Dueces, Bank of America!


image: www.nbcnews.com

Yesterday we did something that we usually don’t do.  It hasn’t happened in over six years for either of us.  We quit our bank, Bank of America, and moved to a much friendlier institution.  By detailing our experience switching banks, I hope to help you gain some more information about how to approach the process by learning from our experience.

We’ve both been customers with these guys for over six years.  Yes, we’ve had the occasional customer service problem, or difficulties with fees, but nothing too major.  Nothing so incredibly bad has happened that would be classified as a single, terrible event.  No, it’s like a fly that keeps hovering around your freshly grilled burger at the barbeque.  It’s really not that big of a deal – you just kind of shoo it away and keep eating.  But when it keeps coming back over and over again – you lose your patience.  You put the burger down.  You march inside the house.  You grab your flyswatter and come back outside to swat that sucker.

That adequately describes our experience over the past few months.  Fees were getting charged when they shouldn’t have been getting charged.  After a twenty minute phone call with customer service, the problem would always get resolved, but it would inevitably come back as their system would always relapse and charge the fee the coming month.  The lady at our local branch practically scolded my wife when she asked to close her credit card account (although I admit, this is a typical reaction within the industry), and is consistently unpleasant when we ask to withdraw cash to pay for our daily expenses.

OK, this had to be stopped.  We were going to have to find something different.  I did some research, and compared several institutions to the baseline (BoA) based on several different factors that are important to us:

1)   Free accounts (direct deposit or minimum combined balance requirements are ok)

2)   Low ATM fees

3)   Easily understood and functional online interface

4)   Branch and ATM within walking distance from the house

5)   Branch within a few mile radius open on Saturday mornings

6)   Higher than average rates on Money Market Accounts (not as important but still worth considering)

7)   Oh and the most important….being treated like a human being instead of a number when walking in the door

There were a few other factors but those were the ones of primary concern.  While that last criteria could only be determined face to face by visiting each bank, all of the others could be more readily determined online.

After doing several comparisons and combing through different bank websites, I noticed different traits between each class of institution:

Big banks tend to have the best online/mobile portals and the most branch and ATM locations within the city.  They also have the most fees that are hardest to get around, the lowest rates, and calling their customer service line could easily take twenty minutes depending on what you need help with.

Mid-size/Regional banks also have good online and mobile portals and a decent amount of local branches and ATMs.  Fees tend to be lower than the big banks, and rates tend to be higher.  Customer service is a little easier.  The downside is the lack of ATMs when leaving city limits.

Local Credit Unions tend to have online and mobile portals too.  The number of branches and ATMs is usually very restricted, although co-op networks usually allow fee-free banking when you’re not local.  Customer service is solid and the rates tend to be the highest, since the members, not stockholders, own credit unions.  Overall perks however, tend to be more basic.

So how did we narrow down our selection?  Well, after looking into the other big banks it didn’t take a long time to realize that they are all pretty much the same, with slight differences.  Note that I am saying this from a customer’s point of view, not an investor’s.  For example, US Bank is one of the most conservative financial institutions of size out there as far as its business model goes, but from the customer perspective who just wants solid checking and savings options they offer just about the same services as the other guys.

Although I might consider US Bank as an investor, from a customer perspective it doesn't offer much of  a difference from the other big banks.

Although I might consider US Bank as an investor, from a customer perspective it doesn’t offer much of a difference from the other big banks. image: www.broadwayworld.com

This eliminated big banks as a category for us.  We naturally gravitated more toward the mid-size banks and credit unions.  Although credit unions had great rates and were pretty friendly when we talked to them, they didn’t seem to have the breadth or technological innovation that other places had.  Despite the co-op network being in place, I just couldn’t imagine myself being in another city and going to a different bank branch for something and having the transaction go smoothly.  Perhaps this is irrational on my part, but that’s how I feel.

In the end, we decided to go for a reputable mid-sized bank in the area.  It seemed to do the trick for us.  It has the features of a larger bank without making us feel like a number when we walk in the door.  Also, they reimburse all ATM fees (what!) and have a decent number of branches and ATMs not just in our city but elsewhere in the region as well.  When we’re visiting family in Chicago I know we’ll able to pop by at a branch or ATM if I need something.  Also, the rates for our savings were significantly higher than Bank of America’s.  Although I admit that in this day and age, it’s not too hard to beat 0.01%.  🙂

Weddings and Travel Budgets

This weekend the Mrs. and I travelled across the country to attend the wedding of a very good friend of ours. We’re going to be attending two more weddings in the next few months – it’s definitely wedding season! It seems like now that our friends and us are entering our mid-twenties, love is definitely in the air. People are putting on the diamond rings left and right. It was a wonderful weekend, with a lot of music, dancing, reconnecting with old friends and making new ones.

