Citibank Fees 2011 Update

In a previous post, I mentioned that "Citibank was Raising Fees Again" and how I was going to switch to Ally bank. However, I got on the online chat and spoke with a rep. Apparently, their website is not completely updated yet so their fee structure will be different starting in December 2011 for the CitiBank Basic Checking Account. Here is what the rep said:

Effective 12/09/2011, to waive the Basic Checking $10.00 monthly service charge you will be required to maintain $1,500.00 average balance in your Checking or combined average balance between your Checking and Day to Day savings account. You can also waive the fee if you receive direct deposit and complete a Bill Payment through our Online Bill Payment service.

I have no problem maintaining a $1,500 balance. $6,000 was just a little too much. I am glad I will be able to stay at Citibank because it's such a hassle to switch banks. I am just worried next year they will have another round of fee hikes.

What We Can Learn from the "We are the 99 percent" Blog

If you have been watching or reading any news recently, then you would have seen the Occupy Wall Street movement. The rage is about the greed in the Wall Street and the financial industry. They are also angry about the distribution of wealth. People who make over $380,000 a year are considered the 1% and they own about 38% of the wealth in the U.S. We Are the 99 Percent is a blog that shows all of the personal stories and hardship of the rest of the U.S. I guess you could say I am one of the 99% because my income is nowhere near $380,000 a year.

Personally, I am not angry at all about the 1%. It's all about perspective. If I take one step back and look at any third world country, I realized how lucky I am. I don't have to worry about finding clean water or wondering if I will go hungry tonight. The U.S. has a lot of safety nets like food stamps, medicaid, unemployment insurance, etc. If you are down on your luck, you may not be able to live a life like you have expected, but you also won't die from starvation. When I read about the poverty in Africa, I sometimes wonder why I am so lucky to have won the ovary lottery and to be born in America.

So while I was reading some of the posts on We Are the 99 Percent, a couple common themes popped up that caused these people to be in financial trouble:

Credit Card Debt


It seemed like a lot of the people on there has some form of credit card debt. I really don't know how to put this in a nice way but if you have credit card debt, then it's probably your own fault. Unless you were a victim of identity theft, every single charge on that card was made under your own free will. A simple answer to this is to pay off all of the debt and pay off your credit card monthly. If you can't control your spending, just cut up the card and pay with cash from now on. Most importantly, live within your means. Simple as that.


Medical Issue

Medical issues was another reoccurring theme on We Are the 99 Percent. Working in the healthcare field, I understand that some medical emergencies are unavoidable. If you get hit by a car or fall off a ladder, it's not your fault. However, many medical conditions are avoidable or the chance of getting that medical condition could be decreased drastically. Exercise. Eat a healthy diet. Don't smoke. Don't drink. It's really that simple

Student Loans


This is another biggie on We Are the 99 Percent. Two words. No sympathy! I have student loans. I had about $30,000 when I was done with college. However, I also knew that there was no guarantee I would get a job once I graduated. That's why I picked a major that was in demand. I may hate my job but it's work none the less.

It's great that people like to follow their dream and have a college major that really interests them and makes them jump out of bed everyday. However, the reality is that if you want to have a financially secure life, you will have to do things that you may not like. It doesn't matter if you have a graduate degree in art or music. If there is no demand, you won't get hired.

I can see why this movement started. Employment rate is still relatively high and people are realizing that if they government does not step in again, they will have to drastically change their life style. I see this as a positive thing. We, the U.S. as a whole has to learn to live with less while living a more healthy lifestyle.

Citibank Raising Fees Again!

Why I am Leaving Citibank

I was checking my EZ Citibank checking account today and noticed a little message for me. Apparently, starting November 10, 2011, they will start charging me $15 if I don't maintain a $6,000 balance across their other products (checking, saving, CD, and money market account).

Yes, I understand they have to make money. However, I am just too use to having a free checking account and I refuse to keep $6,000 in my checking account and I certainly do not want to open any new accounts. I was already annoyed when they were making me keep a minimum of $1,500 in there but $6,000 is too much.

