I hope no one reading this listens to some of the pundits saying it’s a lack of trust in the economic system in a country to save up money. That’s really a like, and I hope you don’t fall for it.

Incredibly, American politicians have told the Chinese their people don’t trust the financial system in China, and that’s the reason their savings levels are so much higher than it is in America. Again, that’s a false assertion, and needs to be discarded.

Savings has absolutely nothing to do with whether you trust the financial underpinnings of whatever country you live in, savings is valuable because it provides a cushion when hard times come, and helps you build wealth over the long term if you’re consistent in putting money away.

Many Americans say they’re going to change their spending habits by cutting back on buying goods and putting much of the difference into building a nest egg.

Analysts listening to those assertions say it’ll have to go beyond the present enforced austerity and become a discipline within someone’s life if it’s going to be successfully implemented.

It’s similar to someone having a heart attack and saying if they survive they’re going to change their lifestyles. Once they’re feeling a lot better though, not too long afterwards, usually they’re right back to what they were doing before.

The problem of course is the illusion of health, whether it’s physical or financial, while in reality problems are brewing underneath and ready to emerge again in response to how we live.

In America, and other countries where consumers are urged to spend in order to drive the economy, it’s a bad bit of advice, and something we largely need to ignore for our financial health and wealth.

Even though it’s expected that many will ultimately return to old spending habits, it’ll be less than before and take longer than in the past. Hopefully those reading this will find the discipline to continue on with your frugality while continuing to put money into savings.

Countries like Japan and China, where people save at a much higher level than western countries, didn’t have near the desperation and fear many had who had no savings to fall back on and have learned to live from paycheck to paycheck; this includes those who make a high income as well as low income people.

If nothing else, this great recession should have taught us that we need to have money put away for times like these, and we need to live within our means in order to have the extra money to put aside for when we need it.

Don’t follow the so-called advice of politicians who attempt to manipulate you into consuming for the good of the nation. Other countries do well without that practice, and so can we.

Once we have a solid financial foundation and savings habits, from there we can look beyond to things we may want or need and spend from a position of strength rather than the need to drain the last penny from our accounts or wallets.

There are now over 50 million Americans without health insurance. Most people that have insurance are lucky enough to get health insurance from their employers but those without health insurance from work are left high and dry. Some people are waiting for Congress to pass some sort of health care reform to make coverage more affordable, but the truth is that you can’t afford not to have health care insurance—otherwise you could find yourself with a pile of medical bills and heading straight toward bankruptcy.

If you find yourself without health insurance you should take the time to sit down with an independent insurance agent to help you shop for cheap health insurance and find a policy that works for you and your family. They can take your information and run it against dozens of different proprietary quoting systems and find you the best deal.

Another option is to consider a health savings account and a high-deductible health plan. The high-deductible health plan will take care of all of your costs above a certain deductible. Essentially, they take care of major problems and you are left to take care of the smaller day to day issues. These plans are great for people who are healthy and allow people to save money tax-free.

An unusual place that some self-employed people have found to get group coverage is through Sam’s club and Costco. Both of these companies have group health plans that its members that are a lot more affordable than many options on the open market.

Some states also have state health insurance plans that you may be able to sign-up for. These will also likely be more affordable than private health insurance. You can check with your state’s health board to see if your state has any options.

If you absolutely can’t afford health insurance, there is public health insurance that you can at least get for your children. The children’s health insurance program (SCHIP) provides coverage to many children whose parents cannot afford health insurance for them.

Get health insurance if there’s any way that you can make it happen. If you find yourself with major medical costs and don’t have health insurance to pay for it, fortunately most medical institutions have a lot of mercy to customers that can’t afford to pay their bills. Quite often you can offer them a portion of your bill and they will take it as a settlement in full.

Several decades ago saving money was a bit more simple than it is today. At one time people simply worked to pay their bills and save money for ….well whatever. While it is certainly necessary to save money for any and all expenses, the strategy you use to save money can make the difference between financial security and just getting by. In today’s world it is not only recommended but almost necessary to have several different savings accounts to fund various expenses. You should have a well padded emergency fund, retirement savings and maybe even a rainy day fund. In addition to these standard savings accounts, you should also consider having an account for reoccurring expenses. Here is how to get started.

