savings account – One Dollar Allowance

“Afford”

June 27, 2025June 23, 2025mrsonedollarallowanceLeave a comment

I had an “ah-ha” moment the other day about this word. There’s a difference between being able to afford something and wanting to afford it. So many times, we focus heavily on what people see on the outside. I hear it at work lately – I work with agents, and there are comments made about how people spend their money. Now, I agree with the “I just handed you a check for $20,000, what do you mean you have no money?” However, there’s a flip side. Just because someone pulls up in a Tesla doesn’t mean they want to throw money around.

TRADE OFFS

Mr. ODA and I have money. We can go out to dinner, go on a vacation and stay in a fancy hotel, pay for flights across the country for all 5 of us, buy another house, splurge on a vacation house and a boat. If we wanted to. We don’t.

Instead, we want to look into the future. We decided that the ability to spend time as a family, being there for the kids’ activities, and going on different kinds of trips throughout the year to give the kids experiences is more valuable.

I talk about this concept often in this blog. Every dollar spent has an opportunity cost. Every dollar spent should cause the question, “is this the best use of this dollar?” We joke about how we hesitate to buy a $30 pair of shorts, which you wear for years, yet we’ll spend $30 to eat one meal. Of course, we do have those instances where we go out to eat, but they’re not a constant staple of our household. We know that the instant gratification of that one meal isn’t going to get us to our long term goals. It’s the same concept with the $5/day coffee purchase. It’s not about the literal $5 that’s going to get you on your way to financial freedom; it’s the mentality that comes with making better financial decisions.

HOUSE POOR

When we were shopping for our first house in 2012, the bank pre-approved us for $750,000. We set our limit at $350,000. Why? Because we felt we could scrape together 20% down payment and closing costs for a $350,000 home. If we were under a $750,000 mortgage, we’d have to pay a higher monthly payment and private mortgage insurance (PMI) as a penalty for not having 20% down. At $350,000, our mortgage payment was about $2,000. At $750,000, the mortgage payment with PMI would have been about $3,500. That’s an extra $18,000 per year we would have been spending on a house instead of investments, trips, a new car, etc.

If I said to you, “pay $2000 to your mortgage, and at the very same time, put $1500 into a savings account that you can’t touch,” what would your reaction be? You’d find every excuse not to do that. You may do it for a month or two, but there would be an emergency or large purchase that comes up and you’d justify using that money for that instead.

CAR DECISIONS

While we can “afford” the Tesla, we didn’t buy it to be showy. We bought it to serve a purpose. Unfortunately, the concept of Tesla comes with pre-conceived notions for people. We didn’t pay for an extra color. We bought the base model because we weighed our expectations of using it versus the cost of extra charging needed and such. With the tax credit, our net was $38,000. I’d venture to say your car was about that price or more if you bought it new. So while we can afford the Tesla, that’s what we chose for our family because it met our needs. We didn’t buy an $80,000 BMW just for the name when a $40,000 car meets our needs.

GADGETS & TRINKETS

Maybe your spending is at the hundreds of thousands level. Maybe you’re buying the new Nintendo Switch that just came out. Maybe you’re buying each new game for your gaming system. Maybe you have bought into the influencers that are constantly jamming the latest mop and vacuum down your throat. Do you need 4 mops? Do you realize that you probably just need to actually use the one you already have and that this new gadget isn’t a miracle worker?

Everyone has their thing. There’s something that brings you joy and you’re going to be drawn to purchasing new iterations of it. I get that. But have you stopped and really considered the purchase?

This is where I don’t like the “envelope” method. People who use this concept, whether it’s literal envelopes or separate accounts, tend to overspend. They see there’s money left in an envelope and it goes into “extra” immediately in your head. “I saved this month, so I can buy myself something fun!”

This month, I replaced my favorite earrings because the originals were worn out ($12), bought a pair of black shorts because I had none ($14), bought a dress because Mr. ODA needed free shipping 😉 ($20), and two books I really want to read and aren’t available at the library ($20). Before this month’s Amazon order, my previous one was for kids summer pajamas in April. I buy filters for my vacuum instead of replacing it (although I’ll admit that I’ve had my eye on a new vacuum cleaner for about a year, but it’s been sitting at $80 and I know I’ve seen it for less than that). My mom bought me my steam cleaner mop several years ago, and I have a Bona that I bought for myself in 2016. The point here being that I’m stopping and thinking before making decisions, regardless of the amount of money I have available to me.

