1 Million Dollars

Wednesday, June 30, 2010


When it comes to money, once you have a bit, there are so many decisions to make. For example, should I pay extra on my student loans or put more towards retirement? Should I have a 3 month emergency fund or a 6 month emergency fund (EF)? If I put more of my savings in my emergency fund, what do I cut? The problem is we cannot do everything we want, spending or savings wise.

For students the choices can be do I work or take student loans? Or should I take out the minimum I need or have some breathing room? All of these choices will affect our futures but we don't know which is the best choice. So how to choose?

Personally I think it is ok to take the max amount of subsidized student loans to give yourself an EF as long as you keep that money as EF and not an excuse to spend more. Also, I would assume that a student would repay the extra amount they took within the first 6 month after graduation to avoid having a large month expense. Also check what fees you pay to get the loan (discover is 0% but direct loans can have up to a 1.5% fee).
In regard to SL vs retirement it depends, if you have having trouble with cash flow maybe paying some the student loans off may be better for you or if you have private student loans (because they are variable) it may be a good idea to pay them off before the rate goes up. For my DF and I, we will be paying off my small loan while he is graduate school while saying 14% of our income to retirement. Because he started saving late, that amount is the least amount we feel comfortable saving. This will allow us some breathing room when he is a post doctoral fellow (which does not pay much).
To determine how much of an EF you need, I would look at your expenses, how easy it would be to get a job to cover those expenses and how stable your job is. As a graduate student my DF's job is extremely stable for the next three years so I am fine with a three month EF but once he becomes a post doctoral fellow it will be moved up to six months because a post doctoral fellow is not as stable.

But all of these are our choices and everyone makes their own, as it should be. Just make sure you know why you making your decisions and why they are right for you.

Friday, June 4, 2010

Where to Save?

Now, you have done some surveys or gotten some cash back from shopping or been frugal for a few weeks, now where do you put that extra money you now have? Well you definitely don't want leave it in your checking, you will spend it. You could move it your saving at your bank or credit union but the interest is pennies so where should you put it?

Well if you opened a upromise account, also open a Sallie Mae account and set up $25 automated transfers from your checking to Sallie Mae and you will get an additional 10% on your cash back from upromise, that it transfer from upromise to Sallie Mae every time you have $10 or more in your upromise account. This additional 10% will be deposited (they say) in February. Keep in mind that this is a new venture for Sallie Mae and expect problems. For example, they were supposed to withdraw $25 from my checking and deposited it Sallie Mae and they withdrew the $25 from both accounts. It got fixed, but it took awhile and I do not know if they would have fixed it if I had not noticed. But checking the account for mistakes takes me a few minutes every week and I do it with all my accounts so that is not a problem for me. My fiance, on the other hand does not want to deal with the issues so he does not have a Sallie Mae account. At this time the interest at Sallie Mae is 1.40%.

Otherwise save up $250 and open a ING account using a link for someone who already has the account. If you do so, you get an additional $25 (if you leave it open with the $250 for three months) and the person whose link you used get $10. At this time the interest at ING is 1.10%. Looking at just rates, if you were going to pick on high yield savings, I would pick Sallie Mae but the additional $25 makes up for a lot. If you do not know anyone who has a ING account, please leave a message here with your email and I will send you a link.

As you start putting the money in these account, they will begin to snowball and you begin to have more money for less effort.