Lazy Man and Money

Digit Adds Fees. Meet Dobot! (It’s Free!)

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For nearly two years now, I’ve been telling everyone that they should sign up for Digit. Digit transfers a little money every day or few days into a separate savings account. The general idea is that the money is out of sight and out of mind. I thought that was a perfect way to grow an emergency fund, save for the holidays, and even execute some clever saving hacks.

Best of all, Digit was free. That’s all changing according to an email I received yesterday:

Today we have a couple of big announcements to make.

As Digit becomes a more important part of our customers’ financial lives, we’ve decided to make a conscious decision about how we want to make money: We work for you, and you pay us. It should be that straightforward. Too many financial services complicate things by making money doing things not in the best interest of their customers. Charging for Digit will allow us to support our service while making sure we always do what’s right for the customer.

A monthly subscription will cost $2.99. For all existing users, Digit will remain free for the next 100 days.

We are also significantly increasing the Digit Savings Bonus. All customers will now earn a 1% Savings Bonus (up from 0.20%). With the recent introduction of Goalmojis, customers are saving more than ever, and we want to make sure you’re earning real rewards for saving with Digit.

Thank you for being an early user, believer and fan. You have helped sparked the savings revolution. We promise to continue building products that make your financial life easier and better.

Why Was Digit Free to Begin With?

My understanding is that Digit was free because they weren’t paying interest (at least at first). Later they added the savings bonus that was mentioned in the email. The percentage rates are annual, so if you had a $1000 in the past you’d get $2… parsed out in 50 cent increments every few months. Obviously, it’s not a lot of interest and I presumed that, like banks, this organization could pool millions and millions of dollars and get much better interest rate… a rate that’s good enough to pay employees at that scale.

It seems that things have changed, or that Digit might want to expand and do more.

Is Digit Worth $35 a Year?

Only you can decide that. I had some readers who said that they set up automatic transfers with their bank to another savings account and it accomplishes the same thing. Other people have said that they wouldn’t have saved anything simply because they had too many other life tasks to get done.

I’m not particularly thrilled by definition of a Savings Bonus. It feels like they should just pay interest like a bank. The only difference I see is that this Savings Bonus is only paid out a few times a year. If a customer leaves just before the Saving Bonus is paid they would presumably lose a couple months worth of interest.

In general, you’d have to have around $3600 for the 1% Saving Bonus to offset the fees. That’s a pretty sizeable chunk of money for some people.

“Have You Met My Friend Dobot?”

Last year a competitor to Digit came on the scene… Dobot (“Dough bot”). Dobot is like Digit, but with goals. Dobot was and still is free. You can read my Dobot review here

While they both squirrel away money, they do it in different ways. Digit saves money into one place which is why I liked it for a general emergency fund. Dobot pushes you to save money for a certain thing.

For example, I wanted to save for this 65″ OLED television that is currently priced around $2500. I told Dobot that I wanted to save $2000 by Black Friday (finger’s crossed for a deal). I have $955 saved now.

You can have multiple goals with Dobot. So I could simply just create one called “emergency fund” with a goal of having $2000 in that by the end of the year. Boom, instant Digit!

It seems that Digit was looking to be like Dobot anyway by offering Goalmojis (which I never got around to using).

Goodbye Digit

It was fun while it lasted Digit, but it seems that I’m going to have to move on. You were doing what is right for me before and now you not. No hard feelings. I’d say that we can still be friends, but you’ll have to drop your monthly friend fee for that to work.

You’ll be fine without me. You’ve probably got a few hundred thousand or a million others to keep you company. I know that many others will leave like me, but I have to think that a few will forget the changing rules or be unwilling to change. In either event, you should make out quite well.

Don’t worry about me. Dobot is treating me well. I wish you the best of luck.

My 2017 Resolution is Personal Finance Blasphemy

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(I hate clickbait titles but it’s appropriate.)

dog on couch

Nearly every blog I read is making a resolution. I subscribe to the Bill Murray line of thinking that it’s best to wait a couple of weeks. However, there is one resolution that I’ll share now.

I resolve to spend money. I want people to call me Spendy McSpendington.

This is difficult for me, because I’ve been Frugal McFrugalface for a long time. It was nearly a decade ago that I put together hundreds of tips on how to save money… and I was frugal long before that.

Things changed in the last month. It was kind of a chain reaction of events:

  • It was time to replace our couch which lead to this conundrum.

  • Our carpets were in worse shape than the couch. Between the standard amount of mess that a 3 and 4 year old make and my dog sitting gig, it was time for a change. Once one dog pees on the rug another will follow and it’s almost impossible to keep up with it, no matter how much Nature’s Miracle Urine Destroyer we use. (It’s a great product, but sometimes there’s simply too much especially when you have 500+ dog day stays in a year like we had.)

