As part of The Great Money Experiment, I am taking a hard look at how we manage our money from a banking and investing standpoint. It’s something that’s been bothering me for a long time—especially the fact that we invest in all sorts of companies that I fundamentally don’t agree with, such as Philip Morris, Pfizer, Amazon.com, and Exxon Mobile, to name a few.
I’ll write much more about my investing plans and switching credit cards in the coming weeks. However, since I happened to get a head start on banking back in November, I will go ahead and give you the lowdown on that piece of the finance puzzle.
The Switch to Local Banking Saga
As the person in charge of our family’s finances for the past 15+ years, I have always been very concerned with getting the best deal for our family. Therefore, we had ended up with savings in one bank (Capital One, formerly ING), a checking account with US Bank to pay our credit card balance electronically (great credit card for travel!), and a couple of checking accounts with a regional bank, Fidelity Bank & Trust.
I chose Fidelity Bank & Trust when we moved to the area five years ago because we got the best mortgage rate with them. It was regional, so I didn’t worry too much about it. However, later I discovered that a different bank in town, Decorah Bank & Trust (DB&T), had all the qualities I love to see in any business:
- It is family- and employer-owned.
- Sustainability is embedded in every part of the business.
- The bank’s owners and employees contribute greatly to the community.
When the Fidelity Bank & Trust Decorah branch was bought out a few months ago, I considered taking the opportunity to switch to DB&T. But, the new bank (Kerndt Brothers) was also family-owned and regional. It’s not worth the trouble, I thought.
Then I added my new Kerndt Brothers checking account to Mint.com and it duplicated all my transactions! (Not good.)
It was a sign. I initiated the switch to DB&T the following day.
In the age of electronic banking, switching banks is no small task. Direct deposits and automatic payments (and PayPal!) have to be set up all over again. I learned an important lesson about not closing the old bank account too soon when our Internet was shut off because our automatic payment bounced. Turns out you can’t change the account mid-bill, even if you pay it after you set up the new account.
I also closed our Capital One account and opened a money market account at DB&T. Finally, I closed our US Bank checking account, which I only used once a month to pay off the credit card. Until we switch credit cards, I’ll just pay the balance with a check.
It feels great to have our various accounts consolidated to one checking account and one money market account at a trusted local bank.
NOTE: We received only the best service from the local Fidelity Bank & Trust team. I don’t in any way want to diminish our excellent banking experience there. Our switch had everything to do with DB&T’s commitment to sustainability and local ownership—and the Mint.com fiasco.
General Financial Strategy
I thought this would also be a good time to note what my current financial strategy is for our family. This is based on reading some of the resources below and thinking a lot about what our goals are—freedom, security, local resilience, and social justice:
- Live way below our means by buying only what we need or really, really love.
- Create an emergency fund to cover six months of living expenses (this is our money market account). I’m hoping to get there this year.
- Once we have our emergency fund, start paying off more of the principal on our mortgage. The financial advisers I’ve talked to about this advice against this due to the low mortgage rate, but I want the freedom of being completely debt-free. Using an online mortgage payoff calculator, you can see how much faster you can pay off your loan if you increase your monthly payment. My goal is to pay off our mortgage by 2022 and save $15,000+ in the process.
- Since my husband and I both receive retirement contributions from our employer as part of our overall compensation, we will contribute whatever match is required to get the full contribution. This goes into TIAA-CREF funds, and part of my work this month will be to investigate how we’re invested and what our socially responsible investing options are.
- Continue to contribute monthly to our whole life insurance policies through Northwestern Mutual, since we paid high fees upfront for these accounts and the longer you have them, the more sense it makes.
That’s how far I’ve gotten. The big, lingering question is, what do I do with my IRA and any additional funds I want to invest? Do I continue to invest in the stock market, which is unstable and full of Big Business? Do I turn to a self-directed IRA? Do I take Joe Dominguez‘s advice and build capital in treasury bonds? Or do I start a local Slow Money investment club? Or some combination…? I hope the research I conduct this month will steer me in the right direction.
Here are a few resources I’ve already made use of or plan to use as I move forward this month:
- The Crash of 2016 by Thom Hartman (also see this YouTube video)
- Your Money or Your Life by Vicki Robin & Joe Dominguez
- Local Dollars, Local Sense by Michael A. Singer (also see BALLE website)
- People Over Capital edited by Rob Harrison
- Slow Money by Woody Tasch (also see the Slow Money website)
- Deep Economy by Bill McKibben
- The Better World Handbook
- Yes! Magazine
- Camino (Swedish, sorry…)
- The Simple Dollar
- Morningstar (stock market analysis)
- Executive Paywatch
- Bloomberg Business
- Green America
- B Corporation
I know I’ll add to this as I go, but this gives you an idea of what I’m studying. Next time, I’ll write a review of the ideas covered in Local Dollars, Local Sense.
Until then, be well and stay warm!