While it is true that plastic bags are produced from natural gas and recycling them can cut down on crude oil usage, we need plastic bags. Aren’t those large garbage bags we use in the kitchen made out of plastic (polyethylene)? What about the black bags lying on sidewalks of NYC awaiting transport to the landfill?

Plastic grocery bags are perfect as trashcan liners. They are the right size to help isolate your garbage from within your large 13-gallon kitchen trash bags. It typically takes me an entire week to fill a 13-gallon bag with trash. Do I want my watermelon rinds, chicken bones, and avocado pits lying in my kitchen for a entire week? Hell no.

Small grocery bags are also great for cleaning up pet litter, especially in the park.

Indeed, it would be a sad day when all plastic grocery bags are gone.

Fighting against bottled water. Very interesting.

Etrade

Etrade offers full-brokerage accounts in addition to the standard money market account. This means that you can open IRAs and stock portfolio accounts all under one convenient interface. For the longest time, Etrade has offered comparable interest rates to that of other online accounts. At the time of this writing, however, the savings account rate is a measly 0.95%. This rate is still 3-4x what your regular bank (Citibank, Chase, Bank of America) would offer. The redeeming qualities of Etrade include its slick interface and expedient transfers. The web interface is neatly organized according to the type of account you have with them. The monthly account summaries are simple to interpret; you’d be surprised how confusing some bank statements are. Account transfers on Etrade are FAST. Accounts are credited by the evening after you make the transfer, although you may not necessarily be able to draft funds immediately. Your balance begins accruing interest the day you make the deposit. Withdrawing funds directly from Etrade is also convenient; they offer an ATM debit card that is valid at any U.S. ATM machine. Etrade does not have an surcharges on ATM use, and they will reimburse any fees incurred from the other end as well. Overall, Etrade Bank is a good deal.

INGDirect

INGDirect has subsidiaries throughout the world, although the U.S. branch is located in Wilmington, DE. Its Dutch counterpart received a huge bailout several months ago during the banking crisis. Currently, it offers a 1.5% interest rate on its savings accounts. ING’s web interface is fluid, and is easily navigable. The login security is well-designed, with keyboard and graphic validations. Account transfers usually take 3-4 business days to process, so your money doesn’t accrue interest during this period. For instance, if I transferred money into my INGDirect account on Friday, it probably won’t show up until Thursday. This translates into 6 days of lost interest.

This ultimately doesn’t add up to much, but there is still a difference. For instance, assume that the interest rate is 2%. If you deposited $1000 every two weeks for the year (23 deposits total), you’d lose out approximately $7.56 in interest for the year if it took 6 days to process a transaction. ($23,000 will accrue approximately $1.26 daily at 2% annual rate, if you roughly estimate using simple interest). Interpret this however you choose.

Withdrawals from INGDirect must go through your regular checking account, so there is no way to pull money directly out of your money market account unless you have an Electric Orange checking account through ING.

HSBCDirect

HSBCDirect is an online subsidiary of HSBC Bank, which also has branches throughout the world. The U.S. headquarters is located in Buffalo, NY. While the online bank is a separate entity, you can withdraw cash through any of HSBC’s ATM’s without penalty. They currently offer a generous 1.65% interest rate on their money market account, and 2.3% on a 12-month CD. The higher interest rates are generally welcoming, although some analysts say that a higher interest rate may indicate financial turmoil. (A bank in need of cash may offer higher interest rates to draw in more investors) I don’t know what to make of it, since these money market accounts are all FDIC insured (backed by the gov’t). HSBC’s web security is akin to that of INGDirect’s–reliable verification. Its web interface, however, is lousy. The interface is functional, but awkward. The website launches a pop-up window when you make account transfers–this is usually shot down by my popup blocker and Adblock. The accounts also require 3-4 days to process a transfer, just like INGDirect. Nonetheless, they offer decent rates.

EmigrantDirect

This bank is an online subsidiary of Emigrant Bank. I know that there are branch locations in NYC, but I believe the physical bank has no relation to its online counterpart. Prior to the economy bust, EmigrantDirect offered some of the highest interest rates in the country. Its money market rate is currently at 1.65%. Its web interface is nothing spectacular, although it is functional. Transfers also take 3-4 business days to process. Overall, decent service.

Summary

Any of the aforementioned four online banks are a decent bet to start some savings. If you have extra unneeded cash, you could stash it in one of the CD’s that these banks offer. Remember that these interest rates change on a daily basis, so don’t make your decision solely on the numbers. The customer service on all of these banks are reliable; they reply in a timely fashion. However, don’t expect the level of service you’d get from a physical bank. These are no-risk opportunities to help build your bank; they won’t make you rich, but will certainly add to your savings.

