Tuesday, July 03, 2007

My quest for savings - 2: Banking

This is the second in a series of posts that I'm planning to make on my quest for the most cost effective and frugal method for things I use on a daily basis. I recently re-located to USA from India and thought it will be interesting to compare what I used to do/have in India versus here in the US.

When I came over to US, one of the first things I did was to open a Checking account with Comerica Bank which had a branch near the place I work. I did not have much choice in deciding the bank as that was the only one willing to open an account without a Social Security Number as my SSN was still under processing . They opened the account on the strength of my office ID as employees from my office are the biggest customers of that bank branch.

I also opened a savings account with them but I was on the look out for a better place to park my savings and I found that with ING Direct which offered 4.5 % interest rate compared to the paltry 0.4 % offered by Comerica. Though there are other online accounts offering better interest rates, I'm not a rate chaser and am happy with ING direct so far.

Within days of my opening the savings account with them, ING offered me an online checking account called Electric Orange which I gladly signed up for – I love online banking and hate to go to a bank branch – moreover, they were offering 4.25 % interest on the Checking account. Only drawback was that ING does not offer paper checks which was fine by me as I had Comerica Checking which has paper checks.

So, I get my pay check credited into my Comerica Checking account and the moment it is credited, most of it is transferred into my Electric Orange account leaving just enough in the Comerica account to pay for bills that I have to use paper checks for. Money left over at the end of every month in the Electric Orange is transferred to my ING savings account on the last day of the month. This way, I get to pay bills that require paper checks from my Comerica account and earn interest for the money I have in my ING Electric Orange Checking account.

Now for the comparison between my banking experiences in US and India. Compared to US, I feel people in India are living in banking heaven !!. Here are a few of the services I enjoyed back in India:

1.Opening a bank account – I had accounts with 3 banks in India – and I never visited the branch even for opening an account !!. Banks send people to my home (or office if I had preferred it) to complete all the formalities and I got my debit card and the account details within 2 days by courier.

2.Transfer money online to any one anywhere in India and to any bank free of cost.

3.Free paper checks.

4.Free bill pay (OK, some banks do offer here it for free).

5.Free Demand Drafts – I just had to go online and request a Demand Draft to be send to any one in India – and the bank send it by courier free of cost !!

6.Free international debit card – they also offered cash back and rewards on purchases using the debit cards.

7.Free stuff /reward points for using net banking !!.

8.Instantaneous updates of my account – I buy something or transfer money – my account was updated almost instantly – compare that to the situation here where it takes at least one business day for the transaction to be reflected in my account.

9.Free phone banking and updates.

The only time I set foot in the bank branch ( I did not know on which city street it was !!) was when I went over to close my account.

To say the least, I'm pretty disappointed with the level of service and the banking charges that are levied here in the US !!

Thursday, June 14, 2007

My quest for savings - 1: Phone service

This is the first in a series of posts that I'm planning to make on my quest for the most cost effective and frugal method for things I use on a daily basis. I recently re-located to USA from India and thought it will be interesting to compare what I used to do/have in India versus here in the US.

Mobile Service: Cingular Pay as You Go

When I came over to US 3 months back, one of the first things I did was to search for a good mobile phone service. I'm not a heavy user of a cell phone so I did not want to lock myself in a long and expensive contract so decided to get a pre-paid "pay as you go" service. After asking around a bit, I decided to go with Cingular (now AT&T) as it had the best coverage in my area - and also because I could get the starter phone (Motorola) with 10 Dollar talk time for 18 dollars from the local CVS Pharmacy. I chose the "simple" plan which charges 25 cents per minute for incoming and outgoing calls. My average monthly usage comes to about 10 Dollars a month and so far, I'm happy with my choice.

The best deal for Cingular recharge PIN's that I could find was with http://www.comfi.com/ – I consistently get about 2 dollars off from the face value of the recharge card and also get a credit for future purchases.

Back in India too, I had a pay as you go phone from Airtel which is one of the largest Cell phone providers in India. I paid around $ 25 for my Nokia 1100 phone. Call charges in India are one of the cheapest in the world – I used to pay around 3 Cents per minute for local calls and around 7 Cents per minute for long distance.

Home Phone: SunRocket

Best VOIP provider that I could find was SunRocket and I highly recommend them. It costs about $199 for a year (about $17 per month – with free calls anywhere in USA and Canada) – no contracts and no obligations – and you get your cash back for unused months if you chose to discontinue. Keep checking their website for deals – I got a GE 5.8 GHerz cordless phone free and they recently had a promotion which offered 2 years for $199 !!

