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Sensationalism is something the news media is known for. They take the most miniscule tidbdsits of information and make it into something that sounds like it is the greatest thing since sliced bread. One of the most recent things to be taken by the media and run to the ground has been the DOW breaking the 11,000 mark.  Personally I think it is nice to see my 401k go up but what does it really matter to me?

I like to think of my retirement accounts like a tree that has taken root. Trees grow slowly but steadily with little care or attention. Planting the tree is like getting started with your investing for retirement. You have to figure out where you want it go, plant the tree, and water it well that first year. As you nail down the allocation that you are most comfortable with you just keep feeding it regularly.

Just like a good tree you can’t just leave it alone forever and hope it comes out ok.  About once a year you step back and take a good look at it then prune it to make sure the tree is even growing the way you want it to. Similarly you should reassess your retirement accounts and redistribute it to get you to that magic allocation you are looking for.

The opposite of this approach is to treat your retirement like a vegetable garden. Vegetable gardens require fairly regular attention getting out there and pulling weeds, watering daily, and harvesting regularly. This kind of constant attention works great for a garden but isn’t so great for your retirement accounts. If you start worrying about every drop in the market like you do a wilted seedling then you are in for a rough ride.

When it comes to retirement savings it is about picking the right tree to grow in your area and then taking care of it but not obsessing over it. Make the environment for your tree the best you can then just clip off the dead branches each year and even things out. You have time before you retire, 100ft oak trees didn’t grow in a day and neither will your retirement.

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We all try to do our best to maximize the return we get on our money. It has driven an entire subsection of the banking industry to cut costs and offer online savings accounts. The rates the banks offer vary as much as the interfaces they offer for you to manage you accounts. I constantly see reviews, articles, and even rate lists that tout the highest rates as though that is the only thing that matters. I have learned the hard way there is a lot more to an online banking account than just interest rate.

Deposit Holds

One of the things you have probably never thought about when opening an account online. I know I didn’t think about it. I am used to holds on transfers and checks bu when I make a direct deposit transaction I expect it to be direct and immediately available, that isn’t always the case. I have been using iGoBanking’s Online Checking Account for a while now but I am finally wising up and getting the hell out. A portion of my paycheck is direct deposited on Mondays, they hold it for three days so I don’t have access to it until Thursday/Friday. This is unacceptable for a checking account. In my savings it doesn’t matter but checking I “need” that cash. Check before you open an account and make sure they don’t hold your direct deposits.

Transfer Limits

Most online accounts limit the amount you can transfer at one time, and the amount you can transfer in any given day or month. These limits don’t mean a lot to people like me who don’t have a ton of cash but when you are looking at $50k+ in an account you have to be prepared for the reality that you may not be able to get all that money in just a couple of days. Check with your bank and make sure you know what their limitations are on transfers.

ATM Fees

When you are looking for an online checking account ATM locations and fees are far more important than the interest rate. When you are making 2% or less on a minimal average balance the ATM fees you pay will murder any chance you had at earning interest. Most banks are only members of a specific ATM network which you can use surcharge free, anywhere else you have to pay. You should check and make sure the ATM’s are convenient to where you live, work or play. Otherwise you are better off sacrificing interest rates for an easier to access ATM. These ATM fees are another thing that has killed me with my current online checking account.

User Interface

While not directly related to your interest earnings the user interface makes a big difference in how you interact with your online account. A well designed interface makes you feel like you are dealing with a professional bank who care about your experience.  Not only does it increase your confidence in the bank it also allows you to more easily manage your money. The bad part about interfaces is you don’t really know until you open the account. To get a little more insight you can look to reviews for more details.

Customer Service

Finally customer service is important when you need some help you want to know you can get it easily. One of the areas online banks cut costs is on their customer service availability. They either aren’t available, or they aren’t easily accessed. It makes it difficult to get the answers you need and can make a big difference in your experience with a bank.

What other things should you look for in your next bank account?