• Determine what reoccurring expenses you have- Most people budget for monthly expenses with “extra” money going into savings. Unfortunately we all have regular reoccurring expenses that we end up paying out of savings that could have been budgeted for throughout the year. Sit down and make a list of things like car insurance, homeowners insurance, taxes, annual vacations and gifts for special events such as birthdays, anniversaries and holidays. These expenses may come once a year, semi annually or quarterly.

• Make a plan- Once you know what reoccurring expenses you have including the amount and when they are due you can then determine how much money you have to set aside each month to cover these expenses. With that number in mind you now know how much you have to save each month in order to pay your reoccurring expenses when they are due.

• Open a separate account for reoccurring expenses- The whole point of saving for reoccurring expenses is to avoid using your other savings to cover the expense. With that in mind it is a good idea to open and maintain a separate account to avoid using this money for other expenses that pop up throughout the year. Many people find that online savings accounts are convenient for reoccurring expenses due to the convenience and availability of funds. You can easily set up a direct deposit into your savings account to avoid the hassle of manually depositing money (thus avoiding the temptation to use that money for other expenses) while reaping the benefits of a FDIC insured bank that offers a higher than normal interest rate. Many online savings accounts do not require a minimum deposit and while they are accessible they are not too accessible where you would have instant access to the cash should you want to use it for something else.

Some people may think that multiple savings accounts is simply a waste of time and requires more energy than it is worth to maintain. In reality by having separate accounts for specific goals you are better able to stay organized and track your progress to ensure you are on target for financial goals.

Despite their continued growth in popularity there are still many people who do not have an online savings account. Some people are simply unaware of the benefits while others are not yet ready to venture from their local branch. Be that as it may, online savings accounts are something that every consumer should learn more about and consider in order to take advantage of the many benefits they offer. If you do not have an online savings account or are considering opening one, here are a few of the reasons keeping people from going back to brick and mortar banks.

• Better interest rates- By far one of the most compelling reasons to consider an online savings account is the higher interest rates that they offer. Without the overhead of traditional banks, online banks are able to offer interest rates that are very competitive. The whole point of a savings account is to have a safe place to save money. Not known to be a “money making” account, finding a high interest rate to help your money grow is a great reason to try an online savings account.

• Automated savings- Banks that operate entirely online eliminate the need to physically make a trip to a bank. By automating your savings you benefit in many ways. You eliminate the temptation to “find” other uses for your money between cashing your check and depositing money into your savings. You can set your account to automatically transfer money from your checking account or from your paycheck if you have the option for direct deposit.

• Pay your bills online- A savings account is primarily used to save money, however some people have discovered the benefits of transferring money into their savings account (more than savings) to cover certain monthly expenses. With the ability to pay bills from your savings account you can safely store you money in your savings account to earn interest until it is time to pay the bill.

• Accessible but not too accessible- Most online savings accounts offer easy accessibility via a transfer into your checking account. Unlike you local branch you probably will not have the option to hit the ATM and withdraw money on a whim. You have access to your money but not so much that you are tempted to use it for unnecessary purchases.

• More affordable- Online savings accounts often allow you to build your savings without the restrictions of minimum balances and unnecessary fees. So not only are you getting a better interest rate you are avoiding many of the fees and restrictions placed on traditional savings accounts.

Online savings accounts are not without cons, however as more people are discovering the benefits are worth the few negatives associated with these accounts. Before signing up for an online savings account take the time to carefully compare all accounts to ensure your money is in the best place possible.

When online banking first became available in 1995, the inventors of the process predicted it would eventually replace the traditional banking which had previously been the only available option. While the prediction has yet to come to fruition, online banking has indeed changed the way people manage their money. With millions of people currently using online banking either for full time banking needs or for savings or bill paying, it has indeed proven itself as a useful tool in money management. There is no immediate threat that traditional banks will become obsolete however, as many people are still leery about trusting their finances with virtual banks or the technology that makes online banking possible. The following are reasons that have prevented many people from making the switch to online banking.