  • My Subaru Forrester was a mess for the same reason the carpets were. It’s not just the dog and the kids, but it’s the beach car as well. I shouldn’t throw the kids and dogs completely under the bus, I probably generated most of the trash.

So here’s what we did after Christmas to close out the year:

  • We bought a new couch! (I might have more to say on that next week. It wasn’t very eventful.)

  • We put in some new waterproof vinyl plank flooring (more on that in the future too).

  • Finally, my wife gave me a gift card for a local car detailer who made the Forrester look almost new again. I couldn’t recognize my car.

That’s a lot to do in the span of a week or so. In total it was about $4000. Of course the flooring and the couch should last for years and years, so I think of it as being amortized over a long time. Still, that’s quite a spending spree for a few days. We’re not done as we’re looking to make other improvements throughout the house.

There’s a method to the spending. We got some great deals on the flooring and couch. More importantly, they’ll be easier to clean in the future which saves me time and energy.

We’re making 2017 the year of comfort. This means that we’re going to try to be spend more to live more comfortably. Many personal finance bloggers focus on fighting lifestyle inflation. We’ve been winning that war for 10 years and it’s time to judicially spend to improve our quality of life.

Reminder: Use Dobot to Save for the Holidays Now!

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Editor’s Note: This article was originally written about Digit, but they charge a monthly fee now. I suggest you use Dobot which works almost the exact same way, but without the fees. You can read my Dobot review here.

A few days ago, I was in the car with my wife picking up the kids and this song came on the radio. I turned to here and said, “I guess it’s time to wake up.” Fortunately, she got the joke right away.

October hits me in the back of the head like this song. Metaphorically, of course, because I’m still typing this article. It’s the start of the last quarter of the year. Everyone is in a rush to put up Halloween decorations, while I get advertisements from my local grocery store to plan my Thanksgiving through them. I bet some of the warehouse stores already have rolled out some of the Christmas stuff.

In other words, this song is going to happen soon. And if you celebrate another holiday that might be around the same time.

(I promise that this article won’t have reference any more song titles… or maybe not.)

Years ago, before credit cards, people turned to Christmas Clubs to save money for the gift-giving season. If you aren’t familiar with Christmas Clubs, I won’t hold it against you… they were before my time too. Here’s how Wikipedia describes them:

“The Christmas club is a savings program that was first offered by various banks in the United States during the Great Depression. The concept is that bank customers deposit a set amount of money each week into a special savings account, and receive the money back at the end of the year for Christmas shopping.”

I don’t know how much money you are you going to spend this Christmas, but the average is around $900. You could spend more or less, but can’t we agree that it’s best to put aside money now?

I’ve found that easiest way to do this is with a Digit Dobot account. Regular readers know that I recommend EVERYONE get a Digit Dobot account. I even recommend personal finance bloggers get it. One said to me, “I save money all the time and I’m great with it. I don’t need that.” He ended up following my advice and saved around $4000 for an expensive international trip. He said he didn’t even notice that the money was being saved.

What is Digit?

Digit was a FREE service (it isn’t anymore) that squirrels away money from a savings or checking account. It analyzes your account balance, spending, upcoming income, and upcoming bills to figure out how much it can safely move to the Digit account. It does a little at a time so you don’t even notice it. You can always tell it to squirrel less, but I set it at the maximum squirrel rate. (If you think I’m trying to set the record for using squirrel as a verb in a paragraph you are correct.)

Digit accounts are bank backed, safe, FDIC insured, blah, blah, blah. It’s got Google Ventures and other big names as investors.

Perhaps the worst part of Digit is that it will take you 3-5 minutes of your day to set-up. I’m being sarcastic. The worst part is that you earn minimal interest on your money. There aren’t a lot of banks paying significant interest nowadays. I’m used to ignoring interest after years and years of receiving almost none from bank accounts.

I’ve had my Digit account since March or April of 2015 and I’ve only saved this much:

Digit Stats

I should have waited until I got that “snowman” for the first digit, right? Oh well.

Keep in mind that I’m saving the maximum amount and my finances might are different than yours. You can customize it to save what works for you. That’s why I feel it will work for everyone. No one has given me a convincing argument NOT to sign up for a Digit account other than, “I’m comfortable with my savings process.” That’s fine, but I’d challenge the person to try something new. They might just find out it was better than their existing way of doing things. I did.

I also have withdrawn money from my Digit account. My car needed new brakes, so I simply sent off a text to withdraw the money and it was back in my account in a day or two. If I hadn’t set up Digit, there’s a real chance that I would have spent it.

Forced savings is one of the most powerful forces in personal finance.

My recommendation is to Digit Dobot now so you’ll be prepared for the holidays.