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If you’re old enough to remember the 1980’s, then you’re probably old enough to remember a time when the Pepsi challenge was a prevalent marketing strategy. The idea behind the Pepsi challenge was that a Pepsi representative would set up at a shopping center or grocery store and provide samples of both Pepsi and its leading competitor, Coca Cola. A customer would sip each one and without knowing which one they were drinking, would comment on the beverage that tasted better. After years of running this campaign, it was determined that Pepsi was the clear favorite among American consumers and even till this day, Pepsi uses that information to their advantage.

Ultimately, Pepsi was offering you the option to buy what tasted the best, period. Not which bottle looks cooler, not which name sounds more recognizable and certainly not the one that gave you quantity over quality. These days, consumers don’t often buy the product that is simply the best for their needs. When it comes time to buy the Coca Cola or just “cola”, Kellogg’s or store-brand cereal, or even the BMW or the KIA, consumers put too much weight on the name of the product and not enough weight on the quality of the product.

It’s no secret that I like to save money at the grocery store, but even I fell into the trap of always buying name brand products in lieu of their generic counterparts. Strangely enough, my mind tells me that the products are well worth the extra cost, even though I have rarely ever tried the generic version. Because I am always looking for a good way to save a few bucks here and there, I decided that I would start buying generic products when the price was right and test them out myself. If the product tasted terrible or was unsatisfactory in any way, I would stick to the name brand version. However, if I couldn’t tell the difference, or hopefully it tasted better, I would stick with it and save pennies on the dollar every week, which would eventually add up to a nice chunk of change at the end of the year.

I started with cereals, then moved on to soups, canned vegetables, cookies and worked all the way up the frozen foods section. Why spend $4 per half gallon on Breyer’s ice cream when I could spend $3.29 on the Winn-Dixie version? After a few months of trying the generic version of almost every product I usually buy, I was pleasantly surprised at how many tasted just as good if not better. Sure there were a few that were downright uneatable, but the experiment had definitely worked in my favor. A few quick calculations showed that I saved around $7 per grocery store visit, which would save me hundreds of dollars each year. Pretty sweet.

But just as there were positives to this idea, there’s one glaring negative that really wasn’t that big of a deal to me but may be for some. Status and success in this world of ours is generally defined by our possessions, so in essence, the more cash, the more flash. The reason that the banker drives the Mercedes and not the Jeep has little to do with the overall performance and features of the car, as I’m sure you can find almost any feature in any model these days and more to do with the name brand itself. Let’s be real here people, if I were going to trust my money to an accountant, would I want him driving a low-end automobile, or a high-end automobile? Sounds a little conceited but it is what it is.

So when I would entertain friends and family and they wanted a Dr. Pepper, I would hand them a Dr. Chek. When they wanted Tostitos and Salsa, I would hand them a bag that said “Corn Chips” and the generic version of Salsa. Immediately the conclusion was drawn that I’m struggling to make ends meet and I can’t afford the good stuff and no matter how hard I tried to convince them that this, in fact, was the good stuff, it didn’t matter.

You won’t find me wearing designer jeans, shirts or shoes because I’m always the guy with the Target dress shirts for $9.99 and the discounted sneakers for $19.99 but I NEVER let price get in the way of quality or comfort. Buying generic at the grocery store, clothing store, furniture store, car dealership and plenty of other places can save you hundreds if not thousands every year. Give it a shot and I promise you won’t be disappointed.

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How to Save on SMS Using GoogleVoice

February 10, 2010
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A few weeks ago I touched on the fact I use Google Voice to save me money. I only briefly mentioned how I use it to provide alternative SMS service and I had some questions about Google Voice as well as the details on how I use it to reduce my SMS costs so here […]

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Understanding Social Security

December 22, 2009
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Social Security was created by Franklin Delano Roosevelt during the great depression. The true name of Social Security is the Old Age, Survivors, and Disability Insurance Program. It was designed as a safety net for the old, widowed, and disabled during a time when everyone had to fend for themselves and these groups were typically […]

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