customer service report

I opened an Ally account about a week ago and so far, have had to contact customer service twice. This is neither bad nor good. I’ll explain.

My last name consists of two names, my maiden name and my husband’s name, no hyphen, just a space. It’s like Elizabeth Barrett Browning or Ralph Vaughan Williams. However, in trying to verify an external account with my Ally account, the web form wanted me to enter my last name with no spaces or characters. I tried various permutations of my name but nothing worked. I tried an online chat with Ally customer service, but as helpful as they were, they couldn’t verify the account, either, due to the space in my last name. He took my number and said I’d receive a call.

I did get a call the next day, and when I called back, the customer service was also helpful but couldn’t verify the account. They tried two more test deposits with my external account and said to call if I had problems verifying with the new test deposits. Today, I logged in and verified the account with no problems. I got an entirely different web form this time which didn’t ask me to enter my name. I just logged in and clicked ‘Verify’ and it worked. I also got my signature card in the mail very quickly so should have a debit card in no time.

My husband shares the double-barrelled last name, and we are used to weird things happening with our name the way it is and I know that we chose for it to be this way, so I am generally good-natured when something like this happens.

My two interactions with Ally customer service were very pleasant, short conversations, and I never had to wait on hold. The problem was fixed in a few days, so thus far I feel neutral to positive about the account experience so far.

A better retirement calculator

Well, I think I’ve found something that sort of fills the need I expressed in my previous entry. This calculator from Bloomberg allows for expected salary increases and by playing around with the ‘current age’ and ‘current retirement savings’ numbers, you can get an idea of what your savings would look like if you didn’t add anything for a few years, but then added a larger percentage of income. It’s not perfect, but it’s fun to plug in numbers — well, maybe it’s only fun for me, but thinking about retirement should be fun for everyone, not just the math nerds!

Best of all, this calculator factors in inflation (I always assume 4%) and percentage of current income needed at retirement. If you house is paid off and that’s where you’ll be staying, your cost of living will be far lower in retirement than it is when you’re starting out.

I also really like the option in that calculator to include social security or not. I’m not placing my bets on social security being there when I retire. I’d like to think that it will, but it’s better to assume that it won’t, and possibly have more income than expected in retirement. I’d be pretty upset if I counted on that money, and then find out I won’t be getting it, or only a percentage of it, but I’d be just fine not counting on it and then having the checks show up anyway.

I’ve also learned from my father’s experience with his own social security that it’s better to have an alternative plan when it comes to retirement income. My father retired from his government job not too long ago, and has started his own business as a contractor of sorts. His income from this second career is erratic, but it’s been enough this year that he’s not getting any social security payments right now. He was also caught in a policy that prevented him from starting his business after retirement, so he was basically forced to work another year in his government job. How’s that for a surprise–oh, hey! You have to work another year before you can retire! Fun, right?

If you plan to work in retirement, even if it will only be part time or inconsistent income from month to month, look into the details of social security sooner rather than later. It’s not some magic check that shows up at age 65 no matter what–there are income restrictions and age requirements, among other things, to think about.

Real retirement calculator?

There are a lot of retirement and savings calculators online that will let you plug in your monthly (or yearly) savings and investments, and your expected rate of return. There are some that will tell you how long it will take you to become a millionaire. There are others that will ask you when you want to retire and calculate how much you need to save monthly to make that happen. What I haven’t been able to find is a real retirement calculator.

What do I mean by that? Well, assume you’re 25 and you put $2,500 in a Roth IRA, but then you kind of forget about it and it sits for five years. Then you’re 30 and married and realize you need to put more into that IRA! So you start making random deposits, sometimes you get on a monthly routine of adding $100, but other months you don’t add anything, and then right before tax season, you add $1,000. Maybe this goes on for a few years, and then you start to get serious about it at age 35. You invest as much as possible each month–let’s say $500. But the next year, at 36, you get a raise, and up your savings to $600 each month. And you continue to get both small and large raises and increase your savings until retirement. Also, after your mortgage is paid off at age 45, you start investing your former house payment as well, so now it’s up to $2800/month into savings and investments.

Where’s the calculator for that? I’d like to see a calculator that allows for exponential savings amounts, lets me project 15 or so years and plug in the amount that I could potentially be saving per month at age 45. I want a calculator that allows me to add in other retirement benefits I may have, like a pension that grows as my annual income rises.

