Personal Finance 

Don’t Forget the Big Picture

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Magnifying GlassOne of the things I learned whenever I drew up our financial network map was that I had a lot of bank accounts, mostly high interest savings accounts at online banks. FNBO Direct, Dollar Savings Direct, HSBC Direct, ING Direct, and E*Trade for starters and that was after we closed accounts at Emigrant Direct and Virtual Bank.

There are many reasons why I have so many bank accounts, and I’ll explain that some other time, but the point of this post is that it’s easy to forget the big picture whenever you’re dealing with the nitty gritty of daily affairs.

In the third episode of the Personal Finance Hour, JD shared a story about how he was fussing with hot chocolate packets to save a few cents on his drink. He started doing this when he was going all out on paying down his debt. The big picture goal was to eradicate his credit card debt and his ends justified the means. After the debt was paid off, he continued to scrimp and save pennies and lost focus on the big picture. It made sense to scrimp when he was on this quest, it made less sense now that he was done.

The same thing happened to me with all these bank accounts. It’s very important to save and it’s very important to get a good interest rate, but it’s less important to spend too much time on getting the best interest rate possible.

Do I need all those accounts? No.

Should I always open an account at the latest bank to offer a nice rate? No.

Does it hurt me to open these accounts? Not really, except my time may have been better served doing something else.

The next time you are working on minutiae, take a step back and see if it’s fulfilling your big picture goals.

(Photo: denverjeffrey)

{ 8 comments, please add your thoughts now! }

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8 Responses to “Don’t Forget the Big Picture”

  1. Olivia says:

    I agree that it is important to focus on the big picture instead of just the little things. That being said, the little things can often be much more important than many people realize to achieving big goals. It is amazing how far a little bit of effort can take you. That is why it is important to determine your priorities and make a plan for how you will accomplish them. If a daily soda is high on your list of priorities, for example, you should not give them up.

  2. Daniel says:

    “The big picture goal was to eradicate his credit card debt and his ends justified the means. After the debt was paid off, he continued to scrimp and save pennies and lost focus on the big picture. It made sense to scrimp when he was on this quest, it made less sense now that he was done.”

    This is interesting. I’m not sure I totally agree with this mentality. Particularly the last line.

    So he got out of the hole he was in, he erased his credit card debt. That’s great – but I don’t think that climbing out of a hole of debt, means that scrimping and saving makes any less sense now than it did when he was IN the hole. He got INTO the hole, presumably BECAUSE he was not scrimping and saving enough earlier in life, right?

    In other words, scrimping and saving when you are NOT in the debt hole, is a good way of not getting into that hole in the first place. I’d rather take swimming lessons BEFORE I am standing on the deck of the Titanic.

    • Jim says:

      I considered scrimping to be at the fringe of saving, meaning it’s the things you do to give yourself a little extra. It’s like the final lean in a track sprint. He got into the hole because he made poor decisions in his spending, very poor decisions. He didn’t get out of debt because he was pinching pennies, he did it because he changed his whole approach and pinching pennies was the extra edge he gave himself. He was sacrificing some personal enjoyment in order to beat the debt faster.

      I’m not saying frugality goes out the window when you don’t have debt (I’m frugal and I don’t have, and never have had, credit card debt), but pushing yourself to spend as little as possible at the cost of enjoying life makes less sense when you don’t have debt. It may still make sense to you, but it’s going to be less important when you don’t have debt.

  3. Diane says:

    Jim, I’m wondering why you had savings accounts at so many online banks to begin with… Were you getting better offers & opening additional accounts?

    Also, what did you do when you closed some of them – consolidate into one or two high-interest savings accounts?

    I have a checking account at a local bank & a savings account at ING. I’m thinking of opening an ING checking, just to get the debit card and have quick access to my savings, if needed.

    I would then feel comfortable keeping more of my money there, because now I keep a fair amount of cash in a fireproof/waterproof lockbox at home for immediate access & in my checking account (which pays no interest).

    • Jim says:

      I was getting better interest rate offers and so I was opening new accounts and putting my new money in them. I still have many of them but for the others I consolidated to the best one available.

      The checking account is pretty convenient and a great way to access your ING funds without having to transfer them out to a regular checking account.

  4. Eric says:

    I agree. I try really hard to prune my accounts so that I don’t have a ton to keep track of….gets messy!

  5. Carole says:

    I recently opened yet another online account, TD Ameritrade’s Save Yourself account. It took me less than 20 minutes to set up the account and the automatic monthly $100 deposit, and for that they will give me $100 at then end of the year. I figure that’s a pretty good salary for 20 minutes of work, even if it does make my financial network map a little bigger.

  6. Andrew says:

    Jim, I find your site very usefully and educational, simple to use and straight forward. With this being said where does one put a medium size portfolio that will continue to grow. High yield Bank accounts I have, yet don’t even beat inflation, stocks seem risky and I’m just learning about government bonds. This seem like the safest so far. I’m willing to take a calculated risk. Seen personal loses of more than 40% in the stock market. Please help and thanks for the service you provide to everyone.

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