After a little over a year of constant downturns in the economy and stock markets, some discussion is coming to light in terms of people reconsidering what retirement means, and how they are going to get there. I know I’ve seen this in my practice, as I’m encountering many more people who are approaching retirement in 10 years or less and they are seriously thinking about extending how long they work, or even changing their retirement plans.

It’s understandable that if you’re just a few years from retirement and you had a large stake in the stock market, the losses experienced this year are enough to rattle even investors who are typically risk adverse. But, what about the younger generation that typically reads this site? The bulk of readers here are in the 25-45 year old range, which puts a typical retirement at anywhere from 20-40 years away. With a longer time horizon, I wonder if the recent economic climate has forced younger people to begin thinking more critically about their retirement expectations.

Is retirement still too far off to really worry about at this point? Are you reconsidering how your investments for retirement are structured after what’s happened? Do you plan on working longer, or change your retirement goals?

Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.

Poll: Have Recent Economic Conditions Changed Your Expectations for Retirement?

First, a small disclaimer:  I’m not a big movie-watcher myself.  I’ll take in a movie maybe every two months, possibly less often than that.  This includes trips to the theater and rentals.  As such, I don’t spend a lot on movies, anyway.

Over the next few years, taking in a flick with friends and family will be an affordable substitute for a vacation.  It’s just plain cheaper.  The good news for people who really love movies is that it’s possible to get by pretty cheaply, and if you downsize other areas appropriately it won’t strain the budget that much at all.

So, here are some tips for you movie buffs on how to maximize your cinematic dollar:

• Really pick and choose which movies you see in the theater. One group of movies that might make the cut are ones that absolutely depend on special effects and the latest, greatest sound equipment.  Another group would be movies that might take a really long time to get onto video.  The main point is that going to the theater is the most expensive option for watching a movie, so choose wisely.  There’s the time and gas to get out there, as well as the fact that you only get to see it once for your money.
• Take in a matinee if you can. Some theaters offer off-peak showings at a discount to the price of nighttime showings.  The movie is the same.
• Stay away from the concessions if you can. The movie theater makes its money on the concessions.  Fountain drinks have a markup of a few thousand percent.  Same with popcorn.  A movie theater that lets you bring in your own concessions is a hidden gem; if you can, take advantage of that.
• Stay away from giving to causes before the movie. Movie theaters play off attendee’s emotions.  They have a movie screen at their disposal to play carefully-designed clips that encourage you (guilt you?) to give right there.  If you do, the movie theater writes off your donation, not you.  If you itemize, and give what you would have given directly to the charity, you can write it off (assuming you’re allowed to do so).
• Look into packs of tickets to see if there’s a price differential. Costco.com offers movie ticket packs for four different movie theater networks.  Check to see what network your favorite movie theater is in, and check the price of the tickets in the pack compared with your movie theater’s prices.  (Or, you can of course check for movie tickets on eBay!)
• See if you can get a group together. For example, our church got a bunch of people to see Fireproof this year, and I believe that they got a small discount.  Every little bit helps.

• For the movies that really don’t need to be seen immediately or ones where the big screen doesn’t matter, watch it at home! It’s way cheaper.  You can buy your soda and candy at the grocery store, and eat it during the movie without feeling like you have contraband.  Popcorn is way cheaper and healthier.  We use a Nordic Ware microwave popcorn popping bowl and it does a good job without needing any oil.  A bag of kernels costs a couple of bucks and could provide popcorn for a couple dozen people.
• Like to watch a lot of movies and want a lot to choose from? Netflix is probably your best choice.  They have over 100,000 titles to choose from.  They pay for shipping both ways, and you can cancel at any time.  There are instant downloads available each month as well.  My parents-in-law have a Netflix subscription and they absolutely love it.
• Are you looking to start or expand a collection? Well, good news!  Lots of people are looking to get rid of their collection or decrease the size of it.  There’s nothing wrong with pre-viewed DVDs (unless they’re absolutely trashed).  People routinely sell their personal DVD collections on eBay, and bidding on these is brisk.  More often than not they will list every single movie right in the auction, so you’ll know exactly what you’re going to get.  A fair price point for collections is less than half of what you can get them for in WalMart’s dig-through-the-box specials.
• What if you’re like me and don’t watch movies often at all? Like I mentioned above, I watch only a few movies a year.  A Netflix subscription would be overkill for me.  If you’re a casual viewer, then it’s easier to find good deals in low quantities because the urgency really isn’t there.
• Pawn shops, thrift stores, and garage sales are good places to pick up one or two cheap movies. Three bucks is a good price point.  If you run across something that looks interesting, pick it up.
• Redbox works well, too. I had a good experience with Redbox when I rented Expelled.  It was a very easy process, and the rental was a buck for one night for a movie that was released this year.
• Don’t forget free! There are options for free movies, of course.  Your local library might have a collection.  Your church might.  Hulu.com has a fairly decent free movie selection.  You could borrow one from a friend, or wait until it comes out on network television.

