Many people wonder about the difference between checking accounts and savings accounts. Each account serves a unique purpose, and it’s best to use them the way they are designed. You should use your checking account for day-to-day spending, while putting away your extra cash in your savings account. This will help you avoid fees and maximize your earnings.
A checking account is designed for day-to-day financial transactions. A good rule of thumb is if you’re buying something, it should come out of your checking account, not your savings account. This is because checking accounts are your most flexible bank account, allowing to you deposit and withdraw money as often as you’d like without any fees or penalties.
When you use your debit card at the grocery store, that’s your checking account at work. If you decide to use your credit card at the store instead, and then pay off the balance at home later that week using a banking app, your checking account is back at work again. Pretty much any routine transaction you make, including subscriptions to monthly services, buying anything, or withdrawing money from an ATM, should take place using your checking account.
Checking accounts do not accrue any meaningful amount of interest for your money. This is their main drawback, since your money will lose value relative to inflation if it sits in a checking account for too long. That’s why the account is designed for day-to-day spending, where your interest rates don’t matter. If you want to save money for the future, you should look at a savings account instead.
A savings account is designed to put away money for long-term savings. You can perform deposits and withdrawals at the bank or ATM, as well as transfer money between savings and other accounts online. However, you can only do a limited number of transactions involving your savings account in any one month period. If you go over that limit, you will receive a fee for each additional transaction.
These transaction fees make savings accounts a very poor place to do your daily spending from. Instead, if you know you will need to withdraw money from your savings account, do it all at once rather than in little bits over time.
The real benefit of a savings account is that it offers interest on your money. The longer your money sits in the account, the more wealth you accrue. Unfortunately, even savings accounts don’t offer great rates compared to the old days, so you shouldn’t hold long-term investments such as retirement savings in one of these accounts. Instead, use your savings account to save up for once-in-a-while expenses like vacations or new technology.
Checking and savings accounts are mainstays of the banking industry, so make sure you understand how to use them. Use your checking account for day-to-day transactions and any spending you want to do. Use your saving account to put away money for longer-term savings. Your longest-term savings shouldn’t go in either account, but should rather go into the appropriate investment vehicle. If you understand these basic concepts, you are a checking and savings account master.
Do the positives of owning a credit card outweigh the negatives? This is a question that many people ask themselves. While it’s true that a credit card is great for emergencies, many credit card companies market themselves as a great way to pay for daily expenses. They do this by proudly displaying rewards and cashback programs. Because of this, the answer to this question might have less to do with the cards themselves and more to do with how you use them.
Having Too Many Credit Cards
If you have good credit, you probably receive credit card offers on a regular basis. You might receive even more if you already have a credit card that’s in good standing. Having one or two credit cards is considered a good thing. After all, each card has its pros and cons, and having two gives you options. However, having too many credit cards not only hurts your credit but also makes having a credit card not worth it.
Having multiple cards gives you a higher credit limit, which typically increases the amount of money that you spend and puts you further into debt. Stick to one or two credit cards at max, and you’ll be happy that you did.
Avoid a Running Balance
Credit cards are a convenient way to pay for weekly and monthly expenses. This is even more true if you get cash back on all of the purchases that you make. This essentially gives you cash back on purchases that you were going to make anyway, such as paying bills.
They key, however, is to pay off the entire balance every month. This prevents the accumulation of too much debt and helps you avoid high interest rates. If this is something that you can stick to every month, then credit cards are worth it. If not, you may want to stay away because you’ll find yourself further and further into debt every month.
Discounts and Free Money
As mentioned briefly above, many credit cards offer special bonus programs. These programs include cash back on certain purchases or even discount at select stores. These cashback schemes can range from 1 percent cash back on everything to 5 percent cash back on select categories. These programs can make having a credit card seem worth it because it’s like getting free money but only if you’re responsible with it.
If a credit card is offering you 5 percent cash back on gas, use that card to get the discount. However, pay off that balance before the end of the month just like if you had purchased that gas out-of-pocket. You can then make that cash back work for you either by giving you a discount on paying back your balance at the end of the month or using it to buy yourself something nice.
Is a Credit Card Worth It to You?
In the end, only you can determine if a credit card is worth it. Just like most things in life, credit cards have their pros and cons. Most people are strong believers that credit cards should only be used in case of an emergency. While this is still true today, you can take advantage of some of the benefits of owning a credit card if you use it responsibly. Remember to pay off your balance every month rather than treat your credit card as an extra source of income.
