I’m Lazy With My Money And Sometimes That Costs Me
I achieved financial independence accidentally in my mid-40’s, thus my blog name. By nature I’m pretty frugal and a saver. The money I saved went into mutual funds for the most part, and the bulk of that was index funds. In short my strategy to get to FI was lazy and boring – spend less than you make, stash the difference in index funds, let it grow and achieve FI.
Yawn. But hey it works.
Time is money, and every minute someone is spending researching stocks to buy or endlessly trying to optimize by tax loss harvesting those hours are cutting into their returns. My time is worth a lot, so I don’t want to spend it trying to eek out marginal gains, because after I deduct the value of the time lost those apparent gains usually become losses in reality.
I spend a grand total of 5-7 minutes on my money every month when I log into my accounts and do a net worth update. Aside from filing taxes, that’s really it. Basically I’m lazy with managing my money, but it worked for me. It worked really really well.
Though sometimes it costs me…
My Cash
Back in March of 2019 I did a post about moving my cash to CIT Bank. At the time their saving builder money market account was paying a 2.45 APY which was better than their competitors and the best FDIC insured option out there. In those days regular banks were offering 0.5 – 0.7 APY on savings and we had been in that low interest rate environment for years as the stock market boomed.
Most money market accounts generally mirror the Federal Funds Rate, and here’s a chart of that since 2019:
As you can see in March of 2019 when I moved my cash to CIT I got a rate slightly better than the Federal Funds Rate. But as covid hit in 2020 you see what happened in the chart above. Tank.
And rates stayed super-low all through 2021. Returns on cash sucked, just as stocks and bonds went down and inflation went up.
But then in 2022 as the Fed started raising rates things started climbing. This is when my laziness started to bite me in the arse. I basically didn’t pay attention.
And my damn CIT savings builder account – for whatever reason – didn’t see it’s APY rise with the Federal Funds rate.
Thanks Darrow
In early March Darrow Kirkpatrick of the Can I Retire Yet blog did a post about cost cutting. He mentioned that CIT Bank was offering a rate of over 4% but that he didn’t like the sign up process as he had issues. I knew my CIT account was barely offering 1% at the time and thought “I wonder if this is a new customer thing”. I hate it when companies treat new customers better than established customers. So I logged on CIT and checked. Sure as shit I was getting barely over 1%. But as I dug into their offerings I saw they had a platinum saving account that offered 4.65%.
4.65!! That’s much bigger than 1.
So all I had to do was open that account and move my money, which took all of 10 minutes since it was within CIT’s site. Even lazy me could handle that.
Why did CIT not give me heads up that I had been leaving money on the table? Well, it’s probably not in their interest (pun intended) to do so. So for all of 2022 I was earning a paltry 1% while I could have been getting a much higher rate. I’m sure it wasn’t 4.65% the whole year, but it was obviously higher. As of this post it’s now 4.85%.
How much did my laziness cost me? I did some rough calculatory operations and it’s about $450 – $500 in interest. I mean, that’s not life-changing money, especially for me. But hey if you were walking down the street and saw 500 smackers lying in the gutter you’d sure as hell pick it up and probably call a friend or two and brag about it. It would make a great day.
Pay Attention You Lazy Dum Dum
I’ve learned a lesson in this whole thing. My laziness has a good side in that I don’t spend valuable time effing with my money. I charge quite a bit per hour for my labor, and damn if I’m gonna waste it clicking around on boring financial sites.
But being lazy with my money has a bad side in that I sometimes miss the boat on things. At a broader level, this also probably explains my declining blog readership and why after over 5.5 years of writing on this blog I’m kind of a persona non-grata in the FI/FIRE space.
I mean, c’mon dude. What kind of FI blogger are you if you can’t even pay enough attention to your savings return to get at least half of what most banks are offering.
FAIL.
I’ve never been asked to be on ChooseFI and I now understand why, haha. They have a reputation to uphold.
In the end you can’t optimize everything, the monetary value of the time and energy it would take would reduce your optimization gains and worse it would consume your life energy. But this little episode gave me a wake up call to at least pay attention a little more, or next time the penalty for not doing so could be much greater.