These are the times in life that I cherish so much. It reminds me why we continue to save and work so hard to create the lives we’ve dreamed of. It’s not about the money. It’s about the ability to buy plane tickets to travel and be a part of such a memorable experience. Money is just an extension of who you are at the core – the type of person you are shows itself in your finances. Being able to travel is incredibly important to us – whether it’s for visiting family and friends or just to get away by ourselves. That’s why a solid portion of our monthly budget goes toward savings for travel expenses. Naturally, we can’t go all out quite yet in this category (we have a mortgage to pay off!), but that doesn’t mean we can’t divert some of our cashflow to travel for important events.

When planning our trip a few months ago, we knew the budget was going to be a bit tight. We had been diligently saving for the event, earmarking money every paycheck so we would be ready when the time came to book tickets, the hotel rooms, and secure transportation arrangements. Because of the timing of the wedding, we actually found that we were a little shorter than we thought we’d be. Like I said, we’re already planning to attend two other weddings soon, not to mention other family events coming up in the fall and winter months. We’ve been trying to lock down the biggest, most volatile cost – airfare – ahead of time for a lot of these events in an effort to save the most money. One unintended consequence of that is, despite our consistently good travel savings, we were left with practically no money for food (I’m talking less than $20) for the whole weekend!

Round trip flights for both of us? Check. Nice hotel room where the wedding reception would be? Check. Transportation arrangements? Check. Card and gift for the bride and groom? Check. Money for meals and entertainment with the bridal party? Uh oh. In our zeal to cover all of the big things in our budget for this trip, we found ourselves wondering how to cover one of the most basic items, food.

The first step to solving this problem was deciding what not to do. We stood firm in our budget in not taking money from our emergency fund (a silly thing to do), and we didn’t want to compromise other elements in the travel budget (like the amount of our gift to the bride and groom). This decision really helped us, because we didn’t give in and let the budget fall apart. We know one of the keys to our success thus far has been due to discipline with our budget. We didn’t want to get into the habit of letting things slide. So what did we do?

Buried in our linen closet were two small televisions in perfect working order. They were cute little TVs from our college days. Seeing as we already have one nice, newer TV in the house, these two were clearly unnecessary. I saw a way for us to get creative. Time to put these suckers on Craigslist.

This was actually our first time selling anything on Craigslist, as we’re usually buyers. We figured we could do a good job of selling though, by putting ourselves in our potential customers’ shoes. After taking some pictures and putting our marketing minds to work, we put up a nice little ad in the Electronics section for our local Craigslist site. It took a bit of work – reposting the ad so more people would see it at different times of the day, changing keywords in the ad title, etc. Within a few days, we were able to successfully sell one of the TVs for a cool $80. Not bad for a little 22”.

TV Emerson

This money went directly to buy us lunch and going out money while we were away at the wedding location. It was still a tight squeeze, but we were prudent while still allowing ourselves to enjoy the moment. Sometimes it’s hard to find that balance.

There were some good lessons to be learned here. Selling the TV to help us go to the wedding reminded of some good life lessons. Here are the takeaways:

1)   You probably have too much crap sitting around that you don’t use. Giving it away or selling it will make you much happier.

2)   Exercise those self-control muscles and stick to your budget. Allow yourself some flexibility but don’t cheat yourself. Keeping up the good habit of staying the course will pay out a hundred fold in the future, as far as being able to manage your life.

3)   Use your brain creatively to figure out financial problems even if they are not real financial problems. Taking the path of least resistance often leads to poor decisions.

4)   Money is just a means to an end – a representation of man’s best efforts. The guy who bought our TV got to enjoy some entertainment, and in exchange Mrs. Mase and I got to eat out at a local restaurant without having to worry about the bill.

The New Elite by Talor, Harrison, and Kraus

The New Elite is a good profile of "the 1%".

The New Elite is a good profile of “the 1%”.

I just finished up reading The New Elite, a book that details the habits, characteristics, upbringings and attitudes of “the truly wealthy”.  I almost shied away from picking this title up because I’ve already read a few works from bestselling author Thomas J. Stanley (The Millionaire Next Door and The Millionaire Mind), which pretty much profile who the typical millionaire in America is.  The typical millionaire:

-is in his or her 50’s

-lives in a home worth less than $300,000

-drives used cars, such as Toyotas or Lexuses

-owns their own business (mostly small businesses) and is a big part of their local community

The New Elite goes a step further, which is why I like it so much.  The authors mention the Millionaire Next Door types, but the primary focus is on the 1% in America – those who have net worths in the tens and hundreds of millions, and annual incomes in the half million to multi-million dollar range.  Although, from Stanley’s research, higher-paid professionals such as lawyers, doctors, and CPAs make their way into the millionaire/affluent category, the 1% is made up almost entirely of business owners with some highly paid corporate executives sprinkled in.  Either way, the message is clear that these people primarily obtained wealth from businesses that they either built from the ground up or, in less common cases, existing businesses where they climbed the rungs of the proverbial corporate ladder.

