Ask MetaFilter posts tagged with Savings

Paying Off Debt v. Safety-Net Savings (Given the New Circumstances)

WCityMike — Mon, 13 Oct 2008 09:53:06 -0800

Traditional wisdom suggests that saving money while in debt is a bad idea: you pay hundreds of times more in finance charges on money you owe than you would get in interest on money you save. Under this scenario, your "safety net", at least until you are debt-free, would be the credit lines you are clearing out. However, in a response to a Lifehacker comment I made outlining this traditional wisdom, someone replied that given the financial crisis, companies could then lower your credit limit, regardless of cause, killing your safety net. Given this, is the traditional wisdom now wrong? Over the months to come, is the wisest place for any money remaining after bills an interest-earning savings account, or still towards reducing my credit card balance? If a mixture of the two, what ratio would you yourself recommend? Finally, what would you yourself consider a minimum balance to reach for your safety net, if you felt the traditional answer of six months' salary was, for now, too high a goal to be practically reached?

I need a German savings account

cmonkey — Fri, 10 Oct 2008 05:01:20 -0800

What's the best account for saving money in Germany? I have no savings right now, and that makes me a little worried.

In the US I would stick $100 a month into a money market savings account, but Deutsche Bank, my daily bank, requires a €5000 initial deposit, which I do not have, and their normal savings account only has a 0.50% interest rate which is a little low. I asked some coworkers for advice, but they could only suggest a Bausparkonto which I guess would penalize me for withdrawls.

So I ask you, friends of the internet, where is the best place to stick a few hundred euros a month with a minimal initial deposit, low hassle for transfers out of a German bank account, and no penalties for withdrawing money?

Not panicking, just refining my strategy.

ourobouros — Thu, 02 Oct 2008 14:14:50 -0800

Given the current economic climate, should I be padding my emergency fund or paying off my credit cards? For the past year, I've been aggressively paying down my credit card debt. At the beginning of the year, I had several credit cards, all carrying a near-maximum balance. Now, I've completely paid off the card with the highest interest rate, and I'm within striking distance of paying off the whole thing. Yay! I estimate that within 4 months, I'll be credit-card-free.

In the meantime, I've been making very small but steady payments into an emergency fund. This fund is now large enough to cover about a month of living expenses.

I haven't been too worried about the economic crisis so far, because I don't really have enough money to be directly affected. But I work for a small business -- exactly the kind of business that might be harmed by the credit crunch. As far as I know, my employer is doing just fine, but I'm a little worried about what might happen in the months to come. Because of this, I've been considering temporarily switching back to minimum payments on my credit cards so that I can build up my emergency fund to a more comfortable level -- maybe 3-4 months' worth. Is this a good idea?

A couple of other factors to consider:

- In addition to the credit card debt, I have subsidized student loans, which I've just been paying minimums on. I figure I'll be paying these off for the next few years, but the interest rates are so low that I don't mind.
- I also have an "irregular expenses" fund that holds enough for things like doctor's appointments, car repairs, etc. So my emergency fund is strictly for emergencies.

So, what do you think? Given these conditions, should I be putting more into my emergency fund? If the economy goes "plop" and takes my job with it, will I be better off with more cash on hand, or will I be regretting not paying off my credit cards when I had the chance?

Thanks, all.

How much money does forgetfulness waste?

KateHasQuestions — Thu, 18 Sep 2008 18:18:15 -0800

How much money does carelessness and forgetfulness waste? When I forget to turn off lights, how much more am I paying for electricity? When I forget to turn the light off when I go to work for the day, or forget to turn the AC off when I leave for the day, how much does each day/each light cost me? What about leaving the computer on overnight vs. turning it off?

Yea, I know it's also bad for the environment to waste energy, and I usually remember.. but wondering how much money I'm wasting... is it worth putting post-it notes on all the doors to remind me to turn off all the lights as I leave?

Questions about the possible economic depression

mintchip — Tue, 16 Sep 2008 21:06:01 -0800

Questions about the best course of action to prepare for a possible economic depression I'm no economist, but I'm trying to learn about the possible economic depression everyone's been talking about since the recent financial upheaval. I have a number of questions.

