I’m getting really competitive rates with a product called easyGROW Checking at First Bank & Trust. You can go to www.easyGROWchecking.com for the info (including the current interest rate); but to summarize, it is a free high-yield account that also offers ATM fee refunds when I meet the three qualifications: using my debit card at least ten times, receiving e-Statements, and having a least one direct deposit or automatic payment each cycle. I do all of those things anyway, so it’s been really easy for me to qualify…and they send me an email each month to let me know if I met the qualifications. I have to admit, I love not having to worry about whether or not an ATM is on my network, and the interest is already starting to add up. It only takes $100 deposit to open the account, and there is no minimum balance.
I saw this $9 fare thing and I called, they told me everything I have read here (without the bad parts) I have to fly to Puerto Rico from Boston with my toddler and you know two regular tikets go over $400 roundtrip so I am considering to apply but, I'm scared to apply and then find nothing. I read that here that not to select seats (anyways dont care where to seat just want to get there). Thanks for any info
I'll also second the suggestion to just order water. One drink is cheaper than two, but no drinks is cheaper than one.
As for the complaining about "ripping off" the restaurant on sharing refills, consider that we often pay more per litre of soda than we do per litre of gasoline. Bottled water is even worse.
You know, it just occurred to me, but I don't quite get why we're expected to tip based on a percentage of the price of the meal. Is it more difficult for a waiter to deliver a $25 steak than a $12 steak?
I think tips should be based on quality of service, not on what you order.
Good comments.........we always just order water for our drink. Alcohol can really add up! We try to use coupons whenever we can- the Entertainment book, the half off deals, Restaurant.com, valpacs that come in the mail, local newspaper......there are plenty of sources. You just have to make sure whatever the restriction is works for you. If you have to order a certain amount, you can order a dessert to go. We ALWAYS make sure to tip on the pre-coupon price, you shouldn't short change the server. We always bring leftovers home, it's lunch for tomorrow!
Great list! Freepeats.org allows parents to pick up free gently used baby, kid and maternity stuff and pass on the baby stuff they're finished with locally.
Completely agree with you! It's outrageous the price some restaurants charge for soda, but people are foolish enough to pay that price. A huge profit is made, but people only get outraged when like you said the oil companies are making a profit. We need oil alot more than we 'need' soda.
You clearly did your homework on this one, girl. Great job. I'm going to try out that first green shopping store for some of the things we order online. Thanks, Elizabeth.
I love buying books - although not necessarily reading them :-)
It took years for me to finally take my wife's advice and join a library. Now, instead of impulse buying at a book store, I visit the library regularly and enjoy the *instant gratification* of coming home with a pile of new titles.
And then return most of them unread a few weeks later.
Silly right? Yep. But I've saved a stack of money and there's no increase in household clutter.
If a book really is worth buying, I know I've spent at least a week evaluating it first...
The problems in our American health care are fixable w/o switching to a single-payer option.
problem 1. 3rd party payment.
Imagine you only had a $10 co-pay for every time you gassed your car up... you think people would act differently? I would! I wouldn't shop for the cheapest gas... I wouldn't even settle for 87 octane. Its 91 octane or racing fuel, baby! This waste on my part would force either an insurance co. or gov't to charge more or offer less for everyone. Yet this is the model we have for medical coverage. People don't just have insurance for emergencies(like your car accident, ladies) but are going to the doc for all kinds of crazy stuff, like low grade fevers. Now i believe its someone's choice to go to the doc for what they want, but they should be accountable to pay for it. If everyone shopped around for the cheapest prices for greatest value, the market would adjust, and so would doctor's prices.
To sum it up, socialized medicine in America would make this problem worse...not better.
Problem 2. Lawsuits.
Doctors have much higher administration costs because they're weary(and rightfully so) that they're going to get sued. So they overcompensate, prescribing drugs and tests that probably aren't needed... but it keeps their backside covered. this translates to bigger cost to the insurance co. which translates to bigger premiums and deductibles for us. You'd think if we just changed some of the laws, doing away with frivolous suits, we'd could fix this in one ballot term. But...the trial lawyers are big contributors to our elected officials...so people would have to be responsible and check who is contributing to which candidates.