• Security- Despite advances in technology and improved security methods, one of the major reasons people are afraid to bank online is the fear of identity theft, credit card fraud or security breaches which would make their banking information vulnerable to hackers. Virtual banks or other financial institutions which provide online banking services go to great lengths to ensure personal and financial information is secure at all times and are also required to comply with federal regulations in respect to privacy and security. Unfortunately just as experts continue to develop technology to make online transactions secure, there is always the chance a technologically savvy hacker could find a way to penetrate these protective measures. That being said, the biggest danger of banking online generally is found on the end of the account holder versus the bank. Before banking online or performing any financial transaction for that matter, make sure you understand what precautions to take to ensure your information is protected.

• Availability of funds- While online banking offers many conveniences not found with traditional banking, one of the biggest complaints many people have with virtual banks is the availability of funds. Depositing, transferring or withdrawing money from some online banks takes longer than going to your local branch and making a withdrawal. This means that if you use on online bank for your day-to-day banking, you may find a delay of up to 5 business days for deposits to post to your account. Certain online banks do offer a credit or debit card that you can use for purchases or the ability to pay bills directly from your online account. Even so many people find the inability to “instantly” access their money a deterrent to banking online.

• Technical difficulties- Power outages, problems with your Internet or down websites can turn the convenience of online banking into a headache. While these occurrences are the exception, not the rule- if you are in a hurry and have to make a transaction, view an account or perform other actions, technical difficulties can be inconvenient. A bigger worry is of course that transactions may be posted incorrectly which could cause real financial problems that could take days to resolve. Of course these issues could arise at your local bank, however when you bank online, you do not have the option of simply dropping by the local branch to correct the problem. With virtual banks you will have to call the bank for all issues which could become frustrating if you get involved in a game of phone tag or have a bank with less that exceptional customer service.

As you can see there are some downfalls to online banking, however there are downfalls to traditional banks as well. If you have not yet jumped on board the online banking wagon, you should take the time to compare the pros and cons before making a decision. There are after all millions of people currently banking online, so the chances are you will find the benefits outweigh the potential downfalls.

We are caught up, as consumers, in finding any way possible to help fit into our budgets. That means that refinancing options are being explored as ways to make this happen. Saving money anywhere possible leaves money available to use in more important places in our budget as well.

So, is it possible to always save money when you refinance your house at a lower rate? It depends.

Lower payments. The goal of a refinance program for borrowers is a lower monthly payment. This is a short-sighted goal. You should not be of a mindset to just fit into a lower payment. You should have as a major goal to pay off your mortgage so that you can one day own the house free and clear. Or, at least pay off enough of the loan so that if you do have to sell, you will have some equity from which you can benefit and use as a down-payment on another house.

Starting over. When you refinance, you start the 30 year process all over again unless you take out a 15 year mortgage and that is not likely since you are trying to save money on a monthly payment. What this means is that if your original mortgage was for 30 years and you have made the payments for five years on that mortgage, you will now be extending that to a 35 year term. This, plus the fact that the amount of interest that you pay is loaded up at the front of the mortgage, means more goes to interest and less to principle.

Fees and costs. Refinancing has its own closing costs and fees, just as you paid when you first bought the home. Get ready to pay these again. Better it would be for you to take that extra money and pay off some smaller, short term debt to give your budget some needed room in which to operate. Do not ignore what can be done by lowering your overall debt load in other ways before considering a refinance.

Avoid the ARM. If you do choose to refinance, be sure to avoid any offers of an Adjustable Rate Mortgage. Attractive because of rates, they can get you in just a few years down the road with higher payments which will put you right back where you were before.

Take a good, hard look at refinancing before you do and make sure it makes financial sense for you. Be better off, not more in debt.

Across the nation bankruptcies and loan defaults are becoming all too common.  Consumers who are not able to keep their commitments financially are found not just here, but in other nations as well.  The clouds of personal finance storms are everywhere: UK Report.

How are our savings accounts holding up?  Is there any hope that we will have anything left once this has passed?

In the Middle of the Storm.  Network news anchors delight in spotlighting the negative so we continue to hear every day about how bad it is becoming.  And while it does appear that the worst might still be ahead of us, the best advice is just to hold on as best you can.  The mounting bankruptcy and loan default numbers tell the story that it is too late for many.  Others are trying to find a way to ward off financial ruin.  Learning how to survive in a ‘down’ economy is challenge all its own but not impossible.  Many who have lost their jobs will be forced to take on other jobs that they never would have imagined just to make ends meet.

