Millionaire on the Prairie

Tag: Tangerine

Go for the Low-Hanging Fruit!

This week, I made a slight tweak to my savings account and it will result in my savings account earning 12.5x as much interest as I was earning before.

Yes – you read that correctly. I will earn 12.5x more interest by making one small adjustment to my automatic transfers.

At the time of this post, Tangerine savings accounts are paying 0.10% per annum. EQ Bank is paying 1.25% on its savings account. And lest you think that Tangerine pays the least amount of interest, have a gander at the Big Navy Blue Bank’s interest rates – 0.005%, and that’s if you’re in the right account. Otherwise, you might earn a big, fat 0.00% on your savings!

Let’s be clear. There is no way that I can possibly convince you that 1.25% is a fantastic rate of return. Even I think that 1.25% is a paltry interest rate for a saving account. Yet, the fact remains that 1.25% is 12.5x higher than 0.10%.

So I made a change that will earn me more interest. For the past decade or so, I’ve had an automatic transfer to Tangerine. Longtime readers will know that I’m a huge fan of automatic transfers. When I get paid, I send a chunk of money to my savings & investing accounts. I rely on the power of automation to do so. Up until this week, the automatic transfer whisked money from my daily chequing account and over to Tangerine.

A few days ago, I made the choice to switch my automatic transfer to EQ Bank. I’m still hiving off the same amount of money as before. It’s just going to a different location. And the higher interest rate at EQ Bank means that my money will compound faster. For the record, I’m not saying that it will compound very fast. I’m simply enjoying the fact that it will compound faster at 1.25% than it will at 0.10%, or at 0.005%!

Take a few minutes to look at the interest rate you’re earning on your savings account. If it’s less than 1.25%, then what’s stopping you from setting up an account at EQ Bank?

I understand why a lot of people hesitate to make investing decisions. There are so many options, and no one wants to make a decision that might result in the loss of hard-earned money. Some people would characterize those decisions as “mistakes.” I prefer to think of them as “learning opportunities.”

Switching to bank that pays a higher interest rate is not an investing decision that should paralyze you. You should find out if the financial institution is insured by CDIC. CDIC stands for Canadian Deposit Insurance Corporation. You can read more about CDIC here. In short, should a bank that is CDIC-insured go under, your savings account is insured up to $100,000. Do not keep your savings in banks that are not CDIC-insured.

For the record, EQ Bank is CDIC-insured and so is Tangerine. On that front, they are equals. Tangerine does not limit the size of your accounts. EQ Bank will accept your deposits up to $200,000. (I’m still trying to determine if that’s $200K per customer or $200K per bank account. After all, I did buy a lottery ticket this week and I’m feeling lucky.) Both banks allow you to have up to 5 sub-accounts under one customer number, and each sub-account can get its very own nickname.

In my humble opinion, both of these online banks are fantastic options for pursuing both short-term and medium-term financial goals. By using nicknames on your sub-accounts, each bank’s dashboard reminds you of your savings goals every time you log in. Personally, I’m saving for non-sexy stuff like property taxes and insurance premiums. Yet, I’m also saving for splurges that make life a little more comfortable – renovations to my home, spa days, satisfying my wanderlust. Your nicknames will reflect your goals and priorities.

When it comes down to brass tacks, I’m voting with my dollars. EQ Bank has a higher interest rate so my money will go there.

This is low-hanging fruit. Your money should be working as hard for you as you do for it. Put inertia to work for you. Spend the few minutes it takes to set up your savings account and your automatic transfer. Don’t stand in your own way of earning more interest. Once the transfer is set up, you need not tamper with it until such time as you hear about a CDIC-insured bank paying more than 1.25%. And if you do hear of such a mythical financial institution, do be kind and share that info with the rest of the class.

October 9, 2021
Money Goals – Are you meeting yours?
How are you doing with your money goals?

At the time of this post, two-thirds of 2021 are in the rearview mirror. We’re heading into the final quarter of the year, so you should have a good handle on your progress. Have you been able to allocate your money towards your most important goals? If not, why not? And if your plans have been derailed, what are you doing to get them back on track before 2022 gets here?

Personally, I’m a big fan of writing things down. I love putting my goals on paper, then referring to that paper throughout the year. Of course, I’m not perfect… and some of my goals don’t get accomplished. It’s not unusual for me to look at my handwritten notes 13 weeks later and say something to myself like: “That’s odd. I don’t remember wanting to do this.”

This is not a good way to accomplish my goals. I’ve learned the following insight about myself – I have the memory of a fruit fly with Alzheimer’s.

