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The Simple Dollar

Checking account fees: Credit unions charge them, too

Checking account fees increased at her bank, so should switched to a credit union, which is now changing its checking account fees. Should she switch again? Question No. 9 in this reader mailbag.

By Guest blogger / November 7, 2011

San Diego labor leader Lorena Gonzalez holds her life savings after closing her Wells Fargo Bank account and move it to a local credit union as part of a protest against big banks in San Diego last week. But be careful. Credit unions are changing their checking account fees, too.

Mike Blake/Reuters

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What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries.
1. Charter school conundrum
2. Roth as college savings
3. Saving Legacy TreasuryDirect
4. Favorite board game
5. How I read
6. Education debt question
7. Community of church without religion
8. Introductory banking offers
9. Checking account conundrum
10. Creating online buzz

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I like to think of November and December as family months. It’s during these two months (and the holidays contained within) that I get to see my extended family more than I do during the other ten months combined.

I’m usually apprehensive about it all as it approaches, but that apprehension gives way to relief once things actually happen, and then often the relief gives way to good times and good memories with good people.

Q1: Charter school conundrum
I have a 9 year old daughter, who is in 4th grade. Her school is consistently short of funds, and each year, tries to pass an operating levy that fails, leaving them hurting worse with each passing year. Currently, she has art once every 6 days, gym every 6 days, and computer lab every 6 days, and there has been talk of eliminating elementary art and music all together. My daughter has advanced reading and math skills, but because of large class sizes, the school is unable to challenge her much, and she has already begun to find school boring. There are no advanced placement programs.

I have an opportunity to enroll her in a charter school next year, less than 20 miles from my home. There is no bus, so I would need to drive her. The school has an excellent reputation, and delivers a well rounded liberal arts education. They have small classes, and promote a family atmosphere. There are no tuition costs. The goal is to produce students who are well prepared for college in a safe and inclusive environment, and they try to make it fun and exciting to learn.

The problem is, in order to drive her, I would need to quit my recently aquired, well paying, full time office manager job, and take a part time job with hours that accommodate this commute (school is from 8am to 2 pm). No one would starve at my house if I did this, but we would be a bit pinched until we adapted to the drop in income. The other option is to try to start a carpool, and ask my boss to come in late(and stay late) a couple of times each week, but I have seen how these things fail, and one parent is left picking up the slack, or the boss is less than thrilled with ‘flexible scheduling’, so I am reluctant to go this route.

How do I decide what is the best way to help my child? How can I decide if I should scrape by now, to provide her a better education, or keep her where she is, knowing it is more convenient? If she stays in public school, I can put away enough money to help with college expenses, I probably can’t if I work part time.

I just can’t find a way to compare the situations, and pick the better one. Do you have any ideas?
- Annie

The first thing I’d do is make sure I’ve explored all of my options. Are there any other children in your area that are joining this charter school, for example? Could you arrange something with the family of that charter school involving one half of the daily commute coupled with a bit of pre-school or after-school care?

Is there an after-school care option near the school that your child could utilize via school busing? What about before school?

I don’t think this is an either-or choice quite yet. If it truly comes down to that, I’d probably not switch schools, since evidence shows little correlation between charter, private, and public schools and long-term academic performance.

Q2: Roth as college savings
What do you think of using a Roth IRA as a vehicle to save for our kids’ potential college costs?

I am an engineer and my husband is a stay-at-home dad, we are both 28 years old. We currently have 2 kids (ages 3 years and 3 months) and plan to have one more child within the next few years. We have a 529 plan for the 3 year old with a negligible amount of money in it, probably around $700. We have no college savings for the 3 month old (yet!).

