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I didn’t think it would be long before there was a new site out there where you could get banks to “compete” for your business with deposit accounts. MoneyAisle appears to be the first to take the idea and run with it.

The Idea:
The idea is simple. You register on the site and then you can initiate (run) an auction where you specify the amount of money you want to deposit and, in the case of CDs, the term, and banks bid on your “auction”. When the auction ends, MoneyAisle provides you with the contact information for the bank that is offering the highest APY.

From their web site:
“MoneyAisle is the next-generation online auction marketplace where consumers find great rates on bank CDs and High-Yield Savings accounts, absolutely free. Our methodology is simple: by having banks actively bid against each other in live auctions for each individual consumer request, the customer wins.

MoneyAisle’s patent-pending technology creates a safe, transparent auction, providing consumers with free access to great deals in real time. The results are instantaneous; you are offered the best rate available on our platform in just a couple of minutes.”

My results:
I decided to run an auction for a High Yield Savings account. I specified that my initial deposit amount would be $10,000. The entire auction/bidding process is totally automated, so the auction only took about 5 minutes to complete.

The end result was a winning bid with a rate of 3.40% from UmbrellaBank.com. This is the same rate that they advertise on their web site for the “Pot O’ Gold Money Market account”. So, in this case, I could found the same offer at the bank’s web site. Nonetheless, it was interesting to try.

Caveat:
I just want to remind you that with any web site like this, it would be in your best interest to sign up using an email address that wouldn’t bother you if you got some spam. I haven’t received any spam from them yet, but we’ll see what happens. Better to be safe than sorry and an inbox full of spam is pretty sorry.

What do you think of this new service? Will you add it to your list of places to check in your rate-chasing adventures?

In a recent emergency fund related post, I discussed some of the side benefits of having an emergency fund. In this edition, I will be talking about another side benefit that I felt was strong enough to break out into its’ own post. The positive monetary effect of having an emergency fund on your financial decision making process.

Ok, so maybe now you’re thinking; He’s going to tell me that having an emergency fund means that I can feel positive about the effects of spending more money. No, in fact, exactly the opposite. My goal here is to actually list some ways that having an emergency fund can allow you to save more money, not spend it. So, here goes:

Having an emergency fund will allow you to save more money because…

• You can switch to higher deductibles on your homeowner’s and/or auto insurance. If you weren’t going to actually file a claim to your insurance company for under $1,000, why have a $500 deductible? The lower you have set your deductible, the higher your premium will be. For example, we use Allstate for our homeowner’s and auto insurance.

  We recently raised our homeowner’s insurance to a $2,500 deductible from $500 resulting in a savings of over $100/year. We’re now paying only $361.36 for the insurance and the only change we made was raising the deductible. We still have the same levels of dwelling, liability, and medical protection that we wanted when deciding on the policy.

• You can get out of the high cost of having to finance vehicles, home appliances, etc… One of the most common things I hear among my friends and colleagues is that they wish they didn’t have a car payment and I don’t blame them. With a decent emergency fund, you could always tap into it to get a car. I won’t get into the debate of buying an economical used car vs. new because the idea remains the same. Buying things with money you have is almost always more profitable than paying over time.
• You can be a more aggressive rate chaser. As you may already know, one of the best ways to keep your emergency fund/savings money earning more is by having those funds in institutions that offer the highest rates. Unfortunately or fortunately, depending on how you look at it, the rates change all the time and the bank with the highest rate this week may not be competitive the next. The next bank might also have a higher rate coupled with a higher minimum deposit to get that “great rate”. Using your emergency fund can get you past those minimum deposit amounts and put your holdings into more competitive interest rate arenas.
• You can withstand the hardships of job loss long enough to find something comparable and possibly even better. There’s an old and very commonly used phrase that I love to hate… “It’s easier to find a job when you already have one”. Ok, so maybe that’s true, but that phrase has an evil twin brother and his name is “It’s easier to not spend time looking for a better job when you already have one”.

  With an adequate emergency fund, you will have a much better chance of weathering the financial storm that a job loss brings and, in turn, be more likely to not have to settle for something just to pay the bills.

For those of you reading this who do not already have an emergency fund, I sincerely hope that this post has given you some more motivation to consider starting one. Flying by the seat of your pants is a great phrase for imagery sake, but living it can be all too overwhelming at times.

There have been some great posts recently regarding emergency funds in the blogosphere. However, in this post, I wanted to highlight a few things that are nice side benefits of having an emergency fund.