EDUCATION

It comes down to being an informed consumer. While you can rely on the experts, understand your own goals. When that relationship banker ran our numbers for a house purchase, all he did was ask us our fixed monthly expenses and income (debt to income ratio). Note that our approval was after the changes on how mortgages were approved from the 2008 crisis. It’s a flawed system. But we knew our limits and what our goals were. He didn’t ask us our goals outside of “so you want to buy a house.” At the same time, we were paying towards a wedding. So on top of needing to come to the table with about $80,000, we also needed $12,000 to go towards that wedding. We closed on our house on July 17th and were married on August 4.

We have money in many locations. Currently, in our main checking account, I’m projected to fall below $0 if I don’t have any income before the end of the week. I have a bank account with more than enough money in it, but it just pains me to move money out of that account. I don’t want to set the precedent. I bet if I had kept my business money separate from my personal money, it wouldn’t be as obvious. But we don’t keep things separate because the business income is our family income. So when I had to pay out over $3000 for a repair on a rental house, that ate into my personal checking account balance, so I’ll need to make that transfer.

I listened to the young receptionist at work bark about people spending their money and how someone showed up in a Tesla but can’t pay their $75 office bill. However, I’m observant. I saw that she complained to me that the money in her account showed up on the wrong day so her card was declined at Hobby Lobby. I saw that she regularly came in with a new outfit from TJ Maxx. I’m sure she got a deal, but is a new outfit twice a week a necessity? When she was let go from the job, she turned to “retail therapy.” It’s hard for me to help walk you through the loss of income while you are actively spending.

Personally, I worry, “what if the ability to transfer from our special savings account isn’t there one day?” That’s because I’m looking at the big, big, big picture of our lives, and not what happens today, this week, or this month when it comes to our finances. So that’s why I don’t buy the kids all the cute outfits I see and I don’t buy myself the latest gadget. I’d rather have the ability to go on a trip and do activities with the kids that build memories.

Additional Annual Income

January 9, 2025December 31, 2024mrsonedollarallowanceLeave a comment

Every year, I like to look back at ways we earned income outside of a W-2 or our rental properties. These things include interest earned, dividends paid, and bonuses received on credit cards.

CREDIT CARDS

We opened a new credit card to give ourselves a 0% interest loan when we purchased the hot tub. I’m a broken record on this, but I’ll keep pointing out the availability of this option. Yes, we made this purchase because we could pay for the item outright, but it would be nice to pay for the hot tub over time while letting our money earn more money in other accounts. A sign-on bonus for that credit card and the immediate high purchase led us to $489 earned for doing nothing expect spending money and opening that new card.

Outside of that credit card reward, we deposited almost $1,200 worth of rewards from other cards into our checking accounts. Then we have some cards that earn points instead of cash. These are kept in that credit card’s “bank” of points because they can be worth more if they’re used within the rewards portal (e.g., booking a hotel). Essentially, 100 points equates to a dollar, but it’s not always that because of the bonuses available. With that said: we earned 18,683 points between 3 cards and $73 on another card.

INTEREST & INVESTMENTS

We have two accounts that pay out dividends in December of each year. This year that totaled over $4k. Between two savings accounts, we earned $2,500 of interest payments.

Mr. ODA invests in Treasury bonds. Instead of withdrawing the money after each 4-6 week period, he rolls it over and the interest earned gets deposited into our account. That’s paid us $2k this year.

ODD JOBS & RANDOM INCOME

On top of the things I can project like interest earned and rewards, I also do a few odd jobs throughout the year. Between a part time substitute teacher position, doing surveys, and selling kids clothing and toys to second hand shops, I brought in another $1600. I use this concept as an ‘offset’ in my mind to cover gift giving throughout the year. Mr. ODA brought in nearly $1,000 doing mystery shopper activities for restaurants. Betting on games and doing fantasy football brought in another $700.

