AskDong

I just finished my taxes recently.  Haven’t filed yet as I’m still waiting on TurboTax to obtain some forms.  I am getting a refund, mostly because I don’t have enough exemptions on my W-4 to account for my mortgage.  I know I’m giving the Government a free loan, and professionals will advise that it’s best to get no refund or even better to pay the Government come tax time.  If you’re disciplined enough to that then by all means do that.  Even though I think I’m fairly disciplined, I’m also aware of the limits of my discipline.  I’m disciplined enough to save and invest my refund (instead of putting it towards a TV for instance), but I’m not disciplined enough not be swayed by the wealth effect of having a slightly bigger pay check.   One of the more important things in saving, and life in general is to know thyself.  When it comes to saving sometimes, it’s best not to be too ambitious.  Someone who attempts to lose 40 pounds in 6 months will most likely fail and give up on dieting.  Another person who sets a goal of losing 10 pounds in 6 months is more likely to succeed and continue dieting (losing 40 pounds over a longer period of time).  I rather be the latter.  Next week I’ll post my State of Dong - a personal financial snapshot of 2005.

For anyone who hasn’t already opened an online savings account, you should.  On the most part I’ve never been a big fan of saving accounts.  Historically speaking you were almost always better off putting money into a money market account.  However the rates on savings accounts offered by the likes ING, HSBC, and Emigrant are almost impossible to beat.  HSBC at 4.25% trumps many 1 Year CDs!

These accounts have no minimum balance, so there really isn’t any reason not to open one.  Just last year I earned over $100 in interest from the money I parked in my ING account.  Money on the most part that would’ve sat in my checking account or money I would’ve parked in 2% money market fund.  As I see it, I basically got at least extra $50 for just opening account.   They can offer these rates basically because they offer no service, and reserve the right to boot you as customer.   This is perfectly fine with me.  I prefer to do all my banking online as is. 

One item of note; the process for setting up an account with the banks can be a bit of pain, especially HSBC.   HSCB sends your customer # and PIN in separate physical mailings which can take over a week to recieve.  Of course the first mailing with your customer # implies that you can use the pin that you created during the application process.   Had I not done a little research beforehand, I might have thought I actually did create a PIN.   I didn’t.  Two days later I was mailed by PIN and finished setting up my account.