That probably is too much to ask of our average, willfully ignorant, American voters, but still the problem is fixable w/o turning to "big daddy" government.
3. Freeloaders!
I have a wife and kid. What would you think of me if my wife was living out of our car and my child was going hungry because I was paying someone's rent and feeding their children. I'd be a lousy father and husband! The point is take care of your own family first and then if there is leftover cash you can chose to help your friend with rent.
Yet my state has chosen to bankrupt itself by offering free health care to those who aren't citizens. Oh, and don't try to find out if someone is a citizen or not because you'll get sued, removed from your position, or have your reputation destroyed by being labeled a racist. These people aren't paying into our system in taxes, but sure are reaping the benefits... at my families and your families(if you live in CA, NM, AZ, or TX)expense! All I'm saying is lets take care of our people... and that doesn't mean leave a Mexican dying in an emergency room because he has a bogus Social #. People show up to the emergency room for things that aren't emergencies because they know its free...well, to them it is.
Before i get accused of being a racist i would like everyone to know that I'm Mexican. But I'm a Mexican-AMERICAN! And I'm proud of it.
What bothers me the most about the current debate over health care is, people think Socialized medicine is the only alternative... and that is not the case.
The point is to be able to say where you got the money to start that foundation without going to jail. If you just pop up with a random foundation you will be investigated and nine times out of ten charged with tax evasion(i.e. the Al Capone treatment).
The comment above about using Kool Aid was great. Dyes and food colors just add a lot of stain to kids hands and furniture. The Kool Aid did not.
The texture of moon sand for those who don't know yet is a lot like that moist sand just below the surface at the beach.
This Home made one is not exact...but actually better.
And with kids....the act of making it together ....well it makes it all the more wonderful
Thank you so much for posting this....YOU ARE KEEPIng families actively together.
BOOK MARK this man all......simple, easy to understand, and always the best among the rest
xoxoxoxo
"How to make a million dollars and have absolutely no money left at all." I actually did this. I also started with nothing as well, just really good credit, and the ability to make large chunks of money in more than one profession quickly as needed, plus a bank that believed in what i was doing. It was the eleventh bank, after i was turned down by ten other banks before that. lol. I didn't go bankrupt at all, however, i was consistently cash poor because i kept putting about 90 percent of my money into more enterprises and leaving about 10 percent for me to live on.
What got me down in the end was corruption, which you don't expect when you are young and full of hope and faith and belief in the system. haha. In school, they leave out the corruption part. That there can be a president of a different bank redirecting your funds into his bank and moving the funds around for his own use; that there is identity theft and people showing up even at banks saying they are you in order to steal your money; that there are people who pay off security guards even if you live in a high-end secure building and go into your condo and steal your personal things, that security guards can be so corrupt that they put in extensions to your phone line at the security desk and steal and sell your telephone messages; that there are companies that are run by corrupt individuals who will switch their books around in order not to PAY their employees, one of whom is YOU when they owe you money and even if you have copies of the invoices that they owe will break into your house and steal your copies which are the only proof of what they owe; that there are entire police forces (some of whom get busted but this takes YEARS and life is too short to wait) WHO won't write up a proper police report even when multiple people are being robbed in the luxury buildings where all of you live, because the police themselves are receiving a piece of what is stolen (i saw this happen in two different towns before i basically gave up).
That if they can't get you in all of these ways, they will inject you with drugs, while you are out and about or walking down the street (biological warfare drugs that aren't even legal and don't have ANY positive to them at all so shouldn't even be in existence or any poison they can get their hands on) and no one can fight off drugs. So you find other ways to live besides "in the system." This isn't even all of it, i could write more...so its not just succeeding in the system and finding ways to improve life for many people, its also a matter of fighting off corruption and then it becomes do you want to bother with that. personally, i don't, thanks, life is too short and i don't feel any of it makes a difference. what good is it to come up with a legal solution, when in the next election the new law can be cancelled and won't exist anymore. all that fighting for nothing.
but hey, if you want to make a million dollars (which today isn't even that much anyway) and have absolutely no money left at all, i can tell you how to do it. lol.
Instead of a stand mixer, I use a Breadman Ultimate Bread machine that I got for free on Freecycle. I don't use it to cook the dough, I just run it through the mix cycle and it mixes and kneads the dough for me in maybe 20 minutes, without getting my hands dirty.
