Go Fourth

Good morning,

Welcome to “Not Pretty, Not Rich,” a newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything. I’m not a financial expert or professional, so don’t take anything contained in this newsletter as advice. It’s also unaffiliated with my employer, and all views contained within are my own.

You can always connect with me on Twitter and LinkedIn if you’d like, and email me with any feedback. 

It’s Friday, July 3.

———————————————————

Another format shake-up this week — let me know if you hate it!

In the news

Here’s what happened this week:

• We’ve lost control of the pandemic. Though it looked like we had flattened the curve and gained the upper hand, coronavirus cases are on the rise all over the country. Some states are returning to lockdown and forcing businesses to close back up. We’re far from being out of the woods — wear a mask.

• Political scandals abound. Remember: There’s an election this year, and that’s going to add a cherry on top of the insanity sundae 2020 has ordered up for all of us in the U.S. Right now, the president is flailing in the polls and dealing with the fallout of a Russian “bounty” scandal. Pay attention, because politicians can do wild things when they’re desperate. 

• We got another good jobs report. Yesterday, the June jobs report was released and it was another blockbuster: 4.8 million jobs created, and the unemployment rate ticked down to 11.1%.

This week in ‘That’s how they get you’

I’m going to try out a new segment this week that will look at some of the ways businesses can offer deals or arrangements that are too good to be true, or that can be a financial pitfall if you’re not careful.

This week: No-interest financing offers.

I recently spent a lot of money on a new computer. I needed a new one, and I decided to actually splurge and get a suped-up PC with all of the bells and whistles that I wanted. I ended up purchasing a beefy Dell XPS, and took advantage of a no-interest financing offer that they were advertising.

Now, I never thought that I would finance a computer, but I figured “what the hell” and went for it. After all, given the current economic climate, you never know when you might need some cash. And besides, I won’t be paying interest for 18 months, according to the offer. That’s all fine and dandy. I fully expect to have the thing paid off within a year and a half.

But I did take a look at the fine print, and it mentioned something along the lines of “customers making minimum payments will not have paid off their full balance within 18 months.” And thus, will end up paying interest (the rate at the end of my 18 months was something like 21%). 

Many people, though, may suspect that by making minimum payments, they’d have eclipsed their full balance within the zero-interest time frame, only to be surprised when, months later, their minimum payments become much larger.

This is a long-winded way of saying this: Look at the fine print. Zero-interest offers can be a good thing, if you know the terms and can plan out a payment schedule. Paying a little bit of interest, of course, isn’t the end of the world. But if you’re not careful, these types of deals can be costly.

Make a smart money move

I talk to several financial professionals and experts on a weekly basis, and over the past two weeks, three of them have mentioned the same financial tactic to me, which I thought I’d share with you: Open up a savings account at an online bank — one that’s different from your “main” bank or credit union.

The benefits are two-fold. First, online banks (such as Ally or Simple) tend to offer higher interest rates on savings accounts. And second, a degree of separation can be useful if you’re someone who’s constantly dipping into their savings to cover expenses. Having your savings in another institution may require another step to transfer that money to your checking account, and that extra step may be enough to dissuade you from doing it.

Oh, and you can set up automatic transfers to that new, out-of-the-way savings account too, which can help improve your savings rate.

If you’re like me, you don’t like having numerous accounts spread throughout the financial system and prefer to have your money in one place. But if you do struggle with keeping your hands out of the cookie jar that is your savings account, it may be a move worth considering.

This week’s numbers and links

Another new segment that I’m trying out — hopefully, it’s fun and interesting.

• $749 — That’s how much you’d need to save from each and every paycheck for two years to be able to afford an average-priced new car in the U.S.

• $1.4 billion — The amount of stimulus funds that were sent to dead people. 

• 3.07% — The rate for a 30-year fixed-rate mortgage, according to Freddie Mac, the lowest since records began in 1971.

• $171.6 billion — Jeff Bezos’ net worth has recovered to pre-divorce highs.

• Tesla is now the most valuable automaker in the world. Imagine thinking that would be the case 5 or 10 years ago.

• A year from now, the new NHL team in Seattle (the Kraken? Totems? Evergreens? Office 360s?) will finally come together after an expansion draft.

Remember: Wear a mask. 

Sam