VOIP is not legal in India – only option is to go in for a land line or what they call WLL (Wireless in Local Loop – which is a hybrid of landline and cell). I had a land line from BSNL – the government owned phone service provider. It used to cost me $20 monthly with local call charges of 3.5 cents per 3 minute call and 7 cents a minute for long distance calls.

Friday, June 08, 2007

Use your loose change to buy Postal Stamps

I keep a small box in my locker into which every now and then I throw all loose change that tend to accumulate in my wallet. Recently the box was almost full and i was looking for a way of using them without too much work. I had seen coin changing machines like Coinstar in my local CVS pharmacy but they charge something like a 9% commission for changing them. Moreover, I can only get back gift certificates for the coins exchanged and not dollar notes. I did not want to use these machines due to the commission charged and to the fact that i could not get dollar notes in exchange.

It was then i chanced upon a USPS Stamp Vending machine in my office cafeteria which accepts coins of all denominations - 1 cent, 5 cent, 10 cents etc. So I use my loose change to buy stamps I need - no commissions and moreover, saves me a trip to the local Coinstar machine. Some people may argue that they do not need so many stamps but I buy stamps almost every other month so that is not much of an issue for me anyway. For people who buy stamps infrequently, suggest that they buy forever stamps that can be used literally, forever !!

Sunday, June 03, 2007

Conducting a "Moving Sale" in India

When we decided to move from Chennai to US, we were in dilemma as to what to do with our furniture, books and other stuff. We did plan to transport some of our stuff to our parents house but did not want to spend a lot of money on transporting all our stuff - neither did we want to leave them in the house and keep it locked.

We wanted to sell our furniture if we could and looked at the options we had. One way to sell was to advertise in magazines like free ads (
www.freeads.co.in) but we did not know how effective it was. We hit upon another idea - of conducting a "moving sale" of sorts and advertising locally in our apartment complex.

Here is how we went about conducting the "Moving Sale".

1. We printed fliers which listed details of all the stuff we were offering for sale with an asking price against each item. We also described the condition of the item in detail. We also explained that we were offering stuff at 50 to 60 % discount to what we paid for. Also offered discounts for someone buying more than one item.

2. We put up fliers in all the notice boards in the apartment complex (we have about 220 apartments in our complex).

3. We did not sell for an offer bellow what we asked for since this was more of a "restricted sale" open only to residents from our apartment complex, word would have gotten around and we could have ended up selling for much less than the offer price.

I was really surprised by the response. Except for the king size bed (which was also eventually sold), we sold almost all the stuff which we had for sale within a couple of days of fliers being put up. Lots of people commented us on our "innovative method" of conducting a "moving sale". Though garage and moving sales are very common here in the US (will write about them in a separate post) they are not at all common in India (especially in Chennai). The response that we got for our sale shows that the demand is there if one is willing to try it.

Sunday, May 27, 2007

Got a salary raise? Here is how to budget for it.

Got a salary raise recently? Congratulations. Now, are you saving more since you got that raise? Not likely, right? Well, here are some suggestions which may help you in making sure that you do just that - with the least amount of pain.

I'm assuming that you already have a budget and is following it. In case you are not, suggest that you read Micheal's excellent website It's Your Money. That should set you on the right path about setting your personal finances in order.

Anyway, as I said above, assuming that you do follow a budget, how do you factor in any increases in income - especially increases in salary? Some people suggest that we calculate the increase in our take home income and save that much more so that we do not end up spending our increases. Some others suggest to ensure that we always save X% of our salary so the increase in income is automatically taken care off.

Both are good suggestions but I feel that they do not address all the issues - inflation for example. How can we maintain our lifestyle on the same amount of money year after year if we opt to save all our future increases in income? Desirable, but not practical I think.

Through trial and error, i have come up with another method to account for increases in income which has worked for me so far. Every time i get a raise (usually once a year), I calculate the average consumer price inflation percentage of last 5 years and increase amounts in my expense budget categories by that much percentage. In case I do not spend that much for a certain expense category, I just sweep that amount into my savings every quarter. This way, I get to save more when i get an increase in salary as well as to account for inflation and suitably adjust my expenses.

How do you handle an increase in income? I would love to know.

Wednesday, May 02, 2007

Re-located to US of A

I have relocated to US and will be here for some time to come. Was busy in the relocation process and did not have much time left to blog. Hope to remedy that and start posting soon. Plan to post about the scene out here compared to my experiences in India.