Tag Archives: saving
I was a Credit Union Virgin
I have worked at the same job, in the same building, for three and a half years. During that entire time, I have never ventured in to the mysterious tiny office next to our cafeteria. It only ever has one or two employees working inside and just the occasional customer. It contains a branch of the NARFE credit union, open exclusively for Federal employees and their families, and I’m their newest member.
Before last month, I was never curious about what a credit union could do for me. I’m not sure why. I had a small loyalty to Bank of America, but they were often more trouble than they were worth. Fees that changed year-to-year, clunky online management services, and, worst of all, poor customer service all put a bitter taste in my mouth. Yet, I’d never considered switching until a coworker told me he used NARFE to help grow his savings. That caught my attention.
In my first year at my job, I briefly considered looking into NARFE but a few things about how they operated, or my perception of it, kept me away. They weren’t a “real” bank so there weren’t tellers, a large safe, or many staff members. The concept was foreign, and I couldn’t see how it would work. It also had very few branches, meaning I wouldn’t have access to someone in-person when I wasn’t at work. I hated the concept of something so seemingly unstable. Especially in my first few years out of school, I craved stability in every way I could get it. Switching banks seemed like a risk I just didn’t want to take.
But once I had a better financial plan and a clearer head about what makes good customer service (hint: it’s not fancy tellers and tons of branches, I promise you), a new bank became a much more attractive option. Saving and I have always been in a love/hate relationship, and it’s only been in the past two years or so that I’ve come to understand the real value of it. So, one Sunday a few weeks ago, I sat down and looked up all NARFE had to offer. Every credit union is different, but let’s just say my mind was blown.
The great thing about credit unions is that they are, for lack of a better term, low maintenance. Because they don’t put a lot of money into branches and staffing, they are able to save money on actual services. The big kicker? Their interest rates. They were the lowest I had ever been offered, especially while still developing credit.
As I knew I was going to buy my first new car soon (update: It’s bought! Name suggestions in the comments, please!) this piqued my interest even more. Then I looked at the rates they offered for checking and savings as well as their fantastic gap insurance for cars, mortgage rates, and other services. After that, I was raving to everyone about how much I love credit unions.
But the truly best thing was the customer service. The branch manager, who also happens to service most of the branch’s customers, is one of the nicest and most accommodating people I have ever met. His sense of humor is fabulous and his determination to help you no matter the situation is truly impressive. He actually makes an effort to know all of his customers and go the extra mile for them whenever possible. Since our first meeting, he now calls out to me when I pass by with my lunch, he helped me carry a heavy whiteboard he saw me walking with, and he stayed a half an hour late one day to help me with my application because he knew I had meetings that delayed me getting to him. That never happened at any of my Bank of America branches.
There are definitely a few down sides, the biggest being the limited branch hours and locations. But because so much of the services I need are online, and most ATM fees are refunded, I don’t really require a branch for my day-to-day needs.
I’ve been proven wrong many times in my life. I swore I would never own a Mac, move to California, or adopt a cat. Well, I love my Mac, I hope to move to California, and my two cats are very fond of me. So I should have known my disinterest in credit unions would change over time, too. It feels good to be wrong.
Adventures in Freelancing (Pants Optional)
I never thought I’d miss desk chairs.
I was fortunate enough to be one of those people who started working immediately after college. A yearlong internship panned out—the television company with which I’d been interning took on a $45 million project during my last semester, and rather than train new coordinators, they just started paying me once I graduated. I started at $500 a week, which at the time felt like legit riches, and then got bumped up to $600 a few months later.
Although I was only supposed to contract for about 5 months, I ended up staying as an employee for more than a year, during which time my incredible boss/mentor rallied tirelessly to get me put on salary, but to no avail. I tried to move laterally in the company, toward one of the creative jobs that were more along the lines of my degree, but nepotism reared its fugly head and I was passed over for any new positions.
So, I found myself with no chances to move within the company and no full-time prospects elsewhere. I did cry, once—in the comfort of my own breakfast burrito—and no one noticed except the waiter, who (bless him) wordlessly handed me a mimosa. After a few sips, I pulled myself together, considered my skills and connections, and shifted my mindset to freelancing. Fortunately, thanks to the proactive work of my now-former boss, I spent almost no time searching for jobs. She put me in contact with a few company connections, all of whom I reached out to immediately and pushed to set meetings up with. During these meetings, if there were even an inkling of a suggestion of a task mentioned, I said yes. Always yes. I agreed to everything from working a private school charity function for a producer to managing the marketing for an upcoming indie film. I can’t stress enough how important it is to say yes. If the task is basic enough that they’re asking a relative stranger to do it, and it doesn’t involve a Hazmat suit, it’s probably something you can figure out how to do. I consider myself a lifetime double student at the universities of Google and Your Local Public Library.