The only reason why I haven't left them sooner is because it's a total hassle to change banks. My paycheck is directly deposited into my Citibank account monthly. The problem is that our HR office is not located near my workplace. It's about a 20 min drive. However, I guess I will have to finally bite the bullet and do it.

Banking Alternative

Chase 

Luckily, I live in California and Chase is everywhere now after they took over Washington Mutual. They offer a checking account with a $10 monthly fee that could be waived with either a monthly $500 direct deposit, $1,500 min daily balance, or $5000 min of linked investments/deposits.

Ally Bank

I have also head great things about Ally Bank. They are an online bank and they have no minimum balance, no ATM fees, no monthly fees, no direct deposit required, and free bill pay. Also, you are able to earn interest on their checking account too.

The only issue is that they don't have a physical location I could walk in and deposit a check. If you want to deposit a check at Ally Bank, you will have to send it to them in a prepaid envelope. This is not a deal breaker for me since I don't receive many checks and I usually don't need the money from the deposited check right away.

I still have about a month to decide but for right now, I am leaning towards Ally Bank.

Why I Choose to Live with Less

Every so often, I am reminded that living with less allows me to live a richer life. Living in an American society that is so consumed with material goods, bigger is better, and instant gratification, living with less seems so wrong and goes against the American way.

However, I just have to take one step back and see the bigger picture. I don't want to live a typical average American life. I don't want to be obese. I don't want to worry about bills. More importantly, I don't want to work until I am 65 years old.

Obesity

According to the CDC, 1 in 3 American adult is obese. If our American ways don't change, it will only get worse from here on out. I have to admit, I use to be fat. Not obese, but I could have lost a couple pounds. I was eating too much and not exercising at all. I finally made the decision to lose weight. I started to eat less and work out. I am happy to report that I went from 190 pounds to 160 pounds. A much healthier weight for my height.

The decision to lose weight has totally transformed my life. I have more energy and feel generally happier. I am able to gain more life experiences and travel more because I took up cycling and hiking.
 
Bills

At my work, there is a lot of overtime offered. This means I could make 1.5x more than my standard pay if I do overtime. However, when they call me at home to come in to work overtime, I simply don't pick up the phone. I don't need to work overtime.

I live below my means so that I could save and not have to work overtime. I keep my purchases to a minimum. If I don't need it, I don't buy it. My time is much more valuable than the pay I will be receiving.

What's the point of being able to afford something if you don't have the time to enjoy it. A lot of my coworkers work overtime so that they could make their large mortgage or car payment. They might have a bigger house or a much nice car than me but they sure don't seem to be any happier. On the contrary, they are stressed from the extra work and having to keep up with their house and car payments.

Work

I hate work in general! My work is quite fulfilling and the actual amount of work I have to do is actually not much. The pay is decent and I have a lot of job security. However, the thought of actually having to work until 65 years old makes me suicidal. What's the point of having a ton of money in the bank when you are old, your health is failing, and you can't fully enjoy the money that you spent 40 years accumulating.

That's why I have made the decision to retire by the age of 45 years old and to just live on less. I do not want to spend the most productive and the healthiest part of my life at work. I want to do the things I love to do and travel more. I want to gain more life experiences. I want to live more fully and the only way to do this is to consciously choose to live with less!

The Importance of Expense Ratio

What's Expense Ratio

The expense ratio is simply the cost of operating a mutal fund or index fund divided by the average dollar value of asset under management. So no matter if the fund gains or loses value, you still have to pay this amount.

How Expense Ratio Makes a Difference

So I was looking at the funds under my 457 plan the other day and I noticed that the fund that I am buying into has an expense ratio of 0.44%. This is a target retirement fund similiar to the Vanguard Target Retirement 2045 Fund I am purchasing in my roth IRA but the expense ratio is only 0.19% at Vanguard. The expense ratio is 2.3x greater in the 457 plan. 

Using this simple expense ratio calculator, I am able to see the huge difference 0.25% makes. As an example, if I have an initial investment of $100,000 with an annual return of 7%, over 30 years, my returns would be about $48,000 less with the higher expense ratio. This goes to show, a small percentage difference makes a huge difference over the course of 30-40 years.