Laura and I just got $945 dollars, for FREE! It was just given to us. I did about ten minutes of work on the internet, and was paid over nine hundred dollars for doing so. It was so easy, it was child’s play. If I can do you it, anyone can. As a matter of fact, I would say that if you weren’t given free money like we were, you aren’t making your money work hard enough for you. How did we do it? How and why did some bank just hand over that kind of money to us? Well, if you’d like to be in our shoes, just read on to learn about online banking, high yield online savings accounts, and our credit card usage. Those three things paid us over $900 dollars in 2007 alone, and cost us nothing!

Online banking. First of all, if you want to make this work, you need to be a little internet savvy. A dial-up connection will do, but you need to at least be in a position to do some banking online. I know that some people are not in a mind set (yet) to be willing to do much of anything on the internet, let alone, banking on the internet. Most, if not all banks, trying to compete, now offer free, online banking, and online checking, and online bill payment methods, and so forth. These are great tools that ultimately save you money, time, energy, and help you stay organized and earn more money. For example, the amount of checks Laura and I write in one year is almost negligible, maybe three or four. Also, we never use cash, so the amount of actual “hard currency” we spend is very limited each year, as well. Almost everything we spend is electronic: credit or online debit/check writing. We use Huntington Bank to do our banking, and they provide a free bill payer, and electronic check writing, and online checking and access to our accounts. When we “write” a check to a charity, an individual, or business, we fill out an online form, and our “check” is sent, electronically, for free to whomever we choose. For example, we donate to Lightrider, and our bank sends them a check. We don’t pay for the check, the postage, we don’t have to drop it off in the post office box, and we certainly don’t have to write anything down in our statement, because it’s all taken care of on our online checking account for us to see. For free!

I hate late fees. They waste my hard earned money. I hate having to remember which bill is due when, and how much it should be. I don’t like having to juggle all that in my head. So, each bill we get, is automatically billed to either our credit card (to earn bonus points) or to our checking account. The online bill payment function works great because then, the bills for the gas, electricity, mortgage, credit card (yes, more on this later!), cable, Roth IRA, mobile phone, and more, get paid automatically for me. Out of sight, out of mind. Not that I don’t see them going out; I want to see them for any unusual billing, but I don’t have to remember to withdraw them, pay them, or worry about them. I just have to keep the paychecks coming in to cover them!

So, lesson one is to get organized with an online checking account. The more you are organized, the less money you will lose (waste) on late fees, missed payments, and losing track of your money. Start a free online checking account with any bank TODAY. Two bonuses to doing so are: 1) No more balancing a checkbook and 2) Linking to an online high yield savings account. Not balancing a checkbook is priceless. Even if you write checks from your checkbook instead of for free online, the checks (both paper and electronic) show up in your online daily balance, as withdrawals. The reason to balance a check book is to 1) know how much money you have: your balance, and 2) to keep track of checks written. Well, you can do both with an online checking account, without balancing at all! “How much do I have in my account?” “Can I cover this next purchase?” I don’t know, look up your online account and see your balance; it’s instantaneous and live. “What did I write this check for? I don’t remember.” Look up on your online account and see a picture of the actual check you wrote and you’ll see who you wrote it to. Magic! Online checking accounts also let you link to online high yield savings accounts. Online banking saves you money and keeps you organized, but online savings accounts are where the real money is.

Online savings accounts. The power of compound interest is a wonderful tool — just ask Warren Buffett. At one time, before he gave all his money to charity, he was the second richest man on earth, behind the Windows computer nerd. He drove a 20 year old beater car, because he couldn’t stand the thought of spending $45,000 dollars on a new car, when he could put that same $45,000 into an investment or savings account and make 10 times that, where a car only depreciates in value. He knows that toys are usually terrible investments: boats, new cars, clothes, and, well, you get the idea.

