Category Archives: Finance

How to Use a Savings Account to Make Christmas Less Stressful

Can I let you in on a secret?

I’m not a big Christmas person. I stopped feeling the “Christmas magic” several years ago, and since we don’t often get to spend it with family, Christmas is generally pretty low key at my house.

This year, we are going through more of the motions than we generally would since my cousin-in-law is living with us and most of our friends are also staying in town; that’s causing me a lot of stress. I’ve already spent way more money on Christmas presents than I should have, but every time I think I’m almost done, I remember someone else. I am so petrified that I will forget someone, or not be able to finish making the presents I have left that I’m not doing well at almost everything else.

The chaos and stress of the holiday season is often more complicated than just the extra financial burden, but wouldn’t it feel more manageable if the financial part was taken care of? The more organized already know what to buy and for whom, and can purchase things, wrap and store them throughout the year, but even if that’s not you, you can still do something very little throughout the year to help you be more financially prepared for the holiday season, and that starts with a trip to your bank.

Sometime very shortly after the end of December paycheck, go to your bank and open a savings account that is set up to have a set amount automatically transferred (you not having to do it every month will help be sure it happens and at most banks will keep this account free) to it from your checking account on the day or day after you get your money to the bank once a month. Treat this like you would any other bill that you would pay, and do what you need to do in order to leave the money alone during the year. By December, you could have a few hundred extra dollars to spend.

Let’s say you typically cut it pretty close by the end of the month, but you think you can spare $25.00 a month for your holiday funds. $25.00 per month or 12 times a year will leave you with $300.00 by December.

Have any other ideas for making the holidays less stressful? I would love to hear them in the comments below.

Three Surprising Uses For Your Credit Card

Credit cards have a bad reputation, and for understandable reasons. Being enabled to spend money you don’t have is risky, and using one effectively requires self control. However, the benefits of taking on a credit card outweigh the risk. Safeguarding oneself against emergency, quick financing for small purchases, and establishing credit to prepare for a larger purchase are the most commonly known uses for a credit card, but here are three lesser known ways to utilize your credit card.

1.Most credit cards are now offering cash back rewards to encourage using them. This means that if you use your credit card instead of a debit card for your usual purchases (groceries, gas, etc.), stay within your usually monthly budget, and pay it off every month, so you don’t owe interest, then you can earn free money! Most of these cards offer only 1% (though I have seen promotional cash back rates as high as 5%), so you won’t earn enough to do anything drastic, but every little bit could make a pretty big difference on meeting your other financial goals!

2. Do you have any kind of expenditures that you need to track separately from your regular spending? This could apply to anything from expenses from a vacation, to entrepreneurial expenses that needs to be kept separate for tax purposes. Opening a second checking account for these purchases could cost you in fees, but utilizing a separate credit card, as long as it is paid off each month, is a much cheaper and convenient way to keep your purchases sorted.

3. Your debit card is generally safe to use, and your financial institution is fighting to keep it that way. However, merchant errors (single purchase posting to your bank account multiple times or a purchase not being reversed etc.) are much more common than you would think and debit card fraud still does happen. Your financial institution has a transaction dispute process in place for when this happens, but your money could still be held up for a few days in the meantime. Credit cards may be just as susceptible, but in the worst case scenario that this happens to you, it’s much less stressful if your checking account is not tied up, especially if you don’t have enough in savings to meet your upcoming obligations in the mean time.

Obviously, you should know yourself well enough to know how you will handle the temptation to overspend and have a plan to minimize your risk before signing up for one, but avoiding the credit card all together, could actually be detrimental to your financial well-being. Have any extra uses for your credit card? I’d love to hear them in the comments below!

 

Two Bogus Reasons You Think Your Teller Shouldn’t Be Asking For Your ID

Around nine times out of ten, if I am being verbally assaulted by a client, it is because I had the audacity to ask the client to provide a picture ID during a check cashing transaction. While I can understand feeling defensive if you think I am falsely accusing you of something , or being annoyed that you have to go back to your car or make another trip, I am blown away by how many of you seem to want any ol’ person with one of your checks to have access to your money. The two reasons most frequently cited for not wanting to present ID are…

  • You maintain large balances in your accounts. Despite all of the warm fuzzy things your financial institution tells you, so you’ll keep your money there, having over a certain dollar amount in any account does not guarantee instant recognition and/or special treatment. There is no “Most Important Clients” or “How to Tell Who is Wealthy and Who Isn’t” course included in new teller training. If anything, your financial institution should be extra diligent in protecting your assets instead of slacking off with identification requirements. Yelling any variation of”DO YOU SEE MY BALANCES!?!” ” HOW DARE YOU ID ME WHEN I HAVE MONEY IN THE BANK!!” or “I’LL BE IN TOUCH WITH MY PREMIER BANKER!” at me won’t help me realize that I shouldn’t have asked you to properly identify yourself, but it will make you look ridiculous, and may result in a dishonest onlooker targeting you in the future.
  • You have had a relationship with your financial institution for a long time. I don’t have to input your ID if I can match your face to your name before you make it to my window, but  when is the last time you memorized between 50-100 faces and names after a single, minute long, interaction with each one? I still haven’t. Tellers and bankers are required to do everything they can to know their clients. but building that relationship takes time. Especially if you are aware of new hires to the bank, you should always plan on needing your ID regardless of the length of your banking relationship.

