Keeping the change (making saving automatic)

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Greg17
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Keeping the change (making saving automatic)

Post by Greg17 » Sun Mar 15, 2015 10:20 pm

I just saw an ad for a product called "Acorns"- it rounds up any purchase you make on your card to the next dollar abd invests the change. The catch is- the funds they have are junk. I've see a similar product with BOA- but I refuse to do business with them. Has anyone found an alternative. I really like the idea of ectra savings when you spend.

tj
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Re: Keeping the change (making saving automatic)

Post by tj » Sun Mar 15, 2015 10:26 pm

Its a gimmick. id rather just have lower credit card bills.

billern
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Re: Keeping the change (making saving automatic)

Post by billern » Sun Mar 15, 2015 10:27 pm

Set up an automatic transfer to your savings account or have part of your paycheck deposited to same.

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cheese_breath
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Re: Keeping the change (making saving automatic)

Post by cheese_breath » Sun Mar 15, 2015 10:45 pm

You realize Acorns isn't free?

https://www.acorns.com/fees/
Last edited by cheese_breath on Sun Mar 15, 2015 11:03 pm, edited 2 times in total.
The surest way to know the future is when it becomes the past.

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cheese_breath
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Re: Keeping the change (making saving automatic)

Post by cheese_breath » Sun Mar 15, 2015 10:58 pm

Greg17 wrote:... The catch is- the funds they have are junk....
Really?

"All portfolios are constructed using the following six index ETFs:
" ◾Vanguard S&P 500 ETF (VOO)
" ◾Vanguard Small-Cap ETF (VB)
" ◾Vanguard FTSE Emerging Markets ETF (VWO)
" ◾Vanguard REIT ETF (VNQ)
" ◾PIMCO Investment Grade Corporate Bond ETF (CORP)
" ◾iShares 1-3 Year Treasury Bond ETF (SHY)

http://www.mymoneyblog.com/acorns-app-review.html
The surest way to know the future is when it becomes the past.

Greg17
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Re: Keeping the change (making saving automatic)

Post by Greg17 » Mon Mar 16, 2015 5:05 am

cheese_breath wrote:
Greg17 wrote:... The catch is- the funds they have are junk....
Really?

"All portfolios are constructed using the following six index ETFs:
" ◾Vanguard S&P 500 ETF (VOO)
" ◾Vanguard Small-Cap ETF (VB)
" ◾Vanguard FTSE Emerging Markets ETF (VWO)
" ◾Vanguard REIT ETF (VNQ)
" ◾PIMCO Investment Grade Corporate Bond ETF (CORP)
" ◾iShares 1-3 Year Treasury Bond ETF (SHY)

http://www.mymoneyblog.com/acorns-app-review.html
That's weird. Either they changed funds or I was looking at a different product.

nordlead
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Re: Keeping the change (making saving automatic)

Post by nordlead » Mon Mar 16, 2015 6:39 am

Go over your past 6 months of CC statements and round up every transaction, and then divide by 6. Set up an auto-deposit for that much every month. You have now done the same exact thing only for free. Redo this every 1-2 years to account for inflation or a rise in spending.

Grt2bOutdoors
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Re: Keeping the change (making saving automatic)

Post by Grt2bOutdoors » Mon Mar 16, 2015 7:15 am

While I haven't reviewed the products or it's costs, these types of programs are designed for those who aren't "self-starters" or "who are unable to follow through on a plan once started". If paying a very small fee (.005-.007 bps) in expense ratio is the price to enter into a long term portfolio designed for total return or capital appreciation, then so be it. But I must emphasize, the term "very small fee", if the program charges more than 5-7bps to automatically withdraw monies from your checking or savings account, then they are being paid too much.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ny_rn
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Re: Keeping the change (making saving automatic)

Post by ny_rn » Mon Mar 16, 2015 7:28 am

nordlead wrote:Go over your past 6 months of CC statements and round up every transaction, and then divide by 6. Set up an auto-deposit for that much every month. You have now done the same exact thing only for free. Redo this every 1-2 years to account for inflation or a rise in spending.
+1. Set a specific amount to save each month and put it on automatic.