There’s so much to be thankful for, amidst the challenges we’ve faced this year. We’re counting our blessings!

Pilgrim doggies from Lulu.com

This is a post from The Digerati Life.

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The Motley Fool is a web site devoted to helping average people make better investment and financial decisions. Recently, GRS forum administrator (and resident economist) Jericho Hill got a chance to visit The Motley Fool headquarters. This is part two of a report on his experience. (Here’s part one.)

When I was in high school, I participated in my state?s stock market game. It was designed to introduce our economics class to the world of investing. That?s where I first heard of The Motley Fool, an upstart website for financial investors that went against the grain of having advisors manage your money. Their newsletter analyzed the advantages of managing your investments yourself, and advocated indexed mutual funds over managed funds.

So, when I received an invitation recently to visit the Fool Headquarters in Alexandria, VA for a focus group, I jumped at the chance. The purpose of the focus group was two-fold.

• One part of the meeting focused on The Motley Fool?s free CAPS service, a community stock-picking tool. I discussed this experience last week.
• The second part of the focus group dealt with how the participants used financial information, where they got it from, and what our views on investing were.

It was the second part of the meeting that I felt was the most valuable. Along with various Motley Fool staffers, the group members spoke about their personal investing habits, beliefs, thoughts, and attitudes. We heard from people ranging from first-time investors saving for retirement, to a professional financial planner, to well, myself. The breadth and depth of perspective was illuminating.

Prior to the focus group, I had walked around the office floor and noticed quite a few quotes on the walls. One by Peter Lynch read ?Never invest in any idea you can?t illustrate with a crayon.? Another said ?Though it?s easy to forget sometimes, a share is not a lottery ticket, its part ownership in a business.?

Later, during the group discussion, another quote came up by Warren Buffett: ?If you have one or two great ideas a year, you?re doing great.? The two new investors in the room stated that they felt pressure to succeed and succeed often as they started to invest for retirement. Knowing there were resources that played on the psychology of investing rather than mathematics of investing was important to those attendees. They also didn?t know where the best sources of information were, or who to follow.

Many of those in the room felt that it was not prudent to follow one particular author or person. Rather, it was the subject matter that as important, and as Burton Malkiel said ?Investors should act like intelligence agencies, gathering information no matter how seemingly insignificant.?

Somewhere during the conversation, I brought up the problem of risk. Individuals have different risk profiles, just as some people can ride very scary roller coasters while I?m stuck on the Dahlonega Mine Train ride at Six Flags. Further, not only do we handle risk differently, but another attendee pointed out that we even define risk differently. Our group took five minutes to write individual definitions of risk. They were all different when we reconvened.

We had a long discussion about risk, and about how our differing views on risk can make conversations on financial topics difficult. Different risk tolerances create difficulties in determining just what one?s best financial plan is. How does one define risk? More importantly, how do you define risk? All agreed that becoming more comfortable with one element of risk (volatility) was exceptionally important to being a successful long-term investor.

When the focus group ended, there was no general consensus on what information we should consume, to whom we should listen, where we should invest, or even how we should invest. That seems like a profound thought to me: that your best personal finance advisor is yourself, regardless of whether you?re just starting out or finishing up.