So I got a backup laptop battery, switched out my unlimited MetroCard for a pay-per-ride and, before I could put on my comfy slippers, I was juggling five different freelance gigs. And I do mean different. I spent my days alternating between cutting Flavor of Love highlights (yes, the VH-1 masterpiece), to pulling stills and sound bites for a TV show’s digital board game, to frantically researching Photoshop layer-masking for a website’s design after having promised I had the adequate skills to do it.
The Money
Let’s talk about the fun part of freelancing: getting paid!!! Negotiating a pay rate is not as tricky or as terrifying as you’d expect. Before that process begins for you, ask someone in a similar field about the rates they charge, both when they started and now. When you go back to the employer, don’t be afraid to aim higher than you think you should. If you’ve gotten this far in setting up a freelance position, they’re unlikely to slam the (e-)door in your face. They’ll either say yes, or they’ll counter with a lower rate. From there, feel free to negotiate away; I found that agreeing on a rate within a couple of emails saved both of us from any potential resentment.
Here’s another thing about quoting a rate for your work. Come on—lean in for this one—I’m going to type in italics to invoke whispering: If they’re hiring you to do some extra work, eight times out of ten they don’t know how to do it themselves. They probably don’t even know what the typical rate is. Don’t take advantage of people, obviously, but don’t be afraid to upcharge based on your own experience (whatever that may be) and to make it worth your while. Like I said, I promise that an employer won’t turn down your services, then tell all his/her friends not to hire you, and then hack into your OKCupid account to declare you a huge, pompous, money-grubbing asshole if you quote a rate that’s too high.
What’s less fun than negotiating a rate is chasing after employers for money. It’s not necessarily that you didn’t do a great job, or that the employer is a bad person, or that the project is necessarily a total go-nowhere scam running out of the back of a souvenir shop. (I repeatedly stress not taking this stuff personally, because it’s very easy to let happen, especially if you’re working alone most of the time and away from the regular, conversational feedback of office life. A year of freelancing left me more sensitive to criticism than Joffrey Lannister-Baratheon.) It is simply not your clients’ top priority to give you their money, regardless of the job you did. So don’t be afraid to bring it up kindly in an email or make a phone call, regularly, to make sure it happens. No one is going to worry themselves as much about your payment as you are. Be your own #1 get-money-get-paid advocate.
The Routine
Throughout my time freelancing, it was hard to regulate some semblance of a routine. I would work late until I fell asleep with my computer in my lap, and then I would wake up the next morning, grab my computer from my bedside, and start working again. The sheer number of deadlines made self-motivation easy; the trickier task was turning my brain off from “work mode.” Imagine getting to your office at 8 am and leaving after midnight every day. Even if you’re only committed to eight hours, you’ll probably find yourself working ahead just because you’re in that environment. When I was working from home, there was no differentiator, especially when “home” was a teeny tenement apartment with no common spaces.
But there were numerous advantages! I could work in my pajamas (although to avoid the inevitable self-disgrace, I usually didn’t), I could do my laundry and grocery shopping in the middle of the day when there were no lines. I worked my gym schedule around the TV Guide for the channels I could watch on the treadmill. My conversational skills didn’t exactly flourish, but my work and home lives were the most efficient they’d ever been.
The Location
At one point, I decided to take the phrase “working remotely” to heart. With some extra cash from one particularly lucrative job, I moved to an apartment two blocks from the Mediterranean Sea for a few months while I continued to cut, edit, and write content for various clients. Wake up, work over breakfast, bring lunch and write on the beach before it got too hot, come home, work through dinner, go out with new roommates. And, of course, go on the occasional adventure. I realize that not every freelance job can be done from across the globe, but if the stars align accordingly for you, then get your ass out there.
