Lazy Man and Money

Are You Friends With Your Checkbook?

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signingcheck
Who couldn’t be friends with this guy?

Most of us strive to try to keep a budget each month. Everyone has fixed costs that have to be covered, such as the rent or mortgage, insurance, and food. Some people call these a “monthly nut”, but I’m not a squirrel. I like to call these “necessary expenses” and have tracked them over time. For many people keeping to a budget was easier years ago. Nowadays, are a ton of electronic payment methods available. Their convenience makes spending money we do not have that much more tempting. Impulse buying becomes easier – all you have to do is swipe either your debit card or your credit card.

This can result in a well-planned budget getting out of the water. Maybe I’m showing my age, but I remember when people would write checks at the grocery store. It slowed everything down. As one of those “quick swipe” credit card people I found this really annoying.

Looking back on it today, I have to respect it a bit. Those people actually spent time balancing a checkbook, so they knew exactly how much money they had. It was a great system for accountability reasons. With today’s credit cards a lot of that accountability is gone.

I have to admit that I’m not very good friends with my checkbook nowadays. I thought about it for a bit and here are some of the reasons why:

  1. I’m Lazy – I type thousands of words a day. It may sound crazy, but I barely know how to use a pen anymore. Adding an item to a grocery list is comical.
  2. I Don’t Need the Accountability – I spend more than enough time thinking about money by writing for this site. In return this website gives me accountability.
  3. Checks can be Expensive – Last year I switched bank accounts. It’s a long story, but since my tenants wouldn’t get out when the lease was over, I had to stop accepting payment from them in order to evict them. However, they had the ability to automatic deposit money in my bank account, which allowed them to stay indefinitely… unless I switched bank account numbers.

    So I switched, but that required getting all new checks. It was well over $25 for 120 checks of the very most basic design. That’s almost half the cost of a stamp, simply to use my own money. I decided to go home and order cheap checks online. It was much, much cheaper. Not only that, but the bulk pricing was much better my bank’s.

Sorry Mr. Checkbook, but for now we’ll just have to be occasional acquaintances.

Death of the Balance Transfer Arbitrager

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Jim writes about personal finance at Blueprint for Financial Prosperity.

A couple years ago, you couldn’t cross the street without being hit with an offer of free money from a credit card. My list of no fee 0% balance transfers was so long I left some cards off simply because I was too Lazy to add them. A housing slump, some credit “concerns,” and two years and the spigot of easy credit has slowed to a trickle. Now, 0% APY balance transfers with no fee are extinct along with the animal it created – the Balance Transfer Arbitrager.

I remember when people first started doing them. You had stories of consumers getting dozens of cards (the term App-o-rama referred to the act of applying for a lot of cards in a short period of time, so quickly that the cards never made it onto the report until after the App-o-rama) just to get the balance transfers. I even got in on the game, getting about $15,000 in credit card debt and earning a little interest on the side (made for some interesting blogging fodder). However, as the deals slowly dried up, so did the easy money.

What does this mean for arbitragers? Enjoy whatever terms you have right now because that’s the end of it. Like an addict, you could move on to cards offering 0% on purchases but that easy balance transfer is done for at least a little while. You won’t find a no fee offer but if you look hard enough you can find ones with a 3% fee and a cap, making it a pretty good deal (relative to the ones with no cap).

That being said, I think balance transfer arbitrage is dead in the long run. Even the best high yield saving accounts are offering 3.50% APY and 3.75% APY interest rates and that leaves you a slim margin of half to three-quarters percent (or more depending on how much credit you get, but it’s not going to be much). Is that even worth the effort? No way.

You have to love capitalism though… the arbitrager made his money while he could (most knew this wasn’t sustainable). The credit card companies also made their money (they earn plenty on transaction fees and the interest of those who didn’t pay off the bill). Everyone is happy (mostly!).

Jim writes about personal finance at Blueprint for Financial Prosperity and is a huge fan of capitalism, even the capitalism that lets Canadians sell tickets to tourists to club baby seals.