The best way to have your money safely work for you is high interest paid to you on your money. Yes, banks have done this for years, but they pay such a paltry amount, it hasn’t been worthwhile. I always want my cake and be able to eat it too. I want to have the best of both worlds. I want to have the convenience of online banking and all its goodies, but I also want to make a lot of money on the cash I have in my bank. Right now, the only way to do that is with online savings accounts — high yield ones.  Big banks have entire divisions dedicated to operating strictly online. Being online, they don’t have to pay tellers, electric bills, security costs, heating and air conditioning bills, leases on buildings, and so forth. So, if they have no overhead, they can afford to pay a higher interest rate to you to use your money — more than the local National City or Huntington bank down the street can. They take your money and make loans with it, as usual, but pay a much higher rate to you because it costs them less money to use your money. If I had $75,000 dollars in my Huntington Bank savings account, it would earn .75% Not even 1%! However, that same 75,000, or just one plain old dollar, would make about 4.5% in an online savings account. How about that? $2,000 dollars in an online savings account would pay $90 dollars in one year, where as if that same $2,000 dollars was put into the local bank, earning just .5% (and that’s being generous), in that same year, would earn just $10 dollars. A difference of $80 bucks. Now, I don’t know about you, but potentially throwing away $80 dollars doesn’t sound smart to me, and heck, I certainly could use that $80.

Sign up for a reputable bank’s online savings account, and get rid of the savings account you have at your local bank TODAY! You want every penny you can working for you. When I closed my savings (not checking) account at my local Huntington bank, they asked why. I happily told them that I was switching to an online savings account. Their eyes cast downward and they sighed while saying, “Oh.” They new what I was doing and it sounded like they were losing a lot of business that way. That should be encouragement to you, if you are nervous about going this route: Many people are doing this!

Here are some reputable places to look at and start:
HSBC
Capital One
iGoBanking
Click on one above and find their “High Yield Money Market Account” or MMA. Many banks do this, and if you want to compare, go to Bankrate.comand that website will list out all the online high yield savings accounts, by customer satisfaction, percentage rate, or whatever you want. The process of setting one up is very easy, but you do need to pay attention to the online steps and follow them carefully.

We set up our accounts with Capital One, but many are easy and functional as well. We signed up online and filled out our bank’s routing and transit number (found on every one of your checks) in the online enrollment process. Within one week, Capital One deposited two small amounts into our Huntington checking account and then withdrew them. They were 61¢ cents and 38¢ cents. Then, once that happened, we filled in those two amounts in the enrollment form online. This verified that I was who I said I was, and that I had a legitimate bank account. Then, Capital One mailed me a login and password that I then used to log in the first time. I then changed it to something more memorable. That was it, it is all set up. When I log in, I can see a a drop-down box that shows my online savings account with Capital One, and my Huntington checking account. I can then make transfers between the two. My paycheck goes into my checking account, and then my Capital One account makes automatic withdrawals from my checking account for different things we want to save for. Each transfer takes three business days, so think a little ahead, but also, it’s good to keep a small “safety net” amount in your checking to cover unexpected costs that come up inside of the three day window. But don’t keep too much in your checking! Remember, the whole point is to earn as much interest as you can on as much money as you can.

Pay yourself. This high interest online savings account should change the way you think about money and saving. It opens up a lot of new opportunities, and with automation, like automatic transfers, it is quick and easy to start saving, all without you having to remember to set money aside. I, like most people, have a hard time setting money aside. If I see it, I may end up just spending it, instead of saving it. We have six accounts set up inside our online savings account at Capital One. Each one takes out a specified amount from our checking account, on a specified day. I have all six take money out of our checking on the 25th of the month — that way I know there is money in there from my paycheck. The six accounts are: Main savings, House, Cars, College, Vacation, and Furniture. Each month we have a certain amount go into each one. This is where it really gets good. We have certain bills that re-occur annually (house insurance) and biannually (property tax, car insurance, etc). Pay yourself these bills each month and make money on the interest until the bill comes due! For example, lets say our property tax is $2,400 dollars a year, or $1,200 dollars every six months. In our county, taxes are due twice a year, so in this example, you would want to pay yourself $200 dollars a month, every month, for six months. This method is much easier than trying to cough up $1,200 dollars all at once when the bill comes in the mail. Put the money away, since you have to pay it anyway, but now you are making interest off that money. So, instead of having $1,200 dollars at the end of six months, you would have $1,254 dollars in your account to pay your $1,200 dollar tax bill because of your interest rate. Once the bill is paid, you have $54 dollars left. Start paying yourself $200 a month again, and in six month, you’ll have $1,254, plus the $54 you started with, and you’ll have over $1,310 dollars. And as this cycle continues, you’ll continue to make money. Do this with any recurring bill. Set it up so that the transfers are automatically done each month so you don’t even have to think about it. When I get our car insurance bill, tax bill, or whatever, I don’t even sweat it because I know I’ve got the coin in the bank, plus interest. (I then pay those bills with our credit card and get either 1 or 3 percent back!)

