It wasn’t until after I got married that began aggressively managing Anna’s and my finances. After our first year of marriage we looked at our spending and realized we weren’t giving or saving as much as we ‘thought’ we were. So we began seeking a plan to manage our finances, focusing on two main areas: 1) Giving and 2) Saving. Without a plan for saving, you won’t. So get a plan and a great bank with an outrageous interest rate. I’ll show you both.
Set-up a good Savings account
Pretty much everyone has a savings account. But do you have the best one out there? I think I do.
I have an online savings account with ING Direct. I deposit into my local checking account and then transfer into my ING account via the web. I’ve been with ING for several years and they are exactly what you would want for a savings bank. I can set up multiple sub-accounts for different saving budgets: Like taxes, long-term savings, and Mac Pro.
The best perk: 4.5% interest rate on my standard savings account. No fees. No minimum. No hoops. Just the orange ball and a great rate.
It is fairly easy to set up a new account. Once you’re on the homepage click “open an account.” You fill out some info, and then have to mail them a voided check from your checking account so they can set up the ability to transfer.
Most people aren’t getting a good rate because they don’t know better or they don’t have the energy to set up something different.
A little bit of time with ING Direct could make you hundreds of dollars a year.
Just Got a Paycheck? Now What?
When we get our paycheck the first thing we do is write the 10% tithe check to our church. Then I transfer some money into our ‘taxes’ savings account so we can pay homeowner bills and IRS bills. After that I look to see what’s left in our checking account (including the previous balance). We have a set amount that we keep in our checking at the beginning of the month to pay monthly bills and budgeted items. Anything that is above that amount goes into a savings account for emergencies and long-term goals. Some months it is a small amount, other months it is a bigger. But we always put something aside. Lots of littles will add up to something big.
Yuri said:
For long term have you considered doing an IRA? You can get way better than 4.5 with mutual funds apparently …
I agree though, seems like short term savings and emergency money should be in a good, easy to access savings account.
What do you consider enough for an emergency fund?
Posted on April 26, 2007 at 9:25 am
{Shawn} said:
@ Yuri: We do have a plan to set up a more effective long term savings account, but we are considering some other possible options.
We have two emergency funds: 1) Enough for one month of expenses in case all our supporters stop supporting us the same day; 2) Our max out-of-pocket expense for health insurance.
Posted on April 26, 2007 at 9:43 am
Blake said:
Go with a Roth IRA when you get a chance.
But interesting about ING. How “liquid” is your money? Meaning, if you needed something from your ING account, how quickly could you make a withdrawal and have it in hand?
Your tithe: on the net or gross?
Posted on April 26, 2007 at 2:18 pm
{Shawn} said:
@ Blake: Thanks for the IRA tip.
It takes about 2-3 business days to get my savings account money into my checking account. And I could withdrawal all of it if I wanted and still keep my account active.
Tithe on gross. I figure I can’t out-give God.
Posted on April 26, 2007 at 4:33 pm
Dave said:
Shawn, I love your blog and this is my first comment. I’m so nervous…well, not really.
Our pastor is in the middle of a series on money and it’s been really helpful. The talks are available online at bethanytc.org
My wife and I are in the middle of trying to put into place a lot of the things you’re talking about.
Peace,
Dave
Posted on April 27, 2007 at 12:52 pm
John Paul Fullerton said:
I bought some books about personal finance from an online bookstore and received a coupon with my books for $25 dollars if I started an ING Direct account. That was nice
I found since then that HSBC direct offers 5.05% interest and got an account there. (http://www.hsbc.com/ click on Internet Banking) The account includes an ATM card that can only be used for withdrawing cash (not paying for goods at stores). They also have a not-as-convenient checking option (that I have not completed) that might allow more general access to funds. I may have heard something about ING Direct adding checking recently.
Posted on April 27, 2007 at 1:00 pm
Scott said:
Shawn, do you have a Health Savings Account type of health insurance plan?
Posted on April 29, 2007 at 3:24 pm
tithe said:
aren’t we suppose to give our first fruit offering first. Maybe i’m wrong on this but i think the tithe was given after Israel give a first fruit offering first?
Posted on April 29, 2007 at 6:43 pm
{Shawn} said:
@ Scott: No. I am with a standard health insurance company. I have a “max out-of-pocket” expense. After that amount is reached then the insurance pays 100% of all expenses.
Posted on April 29, 2007 at 10:57 pm
Scott said:
A “Health Savings Account - High Deductible Health Plan” usually goes by the name “HSA”. It’s designed to save you premium dollars and tax dollars: It should give you a lower insurance premium AND make 100% of your medical and dental expenses tax-free. (Normally you can tax deduct only health expenses that exceed 7 1/2% of your income.)
The theory behind it is this: most people aren’t as mindful as they should be of taking good care of their health and using medical care cautiously. Why? Because the insurance company pays the bills, so there’s a disconnect -people don’t really steward these dollars like they would most any other expense in their life. Doctor and hospital bills aren’t examined very closely because you’re not going to pay them anyway, insurance will.
BUT if you have a higher deductible, now you’re going to be real careful about spending money on medical services because you’re spending YOUR money, not the insurance company’s.
So here’s how it works:
a) You buy a health insurance plan that is HSA-eligible.
b) You open a special HSA bank account.
Your premiums to the insurance company should be lower than a traditional plan because of the higher deductible. Then you can take the money you saved and put it into your HSA bank account. Every dollar you put into the HSA bank account is tax-deductible, up to the IRS maximum of $2,850 per year for a single person, or $5,650 for someone covering themself plus one or more family members.
Then when you have a medical expense that you’re going to pay “out-of-pocket”, you pay for it with your HSA account using a check or the debit card they send you. At the end of the year, any money you did not spend just rolls over to the next year, but it’s all still tax-deductible.
Also, you can use your HSA to pay expenses like dental and vision, so your teeth cleanings, eye exam, glasses, etc, are now paid with tax-deductible dollars.
My family (five people) has one deductible for the whole family ($7,500), then insurance pays 100%. Our family premium is about $440 per month, as compared to at least $900 for a “regular” plan with a lower deductible. The premium savings and tax savings are great enough to cover all my normal medical and dental costs for the whole family for the year.
Posted on April 30, 2007 at 8:10 am
Scott said:
Also on the subject of health insurance, if you guys aren’t familiar with Medi-Share, you should be. It’s a Bible-based “sharing, not exactly insurance” program.
Posted on April 30, 2007 at 8:13 am
Scott said:
Anyhow, the point of an HSA plan or the Medi-Share plan is to save you money.
PS - I’m not selling anything. Just free good advice.
Posted on April 30, 2007 at 2:55 pm
{Shawn} said:
@ Scott: Thank you so much for all the info. I am going to look into this! I appreciate the time it took to share that. And it’s pretty obvious you weren’t selling anything. No need to qualify.
Posted on April 30, 2007 at 9:57 pm