Jericho Hill also recently had a chance to speak with David Gardner, one of the founders of The Motley Fool. Look for excerpts from that interview at Get Rich Slowly in the future.

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Related Articles at Get Rich Slowly:

• Picking Stocks with The Motley Fool’s CAPS
• How to Get Out of Debt
• links for 2007-05-16
• How to Obtain Your Free Credit Report
• Daily Roundup: Money Myths, Going Organic, and DIY Halloween Calendar

Yes! What if your wallet is lost or stolen? Many of us have our driver's license, social security cards, etc. in them. Chuck Jaffe at MarketWatch lays out why credit monitoring is a good way to know whether your identity has been stolen....

Full article: http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid=google&guid=%7B5D8BA284-55D6-49AC-8DCD-9E15E6EEB064%7D&keyword=

I’ve always found it a challenge to find good books to read. What I usually do is go to Amazon and look at the best sellers in categories I’m interested in like finance or business. I spend countless hours reading the reviews before finally deciding on a book. Well there’s a better way of finding good books and that’s joining a book club.

Book clubs are a great way to save on your favorite books because you can sometimes get good deals on books if you buy from the book club. You can order books of any genre from book clubs, from mystery to romance to westerns to science fiction. Get the latest best-sellers or beloved classics for less than you’d pay in a bookstore. Anyone who enjoys reading can benefit from the savings and selection that come with book club membership.

At the book club books website, there’s several different clubs to join including ethnic book clubs or the self-help section which is my favorite.

Umbrella insurance is a type of insurance that provides extra protection beyond your auto and homeowners insurance. Let’s say that a tree on your property falls and completely destroys a neighbor’s house. You get sued and are ordered to pay $500,000 in damages, but your insurance will only cover $300,000. If you don’t have umbrella insurance, you’re going to have to cover that additional $200k out of your own pocket. Unless you like giving away a couple hundred thousand dollars (if you do, give me a call), you’re probably going to wish you had umbrella insurance. For around two or three hundred dollars a year, you can get an umbrella policy that will provide you with up to $1 million of umbrella coverage.

Sponsor: Brohans Video Blog - It’s Like Binary Dollar. Except you don’t learn anything.

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Finance Findings is Binary Dollar’s periodic link dump.

• Zecco IS Cheap [Sun’s Financial Diary]
• Traditional Jobs For Men And Women And The Gender Divide [Digerati Life]
• Practicing Basic Tax Diversification [Tao]
• How to Talk Your Way into Debt [Money Smart Life]
• Lazyman’s Prosper Update [Lazy Man and Money]
• Don?t Be Fooled Into Thinking an Oil Change Every 3,000 Miles Is Necessary [Generation X Finance]
• Are Inflated Shipping Charges On eBay Bad? [Mighty Bargain Hunter]
• Why You Need a Budget [Free Money Finance]
• Are You a 0% Credit Card Daredevil? [Five Cent Nickel]
• GEICO Paid Out A Fraudulent Claim [Blueprint]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

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Well we're a few weeks beyond Hurricane Ike, and our collective attention has turned from tropical storms to financial ones - a topic that I'll write about shortly. 

Most of Houston is back to normal.  Among the properties that I own we suffered a few downed fences and an uprooted tree or two, along with a tenant who appears to have disappeared and abandoned her lease (I'll write about that as well).  All and all I've been pretty lucky - and thanks to those of you who sent your best wishes. 

But take a look at the JPMorganChase tower in Downtown Houston.  Looks like they've cornered the local plywood market. 

This is a guest post from my wife, and features a story I’ve come to look forward to updating every summer: the tale of two entrepreneurial girls.

Last weekend I explored Portland’s beautiful Eastmoreland neighborhood during its annual 140-family garage sale. In the past, I’ve come away with major bargains, but this year I had to be content with enjoying the first day of summer with a couple of friends. We admired the homes, gardens, and assorted cast-offs of the well-to-do.