1. I have always read that there are huge bargains to be had when the stock market tanks. If this is so, what stops investors from jumping INTO the market when there is a huge crash? For example, why not invest in an index fund as soon as the market drops off 500 points? Why *wouldn't* this be a good idea for the individual investor (assuming it isn't).

2. What would happen to people's outstanding debt if the companies they owe $ to went under? For example, did people's debts get wiped out with the banks that closed up shop during the Great Depression? What about nowadays...for example, what would happen to student loan debt if virtually nobody could afford to make payments?

3. Let's say you've got some extra cash flow right now...what's would be the best bet when preparing for a possible period of economic depression? Pay off outstanding debts? Stockpile money in order to buy up things once they've lost value? Etc.

4. How were some people able to purchase "bargains" during the great depression if indeed inflation caused money to lose most of its value?

5. Does FDIC insurance REALLY ensure that money is safe and accessible (up to the limits specified)?

6. Anyone care to venture a guess about what the next few years are going to look like economically?

I live in the UK, where's the best place for me to save £10,000

mairuzu — Fri, 29 Aug 2008 05:18:16 -0800

I have £10,000 which I made from the sale of my house. Eventually I want to use it as a deposit to buy a new house, but don't envisage this happening within less than a year. Where's the best place in the UK for me to save this money?

Alternatives to super when the economy isn't doing so great?

wingless_angel — Mon, 28 Jul 2008 09:23:48 -0800

What should I do in addition to super to have any hope of retiring several decades from now? So according to the Sydney Morning Herald superannuation returns in Australia are way down . I've long been sceptical of being forced to put so much into super since it is more volatile than we've been led to believe. I'm wondering what alternatives there are.

I'm 30, work in the government, I have two different government super schemes. I'm currently contributing 8.5% of my pretax income along with my employer's 17%. I am in a defined benefit fund which I think will screw me in the long run. I have no assets but am saving for an apartment downpayment.

I would like to live overseas for a year on and off here and there, and maybe have kids and this is going to put all kinds of breaks into my contributions. And I'm also wondering, what else shoud I be saving up for to contribute to especially with the economy the way it is. What are the alternatives to super? Should I be watching for the market to bottom out and buying index funds? Buy into property? Put cash into online savings accounts?

I do want to retire someday, and I'm really not sure that super is going to cut it.

Where do you put money for baby?

ND¢ — Mon, 28 Jul 2008 08:04:05 -0800

So, we just had a baby and grandmothers keep coming up to us and handing us checks for $50 and saying "This is so you can buy a savings bond for the baby." However, I would like to hear about alternative saving/investing ideas for my daughter. I know 529s are the hot new thing, but I hate that it can only be used for college. What if she decides not to go to college or needs the money sooner for whatever reason? Is there a good way to invest the money that keeps it in our name until a certain date and then it goes to her and has more flexibility than a 529? I am not sure that tax liability is a major concern since we are talking about like $400 right now, but we would like to set aside a regular amount ourselves and there will be birthday gifts and whatnot to add to it.

Having reviewed the older questions on this topic, I feel compelled to list some advice I am not looking for: "buy gold because the grid is coming down man!", "my parents didn't give me any money and I turned out fine so your baby don't need none either", "don't ask people on the internet, go see a financial planner right now" and generally anything crazy.

Also, I can be convinced that a 529 would be the best way to go, but I would probably need state specific information. We are in South Carolina.

Thanks in advance everybody!

Are these other accounts just more of the same?

forallmankind — Sat, 05 Jul 2008 14:10:14 -0800

When the Citibank e-savings account started (I think about 18 months ago) the interest rate was 3.5%, so I moved all my spare cash there; but now it's 1.5%. Capital One & HSBC are currently offering 3.5% e-savings accounts - is this the same deal? Are these only introductory rates which I should expect to fall dramatically in due course? If so, this kinda feels similar to those situations where people bounce all their debt around 6 months interest free credit cards. Is this what you need to do if you want the accessibility of an e-savings account with a good interest rate? You'd have to keep bouncing to the latest account offering essentially a short-term high rate.