Hanging Up The Slippers
Before I knew it, a year of freelancing had passed. By then, I was working part-time in the office of a client, a social media/entertainment startup, who now needed me on-hand for a few hours a week. I was also bartending a couple times a week, more for the social interaction than anything else. I felt both exhausted and also, strangely, unaccomplished; unless you’re looking at freelance gigs cumulatively, it’s easy to feel like you didn’t contribute greatly to any one project.
Not long after that, the part-time office job asked me to come onboard full-time. After weighing the decision, I decided to hang up my slippers and come back to office life. I would miss the freedom of scheduling my day, and I would miss indulging the weird idiosyncrasies I had developed from being alone most of the time for 15 months (like talking to myself excessively and eating certain foods with a knife only). Ultimately, the most alluring prospects were the regular, decent salary, a stake of equity in the company, the comfort of a desk chair (so much more ergonomic than the headboard of my bed), and the chance to interact all day with humans who weren’t appearing on a daytime talk show.
Am I glad I made the switch back to a one-job-only, 9-to-5 life? Yes. Do I miss the flexibility? Yes, every time I get a low-airfare alert for some exotic city, or try and elbow my way to the only rust-stain-free dryer at the laundromat at 7:30 in the evening. On the plus side, I have more regular in-person human interaction; I’m finally starting to get out of the habit of what I call ‘speaking in email,’ ending all spoken office conversations with “Best, Alyssa.” And I don’t have to chase anyone for a paycheck—it lands nicely into my checking account twice a month.
Is It For You?
I don’t know that I would recommend freelancing as a full-time job to everyone. I think it’s worth trying, especially if any of the above perks seem attractive to you. And oftentimes, they can lead to a steadier position, as in my case.
If you’re thinking about jumping on the freelance train, it’s worth having some money saved up, in case the jobs dry up or in case an employer is dragging their feet to give you your first paycheck. There’s always going to be some lingering awareness (and there should be, if you’re responsible about your bank account) that there will be periods of low income in addition to times where you’re flush with cash. Retail copywriting, for example, is heavily sought after from October to December, but unsurprisingly, work dries up after the holidays. So as tempting as it is after a well-paid gig to head to Serendipity 3 for a celebratory Frrozen Haute Chocolate, it might be worth saving some of that cheddar for a rainy day. If managing your money with some Scroogery isn’t something you think you’re capable of, then maybe freelancing isn’t for you.
Of course, starting to freelance isn’t always an all-or-nothing decision. You might be working one full-time position when someone asks you to take on a project. Then that may lead to other projects, some concurrently, until you have to consider whether it’s enough money and consistent work to quit your day job for. If so, and if you don’t LOVE your day job, then I say get out of there! Be free! Spread your self-sufficient wings! And when that day comes when you’re called back down to Earth for another permanent position, you have to make the decision for yourself: Just how much do you love eating oatmeal with a knife?
Not Going Broke, A How-To
After vacationing in Japan, visiting New York, and moving in with my boyfriend, all within three months, I had a lot of debt and needed to have a plan to get rid of it. I have a decent job that sort of allows me to live comfortably, but the reality is that I needed to budget my spending and hold myself to it. Budgeting my way out of debt and into better savings sucks. It really does, but it’s part of being a responsible adult who maybe wants to buy a house, or get married, or take another big vacation abroad.
Let’s take a look at how I try to set up my budget, which is generally applicable for a young working professional living in the major Bay Area. Please note that the cost of living can be scaled down (or up) depending on where you live.
How Much Money You Make
For salaried workers, this is pretty simple. How much do you get paid? How often do you get paid? Multiply accordingly to figure out about how much you make each month. For example, let’s say my annual income is $40,000–after taxes. It comes out to about $1,200 per paycheck twice a month. We’ll work with a baseline of $2,400 dollars each month, subtracting as we count our expenses.
Cash Flow: $2,400
How Much You Have to Spend
Car payments, rent, and insurance are some typical costs. These are required for not losing your car, your home, and your health (or maintaining any of the above), and as such, these are your priority payments each month. In addition, since you have to buy gas for your car, you should estimate the average cost of a tank and the number of times you fill up in a month. I generally go to a gas station about three times a month, give or take a week. There’s not really an opportunity for cost savings here, barring trading down your current car and moving back and forth.
Cash Flow: $2,400
Rent: -$700
Car Payment: -$306
Gasoline: -$120
Car / Renter’s Insurance: -$110
Cash Flow after Necessities: $1,164
How Much You Have for Food
Barring rent, food is where I spend the majority of my money each month. Cutting back from having sushi two to three times a week sucked, but I had to devise a plan for saving money where I usually spend the most.