Many of the adult garage-salers were raising funds for charities. Sidewalks and curbs were also strewn with young entrepreneurs selling their wares: homemade cookies (still warm from the oven), beaded jewelry, rice-krispie treats, iced bottled water, and grilled hotdogs.

Over the past two years, J.D. and I have had fun meeting one pair of entrepreneurial sisters who rise above the run-of-the-mill baked goods and soda. I was pleased to see them once again. In 2006 they were selling jokes:

Last year they were selling stock tips:

My friends and I each bought a cup of lemonade, which we downed while questioning these young businesswomen about this year's products. The elder girl was selling bottle-cap magnets — each individually created and carefully crafted — at two price points. She told to us some of her inspirations, and compared the relative strengths of the magnets. (The one dollar bottle caps had stronger magnets than the seventy-five cent magnets.) She was proud of her creations, but, like any good salesperson, she didn’t oversell. I selected one with a cancelled 26-pence Queen Elizabeth stamp and moved on to see what her younger sister was selling.

The younger girl had created two issues of a neighborhood newspaper: The Lofty Times. Typed on an actual typewriter (without correction tape!), the publications bear phonetic misspellings and creative punctuation, but are brimming with enthusiasm and real journalistic gusto. We purchased a copy of each issue, did some negotiating to arrange limited re-print rights for Get Rich Slowly, and exchanged email addresses. Here’s a sample story from The Lofty Times, reprinted by permission of 8-year-old author Grace:

the Eastmorland goroge sail

Thouthins of peaple look forwerd to this moment in Eastmorland it is the garage sale! A man named Jared Seger is selling different parts of a house, such as windows, doors, and other things.

In th past years my family has allways gone big on the garagesale. one year DAD beleave it or not bot a hool stack of inapropryite gossap maggaseens, it was hollywood gossap and lemenaid, every year it was a tradishon to have lemenaid.

Other years were forchentelling, jocks, stack priceed, and so many more things that even if I tried, I probly could not name them all! this year is going in a todaly different path. AT ages of 8 and 10, my sister and I have lerned so many things, I, as you can see am making my newspaper. Madeline is making bottlecap prodex.

I have many, many good thouts about the garagesale, I hope you do to.

The girls and their mother gave us a crash course in their annual entrepreneurial endeavors. Their parents loan them seed money for the projects, which the girls must pay back from their profits. Any profit is theirs to spend. With parental support and guidance, these sisters are well on their way to understanding the value of money and the joy of making and selling their own goods — as well as knowing how to stand out in a crowd!

I’m sure that it would be easier for these parents to just give their daughters spending money, but they know that the lessons learned here are priceless and the extra efforts worthwhile.

My friend Rhonda and I later discussed the merits of each girl’s choice:

• The magnets clearly had higher start-up costs, but broader customer appeal.
• Yet the newspapers were well-worth the cover price for entertainment value.
• Both projects showcase the imagination of the creators.

I wish I could eavesdrop on these girls as they consider, reject, and perfect ideas for each year’s merchandise. And I hope that by the end of the weekend, Grace and Madeline were both sold-out! May they return next year with their contagious entrepreneurial spirit, and Bravo, parents!

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Related Articles at Get Rich Slowly:

• Accidental Entrepreneurs Turn Hobbies Into Livelihoods
• Resources for Would-Be Entrepreneurs
• Some Thoughts on Discouraging Materialism in Children
• Sponsor Get Rich Slowly for Blogathon 2006
• Marketing Affects How Children Perceive Food

I freaking love this.  One of the topics that I have seen frequently on the PF blogosphere is how little financial education there is for America's youth, and how that leads to poor decision making as adults.

In a reversal of roles, High School Freshman and Teen Columnist, Emily Hu, writes For Adults, It's Payback Time.

A brilliant nugget from Miss Hu's article: 

"It comes down to this: Once upon a time, when people were forced to really consider what they could afford and credit actually counted for something, people bought houses they could live in for a few years."

(This is a guest post written by ABCs of Investing, a brand new site for novice investors which offers two short and simple investing posts per week.  Feel free to subscribe to the feed.)