You can usually get them fairly inexpensively secondhand or, again, free, as many people get them as gifts and give them away when the novelty wears off.
You could extend it by estimating costs and probabilites for some of the scarier scenarios. What's the probability that you might lose your job and quickly run through your small savings?
In particular, you can't just assume that credit that you've repaid will be available to be drawn down again. Many credit card companies cut their customer's available credit during the recent financial panic--in some cases the cutting credit limit repeatedly, tracking the customer's balance down with each payment. What's the cost if you unexpectedly need $1500 for a new transmission, but you only have $50 in available credit on your card?
That's not to say that you shouldn't pay down the credit card, just that if you're going to do a formal analysis, you ought to cover the less common scenarios as well.
If you have a lifestyle in which you spend more money than you earn, then, your finances will ALWAYS be a hot problem.
If you make more money than you spend, yet, you do not have the lifestyle you want and you are miserable, then, your own life is a HOT PROBLEM.
So, it is a matter of setting your priorities straight at all times, THINK if the urge to buy or do something is worth getting a hot red ulcer in your stomach later due to your decision, which in most cases makes you slave to your work, or, to your debt. REMEMBER, you were born to be a free being, not to be a slave... Not even to your impulses which are divided from your strong desire from the heart by a fine line...
I think this sums it up: When i first reached an age where i was being proposed to by a few of my boyfriends, a common statement of theirs was: "you can have anything you want." one of them, however, said, "you can have anything you want -- except if you want to do one of those million dollar deals of yours, then you have to discuss it with my uncle (as his uncle controlled the family money)." All people are on some kind of a "budget". It doesn't matter what their income is. If you have a billion and you spend a billion plus more, obviously you will be left with zero or subzero and may end up in a lot of trouble. It's not really dollar for dollar, its percentages of what ANYBODY has. understanding that "budgeting" of any sort exists shows that at least you are thinking about more than just your "pleasures" and have a clue.
with my first husband, i think personal finance was definitely part of the bigger picture. it WAS keeping up with jones and making the right choice. we had everything in common, but "choosing" each other for other reasons as well was part of it.
with my second husband we had a lot in common as far as outlook goes, but we married for totally different reasons. we didn't sign a pre-nup or anything. we just got married, because we wanted to have a marriage. the "wedding" wasn't even important, we had a reception a couple of months later.
I love how at least half of these comments are bashing the author about something. The refills thing, give me a break! When the gas companies were reporting record profits, you guys were outraged. But restaurants continue to charge AT LEAST ten times what they pay for soda, and you guys want a clear conscience? If soda was double or even triple what they pay for it, that would be one thing. But I agree 100%, share a soda and use the refill.
Correction: the interest charges for 12 months on a 5000 dollar balance at 15%, with a monthly payment of $300, amounts to $541, not the 900-some-odd dollars I gave before. Which means that paying off the card with the extra money just got a lot more appealing.
Let's reexamine this. This will be a little long, because I don't have time to edit, but it shows a way to account for the relative costs and probabilities, that are relevant to the decision of deciding how much cash to keep on hand.
First, realize that there is a 100% chance that if you pay off debt with savings, you will save the money that would otherwise be incurring interest charges.
There is a chance that is much less than 100% chance that sometime in the future you might run into a glitch and need to use a credit card to get yourself through it, thus costing you interest charges.
Now compare the current interest rate that you are incurring for your debts. Say it is, like in my case, 5.9%.
Figure out the cost for each strategy for the upcoming year.
Keeping the extra emergency money aside, and just paying off the balance according to plan month by month, iamgine you have a current balance of $5000 in debt at 5.9% and you pay $300 per month towards it, which means that, leaving aside interest, at the end of 12 months you will have paid $3600,which along with monthly interests charges leaves you with a balance of $1604.00, with a total interest cost over the 12 months of $211.47.
this is how much this strategy costs over 12 months; $211.47)
Now if you take $5000 in savings and pay off all or a bulk of this amount, thus leaving you with, say, just $1000 in cash cushion, your cost will be the interest you forego on the cash amount, less the interest you would have paid on the debt. Let's say you're earning 2% on your cash. that means that you would have earned $94.63 in interest over the 12 months on the 5000 bucks.