Currently we contribute 5% of my pay into our TSP account (federal gov’t employees version of a 401k). We also have a Vanguard Roth IRA to which we contribute ~$200 per month. At this time we only have $25 per month to save for each of the kids college ($50 total). I had planned to open a separate 529 plan for the 3 month old, and send $25 bucks to each 529 plan per month (at least until we are in a position where we can contribute more). However, I recently ran across the idea of using a Roth IRA as a college savings vehicle. This seems like a great idea for us since we are nowhere near the maximum yearly contribution level for the Roth. I also like the idea because neither myself or my husband needed money for a college education. Our children could be like me and get a free ride to college or they might turn out like my husband for whom college was a terrible fit. The biggest challenge of this idea seems like keeping track of what portion of the Roth is meant for our retirement and what portion for college. Excel spreadsheet? Separate Roth accounts? Is there a reason this would be a terrible idea?
- Kevin

A Roth IRA is a solid way to save for educational expenses.

The problem with using a Roth IRA for educational expenses is that to do so, you’re foregoing a very powerful tool for saving for your own retirement. Regardless of what you’re using it for, annual contributions to a Roth IRA are capped pretty low.

You’ll be in far better shape if you use that Roth IRA fully for retirement and utilize a 529 college savings plan for educational savings. If you’re not fully using that Roth IRA, I’d make absolutely sure that you shouldn’t be, because I’d far rather save for retirement than save for my children’s education. They can always get an education, but I don’t want to be an economic burden to them in my dotage.

Q3: Saving Legacy TreasuryDirect
I want to become active in rescuing the Legacy Treasury Direct system which as you may know is being phased out.

The reasons are pretty obvious, I think. Do you have any suggestions on how I can get started?
- Susan

I did some research into this and, for the most part, it seems that it’s mostly just an unnecessary hassle for people who were using Legacy TreasuryDirect to manage their securities. The phasing out of Legacy TreasuryDirect is being done to move people to the newer TreasuryDirect system, which conducts transactions mostly via the website.

(TreasuryDirect, of course, is a tool for buying treasuries and savings bonds from the United States Treasury.)

As for what you can do about it, the best route is to contact your congressperson. Sadly, contacting your congressperson in hand with a donation usually works the best. The best approach for change is to simply request that the features you want from Legacy TreasuryDirect be folded into the newer TreasuryDirect system.

Q4: Favorite board game
You’re often recommending games to people but you’ve never really talked about what games you like. What are your favorite board games?
- Alan

These change all the time. I’ll name one short game, one medium-length game, and one long game.

The Resistance is a very short deduction card game for five to ten players. In it, each player receives a “resistance” card or a “spy” card which secretly indicates which team they’re on. Then, over a series of five rounds, small teams of the players go on missions (done by playing a card) which can be sabotaged by the spies. If three missions go by successfully without sabotage, then the “resistance” players win. If three missions get sabotaged, then the “spy” players win.

Eminent Doman is a card game that takes forty five minutes or so for two to four players. In it, players are effectively exploring and conquering an unexplored region of the galaxy. Each turn, a player plays a card from their hand and follows the action written on it, then chooses a role card from one of the available stacks of role cards (there are five stacks available to all players) and follows that role. Each other player also has the option to follow that role, too. It ends up being a game of careful calculation as all players are trying to squeeze out victory points near the end, as the game ends when one or two (depending on which variation you choose) of the role stacks are emptied.

Descent: Journeys in the Dark is a board game that can take two to four hours in the basic version and can go on over many, many continued sessions with the Road to Legend expansion. It’s largely a game of dungeon exploration (think Dungeons and Dragons, but little roleplaying and more strategic thought) where one player controls a horde of villains trying to prevent you from exploring the dungeon and the other players each playing a hero (or two) trying to get through the dungeon. I’ve been playing the Road to Legend expansion with a few friends for a few months now and we’ve been having a lot of fun with it.

Q5: How I read
You’ve talked before about how you go reading; taking an hour at the end of the day to sit down and read. But I’m wondering, is it really that you just take one hour at the end of the day and that’s it? You seem to get through books quickly. Can you elaborate on how you read (do you usually try the speed-reading tricks?), where you read (in bed, favorite chair, etc), and any other information you think would be interesting. 
- Will

I make it a point to read for an hour or so at the end of any given day. However, that does not preclude reading when I can throughout the day.

