You Should Probably Do This: Credit Freeze Edition

Tyler LinstenNot Sarcasm, Personal Finance

It’s not often there are financial things basically everyone should do, regardless of their situation. This – a free credit freeze – is one of those things. 

Good news! The government has done something to help you, and that would be requiring the three major credit reporting agencies to offer a credit freeze to consumers – FOR FREE.

GRATIS. NADA. ZIP.

Don’t take my word for it, listen to (or read) the details via NPR here.

Unless you expect to be applying for credit tomorrow, it makes sense for anyone with something to lose (this means you and me) to lock down their credit. I’ve done the hard work for you below:

Freeze via Equifax

Freeze via Experian

Freeze via Transunion

Don’t forget to freeze with all three. Yes, it’s super annoying to have to do this three times, but how often do we lowly consumers get a good deal thrown our way from the powers that be? Not often. So for the sake of your financial security, take the 15 minutes and freeze your credit. Thieves will hate you but Future You will look back at you with pride.

Personal Finance 101 in a Single Picture

Tyler LinstenInvesting, Personal Finance

Study up. You’re living the test.

You can head straight to PF 201 if you master the course above.

Spending the $1,000 results in an instant 100% loss in value, storing it in cash brings a 53% loss in value over 25 years, saving it brings a 22% loss in value over 25 years, but investing results in a 238% gain in value over 25 years.

There are so many important bullet points to be extracted from the table above. These are lessons some people never learn and are more valuable the earlier you start:

  • Spending money is not a great investing strategy, but prevents losses to inflation (this is sarcasm).
  • Inflation is an absolute killer. It is the slow-churning, deadly assassin in your financial life.
  • Even a 2% rate on cash in the bank leaves you with a 77% less purchasing power after 25 years when compared to investing @ 8% per year AND you still lose to inflation.
  • Beating inflation (earning 8% versus 3% inflation) is the only way to increase your wealth.

Let’s repeat that last one, as it’s the answer to the only question on the PF 101 test:

  • Beating inflation is the only way to increase your wealth.
  • Beating inflation is the only way to increase your wealth.
  • Beating inflation is the only way to increase your wealth.

And for the visual learners:

Stop Throwing Away Free Money, Emergency Savings Edition

Tyler LinstenInvesting, Not Sarcasm, Personal Finance

Yeah, you. Knock it off. 

If you have any kind of sizable amount of cash saved outside of your retirement accounts, and many people do, then you’re probably passing up a nice chunk of change by letting it sit idle, earning little-to-nothing in interest. It’s understandable. You just accumulated it in a checking or savings account at your favorite bank, and it’s annoying to open new accounts. Inflation has been pretty low so you’re not too worried about earning nothing. And pretty much everything is better than opening a bank account.

But now you can be paid handsomely all year for a few minutes of your time today.

A Normalization

This is a serious move in the interest rate on US Treasury Bills, and yields on savings accounts have followed.

Seemingly overnight, we’re back to a more “normal” interest rate environment. The Fed is raising rates and banks are more comfortable hiking their own rates on deposits. This is something you need to take advantage of. Here’s why:

Let’s say you have $50,000 in annual expenses.  A very reasonable amount of cash to have in reserve for an emergency account could be deemed six months’ worth of expenses, or $25,000. Plop that amount in an account yielding just 1.85% APY (annual percentage yield) and, voila, you’re now making $462.50 per year for barely lifting a finger. Even if it takes you half an hour to set up the new savings account and link your old checking/savings account, it’s basically the equivalent of earning over $900/hr for your time.

It’s super easy. Do an online search for banks with FDIC insurance and then you can sort according to yield. If you have no allegiance to specific brands or features then you’re free to decide based on yield. Here’s a search I was able to pull up via Nerd Wallet:

Potential homes for your emergency savings.

That’s it. We’re no longer in an interest rate environment where it doesn’t matter where your cash sits. Take advantage of the sea change and pay yourself.  Future You will like this.

Achievement Unlocked: CFA Charterholder Edition

Tyler LinstenAnnouncements, Not Sarcasm

Let’s take a break from sarcastic financial commentary on the internet for a personal announcement. 

This week, after almost nine years since the journey began, including over a thousand hours of study time for three exams, plus subsequent years of gaining required work experience, I now hold the right to use the Chartered Financial Analyst® designation.

It feels good to type it out: I am a CFA® charterholder.

I have so many people to thank for their support and I would never have made it without them. A special shout-out to my wife, who over the final two exams (and for months at a time) dealt with not only long periods of daily isolated study time, but put up no objections to surrendering an entire wall that contained hundreds of yellow post-it notes. I wish I had pictures — only a huge grid of tiny holes remain from the thumb tacks I used to hold them on the wall. No joke, I’d stand there with a guitar on my shoulder, spacing out, while trying to absorb the contents of each yellow square, one-by-one. I guess it worked.

Now, it’s time to update the business cards.