SUMMARY

So with minimal effort, we brought in about an additional $14,000 in the past year! That more than pays for our hot tub purchase. It more than pays for our Christmas gifts, and even birthday gifts paid for through the year.

When I consign, it takes several hours to prepare. But I do those items that way because I can earn more money with less stress. For consignment, I’m preparing my items, logging them, printing labels, and then dropping off. Once I drop off, all I do is watch my sales. If I try to sell these items on mom-to-mom type forums, then I have to manage each individual item, follow up on people who need to pay/pick up, and then set out my items and wait for them to actually follow through. It’s just a lot more mental energy even if it may be less physical hours of work.

Outside of the consignment effort and my very part-time job, everything else was fairly passive. We earned a lot of money just by buying other things. We earned a lot of money by just having a savings account with a decent yield. We earned a lot by Mr. ODA investing in Treasury bonds, which takes a few clicks every few months.

The first step should be to ensure your money that’s not in use is in a saving account and earning interest. After that, a credit card with rewards earned should be used. Teach yourself discipline to count your credit card swipes the same as swiping that debit card in your checking account. You’d be amazed at how much those small bits add up.

Year in Review

January 2, 2025January 1, 2025mrsonedollarallowanceLeave a comment

This was a good year. We took a lot of trips, made some good memories, and purchased some fun things. While day to day life has been hard with 3 little kids and managing some of my own interests, it really was a fun and rewarding year when I look at the big picture.

PERSONAL: MY YEAR

I went through a lot of growth in this year. I started the year with a girls trip, which was really healing in my mom-of-3 world. After that trip, I hunkered down on my diet and exercise. Over 10 months, I lost 22 pounds. Each kid added about 10 pounds to my body’s desired size (where I just plateau unless I put a lot of effort in). It’s not something that I regularly discussed with people or mentioned, but it is something that I’m pretty proud of and took effort. I ran a 5k in August, where I beat my time from the year before, and it didn’t feel like it took any effort to beat that, which was nice.

But then my oldest started kindergarten, which was a surprisingly hard adjustment in my schedule. He was completely ready for school, and him going wasn’t the hard part. I welcome new phases of life and mostly don’t dwell on the losses that those mean. However, the schedule of the year took me two or three months to get used to. He gets on the bus at 7, #2 gets dropped off at 9, she gets picked up at 12, baby takes a nap from 1:30-3:15, oldest gets off the bus at 2:45. It was just a lot of broken up time in my day, and it took so much out of me each day. I finally feel like I’m used to it and can be productive in those short periods in between.

We were told that our preschool will be changing ownership next school year, which threw a wrench in my plans. Sure, things will work out. But it doesn’t change that I had a plan that didn’t need to be thought about. I had a financial expectation that didn’t need to be budgeted for or considered any further. It was another thing that took mental energy from me. I had originally thought I’d not send the 3rd kid to a 2s year like the other two kids. I spent some days mourning that alone time I was giving up by keeping him home. But I toured a preschool, and that’s my wish list for next year. If we don’t get into that preschool, I’ll likely just keep him home with me and try for the 3s year there. It’s just a socializing desire. I don’t work and need child care, so it’s a privilege to send him if it works out.

On top of all the parenting jobs I have, my job managing our rental properties is another job that takes a ton of time and mental energy, but no one really sees the fruit of that labor. May was the only month this past year where everyone paid rent on time. While I’m pretty lenient on that, that’s still time that I’m taking to manage and keep up with. I have one tenant who hasn’t put the water bill in her name yet. Supposedly it’s a city issue, and she always pays when I send her a picture of the bill, but it’s still a time sucker that I have. Then add in that we have several maintenance requests that come up, and a few big projects that were needed.

Related to the rentals, I made 44 posts on this blog. I set a goal to post once per week, preferably on Thursdays, for the year. I fell short by 8 weeks, and I wasn’t consistent with the Thursday post each week. I did well when I had inspiration, and I always did the monthly updates, but I didn’t meet my goal. I’ll keep the same goal of once per week, preferably on Thursdays, for this year. While my reach isn’t far, I do hope that someone will find this little corner and gain a new perspective on their finances. Plus, I appreciate being able to go back to our monthly updates to see how things have changed. It’s hard to see it when you’re looking month-to-month, but to see a drastic jump in numbers from a year ago is nice.