Subtact 211.47 from 94.63 and you will see that there is a difference of $116.84 in your favor, cost-wise, to taking 5000 and paying off your debt.
But it gets more complicated. You also have to figure out the cost of running out of cash and having to re-use your credit card. If your credit card has a higher rate for purchases than your sweet 5.9% deal that I have assumed, say $15% for purchases, then multiply the risk of having to do that (say, 20% probablility--probably high but this is an estimate) and you need to reborrow the whole $5000 bucks, then you have a 20% chance of incurring a $900 interest rate bill (assuming you'll be able to continue to make $300 per month payments on your debt when you re-borrow. A 20 percent chance of a $900 bill amounts to risk cost in dollars of $180. subtract that from the 116 and you have a total risk cost for this strategy of 64 dollars, which is way ahead of the interest cost of keeping the debt on the back burner, which would cost a total of 211 dollars over the year.
Taking the extra money and paying off your debt pays off to the tune of 211-64 dollars or 146 dollars, in other words.
Now you have to decide if the peace of mind of having 6000 dollars of cash around is worth the $146 premium compared to having only $1000 in cash around. For me, I'd decide to keep the cash around as $146 is a reasonable cost for having the added fungibility of cash in my life. I know from my own experience that I just am more relaxed about life when I can lay my hands on actual cash (for example, for a used car tire purchase, or buying something secondhand, situations where cash is really king).
If the interest rate you are paying on your debt is higher than 5.9%, then the value of keeping extra cash on hand goes down (extra cash costs more). If the interest rate your are paying is lower than 5.9%, the value of keeping extra cash around goes up (extra cash costs more).
I’m getting really competitive rates with a product called easyGROW Checking at First Bank & Trust. You can go to www.easyGROWchecking.com for the info (including the current interest rate); but to summarize, it is a free high-yield account that also offers ATM fee refunds when I meet the three qualifications: using my debit card at least ten times, receiving e-Statements, and having a least one direct deposit or automatic payment each cycle. I do all of those things anyway, so it’s been really easy for me to qualify…and they send me an email each month to let me know if I met the qualifications. I have to admit, I love not having to worry about whether or not an ATM is on my network, and the interest is already starting to add up. It only takes $100 deposit to open the account, and there is no minimum balance.
my site http://www.greengrechen.com has a number of exclusive coupons (http://www.greengrechen.com/coupon-codes-eco-friendly-fashion-organic-co...) for eco-fashion designers & boutiques like Stewart + Brown, Crystalyn Kae vegan handbags, TOMS Shoes, & more. in addition, i publish daily finds and weekly deals & steals.
if you're interested in fashion/personal style at all, please take a look, and let me know what you think.
thank you! grechen
I saw this $9 fare thing and I called, they told me everything I have read here (without the bad parts) I have to fly to Puerto Rico from Boston with my toddler and you know two regular tikets go over $400 roundtrip so I am considering to apply but, I'm scared to apply and then find nothing. I read that here that not to select seats (anyways dont care where to seat just want to get there). Thanks for any info
I'll also second the suggestion to just order water. One drink is cheaper than two, but no drinks is cheaper than one.
As for the complaining about "ripping off" the restaurant on sharing refills, consider that we often pay more per litre of soda than we do per litre of gasoline. Bottled water is even worse.
You know, it just occurred to me, but I don't quite get why we're expected to tip based on a percentage of the price of the meal. Is it more difficult for a waiter to deliver a $25 steak than a $12 steak?
I think tips should be based on quality of service, not on what you order.
Does this make any sense to anyone else?
Good comments.........we always just order water for our drink. Alcohol can really add up! We try to use coupons whenever we can- the Entertainment book, the half off deals, Restaurant.com, valpacs that come in the mail, local newspaper......there are plenty of sources. You just have to make sure whatever the restriction is works for you. If you have to order a certain amount, you can order a dessert to go. We ALWAYS make sure to tip on the pre-coupon price, you shouldn't short change the server. We always bring leftovers home, it's lunch for tomorrow!
Great list! Freepeats.org allows parents to pick up free gently used baby, kid and maternity stuff and pass on the baby stuff they're finished with locally.
