My Purchase Structured Settlement

There are a few things you can do to increase the interest you are earning on your savings account.  First off let us talk about what kind of account your money is being saved in.  A typical savings account attached to your checking account will offer you less than 1% interest, so even on $50,000 you only make $500 a year in interest.  That may or may not sound like a lot but if you invested that in a mutual fund for the same year you would earn ten times that.  It is not really wise though to have all your liquid cash for month to month or quarterly expenses tied up in a mutual fund, and thus high interest savings accounts were born.

The first thing you need to consider is how often you will want to have access to the cash.  The less often you need the cash the higher the interest you earn will be.  For example you can earn four percent or so on a CD which is a certified deposit.  The bank will require you to leave the money alone for three months at least, if not you won’t qualify for the interest you earned.

If you don’t need the money for a few years or say you have a small seed amount you want invest now to pay for a family vacation when your kid turns 16, or what is more likely you will have an investment goal for when that kid turns 18 – college.  So you start with a few thousand and invest it in a mutual fund rather than a savings account, this way the risk is hedged but still around ten percent, which is two to three times as much as what you would get in a regular savings account.

Then there are the rest of us who just want the best way to invest our cash but still have access to it.  Here is the plan, enroll in an online savings account from ING or any other internet bank and have your paychecks deposited into it, then just withdraw any of the money you need into your regular checking account, its super easy.  What this allows you to do is benefit from a four percent or higher interest rate on all your savings, and still withdraw what you need.  Internet banks are the best place to get a high interest savings account because they don’t have the same overhead costs as your local bank.  If you are looking for other investment options consider purchase structured settlement as a way to go.

We all are faced with new economic situations and we all need to change the way we think about banking.  Saving needs to become the new chic thing to do, and doing it without ignorance will keep the investment portfolios of the world full.  What we need to stop doing is consumer spending on crap the Kardashians of the world tell us we need.

First Step is to get an emergency fund of at least $1,000.  This is just for those unexpected things that pop up when we aren’t expecting them.  Job loss, an oops pregnancy, you blow a few tires driving home from work, the list continues.  This will help you manage the unexpected without traveling further into debt which will allow you to stay on top of the debt you have now.

Second Step is the pay off debt waterfall.  Make a list of all the debts you have minus the house payment.  Put them in order from smallest to largest and start with the smallest.  Pay no mind to interest rates simply amounts of debt.  The reason is because paying debt is a mind game and you need some quick marks in the ‘w’ column.  Plus once the little guys are gone you can make larger and larger dents in the big stuff.

After you are done with the first two steps and only AFTER, you will be like the great Lakers teams of the past, great momentum, and chemistry in your finances, so it’s time for a bigger goal; saving anywhere between three to six months worth of expenses in a separate account.  This money is not an investment and shouldn’t be treated as such, it simply acts as a barrier between you and life.  If you need to take an extra job working as a pizza delivery man to make this happen than do it, you can easily make $5,000 in six months delivering pizza part time.  It will suck but what would suck worse is losing your current job for 6 months and losing your house.

So at this point you should be debt free, so if that takes 6 months of following the above steps or 6 years you shouldn’t be investing money unless you aren’t losing it in debt interest.  This is where you build the wealth with investment.  Make sure you consult a financial planner before making any big steps with your new financial attitude and make sure you get a high interest savings account to earn interest on your emergency funds.

Interest checking accounts offer a more diverse way to earn extra income off the money in your checking account, but are they really worth it?  Frankly there are better options out there when it comes to maximizing gains off monthly spending.  Using a rewards credit card, rather than checks or debit cards, and paying off the balance each month for example.

The reason for this is that in order for a high interest checking account to really give you much benefit you need to maintain balances between $10,000 and $50,000.  If you don’t have that kind of liquid cash then there is absolutely no reason to have one.  Additionally if you do have that level of cash in a checking account you are at a greater risk of compromise.  If someone gets a hold of my checking account they would be lucky to get $2,000 because anymore than that is earning interest elsewhere.  If you have $10k plus and your identity is compromised you can kiss that money goodbye.  Finally the interest you are likely offered in any high interest checking account will be much lower than what you would find in the same bank with a savings account.

Chances are with more than ten thousand in the bank you should have pretty decent credit, this means you would qualify for some premium benefits with a rewards card from a major credit card company.  The rewards vary from airline miles to cash back to grocery credits.  In all reality you can find a rewards card that offers things you individually really want.  And that’s how it should be, if you search for the rewards you want first and not the gimmicks of the card company you’ll be happier than if you just arbitrarily choose a card.

The best way to manage these reward cards is to make a list of all the regular obligations you have, utilities, phones, etc, and then make another of all your loan payments.  Use the rewards card for all the monthly expenses not related to major debt obligations and keeps most of your cash in a savings account with higher interest.

There are a lot of options you have when it comes to high interest checking accounts but your best bet is a high interest savings account and a monthly rewards card.  But be sure to find a card with benefits you want.