What I've Been Reading 8/29/08

Well, I'm back from my trip - we'll have a big announcement about the Save! America winner and the related details very soon. Also, having a flight scheduled on the day the air traffic system develops a major glitch - not so fun.

To hold you over until then, here are some of the more interesting financial items I've been reading:

Naturally, I've been glued to the political coverage lately (Obama's acceptance speech! McCain picks a Veep and confounds world punditry!), and I'm sure a lot of you have been as well - CNN Money has a cool chart breaking down where both Obama and McCain stand on a number of financial issues. Compare and contrast with your own views!

With the holiday weekend upon us, many people are taking the opportunity to visit relatives in far-off places. Donna Freedman over at Smart Spending writes about the importance of fitting these trips into your budget while still remaining frugal.

The Blueprint for Financial Prosperity is writing a series on the 7 Deadly Sins of Personal Finance.

I hope you found something you like in this list. Have you read anything good lately? Give a shout.

Happy Labor Day!

Save! America - Off to See the Winner

I'm getting my stuff packed to go see the winner of MoneyAisle's "Save! America" sweepstakes.

Details to come!

Now how many ounces of toothpaste can I take in my carry-on again?

Saving vs. Investing

There's a great blog entry over at Portfolio by Felix Salmon - Wise Investing: No Substitute for Saving, which discusses the best way to plan for one's retirement and what the public perception of that is:

Here's a depressing statistic. In a recent Harris survey, 3,866 Americans were asked which things were "extremely important to achieving financial security in your retirement". 39% said that "investing wisely" was extremely important, while just 34% said that saving money during one's working years was.

The 401k plan complicates this a little, as it combines both saving with investing, but overall the points made are valid: the more money you save sooner, the more interest that money will provide as it compounds on itself.

I've been thinking about saving a lot lately - partly because it's a big part of our mission here at MoneyAisle and partly because we're about to present the winner of our "Save! America" sweepstakes from last month with his own High-Yield Savings account. Watch this space!

MoneyAisle Selected for Finovate 2008

Yesterday evening, via the Netbanker blog, MoneyAisle was announced as one of the finalists for the Finovate Conference.

Finovate features some of the leading innovators in the finance/technology world, and MoneyAisle is honored to be among the presenters.

Personally, I'm excited about this. Here at MoneyAisle HQ, we all know what an exciting product we're working on, and how the reverse auction process we're pioneering has the ability to change online finance for the better in a very real and dramatic way - and opportunities such as the one provided by Finovate help us get the word out about how neoSaej and MoneyAisle hope to change the way business is done online, by putting the power in the hands of the consumer.

MoneyAisle on TV: Dallas

MoneyAisle was featured on FOX4 (KDFW) in Dallas last night! Reporter Steve Noviello interviewed our CEO (and fellow blogger), Mukesh Chatter, as well as a representative from Beverly National Bank (one of the many great banks in the MoneyAisle network), and explained to viewers how the MoneyAisle auction works and the ways it can you amazing rates on bank CDs and High-Yield Savings accounts. You can also see some of my co-workers laying some foosball smackdown on each other here at MoneyAisle HQ.

You can watch the piece here.

FDIC to Help IndyMac Mortgage Borrowers

Interesting article from Reuters: Regulator to Help IndyMac Mortgage Borrowers - apparently the FDIC sent out "4,000 mortgage modification proposals ... this week and it hoped to send out 25,000 modification notices over the next few weeks."

"Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes," FDIC Chairman Sheila Bair said in a statement.

This is obviously good news for those who took out loans through IndyMac - and it's a chance for the FDIC to practice what they've been preaching regarding loan modifications. I'm curious how this all will play out.

What do you think about this?

Tightwad Bank

An article in the Washington Post caught my eye today - a new bank in Tightwad, MO (population 63) is naming itself after the town.

That's right: Tightwad Bank.

"We're seeking the customers with a sense of humor," said Donald S. Higdon, 54, who opened Tightwad with his business partner in May after they grew bored with running a sober-sided bank in neighboring Kansas. "We thought the downside was limited, the possibilities were reasonable and the amount of fun was limitless."

Check out the rest of the article here.

9 Questions With Mass. Bankers Association VP Peter Blanchard

Occasionally, I will use this blog as a forum for interviewing prominent members of the banking and finance community as a means of getting new and fresh perspectives on the monetary issues facing all of us.

There is no denying that the banking industry is experiencing a shift. I recently had a discussion with Peter Blanchard of the Massachusetts Bankers Association to get his take on the current industry changes. Peter is the Vice-President of member services and works to meet the needs of all members and associate members. In his role, he hears what challenges banks are facing and the steps being made to overcome these challenges.

Q: In your own words, what is Massachusetts Bankers Association’s mission?