It's in more than 50 U.S. cities.
Completely agree with you! It's outrageous the price some restaurants charge for soda, but people are foolish enough to pay that price. A huge profit is made, but people only get outraged when like you said the oil companies are making a profit. We need oil alot more than we 'need' soda.
I already boring and do these things and more? Heck, I even reuse Saran Warp!
You clearly did your homework on this one, girl. Great job. I'm going to try out that first green shopping store for some of the things we order online. Thanks, Elizabeth.
Check out my various projects and services at Itinerant Tightwad. I also have a monthly education newsletter.
I love buying books - although not necessarily reading them :-)
It took years for me to finally take my wife's advice and join a library. Now, instead of impulse buying at a book store, I visit the library regularly and enjoy the *instant gratification* of coming home with a pile of new titles.
And then return most of them unread a few weeks later.
Silly right? Yep. But I've saved a stack of money and there's no increase in household clutter.
If a book really is worth buying, I know I've spent at least a week evaluating it first...
The problems in our American health care are fixable w/o switching to a single-payer option.
problem 1. 3rd party payment.
Imagine you only had a $10 co-pay for every time you gassed your car up... you think people would act differently? I would! I wouldn't shop for the cheapest gas... I wouldn't even settle for 87 octane. Its 91 octane or racing fuel, baby! This waste on my part would force either an insurance co. or gov't to charge more or offer less for everyone. Yet this is the model we have for medical coverage. People don't just have insurance for emergencies(like your car accident, ladies) but are going to the doc for all kinds of crazy stuff, like low grade fevers. Now i believe its someone's choice to go to the doc for what they want, but they should be accountable to pay for it. If everyone shopped around for the cheapest prices for greatest value, the market would adjust, and so would doctor's prices.
To sum it up, socialized medicine in America would make this problem worse...not better.
Problem 2. Lawsuits.
Doctors have much higher administration costs because they're weary(and rightfully so) that they're going to get sued. So they overcompensate, prescribing drugs and tests that probably aren't needed... but it keeps their backside covered. this translates to bigger cost to the insurance co. which translates to bigger premiums and deductibles for us. You'd think if we just changed some of the laws, doing away with frivolous suits, we'd could fix this in one ballot term. But...the trial lawyers are big contributors to our elected officials...so people would have to be responsible and check who is contributing to which candidates.
That probably is too much to ask of our average, willfully ignorant, American voters, but still the problem is fixable w/o turning to "big daddy" government.
3. Freeloaders!
I have a wife and kid. What would you think of me if my wife was living out of our car and my child was going hungry because I was paying someone's rent and feeding their children. I'd be a lousy father and husband! The point is take care of your own family first and then if there is leftover cash you can chose to help your friend with rent.
Yet my state has chosen to bankrupt itself by offering free health care to those who aren't citizens. Oh, and don't try to find out if someone is a citizen or not because you'll get sued, removed from your position, or have your reputation destroyed by being labeled a racist. These people aren't paying into our system in taxes, but sure are reaping the benefits... at my families and your families(if you live in CA, NM, AZ, or TX)expense! All I'm saying is lets take care of our people... and that doesn't mean leave a Mexican dying in an emergency room because he has a bogus Social #. People show up to the emergency room for things that aren't emergencies because they know its free...well, to them it is.
Before i get accused of being a racist i would like everyone to know that I'm Mexican. But I'm a Mexican-AMERICAN! And I'm proud of it.
What bothers me the most about the current debate over health care is, people think Socialized medicine is the only alternative... and that is not the case.
fill ARCO gasoline - my uncle owns a shell station and he says they're all the same. Don't pay extra for gas!
The point is to be able to say where you got the money to start that foundation without going to jail. If you just pop up with a random foundation you will be investigated and nine times out of ten charged with tax evasion(i.e. the Al Capone treatment).
Dave Ramsey and also Rob Black.
The comment above about using Kool Aid was great. Dyes and food colors just add a lot of stain to kids hands and furniture. The Kool Aid did not.
The texture of moon sand for those who don't know yet is a lot like that moist sand just below the surface at the beach.
This Home made one is not exact...but actually better.
And with kids....the act of making it together ....well it makes it all the more wonderful
Thank you so much for posting this....YOU ARE KEEPIng families actively together.