Greg17
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Re: Keeping the change (making saving automatic)

Post by Greg17 » Mon Mar 16, 2015 11:21 am

cheese_breath wrote:You realize Acorns isn't free?

https://www.acorns.com/fees/
Yes, that's why I was looking for a free alternative.

leonard
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Re: Keeping the change (making saving automatic)

Post by leonard » Mon Mar 16, 2015 11:28 am

Greg17 wrote:
cheese_breath wrote:You realize Acorns isn't free?

https://www.acorns.com/fees/
Yes, that's why I was looking for a free alternative.
Why not just set an amount and stick to it? What's appealing about the complexity of rounding up dozens of charges per month? Rather than just cut one check and be done?

If you did something like this, would you actually go in and verify each month that they had done all the math correctly?
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

DFWinvestor
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Re: Keeping the change (making saving automatic)

Post by DFWinvestor » Mon Mar 16, 2015 12:55 pm

I have a program I use that achieves the same results. For a one time fee of $200 I will help you get into the program.

Here are a few details: I call it "paying with cash".

It is a bit old fashioned I will admit. I started doing this almost ten years ago. At that time I was flat broke, net worth somewhere in the neighborhood of -$150,000 (negative number). I had two maxed out credit cards and that was when I finally got serious about budgeting. So rather than apply for a third credit card, I decided to do something novel for me at the time, which was live beneath my means rather than above my means. So I would take out $300 from the ATM every week, and that was all the spending money I had. For everything. Meals, gas, entertainment, dry cleaners, you name it.

I started saving my change and I would go to the bank once a month and cash it in. I would normally have around $40 in a given month. This felt like a huge surplus to me at the time. So once I used this system for a few months, I would have an extra $40 once a month which would go a long way.

Eventually as my credit card debt disappeared, and my financial situation improved, I decided to stick with the cash pay system for most things. I do use a credit card these days but mostly for large purchases and online purchases (I pay it off right away now).

And I continue to go to the bank every 6-8 weeks and deposit my change. That combined with credit card cash back rewards, and dividends from a few investments that are not automatically reinvested, adds up after a while. Sometimes I use it to help fund vacations, sometimes I use it to pay down my one remaining low interest student loan.

I have decided I will continue with this system until I reach two comma net worth, likely 2-3 years from now. Just because I have done it for so long and it's part of my routine. I will admit to feeling a bit silly these days going in with a ziploc bag full of change, but I won't stop until I reach two comma net worth.

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cheese_breath
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Re: Keeping the change (making saving automatic)

Post by cheese_breath » Mon Mar 16, 2015 1:32 pm

I've heard of a plan similar plan to your "paying with cash", but the entry fee is lower. It's called the "big coffee can in the closet" and costs about $10 more or less depending on what kind of coffee can you want. Plus there's a signup bonus of enough ground coffee to last an average person a couple months.
The surest way to know the future is when it becomes the past.

Greg17
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Re: Keeping the change (making saving automatic)

Post by Greg17 » Wed Mar 18, 2015 7:40 pm

leonard wrote:
Greg17 wrote:
cheese_breath wrote:You realize Acorns isn't free?

https://www.acorns.com/fees/
Yes, that's why I was looking for a free alternative.
What's appealing about the complexity of rounding up dozens of charges per month?
Something that is automated. My pay is variable and it is tough to have a set amount every month

leonard
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Re: Keeping the change (making saving automatic)

Post by leonard » Wed Mar 18, 2015 8:08 pm

Greg17 wrote:
leonard wrote:
Greg17 wrote:
cheese_breath wrote:You realize Acorns isn't free?

https://www.acorns.com/fees/
Yes, that's why I was looking for a free alternative.
What's appealing about the complexity of rounding up dozens of charges per month?
Something that is automated. My pay is variable and it is tough to have a set amount every month
Isn't your spending variable as well?

As stated by myself and many other above, I'd suggest cutting a check each month. Other than auditors, few are going to go over their CC cards in enough detail to see if this is being done right.

"Automate it" by sitting down on the first of each month and writing the check. Puts you in control of your finances.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

Louis Winthorpe III
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Re: Keeping the change (making saving automatic)

Post by Louis Winthorpe III » Wed Mar 18, 2015 8:28 pm

Greg17 wrote:
leonard wrote:
Greg17 wrote:
cheese_breath wrote:You realize Acorns isn't free?

https://www.acorns.com/fees/
Yes, that's why I was looking for a free alternative.
What's appealing about the complexity of rounding up dozens of charges per month?
Something that is automated. My pay is variable and it is tough to have a set amount every month
If your pay is X, and it's variable, it doesn't become any more variable if you treat your pay as X - y. Just save y dollars every month at the beginning of the month and force yourself to live on whatever is left.

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