Friday, June 22, 2012

SmartyPig - Piggy bank your savings to reach goals!

Lately I have been researching about the best checking and savings accounts out there. My current aim to setup an emergency fund at the earliest. As I build this fund, I want to keep it in an account that will offer me a good interest rate and a good liquidity policy.

Everyone must maintain an emergency fund. We all run into emergencies once in a while. These events wreck havoc with our planned budgets. An emergency can be anything - a near and dear one may fall sick or your car may suddenly need repair. We should always have an emergency fund which will allow us to respond to these situations without having to break any investments or borrow money in anyway.

I have been thinking of keeping this money I am putting aside in a high interest yielding account. My current checking account with one of America's biggest banks pays me no interest whatsoever. Well, that's no good place to save money in! At the same time, I cant put this money in a high yielding CD and lock it away for a year or two. I need to be able to utilize this money when i face an emergency.

One of the options I came across was SmartyPig. SmartyPig is an online website partnering with BBVA Compass bank that provides online savings accounts to people like us. The most unique feature I found about this online bank was its emphasis on social networks and how to utilize them to save!

SmartyPig allows you to open a savings account and specify a goal for it. For ex: You are telling them that I am opening this account with a goal to setup an Emergency fund of 7500$. Opening an account can be done entirely online. They will prompt you for your information (All the same information that you would give when you open an account at the branch) along with information of your Goal and the target amount.
You will have to link your current account from which you want to transfer money into this savings account. Once the link is created, you can transfer some money when you wish or setup automatic payments into your SmartyPig account.

Now lets see how this online savings account sets itself apart from other online banking accounts -
1, SmartyPig is currently offering 1% APY on its accounts. This is definitely one of the best interest rates out there in today's environment!
2. You can specify a goal  and target for your account. Then publish this information via Twitter or Facebook to your friends! They can participate in helping you save for your goal as well as encourage you on these social sites!
This is pretty unique. It will definitely encourage a lot of youngsters to save. One of the tricks of achieving any tough task is to announce that you are taking on the challenge. The additional pressure and motivation received from this publicity will help you move towards your goal!
3. There is no fees and no minimum balance! They promise that there is no catch. That is really very helpful since I need liquidity on my account.
4. Once you achieve your goal, you can transfer the money back to your original source of funding if you wish. 
Now here is the twist! They offer a couple of more ways to take the money you saved.
Redeem your goal by taking it back as gift cards from retailers like Amazon, Lowes etc. These retailers offer up to 11% in cashback savings. So in case you were saving for a goal like buy the latest Plasma TV, you benefit on the extra savings via the Amazon gift card as well!
You can also redeem your goal via a SmartyPig Cash rewards card. This is accepted via the Mastercard network. It acts like a prepaid card and Smartypig offers 1% cashback on every purchase made using it as well. So your money is buying you more than it can once again.
Caution: Both of these options to redeem are aimed such that you end up spending that savings via a retailer or prepaid card. So be careful while availing these options. Be sure that you actually saved to spend on something you need!
5. The account is FDIC insured for 250000 $. So you can be assured of its safety.

All these unique features make this a very attractive savings account. If any of you have used this bank, please do feel free to comment and let me know how good or bad this is!

Wednesday, June 20, 2012

TrueEarnings Costco credit card from American Express

During my research recently about cashback credit cards, one of the cards that perked my interest was the TrueEarnings Costco credit card from American Express.

Is this card worth it?

The card boasts of an impressive cashback percentage. They term it the 3-2-2-1 formula :)
That is -

3% cashback on gasoline (Note this is subject to an annual limit of 3000 $. Beyond that they will give 1% cashback )
This is a definite plus if you drive a lot! At today's prices, this is 3 % on nearly 850 to 1000 gallons a year.
Plus remember Gasoline at Costco is generally cheaper than other gas stations. So that's a double benefit!

2% cashback on restaurants. 
If you are like me and eat out quite regularly, then this is definitely another big plus

2% cashback on travel
Who doesn't like to travel? :) If your plane tickets, car rentals and hotel bills give you 2% cashback, then it is again pretty good. 