BOOK MARK this man all......simple, easy to understand, and always the best among the rest
xoxoxoxo
single
cake is good
budgets are sucky
"How to make a million dollars and have absolutely no money left at all." I actually did this. I also started with nothing as well, just really good credit, and the ability to make large chunks of money in more than one profession quickly as needed, plus a bank that believed in what i was doing. It was the eleventh bank, after i was turned down by ten other banks before that. lol. I didn't go bankrupt at all, however, i was consistently cash poor because i kept putting about 90 percent of my money into more enterprises and leaving about 10 percent for me to live on.
What got me down in the end was corruption, which you don't expect when you are young and full of hope and faith and belief in the system. haha. In school, they leave out the corruption part. That there can be a president of a different bank redirecting your funds into his bank and moving the funds around for his own use; that there is identity theft and people showing up even at banks saying they are you in order to steal your money; that there are people who pay off security guards even if you live in a high-end secure building and go into your condo and steal your personal things, that security guards can be so corrupt that they put in extensions to your phone line at the security desk and steal and sell your telephone messages; that there are companies that are run by corrupt individuals who will switch their books around in order not to PAY their employees, one of whom is YOU when they owe you money and even if you have copies of the invoices that they owe will break into your house and steal your copies which are the only proof of what they owe; that there are entire police forces (some of whom get busted but this takes YEARS and life is too short to wait) WHO won't write up a proper police report even when multiple people are being robbed in the luxury buildings where all of you live, because the police themselves are receiving a piece of what is stolen (i saw this happen in two different towns before i basically gave up).
That if they can't get you in all of these ways, they will inject you with drugs, while you are out and about or walking down the street (biological warfare drugs that aren't even legal and don't have ANY positive to them at all so shouldn't even be in existence or any poison they can get their hands on) and no one can fight off drugs. So you find other ways to live besides "in the system." This isn't even all of it, i could write more...so its not just succeeding in the system and finding ways to improve life for many people, its also a matter of fighting off corruption and then it becomes do you want to bother with that. personally, i don't, thanks, life is too short and i don't feel any of it makes a difference. what good is it to come up with a legal solution, when in the next election the new law can be cancelled and won't exist anymore. all that fighting for nothing.
but hey, if you want to make a million dollars (which today isn't even that much anyway) and have absolutely no money left at all, i can tell you how to do it. lol.
Instead of a stand mixer, I use a Breadman Ultimate Bread machine that I got for free on Freecycle. I don't use it to cook the dough, I just run it through the mix cycle and it mixes and kneads the dough for me in maybe 20 minutes, without getting my hands dirty.
You can usually get them fairly inexpensively secondhand or, again, free, as many people get them as gifts and give them away when the novelty wears off.
You could extend it by estimating costs and probabilites for some of the scarier scenarios. What's the probability that you might lose your job and quickly run through your small savings?
In particular, you can't just assume that credit that you've repaid will be available to be drawn down again. Many credit card companies cut their customer's available credit during the recent financial panic--in some cases the cutting credit limit repeatedly, tracking the customer's balance down with each payment. What's the cost if you unexpectedly need $1500 for a new transmission, but you only have $50 in available credit on your card?
That's not to say that you shouldn't pay down the credit card, just that if you're going to do a formal analysis, you ought to cover the less common scenarios as well.
If you have a lifestyle in which you spend more money than you earn, then, your finances will ALWAYS be a hot problem.
If you make more money than you spend, yet, you do not have the lifestyle you want and you are miserable, then, your own life is a HOT PROBLEM.
So, it is a matter of setting your priorities straight at all times, THINK if the urge to buy or do something is worth getting a hot red ulcer in your stomach later due to your decision, which in most cases makes you slave to your work, or, to your debt. REMEMBER, you were born to be a free being, not to be a slave... Not even to your impulses which are divided from your strong desire from the heart by a fine line...
