The Three Tenets of Saving
Aaron is both the visionary and technical mind behind Mint, the first free, automatic and secure way to manage and save money online. He designed Mint to meet his own needs and those of people like him who value the immediacy of the Web, simplicity and their free time. With 10 patents filed or pending, Aaron brings strong innovation skills to Mint. Prior to founding Mint, Aaron was an architect and technical lead for the San Jose division of Nascentric. Before Nascentric, Aaron worked for IBM and founded two web development and online marketing companies: PWeb and International. Aaron holds an MSEE from Princeton University and a BS in computer science, computer engineering, and electrical engineering from Duke University.
Question: What are the three tenants in the field of personal finance?
Aaron Patzer: So, there are always exception to the rule, but the reason that I came up with those three tenants is the field of personal finance is, I think, very confusing and overwhelming to people. If you look on Amazon - if you do a search for personal finance, there are literally 20,000 books written on personal finance and there's no real reason for it. I mean, personal finance is pretty simple. You see content on the Internet, whether it’s CNN Money, the Motley Fool, even, you know, the Mint blog in some ways and fundamentally it can all boil down - all those books, all those articles - to three basic principles which you named. Spend less than you earn which means basically save money, make the money you have work for you which means invest it and then be prepared for the unexpected which means, you know, protect your downside with the right types of insurance, with diversification of your investment.
And so, the first aspect is save it and the best thing to do there is to set a budget on your problem categories. If you’ve lost your job than saving money shouldn’t be your primary concern. It should be finding another job and making ends meet. The other thing that you can do to save money without really changing your behavior is to optimize your financial accounts. So, most people seem to have the checking and savings account that they set up when they were 16 or 17. You went into your local bank with your mom and you set up a checking account and you’re not being paid any interest and if you have a savings account from City Bank, Wells Fargo, Bank of America, and of the big name banks, I guarantee that right now you’re being paid between 0.1 percent and 0.2 percent interest which is ridiculous because you can make 2 percent interest right now and if interest rates go up, the Fed changes the rates, you could make 3, 4, 5 percent interest. You’re going to be earning a fifth to tenth as much at most of the big banks as you could either get at a credit union or an internet bank like ING or HSBC or Emigrant Direct Bank or Ally which is the old GMAC actually pays the best interest rates around right now. I’m a big, big fan and they have accounts without any fees.
So, if you optimize your financial accounts, get a high yield savings account and put your deposits in there. Get a credit card that, if you're paying interest on your credit card, is at a lower rate. If you pay your credit card off every month, get a rewards card. One that gives you airline miles or that will give you 1 percent cash back at least on every purchase. Some of them will still give you 3 to 5 percent back on restaurants or groceries or gas or whatever that type of card is. I use an American Express Blue cash card and after you’ve spent about $6000 on that card it’ll give you 5 percent on gas and restaurants and I mean, it’s - I've made so far this year about $500 cash back. It’s great.
And then, you know, consolidating your student loans or finding even a brokerage account if you're an active trader that you’re going to spend less on your cost per trade. All of those things don’t really require a change in your day to day behavior; they just require being a little smarter about which financial accounts you should have.
Recorded on November 2, 2009
Aaron Patzer founded Mint.com to help people learn how to manage their personal finances. Here’s his advice on how to make sense of a confusing field.
Swiss researchers identify new dangers of modern cocaine.
- Cocaine cut with anti-worming adulterant levamisole may cause brain damage.
- Levamisole can thin out the prefrontal cortex and affect cognitive skills.
- Government health programs should encourage testing of cocaine for purity.
Pfizer's partnerships strengthen their ability to deliver vaccines in developing countries.
- Pfizer is helping to drive the UN's sustainable development goals through partnerships.
Civil discourse has fallen to an all time low.
The question that the American populace needs to ask itself now is: how do we fix it?
Discursive fundamentals need to be taught to preserve free expression
In their findings the authors state:
upholding First Amendment ideals.
Talking politics at Thanksgiving dinner
- Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
- Traditional Liberals: older, retired, open to compromise, rational, cautious.
- Passive Liberals: unhappy, insecure, distrustful, disillusioned.
- Politically Disengaged: young, low income, distrustful, detached, patriotic, conspiratorial
- Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
- Traditional Conservatives: religious, middle class, patriotic, moralistic.
- Devoted Conservatives: white, retired, highly engaged, uncompromising,
It's interesting to note the authors found that:
"Tribe membership shows strong reliability in predicting views across different political topics."
Here are some statistics on differing viewpoints according to political party:
- 51% of staunch liberals say it's "morally acceptable" to punch Nazis.
- 53% of Republicans favor stripping U.S. citizenship from people who burn the American flag.
- 65% of Republicans say NFL players should be fired if they refuse to stand for the anthem.
- 58% of Democrats say employers should punish employees for offensive Facebook posts.
- 47% of Republicans favor bans on building new mosques.
Here are some guidelines for civic discourse that might come in handy:
- Practice inclusion and listen to who you're speaking to.
Civic discourse in the divisive age
dangerously tribal, fueled by a culture of outrage and taking offense. For the combatants,
the other side can no longer be tolerated, and no price is too high to defeat them.
These tensions are poisoning personal relationships, consuming our politics and
putting our democracy in peril.
Once a country has become tribalized, debates about contested issues from
immigration and trade to economic management, climate change and national security,
become shaped by larger tribal identities. Policy debate gives way to tribal conflicts.
Polarization and tribalism are self-reinforcing and will likely continue to accelerate.
The work of rebuilding our fragmented society needs to start now. It extends from
re-connecting people across the lines of division in local communities all the way to
building a renewed sense of national identity: a bigger story of us."
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