Five Frequently Asked Questions – Answered!

In this post, I’m going to compile five of the most common comments and questions I get from readers, along with my response to them.

A Dire Situation

Help me! My complex financial situation is incredibly dire!

While I’m quite happy to offer suggestions to readers about their finances, I make it clear that I am not a financial advisor. My advice is that which you should expect from a layperson, no different than if you asked a buddy over a beer what he thinks you should do with your finances.

Most of the time, if the situation seems dire and complex, I encourage the person to seek professional assistance – but that often gets a pretty bitter response. I am never going to offer detailed suggestions over email, simply because a single email, no matter how detailed, can ever really make the whole situation clear. If nothing else, I don’t know who you are and whether or not you have the fortitude to actually dig out of the situation.

If you’re truly scared about your situation, the solution will almost never be found in a single email to a personal finance writer. The biggest benefit that I can provide is an ear to listen to your problems – I’m probably not the person to be providing the solution (although I would love to if I could).

Investment Advice

I just came into $X. How should I invest it?

The first answer I always have is do you have any high interest debt? If you have any debt above, say, 7%, use this money to pay off that debt.

After that, you need to figure out what your most important goal is. Are you saving for an education? A car? A house? Retirement? Which one of these feels the most pressing in your life right now? For most people, one of those will stand out – for example, right now I’m most worried about our own next car purchase, so my focus would be on saving for a car.

Once you’ve got that figured out, figure out how far off that goal is. If it’s more than ten years, you should probably be putting it into the stock market, preferably in the form of low-cost index funds like what’s offered through Vanguard. If it’s less than ten years but more than one year, I’d shop around for the best long term certificate of deposit rates at various banks. If it’s less than a year, the best place to put it is probably in a high interest online savings account. That’s my rule of thumb suggestion.

No Answers!

Why didn’t you answer that email I sent you two and a half weeks ago?

While I read every email I get, I do receive about 300 messages on an average day. If the email doesn’t seem to need a response (at least to my reading), I usually don’t respond to it. For a while, I used to send out a highly automated “Thank you for writing!” message in response, but I honestly felt like that was more cold and impersonal than not writing back at all. The other option would be to attempt to formulate a real response to all of those messages. With that many messages, let’s say I spent just a minute on each one. Five hours, gone. There’d be no time left to write The Simple Dollar.

That’s not to say I don’t respond to some of the emails – many of you know quite well that I do respond. The challenge for me is dealing with all of those messages and figuring out quickly which ones need a response and which ones do not. If you wanted an answer and didn’t seem to get one from me, mail me again and make the question more clear. It’s quite likely I read your message and didn’t see that you had a question.

Getting Started With Blogging

I’ve just started a blog, or I’m thinking about starting one. You seem to have had success – how can I get started? What do I need to do to be successful?

In terms of the basic mechanics of blogging, your best bet is to bop over to WordPress.org and get a free one to start with. Experiment with it, see what you can learn, and see if it fits you.

Most people, though, aren’t interested in this. They know the mechanics of blogging, but they’re yearning to learn how to take those mechanics and build it into something compelling that others will read. That’s quite a bit trickier. A while back, I laid out everything I know about blogging in a series entitled Building a Better Blog – you can either read the entries individually for free or download the whole thing as a PDF for a small fee.

The biggest piece of advice? Feel free to dabble, but realize that you won’t be a success unless you have a passion about your topic – the kind of passion that will encourage you to write day in and day out for years about that topic. If you can’t even conceive of doing that, you probably won’t make it as a top notch blogger.

ING Direct Versus Other Online Banks

Why do you encourage people to use ING Direct? Online Bank X has a 0.7% higher APY, and Online Bank Y has a 0.5% higher APY! ING is a ripoff!

If you’re looking for a place to just stockpile a liquid cash portion of your portfolio, then by all means you should chase the highest rate. But, with the ongoing rate wars, banks bouncing their rates up and down all the time, and banks appearing and disappearing on a regular basis, it’s basically impossible to make a consistent recommendation of a bank to put your money. If this is what you want, go to Bankrate.com and find the one with the highest rate. In fact, it’s reached a point where people have basically spammed comments on The Simple Dollar talking up their rates that I just delete such comments – informed readers can use Bankrate if they are just hunting for the best rate.

Personally, I feel that focusing on maximizing the rate and jumping back and forth between banks is a waste of time, because virtually all online banks are within a percentage point of each other. Let’s say you’ve got $10,000 in your account and you want the best possible return. Your local bank might offer 1%, while the best rate online varies between 4.1% and 5.1%. Even if you’re in the lowest of the online banks, the cash difference between that and the highest online one is $100 over a year (meanwhile, the mere commitment to online banking over your local bank is going to be at least $310 a year, so the real value move is switching to any online bank). Even if you just spend one hour a month checking rates and moving your money between online accounts, your effective hourly rate is $8 an hour. You’re better off working at McDonalds.