Why We Fail With Money

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Yesterday, I wrote Many Americans Can’t Afford $400 in an Emergency, which was based on research cited in The Atlantic article.

The point of many Americans having minimal savings is interesting on it’s own. What really makes The Atlantic article pop is that the author seems to be successful by all measures… on the outside. As Neal Gabler says,

“I have had a passably good career as a writer—five books, hundreds of articles published, a number of awards and fellowships, and a small (very small) but respectable reputation.”

The author points out that even middle and upper class income earners have problems coming up with a significant amount of money. It’s not one age or one demographic either.

One of the biggest issues seems to be the invention of the credit card. People seem to have lost focus on saving money. This lead the following dangerous combination:

“When you combine high debt with low savings, what you get is a large swath of the population that can’t afford a financial emergency.”

Essentially people have been given enough rope to hang themselves.

The problem extends deeper than just the availability of credit. The bigger problem is one that I hope readers of Lazy Man and Money have conquered.

According to the article, most Americans are “financially illiterate.” One study found that 65% of people between the ages of 25 and 65 could be classified that way.

The author reviews some of his life choices such as being a writer in New York city (not the best combination of income and cost of living) and how the decisions he made were never really about money. They were about how he wanted to live his life.

I’d argue there’s nothing wrong with that – to each their own. However, he seems to be realizing now that maybe money should have been more of a consideration.

The author still did well, but financial emergencies popped up. (They always do.) It wasn’t something simply like a lawnmower breaking down like in the picture. Instead it was one of the biggest expenses, housing. It seems like housing and medical bills always seem to cause the biggest financial problems. In this case, he was keeping up with two mortgages.

And while it might not be an emergency, sending two children to top colleges with little financial aid was another big blow. Finally the nature of getting big book advances means a lot of upfront taxes and lean years with little income.

The other big issue he found is that wages aren’t increasing. His weren’t. He said he was getting paid the same as he was 20 years ago. Inflation will eat your buying power. He points out that America isn’t much better, but at least wages have been flat with inflation… not losing their buying power. It seems most of the gains over time went to those who were already in the top 25% with the biggest gains going to those in the top 5%. (Somewhere, I picture Bernie Sanders saying, “I told you so.”)

The downward spiral continues.

The lack of money is the highest cause of stress. Stress itself can cause health problems. However, think about combining that with poor eating habits (the unhealthy stuff is usually the cheapest) and the high cost of health care. As the author put it:

“Money may change everything, as Cyndi Lauper sang. But lack of money definitely ruins everything. Financial impotence casts a pall of misery.”

It seems to me that the main reasons we fail with money are:

  1. We don’t have an understanding of money (we’re financially illiterate)
  2. We don’t think about money (we chose to focus on other things in life)
  3. We don’t have the self-control (we overuse credit)
  4. It’s a competitive environment with respect to wages
  5. Crappy financial things happen

I’ve never really stopped to think about this topic until I read the article in the Atlantic. What do you think about how we fail with money? Let me know in the comments.

Personal Finance at the Core of Mark Cuban’s Political Thoughts

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There are few people who I have more respect for than Mark Cuban. Did I just lose half my audience? Oh well. For those still here, feel free to skip the next section unless you feel the same way.

My Mark Cuban Man Crush

I can’t say that I’ve followed everything he’s ever said, but usually when he says something, I find myself agreeing to it. Sometimes when I feel something is a scam, Cuban comes out and says so. For example, here’s his take on Power Bracelets:

I’ve also written about Mark Cuban on Student Debt.

However, the best example of me agreeing with him goes way back to 2008, soon after I started writing about MLM scams. A few months after I wrote about my first MLM (MonaVie), Mark Cuban would call them as scams as well:

“There are no shortcuts. NONE. With all of this craziness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with some scheme. The schemes will guarantee returns, use multi level marketing, or be something crazy that is now ‘backed by the US Government’. Please ignore them. Always remember this. If a deal is a great deal, they aren’t going to share it with you.”

And while this article isn’t about MLM, I have to note the irony that Dallas-based Mark Cuban calls them “scams” while I’m being sued by Dallas-based Le-Vel for have the same opinion. (* See note at the end of the article).

Have I appropriately disclosed my man-crush on Mark Cuban? Good. (Though if you see on me on Shark Tank, I’m going to try to get Mr. Wonderful in a bidding war. And since he’s a Bostonian he might just win.)

Let’s Get Politics Out of the Way

I’m “only” 6 weeks late to the party with by highlighting Mark Cuban’s thoughts on SocioCapitalism. Next time, maybe Google News will put it in the homepage that I read 3 or 4 times every day. I’m not sure why this article published around the same time suddenly became relevant to bring my attention to it.

