$5 Monthly Charge for Using Your Bank of America Debit Card

I was catching up on the news this morning and came across this article in the Bangor Daily News. Bank of America has done it again. They are always thinking up new tricks to come up with new procedures and costs that affect your money and my money. Not just nickel and diming us, but dollaring away all our hard earned cash. Their latest gambit is—starting next year, when you use your debit card they will charge you $5.00 a month. Ouch!

Now that pretty much all vendors including the local hot dog vendor and ice cream truck accept debit cards, Bank of America wants us to take a step back in time and go back to the old fashioned ways—go to their atm & withdraw money before you can spend it. Highly inconvenient. I can guarantee that, despite your best efforts, you will end up using your debit card at least once a month so it might as well be at the beginning of the month rather than at the end of the month.

Alternatively you can use your card as a credit card (if you have that facility), but more and more businesses prefer debit cards (it’s cheaper for them) so they offer discounts for cash and cash equivalents e.g. debit cards. So bye, bye discounts and hello more fees. I used to be a long time Bank of America customer until a few months ago when I finally had it with them and closed my account. If I had not closed it then, I would definitely have closed it now because of this new policy.

Apparently other banks have been testing this out with both Wells and Chase charging $3.00 a month in some states. I had not heard about that until now, but since I am not (or was not) their customer I may have tuned out that news.

Let’s hope that my friendly, neighborhood credit union doesn’t get in on the action because at this rate I think am better off keeping my money under my mattress.

Where Do You Buy Your Food?

I have often heard that we are what we eat. When our schedules get very busy, it becomes harder to plan a healthy meal. It is even more difficult to know what to buy and where to buy it from especially when we are presented with so many new choices. For most immigrants, it is important to live on a budget while working on settling in a new country. Here are some options to consider that can help you eat healthy and stay on budget. They may also help you make some new friends.

Join a local Food co-op or a buying club - These are organizations that look for the best value in healthy foods for their members. They pool their dollars to shop for the best deal and members pay an annual membership fee. Most co-ops keep their costs down because they are run by volunteer members and open only at specific times.  To learn more about food Co-ops or find one in your area click here. 

Shop at the Farmers Market - Farmers markets are run by local farmers who sell their produce in the market. The greatest benefit of a farmers market is getting fresh produce all year round and also having access to a variety of foods because most produce is seasonal. You can order fresh milk or meat at some markets and pick it up at a later time. It is a also a great way to find out what grows well in your area. Click here to find one in your area. 

Join a Community Supported Agriculture(CSA) Group - This concept is similar to a food co-op except that the produce is from a local farm. Co-ops focus on getting the best value for their members. In CSA's farmers offer shares to the public; when you purchase the shares, you are guaranteed a box of fresh produce every week or every other week. The only catch is you may not know what you will get every week (as opposed to farmers markets and co-ops where you pick what you want to buy). This is a great way to learn how to cook new foods. Joining a CSA amounts to making a promise to buy seasonal food. Most CSA's offer a convenient delivery service of the produce to their members. Places that experience harsh winters may only have CSA's in the summer. Click here to learn more and find some in your area. 

Grow your Own Food - If you find gardening therapeutic, it is a great way to relax and create healthy food options for you and your family. Most vegetables and herbs can be grown on a patio or a backyard. Click here to get some tips on gardening in your backyard. Local fresh food stores may also have some tips about what to grow and how to grow it. It is a great way to build a community of people who share your values. 

The 5 Things That Take up 50% of Your Earnings

The beginning of the year is always a good time to do a major review of your financial health. In reviewing my budget, I came across this helpful article that I had filed away last year - Five Expenses That Will Consume 50 Percent of Your Lifetime Earnings.

According to Manisha Thakor, there are 5 areas of spending that will consume half of your lifetime income. Keep these five areas under control and you have a chance of staying financially afloat.

1. Education – the common wisdom is to attend the best college you gain admission to. But can you afford it? Consider your choice of major, your prospects for employment after graduation and your likely annual earnings. How much is too much? Thakor says that “the amount of your student loan should not be more than what you expect to make annually during your first 10 years”. Suddenly, that expensive education does not look like a good financial investment any more.

2. Car – Thakor suggests that you should spend no more than 10% of your income on a car. Fine, but make sure it’s a cash payment and not a car note. A car starts to lose value as soon as you drive it off the lot. A car note means that you are funding a diminishing asset. Better to save and save until you can pay cash for a car. For most of us that means that we may never buy a brand new car but financially that is the better decision.

3. Home – for most people this is their most important purchase. The days of the easy no-doc mortgages are gone and most banks are back to responsible lending practices. This means that you are unlikely to get approved for a mortgage that is more than 3 times your annual income. Try and spend less and if anyone tries to convince you to spend more, run!

4. Kids – according to the US Department of Agriculture, it costs $220,000 on average to raise a child up to the age of 18, excluding college costs. Being a parent can have many rewards, and the little darlings may be adorable, but remember you also have a retirement to fund. Plan accordingly.

5. Retirement – regular saving is hard enough. Regular saving for a far-away goal is even more difficult. Thakor says that “a simple rule of thumb is to multiply your current income by 25. So if you make $50,000 a year and want to maintain that standard of living in retirement, you’ll need a nest egg of at least $1,250,000”. See number 4 – that’s equivalent to the cost of 5.6 kids. Do the math.

I don’t buy anything on sale….

.....unless I would have paid full price for it, at which point it becomes a must buy!

Before you start thinking that I have lost my mind, allow me to explain...

The “End of Year” Sales are still going strong and for most of us, clothes shopping is a major budget buster. We spend a lot of our money shopping and try and rationalize our spending by telling ourselves and anyone who cares to listen, “I got a good deal, I bought it on sale”. But if you didn’t need it to start with, then you just wasted your money, regardless of how little you actually spent.

Recently, what I have found works for me financially but not necessarily fashionably (I am still working on that) is to take the time to develop a carefully curated shopping list. I ask myself, “What do I need this season?” I then come up with a very detailed list that includes colors and fabrics e.g. a black satchel style handbag, dark long jeans to wear with heels, brown tweed work pants.

I try to create a list that will fill the gaps in my closet, work harmoniously with other pieces and allow me to indulge in one or two trends for the season. Armed with the list, then it’s time to start shopping. I spend a lot of time searching online for styles I like before I actually hit the stores. However, I rarely buy things online because I like to feel the fabric and study the construction. Apart from the trendy items, I look for quality pieces that can last a while. I have found that taking the time to develop the list makes it easier to identify pieces that will not meet my needs. No more impulse buys that will sit in my closet with the tags still on (and I sure have had plenty of those).

Once I start the actual shopping, it is very clear to see that all those cute items on the sale rack that do not match what’s on my previously determined list, are a total waste of money. If it wasn’t on the list it means that I don’t need it - even at 70% off! That sale item is still a waste of the 30% plus tax that I still have to pay for it. You can apply the same rationale to whatever your shopping weakness is – electronics, books, furniture etc.

As immigrants we often have to save a little more than our non-immigrant family and friends. Many of us send money back home regularly to support our extended families. One also has to be prepared for the emergencies that come up such as family medical bills or a death in the family that requires the purchase of an expensive last minute flight home. Watching your clothes budget is one way to help you save a little extra money every month. Buy only what you truly need and you will find it easier to meet your financial goals.

What is your shopping weakness? Create a needs list (not a shopping list!) and don't leave home without it.