Or have I got it all wrong. Are those nice people at Capital One gonna hang on to that nice 3.5% for me (or at least let me know when it drops significantly, unlike my buddies at Citibank)? I notice that the HSBC rate is only available through mid August....

MAGI May (Be Headed North of $100k)

Anonymous — Thu, 26 Jun 2008 09:09:13 -0800

Will opening a Solo 401(k) before year's end reduce my modified adjusted gross income (MAGI)? I'm a 28-year-old freelance worker with a sole proprietorship, and I'd like to be able to fully fund my Roth IRA for 2008 It looks like I will soon reach $100k in earnings for the year, and I'm starting to think about ways to reduce my MAGI in order to be able to contribute the maximum amount allowed ($5000) to my Roth IRA.

From what I can tell, contributions made to an employer-sponsored 401(k) will reduce my MAGI, but does this reduction occur with self-employed (aka Solo) 401(k)s? If not, does anyone have any additional advice for reducing my MAGI?

How do deal-a-day sites work?

SirStan — Wed, 11 Jun 2008 13:40:33 -0800

How do deal-a-day sites work? Are they really 'deals', and where do they get all the loot? Woot.com, Chainlove.com, steepandcheap.com, backcountry.com. How do these sites WORK. I am a programmer, I could script one up in a day, that side is easy. How do they actually get all the crap they sell, and still make a margin on it all? Are the deals really deals? How are they sourcing stuff in quantities enough to even make them available for volume payback on low overhead?

If I wanted to start a deal-a-day site (and I dont), what might my background look like to be most successful? Do I have connections to a large wholesaler through existing business lines, and I offer to buy 5000 of their remaining 2007 stock of closeouts? Do I have a "friend in the business" that sources me say Oakley stuffs?

How would I get a deal to offer a deal?

Why can't I close out and withdraw from my 401k? Any way out?

Anonymous — Mon, 09 Jun 2008 19:02:16 -0800

I want to close out my 401k (and pay the necessary taxes) so I can pay off some debt. My 401k says I'm not allowed. Why not? Can I change anyone's mind? I have relatively minor credit card debt n. I have meager 401k savings n. (I am only 23). I would like to pay off my credit card, and be putting the money I'm currently putting toward monthly credit card payments toward more immediately accessible savings. Additionally, my company has as of last month decided to start matching 401k contributions, so I'd rather be putting matched money in than letting the $n sit there doing not much in the stock market while I continue to accrue credit card interest. However, I can't put money in until I'm not worried about paying off credit cards.

So I called my 401k people (Fidelity) to ask to take the withdrawal. They said I can't. I said, are you seriously telling me I can't have my money? And they said that since I'm still at my current company, I can't do anything with it until I'm fired or leave voluntarily. I've got a while before I'm planning on either of those. What the hell? It's my money, isn't it? We wants it :(

The other option is to take out a loan, but I'm only eligible to take out loan n/2, and paying back loan + interest plus paying off the other half of credit card debt won't really solve my problem. My goal is to wipe out the debt, be able to start contributing small (matched) amounts to retirement, and separately do a better job of keeping an accessible savings account with monthly contributions.

So, question 1: Why can't I take out my money? What's the reason behind this? And is it likely that by arguing in a different way I could get it? I'm fully aware of and willing to pay the necessary taxes if they'll just let me get at the money.

Question 2: Any other options for what I'm trying to do?

(Anonymous because I don't want this connected to the real name I use on here)

Help me stash my cash

t0astie — Tue, 03 Jun 2008 05:22:10 -0800

I am absolutely crap at saving and live pay cheque to pay cheque. This must change. Help me find the best place to squirrel away a small amount of cash each week, where I *won't* be able to withdraw it easily. Despite my general uselessness with saving, I've become quite good at paying bills. But only because I make micro payments on each bill, each week on pay day. So, I pay $60 for my car loan, $12 for health insurance, $5.50 for my landline… and so on with six or seven different bills. Hurrah! For the first time ever, I am not getting angry overdue letters from phone/electricity/credit card providers.

I've tried to do something similar with savings, putting money each week into online savings accounts like ING. But it hasn't worked, because, well, I can take it out.