1% cashback on all other purchases including Costco
Now let me compare this with the other American Express card I liked a lot - Blue Cash Everyday American Express card. That card offers 3% cashback on all grocery purchases but has a catch that the groceries have to be bought in supermarkets.
Costco will be considered a wholesale club. Walmart will be considered a superstore. So purchases in these places will only fetch you 1% cashback with the Blue Cash Everyday card.
This Costco TrueEarnings card is also offering the same 1% cashback on Costco purchases. So in my personal opinion, this is not really a parameter that differentiates these cards.

Lets talk about Annual fees. The Costco credit card doesn't charge you annual fee as long as you maintain your Costco membership.
So the annual membership fee is the same as the costco membership fee if you don't already have a Costco membership. But if you do, then this card is free!

How do you redeem your rewards? you get a reward coupon from American express that you need to redeem at Costco. You can do so as both merchandise or cash.
I personally don't like the fact that the cashback rewards can be utilized only annually once. Plus you need to take your coupon to the local Costco to redeem it. I would prefer the multiple options which Chase offers! You can get it as a check or credit back to your account as well from Chase. That's pretty convenient!

Overall I felt this card is very useful if you are a larger family and have the habit of buying in bulk from a wholesale club to save on expenditure. Costco is definitely one of the better or best wholesale clubs around. So if you fall in this category, this card is really good. 

If you don't fall in this category like me, then the American Express Blue cash Everyday or Preferred is a better card for you.

Hope this review helps you!

Tuesday, June 19, 2012

Live for today or Live for tomorrow?

I was browsing around looking at fellow financial blogger's sites when I found a very interesting article - Stop being obsessed about saving every penny by dollarVersity.

He has written very well explaining the dangers of becoming extremely frugal. Living frugally and counting every cent means you basically live a tough life today, hoping all the money you save will give you a better tomorrow. He warns that we will loose sight of when this tomorrow would come and will end up not enjoying life at all.

Personally I believe one should try to reduce any expenditure in his or her budget which is not a necessity. However i fully agree with dollarVersity's author as well! Living like that is extremely tough and mentally depressing as well.

My goal with budgeting and my desire to save money is driven not by a distant dream of being able to live a happy retirement when I am 55 years old. Luckily I don't have too many debts which force me down this path as well. Nor do I plan to leave a legacy behind for my future generations :) . Simple and plain - In another 5 to 10 years from now, I want to be in a position where I can reduce the stress in my life around the questions - Is my job recession proof? What will happen if I loose my job?
I basically want to reduce the stress around my dependency on my salary income and job. I should be able to relax thinking I can survive till i find another job. My family would not suffer till then. We can meet our needs in other ways we developed over the past by saving when we could.

I believe if I am able to cut down this stress in my life, I will have a much more relaxed tomorrow. Also I have a definite tomorrow in mind. My tomorrow is not a far far away tomorrow!! Always keep tangible goals when you want to achieve anything. Keep both long term goals as well as short goals.

In this quest, I know that its important for me to do multiple things. Save to create emergency funds. Save to create investments. Invest what I can such that i get decent returns. Develop alternate skills. Improve my work skills. Develop passive income sources. etc, etc. In this quest, I do tend to be frugal today. I do make sacrifices where possible to achieve these goals.

But everyone needs to remember one thing - the journey is just as important as the goal. You are talking of precious 10 years of your life that you wont get back. You will succeed in saving only when your mind is happy and excited to do it. Your mind requires a few perks once in a while to feel that happiness. So always budget for a little fun and happiness every month.

CAUTION: Never go overboard. Never splurge such that it will wipe out all the good work you did in the past few months.

However do allocate some money in your monthly budget to a category that will give you entertainment and happiness. Make sure your near and dear ones enjoy this category as well. This will make them happy and willing partners in your endeavor to save and secure a safe future! Hope this advise helps you.

Sunday, June 17, 2012

Best cashback credit cards out there!

As I explained in my previous post, cashback credit cards make most sense in terms of getting rewards back from your credit card company for most people. I read somewhere that the credit card companies charge merchants 2-3 % of the transaction as their fee. If that is true, cards that offer 1% cashback are pretty good. Then there are some cards that even offer higher percentages of cashback. Choose wisely based on your spending pattern to reap the best benefit for yourself.