I am not accusing you of anything, suggesting something is wrong with your transaction, or trying to keep your money away from  you; I just want to know for sure that I am giving your money to you. So, please just take a deep breath and hand me your ID.

Why Your Bank Won’t Let You Cash Your Check

Checks aren’t money.

That statement probably sounds strange, especially as checks still one of the most common way money passes hands. Checks are more accurately a permission slip to collect a certain amount of funds from a specific bank account. Often, your bank will honor your permission slip and give you the money even if they haven’t collected it yet themselves, but sometimes it doesn’t. Why?

First you need to know that banks classify checks in two major groups, on-us and not on-us, depending on which bank has the account the money is coming from. If the account belongs to the same bank you are presenting the check at, the check is considered “on-us”. If not, the check is “not on-us”. Banks will also classify you into one of two groups, clients and non-clients based off of weather you have a deposit account with the bank or not.

“On-us” checks are the easiest to cash because the bank can verify that the check is valid, or that the funds are there and the check isn’t fraudulent. Both clients and non-clients are able to to cash on-us checks, though often non-clients will have to pay a fee. The most common reasons a bank will refuse to cash an on-us check are

  • The check is written for more than what is in the account or the check is written off a closed account.
  • The check is suspected to be fraudulent. This doesn’t necessarily mean that the bank is assuming that you are doing anything illegal. Checks are more likely to be more heavily scrutinized if they are for high amounts or if the account owner has reported previous fraudulent activity or stolen/missing checks.

Be aware that banks are not allowed to give out confidential information about the account the check is written off of, and that often means that they cannot give you a specific reason for refusing to cash the check, so you may need to contact the account owner.

“Not on-us” checks are more risky for the bank to cash, since their validity isn’t as easily confirmed by the bank. In most cases, non-clients will not be able to cash not on-us checks. In order to be protected against losses from cashing bad checks, banks will cash not on-us checks against your account. What this does is allow the bank to recoup what they gave to you out of your account if the bank is unable to collect the funds from the account the check is drawn off of.  This is where lack of “offsetting funds”, the most common reason a bank will refuse to cash a not on-us check, comes into play. If you were to cash a $500 check against your $3.00 back account, and the check ended up not being valid, that would be devastating to your account, especially if you were unable to return the cash. To protect you and itself, the bank will often require you to have “offsetting funds” or the amount of the check in your account before giving you cash for it.

Other reasons a bank may refuse to cash your check that apply to both on-us and not on-us checks include

  • The issuer of the check didn’t fill it out correctly. Important information, like who the check is made payable to, is missing, or the legal line doesn’t match the written line. Maybe the issuer wrote the check for the wrong amount, tried to change it, but didn’t initial the changes or filled it out with different ink colors. If this is the case, you won’t be able to fix the check, and instead will have to take it back to the issuer.
  • The check is mutilated, and important pieces of it are missing or illegible. Contact the issuer to get the check reissued.
  • The bank can’t properly identify you. This is especially problematic if you are utilizing the drive through, are working with a new teller, or haven’t established yourself on a first name basis with the employees of your local branch.
  • The check isn’t made out to you or is made out to you and another person. In some circumstances, a check can be specially endorsed to allow another individual to cash it, but the policies around doing so vary. Some banks still require the payee of the check to be present and have current identification or will still refuse the check if the payee is a non-client. If the check is made out to you and to another person, most banks require that either both of you be present with ID’s or that the check be deposited to an account with both payees on it.

Banks are constantly working to improve their check processing procedures to give you access to your money quicker, and one day might be able to instantly verify checks or make checks obsolete all together. In the meantime, to avoid not being able to meet your financial obligations when your bank is unable to cash your check, I recommend that you familiarize yourself with your bank’s funds availability policies, and plan accordingly.

Do you have any crazy check cashing stories? I’d love to hear in the comments below!

Breakfast Sandwich Challenge

Ever wonder exactly how much money you would save by making your breakfast at home instead of picking it up on the way to work in the morning? Well, wonder no more! I figured it out for you.

For the prices I calculated, I am working with the following price assumptions based off of regular sale prices in my area with the unit cost rounded up to the penny. Your results may vary based off of ingredient costs in your area.

  • English muffins- package of 6 for $2.00
  • Eggs- package of 18 for $3.70
  • Cheese- 1 lb for $4.00
  • Bacon- 1lb or 18 slices for $4.00

For a bacon, egg, and cheese english muffin, I use

  • 1 english muffin at $0.34
  • 1 egg (more than one egg doesn’t fit nicely into the muffin like the ones you buy for breakfast) at $0.20
  • as much as 1/4 cup cheese at $0.40
  • 2 slices of bacon at $0.45

This means a homemade bacon, egg, and cheese english muffin costs $1.39. The same breakfast sandwich costs $2.79 at my neighborhood 7/11, which means a savings of $1.40 per day. Prefer a fast food place in the morning? Burger King is currently running a 2/$4 special on their breakfast sandwiches. If you buy two, eat one and save the other for the next day, that’s still a $0.61 savings.

