Live Debt Free

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Bank With No Fees [Checking and Savings]

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Bank with no fees - checking and savingsA message and a $50 bonus

I sent this info as an email to all my subscribers yesterday but – since debit card banking fees are such a hot topic right now – figured I needed to share it publicly. More on the $50 bonus in a minute.

I saw a World News special last night about how so many American’s are fed up with big banks and their new fees, specifically the $5/month fee Bank of America is charging customers for using a debit card. That is just horrible… charging us to use our own money – where will it end?

I saw the light years ago and did A LOT of research into what banks give great service with no fees. I found three solid options.

Rewards debit w/your existing account

This is a perfect option for Bank of America customers.

How can you get 2% rewards cash back on all debit purchases, and 5% on select debit purchases without having to switch banks? Simple, use PerkStreet.

Here are some of the benefits PerkStreet delivers:

  • Keep your existing bank – Sign up and link your PerkStreet account to any other bank account for free. Transfer money when you need it, always free.
  • 2% cash back on debit purchases – You’re rewarded for spending money you already have rather than using credit cards (which I’ll never recommend).
Read more about PerkStreet Financial Rewards Debit and sign up if it suits you and you’re ready for a simple debit card change.

No fee checking accounts

The banks I recommend lock, stock, and barrel are Capital One 360 and Ally Bank. They are both online banks, that also allow for paper checks if you so desire. The reason they can survive and even thrive in this economy is because they have no brick and mortar branch offices to maintain… and that savings gets passed straight down to us.

The other recommendation I have is to open an account with your local credit union as a supplemental account (or clearinghouse if you will) for your online accounts with either Capital One 360 or Ally.

Personally, Betsy and I have accounts with Capital One 360, Ally, and our local credit union, but we mostly use Capital One 360… they are simply fantastic and I recommend them in full confidence.

Read more about their checking accounts by following the links below and make the switch if you like what you see.

  • Capital One 360 checking (called Capital One 360) – A $50 bonus for all new customers.
  • Ally Bank checking

And savings accounts

If you’re looking for information on savings accounts, use these links for Capital One 360 and Ally Bank.

Let me know if you have any questions and I’ll do my best to help.

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Business Savings Funds For Entrepreneurs

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The following information is for general purposes only and is not meant to apply to any specific situation. Please consult with your certified public accountant or tax professional to discuss your personal situation

Businesses usually do not fail because of a lack of ideas. One of the key reasons businesses fail is lack of cash. If a business can survive the period where sales are slow and startup expenses are your primary outflow, it has a chance to be one of the 50% of businesses that survive the first five years of existence. Starting a business is a scary time, and managing your personal and business cash flow well can be the critical factor to achieving self-employment. Anyone aspiring to become self employed should consider three unique savings funds to manage liquidity during the transition from traditional employment to “free agency”.

The escape fund

I am stealing this term from Pamela Slim’s outstanding book “Escape From Cubicle Nation”. Any escape from traditional employment is made easier with a strong cash reserve from which you can draw before your self-employment pay equals your take-home employment pay. The escape fund is the buffer that allows you to build your business from a position of strength instead of desperately looking for the next sale for income. Before I decided to take full-time employment and build Whiteboard Business Partners as a side business, my wife and I considered using our emergency fund as our escape fund. I’m glad we did not make that decision, because the emergency fund is a key risk management tool. Even though “creating a self-employment opportunity” is important in my vocational plan, it’s not an emergency. My wife and I maintain a six-month fund of living expenses, and we did not want to increase our family’s risk by drawing on the emergency fund. Our family has always lived below its means, so saving money has never been a problem for us. We are simply reallocating a portion of our discretionary savings to our “escape fund” and keeping our emergency fund intact. When the time is right for self-employment, we will have the escape fund for any cash shortfalls before drawing on the emergency fund.

