Lazy Man and Money

Text Digit to Boost Your Savings

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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).

I’m a big fan of Lifehacker and last week one article caught my attention: Boost Your Savings Account by Adding the Money You Save on Every Deal. The article brings up a great point by Eric Nisall of DollarVersity in an article posted on The Simple Dollar about saving money:

“If you’re constantly scouring the Internet for deals or whipping out your coupon binder, you could be saving boatloads of money on everything from groceries to office supplies. But, what if you actually transferred those savings into an actual savings account?

Eric Nisall from DollarVersity once tricked himself into saving money by doing exactly that. Each time he used a coupon or earned significant savings somehow, he would move that money into a special account. Over time, this helped him build a stash of cash that practically came out of nowhere, he says.

‘So, if I went to the grocery store, or any shopping really, I took the ‘total savings’ from the bottom of the receipt and transferred it,’ says Eric. “I transferred all of my overtime payments as well. Since I only budgeted for gross spending and regular paychecks, I didn’t notice any difference in my everyday account.’”

I have two non-sequiturs* that I’ll save until the end so I can get to the real point.

This sounds like a very cool way to save money. I immediately dismissed it because I’m Lazy and I’m not going to go into my bank account and physically transfer the money. When you are on the go, it simply doesn’t make a lot of sense. I could save receipts for home and do it then, but it still is “bookkeeping” and part of my message is that you shouldn’t spend time managing your money.

It was then I realized that I had my Digit Dobot account. I can just text, “Save 13.72” in the SMS thread with them on my phone and move on. Dobot will transfer the money out of my checking account and put it in their (FDIC-protected) savings account.

Regular readers know that I love my Digit Dobot account. You can read my Dobot review here).

Dobot makes Nisall’s idea very easy and much more practical for the average person.

As I was publishing this, I decided I should read the comments on the Lifehacker article. It’s really interesting…

One person asks for an app to make this easy and the author of the article agrees it would be “amazing.”

The very next person asks if someone has heard of Digit and proceeds to explain how it squirrels away little bits of money each day. This is my main reason for using Digit. However, the person bringing up Digit and the people responding don’t bring up the texting functionality of Digit that is the amazing app that the author is looking for. It seems like it was brought up as an alternative to Nisall’s way of saving money rather than a way to easily implement it as a complimentary savings tool.

* 1. I had dinner at a Five Guys with Eric last year at FinCon. First time I had gotten a chance to really talk with him. Great guy.
2. This is the first time I’ve had to embed three layers of quotes with the “total savings” quote in the article. I have to admit that I didn’t know what to do here, so I just stuck with the single quotes.

Save Money for the Holidays with Digit

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Back in March of this year, I heard about Digit and signed up for it. For those of you who are new to Digit, it 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.

Digit Saved me Over $100 in One Week and I just set it up and (mostly) forgot about it.

Here’s what the account looks like now:

Digit Savings
Digit Savings since March

That’s not a bad little emergency fund, right? My Digit account actually has even more money in it. If you sign up through this referral link you can actually earn $5 by referring other people. I’ve collected quite a few of those $5 bonuses. It almost sells itself. No one is against saving money the easy way.

The other day it occurred to me that Digit could be a new kind of Christmas Club. If you aren’t familiar with Christmas Clubs, I won’t hold it against you. I think they were a little before my time. 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 I read the average is around $880. I’m sure everyone’s Digit savings are going to vary over time, but mine seem to be around $200 a month. That means in about 4.5 months, I’d have enough savings to fund the average Christmas budget. What I like most about this is that you set it up once and you never need to do anything. For the most part, I don’t notice what’s in my Digit account unless I’m writing an article like this one.

So my recommendation is to sign up for Digit now so you’ll be prepared for next Christmas. You might even be able to snag some free money yourself by referring friends and family.

Saving’s No Chore, Digit and Ignore

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A couple of months ago, I wrote about how Digit Saved me Over $100 in One Week! When I love a financial product and it works well, I make a point to provide a few updates. This way you not only get a follow-up, but those who missed it the first time get a second chance.

Last week I hit a milestone with Digit. They sent me a text message: “Making it rain savings, like a boss. You now have over $250 in your Digit account.” Along with it, they attached the image to the right.

Pretty cool, right?

Umm, What’s Digit Again?

I forgot, some of you are reading about Digit for the first time.

Digit is a way to save money automatically. You just link your checking account to Digit and it analyzes your income and spending. Then it squirrels away a little money each day or a few times a week. You don’t even notice it is going on.

We all know that you should pay yourself first, but it is really hard to do. You can set up automatic transfers, but that’s going to be a fixed amount and not very smart. Also, how many people actually save money? I have a better chance of getting my kids eat broccoli. I bet if I took a poll fewer than 10% consistently save money through automatic transfers.