PERSONAL: THE FAMILY

We made it to 12 states this year, and that’s pretty cool. The kids got to see a lot, and they’re really interested in different states and their stats. I appreciate that curiosity and the ability to learn while traveling. Only one trip was on a plane, which was to Colorado. We did a 2-week long trip to New York and Michigan, with a few stops in there. We went to Chicago for a wedding and explored the area, took the kids to Gatlinburg for Fall Break, went to Ohio to watch the eclipse in totality, and tagged along on Mr. ODA’s work trip to South Carolina.

Mr. ODA sold his 15 year old vehicle, and we purchased a Tesla. I didn’t have a great experience with one in Colorado, but I think that was more related to the circumstances than actual electric vehicle ownership. I had a great experience with the test drive, and we picked one up by the end of that week. We took advantage of their 0% interest and 3 months of free charging. We also referred a friend of ours, so we received $1000 in Tesla credits that we’ll use for charging after the free period.

We bought a hot tub. That was a purchase that was about a year in the making, so it wasn’t made lightly. There hasn’t been two days in a row where someone didn’t get in it, until we just left for a week (hoping that the water is in good shape when I get back!). Our deck was crushed by a tree in July 2023, and it wasn’t rebuilt until May 2024. Then we had to take the time to make the decisions on what we wanted, get it ordered, and wait for delivery. It was delivered in November, and it’s been a great purchase thus far. We haven’t done such a splurge before, and it’s nice to give ourselves something that we can enjoy.

The kids are doing their activities. We’ve been in a nice lull, but I recently saw our March calendar from this past year and was reminded of all those hours! Our oldest is doing t-ball for a second year. Our second is regularly doing gymnastics, but we’re also letting her do t-ball this spring. Our oldest is also doing an after school activity for checkers, but supposedly it’s in a fun way, so that’ll be interesting to see pan out. He was accepted into an advanced program for his 99th percentile state testing scores, which was a really exciting moment as parents. Our second will finish out her preschool year and go to kindergarten next year. And we hope to have another fun season over the next two months with everyone on skis!

RENTAL PROPERTIES

Besides the management of late rent payments, I had to put a lot of hours into these houses this year. We took a trip to Richmond, VA to work on quite a few of these houses. On top of that, there were several other activities that were needed, management of tenant turnover, and management of rental income, but I’ll save that for a future post so this doesn’t grow too long.

FINANCES

Our net worth increased by $745,000. We started the year with a goal of hitting $4 million net worth, and that was achieved in a short time. Month to month feels like we’re barely moving the needle, but it’s amazing to see that number over the course of a year.

We paid off one 0% interest credit card from our carpet replacement in our personal home, and then we opened a new 0% interest credit card to pay for the hot tub. That new card gets 2% cash back, so it’s being used more than we usually use a 0% interest card. Typically, we just pay for the major purchase and then pay it down over the 0% interest period. This time around, it’s being used for every day purchases so the monthly payment I’m making is more than I’d usually see.

I have a separate post that goes into our extra income that we brought in over the last year, which is related to earned credit card rewards and interest on savings accounts and bonds. That’s even cooler to see the total ($14k!) because that was actual cash that went into our account and was used.

In the last year, I only officially worked 11 days, which is crazy to think about. But I’ve been doing random other jobs to help others out. I’m on our homeowners association board of directors, and I’ve been helping a new school get their financials up and running. I’m ready to take a step back from the finance work because my commitment to the HOA feels more pressing, but we’ll see how the next couple of months progress. It’s just really hard to get things done when I’m rarely without a toddler who wants my attention (unless I get up at 4:30 or 5 am).

SUMMARY

This year has felt like it took a lot more hours from me for work and management of things. But I also feel like I have more energy now that I’m two years from having our last baby. We have lots of other things planned for this coming year, and I hope to take some even bigger trips to see more of the country now that we have a bit less baggage coming out of the baby years. We have no plans to make any big purchases at this time (although there are new windows needed on our house in the next couple of years), and I really hope this year is lots of fun with the family more than anything else.