I tend to take a book with me every time I leave the house, as there are often times to read when I’m out and about. I’ll often take short breaks from work during the day to do something else and refresh my mind, and at least once a day those breaks involve reading for personal enrichment.

I find all sorts of little spaces during the day to get a few pages in, because it’s something I value.

I do read pretty fast, but it’s more of a matter of many many years of practice reading every single day. I have never taken a speedreading class, nor do I really want to.

Q6: Education debt question
I’ve been living in China for 6 years and am pretty good at Chinese! Would love to go back to school, get an MA in Chinese and a one year degree in Education so that I would be qualified to teach Chinese in the USA. I’ve been a teacher here at a prestigious university and love it.

My problem is: Education in America is robbery. The programs I see cost 20,000$ tuition plus room/board for each year. It’s so hard for me to make the choice for massive debt to teach (at a low salary).

I have been spending most of my adult life here studying Chinese and traveling all over East Asia, and would love to use it this knowledge. –OR– I could stop studying and save $20,000 a year or more by working full time teaching English (though I don’t enjoy it that much at the private schools).

I’m 30 and have a BA in History, enjoy my life now, but think I ought to do something “more”. Is it saving money, buying a house cash in a 4 years in Western MI (where I’m from) and doing anything really (free rent and maybe even a roommate?). Or should I follow a passion, something I love and be up to my eyeballs in debt? What do you think?

I have 10,000 in student debt. 20,000 in cash. If I give this money to my parents and do my FAFSA alone (without parents info) I would probably get some help from grants, but not sure how much. I get paid in cash and when I file taxes my income has been very low.
- Chloe

Education in America is expensive, but there are some ways to reduce the debt load.

If you’re going for graduate work, one way to reduce the load is to teach. Most large schools will employ graduate students to do teaching assistant work for undergraduate classes and will even allow you to fully teach some smaller classes in some cases. They compensate for this either directly or through reduced tuition.

If you’re going for an undergraduate degree, one way to reduce the load is to get as many classes out of the way as possible at the community college level. Find a community college that transfers credits to the school you want, then take your general education requirements there at a much cheaper rate.

Another approach, if you’re a teacher, is to look for loan forgiveness opportunities, where you agree to teach in a disadvantaged district for some number of years in exchange for your remaining student loans to be wiped away.

Q7: Community of church without religion
When I was growing up, my parents and my sisters and I attended a church with a very tight-knit community. Everyone knew everyone and people were constantly helping each other out and inviting each other over for meals and the like.

As an adult, I no longer agree with that religion – or pretty much any religion. What I do miss is that sense of community, though. How can I go about finding that without joining a church that doesn’t share my beliefs?
- Shawn

I agree with you that a church community can be an awesome thing. To me, the community and fellowship is the biggest reason to be involved in a church.

If you’re looking for that with minimal religious doctrine, I would suggest looking at a unitarian church. I took some religious studies coursework in college and attended the services of several different faiths, and the Unitarian church I attended (which I attended twice) seemed to mostly be discussions about different issues with very little overriding doctrine. In fact, it seemed that everyone believed something different. Many of the discussions had little to do with actual religious doctrine at all.

Beyond that, though, the church seemed to have a strong community, with multiple weekly congregational dinners, volunteer activities, and other things. Their calendar was full of activities, plus I overheard several different families discussing smaller potlucks and other things that weren’t on the calendar.

I’d try this route if I were you.

Q8: Introductory banking offers
I sometimes see offers such as “Get $25 for opening a savings account at our bank.” Do you think opening multiple accounts to get these incentives, particularly if they do not require a large deposit, is a good idea? This also leads me into my next question.

I have four savings accounts, one with a few thousand and the others a few hundred each. I plan to use one as my emergency savings (the one with the most) and another for a scholarship fund. My problem is I sometimes feel that I’m not making progress in saving, but this may just be a result of having so many savings accounts. I split $400 each month into all four accounts, so $100 each. I do not have anything that I am saving for in particular, especially now that I have reached my goal for the scholarship fund account. I thought about rotating sending all of the money to one account each month, so instead of $100 to each account it would be $400. I guess I would be doing this so I could see a big jump. Any suggestions? 
- Shelly

Introductory savings and checking account offers vary from instance to instance. Some have no strings attached. Many require that you do certain things like maintain a $1,000 balance in the account for one year or else pay back the value of the initial offer. Read any such offer very carefully before taking advantage of it.