The majority of investors use a financial advisor or broker to help with their investing planning.  There is nothing wrong with getting some help with investing since it is a fairly intimidating subject.  Most people just don’t have the time or the interest to read investment books and become knowledgeable enough to be able to handle all of their own investments.  Do-it-yourself investors forget how much time they have put into learning about finances and think that investing is easier than it really is.

The great thing about investing is you don’t have to choose between being an expert DIYer or a clueless investor who needs an advisor.  You can hire professional help AND know what you are doing at the same time!

A few years ago I bought a basic electrical book.  It showed how to do electrical repair jobs and even how to plan various circuits in a house.  One of the things that I found most interesting about the book was in the introduction; it said that learning the basics of your electrical system is useful whether you do the work yourself or hire someone else.  The point was that even if you end up hiring a contractor to complete your electrical work, any knowledge you have about the electrical system in your house and how it works will assist you greatly.  The same logic applies to investing: the more investment knowledge you have when dealing with an advisor, the better off you will be.  It is worthwhile to spend a bit of time learning about investing.

There are number of areas where some investing knowledge will help if you have an advisor:

• It won’t be as easy for the advisor to take advantage of you.  Let’s face it: some financial advisors, like real estate agents, make money on commission, and unscrupulous ones can rob you blind if you let them.  Knowledge about proper investments and for that matter knowledge about how advisors make their money will help you a lot.
• You’ll have more productive advisor/client meetings.  Usually when a client visits or talks with their advisor, the advisor is telling them what to buy.  If you can spend some time before meetings looking over your portfolio then you can drive the meeting agenda and make sure that your questions get answered.
• You’ll know better what you want from your advisor.  A lot of investors just hand over the financial reins to their advisor and just do whatever they are told.  If you have some investment knowledge then you will be in a lot better shape to determine what you want from the advisor, communicate your desires to them and make sure that they are the right advisor for you.

The single best way to learn about investing is to read.  Read, read and then read some more.  Books, blogs, websites, newspapers are all sources of information.  Talking with friends, relatives, co-workers can also be helpful.  But beware, all the “good” ways to learn about investing can unfortunately also be “bad” ways to learn about investing.  The best way to protect yourself is to read as much as you can and eventually you will be able to figure out where the good information sources are.

Knowledge is power!  Make sure you have as much as possible when dealing with your advisor.  Even a little bit of knowledge is a lot better than none at all.

(Photo credit: net efekt)

Who’s to blame for the worst economic crisis since the Great Depression?

Warning… long rant ahead.

Have you heard the latest bad joke around? Okay not this bailout crisis joke I wrote about a week or so ago but the one on how we’re socializing our financial markets by making the taxpayers bail out all our financial institutions. As someone put it, “this is a form of wealth distribution alright, the government robbing from the poor to give to the rich….”.

So when will this nightmare of a crisis end? Sure we’re shoring up our failing banks and institutions right now, and even possibly certain vital industries that are the heart and pulse of our nation. But, I also see the flip-side, which is the fact that we (and our kids, and maybe even our grandkids) will be paying off for this till kingdom come, with the whole thing financed by our debt to foreign interests (e.g. Chinese).

This soap opera can’t be without its sorry cast of characters.

Golden Sach’s Bailout Man: Henry Paulson and George W. Bush, by Buckfush

Big 3 take private jets to grovel for cash, by Daily News

Capitalism Gone Awry

I wonder: how naive have I been? I am big on capitalism and believe wholeheartedly in rewarding anyone for the work they’ve done and value they’ve produced. I’ve always been of the mind that, if a CEO does well by his company and makes me happy as a stockholder, I have no qualms in approving a commensurate pay package for the geezer.

I’ve always been a proponent of self-regulation and a laissez faire economy, but this very thing has led to the disasters we’re seeing today. Now with the government sweeping in to save “the big guys” from themselves and their gross mistakes, I see that apparently, self-accountability is optional in this free market. Very interesting what this blog has to say:

Now consider: finance is a necessary function, but is represents a tax, a drain on the productive economy, just as defense and lawyers do. It is ironic that free market fundamentalists have so vociferously argued for unfettered markets, without understanding (or perhaps understanding all too well) that the house always wins.

