As featured in The Wall Street Journal, Money Magazine, and more!

August 2009

Our guest today is Matt Jabs, blogger and founder of Debt Free Adventure, a blog designed to help the author stay accountable for getting out of debt. Debt Free Adventure is one of my favorites among new personal finance blogs.

Today’s discussion focuses on the concept of giving yourself a raise, an important way to improve your financial condition, particularly in an economic environment that is supporting fewer raises from your employer. Tom Dziubek and I explore this concept with Matt Jabs and discover a number of ways you can give yourself a raise today.

To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.

[00:00] Introduction from Tom Dziubek
[00:33] Interview with Matt Jabs of Debt Free Adventure
[01:10] Matt’s inspiration for writing about personal finance
[02:57] Giving yourself a raise at home
[04:26] How to give yourself a raise
[08:41] Creating a personal trigger to change your mindset
[10:24] Living outside the box
[12:16] Finding and following your passions
[14:29] The journey is as important as reaching the goal itself
[15:59] Dealing with customer service reps
[21:39] Do it yourself
[25:17] How it adds up
[28:04] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.


When I started formally tracking high-yield savings rates, with a shared online spreadsheet, it was common to see banks offering interest rates above 5.0% APY. That was in January 2008, and the economy is in a different situation now. According to the government, there has been no measurable inflation, and now interest rates for lending are held low to stimulate the economy. Savers suffer in these conditions.

Bankers were livid this past spring when Ally Bank, a re-branding of GMAC Bank which had been tainted by the bailout of General Motors, rose like a phoenix and maintained the same interest rate it had been offering in its previous incarnation. The director of the FDIC got involved to prevent Ally from using its bailed-out position to create an unfair competitive advantage over other banks.

The bank must now be confident that it is no longer on the FDIC’s bad side. Click here for the latest interest rate from Ally Bank. It’s a small increase, resulting in only 50 cents more a year on an initial $1,000 balance. It seems to be a signal, though weak, that Ally wants to be considered a stronger bank than others, but I don’t think it’s a signal that we should expect to see more banks raising interest rates.

I do have an account with Ally Bank and you can read my review of the Ally Bank savings account here.

Today’s interest rate increase should not be enough to convince someone to move all of their money into this one bank, but if you have the inclination, Ally is a good choice for a diversified portfolio of savings accounts because at this time, I would expect they will continue offering one of the highest interest rates for highly liquid accounts and despite FDIC’s funding woes, your money should be safe.

See the review of the best online savings accountsupdated November 13, 2009.


After we got married, my wife and I combined our finances. We moved most of our money from a local brick and mortar bank to a bank that we primarily access online and over the phone.

This arrangement has worked out well for us, but it does mean some accounts that were previously utilized many times a week have now lain dormant for quite a while. We’re not really too worried about the checking and savings account, but we do keep a close eye on the credit card from that bank.

The card is important to us because not only is it the largest line of credit we have available to us (we rent, have no student loans and no car loan), but it’s also been open the longest – it has a major affect on my wife’s credit score.

With the recent increase in banks closing customers’ cards, we started to worry that our card would mysteriously one day disappear, since we don’t use it very much.

According to this recent article from the Wall Street Journal, while ‘surprise’ card cancelations are on the rise, there are risk factors and other things you can be aware of that might help you keep that card in your wallet.

From the article:

“An issuer can cancel a credit-card account without notice when …

* A customer hasn’t used the card in more than a year.
* A customer has defaulted or is delinquent on the account.

An issuer can cancel an account and send written notice within 30 days after the cancellation when a reassessment deems the cardholder too risky.”

In fact, your bank doesn’t even have to notify you about the account closure if your account is closed based on inactivity, default, or late payments. Many people find out about the cancelation only after their card is turned away at a store or restaurant.

So what can we do to keep our cards and avoid damage to our credit scores?

- Pay attention: Double check your bills to make sure you’re not late or in default. Monitor your credit report to make sure it’s accurate, and do all you can to fix any problems.

- Use your card: We use our card for the occasional entertainment expense. Interesting enough, despite hardly using the card over the past few months, our credit limit was increased, helping us our with our credit score. Having a set plan for a card (a small recurring bill or a determined budget category) will help keep the card active.

- Diversify: After reading the article, I realized that even if we do everything we can to keep that card active, we’d really be hurting if it was ever closed. We need another option that will reduce the overall impact of a card closure on our score. Granted, the impact won’t be as bad for someone with a mortgage or student loans, but when a credit card is the only credit you’ve had time to get, it could be a whopper.

I’m much more comfortable now that I know we’re working to keep the card open. I now know that we need to diversify to decrease the impact that each source of credit has on our credit score. Knowing what’s going on with your cards can help preserve your hard financial work and can prevent surprises at the check out stand as well.

Source: Wall Street Journal, Credit-Card Companies Can Cancel Cards Without Customer Knowledge, Aug. 12, 2009.


Editor’s Note:  This offer is no longer available.

Now that regulations established by the Credit CARD Act and related rules by the Federal Reserve have begun to take effect, I’ve started receiving notices from card issuers regarding my accounts. My Discover Miles Card was opened in 2005 to attempt a 0% balance transfer, a way to earn interest on someone else’s money for free, but the move failed when MBNA denied the transfer and has gone almost completely unused since that event.

Nevertheless, Discover continues sending notifications of terms changes, balance transfer checks, and new cards requiring activation, all to encourage me to use their service. I received one from Discover today, even though I haven’t used my Discover Miles Card in several years.

Here is the summary of the changes.

  • Discover will no longer increase the interest rate on existing balances if I pay late or exceed my credit limit, but the interest rate on new purchases may increase to a Default Rate if I miss a payment.
  • The card is moving from a “fixed” interest rate to a higher variable rate for purchases: the Prime Rate + 9.74%.
  • The same is true for cash advances. The new variable rate for these transactions is Prime rate + 20.74%. (Yikes!)
  • The credit card company is using the grace period differently. They will not use new purchases to calculate the amount of interest due as long as I pay my credit card bills on time.

The notification included four pages on fine print, but none of these changes will affect me personally unless I need to use this credit card. I expect my other credit card issuers will send similar notifications soon, but even the new regulations for the cards I use will not affect me much because I charge only what I can pay off by the time the bill is due and pay off my entire balance at that point.

There is always a possibility that I experience a severe emergency for which I have insufficient cash. If for some reason I do need to carry a balance from one month to the next, I would prefer to fully understand the many ways in which I will be punished by the credit card industry.

The improvement of the grace period and the elimination of double-cycle billing are two aspects of the new credit card regulations that benefit consumers. Some of these changes, such as the elimination of double-cycle billing, won’t go into effect until February 2010.


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