As for the multiple accounts, if you have no reason to have extra accounts open (usually, this is done to help with multiple savings goals), feel free to close the extra ones and roll all of the money into a smaller number of accounts.

It sounds like you have one savings goal and one emergency fund. Keep those separate in two accounts and close the rest.

Q9: Checking account conundrum
A few months ago, the bank with which I was a customer for about 15 years started to assess what I felt were unreasonable fees for ATM card use. It was $2 per transaction at any ATM that was not their bank, something that I felt was egregious at the time.

The credit union we joined over a year ago has just announced a new structure to their checking accounts. If I do not respond to their letter I will automatically be put into their plus membership, which requires either a minimum checking balance of $1500 or minimum relationship balance of $10,000 (which I think includes savings accounts…is that what combined consumer deposits means? If it does then I qualify.) Interest is 0.10%, variable. There is a monthly maintenance fee of $10 and up to 10 free ATM transactions at star ATMs. Non-star ATMs are $1.50. Debit pin- based transactions, aka getting cash back when you buy groceries, is $0.25 per transaction.

For the basic plan I could have no minimum requirement, no monthly maintenance fee, no interest and no free ATM transactions at star ATMs.

Right now I have no minimum, no fees for ATM unless I go over 10 per month and no fees for getting cash back. I have interest as well but I have made 1.71 in the last 10 months. By my calculations, I use a pnc ATM that has no fees 3.3 times per month. I get cash at the store 2.1 times per month on average. Based on my current year, I would have been assessed $38 in fees already and be on track to have $45 in fees for the entire year. I suppose that compared to the $10 monthly maintenance fee then I am in better shape.

My question to you is, do I have any choice as a consumer to stay with my current checking account? Why do I have to be forced to choose one? They say in their letter that the previous options will no longer be available after January.

It sounds like the basic plan would work for me, but it really annoys me to have to deal with fees! I hoped a credit union would make me safer from these fees but it hasn’t. It’s the wave of the future!
- Jenny

This might be an opportunity to shop around for a new bank, one that doesn’t charge such fees. These seem a little over the top on the “better” account, especially just for getting a measly 0.10% interest.

When dealing with a bank, you essentially have to choose among the account types they offer. It sounds like they’re offering two to you, of which neither one is all that good.

If I were you, I’d complain there. If the complaint didn’t result in any changes, I’d switch financial institutions.

Q10: Creating online buzz
I spent some time researching emergency 72 hour kits. With all the disasters happening and peoples lack of being prepared I thought this was a good niche market. I was able to make the determination that buying a pre assembled kit was best. For example, People have thoughts on what knife they want or what type radio they want ect. I wanted to cover the basics and allow people to add the extras. It is important to note I was able to secure distribution rights for Canada. How can I create interest, buzz ect. I have researched google ad works, a variety of search placement sites, contacted insurance groups, auto clubs ect. Everybody has an opinion which seems to conflict with others. I hope this is clear and to the point. Please ask other questions as I may have missed a key important point.
- Rob

The tricky part is that there are a lot of ways to create this buzz that you seek.

Given that you seem to have a particular product that appeals to a particular group (Canadians who would be interested in such kits), I’d spend some time figuring out where that group congregates online. Are there messageboards that cater to such a group? I’m not familiar with the exact nature of this group, but I would assume that you do since you’re involved in the business.

Find that group and market to them. Buy ads specifically targeting the places where they congregate online. Join those sites and join in the conversation. This doesn’t mean talk about your product all the time. It means be a member of the messageboard. If you want, put your business in the signature, but if all you do is promote your business directly, you’ll probably wind up being banned or ignored.

This is the approach I’d start with for online buzz for your product.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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