I really want to find somewhere, or some sort of investment strategy, where I can put away $25-50 a week for an emergency fund, until I have $1000. And not access it. I mean, I'd like to be able to access it if it's life and death, but not overnight, or the next day, like with ING.

But I'm a complete investing novice and have no idea where to even begin looking for something like this, or what name / names it might have.

Any suggestions for what sort of place I should direct the cash would be great.

And can I just clarify – I'm *not* looking for general advice about being a better saver, like cutting out my daily coffee, or being more disciplined or whatever. I'm looking specifically for advice about *where* to put the small amount of surplus cash I do have so I can't spend it easily. ING and online banking are waaaay too easy to access, so no tips in that direction, thanks! And I'm in Australia, not the US, if that makes any difference in advice.

A sensible saving plan for an uncertain international future?

Cantdosleepy — Thu, 15 May 2008 07:10:35 -0800

PersonalFinanceFilter: 25 year old looking to start making payments into something pensionesque, but with an international bent. Any suggestions? I think it's time to start a pension (overdue, probably). I am British but have a Significant Other who has ties to three other countries, and feeling not a massive attachment to the UK, there's a reasonable chance that I won't be seeing out my days here.

I earn about 25k a year before taxes. I'm living in London so there's not a massive amount left at the end of the month, but I'd like to start putting a little something by.

So what do people advise? Would a regular British pension with a reputable company (Scottish Widows &c) be a good bet if I plan on disappearing from these shores in the next five, ten, fifteen, thirty years? Or might a regular/fancy savings account that isn't technically a pension but might operate like one (and still be around in ~50 years) be better for my situation?

FinanceMasters, I humbly beg for advice.

Money stories from international types are also greatly welcome.

Thanks!

Savings for babies

pyjammy — Wed, 09 Apr 2008 08:59:33 -0800

What is a good savings account to set up for a baby? Four months ago, I had triplet boys. At their recent baptism, they were given several checks. I want to set up a savings account for each boy to deposit the money into, but I'm afraid if I just go to our local bank, we're going to get an abysmal interest rate. We live in New Orleans, if that's useful to know.

I was thinking of setting up an ING account for each baby, but you can't send checks right to them, can you? So I'd have to deposit the checks into my account first and then transfer the money into each account. Kind of a pain, especially when it's for three different kids.

And what if people make the checks out to them, and not me? Can I endorse them on their behalf? Otherwise I'd have to wait a few years until they can sign their names. Ha.

I may just be overthinking this. But are there things I need to think about when setting up a savings account for a child? or three?

Please help me decide between Fidelity and Vanguard.

salvia — Sun, 06 Apr 2008 16:37:09 -0800

Questions about opening a Roth IRA -- particularly, does it matter where I open it? If so, Fidelity vs. Vanguard? I want to open my first Roth IRA. I've read past questions and some online resources, but I still have some questions.

- First, does it even matter where I open it? If I figure out I screwed up, how hard is it to switch from one of these to the other?

- I will (very soon) have a 403b with Vanguard through my employer. Does that tilt things in favor of Vanguard for an IRA? Would I be able to "pool" these funds? It sounds nice to make one phone call rather than two. But is there some reason that tilts things in favor of Fidelity? Would it be better to have them both as options? Then I could hold, say, some of both group's target retirement funds.

- To make a good decision, do I need to figure out where I would invest the money first? They have different expense ratios even for their S&P 500 index funds (VFINX is .15% vs. FSMKX is .10%). I realize this isn't much of a difference, but if they differ on the simplest index fund, they're going to differ by more in other things, right? (I'd be deciding between S&P 500 index funds, some index fund with non-US companies, or a target-date retirement fund.)

- If you do think I should decide where to put the money first by actually looking at fees, how do I find that out? There are these scare stories (eg) about hidden fees. Are they still hidden if I look at Morningstar's front load %, back load %, and expense ratio? Or is there a better place to find all this out?

- All over the web people are saying that Fidelity's customer service is better and more informed. This has me leaning toward Fidelity. Do you think this still holds true?

- Lastly, what does this comment from jak68 mean, "Also -- in case you didnt know -- there is a small difference between buying funds via a trading account at a brokerage house (as with fidelity, schwab, ameritrade etc), VS. buying the fund directly from the fund family's website (vanguard, etc)?" Should this influence me in some way?