The other issue with automatic transfers is that it doesn’t hide the money from me that well. I see it every time I log into my bank. When it is right in my face, it’s almost like it isn’t squirreled away at all. It’s too easy to say, “Hey I’m a little low in my checking account this money, let’s move a chunk in there.” And then I can keep spending. That’s no good.

At this pace, Digit will set aside nearly $1500 this year. That’s particularly notable because most Americans can’t afford a $1,000 emergency expense. In less than 5 minutes you can set yourself to be in a better position than most Americans within a year.

I don’t want to oversell it, but this website is “Lazy Man and Money.” It isn’t “Spend Lots of Time Managing Your Money.” Saving money doesn’t get any easier than using Digit.

P.S.

Dear Digit: I’ve trademarked the phrase in the title. If you want to work out a licensing agreement let me know ;-).

P.P.S.

Your savings are FDIC insured and the investors are former executives from very popular companies. I don’t think have to worry that your money is going to disappear overnight.

Should You Leave Money to Your Kids?

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Let’s pretend for a minute that you are a rich celebrity with millions and millions of dollars. Would you leave the money to your children?

Sting says he won’t in this article.

Specifically Sting says:

“I told them there won’t be much money left because we are spending it! We have a lot of commitments. What comes in, we spend, and there isn’t much left. I certainly don’t want to leave them trust funds that are albatrosses round their necks… They have the work ethic that makes them want to succeed on their own merit.”

There are lots going on here. With an estimated net worth of around $300 million dollar, what kind of commitments does he have? The interest alone is worth $9 million if it earned a paltry 3%. I don’t want to tell Sting how to live his life, but that’s some serious spending. He might have a problem. Furthermore to spend it all down at age 62 before his death… well that sounds a little like Brewster’s Millions.

I can respect not wanting to spoil your kids so much that they can’t fend for themselves. At the scale of millions it probably makes sense.

Looking at it from a personal view, though I feel differently. I am without even a single million. Yet I’m thinking about leaving money to my kids. Am I crazy? Perhaps.

My thinking is that there must be some way to structure a trust fund so that it incentivizes the kids to save money. Maybe it would look a little like a company match in a 401K. If the kids add money to a fund they can pull some extra out down the line. Perhaps the money could be structured in a trust to give them 15% annual interest rate on money deposited.

This would create a lasting legacy for Sting’s future generations. Seems like a better plan than just spending it all.

As an aside, I’ve never really liked Sting. I thought his music is kind of girly. However, I don’t mind the Police. I kind of even like them. Am I the only weird one who thinks this?

More Money, More Life

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Some days I feel like I write too much about money. Then I read something in the news that makes me feel like I couldn’t possibly write enough about money.

This article in Aeon magazine is a great example: Costly new longevity drugs could help the wealthy live 120 years or more – but will everyone else die young?

The article explains that there’s a “longevity gap” between those with money and without money. For example, “College-educated white men can expect to live to age 80, while counterparts without a high-school diploma die by age 67.”

The article digs into some of the reasons why those with less money are likely to die younger:

“Scraping to come up with routine living expenses – food, shelter, medical care, transportation – can cause chronic insomnia and anxiety, which boosts levels of cortisol, the stress hormone in the blood. This already makes the poor more vulnerable to a cascade of debilitating, life-threatening ills, from diabetes to high blood pressure and heart disease… People who are poor get sick more often. They live in higher-density households, and when one gets sick, everyone gets sick. And these disparities are going to expand.

On the other end of the spectrum are those who are more financially secure:

“[The benefits] range from simply growing up in less toxic environments with two financially stable parents to the ability to secure good jobs that provide decent salaries and adequate health insurance. They live in more prosperous communities with less crime and decent public schools, ample doctors and hospitals, better food and nutrition, and superior social services that cushion any fall…. [Gerontologist Caleb Finch says], ‘They engage in health-promoting behaviours, they don’t smoke, and they’re more likely to have time to exercise.'”

It hardly seems like surprising news that having financial success would lead to living longer.

However, the magazine points out that the gap has widening. Not only that, but paints a picture of new medicines being able to the rich that could drastically widen the gap even more. I’m a skeptical of their examples, we’ve been hearing about scientists extending rats lives for years, but translating the research to humans is a whole other ball of wax. Still, I’ll agree with the magazine’s general premise even if I believe it is a little aggressive.

Do you think people might think about money differently if they knew that managing it wisely could lead towards living a lot longer? I like to think they would. Then again, people don’t always make healthy choices when eating so I can’t see them suddenly saving money as if their life depends on it… even if it does.