Managing:Money

Welcome to Lootology, where we've created an online database of information and links to helpful websites related to personal finance for “college-aged” students. This site covers the core concepts of personal finance, and provides tools and links to sites to help you manage your money successfully.

“Successful money management” means simply that you plan ahead so you can meet your goals... whether you want to own a car, travel the world, rent an apartment, or retire, you won't get there by accident.

Banking
Selecting a bank and setting up account(s) are important first steps into the financial world. At the age of 18 you can open a bank account or get a credit card without a parent or guardian. You’ll also be fully responsible if you get into trouble. A joint account with a parent or someone who can help you keep track of your money might be helpful, at least initially, and is advisable for students without the time or interest in managing money.

Banks have undergone profound changes in the aftermath of the Great Recession. Due to declining revenue and increasing regulatory requirements, the big banks are raising fees and scaling back rewards programs. While many banks were offering free checking accounts not too long ago, new accounts are more likely to come with strings attached. Many consumers, fed up with increasing costs and impersonal service, are looking at credit unions and internet or online-only banking as an alternative.

A good site for comparing banks:

http://www.bargaineering.com/

The site has good information on banking and bank products, as well as sections on “Banking” and Bank Deals”.

''Credit Unions are non-profit alternatives to banks. They provide the same services, but with a focus on local community development and better customer service. Credit Unions are gaining market share.''

If you are interested in locating a credit union for your banking needs go to:

http://www.creditunion.coop/

Online-only institutions have improved considerably in recent years. Some of them are now linked to nationwide networks of free ATMs that are more extensive than any one bank’s network. Others let you use any ATM you want and reimburse you for most or all of the fees you pay to withdraw money. Online banks pay interest too, though it won’t amount to very much. The greatest benefit is the 24/7 convenience and speed of online banking. Some of the more popular online banks are: PerkStreet, USAA, and ING Electric Orange.

http://www.PerkStreet.com

PerkStreet is an up and coming online-only bank that has been offering cash back on debt card purchases. It also offers mobile alerts for balances and deposits.

Take the time to find the right fit as moving accounts to a new institution can be complicated. Factors worth looking into before opening an account with a traditional bank, online-only bank, or credit union include:

- Branch network (how many branches and where)

- ATM network, and surcharge for use

- Balance requirements to avoid a monthly fee

- Other fees

- Interest paid on balances

- Online banking services

- Overdraft policy and protection

- Student account services

- Debit and credit cards

- Service availability

- Quality of service

Online banking services are an increasingly important competitive advantage for banks, online banks, and credit unions. The perks are plenty: instant online transactions, automatic transfers, account management, budgeting, bill pay, conveniences such as banking via smart phone, and even text/email alerts. Security for online banking tends to be good, although customers should take precautions such as frequently changing their passwords.

In the last year or two some banks (including internet banks and physical banks) have begun letting customers deposit their checks by snapping pictures of them with a smart phone and sending the photos in. It’s hard to beat that for ease and speed of deposit. If you use this function, be sure to confirm that your deposits were made without errors.

Watch out for banks that charge unreasonable fees for:

- banking in a branch

- using ATMS

- balances dipping below a minimum

- foreign transactions

- paper statements

- overdrafts

- accessing overdraft accounts

- insufficient funds

- using debit cards

Also, make sure you won’t be charged for: closing your account, redeeming rewards points, getting copies of old statements, talking to a live customer service representative, and using your debit card.

Here are a couple of useful sites to help you find a bank or compare the terms of the accounts offered.

http://www.bankrate.com

Bankrate.com compares bank products, reports bank rates, and offers personal finance tips. You can input your geographic location and get a chart that compares the basic terms of bank accounts offered by various institutions.

Bankrate.com provides a lot of information; if you need more you can use the following sites:

http://www.findabetterbank.com/

This is a database of banks and credit unions that you can use to find up-to-date information on checking accounts.

http://www.moveyourmoneyproject.org/

This is a database to assist those wishing to move their money out of big banks.