Interest Rates & Value of Money

December 5, 2024November 20, 2024mrsonedollarallowanceLeave a comment

We bought a Tesla. In the process, they’re offering a 0% APR promotion. They let you see how your credit rating affects your monthly payment (through different APRs). The final column in the table below shows the increase each level adds from the previous level.

This is based on a 60 month term. So, ignoring the promotional option available, between the ‘>720’ and ‘680-720’ would cost you $39 per month. That’s a total of $2,340 over the loan term. By using the promotional rate, that’s $88 per month “saved,” which is $5,280. Don’t let it be lost that working on your credit history and credit worthiness is something that pays off into the future.

When we look into a large sum of money leaving our account, we consider the “net present value” of the dollars. The net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Investopedia uses the following over-simplified example. “An investor could receive $100 today or a year from now. Most investors would not be willing to postpone receiving $100 today. However, what if an investor could choose to receive $100 today or $105 in one year? The 5% rate of return might be worthwhile if comparable investments of equal risk offered less over the same period.”

The 0% interest loan through Tesla is for about $40,000. Mr. ODA calculated that our net present value of money, based on our approximately 4% savings interest rate, is $36,017. Taking nearly $40k out of our savings account wouldn’t be a financial problem, but it’s not the smartest financial move in our portfolio. Instead, we’re going to pay about $580 per month, while the “balance” of that $40k earns interest. At 4% interest, the balance of $40k earns nearly $1,000 in a year. That balance will continue to dwindle, therefore lowering the interest earned each year, but it’s still a significant sum of money. In the first few years, the interest earned is essentially paying a couple of months worth of the car payment.

By being conscious of our financial standing in the world, we’ve set ourselves up for earning these promotions. Had our credit worthiness been below a score of 720, it would have cost us over $5k more over those 5 years of the loan. While I understand that purchasing a Tesla may be considered a luxury, this concept and awareness can be applied across all financial decisions, which is why I wanted to highlight it here.

New Credit Card

November 7, 2024mrsonedollarallowanceLeave a comment

Over a year ago, we opened a new credit card because we replaced the carpet in our house. This year, we finally were able to make a purchase we’ve been waiting for: a hot tub.

Mr. ODA has wanted a hot tub for a while. We did some exploratory searching in May, thinking our deck project was nearly over. Then the waterproofing was never waterproofed. The contractor ghosted us on it. Mr. ODA bought his own supplies, but it was never enticing to tear up our brand new deck boards in 95 degrees to diagnose and fix the problem. We finally got around to that project in August. Once that was done and life calmed down a little bit, we decided to put more effort into the search. We went to 3 different places one day to get information. Then we sat on that for a week and decided on which one we liked the best and ordered. They told us 3 weeks, and it’s expected to be delivered and installed this coming Tuesday, which is over 5 weeks from our down payment, but such is life.

WHAT WAS THE BACKGROUND?

When we were in the process of IVF to have our first child, Mr. ODA was discouraged by the lack of financing availability. We could either take out an outrageous personal loan, or we could pay it in cash. Their “guarantee” program was $22,000. Up front. That didn’t include the medications that were bought separately.

We never like the idea of paying large sums of money out at once if we can help it. We make our money work for us.. meaning money is constantly moving and being invested in short term securities for us to earn interest on it. Mr. ODA had the idea to open a 0% interest credit card for the IVF payment, and this idea has carried us through several large purchases now.

WHY A CREDIT CARD?

By opening a new credit card, which we strategically pick, we give ourselves a personal loan for 0% interest.

A personal loan averages 12% at the moment. Since we have the cash available to pay for a hot tub outright, paying any percentage of interest to a bank is not something we’re interested in. We could just pull about $10k out of our savings account, our short term securities, or cash out a taxable investment. However, that costs us interest that we’d be paying ourselves. In our savings account, our current balance yields us about $120/month in interest earned. If we reduce that by about $10k, we’d lose about $30/month in interest payments. Instead, a new credit card is opened. It gives us the ability to pay the minimum balance (or more if we want) each month, leaving that cash in our account to earn interest or be invested.

WHICH CREDIT CARD?

When we search for a new credit card, not only are we looking for 0% interest rate for an introductory period of at least 12 months, but we’re looking for another incentive. Many people were talking about “credit card hacking” a few years back, where they’d open a new credit card to get the bonuses and then render that card obsolete (not close it). There are negatives to opening too many credit cards that I’ll get into later.