While you can invest this excess green in the stock market, bonds, mutual funds, or any other venture that might promise huge returns, I find that this is impractical for the majority of us for a number of reasons:

1. Unless you had a career prior to medical school, the amount you’d be able to invest off of a resident’s salary is not sufficient to offset any transaction fees, no matter how little your broker charges. Scottrade used to charge $8 per trade. If you’re putting green into the market monthly, you’re incurring a minimum of $96 a year in commission. Try to make that back in this bear market.
2. If you’re working 80 hours a week, you have no time to research your investments. If you’re already economically savvy, go for it. Most of us need to sleep or study for our job.
3. You might actually need the extra cash sometime. You can’t pull out your money in a pinch if it’s invested in the market.

The alternative to investing it is a no-brainer: stash it in the bank. Which bank? The short answer is an online bank. Current interest rates are a pittance, and most banks with a physical branch offer <0.50% rates on their savings accounts. Online banks offer slightly better rates, and are nearly as convenient if you can coordinate them appropriately. There are dozens to choose from, and most of them are generally reliable. Etrade and INGDirect are two institutions that offer online banking.  Stay tuned for my upcoming review of my experiences with various online banks.

]]> http://ophthosurgery.com/2009/05/where-should-a-medical-resident-stash-his-cash/feed/ 0 http://ophthosurgery.com/2009/03/maximizing-your-bank-account-in-todays-economy/ http://ophthosurgery.com/2009/03/maximizing-your-bank-account-in-todays-economy/#comments Mon, 09 Mar 2009 09:50:11 +0000 admin http://ophthosurgery.com/?p=352 I admit that I’m ignorant about business and economics. I’ve been a student for the majority of my life so far, and it seems like the only “economic success” I’ve had is racking up a shocking amount of student loan debt throughout the years. Recently, I’ve been playing catch-up with economic terminology so that once I actually have a positive cash balance, I’ll know what to do.

I’ve read a bunch of guides on cutting spending and minimizing expenses for the average-Joe, but many of the suggestions don’t necessarily apply to me or seem a little bit too fundamental.  Nonetheless, I’ve decided to add on to the list of online guides, and offer some of my thoughts on saving money. Perhaps they will be of use to some people.

1. Credits cards. I am considered a “transactional user”, which simply means that I pay off my credit card balance at every billing cycle. While it’s commonplace for me to tell you not to carry a balance since I don’t myself, I’d imagine this is where you rack up excess consumer debt. Credit card companies charge hefty interest rates up to the 20-30% range for balances. If you carry a monthly balance, then it’s time to crunch the numbers to see where you’re bleeding cash. When you do use a credit card, get some cash return with one that pays cash back on your purchases, like the Chase Freedomcard. I get 3% back on my top 5 categories of expenses, and 1% back on everything else. It adds up, albeit slowly.
2. Daily expenses. Yes, people tell you to cut back on your daily Starbucks latte or stop eating at restaurants, but can we make the sacrifice? My advice is biased, but part of my philosophy is to live within your means without deprivation. Yes, I could “save” a lot of money by eating gruel every day. In fact, I could dilute my gruel to save even more. On the other hand, it’s probably not too economical or healthy to eat at Peter Lugar’s every day either.
   1. The goal in cutting back on daily expenses is to identify what to adjust without feeling punished. If you drink daily Starbucks coffee, can you make due with Dunkin’ Donuts instead? (About a $0.50 difference). Try drip coffee that you brew yourself. Find that compromise. Maybe you can buy Starbucks grinds from Costco, and brew it yourself. Or get Starbucks on Tuesdays and Thursdays only.
   2. Groceries. Do you have room to save on groceries? Sure, you can scroll the weekly circulars and hunt down deals. I would recommend doing so only if you think it’s worth your time and transportation cost. Superfresh may have oatmeal for $0.50 less than Pathmark, but you pay in transportation time, $0.15 in gas, and vehicle wear. That would not be worth my time. Fortunately, I’ve hit the jackpot on fresh vegetables at the local hispano supermercado–I cannot find cheaper fruits or vegetables anywhere else in town. Bananas are 25c/lb! I usually load up whenever I go.
   3. Another note on groceries. If you have an Aldi in your city, shop there.  The money you’d save on milk itself there should pay difference in transportation, in most cities. No need to deprive yourself either. I got lucky the other day, and Pathmark was liquidating its Bahlsen (German) chocolate butter cookies. I bought 10 boxes. That should last me 10 days of snax (j/k). And if you do load up on groceries, don’t let them spoil. That defeats the whole purpose of buying cheap food. Either buy less, or cook all of it first.
3. Eating out. Restaurants are hurting as badly as consumers. There are deals to be had. Keep an eye out for any lunch specials. In general, by simply eating lunch instead of dinner at the restaurant you can cut back costs. If that’s not plausible, then perhaps changing the restaurant venue may save you dollars. Instead of eating at Mama Mexico’s, you could have a meal at Chipotle’s. There’s almost always a more budget restaurant alternative, short of fast food. If eating second rate restaraunt food is too much of a sacrifice, don’t do it. It’s simply a good alternative to renouncing restaurants altogether.

That’s it. Obviously you can micromanage all of your expenses, but keeping a general open mind to what you’re spending and what you can afford to cut back on. Good luck on the savings!