extra Savings” fund. A lot of people think these sub-accounts are all part of their primary ING savings account. Those people are wrong. Each sub-account is actually a new account. So while some people may think they only have one account with ING, they actually have 2, 3, 4, or more.

While ING does make having multiple savings accounts easy, it also makes me want to create a bajillion more accounts. Just think I could have a “Big screen TV” fund, a “Vacation” fund. and a “Don’t tell Girl Ninja about this money” fund. With all of these new possibilties I’ve come to realize something: I think I might need to join A.A. No, not not Alcoholics Anonymous, but Accounts Anonymous. I’ll be the first to admit it…Yes, that’s right. I’m a bank account whore. It’s kind of scary when I think about it. My personal information isn’t so “personal” when I have accounts with a zillion different companies. Here’s my current account stats…

Savings Accounts: 3 accounts (all ING)

Checking Accounts: 2 accounts (ING/Chase)

Retirement Accounts: 2 accounts (Wells Fargo/Employer)

Credit Cards: 3 accounts (BoA, Chase, Employer)

To further fuel my addiction, I got an envelope from Chase today saying they will give me $100 if I open a money market savings account with them. I think I’m gonna have to open up the account. Deposit the minimum balance necessary to qualify for the promotion ($5,000). Keep money in the account for the 10 days it takes to receive the $100 bonus. After 10 days, withdraw all money from Chase . Put money back in to ING. Close my Chase money market account. Send Chase a letter saying “How ya like them apples?”

I have a total of 10 different accounts, soon to be 11. At least one person confessed to 9 different savings accounts on J’s post (I can’t imagine how many TOTAL accounts they have). How many accounts are you sleeping around with? Can anyone out there beat 20?

No difference between optimism and stupidity?

I love that people use optimism to excuse stupidity. I try to avoid being labeled a pessimist or an optimist. I much rather prefer to associate with the realists. I do consider myself a positive realist, which in my opinion, is significantly different than an optimist.

Wikipedia defines an optimist as one who generally believes that people and events are inherently good. While I would love to be able to assume most people and events are “inherently good”, I’m gonna have to keep it real and disagree. I’m pretty sure there is nothing good about terrorism, Hitler, country music, Detroit, and this guys shorts…

Did you just throw up in your mouth a little after sneaking a peek at that picture? My apologies, but I couldn’t resist.

I get really frustrated when people make stupid decisions because they have “faith” everything will work out in the end. I bet we know plenty of people that live paycheck to paycheck by choice. They spend every dollar they earn on frivolous things like $300 bar tabs, flat screen TV’s, video games, etc because they know their next paycheck can get them through the upcoming month. They use their optimism (believing that their next paycheck is an absolute) as an excuse to do financially stupid things (not establish an emergency fund). Guess what buddy, if that paycheck doesn’t come, YOU ARE SCREWED!

I’ve got news for the overly optimistic: Rainy days lie ahead, bad things are going to happen to you, and…gasp… sometimes life isn’t all rainbows and unicorns.

Don’t get me wrong, I LOVE POSITIVE PSYCHOLOGY and I hate negative people, but I get sick of people that hope for the best, only to find themselves royally screwed when things didn’t work out the way they planned. I believe you should hope for the best, but prepare for the worst. Sure I plan on having a job next month, but if for some reason the crap hits the fan, I have a decent E-fund to help me survive unemployment.

While I like the idea of ending poverty, I’m forced to face the REALITY that I will never live to see the day that happens. No matter how much we attempt to level the playing field, there will ALWAYS be people that squander away everything they have, much like there will always be people that are diligent savers. I’m really not trying to open up a political can of worms with this point, but I get so frustrated when I hear someone say “We need to put an end to poverty and spread the wealth around”. It’s hard to tell someone they are stupid for wanting to end poverty, but when their solution is to further tax the rich, they are just that… stupid. Out of fear of receiving a verbal lynching, I shall end my rant here and open the floor for discussion.

Have you had to deal with some stupidly optimistic people? Do you just bite your tongue and watch them make bad decisions or do you attempt to intervene and share some realistic input? It’s tough to tell someone they are being too positive, but sometimes it’s too important not to!