Sleeping Easy - (The Peace of Mind Factor)
Quite possibly the single most important aspect of having an emergency fund to my wife and I, or most people for that matter, is the peace of mind that comes from knowing that we can handle a decent sized monetary crisis without going deep into debt. That literally does help us sleep easier at night. However, this post is about the side benefits of emergency funds and I want to talk about a different type of peace of mind.

Having an emergency fund has allowed me to be a tad more reasonable when considering doing even neccessary things in our lives. We’re considering redoing the deck on our home soon and getting new siding. Without the emergency fund, these topics could easily become hot button subjects for my wife and I. That same logic trickles down into many financial decisions that people make when dealing with their spouses, significant others, and even friends. The peace of mind factor definitely carries over beyond just having the knowledge that you can financially handle emergencies.

Interest-o-rama - (The Safe Investment Factor)
If you’re like me, your emergency fund is, or will be, saved in an FDIC insured high yield savings account of some sort. So, you’ll not only be earning that glorious interest as your accumulated wealth of emergency funds sits back acting as your financial bodyguard, you’ll also have it invested in a place that doesn’t experience the volatility of other, more risky, investments.

Personal Financial Growth - (The “I did it” factor)
For many of us, our emergency fund is the first large of sum of money that we have saved for something other than a consumer purchase. I admit, it is great to save for vacations, big screen tvs, new cars and the like, but saving in your emergency fund helps you gain insight into why it is so important to save for times and not just things. This ideal can then be applied to other savings initiatives that are crucial to long term financial health; retirement, children, education, etc…

Financial Education - (The “I knew that” factor”)
Along the same lines as the benefit above, managing your emergency fund can be a great opportunity to learn more about dealing with money managment. If you take the opportunities to store your emergency funds in competitive banks, you’ll soon notice that no one bank keeps the most competitive rates for long. This leads to rate chasing and the subtle nuances of making sure your money earns as much as it can for you while also taking into account the amount of time it will take to open new accounts and move the funds.

This will lead to you thinking about the loss of interest as money is moved from one institution to another, the total of additional interest you will earn for making the move, and how that individual bank handles their sign up process. All of these things help you to build a solid foundation as a financially educated individual.

You owe what? - (The “Jones’s are broke” factor)
It happens to me all the time and I’m sure many of you can relate to this. You get caught up in a conversation at work or with friends where someone comes out and admits that they have a ton of debt. Inevitably someone else in the group has the same or similar story and now you’re the odd man/woman out. I don’t know about you, but I love that feeling.

Sure they may pull into the parking lot in their Benz, sporting their new designer clothes, but at the end of they day they are keft with having to deal with, what can be, overwhelming amounts of financial stress from their overspending. If the Jones’s are as broke as they seem these days, I’ll be a Smith instead.

Good Blogosphere Emergency Fund Posts:

• Lulugal at HowISaveMoney opens the list with the typical ideas behind creating an emergency fund.
• Mark at The Loco Mono talks about defining your emergency fund.
• Brooke from Dollar Frugal asks; What have you used your emergency fund for?
• LazyManandMoney talks about using the snowflake saving method to build an emergency fund.
• Paid Twice talks about personal opinion on having and “e-fund” when you are in debt.
• MillionDollarJourney talks about why your retirement account is not an emergency fund.
• Flexo over at ConsumerismCommentary gives us 50 tips to help establish our emergency funds.
• GetRichSlowly talks about learning to love the emergency fund.
• Heck, even I discussed our humbly boring emergency fund.

Are you noticing any other side benefits from having an emergency fund? Did this post make you think it’s time to start an emergency fund of your own?

While reading a post about Changing How I Save Money in My ING Accounts over at HowISaveMoney.net, it dawned me that I had never “blogged” (gotta love it when you use blogging as a past tense verb) about one of the ways that we manage our credit card payments and earn a little more interest at the same time.

In the not-so-distant past, I had no credit cards and no credit card debt. In fact, I didn’t even try to get my first credit card until I was 26 years old (I’m now 31). However, having many friends who faced some pretty serious credit issues including high balances, interest rates, and the like, I knew that when I got my first credit card I was going to make absolutely sure that I was able to pay the bill when it came due. The easiest way for me to do this was to simply transfer the money I spent on the credit card over to a savings account on a regular basis. I actually used to make daily transfers.

At the time, the account I used was at ING. Besides the peace of mind from knowing I had money to cover the bill, I had the added bonus of earning a little extra interest on the money as I waited to make the credit card payment. I still use this method today although the money is now sitting over at Citi and it may be moved again soon.

Where do you leave your money that is destined to be used for credit card payments? Do you make use of high interest savings accounts as temporary holds?