Peter: The Massachusetts Bankers Association (MBA) represents and promotes the interests of its member institutions and those of the Massachusetts banking industry overall, while offering a wide range of services that meet their needs. The MBA carries out its mandate through legislative and regulatory initiatives, education, research, media and public relations, and assists our members in competing effectively in a rapidly evolving financial services industry.

Q: Describe your involvement with the Massachusetts Bankers Association.

Peter: I serve as vice president of member services. In that capacity I am responsible for direct member contact with the MBA’s 205 members and 225 associate members. I specialize in the areas of bank security, technology, e-commerce, and retail banking, reviewing many products throughout the year.

Q: What are some of the major benefits of being a member bank?

Peter: Like most business trade associations, the MBA focuses on legislative and regulatory activities on behalf of members. In addition to education, media and public relations, research, and important maintenance services are provided such as insurance for member banks. Additionally, members depend on the MBA’s endorsements, advice on product trends and recommendations on where to find solutions for their business needs. And while some of these requests are for general business issues, many focus on solutions unique to banking.

Q: Describe a typical member bank in terms of size, location, numbers of branches, etc.

Peter: We have a diverse membership that extends from the largest in the country to the smallest in Massachusetts, but a typical member, if typical is the right word, would be a bank with between $150 million under management with a few branches to a billion in assets with fifteen to twenty branches. Our membership includes all bank charters.

Q: With large money center banks opening more branches across the country and making online banking that much easier for people, what are some of the major issues community banks face?

Peter: This is an interesting conundrum; building more branches to attract more customers while at the same time trying to drive customers to online services to cut expenses. The reality is that banks large and small can compete as long as they employ multiple channels in delivering services. Customers of all banks want service options. While they may want to go into a branch to open an account, they may want to begin the process of shopping online for the best rates.

Q: To what extent have online banks, such as ING Direct, changed traditional banking practices?

Peter: Online banking has changed the banking paradigm. The competition is more amorphous today - It’s there, but not necessarily across the street with a sign on the building. Community banks are learning to compete by offering the same services using a variety of technology products available them. That said, there is no question that when customers don’t come through the door on a daily basis, it is more difficult to sell more products. But local banks, perhaps we should call them hybrid banks today, do have store fronts, so to speak, and can offer something not available from online banks, namely, a trained person in the branch who can help them with problems, assess their financial needs and offer them solutions. Regardless of whether you’re a small community bank or a multi-billion dollar bank, many customer segments want that personalized touch.

Q: What are some viable solutions for member banks to address the competition in terms of money center banks and online banks?

Peter: Some solutions are not high tech. Simple sales training is an important part of any retail business - You have to know how to make the sale. This seemingly basic function is very important to retail banking today. But, there is a vast market of global consumers out there who will not come through the doors of a typical bank, thus not giving the banker a chance to make the sale. To effectively compete, community banks need to employ a range of technologically competitive solutions that will identify their global market, which typically is a marketplace defined by their branch network, county, state or regional geographic boundaries. They depend on their reputation, community visibility, and print or broadcast media to attract customers. But to function effectively, banks need to attract deposits at competitive rates and technological solutions, such as MoneyAisle, that can help banks gather deposits attract their attention.

Q: What are some of the main reasons why the Massachusetts Bankers Association chose to work with neoSaej?

Peter: Clearly, the neoSaej solution caught our attention as something fresh, simple and aimed at a basic function of the bank, namely deposit gathering in a cost effective manner. It is a cutting edge product with a highly respected development team that understands banking and the banking environment. The fact that there is a banker advisory panel, a board with known success in the start-up and global corporate market, solid funding, and a growth plan all contributed to our interest.

Q: What do you believe some of the key benefits will be to banks that choose to utilize neoSaej’s unique offering?

Peter: The neoSaej product is very simple to use from both the banks’ and customers’ perspective. It offers the bank flexibility in deposit gathering, the ability to control deposit gathering campaigns, manage risk with a wealth of reporting options and the ability to attract deposits in markets previously unavailable to the bank. This product also gives the bank 24/7 operating capability without the related staffing and expense.

I would like to extend my thanks to Mr. Blanchard for taking the time for this interview.

High-Yield Savings Accounts, Extreme Savings, and Cookies

I recently read an article at U.S. News & World Report's Website called "9 Extreme Ways to Save" - among the advice given is to bake cookies in your hot car instead of a stove, to reuse plastic sandwich bags (a family of four could save about $30 per year), and to turn your car off while it's still moving.

While the article was certainly entertaining (despite my aversion to the overused buzzword "extreme"), I'm not sure how practical a savings strategy automotive cookie baking really is. Besides, I don't want the aroma of exhaust fumes messing up my Snickerdoodles. If you're looking to get some extra dollars each month, there are easier ways.