First, I accounted for breakfast and work lunches. I normally don’t eat breakfast, but sometimes I do get coffee. Paying $4 three times a week for a coffee and snack comes to $12 per week for breakfast. For lunch, the cafeteria at my work tends to charge about $6 per meal, but I want a little breathing room to eat out with my co-workers once a week at about $15. A $6 cafeteria lunch four times a week, plus $15 for eating out once a week, comes to $39 per week for lunch. Next, we should account for dinners, desserts, and other snacks you would normally eat at home. I try to eat something of moderate size and of moderate price from the grocery store most nights of the week. This usually comes out to about $10 a day, sometimes serving for two or more.
To account for eating out, I let the cost savings roll over, and try to not binge on alcohol or appetizers. In order to calculate how much you’d spend each month, multiply your weekly costs for breakfast, lunch, and dinner by about 4.3 (the average number of weeks in a month). It isn’t an exact number, but it generally works out to be fairly accurate (and then I round up to the nearest whole dollar).
This part of the budget varies greatly from person to person, as some people care more about what they’re eating, how often they’re eating it, and if they can stand leftovers. I for one don’t mind leftovers, but hate monotony in the variety of my overall meals, so I spend a little more on some meals for bigger tastier foods.
Cash Flow after Necessities: $1,164
Breakfast: -$51
Lunch: -$168
Dinner: -$300
Cash Flow after Food: $645
How Much You Have for Fun
Shit gets tricky here. You have a finite amount of money left this month. You could spend it on drinking, a new pair of shoes, or a coffee table. I like all of these things, but my savings are more important to me. If you don’t have any, what happens when you run into trouble? I’m a bit proud and don’t really want to ask my mom and dad for help, so I put a small, but decent chunk directly into savings.
After that, it’s sort of like juggling. You can revise how much you spend each month on entertainment, such as movies or small trips. Or maybe, you want to spend more money on material things, and go shopping more often. These budgets are flexible because you still have money left over. I recommend that you put anything remaining from your cash flow into savings.
Cash Flow after Food: $645
Savings: -$200
Entertainment: -$120
Shopping: -$200
Cash Flow after Fun: $125
Getting Out of Debt
Above, there’s the basic outline of a budget, but you can see that at the end, there’s not a lot to pay back toward existing bills. Here’s where you look at all the things you’re spending money on and figure out where you can afford to cut back. For example, you don’t really need to spend $200 a month on shopping for new things. This could be cut down to $50 for new games or some new makeup, bringing your debt repayment funds up to $275. Furthermore, not everyone is like me and spends a lot of money on food. Some folks I know spend less than $200 a month on food, and that could be you too! Saving money to pay debt sucks, but it needs to be done if you want to be a financially responsible adult. Just learn to cut where it doesn’t hurt as bad.
Note that if you have long-standing credit card debt, you should try to pay it off first before putting a lot into savings. Your savings doesn’t accrue interest, while owing money to credit card companies costs you more in the long run. You should also aim to pay off your credit cards every month, making the bills in the long term much more manageable.
Making Everything Easier
Finally, work out your budget in Microsoft Excel or Google Spreadsheets: it’s an excellent way to have a copy that you can manipulate and track your progress. Alternatively, you can use a site such as Mint to have them track your spending. Such websites can pull records from your credit cards, bank statements, and other bills to better show much you’ve been spending, and usually they have great ways to analyze your spending or track your goals. You can use these to see where you’ve been putting all your hard-earned cash, so you can decide where you need to cut back.
Good luck with the budgets and the savings!
How and Where to Save for a Rainy Day
When you will use this money: within 1-5 years
Where this money lives: high yield savings account, money market account, CDs
In my last article I went over how much of your budget goes into your short-term/emergency savings account. But we still need to figure out how much money you should keep in this account. Basically, you want to have at least 3-6 months worth of expenses in your short term/emergency account. Remember, your short-term/emergency account is used in case you lose your job, need to put a deposit down on an apartment, or are planning to travel for a few months.
To figure this out: Add up your necessary expenses (rent, bills, grocery, car payment, gas, medical) plus some extra. Multiple that by six months. This is what you’re aiming for. Three months is good. Six is much better (what if your computer dies while you’re unemployed?!).