There are two chapters of the book in particular that enjoyed.  One discussed the journey of wealth, and how the attitudes of the 1% change over time as they become more used to having money.  These are classified as Apprentices (0-5 years of being wealthy), Journeymen (6-14 years), and Masters (15+ years).

Apprentices typically exercise extreme financial caution with their investments and moral caution with their relationships.  They do not want their newly created wealth to disappear overnight because of reckless speculation, and they do not want to attract unwanted attention from family members and friends asking for a piece of the pie.  Journeymen start to grow into and accept their role in society as a wealthy person, and begin to be a bit freer with their spending.  Masters are mostly comfortable with their financial status and many spend lavishly on status symbols such as fine art or rare watches and jewelry.

I like this classification of the top 1% because it exposes the nature of human behavior.  Sometimes when we get something really coveted by our peers or surpass a significant milestone of personal achievement, we can feel guilty even though we rightly earned all of the fruits of our labor.  Over time, however, the guilt and bad feelings associated with the accomplishment or newly achieved status starts to wane, and acceptance and pride take their place.  It is one thing to feel entitled for things that you have, but it is completely different to reward yourself for a job well done.  This behavior pattern lines up with other data on the wealthy, as 90% of millionaires in America are self-made.  It makes sense that a natural shift occurs in the 1%’s attitudes about money the longer that have it and the more it grows.

Another one of my favorite chapters is about the varying personalities of the truly wealthy.  This method of classification brings light to the fact that not all wealthy people are stereotypical John D. Rockefeller types – stern old men who are ruthless in their business and personal dealings.  In fact, that stereotype appears to be completely inaccurate.  The authors classify the wealthy into a few categories based on habits, interests, and personality.  Here’s a summary:

Neighbors – These are the “Millionaire Next Door” type.  They typically continue to live a middle class to upper-middle class lifestyle, and practice stealth wealth.  They typically enjoy maintaining involvement in their local communities – primarily via their businesses.

Wrestlers – These folks tend to wrestle with their wealth and what to do with it.  They typically worry about their children developing good money habits and not having a sense of entitlement.  Wrestlers tend to spend a lot on lavish items.

Mavericks – This is the Richard Branson type.  These millionaires often have high-energy, sometimes quirky personalities.  They often pursue a variety of interests outside of their business and live more on the wild side.

Directors – Think of a CEO-type of personality.  Directors feel that money should serve a very intentional purpose and seek to appropriate it responsibly.  They are the most concerned with retaining their wealth and passing it down to future generations in the best way possible.

Patrons – These are the people whose names are etched in stone at your local art or history museum.  Patrons feel it is their duty to share wealth with others (with good judgment, of course), particularly with those who help the community at large in civic pursuits.  They tend to describe themselves as content and happy, but they also like to spend on luxury items.

Wealthy people are not all the same, just like folks in the middle or lower classes are not the same.  Personality influences how you spend your time and money, regardless of how much of either you have to give.  Reading this section of the book really made me think and remind me of the fact that wealth is simply a means to an end – it is not an end unto itself.  Having more money at your disposal simply amplifies your personality.  The way you treat $100 is the same way you treat $1,000,000.

OK, this is not strictly the case.  After a certain level of wealth, spending on luxury items can go relatively uninhibited without recourse (think: superstar music artist or professional athlete with a long career).  This is the super-minority of wealth in America (top 0.1%).  However, this does not change the fact that habits are habits.  If you always give some of your income to a charitable cause even though you are a member of the middle class, you will likely keep up that practice when you become wealthy, the numbers on the checks just get bigger.

The book did focus some chapters on the spending habits of the wealthy, which was OK, but I was not particularly interested in this data.  The authors have a firm that markets to wealthy individuals, so I can see why they spent a fair amount of time on this subject.  Also, the book discusses other interesting topics, such as how the wealthy are more and more becoming “globizens” (global citizens), due to the increasing globalization of the business world.  There’s also a chapter on the children of the wealthy and their attitudes about life and money, which is interesting.

The New Elite makes for a good read if you are interested in the 1%.  If you haven’t read Dr. Stanley’s The Millionaire Next Door or The Millionaire Mind, I would recommend reading those alongside this book.  In my opinion these three books do a great job of explaining the origins, lifestyles, and attitudes of the affluent and wealthy in America.