With some online savings accounts, they even provide a debit card linked to it, so spending is easier (not necessarily a good thing: harder access to your money means you are more likely to save it! Just like not carrying a credit card or cash.) If you keep your spending under control, the debit card is a great convenience factor.

Where else can you set up a way to earn nearly 5% on your money, have it cost you nothing, provide an easy way to start saving for rainy days or special expenditures like vacations or toys, and earning interest with only one dollar (opposed to banks which have tiers where the first $50,000 may only pay half a percent of interest)? Open one today! Even if it is only 10 bucks a month, because one day, you will be glad you did. People who fear the internet ultimately lose out. Don’t be afraid, the internet is safe, if you stick with reputable web sites (not: Jim Bob’s savings accounts). I feel bad for all the people who fear the internet and put their money away in something “safe” like a CD. A CD may pay 4.5% for one year, just like an online savings account, but with a CD, you lose access to your money for a whole year!

Finally, credit card usage. This is another great way to earn free money. With disciplined use, we earned almost as much in one year by using our credit card that pays us back, as we did with our online savings account. How about that? Finding a good card is half the battle, but once you do, life is wonderful. A word of caution here: credit cards must be used with diligence and discipline. I DO NOT buy into the idea that some people aren’t cut out for using credit cards because of overspending. We are as responsible as we choose to be. It takes practice, but with a little foresight, a little thought about “How long will this take to pay back?” and “Do I really need this?” everyone should be able to use a credit card responsibly.

Credit cards are not for increasing your wallet size! If you do not have the money in your bank account, do not put credit on your credit card. How simple is that? Do not use a credit card to cover expenses that you can’t pay for, even in an emergency. If you need cash, talk to a rich relative, your local bank, or get a second job, but don’t put bills on a credit card — the interest will kill you and your whole plan of earning wealth via interest. Embrace the mindset that these banking jokers have to pay YOU interest, not the other way around! Use them to your advantage, and see things from the viewpoint that you won’t be a sucker or slave to the banks. Make THEM play the fool for once and have them pay you.

So what card should you use? Reward cards are the only way to go. There are as many reward cards as their are preferences. I personally don’t care what interest rate credit cards charge in interest because we pay our bill off every month. Reward cards (ones that pay you back or give you something in return, like airline miles) usually have higher interest rates on balances, but who cares? My card could have a 50% interest rate, but since we pay it off each month, it doesn’t matter. Cards that don’t pay rewards usually don’t have as high an interest rate, but why fool with them if they aren’t going to pay you to swipe your card? Don’t be the sucker; make them be the sucker and make them pay you for using their card. Since we never carry cash, we put almost everything on our card. Why use cash or checks when I get paid to use a credit card? Our rewards add up fast . . .

The best card that I have found is the Chase Freedom card. I know there are lots of cards out there, and many people have their own ideas on which card is best, but in my opinion, the Chase Freedom card is the best and is what we use. Why is it the best? For three main reasons: it pays us back at either 1% or 3% for each purchase, depending on what the purchase is. (3% off any gas, pharmacy, grocery, fast food, and many other categories, and 1% back on all other purchases). Secondly, it will allow us to switch between cash back and points, like airline miles, and back again. One month I may want to cash out some rewards in the form of money. The next month, I may want those points to go toward airline miles that can be used on my next airline ticket purchase. They are switchable. Finally, it is one of the few cards that will allow you to pay the balance in full, each month, automatically! You heard right: never pay late fees or finance charges with this card, because every month, it deducts the monthly balance from our checking account. Most cards won’t let anyone do this because they love it when you only pay the minimum balance or are late because then they get to make more money off you and charge late fees! But the wise financial wizard that you are will never have to worry about this with a Chase Freedom card because it will pay off your balance without you having to remember to do so, or even be home. If you are on vacation or celebrating during the holidays, it pays off your card. Who hasn’t forgotten to pay a bill? With this card and a properly set up online bank account, you won’t have to worry about it again, and you can earn money too! Click on the picture of the card above to sign up.

I don’t type any of this to gloat, preach, or be condescending. I know that most people who read this will already know most everything I’ve mentioned here. I do hope though, that this motivates you to get out there and sign up for online banking, a good rewards credit card, and most importantly, a high yield online savings account. Do it today — you’ll be glad you did.

For more, visit TobyLaura.com!