Not only are we looking for 0% interest, we also would prefer to receive another incentive for the credit hit. This new card gives us $200 cash back for spending $500 in purchases in the first 3 months, which we’ve done without any problem. This particular company has other options on the market. One card gives you 4% back on certain purchases, but there was no introductory rate on purchases. Other cards have an annual fee, which we try to avoid unless it’s glaringly obvious that you’re going to make that fee back in rewards you can’t get elsewhere (e.g., I’m not going to pay a $99 fee to get 2% cash back when I have a credit card that gives me 2% cash back without a fee).

Typically, these credit cards don’t offer us a better incentive than other cards already in our portfolio. However, this new card actually gives us 2% cash back, which is the same as the Citi Double Cash card. This will change our equation of managing the balance a little. Historically, I’ve had a balance on the new credit card, paid $500 per month towards it, and then paid it off before our introductory interest rate period expired. The balance almost always was decreasing, so I knew what I was working with. This card is being used more often, with 4 transactions in the last 3 weeks already on it. I’ll be interested to see if that changes how I manage the balance.

WHAT ARE THE CAUTIONS TO CONSIDER?

First of all, the most important thing to consider is where this purchase is something that you can and want to afford. When your money goes towards one thing, you’re taking it from something else. Weigh whether that’s worth it. In the case of IVF, having a child was more important than any other place those dollars could have gone. In the case of the new carpet, all of the carpet in the house was old and, frankly, disgustingly stained; I wanted the carpet replaced as soon as possible so that I could enjoy what I was living in. And now, the hot tub. This is one of the few splurge purchases we’ve made. We have gotten to a point on making decisions that bring us joy. We were also gifted money over the last year or so that was earmarked for this.

When putting a large sum of money on a credit card, you can’t forget about it. You still have to make the monthly minimum payments. If you don’t, you could have to pay back all the free interest you’ve received thus far and/or start paying interest (to the tune of 22%…so that’s $2,200 in interest on a $10k balance) on the balance immediately. You also need to be able to pay the entire sum by the end of the introductory interest period (or, again, you’ll be paying interest on the balance).

For the credit card that we used to pay for new carpet and new windows on a rental, we put nearly $12,000 on the card in October to December of 2023. We also used it to make 2-3 more relatively smaller purchases. I paid $500 every month towards it. The minimum payment was typically around $100, but I wanted to see the balance dwindle a bit faster than just the minimum. My current balance is $6,500. I’ve been been monitoring our money movement for a month or so, preparing to pay off this balance no later than December 13th (I appreciate this company explicitly listing the date of the introductory rate expiration because they don’t always do that). A balance of $6,500 is obviously less than needing to outlay the full $10k-12k last Fall, but it’s still not a small chunk of change that needs to be fit into our cash flow right now.

Opening a credit card will affect your credit score and history. This may not matter to you if you don’t have any large purchases (e.g., buying a home) on the horizon where you’ll want the highest credit score you can get yourself. However, if you believe there will be large loan-seeking opportunities in the next 1-2 years, opening a new credit card should be carefully considered.
– It’ll count as a hard pull on your credit, which degrades your credit score for one-two years. Credit Karma says the “ding” on your credit lasts only about 3 months, but too many at one time could cause a bigger drop in your score.
– Opening a new card lowers your average credit history. This is why people say not to close any accounts. If you close an older account, it brings your average down. My average is currently 6.5 years, and it’s listed as “fair.” If you have old cards that you’ve kept open, you may need to use it for a transaction to keep it active and open.
– If you’re adding a large sum on the credit card, your credit utilization could be higher than preferred for your credit score calculation. According to Credit Karma, you should be below 30% credit utilization, and being below 10% is even better.

SUMMARY

If you’re about to make a large purchase that you’ve considered carefully and have decided is worth the cost, then opening a new credit card with a 0% interest for an introductory period could be a beneficial option. It’s a way to give yourself a personal loan for no interest. Be sure that you have projected the cost over the course of the introductory interest period so that you know you’ll be able to pay off the balance in time, and that you make all minimum payments on time.