That might not seem like a significant savings, but if you stop for breakfast at 7/11 five days per week, that’s an extra $7/week or $364/ year for a comparable breakfast sandwich to the one you would make at home. If you do the same at Burger King, you end up spending an extra $158.60  annually or $3.05 weekly for breakfast.

Not everyone enjoys breakfast sandwiches in the mornings, so I would love to hear about other foods you’d like to save money on in the comments below!

Five Tips for Improving Your Banking Relationship

A very frustrated woman came into my work looking for help cashing her tax refund check. For most people, getting a tax refund check cashed is relatively easy to do, even without a bank account. Unfortunately for this woman, the check was made out to her and her husband, and he was in jail. She had established power of attorney over her husband and had been running his affairs, but because they did not have any relationship with a financial institution before his incarceration, all of the banks within a reasonable drive from her home determined that to cashing the check or opening a new account with her and her husband to deposit the check into was too high risk. Their lack of a banking relationship cost them prompt access to thousands of dollars.
One of the big dividing factors between adults who are successful and adults who are not is the quality of their relationship with their financial institutions. Here are five tips to ensure that your relationship is a good one.

  • Choose your bank carefully. Just because your parent’s bank works for them, doesn’t mean that it will work out for you. Before you open an account for yourself, you need to be aware of and comfortable with the following
    • Funds availability policies- banks are required by law to give you a written copy of their funds availability policies, but most people do not take the time to read them. When you deposit a several hundred dollar check, do you automatically have access to a portion of the funds? If you deposit a check on a weekend, do you have to wait until after Monday’s business date before the funds become available? Can I cash this check without having the amount of the check, or offsetting funds, in the account already? Knowing the answers to these questions will help you plan ahead and avoid frustration later on.
    • Fee schedule- How much will your bank account cost you? Paying monthly maintenance fees on your account is easily avoidable if you understand the criteria for keeping the account free and ensure that criteria is being met, or that you can switch into a different account that works better for your financial situation. If the institution you are with doesn’t have an account you can reasonably keep free, you need to consider looking into switching institutions.
    • Overdraft policies- What happens if you overdraw your account? Is overdraft protection available for you? How long can it stay overdrawn before it starts accruing fees? Knowing the answers to these questions can help you minimize your costs and avoid a huge headache if you accidentally spend more than what is in your account. On this note, also keep in mind that while some institutions can reverse one overdraft fee as a courtesy, you are ultimately responsible for making sure that you have enough in your account to cover anything you purchase. If the overdraw was not a result of a bank error (like your bank not processing a deposit correctly), the bank may not have to reverse any fees regardless of how loudly you insist that your failure to keep track of your own money is somehow not your fault.
  • Get on a first name basis with the people who work in the bank or credit union you keep your money in. While it is tempting to solely utilize the ATM and online banking services for convenience, doing so would be a mistake. Technology is awesome, but in the circumstance that your account gets messed up you will need a human to help you fix it. A familiar face at the branch, who you already know well, will be more motivated to help you than the random person who will pick up the 1-800 line, and you get the added benefit of being able to just talk to the one person instead of getting a different stranger each time you call. Knowing the tellers could also have the added benefit of allowing you to be able to cash your check if you’ve forgotten your ID or don’t have the offsetting funds in your account.
  • Be on your best behavior. We get it. Trips to the bank are tedious, and you have several things you’d rather be doing. Standing in line tapping your foot, being huffy and rude to the employees, throwing tantrums, or acting aggressively is not going to get you on your way any faster, and the more flustered the employee you are working with is, the more likely your transaction will be done incorrectly. On that note, is something wrong with your account? See something scary on your bank statement? Definitely reach out to your institution, but make sure to take a deep breath and be as calm as possible before picking up the phone or going out for a drive. The part of your brain that handles logical thinking shuts down when you are in attack mode, which is less than productive for you.
  • Be responsible for your finances. The institutions that are not pushing you to sign up for additional products are being bought out by the banks that are, and soon everyone will be pushing extra accounts, loans, credit cards etc. Signing up for everything that the nice people at the bank isn’t going to be what is in your best interest because, unfortunately, many bankers are being forced to choose between pushing unnecessary products or no longer having a job. This doesn’t mean that refusing to even hear the banker out is in your best interest either. Banks are constantly changing out their products, your financial situation is constantly changing, and taking the time to learn about what’s new prevents you from missing out on new benefits. If your bank utilizes the “needs met” framework for sales, the offers are going to be more tailored for your financial situation as well.
  • Pay attention to what your institution is telling you. Banks are constantly changing their accounts. Most of these changes require your bank to notify you by law, which is most likely going to be among the promotional junk they include in your statements or fill your mailbox with. Make sure to give anything your bank sends to you a quick look through before you throw anything from your bank away.

These are my five tips for having a good banking relationship. I cannot stress how important this relationship is to being a more financially successful adult, and I’d love to hear any tips you may have in the comments below!