Good Morning AF,
I’ll bet a lot of people, including myself, missed rate change adjustments. We’re trained on the stock/bond side to set it and forget it. Interest rates have been pretty boring for decades. Finally, if you had paid for a big brokerage to manage your money, would they have made the switch at the optimal time? That’s why Blogs like this are so valuable. Thanks
Yeah good point, I’m probably not the only one. Thanks for the comment!
to hell with the fi/fire space. why would you want a join any club that would have you as a member?!
that being said, there really IS a free lunch in parking your cash in a higher yielding savings acct. i stuck with ally the past 5-6 years and didn’t need to ask them to raise my rate. i’m getting less than 4% but not much less and the savings/checking part has been seamless the whole time.
At the time I opened my CIT account I was between them and Ally but CIT had a slightly better rate. Both had the highest rankings of the ‘new online’ type banks. I can’t complain too much about CIT though, they’ve been perfect for me – easy website to use, transfers all work fast, and FDIC insured. Sounds like Ally did a better job of keeping you in a good rate but you might wanna keep watch if the difference between Ally and others keeps getting bigger. It is a pain to keep opening accounts and moving money though.
Oh, I don’t know, I think you’re describing a whole hell of a lot of us. A lot of financial stuff is boring to many people and at a certain point you indeed make that trade-off between time & money. You already have enough. You’re just realizing that the actual amount you think is worth your time isn’t a quarter lying on the street, but maybe more in the range of $100 bills – no harm in that. Throw in a little bit of FI ‘keeping up with’ competition/status awareness and now you’re irked enough to write a post, lol
From what I’ve read on the macro-eco/behavior view about those deposit interest rates is that up until pretty recently, the big banks didn’t need to raise deposit interest rates as the Fed increased the rate because depositors WEREN’T moving their money or paying a lot of attention. Until you give a bank a reason to fight to keep you, they have incentives to delay passing along any increase (borrow short to lend long, right?) and then only partial, so there’s always a lag. Some of the banks have record profits, some are getting hit by panic runs, and many are watching the ticking time bomb of commercial/office real estate loans…so they’re going to hold back if they can because they ARE paying attention.
Cheers!
Great comment Wendy, and haha, you got me.. I was irked (and a bit embarrassed) enough to write a post. And yes I think the recent panic activity in the bank sector is affecting things, let’s hope that goes away soonest.
How long did it took to reach the fire?
AccidentalFire,
Blogger are my best source of timely personal finance information and tipped me off to looking into Treasuries (via TreasuryDirect) and T-Bill auctions (using Fidelity) as rates rose. Although you might be late on this one, you’ve been uniquely insightful in other posts. I (and I’m sure many others) appreciate your posts. Nobody is perfect and everyone gets lazy every now and then.
Thanks for the kind words Phillip. I too have been tipped off by FI blogs as mentioned in the post. Between Big ERN, Can I Retire Yet, Michael Kitches, and a few others, I think the FI/FIRE space is covered well with very educated financial minds. I rely on them to keep up with things, and have met them all and can attest they are great people.
I get the lazy, I’m there too. I’d rather set it and forget it and spend my time doing anything else. But your last point is something I worry about: ” …or next time the penalty for not doing so (paying attention) could be much greater.”
Like everything else, I imagine indexing will someday become suboptimal, and perhaps Vanguard will devolve into a company I want no part of. Because, you know, entropy and stuff. Maybe in my lifetime, maybe not.
But how do I know when?
There are plenty of clickbait articles out there which say indexing is dead and vanguard is evil, but whenever I poke my head up from the sand and actually read said articles, they seem to be based on faulty premises and written to stoke fear just to grab eyeballs and money.
So I go back to not caring about the rest of the financial world for another six months and instead read FIRE blogs that discuss the human side of stuff(like yours), and avoid listicles with ways to build a better CD ladder or whatever.
In short, I’m not paying attention. I know I should, if only to avoid edge-case risk scenarios, but it’s contrary to the temperament which got me to FI in the first place. I don’t know how to solve this, aside from accepting my fate which includes the low probability I’ll be F’d. And hope that one of the blogs I read posts something if things go sideways.
I’d be interested in how you, or any of the other readers address this. How do you pay attention without getting sucked into the fear mongering news machine?