How does a cashback credit card work?
Lets take an example of a card that gives 1% cashback on every transaction. You spend around 600 $ in a month on this card. The card company would add 6 dollars to your rewards at the end of the month (after the billing cycle is done). You can get this reward back as a credit to the card if you wish. There are options of getting this money as a check or deposit to another account as well (depending on the card company).

Here I took an example of a card that gives 1% cashback. That is generally the minimum percentage out there. There are cards that offer higher percentages and you can reap rewards upto 30$ - 40$ per month. Now that is a significant reward! :) Some savvy credit card users do even better!

In my case, I found i spend most of my money on groceries and eating out every month. I did my research using, which I highly recommend to everyone. Best part - it is free!

Now based on this research, following are what i found as the best cashback credit cards out there as of today (June 17th 2012) -

1) Blue Cash Preferred and Everyday from American Express
These are two cashback cards from American Express. One is the Blue Cash Preferred (comes with an annual fee of 75$) and another Blue Cash Everyday (no annual fee). They offer great cashback rewards on expenditure in supermarkets and fuel.
The Preferred card offers 6% on supermarket purchases while Everyday card offers 3%
The Preferred card offers 3% on fuel purchase while Everyday card offers 2%
They both offer 1% cashback on all other purchases.

Getting 6% cashback on supermarket purchases is awesome. Say you spend around 400 dollars at your neighborhood  supermarket for groceries in a month. That would mean at the end of the month, you would have 24 $ back in your hand!
Say if you prefer not to give the annual fee, you would have 12 $ back.That is still awesome!

Currently they have a promotion saying if you spend 1000 $ in the first three months on this card, you will get 150 dollars as a bonus on the preferred card, that is 2 years of annual fee in your hands straightaway! :)
If you still prefer the no annual fee card, you will get 100 dollars of bonus!

2) Chase Freedom Visa Card
This is another awesome card out there. It is on the VISA network so you need not worry about where it will get accepted!. Visa is probably the most widely used card network across the world

This card offers 5% cashback on different select categories every quarter. Throughout the year it offers 1% cashback on all other categories. I have found that these revolving categories are actually very useful for us.
For example, between April and June, they are offering 5% cashback on groceries. That is pretty awesome!
Between July and September, they offer 5% cashback on gas stations and restaurants!
Looking at my spending pattern, I clearly know that I will benefit a lot in both of these quarters. Rest of the year too they have very good distribution in categories.

Best of all this card comes with no annual fee!
They have an upper limit saying upto1500 $ spent per month on the special categories will be eligible for cashback. 1500 dollars is pretty large upper limit for groceries or fuel or restaurants! so dont worry about that!

Also they too have a 100 $ bonus offer going on currently which you will get for spending 500 dollars in the first three months using their card. So that's some extra free money you can make!

Caution: While these cards say they will provide 5 % cashback on groceries, the fine print says it is only for supermarket purchases. That is if you buy your groceries from a superstore (like Walmart) or a wholesale club (like Costco or Sams Club), you will not get the cashback. So be careful to check how much you spend in supermarkets, when deciding about this card!

There are two other very good cards that I found in my research. Discover and Citibank. I will post about them tomorrow. Till then, keep saving!

Saturday, June 16, 2012

Cashback credit cards

Previously I had written on why we need to be extra careful about using credit cards. Credit cards are generally considered an enemy in the battle for financial security. But the truth is they can be used as a potential ally in this same journey. A potential ally who you need to keep a tab on always :)

I have found that credit cards are very useful in two ways -

One, they act as an emergency fund. Everyone needs to maintain an emergency fund always. Typically this should be the amount you would need to maintain your lifestyle for at least three months when your source of income , god forbid, stops to exist. It is a fund you will turn to when you are suddenly faced with an emergency. This kind of thing turns your planned budget upside down.

Ideally you should save a portion of your income in a savings account for this. There are some really good savings accounts out there which provide a great interest rate (however these rates may seem pretty low unfortunately in today's world). These accounts also allow a great deal of flexibility in terms of liquidity of funds. One great website I found that shows latest and best savings account rates is
Another site to check for interest rates is

However your credit card can also be a great asset when you run into an unexpected emergency. It can supplement as your emergency fund available in a savings account as well. However remember to pay off the card as soon you recover from your situation. Keep in mind credit card debt can be your worst enemy as i mentioned in my previous post - Credit Cards: Advantages and Disadvantages

Secondly, you can pick and choose your credit card such that you get back something from it via rewards.
If you travel a lot, a travel rewards card can be a big help. But in my case and in my personal opinion for most of us, a cashback credit card is the best. You can earn cash back from the card company thanks to all the transactions you did.