I know I’ve “beaten around the bush” too much already, but let me quickly address: the points Mark Cuban makes about politics and people. There are going to coincide with his points:

1. Social Media Influencers are more important than traditional political endorsements

I mostly agree. Social media is greatly important and it probably has surpassed traditional political endorsements. However, there’s a lot of other media out there that shouldn’t be discounted.

2. SocioCapitalism is and has been Capitalism for Millennials. You haven’t been paying attention. Bernie has.

I agree with the points Cuban makes, but I think that he overstates the importance of SocioCapitalism in general. It can be a big deal if things go viral and/or reach a critical mass/tipping point. If I create a shoe company like Tom’s Shoes giving a pair it isn’t necessary going to beat out Nike… or even compete. That’s not say it can’t be successful, but I think it is best-viewed as a “would be nice” not a “must have.”

If you want to see an example of this NOT working visit my website: Be Better Now. I’ve donated a few hundred dollars to charity. That amounts to about as many visitors as I get on a typical month… and I have no advertisements on the website. (I admit that I’ve terribly mismanaged the website due to my other commitments.)

3. There has not been a single instance of leadership from any of the candidates

True… Cuban goes in detail how it’s just “us” vs. “them” with each party. There’s no one attempting to bridge (or even narrow) the gap. Cuban has a great conclusion, “There are new ideas in this world that matter. It would be nice to get one from a Presidential candidate.”

(Personally, I’d settle for a candidate that could pass legislation to put an end to pyramid schemes as suggested in this Bloomberg article. It might not seem like much, but it would give many millions of economically disadvantaged people a couple hundred dollars a month… a very BIG DEAL for those people. I’m a fan of easily picked, very low-lying fruit, right?)

4. It’s a problem that all the candidates appear to be technologically illiterate.

As Cuban might say on Shark Tank, “Oh Hells Yeah!” I’m not sure that any of the candidates have any grasp of technology… and Cuban explains why it is vital. Candidates can bicker back and forth about things are very subjective, but where’s the candidate that understands very basic technology? Demonstrating knowledge of technology is easy when everyone else knows nothing. In the land of the blind, the one-eyed man is king.

Yet it seems that no one really gets it. (Carly Fiorina at least made an effort, but fell very, very short.)

Finally, Cuban on Personal Finance!

Here’s Cuban point that caught my attention:

I think the real problem is the uncertainty that comes with more than half of the country having under 10k in liquid assets and about 35pct having under 1k.

I’ve been there. When you don’t have enough to buy ealth insurance, even with subsidies, that is stress. If you are fortunate enough to get insurance and your savings are less than your deductible, that’s stress. When you know that one problem with your car and you are carless, that is stress.

Much of the savings from the drop in gas prices has not been spent because of these stresses.

It reminds me of a joke from one of my favorite comedians:

Steven Wright on Drowning

We can laugh at that because of course we aren’t going to drown.

It’s not so funny when half of America has a very small emergency fund and a third not much of anything. (Seriously people, Get Dobot Now.)

Cuban continues:

Add it all up and at least half the country is stressed about keeping their heads above water. It’s not that they are mad at politicians, it’s that no one, politicians or elsewhere has proposed anything that gives anyone a glimmer of hope of swimming above their debt.

Hey have you met my friend, Mr. Personal Finance Blog? It’s full of ways to save money and guides to financial freedom.

I like to say that you need to know where you are starting from to know where you are going. I recommend you track your personal finance journey with Personal Capital’s software.

I’m not saying that blogs have all the answers for America. However, there is probably a large portion of people who could be helped by the information. (Of course having the information and actually acting on it are two different things.)

Cuban’s post goes on about getting high-quality food at a reasonable price to low-income families. My thought is that Healthy Harvest on Shark Tank’s is the right idea, especially given John Oliver’s food facts on how much is wasted:

It’s just a matter of logistics in getting the food to the people. I have to believe that shipping the food is a solvable problem. We’ve been shipping food for years right? Also, the world appears to be drowning in excess cheap oil. Maybe the devil is in the details.

(Thank you for following me on the journey of this blog post. I realize it was all over the place. I simply felt like I needed to reiterate the financial problems that many in the country face. Perhaps, if we work together, perhaps we can bring financial knowledge and help to everyone.

* This article is not targeted or aimed towards Dallas, Texas, or any particular state. I’m noting the coincidence Mark Cuban’s and his views to an international audience about MLM and my own views to a similarly international audience. This website is very rarely geared to a particular state and when it is, it explicitly and clearly stated such as Can You Fix California’s Budget?. I shouldn’t have to include this disclaimer at all, but it’s better to be safe, clear, and transparent, due to the number of scammers who want to harass me with lawsuits for expressing my opinion in order to help consumers.