A lot of people decide their home purchase based on what their neighbors are doing. They buy what is popular, clean, easy, safe, and expensive. They mortgage themselves into a life-long of debt slavery to pay off their presumptuous investment. They do not even have time to enjoy living in their mansion because they are slaving to pay off the loan. If you do not want this to be you, you should consider your income. The average U.S. household income is $73,298, according to USA Today. The average home is $188,900. This is almost twice the annual income of most U.S. citizens. Many Americans refuse to just get it all paid off over a few years, and they commit themselves to decades of mortgage without thinking about the consequences of doing so.
If you do not want this to be you, prepare to make some sacrifices. Try Warren Buffett’s investment mantra: avoid what others love, and love what others avoid. What do the people around you pursue when they are buying a home? They buy houses with high prices, nice locations, safe, affordable, easy, loans, quick, low effort, close to work, and luxurious. When there is a scarce quantity of a popular item, the price is high. This is basic economics. In order to make the laws of economics work for you, you need to compromise your purchase behavior. What virtues are absolutely essential in your new home? Perhaps it should be safe and close to work. In order to get a home you can afford, you need to compromise the other virtues. Buy houses with low prices, ugly location, safe, expensive, hard, no loans, slow, high effort, close to work, and poor. If you do this, you will get what you absolutely need with minimal debt and cost.
The problem that most home buyers suffer from is an unwillingness to compromise their buying behavior on any virtue. They must have all. They thus are enslaved by the laws of economics to paying off decades of mortgage.
Make your life easier by using economic laws to your advantage. It is helpful to know your personal investment strengths and weaknesses. An example might be work ability. Many people simply cannot become engineers. They do not have the mental capacity to do so. They are limited in their professional salary because they are not able to get a job that pays extremely well. These natural investment handicaps are what you need to compensate for when making your purchases.
Where the engineer need not prioritize a low price home, the salesman might. If the salesman looks at his friend the engineer for investment tips, he will be indebted for life. The salesman must compensate for his lower market labor price by buying a lower priced home. Then he and the engineer have an equal handicap. The engineer buys an expensive home that takes him years to afford, even on his high salary. The salesman buys a little apartment that also takes him years to afford on his low salary. If the salesman wanted to instantly afford a home, he could move internationally where demand for his services as an English speaker are even higher, and the housing market is cheaper. The engineer can stay in the United States because his high income overcomes the market handicap of high housing prices. The cleverest engineer would maintain his high income and move overseas. Then he would be a super wealthy man, because of the lower cost of living.
If you do not want to be like one of your indebted neighbors, compromise your value equation when buying a home. Decide what your home must have. Be flexible on the other things. You will end up with a decent situation at a price that lets you take it easy while your friends are slaving all day to pay off their mortgage.
When purchasing a new vehicle, you want to make sure you get the lowest interest rate. If you obtain a lower rate, you will save a significant amount of money. The terms of an auto loan usually last anywhere from 2 to 7 years. The quicker you pay off the money, the more you will save. In some cases, it is a could idea to refinance your car. Therefore, you need to research your options to decide when refinancing your vehicle makes sense.
Your interest rate is the biggest factor to consider when you are thinking about refinancing your car. If you can get a rate at least 1% lower than your current rate, refinancing could be a good idea. You could save a lot of money throughout the life of the loan. When refinancing a car, the rate will be for a used car, so the rate could be higher than that of a new car; however, if you can get a better interest rate, you will be paying less for your loan.
In addition, your credit score is a factor that determines your rate. If your score was a little high for the original loan, you might think about refinancing if your score has improved. If your score is higher than when you first received a loan, you can refinance with your lower score. A lower credit score means lower interest rates. Before you refinance your car, make sure you look at your current credit score.
You might choose to refinance if you need to pay a lower amount each month for your loan. Your current monthly payment amount might be a little high for your budget. You can refinance and lower your monthly payments. You could use the extra money on other things that you might need.
You could also refinance to shorten the life of your loan. If your financial situation has improved, you might want to pay off the loan earlier than you had originally planned. You will pay off the loan faster; therefore, you will pay less money in interest over the course of the loan.
Refinancing your car is much easier and faster than refinancing a mortgage. You can refinance your car loan anytime you wish. You can apply for a car refinance, and you can receive a decision very quickly. Refinance calculators are available, so you will know how much you will be paying. You can then save money!
A lot of Americans and people in other developed countries have gotten addicted to an insidious poison that they wrongly call a lifesaver. This poison saps our freedom and our portfolio. It is called debt.
Modern economists boast loudly of the benefits of liquidity, which is their pet name for debt. “With liquidity,” they urge, “We can feed the masses and not have to raise taxes.” What these short sighted individuals ignore is the necessity to be under their creditors’ control. Financial radio host Dave Ramsey used to think that debt was a tool that you use to increase your wealth. He got this idea from a finance professor in college. He later changed his mind.
