Finance 101: Debit Cards, Weddings, and Peaceful New Careers
by Erin Dresch
The news that Bank of America is now charging $5 a month for debit card usage pisses me off. I really want to close my checking account there and open another one somewhere else that won’t charge me, but I heard that closing a checking account affects your credit score?
The short answer is that closing a checking account won’t really do any harm to your credit report. You won’t get shunned by society at large for leaving Bank of America. Here’s the long answer: What does affect your credit is when you open a new account. When you open up a new bank account, some banks will do an inquiry into your credit, known as a “hard pull.” This will affect your FICO score for about 12 months, but marginally. Usually it takes off 5 points on your FICO score on average.
What you really need to look out for is if you can open up a new account. Banks don’t just look at your FICO score, they also dig into something called a ChexSystems report, which looks into your past with previous bank accounts. If you’ve overdrawn your account, it would be on there. I know, how judgy of them. Luckily, you can look at your own ChexSystems report for free online. As long as it’s decent, you should have no problem finding a new place to stash your cash.
But OK, now I’m going to burst your bubble a bit. As good as it feels to stick it to goliath Bank of America, you may face this problem again at another bank. BofA isn’t the only one planning to end free checking. Due to new laws banning previous fees, banks are coming up with new and creative ways to get revenue, since they’re all pretty much in the same boat. I would go so far to say that in a few years, you won’t find a bank that doesn’t charge for a debit card. Sorry to break it to you.
If this is too much to bear, there are some options. First, banks will waive fees if you have a certain amount of money in your account (or a few other factors). So do some research, ideally with a real, live person, and see if you can work something out. The other option is what I like to call “old-timey banking.” Here’s what you do: Get rid of your debit card. Request a card with only ATM usage from the bank.
Hell, if you’re a real masochist, have NO card and go to a teller every time you need cash! (For real, don’t do that last part, I’m JK.) This move would be annoying, but I think financially beneficial to a lot of people. Overusing debit cards have caused many to sort of become numb to how much money they’re spending. Using cash for most purchases can help bring folks back to reality that every time you buy something it cost REAL MONEY.
I’m getting married in the spring and the budget is already causing problems among me, my fiancé, and my family. Both of our parents are chipping in for the wedding, we’re paying for the rest, and things just keep ballooning. Both our parents say they won’t give anymore, which is fine. We can cover it, but just barely. There is also some friction about my dress. I found one that’s absolutely perfect, and I felt so great when I tried it on, but it’s $4,800. I haven’t bought it yet, but my fiancé says it’s ridiculous to pay that much. I know its extravagant, but this is my wedding and I want it to be memorable. I also feel like we’ll make up for a lot of the costs with the gifts from the registry. So my question is, is my fiancé right about the dress? And are there any ways to save money on the wedding?
First, congrats on the nuptials! A few months ago I got a chance to speak with a one of the co-founders of TheKnot. Uh, they know some stuff about weddings! And it must have been fate, because I asked him “what’s the best way to reduce the budget of a wedding?” and he was ADAMANT about his answer. He knew it in his heart of hearts. You ready? He said you have to cut the guest list. That is the quickest and easiest way to save costs. Think about it. Let’s say your wedding is $100 a head, and you’re inviting 140 people. Now let’s cut that number to 115, and beep boop bop, you saved $2,500!
I understand that not inviting some random Great Aunt who lives 1,000 miles away or your roommate from college you don’t really talk to anymore might be tough and cause some fights. But I’m not here to tell you how to solve those battles, I’m here to save you cash.
Now the thing you were saying about the registry making up for the wedding costs. That’s not a really good way of thinking. I would actually say that’s bad! First off, never underestimate the true cost of the wedding when all is said and done. And comparing what you spend at your wedding to gifts you receive after is a serious apples to oranges problem. One hundred bucks you spend toward flowers may be the same amount as a kick-ass coffee maker, but it’s not like you’re getting that money back. I feel like that sort of thinking gives people the excuse to spend more, because you somehow think it’s boomeranging back to you. When really you could have pocketed the money and used it for, oh I don’t know, your gas bill.
While we’re on the subject of the registry though, I encourage you to look into getting a down payment registry. I know mixers and towels rock your world, but most couples have everything they need for the home already. A down payment registry can really give you a head start on owning a home.
Here’s the thing about the dress: I don’t think it’s about the dress. Weddings are stressful, and cause normally rational people to go a bit crazy. I think that your hubby-to-be may be taking out some of his worries/frustrations on your pretty dress because he doesn’t have any control over it. When he sees you that day, looking all gorgeous, I think he’ll forget how much it was and any previous fights over it. However, since you have the time, try checking out sample sales to see if something similar, or even your very dress, grabs your attention. You never know! And at the wedding, when people compliment the gown, you can go “I got it on SALE!” I know that’s kinda tacky, but I would totally do that.
I really, really, really hate my job. I work in an office all day, and hate the people and what I do with my time. It’s totally unsatisfying. The only thing that really picks me up is yoga. I’ve been practicing yoga for years, and lately I’ve been thinking about quitting my job and becoming a yoga instructor. I already have $6,000 saved, which more than covers the training I need for certification. I know it’s a risk, but I really feel like this would make me happy. Is this PROFOUNDLY irresponsible?
Don’t quit your job and become a yoga instructor … right now. I think it’s great for people who have relatively little obligations to change career paths and find out what they really want to do, but you need to have a PLAN to do it. And, for the record, a plan is more than just Googling how much yoga training costs. This economy is no joke right now, and job safety is not something to screw around with. So if you really, really, really want to do this, you have to be disciplined and understand you might fail. So let’s walk, not run, to your next career.
First, you need to save up to cover at least three months of expenses. Ideally six months. I would recommend not only saving, but cutting back as well. Since yoga instructors don’t usually make as much as people who work office jobs (or have health insurance), you’ll need to downsize anyway. So get a roommate, turn in your car, do what you have to do.
While you’re saving, do some research. Talk to as many yoga instructors as you can. Ask them questions like, “How did you first get hired?” or “How many classes do you teach a week?” Try to find out the ins and out of yoganomics. If I were in your shoes I would also find someone who’s really made a success in this field — the Oprah of yoga, if you will. They may be willing to give insights and advice you wouldn’t have figured out on your own.
It’s also a little scary to change up career paths and teach yoga if you’ve never taught a class before. Try hosting a little yoga party for your buddies. If you shine like a yoga star, that’s great! If it totally sucks, at least you know! Getting your friends involved will also help spread word of mouth, which you will need when you try to find work.
Erin Dresch is the producer of business news at NY1, a local news station in New York City. Do you have a question for Erin?
Photo by James Steidl, via Shutterstock