Before I go into how and where to put this money, let’s talk about how you can make money on these savings.
I have been banking with Wells Fargo my whole life. It actually says, “customer since 1988″ on my debit card. So I trust them. After I became a full-time salaried employee at my job, I went to Wells Fargo to see if my savings account (where I keep my short-term/emergency funds) could be changed to one with a higher APY (annual percentage yield = a tool for evaluating how much you earn on your savings each year) since I could start putting more money in it. I was able to switch from .01% APY to .05% APY. Five times more! I knew there were better offers at different banks but I figured they didn’t vary that much so I stuck by my bank.
Wrong.
When I started researching for these articles I looked more closely and found that you can find dozens of banks that offer up to .95% APY. They’re just not the big banks you most commonly think of—they’re mostly online banks. Online banks are able to offer much better APYs because they don’t have physical branches that are costly to run. Basically, if you have $10,000 in one of these online savings accounts making .95% APY, you make $95 a year in interest. Wells Fargo on the other hand, was giving me just $5 a year. No f*@%ing way.
It took half an hour online to open a high-yield money market savings account with Ally Bank and I found that there were some other perks too. There are no fees to have the account. With Wells Fargo you have to have a minimum balance of $3,500 or have an automatic monthly transfer go into the account. You get a debit card that you can use at any ATM and if there’s a fee, they reimburse it. This perk is nice although you shouldn’t be taking money out of this account on a regular basis.
So, let’s say you now have a sweet savings account set up and you’ve started putting money in it. Now what do you do? You don’t touch the money. What was that? DON’T TOUCH THE MONEY. This is not a second checking account. This is a comfy cushion you have hand-sewn so that if something bad happens you can fall down and be okay. If you keep taking the stuffing out of your comfy cushion, you’re gonna fall flat on your face and your face is going to look like crap.
Because this could be tricky, I’ve put together some helpful guidelines:
Ok, here are the situations when you can touch your savings: You lose your job. You have a sudden medical emergency. Your computer makes a horrible sound, goes black and never comes back. You have to put a deposit down on an apartment. You’ve been sleeping on an air mattress for the past year and need to buy a big kid bed. You need to buy a new car because Old Classy died.
Here are the situations when you cannot touch your savings: You need that $200 dress because you’re seeing your ex for the first time since you broke up. You really want to hit up Vegas this year brah. You’re too lazy to budget correctly so if you need more money, you can just take it from here, right?—This is especially NOT ok.
Exceptions: You’re using this account to save for your wedding or to travel for a long period of time. That’s ok, although I would suggest creating a separate savings account (or sub-account) for this if you can, and maintaining at least 3 months worth of expenses in your emergency account.
In researching the best place to put my money, I found some high-yield savings accounts that you should also consider:
- Ally Money Market Savings Account – 0.95% APY. No min deposit, no min balance, no monthly fee, easy to access money with debit card that can be used at any ATM without a fee. This is the account I currently have.
- ING Direct Orange Savings Account – 0.80% APY. No min deposit, no min balance, no monthly fee, ability to open sub-accounts to save for emergency, wedding, new car etc and keep that money mentally separate.
- American Express High-Yield Savings Account – 0.90% APY. No min deposit, no monthly fee.
- Discover Online Savings Account – 0.80% APY. $500 min deposit, no min balance, no monthly fee.
That being said, the best thing to do is compare savings accounts for yourself with Mint.com.
Another place to consider putting your money is in CDs (certificate of deposit). A CD is a time-based investment. You put in an amount of money (usually at least a couple thousand dollars) for a fixed amount of time (generally between 3 months and 5 years) and the bank pays you interest at regular intervals. Keep in mind if you need this money before the agreed upon date, you will be charged a fine. So if you are interested in CDs, be sure you will not need that money within the agreed upon time period. These accounts have higher APYs (historically around 2%–5%) than high-yield savings accounts so you will make more and your money will be insured by your bank (so long as you work with an FDIC-insured bank).
Pro Tip: CD interest rates are extremely low right now so it may be just as smart to keep your money in a high yield savings account at the moment.
Whether you’re ready to start saving right now or not, be sure you know the savings options that are out there for you in the future. As we learned, sticking with the same account you’ve had since you were 15 might not be the most lucrative place to put your money. Once you’re ready, you’ll feel much more confident because understanding your savings options won’t be unexplored territory.