I Love When The Free Money Fairy Stops By

Near the end of 2009, I discovered Bing Cash Back.  Bing, as many of you probably know, is Microsoft’s answer to the Google search engine.  In an effort to nab some of the lucarative business that’s tied to shopping, where I’m sure they get to charge some of the highest ad rates, Bing has teamed up with many retailers to provide ‘cash back’ if you purchase from their site having clicked through from Bing’s shopping or search page.

If you haven’t tried it, it’s definitely worth checking out.  I made a couple of purchases last year that we were going to make anyways, and got a few bucks back as a result.  They have a pretty decent selection of stores, some that you’re probably never heard of but many major retailers as well.

One of the things that I signed up for was a promotion that they were running at the time, where if I agreed to have them deposit my ‘cash back’ earnings into a PayPal account, they would give me an extra $10.

That seemed like a pretty good deal, so I signed up for it, and…..promptly forgot all about it.

So imagine my happy face last week when I got an e-mail saying that I had just gotten a $10 into my PayPal account from Bing Cashback.


Since I don’t carry cash around much anymore, the days of the surprise find of cash in an long-unused jacket pocket have largely ceased, but this was a pretty darn close substitution!

The free money fairy is always able to put a smile on my face!

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To Carry Cash Or Not Carry Cash

Some people find that cold hard cash in their pocket is an invitation to spend.  Others feel that carrying cash makes them spend less.

Some people spend exclusively by cash.  Some would prefer never to have cash.

I started thinking about it and wondering where I fit in.

I used to spend pretty much exclusively in cash for most everyday purchases except for groceries and laundry, where I think I’ve pretty much always used a credit card..  When I’d go out to eat, I’d pay in cash.  When I went out with friends, it was cash.  Things like the dry cleaners, haircuts, clothes were all done with cash.

When rewards credit cards came into play, I moved more and more of my spending to credit.

It was only when my wife and I combined our accounts that I converted nearly all of my cash spending to the use of the debit card.  Since then, I can take out ten bucks and it will often last a month or more.

I find that when it comes to whether I spend more or less with cash, I think that I actually spend more. With me, it all boils down to percentages.  Meaning, that the less I have in my wallet, the greater percentage of cash that each purchase will make.

Say I have $100 in my wallet.  If I pass by the vending machine and decide that a $1 soda looks good, I can think to myself ‘That only represents 1% of my total cash, so why not?’.  In relative terms, the purchase represents 1% of what I have, which, to most is ‘no big deal’.

If I only have $5 in my wallet, suddenly that $1 soda represents 20% of what I’m carrying around.  For me, that will turn a potential purchase into an empty-handed walk away from the soda machine.

Meaning for me, the less cash I carry, the less overall spending that I do.

I think people are wired differently.  Some people see the use of a debit card as a black hole and so they prefer not to use it.  Personally, I track our debit card spending almost daily and we have a pretty strict monthly spending limit, so each purchase definitely makes me consider whether I really want to spend money on it knowing that there might be other uses for those dollars.

I think the trick, no matter what, is to create spending limits, track them, adhere to them, and modify them if necessary.  You need to modify them if you’re finding yourself short on essential things like food, gas, or other important things.  Allowing yourself more so that you can buy a new pair of shoes every other week probably violates the spirit of spending limits.  The key is to set realistic spending goals, and also to track your purchases.

Either way, I think every person should understand their ‘cash’ preference and how it affects their spending.  With so many options available for many people, it only makes sense to make the adjustments that will reduce your discretionary spending.

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Moving Back Into Demand Notes

The bank that we use for depositing paychecks and paying bills has a horrible interest rate.  It’s practically non-existent actually.  So, we’ve always had a savings account for our long term savings and emergency funds.

For the longest time, I’d been using a GMAC Demand Notes account.  Basically, that was a money market account that paid a higher interest rate than any other account I’d ever seen available.  There were two catches.

First, you had to be an eligible GM employee or relative to participate.  I come from an automotive family so this was no problem.

Second, the account is not FDIC insured.  So, it’s considered along the lines of a stock or mutual fund that it could be devalued at any time.  Traditionally, this wasn’t a concern, and so in the heydey of higher interest rates, I was more than happy to take a return of 5.5% or more on our long term savings.