Thanks for your help. I'm interested in learning more over the long term, but I also have the feeling that I'm making this too complicated and should find a way to make this simple.

Opening a 529 when I don't have kids

waylaid — Mon, 24 Mar 2008 08:21:13 -0800

I'm in my mid-20s, and having worked several jobs (often a couple at a time) through college and grad school, I would like to avoid the same fate for my (future) children. Can I open a 529 and start saving without having any kids? I live in DC, which offers what seems to be an excellent 529 plan with no fees, with a contribution of $25 min a month.

Can I start a 529 with no kids (or none on the way, either?). I'm not married or even in a LTR right now, but I'd like to start saving. I almost certainly plan to have them.

Do I just set myself up as the beneficiary? Along those lines, what if I don't have children - am I able to withdraw the funds, or use them for future education down the line?

Savings plan for primary school?

lmY2K — Fri, 21 Mar 2008 14:36:47 -0800

My child will be switching to a very expensive private elementary school. I have already prepaid the tuition for next year, but what is my best strategy to pay for the following years? Specifically, what is the best way to invest about $2K/month so that I can withdraw the needed lump sum once a year? 529 plans are for college expenses only, and Coverdell education-savings account maxes out at $2k/year.

AAA - more than roadside service?

kidsleepy — Thu, 28 Feb 2008 11:39:11 -0800

What practical uses, besides roadside service, have you used your AAA membership for? I asked for and got a AAA membership for Christmas. I wanted it mainly for the roadside service, which came in handy just yesterday for a dead battery. I know there are other benefits to AAA, like hotel discounts, free road maps, etc. Browsing around the AAA website, I found out that I can get a 10% discount from target.com! There are a TON of discounts listed on aaa.com. Which benefits do you actually use? Which are a waste of time? Does anyone know any "secret" AAA savings? I have "Plus" membership if that makes a difference.

How can I protect myself from my financially unstable mother?

fan_of_all_things_small — Tue, 19 Feb 2008 03:51:31 -0800

How can I protect myself from my financially unstable mother? This is a question regarding my mother. Long story short, she's currently waitressing after losing her career due to abetting illegal activities at her workplace, she's bankrupt from credit card debt due to overspending, and still gets help from her rich father who is in his early seventies just to "make ends meet", which basically means eating out on a regular basis and getting big cable TV packages.

She's always going on about how she can't wait until my grandfather dies so that she can get a big inheritance and not have to "worry about money anymore" but it is likely this money will be squandered as well. When my sister and I were young, we received bonds from our grandparents for our college educations and my mother cashed them in, as well as took money from us from our first childhood bank accounts which were joint owned with her, which gives me paranoia about her stealing money from me now.

My question is this; I finally have financial stability since graduating from college and I'm making plans to invest the money in savings for emergencies and my own retirement. I also have to worry about paying off a lot of loans. Besides suddenly being paralyzed with the, potentially irrational, fear that my mother will somehow find a way to take my money from me, it has suddenly occurred to me that she has no retirement fund. The only way I can see this ending is with my sister and I being coerced into paying for our ailing, sick mother while we drown in financial ruin. My mother has never shown any ability to stand on her own feet and is used to being pampered by her rich father. My sister is in her early twenties has already been guilt-tripped into giving her money even though she has credit card debt of her own.

Seeing where things are headed, I'm confused about what to do at this point. Should I hide details about my financial information? Insist that I only help her with money when she's in extreme distress and aging, but not before then? At what point does someone draw the line when their parent can't take care of themselves? I've already tried talking to her about money to no avail, so it's become obvious to me that the change needs to happen on my end.

I want to be ready for whatever comes. Please suggest ways that I can protect myself. Thanks for your help.

Did the ant and the grasshopper both retire comfortably?

chickletworks — Tue, 19 Feb 2008 00:21:08 -0800

At what age did you start saving for retirement? At what age do you recommend starting to save for retirement? I know that the smart, responsible answer is "As soon as possible," but guess I'm asking whether you can put it off for a while and still be okay-- and whether average people do.