I think this sums it up: When i first reached an age where i was being proposed to by a few of my boyfriends, a common statement of theirs was: "you can have anything you want." one of them, however, said, "you can have anything you want -- except if you want to do one of those million dollar deals of yours, then you have to discuss it with my uncle (as his uncle controlled the family money)." All people are on some kind of a "budget". It doesn't matter what their income is. If you have a billion and you spend a billion plus more, obviously you will be left with zero or subzero and may end up in a lot of trouble. It's not really dollar for dollar, its percentages of what ANYBODY has. understanding that "budgeting" of any sort exists shows that at least you are thinking about more than just your "pleasures" and have a clue.
with my first husband, i think personal finance was definitely part of the bigger picture. it WAS keeping up with jones and making the right choice. we had everything in common, but "choosing" each other for other reasons as well was part of it.
with my second husband we had a lot in common as far as outlook goes, but we married for totally different reasons. we didn't sign a pre-nup or anything. we just got married, because we wanted to have a marriage. the "wedding" wasn't even important, we had a reception a couple of months later.
I love how at least half of these comments are bashing the author about something. The refills thing, give me a break! When the gas companies were reporting record profits, you guys were outraged. But restaurants continue to charge AT LEAST ten times what they pay for soda, and you guys want a clear conscience? If soda was double or even triple what they pay for it, that would be one thing. But I agree 100%, share a soda and use the refill.
Correction: the interest charges for 12 months on a 5000 dollar balance at 15%, with a monthly payment of $300, amounts to $541, not the 900-some-odd dollars I gave before. Which means that paying off the card with the extra money just got a lot more appealing.
Let's reexamine this. This will be a little long, because I don't have time to edit, but it shows a way to account for the relative costs and probabilities, that are relevant to the decision of deciding how much cash to keep on hand.
First, realize that there is a 100% chance that if you pay off debt with savings, you will save the money that would otherwise be incurring interest charges.
There is a chance that is much less than 100% chance that sometime in the future you might run into a glitch and need to use a credit card to get yourself through it, thus costing you interest charges.
Now compare the current interest rate that you are incurring for your debts. Say it is, like in my case, 5.9%.
Figure out the cost for each strategy for the upcoming year.
Keeping the extra emergency money aside, and just paying off the balance according to plan month by month, iamgine you have a current balance of $5000 in debt at 5.9% and you pay $300 per month towards it, which means that, leaving aside interest, at the end of 12 months you will have paid $3600,which along with monthly interests charges leaves you with a balance of $1604.00, with a total interest cost over the 12 months of $211.47.
this is how much this strategy costs over 12 months; $211.47)
Now if you take $5000 in savings and pay off all or a bulk of this amount, thus leaving you with, say, just $1000 in cash cushion, your cost will be the interest you forego on the cash amount, less the interest you would have paid on the debt. Let's say you're earning 2% on your cash. that means that you would have earned $94.63 in interest over the 12 months on the 5000 bucks.
Subtact 211.47 from 94.63 and you will see that there is a difference of $116.84 in your favor, cost-wise, to taking 5000 and paying off your debt.
But it gets more complicated. You also have to figure out the cost of running out of cash and having to re-use your credit card. If your credit card has a higher rate for purchases than your sweet 5.9% deal that I have assumed, say $15% for purchases, then multiply the risk of having to do that (say, 20% probablility--probably high but this is an estimate) and you need to reborrow the whole $5000 bucks, then you have a 20% chance of incurring a $900 interest rate bill (assuming you'll be able to continue to make $300 per month payments on your debt when you re-borrow. A 20 percent chance of a $900 bill amounts to risk cost in dollars of $180. subtract that from the 116 and you have a total risk cost for this strategy of 64 dollars, which is way ahead of the interest cost of keeping the debt on the back burner, which would cost a total of 211 dollars over the year.
Taking the extra money and paying off your debt pays off to the tune of 211-64 dollars or 146 dollars, in other words.
Now you have to decide if the peace of mind of having 6000 dollars of cash around is worth the $146 premium compared to having only $1000 in cash around. For me, I'd decide to keep the cash around as $146 is a reasonable cost for having the added fungibility of cash in my life. I know from my own experience that I just am more relaxed about life when I can lay my hands on actual cash (for example, for a used car tire purchase, or buying something secondhand, situations where cash is really king).
If the interest rate you are paying on your debt is higher than 5.9%, then the value of keeping extra cash on hand goes down (extra cash costs more). If the interest rate your are paying is lower than 5.9%, the value of keeping extra cash around goes up (extra cash costs more).