The business emergency fund

Too many young businesses operate like many American families – they live “paycheck to paycheck”. One major, unplanned expense can cause a business with no emergency savings to die.  As a Financial Peace University graduate, I can almost hear Dave Ramsey’s pleas for an emergency fund in my sleep. I applied Mr. Ramsey’s emergency fund principles more for my business instead of my personal finances and started thinking about the right emergency fund for my business. Depending on the phase of your business and your available funds, there are three different amounts to consider for a business emergency fund.*Six months of operating expenses – This level is consistent with Dave Ramsey’s baby steps and is my preferred choice. If you have six months of operating expenses available, you can adjust to sales downturns without having to accept work you really do not want to take.*The amount of your largest purchase – A brand-new business or an entrepreneur running a very tight budget can consider this emergency fund. Think of the largest purchase you would have to make to keep your business running. For example, if you run a cake decorating business, how much would it cost to replace your oven? That amount would then be your emergency fund. This is not as safe as six months of operating expenses, but it does provide some level of comfort.*A year of revenue – This amount might be too conservative, but the economic recession has proven liquidity can be a good thing. Many debt-fueled companies and leveraged buyout companies learned this lesson the hard way!

The tax fund

Self-employed individuals must maintain a fund to pay taxes. Federal and state governments do not take kindly to not paying taxes, and self-employed people do not have taxes withheld like traditional W-2 employees do. Since you must pay taxes on a quarterly basis, it’s important to keep a separate fund to pay your taxes. One key point to remember is that self-employed individuals must pay BOTH the employer and employee portions of Social Security and Medicare taxes. Employees only pay 7.65% of wages, but self-employed individuals must pay 15.3% (note that the employer’s portion of taxes is a deductible business expense). You must be disciplined to put aside at least 25% of your revenues for taxes. A conservative business owner will place even more in this fund.

The hill and valley fund

You do not want to starve your business when times get rough, and you want to be disciplined enough to keep investing even if sales are down. Many business owners I know take a portion of their revenue and invest in a special account to ensure proper investment in all business conditions. Please realize this fund is different from the emergency fund. You need the emergency fund to deal with a true business emergency like the loss of a major customer or an insurance deductible. The hill and valley account allows you to make regular business investments as part of a written plan instead of spending based on your revenue.

Smart business owners plan for the future and ensure they can pay their bills and invest in their businesses regardless of economic conditions. Having these four funds will increase your chances of making the leap from employee to entrepreneur.

Saving and Investing Compared

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We live in perilous financial times.  Over the past few years thousands of people have learned valuable lessons – many of which the hard way.  One of those lessons is the difference between saving and investing.  By clearly understanding the difference between saving and investing we can avoid the disaster that left too many people wondering where their retirement went.  Typically when you ask someone how they are saving for retirement they will say they are putting money away in a 401(k), IRA or other qualified plan.  Then you ask them how they’re investing for their future and they’ll mention diversified stock portfolios, mutual funds and possibly some real estate.

It’s important to point out that the two answers above are essentially the same.  Too many people aren’t fully aware that when they contribute money to a 401(k) or other qualified plan they are investing.  We have been tricking ourselves for years by calling it saving.  to prove this flaw lets look at the definition of an investment: to expend money with the expectation of achieving a profit.  The key word in this definition is ‘expectation.’  We have become too tolerant with our expectations – we no longer take into consideration the fact that investing money involves severe risk (just ask those that were looking to retire in 2008 but couldn’t because they’re retirement funds were cut in half).

Actually saving money can be compared with putting money under your mattress.  It’s there and it always will be there regardless of what the unpredictable markets decide to do.  Now, I’m not suggesting that everyone turn their pillows into their new retirement plans, I’m just hoping to shed some light on some of the false practices we’ve been told to follow and which have been failing miserably in recent years.  Every single person in America would be better off in the long run if they asked themselves ‘am I saving  for retirement or investing?’

Often times when this overlooked difference is pointed out, the question arises ‘if I’m not actually saving money in a qualified plan where can I efficiently save for retirement.’  In late 2009 Time Magazine ran a cover story called Time to Retire Your 401(k) – the alternative they proposed was a life insurance plan.  It may sound crazy but over the past decade more and more people are looking toward permanent life insurance for steady, consistent, and risk free growth.  On top of the fact that qualified plans are subject to market gyrations you also have to take into account that when you are in your retirement years and begin taking distributions there is no telling what your tax rate will be.  One way to win with a tax-deferred retirement plans is to be in a lower tax bracket when you retire than you’re contributing.  Based on the fact that our country is trillions of dollars in debt it’s hard to imagine taxes going anywhere but up.

Hopefully we can learn from the past and use vehicles that help us save for retirement instead of invest or gamble for it.

Nick Drzayich is an advisor at Eagle Capital Management where unique concepts such as Infinite Banking are taught.