The whole crisis has caused a very large swing from one extreme to another, the moving pendulum leaving behind much collateral damage: credit’s gone from very loose to extremely tight overnight.

Some people who had access to a lot of credit will correctly have a lot less, and that on dearer terms. But there are also perfectly worthwhile businesses and individuals who are also caught in the meat grinder of indiscriminate reduction of loan balances. Times are bad, and any efforts to extract more revenues from customers, even if it is blood from a turnip, or worse, even if it puts a viable business under, is warranted.

Silly me to have been so gullible, as I now stand confused about what should be done and how the economy should be run. It doesn’t help that I keep reading stuff like this to feed my migraines and sour stomach bouts.

How This Economic Crisis Is Breaking Financial Rules

What stance do I take now, as a die-hard pro-business supporter? I had placed my faith in the “powers that be” and didn’t think I’d ever see these levels of corruption, unchecked greed and blatant mismanagement in a first world country on this grand a scale (yes, I say this as someone who’s no stranger to the machinations of the third world, where corrupt ineptitude is rampant). This stuff happens, sure enough, but it happens in another world, and under the covers.

But there’s no hiding the ugly anymore. All I can see now is just how the ruling class has done a number on the working masses. And for the millions of people who followed the financial rule book throughout their lives to meet a horrible end to their futures because of the incompetent, morally degenerate few — well, I can say I’m beyond disappointed, and have crossed the line to feeling outrage and disgust.

Yes, this crisis is breaking all sorts of rules, including those I’d consider as long-standing successful personal financial tenets. Responsible approaches to personal finance don’t have a chance against a crisis of tsunamic proportions:

So let’s see — doing the right thing by scrimping, saving, investing, diversifying, doing proper asset allocation, avoiding market timing, indexing, and hedging against inflation through equities, even doing your job well will no longer guarantee you a splendid, worry-free financial future. Not when a “once in a century financial event” can just come by and rob you off the stuff you worked so hard for; not when someone “up there” can change the rules for you, just like that.

I didn’t necessarily see it coming, but some of my readers here have: I see just how observant readers have been, as they’ve shared their insights on the causes and consequences of the subprime mortgage financial crisis, the pros and cons of financial bailouts, and the relevance of market timing during a stock market bear and the current investment climate.

The Economic Crisis Calls For Faith: Do You Have Any To Spare?

Perhaps I’ve placed far too much faith in the integrity of our political and business leaders and trends in modern history to believe that our financial system was strong enough (and people were smart and honest enough) to absorb any shakeups, shocks and imbalances that happen. I still have hope, but recent events continually call to question my position in this matter.

Not long ago, I had asked: who’s to blame for the subprime mortgage mess? I said then that everyone here had a hand in this (from the mortgage lenders to the developers to the Fed to ignorant homeowners), but in reality, I’m now seeing where the bulk of that blame should go. It should be clear by now who should bear the brunt of your harsh judgment: follow the money.

Sure we (as the little people) can’t really do much about this (except whine, rant and call the villains out), but with more discussion, we can spread awareness of these ridiculous affairs. What I got out of this is that there’s little out there we can count on and few people we can trust when it comes to our finances. A sobering thought. Do you think there are really any lessons and takeaways here for the future? Do we even have much of a future the way it’s been mortgaged?

I welcome your thoughts on this matter. Fire away!

This is a post from The Digerati Life.

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I bet this whole financial mess has made everyone of you open your eyes and question your wants, question your income, question your money management (or the lack of it), question your expenses, question your investment strategies, question your job security, question your $10-per-workday lunches, question your credit card statements, question your insurance coverages ….. sort of made you question your attitude towards money.

For those of you who still have your jobs, I bet you feel fortunate (and generally crib less about being less paid, etc.) - and I bet you are putting in extra efforts to make sure that someone higher up notices your hard work before you get into the to-be-laid-off list.

It has made people question their governments, and governments question their respective policies.

