Red Is A Flavor

I am mid-stream, moving all of my banking services from WAMU to a new bank, not due to its failure, simply due to a better banking option.  As a firm believer in in the FDIC and the possibility of damage, runs on banks will cause, I almost want to stay just because they have truly been the best bank I have ever used.

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Earlier in September when I learned that USAA opened their membership to Honorably Discharged veterans, is when I made the decision to jump ship.   This was before WAMU was even rumored to be on shaky ground, but the process of migrating my assets, bills, debit cards, etc has taken longer than anticipated.  Now I feel like I'm going to appear as a knee-jerk bank runner.

WAMU/Chase, can simply not compete with the services and APR that I will get as being a USAA member.   In fact, USAA offers some services that our local WAMU branch personnel have never even heard of, like  100% free prepaid debit cards, and the capability to deposit checks via your scanner at home 24/7.

Sorry WAMU, I know the timing sucks, but I have to move on.

As for you reading this…your mattress is not any safer than your FDIC insured bank account, so unless you have a valid reason to change banks have faith in the system.  If the public begins a run on banks, that money you are sleeping on will be losing value too.  Remember, the US dollar's value is based on the market's faith in it, nothing more, nothing less.

Image: TheTruthAbout [via Flickr]

In 1996, while in the military, earning below poverty level, my wife and I managed our pennies and nickels using the plain old checkbook register. When I was finally able to save up enough to upgrade my IBM PS2 to a flashy new Packard Bell XT, we noticed it came preloaded with Microsoft Money. Just out of curiosity, we gave it a try. Eleven years, thousands of transactions, dozens of banks later, we still use it, a new version obviously, but still reliable old MS Money.

Most people budget their expenses on their paycheck schedule, either weekly or bi-weekly, not on their monthly income.  Yet, our mortgage payments (like most other bills) are due every month.  By simply aligning the two, you can take years off of your mortgage and greatly reduce your interest paid.

Instead of making your payment every month on the due date, simply make your payment every 28 days.  This will better align your mortgage payment (which is probably your largest bill) with your income and it will effectively accelerate your payments 2-3 days for 11 months of the year.  By the end of the  year, you will have almost made one full extra payment in principle, because you will be nearly 29 days ahead of schedule with payments (30 days on leap years).

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A $200k fixed rate 30yr mortgage at 5.5%, (first payment due on January 1, 2008), can save over $17,000 in interest over the life of the loan, and payoff the loan 32 months early, by following this simple payment method.

In addition to the obvious interest savings, budgeting your family expenses will most likely be easier with a 28 day alignment, rather than a 28/30/31 when your payment is due on a particular day of the month.  You will know that your mortgage always aligns with your paycheck, making it easy to remember and budget for.

Try it out on your mortgage by downloading my savings Spreadsheet for Microsoft Excel, and see how much you can save.

Download: 28 Day Mortgage Payment Savings Calculator.xls

NOTE: Before beginning any prepayment program, ensure you lender does not charge prepayment penalties.

Image: roarofthefour [via Flickr]

While on the way home yesterday, I happened to hear a radio commercial stating the USAA has open its enrollment eligibility to "former officers and enlisted personnel who separated on or after 01/01/1996". This opens all kinds of financial benefits for us "one term" veterans. Previously, you had to be either active duty or retired military to join.

I signed up as soon as I arrived at home, and promptly applied for their Platinum Mastercard. Within 60 seconds I was approved, with an APR more than 5% lower and a credit limit 6 times higher than my current Chase Platinum. Which immediately alters my debt ratio on my credit score for any balance carried. Yeah me!

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Next, I will be moving my oldest son's savings account from Washington Mutual to USAA's Teen Checking, and setting up a prepaid account for my youngest's allowances.

United Services Automobile Association (USAA) is a Fortune 500 financial services company focused on providing banking, investing, and insurance to people and families that serve, or served, in the United States military.

Some benefits of Membership

• Free Checking – Free worldwide ATM use, free checks, interest earning, rewards, and more. They even reimburse you for other banks ATM fees.
• LOW Credit Card Rates – APR lower than all options reported at BankRate.com
• Teen Checking – 100% free Checking account with debit card. They even have their own website to logon to to maintain their account.
• Insurance – Automobile, homeowners, renters, life, annuities, and more!
• Free Prepaid Mastercards – Great way to manage allowances for kids. The next cheapest that I've found is PayJR for $5 month.
• Loans – Competitive mortgage, auto, personal, and home equity loans.
• Investments – USAA provides a limited discount brokerage service and a family of no-load mutual funds.
• Financial Planning – USAA also offers limited free Financial Planning advice, as well as a more thorough flat-fee or hourly-rate financial planning service.
• Discounts – Car Rentals, travel, and more.

If you were a single term soldier, sailor, or airman (who discharged after 1995), I highly recommend exploring your benefits and options now available to you as USAA. Also, keep in mind, as a USAA member your spouse and children (adult children too) are eligible for membership as long as you are.

Click here to Join

Image: annia316 [via Flickr]