***I have not received any sort of compensation from Learnvest (or anyone), nor did they solicit a review. This is my actual experience as a real human woman trying to figure out how to be not broke.***
As promised, here is the second part of how signing up for a Learnvest program overhauled my finances and helped me save more money. If you haven’t checked out part 1, you can read it here.
Since I started working in high school, I’ve had a savings account and a checking account. I’ve been with many different banks over the years, but I’ve always just had a free checking account linked to a traditional savings accounts.
Fast forward to 2012 when I had to quickly figure out a whole new life and that meant new bank accounts. While researching banking options, I kept reading about Ally and how internet banks were changing the game for free checking and savings. I found out I could get a free checking account, free checks, a debit card, pay no ATM or overdraft fees, and make .45% interest, which totally beat the “we won’t charge you as long as you never do anything but use your debit card and make deposits, but what’s this whole ‘interest’ thing?” account I had at a local bank. I could also get a money market savings account with a debit card that would also not charge any fees (unless I make more than 6 withdrawals in a statement period) and pay .85% interest. Easy access to my emergency fund and almost a full 1% in interest for just letting my money sit there? Sold.
When I talked to my Learnvest advisor about my plan, he told me to keep my existing accounts with Ally, but add a second checking account and two more savings accounts. What? That seemed so complicated! Couldn’t I just keep my two account system?
In a word, no. This is how you see progress on your money. My existing checking account became my “Fixed Monthly Expenses” account. All of our bills get paid out of that account during the month and that’s where my paycheck gets deposited. Then I added a second checking account to be my “Flexible Spending” account, so each week I transfer in my flexible spending allowance (the One Number Strategy). My money market savings account is my emergency fund (debit card for easy access), and I have an regular savings account (no debit card or checks) for travel savings (earning .99% interest!). I also opened a savings account with Barclays for “irregular expenses,” like car insurance, car registration, life insurance that I pay once a year, etc. It’s at a separate online bank so I can’t access the money easily. If I need it for one of these expenses, I have to plan ahead to make the transfer to my Ally account or to one of my credit cards.
When I log into my Learnvest account, I have a checklist that tells me what all I need to contribute to for each month in my Goal Calendar. So when I get a paycheck, I go down the list. Roth IRA contribution? Check. Emergency fund contribution? Check. Travel savings? Check. It even keeps track of loan and credit card payments that need to be made.
At first I thought it was going to be too many accounts to keep track of, but then I realized that it was actually working. When I had two accounts, it was way too easy to say, “Well, I’m going to spend a little more than I should because I can just transfer from my savings.” Now that every account has a specific purpose, I don’t want to do that. I want every penny sitting right where it was designated to sit and I want those pennies earning as much interest as they can.
When we went to Boston last summer, I had basically drained my savings for vacation. While I now have a balance on my Chase card from making some not wise decisions in August (yes, right after I paid off the damn Amex card and was debt free for about 3 weeks), I am making progress paying that off while I have 0% interest, and I have saved up about $4000 in cash in four months and have started contributing again to my Roth IRA that hadn’t gotten a contribution in two years. My net worth has increased by $9000 since I started my program from reassessing my retirement investments, paying down debt (that’ll happen anyway because of loan payments, but there’s been some credit debt crushing in there too), and saving actual money.
It’s tempting for me to just throw my cash reserves at my credit debt and be done with it Dave Ramsey-style, but as my CFP told me, I now have actual cash available in an emergency. If another major appliance dies, I can pay for it outright. If I pass out in an airport for no reason (it’s been known to happen), I can pay the stupid bills and forget about the whole dumb drama. Vacations won’t put me in debt now or drain everything I have because travel has its own allocation, and I’m still making quick progress on paying off my credit card. I’m also earning interest on my cash and not paying interest on my card and every little bit helps.
If you want to try out a Learnvest program, here’s a promo code for $50 off the start up fee: 412CEF66 (use before Jan. 31).