“Finances are so complicated”

How many people have you heard excuse their lackluster personal finances because managing their cash flow seems like too much work. I’m afraid I know a handful of people that are so intimidated by their finances, they choose to ignore them completely. Guess what?! Managing your money is really, really, really simple. Even more simple than this maze…

There are really only three things that can be done with money.

1) Spend it

2) Save/Invest it

4) Steal it

4) Give it

For the love of all that is holy, don’t try and make personal finance more complicated than it should be. Your goal should be to have less than 100% of your money in the “spend” category. Ya got issues if you are spending 103% of your income every month, sadly this is more common than we all realize.

To keep this post short I’m gonna post up the percentage of my income that gets allocatted to each category every month….

Spending: 60%

Save/Invest: 30%

Donate: 10%

So that is the breakdown of my numbers. Keep in mind it is an average, some months my spending was 35% of my monthly income, and other times it was 140%, so it’s important to try to think over the course of a year or so.

Now it’s your turn sucka, why don’t you post up a quick snapshot of your “Spend, Save, Give” percentages. Try to be honest and accurate. There really is no “perfect” breakdown as each of us is unique and has our own perceptions of what is important to us.

p.s. don’t do drugs (yeah, I know that has nothing to do with finances, but I just thought you mind need a friendly reminder :))

Do me a favor, ignore the majority of my advice

So I was reading the other day (Yes I do actually know how to read) and came across something profound. I’d like to share it with you now…

No one-size-fits-all recipe can guarantee a great relationship. Whether we’re talking about husband and wife, close friends, co-workers, or parent and child, every relationship is different. No two are ever exactly alike. What builds and sustains one is often of no value in another….

…..Each relationship has its own dance and drama, played out according to the unique strengths, needs, and personalities of the partners.

If you are wondering, this excerpt comes from the book “Contrarian’s Guide to Knowing God.” I think the author makes a valid point: What works for one person, might not work for another. Later in the chapter he goes on to discuss, that just because each person is different, that does not mean there are not fundamental rules in which we must all oblige. For example, don’t kill, steal from, or lie to each other. When these “ground rules” are broken, bad things happen.

Ready for the personal finance tie in? No two financial journeys are ever the same, but the ground rules apply to all. Sure there may be some disagreement in what is considered a fundamental financial principle, but here are mine…

1) Spend less than you make

2) Don’t accumulate debt (without a game plan to pay it off)

3) Have money set aside for a rainy day

If any one of these three financial principles are violated, you will almost surely face unnecessary hardships.  Notice, though, that there is room for WHAT YOU WANT within each parameter. Sure you need to spend less than you make to have financial freedom, but it’s up to you how much less. Maybe it’s $50/month, $500/month, or more. You get to decide what works best for you.

Becoming financially secure is not about following a strict guideline, but more taking some basic principles and making them unique to your situation. We need to be more tolerant of our peers gameplans (unless their plans involve money, vokda, a tiger, and a midget).

I’m a pretty stubborn individual so it’s important for me to be reminded that my way is not the best way (although I will definitely try to argue that it is).

What are some universal financial principles that you believe everyone must follow? Have you been stubborn, like myself, and become frustrated when people don’t do things “your way”?

How far will you go to get a good deal

We all have “that friend”, the one who will drive 30 miles across town to save $0.02 per gallon on their gasoline. I get a kick out of how far people will go to get a good deal. Call me crazy, but I’ll almost always take an okay deal with minimal effort, over a lot of effort for a good deal. That’s not to say that I don’t get a little intense from time to time.

Let’s run through a little test and see if you are normal bargain shopper, or if you fall in to the “obsessed with getting a good deal” category. Answer the following questions….

1) Do you shop on The day after thanksgiving (black friday)?

2) Do you send in rebates valued under $5?

3) Have you changed your savings account more than twice in the last year because of better interest rates offered elsewhere?

4) Have you bought more of something than you actually needed just because it was on sale?

5) Do you try and barter with salespersons that work at stores that typically don’t negotiate? (Best Buy, Costco, etc)

If you answered yes, to any of those questions, you are probably a pretty intense deal seeker. I have to admit I am guilty of question 5. I was at Costco once looking to purchase a monitor for my computer. The specific monitor I wanted was sold out, except for the display model. I tried for about 30mins to barter with the Costco manager, hoping he would give me a discount for purchasing the display model. He wouldn’t drop the price, so I had to punch him in the face say goodbye and leave monitorless.