I recommend ING Direct (and I have since the day I started The Simple Dollar) because it’s the online bank that I use. I don’t follow the rate wars – it’s not a productive or valuable use of my time. I simply wanted a bank that was competitive with online rates, but my biggest criteria is usability and customer service. Can I quickly do everything I need to do via their interface? Is their online bill pay service free and sensible? Can I set up sub-accounts to help me partition and manage my savings? If I do have a problem, can I quickly get someone on the phone? Is the bank sturdy, meaning is it backed by a large enough bank that I don’t have to worry about it blowing away in the wind like NetBank? I tried using a number of online banks, but none of them had the service that ING Direct had. That’s what I want from my primary bank, and that’s why I use ING Direct.

Again, if you’re going to chase rates, you’ll likely always find a better one than the bank you’re at, but if you’re trying to choose a full-featured bank that will handle your primary checking and savings while giving you good rates, customer service is going to be the biggest part of the choice. Out of the online banks, none of them touch ING Direct. I’ve never had a problem with them in the years I’ve been using them, and every time I’ve had any question or needed anything from them, I’ve quickly had my answer.

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25 thoughts on “Five Frequently Asked Questions – Answered!

  1. Thanks for clearing these up, Trent. Keep doing what you’re doing. I think you’re right on track.

  2. A lot of good information. I too have an ING account, but keep most of my emergency fund at AmTrust Direct. ING has a better interface, but Amtrust consistently pays a little higher interest.

    Best Wishes,
    D4L

  3. JP says:

    Trent,
    Great post for some of the newer readers (and good clarity for the rest of us).

    I do think you should re-examine your advertising policy and bring back some of the ads. From my perspective, they take NOTHING away from your site, but I do get some satisfaction in knowing that every day my eyeballs are making you a bit of money just by visiting. You deserve the extra income.

    Keep up the good work!

  4. “I just came into $X. How should I invest it?”

    Umm, donate it to The Simple Dollar?

  5. Trent says:

    JP: I’m slowly adding ads as I work out relationships that I’m comfortable with. The reason I got rid of so many before wasn’t that I didn’t think ads were okay for a blog to use to raise revenue, but that I was having ads displayed on my site automatically that I didn’t agree with. Because of that, I’m being careful as I work out new advertiser relationships.

  6. I think you have solved 95% of your email problems right here. You can probably just send a link to this post in a generic email that says… “Maybe this will help..” Oh, and you have answered my questions before and I did really appreciate it. I had no idea you go so much email!!!

  7. rstlne says:

    The reason I switched out of ING Direct is after a long period of observation over many interest rate changes, I noticed that there was another online savings account that consistently offered a higher interest rate than ING Direct. Then last Spring, they had a special offer than sealed the deal for me. That said, it’s just a place to stash cash for about 2.5 years of expenses to serve as an emergency fund. There are better places to invest money that I don’t need immediate access to.

  8. RV says:

    Hi, I’m a new reader and would like to thank you for the great post. Funny thing is, I opened my ING Direct savings account literally 7 hours before you posted this! Even though I did see some higher rates elsewhere, you’ve convinced me I did the right thing.

    I’m also thinking about opening a Schwab High Yield Checking account to get some interest on the money that’s won’t be in the new ING account. Have you heard anything about them? Any thoughts?

    Cheers!

  9. Todd says:

    I was just reflecting on the Hollywood writers’ strike this morning, and thinking about how poorly almost all writers are paid in this country. When I read your blog posting I thought, “Trent has thousands of readers every day and has helped many of us save a lot of money. He should at least be able to make a modest living from writing just The Simple Dollar alone.” Three hundred e-mails a day! People in my office complain that they have to sort through 50 e-mails a day, and they also spend hours a day surfing the web or forwarding ridiculous “feel good” mass e-mails–AND they get paid a decent salary for their time. Meanwhile, you consistently produce some of the best writing of any blog I’ve seen and yet can’t even afford to do it full time? Sorry for the rant. What a bizarre workplace world we live in.

  10. Frugal Dad says:

    I’ve been with HSBC for a while now and just haven’t had the motivation to move to ING, although I do find their relatively new Electric Orange account concept intriguing. Thanks for putting this together. I’ve been reading your blog a while now, but I think newcomers will find this advice extrement helpful.

  11. Gary says:

    My personality dictates to me that I must get advice from others in order to assure myself that my own decisions are valid and good decisions to make.

    I enjoyed this post, because it helped me to feel okay about my decision to have started an ING Direct account a few months back and not worry so much about the aforementioned “rate wars.”

    Anyway, first time poster, short time reader. I enjoy your blog. I found myself in a lot of debt (I’m 24 years old) and scrambled around online for help a few months back. You were the first personal finance blog I found and I visit at least twice per week to catch up.

    Good luck with your passion!

    Gary

  12. Best Advice on Debt says:

    As far as blogging and how to be a success at it…

    Content is king. If you write good, compelling content, people will read it. To do that, Trent’s right – you have to have a passion about your topic.

