Please, Recommend a Personal Finance Product to Me!

thumbs up by dev null on Flickr!All the time, I get requests from readers asking me for recommendations of financial products. What bank should I use? Where should I put my investments? Where should I open up my retirement account? What credit card should I get? Where should I get my insurance from? What kind of software should I be using to manage my finances?

For the most part, I don’t like to actually recommend or endorse financial products. It’s not fair for me to do that because, frankly, I don’t use most of the products that are out there. I’ve never had a checking or savings account at most of the banks in the world. I’ve never held a credit card with a lot of banks. I’ve only had accounts with a few investment houses.

For me to make a blanket recommendation and say that a certain account is the best out there would be a lie and a fraud. I don’t know that any given account is the best one out there.

All I can call upon is my own experience, in which I looked at a bunch of different options for accounts and financial products, chose one, and tried it out. In some cases, it wasn’t right for me, so I tried another one until I found a product that met my needs for ease of use, good returns, low fees, and great customer service.

In short, the closest I’ll come to a recommendation of a financial product is to simply tell you what I personally use. If I don’t actually use it, I’m not recommending it.

So, in order to get all of the questions out of the way in one swoop, here are the products I use. In most cases, I tried at least a few different variations on that product before settling on my current choice, so these aren’t just “blind” first picks. However, I don’t claim to have used all of the products on the market – there may yet be a better product out there. These just happen to be the financial products that I use – and hopefully that will provide some useful information to you in your searches.

Checking and savings Most of my long-term readers know that I use ING Direct as my primary checking and savings account. They excel at customer service, ease of use, and lack of fees – I’m completely happy with them. I also maintain a free checking account at a local bank for teller access, for the purpose of having paper checks drawn from a local bank and having a teller available to me during normal business hours.

Retirement I have a Roth IRA through Vanguard. At previous jobs, I’ve had dealings with other investment houses, but none of them offered what I wanted – extremely low-cost index funds and electronic-based customer service. That’s why I use Vanguard – my Roth IRA savings are in index funds, just waiting until I’m old enough to start grabbing those tax-free returns.

Other investments I do not invest in individual stocks, so I don’t have any reason to have a stockbroker at this time. Instead, I keep my non-retirement investments in index funds as well, so I also have a Vanguard account for those. Again, I choose Vanguard because the costs are very low, I agree with their investment philosophy, there are a ton of index-based investment options available, and their customer service and online interface are strong.

College savings We use a 529 to save for our children’s education. Since Iowa has one of the best programs around, we chose College Savings Iowa right off the bat for our education savings purposes. The investments there are handled by Vanguard and their online interface is solid, as is their customer service by phone (which I’ve used twice, once for each child).

Credit cards My wife and I have three credit cards between us, which we use only for specific types of purchases. Since we pay off our balances in full each month, we don’t really care about interest rates or billing. Each one is worth talking about individually.

We have a Target Visa for some of our household supplies, our prescription purchases, and some of our food. This card gives us a certificate for 10% off our total purchase at Target every time we run $1,000 in purchases through that card or when we refill ten prescriptions there. Since I use a monthly maintenance prescription for my thyroid and Target has two pharmacies within ten minutes of my house, we did the math and realized that the card could easily add up to a 4-5% return if we planned our purchases carefully. We use this card only at Target.

We also have an Visa for similar reasons – for Amazon purchases only. It’s effectively a 3% return on our purchases and it also happens to be our oldest card, too.

Our general use card is a Citi Driver’s Edge Platinum card, because most of our remaining charges are for gas (or for car repairs, it seems). It gets a 3% return on those, we get a $0.01 rebate for each mile we drive in either of our cars – we just send them our receipts from automotive maintenance work for proof of mileage and they give us an appropriate amount. The rebate is easy to cash in, too – we just send them a receipt from some automotive-related purchase (like a new car or a repair) and they cut you a “rebate” check. It’s taken a big edge off of some of the recent car repair bills.

My suggestion is that you should have only cards that actually match your most routine purchases. If you buy all of your gas at BP, for example, a BP Visa might be worthwhile (I don’t know any specifics about that card, but I would look seriously at it if I bought all my gas at BP). Similarly, if you do all of your grocery shopping at the Costco in your town, a Costco American Express card might be worth it because of the bonuses given for shopping there (again, I don’t know about the specifics of that card offer, but if I were a very regular Costco customer, I’d look into it). The cards listed above happen to be the ones that match our lifestyle – we shop for household supplies and prescriptions at Target and buy a lot of items (housewares, bulk food, gifts, etc.) off of Amazon. If a card doesn’t match your lifestyle, you shouldn’t bother – and you should avoid credit cards entirely for a while if you can’t keep the balance paid off. Credit cards are like a power tool, but just like a power tool, they can hurt you badly if you’re not prepared.

Software To be honest, I don’t really like any of the major software packages for personal finance management – not Quicken or Microsoft Money or anything else. I started off using spreadsheets for my budgeting and net worth calculations and found no compelling reason not to use them. For the longest time, I simply used the free open source spreadsheet, but lately I’ve moved to using Numbers for Mac for this purpose. Given that I write Money360, I’m constantly encouraged to try different packages – if I were starting from scratch, I’d probably give the PearBudget spreadsheet a shot – I used it a lot early on until I found that I wanted to modify a lot of things.

Insurance Over the years, we have been with several different firms for our homeowners and auto insurance policies, and we’ve mostly been driven away by really bad customer service. We’ve been with AIG for about a year and a half now and have been quite happy with them – strong rates, very efficient customer service, and nice curbside services that don’t cost a dime, like helping my wife out when she locked her keys (and her insurance card) inside her car. While this happens to be what works for us, what has driven us from other firms was the shoddy customer service on the local agent level. Don’t tolerate getting the runaround from your insurance agent – there are a lot of companies out there that want your business.

For life insurance, my wife is sticking with the whole life insurance policy that she’s had since near birth, which is pretty large. I have a smaller term policy I’ve had since I was in my early teen years that will expire soon, so at the moment, I’m actively shopping around for life insurance – I’ll update you when I find a term life insurance provider I’m happy with. I’m also looking for long-term care and long-term disability insurance, but haven’t found a provider that suits me yet.

Groceries I do my grocery shopping at a mix of Fareway (best prices, sometimes poor selection), HyVee (best selection, esp. of healthy stuff, but often high prices), and Super Target (often the most convenient for a small shopping trip and the prices are competitive) – I sometimes make stops at both Fareway and HyVee if I have plenty of time to grocery shop, as that gets me the best prices on most stuff and also lets me get some specific health food selections and esoteric items at HyVee. We buy some bulk items at Sam’s Club and a few online at Amazon, but we mostly use the latter two for household supplies and toiletry purchases. On rare occasions, I’ll hit a drugstore specifically for toiletries, usually if I happen to notice coupons that stack well in the papers.

For your area, I recommend finding the cheapest grocery store and using it for your staple purchases. Then, if you have some esoteric items you want, find a grocery store that carries those items and use that store mostly just for the esoteric items.

Whew! I think this handles most of the financial services that we personally use. In the future, I plan to just provide this page to people when they ask for suggestions or recommendations.

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