Caution: Remember these should be transactions you would have made irrespective of whether you had a card. That is never spend to buy things on your card just for the reward points. You should buy only if the item is essential for your needs.

There are many cards out there which offer great cashback %s on different categories. I will detail out a few i researched in my next post. Most importantly, by analyzing your expenditure, you should be able to determine on which categories do you spend a lot via plastic.
If it is groceries, then search for a cashback card that gives max % on supermarkets
If it is on fuel, then search for a cashback card that gives max % on gas purchases
There are many choices out there so be careful to read through all features of card before taking one. There are many websites out there which help you even compare different cards, like -

We will talk more about the few ones that I researched recently in the process of choosing one for myself in the next post. Till then, keep saving!!

Thursday, June 14, 2012

Save for a secure future!

Whats the most basic way to increase your net worth? Whats the trick to ensure a growing bank balance?

Its a very simple principle. Always make sure you spend less than what you earn. What remains after this has no where to go but into your net worth!! As long as you follow this diligently, you will secure a safe future.

Budgeting is a necessary skill in today's world. One needs to monitor his/her family's cash flow and plan accordingly. It is important to plan how much you will spend on all categories of your expenses and then track how you are progressing towards it.Make cutbacks when you are overspending on a category.
ex: If you realize that you are spending a lot on eating out, then brown bag your lunch for the remainder of the month.

Some more important advice on saving money -

It is important to control the need for instant gratification. Most people today have developed tendencies such that they can feel happy only if they are spending a lot of money. Ever heard of shopping therapy? Unfortunately such tendencies, if unchecked, can destroy your budgets. They may bring a lot of pleasure and happiness in the moment but over time they ruin your financial future.It is actually not true that you need to spend to feel happy. There are many productive and cheaper ways to make yourself feel better - charity work, writing, reading, hobbies, cooking, exercise etc.

At the same time, it does not mean you need to live frugally. Meet all your necessities always. Spend a little extra once in a while to feel mentally and spiritually wealthy. Enjoy a movie with your family. Eat out a few times a month. Spend some money to help the needy. Do all these as long as you remember our basic principle - Spend less than what you earn. Also always aim to increase the gap between these two - income and expenditure.

Another important thing is to stop comparing yourself with others. Your neighbor may be driving an expensive SUV. Your childhood friend may be travelling to different exotic places in the world. They may be doing it as they earn enough to live that way. Or they may be doing it by getting into debt. It does not matter. You need to think what is best for you and your family. If you can afford it, then do it. Don't do it just because your friends did it. This is very important to prevent debt and ensure your savings stick around for the future.

Keep these things in mind and you will be on your way to financial security! Remember, your commitment to the end goal is your biggest strength in any battle.

Credit cards - advantages and disadvantages!

In today's times, most financial gurus who advise people on how to manage money and avoid debt tell us to avoid credit cards like plague! Its definitely true that you do not want to get into credit card debt at all. Its the worst kind of debt. I will explain why -

It generally sneaks into your world in small quantities and grows big. You end up getting caught off guard.

Imagine you are planning to take a loan to buy a car. The amount you are borrowing is generally around 10,000$. Since it a large amount you tend to stop and think through the implications of the loan. How much will be  the interest? How much would i need to pay every month and so on. But credit card debt generally starts in a different way. You end up not paying your card balance this month. Its only around 500$s. So you feel you can catch up the next month.
Oops, you cannot pay it off this month too. But thats fine, its only around 1000 bucks now. I can pay it off next month. Unfortunately for many, this cycle just continues. As a result, a huge credit card debt :(

Also the interest rates on credit card debts are huge! When we apply for a credit card, we generally dont pay too much attention to the APR/APY the card charges. We are blinded by the bells and whistles around the card more than these important financial details. Does the card offer cashback? Does the card give me great travel  points? Does the card give me initial bonus? etc etc. The only time we realise the actual interest rate on the card is when we fall into their debt trap.

