Self Lender App

I found this app recently but YNAB doesn’t have built in support for it.  It’s called Self Lender and it’s supposed to help you build credit and save money at the same time.  You make monthly payments for a year and it reports them to credit agencies for you.  The money goes into a CD then at the end the money is yours.  Anyway, I set it up in YNAB as an investment account and just set it up to automatically transfer to that account once a month under the Savings category.  Do you think I should create a separate savings category or just lump it all together?  Also, why do some transfer require categories and some don’t?  Should I have made it a general asset account instead?

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  • "Also, why do some transfer require categories and some don’t?"

    Transfers between on-budget accounts don't require categories, since no money is entering or leaving the budget. You're changing the location of your money, but it doesn't affect your budget at all.

    Transfers between an on-budget and a tracking account require a category, since money is entering/leaving the budget.

    Personally, if this money is going to be inaccessible to you during this time period, I'd set it up as a tracking account. If you leave it on budget, then make sure you have a separate category for it so you separate that money from the rest of your savings.

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  • Hi Jeff Altman !

    Just in case it wasn't clear in the above, the "Investment Account" option in YNAB, is a Tracking account - so your transfers to that account will require a category because those funds are considered as "leaving" your budget.

    Since you'll need to categorize those transfers, you may want to create a "Self Lender" category. In your reports, this will tell you how much you're "spending" on saving. :)

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    • Faness thank you!  If I want to start tracking the balance on my E-ZPass account should I use cash, checking, or something else?  It  carries a balance that slowly gets used up and refilled with $35 once it hits a certain point.

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    • Jeff Altman It depends on how you want to handle those funds.

      A merchant account is treated like a checking account. If you use a Merchant Account, those funds will appear in your budget. So, if you have a positive balance of $20 when you add the account, that $20 will show in your To Be Budgeted for you to allocate to your categories (maybe a "Tolls" or "Travel Expenses" category?).

      If you use the Other Asset option, those funds will be off budget. Off budget accounts are for tracking balances - so you'd be able to keep an eye on how much is in your E-Z Pass account, but those funds won't appear in your To Be Budgeted to use in your budget. Transfers to that account will need a category, but regular, everyday transactions won't be categorized.

      If you want to budget for those transactions, not just monitor them, I'd go for the Merchant account. 

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    • Faness so would I be better off just doing a checking account instead of merchant account then?

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    • Jeff Altman They work exactly the same on the back-end, so if you're more comfortable with "Checking" that works! :)

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  • You do  realize that you are paying 14% to 16% fees on this saving money and building your credit plan, right?

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      • Ben
      • Toolkit for YNAB Designer & Developer
      • furiousfalcon
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      • WordTenor
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      • WordTenor
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      If I’m doing the math right, it’s about 5% APR on the $25/mo loan. Assuming 2% on the CD, $63 more than that amount is paid in, so $31.50 per year over $600. 

      But yeah, even 5% is kinda silly. At $25 per month you can have a deposit for a $300 secured card in a year, plus the $300 will earn interest as it is being saved. 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
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      Ben 

      Admittedly, I didn't do the math myself. I relied on an  excerpt from this NerdWallet article:

      Self Lender offers one- and two-year terms, though you first determine what you want your monthly payment to be. The lowest payment — at $25 a month — has a two-year term. That loan comes with a nonrefundable $9 administrative fee (it can be up to $15 if you choose a different payment). At the end of the term, you get $525 plus interest of 0.1% APY (in two years, that would be well under a dollar). You’ll have paid $609, for an annual percentage rate of 14.92%.

      The other monthly payment amounts you can choose from are $48, $89 or $150; those higher amounts have 12-month terms and slightly higher administrative fees. APRs for Self Lender loans do not exceed 16%, according to the company.

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    • Ben thanks for the link!  I just did the $48 one to give it a shot.  I’m not sure how much sense it really does make with the fees so I provably won’t do another one after the year is up.  It looks like it only ends up costing around $50 so it’s not the end of the world.  I’m sure I’ve probably spent $50 on sillier stuff over my lifetime.  😂😂😂

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      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
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      HappyDance yeah, I'm assuming a normal CD yield in my calculation. 0.1% is ridiculous. These people are officially on my s-list. I hate companies that prey on people who need financial help. 

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    • WordTenor I dunno.  I think the main reason people do it is because they report to all 3 credit reporting agencies not because it’s a great investment.  I figured I’d try the $48 one for a year and see what happens.  It can’t hurt me that much.  😂😂😂

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      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
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      Jeff Altman Exactly. You need help building your credit, so businesses have sprung up to take as much advantge of that as possible. It's not you I find reprehensible, it's them. 

      However, if you are able to break it, you're paying a LOT for something you can do yourself easily. With a few months of $48 (in some cases, only one month--the Capital One card requires a $49-$200 deposit) paid to yourself, you could put a deposit on a secured credit card. Using YNAB, you could ensure that all your spending on the card is backed by cash and pay it in full every month. That way, you keep your money. 

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    • WordTenor I’ve actually had the Capital One card for a long time.  It’s pretty good deal as long as you keep it paid off and don’t pay interest on it.  I can’t remember if they report to all 3 credit reporting companies through.  I’ll have to check my credit reports.  😃

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      • WordTenor
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      • WordTenor
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      Jeff Altman ...then may I ask why you're also using this product? I don't mean to be impertinent or accusatory, I'm just curious. Mathematically this is much worse, and since the only part of your score it could realistically improve is your mix of credit (10%) I don't see much use in it. To achieve the same effect, you could see if you qualify for a high-interest personal loan from a credit union, throw the money in savings, and then your outlay is less. 

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      • jenmas
      • jenmas
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      Jeff Altman I have a regular CapOne card and it reports to all 3 agencies.

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