Accounts and Debit Cards
Checking and savings accounts serve different purposes. A checking account allows you unlimited access to your money with fees or without (with some limitations and restrictions). A savings account LIMITS your access to withdrawals but generally offers more interest. Know the terms of these accounts. Do not use a savings account like a checking account or your bank will close it.

Many financial institutions, particularly credit unions, offer student accounts with particularly favorable account terms, for example no monthly fee.

Debit cards are generally offered with checking accounts. With a debit card funds are immediately withdrawn from your account and transferred to the seller of goods or services. Debit card purchases have replaced many cash transactions; currently debit cards make up roughly 50% of purchase transactions

(Credit cards are a form of payment that allow the card holder to carry a balance of debt up to an approved limit, and pay interest on money owed when the amount due is not paid in full.  See the section on credit for more information on credit cards.)

Debit cards also give you access to ATMs (automated teller machines). ATMs can be used for cash withdrawals, credit card  cash advances, and confirming account balances. When traveling in a foreign country, ATMs provide one of the best possible foreign currency exchange rates for travelers, although steep withdrawal fees may also apply.

To learn more about debit cards check out:

http://www.DebitSavvy.org

This is a website that covers all the basics of debit transactions, debit card safety, and saving tips. Above all else, guard your pin number like you protect your social security number.

If you lose your debit card or someone else uses it, notify your bank immediately so that you won’t be responsible for all the transactions. ''You should have the card issuer’s toll-free number or website recorded somewhere that is easy to access, like your phone or computer, so you don't have to search for your bank's information if you lose your debit card. ''

If you are writing checks and using a debit card, you must keep track of the funds in your account at all times. When you write a check, understand that the amount of the check can be withdrawn from your account right away or weeks later. ''In other words, your checking account may have more money than you'd expect, but unless you keep records, you may not know that the money belongs to the check recipient who can claim the funds at any time. ''

Writing a check for more money than you have in the account may be considered a crime in some cases. Never spend more money than you have in your account. If you go below a zero balance in your checking account the bank may honor the check but charge an overdraft or non-sufficient funds fee. Or the bank may return the check to the depositor unpaid and the depositor may charge you as much as three times the amount of the check in penalties.

If you overdraw funds repeatedly, make mistakes on your account, or write bad checks, you will be reported to ChexSystems. ChexSystems, Inc. is a network of financial institutions that regularly contribute information on mishandled checking and savings accounts.

A ChexSystems report is the checking account equivalent of a bad credit report. It reports negative activity to other banks and makes it very difficult to open a new checking account.

You can get a free copy of a ChexSystems report by going to:

http://www.consumerdebit.com

or calling (800) 428-9623.

Overdrafts

Overdrafts take place when you withdraw more money from your account than you have in the account. In this situation you have a negative balance and the account is said to be "overdrawn". If the account has been set up with overdraft protection and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then an overdraft fee may be charged.

Overdraft protection can cover ATM withdrawals, purchases made with a debit card, electronic transfers, and checks. In the case of checks or electronic transfers (ACH or automated clearing house transfers) overdraft protection allows for these items to be paid as opposed to being returned unpaid, or bouncing. Bouncing checks may lead to merchants refusing to accept your checks in the future.

Banks are required to get a customer's consent before enrolling them in overdraft programs. Banks used to automatically sign up customers for overdraft protection without giving them an opportunity to opt out. Rather than deny a transaction that resulted in an overdraft, the bank would honor it, and charge an overdraft fee and/or interest. Banks often charge as much as $35 per overdraft violation.

In order to maximize account overdrafts and revenue from overdraft fees banks have been known to process larger transactions before smaller transactions.

Planning & Monitoring Accounts
Monitoring and managing your accounts doesn’t need to be time consuming. There are numerous online banking tools and third-party websites that can help you plan or budget by automatically sorting your bank account and credit card transactions, or warn you by text or email alert when attention to your bank account is needed.

http://www.mint.com Mint.com is a free personal finance site that helps you manage your bank accounts, spending, financial goals, and budgeting. Mint.com can make a huge difference in your ability to manage your personal finances because it automatically tracks and categorizes your checking, debit card, and credit card transactions. You can log onto Mint and see your spending habits without inputting the data item by item. The site will even compare your current spending to historical spending by category. You can use Mint.com to set goals and save, and/or issue email or text alerts on unusual spending, fees charged, bills due, or low balances.