One of the best ways to increase your money saved is to have your savings do some of the earning for you, by moving your cash from a standard savings account to a High-Yield Savings account. The national average for a statement savings account is around .37% - compare that with what you could earn in a High-Yield Savings account (3.50% or higher) - and the interest your account accrues could provide a substantial amount of extra cash - enough to buy all the cookies you could want, without the exhaust-fume aftertaste.

CD Laddering

In difficult economic times, people are naturally reevaluating their investment strategies. Open any of the dailies and columnists are doling out advice on ways to minimize risk. Fixed-income investments are especially important as we look to realize a predictable cash flow.

A common fixed-income investment strategy is Certificate of Deposit (CD) laddering. A CD ladder involves taking a sum of money and investing it in various CDs with different maturity dates to produce a predictable cash flow. Once one CD matures the principal is reinvested and the ladder continues. The ladder typically works like this:

• Take 10k and invest it in 10 CDs with different maturity dates.
• Receive quarterly cash flows over the next 2 ½ years.
• Reinvest the principal, continue the ladder.
  

I'm sure I don't need to remind you that MoneyAisle has amazing CD rates, which you have access to 24/7 - run a live auction and see for yourself. It's absolutely free.

Do you engage in CD laddering? Have you considered it? I would love to hear any tips you have regarding getting the most out of your CDs.

What I've Been Reading 8/07/08

With the price of gas, more Americans are vacationing close to home and enjoying a "stay-cation." A group of personal finance bloggers have listed a bunch of Frugal Things to Do... in their areas. Check it out - you may get some ideas for low-cost weekend fun even if you don't have some vacation time coming up.

One thing we're all spending money on is food. There are a lot of blogs out there offering advice on ways to cut cost and engage in some cheap, healthy eating but this one found inspiration in an unlikely place: by watching The Simpsons. Now, Homer Simpson is hardly a model of thrift and restraint, but there are still some good tricks to pick up from this classic of American television.

On a more serious note, the Dual Income, No Kids blog (DINKS) has information and tips regarding diversification of your finances.

Endorsed by Massachusetts Bankers Association

I've got some cool MoneyAisle news to share: the Massachusetts Bankers Association just endorsed us. In the press release put out this morning, the President and CEO of the MBA had this to say:

"It is important for the banking industry to advance new technology and respond to changing consumer behaviors," said Daniel J. Forte, President and CEO of the MBA. "MoneyAisle not only enables banks to connect with new customers, but also provides a progressive, alternative for banks to offer their services. We are pleased to champion this service and its benefits to our members."

You can read the full story here.

What this means for you, the consumers, is this: by connecting us with banks to actively compete for your business in live auctions, you'll have even more sellers competing to give you great rates on banking and financial products. The larger the pool of banks bidding for your business, and the more competition created, helps you get the best deals in our system.

Avoiding Overdraft Fees

I wrote last week about the possible disappearance of the paper check from our lives in the near future. Perhaps an even more important by-product of this situation is the disappearance of the account attached to it.

As we increase the use of our debit cards to purchase items such as gas for our cars and groceries for our families, we also increase the possibility of losing track of what we’re spending. Combine this with automated bill payments as our society becomes increasingly paperless and if we’re not vigilant about the balance in our accounts we run the risk of spending more than we currently have available to us.

Most banks offer a form of “overdraft protection”, charging a fee - usually between $20 to $30, although I’ve read that one bank charges as much as $38 per overdraft transaction – to cover transactions which exceed balances. The best way to avoid these fees, of course, is diligent account management. However, one forgotten trip to the gas station can throw an entire account balance out of whack. The way many banks process transactions, according to a USA Today article, is by charging you for the most expensive transaction first – if you find yourself in this situation, suddenly a bottle of water or pack of gum can wind up costing you twenty times its usual value!

Here are some tips to help you avoid this:

• Check your account balance often: Don’t just look at the monthly statements. Most banks allow you to check your account online, or do so over the phone.
• Some banks allow you to set up your own overdraft protection, connecting your checking account to your savings account. This method will still incur a fee, but it’s usually significantly less than the bank’s overdraft protection.
• Give yourself a monetary “cushion” in your checking account. By not letting your balance dip below $100, you could be saving yourself multiple headaches in the future.
• Read all mail correspondence your bank sends you: it may look like junk mail, but there may be a notice about some new fee you were previously unaware of.
• If your overdraft fee is a one-time mistake, talk to your bank about waiving the fee. If you’re a customer in good standing, they may be willing to do this, and it doesn’t hurt to check.
• Shop around: you may be better served by moving to another bank with less draconian fees.

If you have any additional tips to share on avoiding overdraft or other banking fees, I’d love to hear them.