So it is very important to understand the dangers of using credit cards. In fact if you cant control your shopping instincts or if you are a person who is given to a lot of impulse buying, credit cards are the worst idea for you. You don't really realize how much you have spent till the month end. Its the opposite of financial planning and budgeting.

I have heard experts even advising to freeze credit cards to avoid these situations. When i say freeze, literally put your plastic in a bowl of water and stick the bowl in the freezer :) That method sure works!!

But credit cards can actually also be a powerful ally in your financial journey. That is if you  know how best to use them. I will explain why in my next post.

To utilize the power of credit cards, it is a must that you know what problems it may create and it is a must that you are capable of controlling your financial behavior.

  • You should not use credit cards if you are impulse buyer
  • You  should not use credit cards if you do not monitor your expenditure on a daily basis. You will only realize at the month end how a number of small transactions can result in a big bill
  • You should never put off paying your balance. Pay it off in time to avoid the interest rate they charge
  • If you get into credit card debt, then freeze your cards immediately!! you do not want to add any more to that debt. It is very tempting to buy stuff on your card even when you know you cannot afford to pay for it at the month end.

Keep these rules in mind when you shop around for plastic! We can reap benefits from this plastic if we follow these rules.

Tuesday, June 12, 2012

Why is free?

Why is free? how does make their money?

I started thinking on these lines to try and figure out why they were offering their software for free for all the users. I mean there must be a catch right? anything that is free and good must have a catch somewhere :)

So far what I could make out from their website is that they make their money through advertising. They show different advertisements for bank credit cards, insurance policies, brokerage accounts etc in their website. Also they encourage people to utilize these offers to save more. So I am sure many of us would feel it necessary to open an account that we never thought of before. As a result, the advertiser gets a new account opened thanks to Mint and they give Mint a referral fee. They might also be giving Mint some money to show the advertisement in the first place.

Take for instance what I saw in my account. Under the tab, Savings, Mint gives advise on how I can save more  money. They basically run some analysis on my transactions through the month and the accounts that I have currently and give this advise. This is a perfect place for cross-selling and up-selling. advised me that I could apply to the American Express Blue Cash credit card and save money via Cashback points as the amount of money I spend on grocery every month is pretty high and this card gives 3% cashback on supermarket purchases. From my perspective, this is sane advise on how to save money. I am not looking at this advise as an advertisement which shows up on some random website I browse. This is a perfect targeted advertisement placed in nice context for the consumer to see. If i go ahead and take this card, Amercian Express is benefited. And is benefited as they showed the advertisement and probably even get a referral fee :)

Similarly there is advise in the site about how to avail cheaper insurance policies, better brokerage accounts, savings accounts etc. All of these are placed in contextual sense to us, the users, to indicate ways to save money and invest money to increase our net worth and budgets. At the same time, they are very good advertisements for the banks. My guess is this is where makes its money.

How good is this revenue model? With 7 million users, i think this must be a very compelling place for all companies to place their advertisement campaigns. So must be receiving steady or maybe increasing revenue. Time will tell us if the model works out for them. If it does not, then we will definitely see some impact in our free usage of this software down the line.

lets hope not :)

Sunday, June 10, 2012 - Is it safe and reliable?? is an online website that provides us a free application to manage our money. It is completely free for its users. I have been using it for a couple of months now and have found it to be an amazing tool. It gives me great visibility into my expenditure with details like how much I spent on grocery, how much on clothes, how much on fuel, etc. With this kind of visibility into my expenditure, I can make decisions around what i need to cutback, what i need to avoid etc. And all this without me having to make notes in a diary or excel sheet on a daily basis to record my expenses!
Caution: if you tend to make most of purchases using cash, would require you to key in these transactions. If you do it via a credit card/debit card, you dont need to worry.

How does work?
Here is the frightening first step for most of us - when you setup your account in Mint, you will be asked to enter the online banking user ids & passwords for your different accounts. Mint uses this to connect to your accounts and pull your balance and transaction information from them. They assure us that this is a read only access and no one can use this detail to move any money out of our accounts.