I'll talk with a financial planner, but I wanted to get a sense of how other people have made retirement savings decisions. Thanks in advance!

FX gives me a headache

barrakuda — Fri, 15 Feb 2008 06:46:02 -0800

I am permanently moving from the US to Europe in about a month. I have about $50K in savings in HSBC high (and ever-falling) interest account. I am at a loss as to what to do with this money. Money-savvy Mefites, please come to the rescue. So I have all this money sitting in savings. For the next four months my salary will continue to be paid in dollars. I am a horrible, albeit charming, investment ignoramus. On one hand, I feel terrible about converting my savings to euros, on the other I don't know whether I want to leave my money in the States especially if the dollar is to further depreciate against the euro. I considered buying an apartment in Washington, DC and renting it out; but I wonder if there are other means of managing my hard-earned money and assuring that it will not loose its value. Ideas? Comments? Anyone? Bueller?

Recommendations for a financial advisor/accountant for a young couple?

scazza — Wed, 30 Jan 2008 13:51:24 -0800

Recommendations for a financial advisor/accountant for a young couple in NYC? We've read a lot about finances, but I would like to sit down with a person. I'd prefer someone who can do it all; to slog through all of our financial life, to ask questions of, to plan, to do taxes, not just someone interested in investing. I don't know if it should be someone who specialises in freelancers (arts and computing) if there is such a thing, and I think I'm looking for someone independent because I don't want to worry about prejudiced advice.

We both have irregular careers: his as a specialized-but-underpaid programmer doing both freelance work and a day job that changes every couple of years; hers currently studying but eventually working in a performing art that involves lots of travel and work accomodation (apartments) paid out of pocket (but tax-deductible) and pay on a performance-only basis.

With this in mind, we have no idea how to achieve our goals. We are relatively good at our basic budgeting and financial management but need help with saving for retirement (IRA) and a baby someday, managing his 401K (503b), improving credit, buying a home as soon as practicable (we feel like we're throwing money away on NYC rent), affording travel to stay close to family on three coasts of the US, plus the UK and NZ, and very necessary vacations. A wedding would be nice too but it seems too complicated already.

Thanks!

What to do with all that money?

Anonymous — Mon, 14 Jan 2008 15:41:00 -0800

I will soon receive an inheritance of about $100,000-$150,000 (numbers are vague right now). I'm looking for tips and advice for managing that money. I have talked with a financial advisor from one of the major firms about this and they would be happy to help me with my money at the rate of 4.5% per year. Frankly, I view that as extortionary. I even remember once hearing advice that said to not pay more than 1% in fees. This sounds reasonable to me. My current IRAs and other means of saving that do charge, charge less than 1%. I doubt it's 1/5th of a percent. I'm pretty sharp and generally good with money. I think that with the right research, and proper dedication, I can manage this money myself and save scads of fees.

Ideas so far:
1. I have a small amount of debt that I want to pay off immediately. Less than 10K.
2. I have a 13-year-old daughter for whom I want to sock aside somewhere between 20-30K for college. This is very important to me.
3. My mortgage is split 80/15 (the 15 being about $23K). I am toying with the idea of paying off the 15%. The interest on that portion is 8.25%.

For what it's worth, I am a late-thirties male with decent (not great) income and a proven ability to live frugally when I set my mind to it. I have no car payment. Only regular payments are child support, house, utilities, subscriptions etc. Currently, I am paying towards that small amount of debt on a monthly basis.

I need help on figuring out how to manage the rest of the money and my future money since I will ideally be out of debt aside from the mortgage. So, pointers, advice, tips, reading material, ideas, what have you?

email can be sent to AnonyMeFimomoney (at) sbcglobal.net

What do I do with a big check?

Anonymous — Mon, 07 Jan 2008 23:44:19 -0800

I'm about to receive $40,000. How do I deal with this much money? I'm about to get $40,000 as part of a divorce settlement from the sale of real estate (frankly, I'd rather have stayed married but that is not to be.) Can I just deposit it in my savings account or do I need to do something special? I may need to spend most or all of it in the near future: while I have it is there something very safe I can put it and "earn" interest while still being able to take it out?