On my part, I have convinced at least half a dozen young people (close friends and relatives) to open their minds about saving more and/or investing in the stock market (on the argument that it’s a good time to buy stocks, develop good money saving habits, etc.). It’s a happy feeling (almost a proud feeling) when these guys and gals discuss interest rates, stocks, ETFs, and portfolio diversification over lunches and other casual meetings.

Of course there is much suffering and stress, but hopefully most of us will come out of it with several lessons for life. Hopefully, adversity will bring out the best of our efficiency and adaptability.

As it is, we have to read/hear bad news everyday … just thought I should throw in a pinch of positive out there.

One of my favorite saving techniques is the use of targeted accounts. If I want to save for something big — like a Mini Cooper, for example — I’ll open a new savings account specifically for this purpose. I first learned about this method from Robert Pagliarini’s The Six-Day Financial Makeover:

Traditionally, most people invested for various vague goals and lumped all of their savings together in a single investment account. That?s pretty boring. It?s not very inspiring or effective. Purpose-Driven Investing satisfies our need for a purpose and our need for instant gratification by thinking of each of our goals as a separate ?basket?. Each of our baskets represents a single goal with a clear purpose that we can see and grow.

What does this mean in the real world? It means that we have a single investment account for every goal. For example, if one of your goals is to take the family on a European vacation, create a separate savings account called ?Family European Vacation Fund?. This account or basket contains all of your savings toward that one goal. Every penny in the account is for the European vacation — not for retirement, a new car, your emergency fund, your kids? college tuition, or any other goal.

I like this idea, and have been using it ever since I saved for my Nintendo Wii.

Until recently, I kept my targeted savings accounts at the local credit union where they earned me a paltry 0.35%. For the past few months, Get Rich Slowly readers have been urging me to move all of my savings to ING Direct, which is where I keep my emergency fund. “It’s easy,” my readers tell me. “You can open multiple accounts, give them any name you want, and track them all from the same screen. You can even open a checking account!”

Last month, I finally overcame inertia to try this myself. My readers were right: opening multiple accounts at ING Direct is easy. (It’s probably easy at HSBC Direct and many other online banks, as well.)

Step one: Choose an account
First, I logged into my ING Direct account summary page. From there, I clicked the big “Open an Account” button.

I was directed to a page listing a variety of available accounts, including business and retirement accounts. Because I wanted to open another savings account, that’s the option I selected.

On the next screen, I was asked to further refine the account type:

Step two: Fund the account
Next came the good part: I selected how much I wanted to put into the account and where those funds would come from. I was also able to give the new account a nickname. Since I was opening these extra accounts specifically for targeted saving, it makes sense to name each one based on my goal.

Finally, I had to agree to the terms and conditions of the account.

Step three: Wait
Then the waiting began. Because ING Direct had to “pull” the money from my credit union, it took several days for the cash to transfer to my accounts. At first they appeared empty:

After the money had transferred, it was easy for me to track all of my savings goals in one place.

Next on my list? Exploring ING Direct’s certificates of deposit and business accounts.

A useful tool
Thank you to all of the readers who suggested this. I don’t know why I took so long to try it. I’m sure this technique isn’t limited to ING Direct. I was doing something similar at my local credit union (though without the pretty interface, account nicknames, or high interest rates), so I suspect that other online banks offer similar functionality.

Not everyone needs multiple accounts to save for goals. My wife, for example, is perfectly content with a single gigantic savings account for everything. But for me, being able to separate funds like this is awesome. It keeps me motivated to save. And because it doesn’t cost me a penny, I’m happy to do it.

Note: This article was originally scheduled to appear on June 12th, but Trent at The Simple Dollar posted his handy (and similar) guide to budgeting with an online bank that day, so I delayed my story for a few weeks.

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Related Articles at Get Rich Slowly:

• Use a Freedom Account to Prepare for the Unexpected
• Which Online High-Yield Savings Account is Best?
• The Official GRS Referral Swapping Thread
• Optimize Your Bank Accounts with a Periodic Review
• What are Your Experiences with Internet Banking?