I did spend a lot of time wondering if I should take this step. Finally I did and now I feel pretty happy about it. Today when i log in to, it uses the credentials I entered previously to pull information from my accounts (my checking account, credit card account, etc). It then collates this information and shows me the total amount I have and the total amount I owe to my cards. Previously I used to get this information by logging into each different website and manually summing the balances I see there.
Caution:I have noticed can't pull pending transaction information sometimes. So when you look at your credit card balance, keep in mind there may be a few recent pending transactions that are yet to show up here.

Is worth the risk?
If you are like me (lazy but sincere about wanting to manage your money better), it is definitely worth it. In two months, it has already helped me a lot.
For example,  I was able to get a picture on how much I spent on fast food and clothes monthly. This straight away showed me venues to improve my life. I can now plan to cut down on my fast food consumption and watch Mint record my success in the current month. Its definitely good for my health as well as wealth :)
Another example, now I get a picture of how much I spend on groceries and in which grocery stores. With this information at hand, I can plan to maximize my benefits by trying to show at one location and gain reward points better. Some supermarkets like Kroger allow you to use these reward points to get discounts at the gas pump. also allows you to plan for the future. You can plan a budget for the month and track your progress towards that budget. You can configure alerts that tell you if you are exceeding the allotted budget for a category like fast food. It also shows how you are progressing towards a goal you can setup, like setting up an emergency fund.

Is safe?
So far so good! thats what i would like to say. I have a few friends who have been using Mint longer than  I have. They too assure me its safe. advertises that it has over 7 million users and has won many awards. So based on these statistics and numbers, I am making an educated guess that they should be safe.
Caution: Even huge corporations like Sony have had security breaches and passwords stolen. So my advise would be to keep a track of your account always. If you hear any news about a breach, immediately change all your online banking passwords. Also even though gives you a complete picture of your finances, logging in to your individual bank accounts once in a while and monitoring your transactions there is a good practice.

Why is free? How does make its money?
I will talk more about this in my next post. Till then, keep saving! :)

Saturday, June 9, 2012

Monitor your finances!!

Jack had 3 silver coins in his bag. He gave one to Jill and one to John. How many silver coins does Jack have now?

I know this is way too simple a mathematical question for you. So don't bother calculating it. But here's what you need to solve -
Put yourself in Jack's shoes. Think how much money did you have at the beginning of the month, what came in to your bag (or bank account!) and what will go out of your bag by the month end. Now arrive at what you will have at the end of the month.

Does the math seem tough all of a sudden? :)

This math puzzle before you is basically what constitutes your financial budget for the month. It is very important for any family to have a budget. In today's economic situation, we absolutely must have a handle on this puzzle to meet our long term dreams and aspirations. I am not talking dreams of becoming millionairess very soon but simple dreams of living happy contended lives.

If you dream of saving money and building assets for your future, the first step is to track your finances. You need to know how much income you earn and how much you spend on month to month basis. Once you have this information, it is much easier to plan how much you can save and what to do with the savings; or worse case, you can figure out how much you are short and how best to face this shortcoming.

I remember my dad using a little diary to make notes every month once he got his salary. He and mom would sit together and list down all the expenses they had to take care of in the diary. He would write down the name of the month and underline it. The list underneath would go something like this -  newspaper, milk, school fees and supplies, fuel, groceries etc. Later as he paid off each of these expenses, he would strike it out in his diary. So now he knew how much he spent, how much he still had to spend and more importantly what was left at the end of the month.

I pretty much started out doing the same when it was my turn. Just that I did it on an excel sheet on my computer instead of a diary :). I had a column to track my income, a column to track my expenses and at the end a simple excel formula to tell me whats remaining. Now i have discovered there are some websites like that allow people like us to do the same online. is free and seems to be pretty safe based on my experience so far. It tracks my accounts and transactions and produces beautiful reports detailing my income, expenses, savings and even trends related to my expenditure!

Whether you prefer to conveniently let a website track it for you or prefer to maintain the log yourself, it is absolutely necessary to do this as a first step towards managing your money. This log is your key to find what expenses can be avoided or curbed in future. This log will tell you if you are headed in the right direction. So go ahead and get started on this immediately.

I will share more details about based on my experience so far in my next post.