After the Storm.  The cycle of economic forces will bring us back around to better times.  This is best chronicled in the years following the Great Depression of the late 1920s.  In the years following WWII, the steady and strong growth of our economy went unabated for decades.  Our nation needs a reason to begin the rebuilding process, but hopefully it will not be another world war.  So, we look for a catalyst to point the way out hopefully sooner rather than later.

Re-building.  After our economy begins to come back to life, there will be many opportunities from which to profit and rebuild savings and investment accounts.  But, it will require global demand for products and services which will create jobs in the private sector.  The best role for government in all of this is to help the process along.  Contributions to the ability to re-start saving and investing can be made by lowering taxation and regulation where possible.

The most confident and respected advisers tell us to do what it takes to survive, look for opportunities to save money for the things that matter, and be on the lookout for improving financial signs that help us make wise decisions when it comes to saving and investing.

VirtualBank is a totally online banking account which handles mortgages, CD’s, Money Market, and of course, online savings. They no longer offer online checking. Unfortunately, there really is not too much to recommend when it comes to online savings with this bank at this time.

To apply, you will need to do the normal when it comes to opening an online account, need driver’s license, social, date of birth, but they also ask for employer and employer address. They also do not allow cell phones as their phone numbers. Hmmmm, wonder what that means as many consumers no longer have home phones having opted for cell phone use only.

They do offer you an ATM card. They also have your own personal banker when you call. Initial deposits can be mailed or transferred from your linked funding bank. You can directly deposit to your savings account regularly via your linked bank or by direct deposit from payroll or pension or by check.

To retrieve your money out of the account, you can withdraw from any ATM – with a VirtualBank ATM card – or request cash back from a POS sale. It is FDIC secured for individual. VirtualBank does not offer business accounts at this time and you need to be a U.S. citizen or resident alien with a valid social security card to open an account.

They market their savings account as a good starter account for children, not great, just good. Their website also goes on to tell you that there is no minimum balance or monthly service charge for children.

Well, I’m an adult and as of September 2008, 1.34% is not enough to get me to move my children’s account here. Also, not too pleased with the $1000 minimum balance I would need to begin the account. As you read the disclosures, there are some other issues. You can only make six transfers from your account each four week period, either by automatic withdrawal back to your funding checking account, telephone agreement, order, or instruction. However, only three per month can be made by check, draft, debit card, or similar (like POS transactions). If you do not keep $1000 in your account you will be charged a fee of $10 a month. If you close out within the first ninety (90) days you will be charged $50.

If you want the 3% rate with VirtualBank, you will need to get a Premium Money Market account with a minimum deposit of $5,000 and have a balance of $95,000. That’s a bit steep for me.

However, playing the devil’s advocate here, VirtualBank did have a good service and rate record up to 2007. Their customer service was unsurpassed at that time. It appears they invested too much into their mortgages, had some ARM problems, and because of that they seemed to have lost customers and have had a suit against them in California regarding not disclosing terms when it comes to ARM loans.

All in all, currently I would stay away from VirtualBank until they straighten out their issues and get their online savings account on track with some of the other online banks out there.

Because interest rates have fluctuated quite substantially from bank to bank in the last year, consumers are finding themselves having savings at banks and credit unions which used to have some of the best interest rates around, but no longer do. Some banks are offering above market rate interest rates to their savings and CD customers so that they can get an in-flux of capital, while others have less of a desire to attract new customers don’t have as competitive of an interest rate.

The first place many savvy consumers head to when shopping for a new certificate of deposit or savings account is BankRate.com. With IndyMac and Bear Stearns recent failures, consumers want to ensure their money is at institutions with solid financials. BankRate offers a listing of interest rates on varying types of accounts as well as a rating system to give consumers an idea of how healthy the bank is financially, unfortunately, it cannot be trusted.

Consumer advocate, Clark Howard, recently reported that before IndyMac’s failure, it was a pretty loosely held secret within the banking industry that IndyMac was facing severe financial trouble. Up until the day that IndyMac closed its doors, it had a “Superior” rating according to BankRate.com’s “Safe & Sound®” rating system.