And I’m not exaggerating by much. The major money goals are met every single year:
- contribute the max to my TFSA in January? Check!
- pay annual insurance premiums in one lump sum? Check!
- invest a portion of every paycheque into my exchange-traded funds? Check!
And do you want to know why the major money goals get accomplished every year? It’s mainly due to the fact that I don’t have to think about doing anything. I’ve set up automatic transfers to take care of these goals. My paycheque is deposited to my bank account – my automatic transfers whisk money into various savings & investment accounts – my goals are met without any added effort on my part! It’s a magical, wonderful process.

Getting back to those handwritten goals that are forgotten, moments after I put down my pen…

Yes – those ones deserve a bit more attention. I haven’t come up with a perfect solution for those ones, but I’m working on it.

I’m a fan of Tangerine. This bank allows me to have 5 sub-accounts under one bank number. Each sub-account has a name. Tangerine also allows me to create Money Rules, which are fantastic! This week, I took another step towards meeting my goals. Each sub-account is named after my most important priority.

Every two weeks, a part of my paycheque is transferred into Sub-Account #1. My first sub-account is a slush fund for things that occur each year, but irregularly. Think unexpected car repairs or appliance replacement. These items have to be funded, and I would prefer not to use credit to pay for them. Also, I don’t want to deplete my emergency fund for car repair or a new fridge. My emergency fund is there to replace my income should I lose my job. Anyway, I keep a few thousand dollars in Sub-Account #1. Once I’ve hit my target, the first Money Rule kicks in.

Money Rule #1 says anything over-and-above the target amount for Sub-Account #1 is to be automatically transferred to Sub-Account #2. I use this second sub-account to accumulate money for my annual RRSP contribution, annual insurance premiums, and property taxes.

Once the target amount for Sub-Account #2 is met, Money Rule #2 kicks in. Anything over-and-above the second target amount is transferred to the sub-account of my next highest priority, until all 5 sub-accounts have been fully funded.

It’s a pretty good system. Its biggest drawback is that I didn’t put it into action until last year. Ah, well… no sense crying over spilled milk. The fact remains that I’m using it now and my handwritten goals are still being funded. Tangerine allows its customers to change the names of the sub-accounts. As one goal is met, i.e. renovating the bathroom, I usually change the sub-account’s name to the next thing I want to get done. This is why one of my sub-accounts is currently named “New Blinds”. It’s not a particularly sexy name, but it effectively reminds me of how the money will eventually be spent!

Pursue your best life!

Is anything stopping you from meeting your money goals?

Maybe your memory is like mine. If so, you have my sympathy! You have goals, but you’ve forgotten what they are. It happens. Protect yourself from your faulty memory by using automatic transfers to fund your goals.

It’s also possible that other priorities popped up and derailed your goals. You know your life better than I do, so I’m not here to judge the choices that you made. I’m simply going to nudge you towards reviewing your goals and what you need to do to meet them. And if you can’t meet them this year, that’s fine too. What isn’t fine is giving up on your goals. You’ll never meet them if you quit pursuing them. That’s just how life works.

Personal finance is personal for a reason. Everyone’s circumstances are different. If unexpected events knocked your money of the path you’d set at the start of the year, then so be it. I’m simply here to give you a nudge about not abandoning your goals, even if events of this year went in a direction you hadn’t expected. No – I can’t promise that it will be easy. All I can do is encourage you to not give up on the goals you set for yourself, since I believe that they will get closer to living the life you want to live. And if they won’t bring you closer to your dream life, then ask yourself why you created them in the first place?

Your money goals should be helping you build your very best life. At the end of the day, money is a tool. When spent in a way that brings your dreams to life, that maximizes your joy & happiness, you are putting your money to its very best use. Give me one good reason why you shouldn’t be putting your money to good use.

So if your goals have gone sideways, figure out what you most important next step needs to be. Evaluate your money goals and determine if they’re still important to you. If yes, then figure out what you need to do in the next 13 weeks to get closer to achieving them. And if the money goals of early 2021 are no longer important, then define new ones and create a plan for achieving them. You’re the only person who knows your heart’s deepest desire. The responsibility lies with you to determine the most effective way to make your dreams come true. Start right now because your best life awaits!
September 18, 2021
Why I love Tangerine

As you know, I hate paying bank fees. Thankfully, there are many great options available so I never have to. (And if you’re still paying bank fees, please tell me why? You don’t have to pay them either if you’re willing to spend roughly 20 minutes setting up a free online bank account.)

However, I digress. The three best online banks in my opinion are Simplii, EQ Bank, and Tangerine. And to be explicitly clear, I am not being paid by any of these banks for this post. I’m simply sharing my opinion. Feel free to do your own research make your own choices.