Last year, when both GM and GMAC were in trouble, I started to worry about the possibility of GMAC defaulting on their demand notes.  So, I pulled a pretty sizable chunk out and moved it to a new ING Direct Orange Savings account.  At the time, ING was paying almost identical rates to the Demand Notes account, and was aggressively pursuing new customers.  We even got a $25 sign up bonus!   Since ING Direct is FDIC insured, we had the best of both worlds!

Since then, ING has cut rates a lot so that they are no longer what I consider a top-tier payer of interest rates.  They are currently paying 1.25%.  GMAC Demand Notes, on the other hand, is currently paying 2.15%.  That’s a 72% premium.

I have been watching everything closely, and I believe that the risk of GMAC Demand Notes defaulting is minimal.  GMAC has received government bailout funds a couple of times, so I believe that the government has no interest in letting them fail or default.  I also believe that they’ve strengthened their balance sheet and are on the road to recovery.

So, while I don’t think that GMAC is out of the woods, I believe that the risk has been minimized to the point where we are slowly increasing our balance in our GMAC Demand Notes account.  Basically, our strategy to date is to make payments out of our ING Direct account (our winiter property tax bill was the most recent payment) and make new contributions to the GMAC Demand Notes account.

As our ‘most afraid’, we had about 95% of our long term savings in ING Direct.  As of right now, we’ve lowered that to about 85%.  I’m not sure what blend I feel comfortable with.  At this point I don’t think I’ll ever be comfortable with 100% in an uninsured account again, but I could consider a 50-50 blend being reasonable depending on market conditions.  The extra interest income is sure nice as well as long as I believe the risk to be minimal.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

A Few Life Lessons From An Eight Month Old Who Is Learning To Stand

Our eight month old son is learning new things and advancing right before our eyes.  It seems not a day goes by that he doesn’t figure something new out. In the recent weeks, he has mastered crawling and the latest skill that he’s working to perfect is to pull himself up to a standing position.

Watching him learn and hone this new skill makes me realize that there are things he does in his learning process that we can apply to just about anything, whether it be saving money, getting out of debt, adjusting to a new job skill.

Here are just a few lessons that he is teaching or providing a refresher course on as he takes on the quest that is learning to stand:

  • Look for opportunities – Baby Beagle is always looking for new places that he can pull himself up.  At first, he started small using low objects like the sofa (with a cushion removed by mommy or daddy so he could reach), but once he got the hang of that, he went for the areas on the sofa that had the cushions in place, various toys, tables, whatever….
  • Practice makes perfect – Once he gets the hang of it, he’ll plop himself down and pull himself right back up.  He’ll do this over and over until he can get to his ‘new’ position quickly.
  • Know when to ask for help – Baby Beagle is pretty independent, so he likes to do and figure things out for himself.  Still, when he’s trying something new or going after something that he hasn’t attained yet (a higher pull-up for example), he’ll let you know when it isn’t going well, and will look for an assist.  This might be repeated a few (hundred) times until he catches on, but eventually he’ll master what it is your helping with and make it on his own.
  • Look for re-assurance when things don’t go as planned – Babies are babies and, just like in life, not every attempt works out as planned.  Though there have been hundreds of times where standing has worked out, there have been a few misses that have resulted in a bonk on the head or a face dive into an unyielding object.  The accompanying tears are a cry for re-assurance and comfort, a reminder that it’s not always possible to succeed 100% of the time, and to have people close by to help you during the times that success doesn’t come.
  • Take pride in your success – Very often, when Baby Beagle pulls himself up, he takes a second to look around, smile, and give a little cry of happiness in his accomplishment.  If you cheer him on, he’ll get even more excited often to the point where he topples over!  He celebrates and takes pride in his accomplishments, which gives him the motivation to repeat his accomplishments and to try for greater things.
  • When you fall, pick yourself up and try again – So many times, the first attempt doesn’t go as planned and the solution is just to try again and again.  Don’t give up.

It just goes to show that as much as we teach babies and help them learn, there is a lot that they can teach us as well!

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