The Safe and Sound® rating system that BankRate provides might offer some insight as to the health of a bank, but it’s not be be-all and end-all. In order to make sure your money in savings is secure, you need to do two things. First, make sure that the bank is a FDIC member of a NCUA member. This will provide insurance if the bank fails and provide you up to $100,000 of coverage. Special situations exist where that number can be raised. The second thing you should do is never keep more than $90,000 inside any one bank. This ensures that your principal and interest will be protected.

You shouldn’t be terribly concerned about bank failures, because they are such a rare occurrence. The FDIC usually provides you access to your funds within a period of 24 hours anyway, so it’s a very seamless transition for you. Just ensure that your bank is a FDIC member or NCUA member and that you don’t keep more than $90,000 in any one bank and you’re good to go.

If you asked an individual a decade ago whether or not they would trust their hard earned savings in some account with out a branch that you can only get to on the computer, chances are they would laugh at you. People want to feel that their money is safe and that they can get it if they really need it, so the idea of an online savings account is really counterintuitive to the human thought process. In the last decade, commerce on the internet has exploded. Consumer purchases through the internet are now common place, and very few people think anything of it when buying, selling, and transferring money online. The fears and worries related with doing business online are going away at a rapid pace, which leads us to ask, is it time to move to an online savings account?

Let’s consider the benefits.

Higher Interest Rates – You’ll be lucky if you find anything over 2.00% APY for a savings account in your home town. Bricks and mortar banks have a lot of fixed costs they have to pay for their branches that online savings do not, which enables them to offer a much higher interest rate. With a good online savings account, you can easily earn anywhere from 3.00% APY to 3.75% APY depending on where you open an account.

New Account Bonuses – A lot of online savings banks will offer you a bonus just for signing up for an account. This is true for a lot of bricks and mortar accounts too, but much more frequent in the online savings world because of the very high competition for people’s business. About the best bonus going around right now is the new sign-up bonus for ING Direct. You can get $25.00 if you can get an existing customer to send you an invitation email.

Lower Fees – Many online savings banks, such as ING Direct and Emigrant Direct, offer literally no fees and no minimum balance to speak of. Not all online savings banks have a great fee structure, but a lot of them do. If you shop around you can find an account with no fees to speak of.

Instant Access – When you are dealing with an online savings account, you always have instant access to your account as long as you have an internet connection. Just sign-on and you can transfer, withdraw, or do just about anything with your money.

Banking From Anywhere – With an online savings account, you don’t have to be in a town where your local branch is, rather all you have to do is just sign online and you have instant access to your account.

FDIC Insurance – You know your money is protected because these banks are FDIC insured. If the bank were to go under for whatever reason, you would still have access to your money, which is always reassuring.

Security – Some people fear putting their personal information online because of rampant instances of identity theft, but online savings banks have some of the best internet security around. They use a combination of secure connections, mouse-based pin-entry, site-images, security questions, and more to keep unwanted individuals out of your online savings account.

What about the down sides?

Online savings accounts really have some excellent features, but there are some downsides that one should be aware of.

Not As Immediate – When you withdraw money from an online savings account, it has to be sent back to your checking account through an EFT transfer, which can take 2-3 business days. If you need your money in a pinch, this might be an issue. There are some banks that offer an ATM card with your online savings account so that you can get to your money fast if you need to.

Technical Difficulties – If your internet happens to be down, or if the online savings bank’s website isn’t working, you can’t get to your money. Be sure to sign-up for an online savings account with a history of not having major technical problems.

Lack of Tellers – There’s no branch you can go down and visit, rather you have to call an 800 number if you have a problem with your account. If the online bank you go to doesn’t have great customer service, this could be a problem. Be sure to ask people who have used the account whether or not they have had good customer experiences before signing up for an account.

The Verdict:

Online savings accounts still have a few minor downsides, but they can be largely avoided if you get a good account. When you look at the amazing interest rates offered by online savings banks as well as the low fees, new deposit bonuses, and 24/7 access to your account, there’s no question. Online savings banks are the wave of the future and excellent places to put your money.