At the time of this post, EQ Bank had the highest interest rate on its savings accounts.

Tangerine is my favourite online bank for the reason that it is best suited to help me achieve my goals. First of all, one customer number allows me to create and access up to 5 sub-accounts. Secondly, I can ascribe a name to each of these sub-accounts. Thirdly, I’m able to use automatic transfers from my real-world bank account to the sub-accounts.

All of my favourite personal finance tools are available to me in one online bank. What’s not to love?

Make use of Sinking Funds!

The older I get, the worse my memory becomes. Raise your hand if you can relate! Anyway, having sub-accounts means that I can create pools of money for my short-term goals. Before COVID-19, I traveled every single year so one of my sub-accounts was appropriately named “Travel”.

The beauty of naming my sub-accounts is the inherent prioritizing function that I had to go through in picking those names. Again, I only have 5 sub-accounts so I had to figure out which of my many short-term goals were the highest priority. Travel is still more important to me than furniture, which is why I still don’t have a sub-account called “Furniture”.

Having various sinking funds for my short-term goals means that the money is there when I need it. Un-sexy things like insurance and property taxes need to be paid every year. One of my sub-accounts is a sinking fund for those expenses. When those bills come due, the money will already be there. Do you know how nice it is to not have to scrabble together the money at the last minute?

I also have a sub-account for medium-term goals, namely anything that needs to get purchased in the next 2-5 years. When it was time to replace the windows & siding on my house, I got the quote then got to saving. It took nearly 2 years to save up the money but I wasn’t worried about how to pay my contractor when the work was done.

And once that particular job was done, it was no longer a priority. So that particular sub-account acquired a new name… “Landscaping.” Trees need to be cut down… grading needs to be levelled… new sod needs to be laid. (For those of you who don’t yet own a home, know that it is a money-pit. On top of the mortgage, you will be on the hook for repairs, maintenance, upgrades, and all the other financial joys that come with home ownership.)

Automate!

You know what else I love? Automatic transfers! Yes, you heard me say it – I love automatic transfers. I have my main bi-weekly transfer from my checking account to my very first Tangerine sub-account, which I call my Freedom Account. (Shout out to Mary Hunt of Debt-Proof Living!) I have more transfers in place from sub-account #1 to the various other sub-accounts.

Here’s another reason why I love Tangerine. This particular online bank has a rather unique feature that I haven’t found anywhere else. Tangerine allows me to implement “Money Rules” and these rules allow me to control what happens to the overflow.

Overflow? Blue Lobster, what the hell is overflow?

Dear Reader, if you’ve been doing automatic transfers for any length of time, you know that money piles up. One day, you account has $25 then the next time you check it, there’s way more! That’s the power of implementing automatic transfers. You do it once then move on to other tasks in life. Your money will accumulate automatically without you having to remember to make every single transfer manually.

At Tangerine, you have the option of re-directing money once a pre-determined amount is sitting in your sub-accounts. That re-directed money is the overflow. Pay attention – here’s where the steak starts to sizzle.

Money Rules in Action!

For example, you need to accumulate $3000 for your pet emergency fund. So you set up an automatic transfer. Once your $3000 is in place, you’re not going to cancel your automatic transfer! Instead, Tangerine gives you the power to have that money re-directed to one of your other sub-accounts. Maybe you’re saving up to go on a road trip or new furniture. Tangerine’s system means that money that otherwise would’ve stayed in your pet emergency fund is sent to your next highest spending priority.

And you don’t have to worry about fiddling with the automatic transfer should you need to use some of your emergency funds. Let’s say you need $1500 for your furry friend’s surgery. Your pet emergency fund will drop down to $1500. The automatic transfer will go back to funding that sub-account until it gets back up to $3000. At that point, future funds – the overflow – are whisked away to the sub-account named for your next highest priority.

It’s a pretty sweet little feature. Again, it ensures that your money is going towards your highest spending priorities.

Do yourself a favour.

At the very least, consider opening a Tangerine account. The purpose of this account was, and mostly still is, to make it somewhat difficult to access this money until I really need it. I wanted a simple method to siphon money from my day-to-day spending to my financial goals.

You don’t have to obtain a bank card for this account. I’ve had my Tangerine account for more than 10 years. I’ve never asked for a bank card. Without one, I can’t withdraw money at a bank machine. My money stays in place until I need it. What more could a Single One want?

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Weekly Tip: Figure out your priorities and spend accordingly. There will come a point in life where you realize that it makes absolutely no sense to spend your money on things that don’t make you happy. The sooner you reach that point, the better.

August 29, 2020