To stay out of debt is simply an exercise in postponing immediate gratification for longer term benefits. The average family feels that they need to send their children to college. However, they are unwilling to make the financial sacrifices to afford even a cheap school. In order to go to a high tier school, they put themselves in slavery to the Federal Government’s student loan program. After graduation, the children leave their school with an entitlement mentality that they carry with them the rest of their life. The average U.S. citizen with debt has total debt at $181,571, which is over twice the average household income of $73,298.
There are some powerful ways you can remove debt if you are a part of this statistic. It is important to remember, however, that there is no gain without some pain. You will suffer if you choose to become one of the few who is not a slave of the international banking cartels.
- Be Unpopular – Popularity has its price. Almost everyone wants it. If you have a scarce quantity of something with high demand, it will raise the price. Affix unpopularity to whatever you are thinking about doing or buying, and you will find lower prices that can save you money.
- Be Content – Rather than thinking about what you do not have, think about what you do. Make a daily list of the things you have that you enjoy. Contentment is a rare quality, but it is essential if you want to remain debt free.
- Live Far Below Your Means – If you are making $100,000, you should be living on $40,000. The rest should be going to debt payments, emergency preparedness, and taxes. Do not copy the Joneses in living $200,000 when you only have a $100,000 income. That is a recipe for life long debt. If you make $20,000, by necessity you will have to pay more to live. Downsize a lot. Move in with relatives. Take the nasty apartment downtown. Move overseas to China and teach English where cost of living is lower. Debt elimination requires pain. It is worth it when you are free.
- Work Hard – There is a reason that Steve Jobs told President Obama he could not make the iPhone in the United States. There simply is not enough hard working low income labor to make it cost effective. American workers demand all the perks, and underachieve. Be the rare employee who over achieves on low pay, and you will soon be the boss.
- Move – Do not live in Southern California or New York because your friends in college are. Sacrifice is key. Cost of living varies wildly based on the popularity of a location. You can construct a cost of living income indicator using the equation B=I/C where I is your annual income and C is the average living cost. You want B to be large. If you live in a place with a large B, you will be happy and debt free eventually.
When it comes to cell phone plans available throughout the United States, there are many options. At the same time, each carrier has a variety of things to offer, whether that is a better choice of smartphones, unlimited data, cheap monthly prices and more. If you are considering switching carriers or cell phone plans, it’s important to know about at least a few different options. Here are some of the top cell phone plans available throughout the US that you might want to consider.
Straight Talk is one of the best no contract wireless providers in the country. It has been an option for prepaid cell phone usage well before any of the four major wireless carriers went the no contract route. One of the best cell phone plans through it is its Unlimited 30 Day Plan, which offers unlimited talk and text minutes as well as unlimited 4G LTE data for the first 5GB. After the first 5GB, the data speeds are decreased to 2G speeds. This plan costs $45 per month and is well worth it for anyone who is not overly heavy on their data usage. Along with this plan, you can bring your own unlocked GSM smartphone to use or purchase one brand new.
T-Mobile ONE Plan
T-Mobile was the first of the major wireless carriers to offer no contract plans as of spring 2013. Recently, it has gone several steps further than that and introduced a cell phone plan known as T-Mobile ONE, which allows you to enjoy four lines of service at $160 per month or $40 per line. The great thing about this plan is that what you see is what you get when it comes to the price. In other words, the plan is $160, with taxes and other charges already included in that amount. The plan offers unlimited talk, text and high speed data. This is a great option for anyone who wants to enjoy the perks of unlimited 4G LTE data without being throttled or forced to pay overages. You can bring your current smartphone or buy a new device from the carrier to use with the ONE plan.
Consumer Cellular is another excellent option for cell phone service. It offers an array of plans that allow the user to essentially build and tailor to their needs. You simply choose the amount of talk minutes you want for a set price, then choose a text message and data bundle for another price. For example, if you select 1,000 talk minutes for $20 per month and add on the 5,000 texts and 500MB of data bundle for $10 per month, your cell phone plan comes to $30 per month. There is also no contract with Consumer Cellular’s plans, giving you far more freedom. You can also bring your own phone over or purchase a new one to use with your plan.
AT&T Mobile Share Advantage Plan
With AT&T’s Mobile Share Advantage plans, you can be free of worry of overages. There are a few options of data amounts you can get with these plans, from a minimum of 10GB per month to a maximum of 30GB per month. Each plan has unlimited talk and text and even includes rollover data, meaning that if you don’t use your entire amount in any given month, it carries over to the next. A great bargain is the 10GB option at $80 per month for up to 10 people.
All of these are good cell phone plan options. You can find the one that best fits your needs and the needs of anyone else you may include on your plan. Shop around and see what’s best for you.