Saving Money

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About a week ago, I misplaced my credit card. At the time, I didn’t think much about it, and went ahead and canceled my card and had them mail me a new card. They told me it would be only 7-10 business days, and I assumed that was just a worse case scenario, but it turns out it wasn’t. It took a week and half for my new card to arrive.

I am somebody who prefers to us his credit card for as many purchases as possible. This way I don’t have to worry about losing spare change and I can keep better track of my purchases. I have a rewards card, but honestly, I don’t really care that much about the rewards. If I get rewards, so be it. I sometimes use them, sometimes I don’t.

Generally, I avoid auto-pay services like the plague. I know they can be budget busters. I buy refills for my phone every 6 months or a year, which is a bigger payment upfront, but I save later on. That does get withdrawn from the credit card, but not until next year. Always good to pay up front, borrowing sucks. I will have to update that later on. I do auto-pay by rent, electric and gas bill, and car and renter insurance directly from my bank. I don’t have cable TV or Internet, and haul my own trash to the transfer station. Fine, but those are essential, especially living in a rented apartment in the city. When I eventually move off grid, I won’t have any of those expenses except maybe car insurance.

I didn’t think it would be a real issue, until I remember my bus pass was linked to the credit card. I had forgotten my password to my CDTA Navigator bus pass service, so I had to get it reset because I was locked out of my account. So I had to wait a day for that to be reset by CDTA. Fine, but of course the buses take up to “two days” to sync money added to your card to the buses, because they load the fare data via wireless internet once a day, when the buses are returned to the garage for the night, and the fare boxes are unloaded. Fine. It turns out I had enough money to cover my bus fares but I kept a few extra quarters and bucks in my wallet.

Other then that, I didn’t anticipate much issues, although my debit card didn’t seem to work everywhere. I had that issue at Stewarts’ the other day. I don’t like only having the debit card, as I’d rather have two options for payment in case one card doesn’t work. I don’t carry much cash, and if my debit card fails for some reason, I really prefer to use my credit card. Moreover, the credit card is easier to manage – I don’t have to worry about overdrafting it – and it’s easier to review expenditures and pay it all off at once.

So be it.

Effective Federal Funds Rate, 1954-2017

The federal funds rate remains historically low, despite recent increases, making it cheap to borrow and difficult to save in conventional savings accounts. Many smart people worry that such a low federal funds rate will eventually push too much money into the stock market, which will lead to a significant market correction.

Data Source: Board of Governors of the Federal Reserve System (US), Effective Federal Funds Rate [FEDFUNDS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FEDFUNDS, August 9, 2017.

Why do we no longer use $1,000 bills?

Today in 1969, large denomination bills of US Currency, e.g. $500, $1,000, $5,000 and $10,000 bills were officially withdrawn from circulation. While you could use these large bills after July 14, 1969, banks no longer distributed them, in an effort to reduce corruption and illicit uses of large denomination bills.

‘One Nation Under Gold’ Explores America’s Obsession With One Precious Metal

"In 2016, Donald Trump became the first major-party candidate in more than half a century to advocate a return to the gold standard for the U.S. dollar. My guest, James Ledbetter, says most mainstream economists agree the idea is completely unworkable. But for much of American history, it was an article of faith that real money ought to be gold or at least redeemable for gold or another precious metal."

Why Higher Interest Rates Aren’t Helping Your Savings Account

"Federal Reserve officials raised the benchmark lending rate to a range of 1 percent to 1.25 percent on Wednesday, the central bank’s third such move in six months. In the hours since the decision was announced, U.S. banks including Citigroup Inc., U.S. Bancorp and SunTrust Banks Inc. announced that they’ll pass on the higher interest rates to borrowers, without disclosing plans to provide better rates for deposit customers."

"After years of stubbornly low interest rates, U.S. banks have been slow to increase offers for deposit accounts. They are seeking to benefit from a fatter margin between what they charge for loans and what they pay out to customers who provide the funds."

Federal Fund Target Rates, June 14, 2011-17

The strengthening economy means the federal reserve has increased their target rate by a quarter point, which means they will take steps to tighten the money supply and force banks to lend at a higher rate. This is good news for people with savings accounts and bad news for people who are borrowing money. More about how the Fed sets market rates: https://www.thebalance.com/how-does-the-fed-raise-or-lower-interest-rates-3306127

Data Sources:
Federal Reserve issues FOMC statement, 6/14/17. https://www.federalreserve.gov/newsevents/pressreleases/monetary20170614a.htm

Board of Governors of the Federal Reserve System (US), Federal Funds Target Range - Lower Limit [DFEDTARL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DFEDTARL, June 14, 2017.

Board of Governors of the Federal Reserve System (US), Federal Funds Target Range - Upper Limit [DFEDTARU], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DFEDTARU, June 14, 2017.

Trump Administration Files Motion Aimed At Controlling Consumer Protection Agency

"The Trump administration has gone to court to try to bring the Consumer Financial Protection Bureau under its control. The bureau is an executive branch entity, but the president doesn't have direct control over the six-year-old agency.

The Justice Department filed a brief with a federal appeals court in Washington on Friday, making the case that the structure of the agency violates the Constitution."

Why do we no longer use $1,000 bills?

I wish they would do away with the $100 bill. I occasionally get them at work, and they are a pain to deal with. 90% of currency I keep in my wallet is $1 bills, because they are most useful. I occassionally have a $5 or $10, or maybe a few $20 when i am on a road trip, but these days plastic is much easier, as you don't deal with change.