Mint's graphs and charts also help you track income, balances, savings, and net worth over time. You can also compare your spending year-to-year or month-to-month. You can even track progress on individual financial goals such as buying a car, saving for the future, getting out of debt, or paying down student loans. Just enter how much money you need, set a date and link your goal to specific accounts.  Mint has numerous text or email alerts which can be set up to notify you when you have been charged fees, when unusual spending occurs, when bills are due, and when your spending exceeds your budget. Every week you’ll get a summary of your spending and saving.

Mint.com is a fantastic free tool to track your spending, manage your bank account, and maintain a budget. The weekly summaries of your finances are very helpful as are the alerts which can keep you on top of fees, bills, and balances.

People with complicated finances and/or investment portfolios may find that Mint’s features are not sophisticated enough. For example, the categorization of expenses is not always perfect, and the investment tools may not accommodate a large, diversified portfolio. Moreover, the biggest criticism of Mint.com is the potential for security breaches. While Mint has taken precautions and uses the same 128-bit encryption and physical security that banks use, some people are uncomfortable providing user names and passwords to a third party like Mint.com.

Automation, or recurring transfers of money from one account to another, is another tool that can help you save money and manage your personal finances. Automation transfers a designated amount of money from one of your accounts to another, forcing some discipline on your savings and spending patterns. For example, you might have your paycheck deposited into your savings account on the 31st of the month. Early in the month you might set up a recurring transfer of some of this money into your checking account to cover your bills. Read Ramit Sethi’s guide to automating your accounts. Ramit Sethi is the New York Times best-selling author of I Will Teach You To Be Rich.

http://www.iwillteachyoutoberich.com/automate-your-personal-finances/

Budgeting
Most people avoid financial planning or budgeting because they feel it takes too much time and discipline. It’s much easier to focus on the basics: make more money, spend less, save more.

Budgeting or establishing a spending and savings plan does not need to be time consuming. Budgets can be automatically generated with online banking tools or Mint.com. Understanding where your money goes is the first step to finding ways to cut back, in order to save more. Are you buying a latte every day? That could be $1,183 a year, enough for a new laptop or vacation. It’s not what you make that matters, it’s what you save.

Mint.com calculates your average spending in various categories to help you easily create a budget based on historical spending. You’ll even get alerts when your spending exceeds the norm or budget.

For people who are seriously into budgeting there is YOU NEED A BUDGET software.

http://www.youneedabudget.com/

While there is a cost for this software, this is serious stuff! And a free trial is available.

http://www.bills.com

This has free Personal Budget Guides and Worksheets you can download. Download the budget worksheets to monitor your cash flow and expenses.

Bills.com > Manage Debt  > Dollars & Sense  > Budget Guide - A Free Guide to Managing Your Budget

Debt Management
There are plenty of web sites to help you manage your debt. Whether your bills amount to a monthly credit card or you have many bills (such as rent, utilities, cell phone service, groceries, student loans, car payment, etc…) get in the habit of managing your bills so that they are paid in full well before the due date. Late payments will destroy your credit score.

(See the section on credit - Link)

There are a number of tools to help you manage your debts and bills.

Manilla

http://www.manilla.com

With Manilla you can organize your bills, statements & balances in one place for free. You can also use it to store your bills and remind yourself when they are due.

ReadyForZero

https://www.readyforzero.com/

ReadyForZero is a free financial tool that helps you pay your debts off. ReadyForZero tracks your progress and rewards you.

Pageonce

https://www.pageonce.com/

Pageonce provides money and bill management for your computer or mobile phone and offers quick snapshots.

There are a number of money management tools that can help with bills and accounts. Take a look at several and determine which works best for you.