I can guess at these numbers, but none of the calculators I’ve found–including Excel sheets people have made–allow for this type of input. Most people don’t invest $500/month for the rest of their lives, though maybe some do. People who want to accumulate wealth put away everything they can.

Ally money market: Post #1

Last night, I opened a new money market account with Ally. I hope to report on how it goes, how easy it is to use, etc. The sign up process was fairly easy, though for some reason, I was not able to auto-link my Ally and ING accounts. That just means I’ll have to wait a couple days to verify the account with some mini transactions. It was easy to connect with Mint, probably since Mint advertises for Ally.

This account will be used as our emergency fund, so the checkbook and debit card attached to it will be kept at home in a drawer, instead of in my (or my husband’s) wallet. Having the ING savings account has worked well for longer-term savings goals, but in a true emergency, it will be nice to have quicker access than the time it takes for ING to transfer funds to checking.

Emotion vs. head knowledge and monthly spending

One thing that I’ve started to do in order to psych myself out–emotion, not head knowledge–of thinking I have a lot of money to spend is to subtract all our regular recurring bills from the checkbook at the beginning of each month. This renders the account ‘balance’ pretty low on paper, so that when I go to buy groceries, stop at Target, or go out to eat, I’m aware that I really don’t have all that much to spend. I do not add paychecks before they come in–those get added as they are deposited–because that’s not the point of this exercise.

I think this could work for others even if it resulted in a negative balance at the beginning of the month, because then you’d be aware of the hole that you’re in and need to climb out of. Seeing -$800 or whatever would be tough, and that would be a good strong reminder.

I’ll admit it kind of wreaks havoc with knowing the actual balance of your checking account if you don’t regularly check your account online, but I’ve found that the benefits far outweigh the inaccuracy. And, it will be accurate as the month goes on and the bills are paid. Another benefit is knowing how much you can shuffle to savings or debt, and it could also prevent overdrafts when bills come due.

Even if you’re not good at budgeting, or don’t want to budget (i.e. put a limit on categories of spending like groceries, entertainment, etc), at least knowing what bills come in regularly would be helpful.

Know of any other tricks to curb spending? Please comment!

Why interest sucks

If Dave Ramsey’s proposed concept of paying off debt (any and all debt–no debt is ‘good,’ even student loans, even mortgages!) isn’t a familiar one, I’ll use some of my own real world examples to demonstrate why I am waging an all out war on debt (my student loan). These are actual real life numbers, so if you’re afraid of what this means, then you know my fear!

Now, I’ve already admitted I borrowed a bit more than I should have in order to get through graduate school, but I’ve also got a better job than I thought I would have at this point, so I’m going to be kicking this loan–hard–very soon.

My loan information:

Principal balance: $31,784.72
Interest rate: 6.625%
Monthly payment: $241.45
Repayment term (months): 235
Interest paid: $24,997.22
Total amount repaid: $56,738.02

Okay, maybe that doesn’t look scary, or maybe you aren’t used to looking at straight numbers, so let me put that into regular English. I borrowed $31,000+ to pay for school. My interest rate is 6.625% (keep in mind, some mortgages are going for around 5% or less these days) and the repayment term they’ve given me is 235 months. In real terms, this is nearly 20 years to repay this loan–20 YEARS! You’d think that’s great, right? I can take my time, only pay $241 a month, and that it’s… but wait. What’s this ‘interest paid’ category? Take a closer look. That’s right, if I take 20 years to pay off this $31,000 debt, I’ll pay AN ADDITIONAL $24,997 in interest. That means I’ll pay $56,738 for my $31,784 education. Yikes!

Seeing those numbers makes me angry. This is good, because this anger and frustration is what propels me to do something about it. This debt happens to be Debt #3 in our ‘snowball,’ so it’s going to be last in our series of debts.

Debt #1 in our snowball is already paid off, and right now, we are focused on paying off Debt #2. Right now, Debt #2 is getting paid each month, plus the amount we were paying toward Debt #1, and whatever other money we can throw at it. We are putting a very minimal amount into savings each month, because our debt interest is much higher than the interest we’d earn on money in a savings account. We are putting a substantial amount to our student loans each month. And then what? Then I’ll have an additional $24,000 in my pocket 20 years from now…