Dude the struggle is real. As for indexing and Vanguard, yeah… I’ve heard the theories as to why indexing makes everything overpriced but I’m not really buying it. The market is alive, companies are dying and being born all the time, it’s complex. I think there is a low probability we’re F’d, even though I have a tendency to catastrophize. The AI stuff does scare me, from both a graphic perspective (putting us designers out of work), and from a deep-fake future where we’ll have a hard time discerning what’s real. How do I handle news? I have a very small number of trusted sources that at least try to be balanced and I stay as far away from mainstream/legacy media and ignore the rest. My job still keeps me more than tuned in on geopolitical events from a defense perspective, so I have the advantage of knowing about overseas things without getting it from a biased source (ie, all of them). Thanks for reading and let’s keep at least one toe in the pool of finances so we know what’s going on, haha
You may be a persona non grata… but you’re one of the few FI/FIRE blogs that I read. 🙂 Plus, sometimes I think the FI/FIRE online space can be super toxic. As in, if you don’t march lockstep with them and have the same exact opinions about everything, you’re basically canceled. Call me old-fashioned, but I think healthy debate and differing viewpoints are a good thing. Keep up the good work—I always enjoy reading your blog!
(But if you ask me, you should ditch CIT for Ally Bank—I’ve had some dealings with CIT’s parent company, the one that acquired CIT recently, and I am not fan, LOL.)
Yes there has been quite a lot of toxicity in the FI/FIRE space in recent years. There have been cancel-mobs and bullying incidents and just a lot of despicable tribal behavior. As you know I don’t allow political discussions on my blog for this very reason – once you enter that zone you’re mostly dealing with bad people who only spew bullying and hatred in the name of tribal adherence. As for CIT I didn’t even know they had a parent company – see I am clueless! Just looked it up and see it’s First Citizens Bank… sorry you had a bad experience and hope I don’t have any run ins. Right now I’m happy with 4.85%, that’s way more than my mortgage interest rate. Thanks for the kind words Natalie!
We don’t have a lot of cash in the bank so the interest rate isn’t a huge deal to me. But 4.85% is way better than sub 1%. Fortunately, our credit union is giving us 4%. The rest is in our investment accounts.
I’m too lazy to move to online banks. Everything is already linked to our credit union account.
Well if you’re lazy too then I know I’m in great company 🙂
I don’t know. Like Natalie above, I enjoy your blog for its authenticity and absence of click-bait-y posts.
While your voice is different than many finance blogs, I appreciate the realness that comes through. I have a long list of blogs I track on Feedly but there are small handful that I check regularly because when they are posting it is something I might want to read and not just a post based a need to post on a weekly basis, etc. I count this blog as one among others like – Get Rich Slowly, Retirement Manifesto, Stop Ironing Shirts, JLCollinsnh, Freddy Smidlap’s, Retire by 40, and maybe a few others.
I also appreciate the realness of posts such as these. We aren’t perfect. It is nice to see when others aren’t ‘optimizing’ as much as they could. This post just goes back to the sentiment that if you focus on the big stuff, then the small stuff won’t be a big deal. Yep, you could have collected some more interest, but in the end it wasn’t a big deal and you could make an easy change moving forward. It is definitely a reminder “not to set it and forget it indefinitely” but to check things out periodically. I would much prefer to be in that position than to instead spend more time and brain power than necessary trying to keep up and optimize at all times. I aim to review and update my accounts quarterly and take stock then. If current events might affect what I am doing (inflation, Fed rate changes, etc) – I may take some time to review impacts then as well.
Sometimes it is okay to ‘lose’ money to save your brainpower for other enjoyable parts of life!
Thanks so much Austin for the kind words and for your readership. You’re right, I’m okay with losing small amounts of money as long as I’m using that brainpower to do other things that are good for me, such as exercising and being with friends. In the end I think my solution to this will be to set quarterly calendar reminders to do a quick check of interest rates and some other financial measures just to stay relatively in touch. I can use technology as my friend 🙂
So glad to know I wasn’t the only one ignoring interest rates! Like you, I have so many other things I’d rather do with my time than maximize every dollar. I did spend a fair amount of time recently in learning and signing up for Medicare, as mistakes there can be really painful.
I think lots of us got caught out. As trivial as it seems signing up for new accounts and moving money around is a pain in the arse.