We are probably all guilty of obsessive deal hunting, but the line has to be drawn somewhere. If you plan to wake up before 8am on Black Friday this year, you just might have an addiction to getting a good deal. I mean come on, people die at Wal-Mart as they get trampled by the bargain mob. And what about extreme couponing? Bargain Life posted an article about that sort of couponing and what it does to the family.Anyone else feeling brave and willing to share an embarrassing “deal hunting” story? Are you guilty of doing the across town gas station fill up?

"M" is for Mortgage (and Mullet)

Acquiring financing in these tumultuous times is probably the freakin’ scariest aspect of purchasing a home, or at least it will be for this Debt Ninja. If you are looking for financing or refinancing for your home, whether looking at an FHA mortgage, jumbo mortgage, VA mortgage, or a reverse mortgage, make sure to research the crap out of the various lenders so that you can take advantage of the lowest mortgage rates available.

Most conventional mortgages, with an affordable interest rate, typically require a down payment of anywhere between 5-20% of the purchase price. That can end up being a hefty chunk of change, but the general rule of thumb is choose the largest down payment plan you can afford- if possible 20% – with closing costs that equal up to about 3% to 5% of the purchase price, but you better make darn sure you have enough money left in your savings account to cover three to four months worth of housing expenses. A larger down payment will reduce the size of your loan, start you off with a lot of equity upfront, and possibly allow you to avoid paying private mortgage insurance. All around a pretty sweet deal if you ask me 🙂

There is also the option of getting a mortgage with little or no down payment. Before the housing market crash, lenders were increasingly willing to finance as much as 95%, 97% ,or even 100% of the home’s value. Essentially you could be broke, but still buy a pretty sick house. Generally speaking, the larger loans have higher interest rates than smaller loans. Why? Because mortgage lenders consider these highly risky (aka sketchy) loans. The borrowers may not only have to pay a higher interest rate, but they will also be stuck paying for the private mortgage insurance. Basically this is a pretty terrible option and I wouldn’t recommend using it, but I got to state the facts and this does work for some people.

Pretty much the only benefit to the larger financing options is the fact that it allows families with low or moderate incomes to be able to enjoy the life of homeownership…that is until they get foreclosed on for buying something they can’t afford. The recent housing market collapse, has left us all asking “Should someone that can’t afford to put down 10% on a home, be allowed to purchase one at all?”

High School Money

As people are looking for causes of the recent recession, I have heard it suggested (more than once) that high schools need to implement some kind of finance/money/economic course in their standard curriculum. It’s been argued that if people were equipped with sound financial principles in high school that the entire economy would be better off. If kids know that debt is generally a bad thing, they are less likely to make bad personal finance decisions later in life (like rack up a ton of CC debt or take out a 5 year ARM). Seems like a pretty good idea right?

While I agree the thought in nice, there is no way in HELLO that is going to work. Why? You can’t force high school kids to learn about things they have no interest in. I was a dork and enjoyed math and science, as a result I performed well in those subjects. I hated (and still hate) history and that was always my lowest grade. There was nothing anyone could do to make me want to learn about the civil war, period, end of story.

I could only imagine if my H.S. tried to force me to take an econ. or business class. Absolutely nothing about compound interest, saving for retirement, or taking on a mortgage appealed to me when I was 16 years old. Are you kidding? I was far too busy trying to figure out how I could get April Baldwin’s (super hot high school girl) phone number. Plus let’s be honest, it’s not like the majority of high school classes are really all that exciting, so a course about money would just be straight up miserable. Unless of course Mr. Ninja and Mr. J. Money were the teachers, but if that was the case there would probably not be too much “learning” going on in the first place 🙂

So what about you? Do you think you would have genuinely been interested in a personal finance class back in high school? On a side note: What subject did you absolutely despise back in the day? I think PF is something everyone should learn about, but they have to do it on their own will and desire. It’s like politics, I use to hate the stuff, but as I get older I am becoming more and more interested.

Class Dismissed suckers,