    Good advice.

  13. Mrs. Micah says:

    I’ve found ING quite easy to use as well and with stellar customer service. Plus the stress of rate chasing and changing all my linked accounts, direct deposit, and the like just isn’t worth it. I compare it to the rate I was getting at 0.20% and see it as way better than that.

  14. Lurker Carl says:

    ING Direct is the gold standard for on-line banks. But you don’t have to store all your eggs in the same basket, open an account with a bank offering a higher interest rate and move the bulk of your savings. At 4% versus 5% interest, it’s significant whether you are earning it or paying it. Keep using the Electric Orange account for your regular banking.

  15. Michiko says:

    Continue to do the great work you do Trent. I read this website daily and hopefully I’ll actually start applying what I read!

  16. Rob Madrid says:

    My advice to anyone in dire strights is to go to Trents first post and start reading. By the time you get to this post you’ll have a really good idea of what to do. That’s what I did and the turn around has been amazing. Last month for the first time ever we ran out of month before we ran out of money!!

    We also paid off a loan today! I’m counting the days till our payments go to savings and not to debt payment

  17. Diana says:

    Why do you recommend WordPress for hosting your blog? I signed up on WordPress and was very confused with how it worked and the overall layout – then I tried Blogger and was pleased with the overall usability. I was just wondering what makes WordPress so much better?

  18. Diana says:

    Why do you recommend WordPress for hosting your blog? I signed up on WordPress and found the overall layout to be confusing, but then switched to Blogger and was pleased with the ease of use. I was just wondering what makes WordPress better and if I should give it another shot?

  19. Lorraine says:

    Hi Trent

    I am a newly avid reader and soak up every post – even though an Australian and some of your content is obviously not pertinent, overall your ideas and thoughts are always food for thought.

    Along the lines of the ‘ideas’ you give those who seek advice, I wonder if you could offer some ideas for those of us who are ‘obliged’ to look after aging parents? It is hard to save for retirement, to plan for the expenses our children will incur and at the same time need to put money away to support aged parents. And I am not necessarily talking about those who are frail etc – in our case we are supporting a parent who relies on us for subsidised housing and occassional inputs of cash. We are literally ‘stuck’ in this manner with no other siblings to share the load and the person in question is reluctant to do anything to remedy their situation by better spending/planning ahead etc. Perhaps I should have emailed this instead but just thought it provident to mention given your post material today.

    Would love some ideas! And yes, I personally believe we have a duty to care for our loved ones – but hard to do when they don’t care for themselves and expect us to pick up the pieces.

    Regards

    Lorraine

  20. Dee says:

    Thanks for taking the time to make this post Trent :)

  21. Louise says:

    @RV
    I was impressed by the rate too, but I wasn’t interested in opening two accounts with Schwab. I only wanted an interest-checking account, which they don’t offer by itself (or maybe they do but the interest is pennies, I forgot).

    A question for Electric Orange people: how fast is the transfer from ING savings to EO checking?

  22. Also Dave says:

    Louise, it’s one second. Maybe less.

  23. David Agyeman-Budu says:

    Hi Trent,
    I am an avid reader but 1st time posting on the blog … (bad habit I know, please forgive me). Well I do side with you 100% on the rate chasers and ING . Their customer service is off the hook. I have been an ING saver since 2004 and comparing them to wellsfargo, any time I call I get person who answers the phone DIRECTLY. Wellsfargo puts you through this long automated prompts after along wait only to be asked the same questions when the rep picks up and to add salt to injury they charge you for talking to a rep.(That was 2004-ish)
    Last December I wrote a check from my electric orange account and for some reason it got delayed (my guess, heavy holiday mail). I panicked and canceled it but realized that the cancellation fee was $30 after I had clicked to authorize it. The check was for $15.40 and I realized my foolishness. A day later an ING rep emails me that since it costs more to cancel they would remove the cancellation request and assured me that the money would be put back into my account. Man, I was so happy that I emailed them back “Thanks, You guys rock!!” And guess what? I got a response acknowledging the praise. I thought it would probably bounce back with some automated response, but no, that was a real person. That guy blew me away.

  24. Trent, I emailed you several weeks ago and have not heard back yet. I have this unique, challenging problem that I need your advice on. I received a lump sum of money and do not know whether to deposit it in an ING account or invest it in advertisements to improve my blog readership…. ;)

    Put a link to this post at the top of your contact page and in old letters ask people to read before they write. You might even mention specifically the five questions answered here. It might save you 50 emails per day.

  25. Lauren says:

    People who have questions and wish to speak to a financial advisor can take advantage of this Friday’s (January 25) FREE FINANCIAL ADIVICE. Anyone can call 888-919-2345 from 9-6 EST and speak to a normally fee-only financial planner for FREE! Sponsored by NAPFA (National Assoc of Personal Finacial Advisors.)

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