I’m the cashcow!
As things are finally starting to wind down (At least that is what I am telling myself) I have some time to update the bloggidy. A lot is still happening around work, renovation and life itself, but I would like to talk about a certain thing that has happened during the last month. I got a nice little mail in the post box, which is kind of rare these days, regarding renegotiating the rate rebate I have on my mortgage. It is something you usually do in Sweden ones a year if you have a floating rate., which I have. It is something I have previously done ok with and I am happy with the current rate I am paying. 1,4%. I know that there people with even better rates out there and of course I feel motivated to do an even better negotiation this time around.
So I start gathering my amounts and preparing myself with as much data as possible before I contact my bank. This is something that will affect my finances for a whole year so I take it quite seriously. As I go through everything I can see that my finance are looking a lot better compared to last year. So I am convinced that I must be doing better this time around even though I did quite alright last time. Now, to the silly part in this. I have had the same bank for literally my whole life. I have moved around a lot and had different life situations but I have always kept the same bank. There are about 4 big banks to choose from in Sweden in order to have a full package solution, it is run a little like an oligopoly. For good and for bad, I have always stayed with my bank and this sort of customer loyalty I expect to pay off. I can only imagine how much they have earned on me during all this time. In short, they’ve made a killing on me.
I call the personal bank man. They know what it is about and quite quickly starts asking me for the details they don’t have about my financial situation and so forth. It is a very smooth process up until the point where the bank tells me they are running the data in a system that will give me the rate they can offer me. Up to this point I am a happy customer as its been going quick and I am expecting a great result. And it is at this point I get surprised. They actually want to give me an even worse rate then before?!? I was shocked. I asked why it could be like this when everything looks better this time around? I got the lamest explanation of how they take in consideration new conditions then before. Well, as I am getting back from my initial shock I asked what these new conditions were and if there is something concrete that I failed at compared to last time. The answer from the bank was that “they look into debt vs asset ratio and income and so forth”. He actually said “so forth”. These “conditions” are not new. In fact it is the same ones that you always have had. The person I was talking to all of a sudden became completely dis-interested and didn’t really wanted to talk much more and discuss anything or explain much. I got vivid. I ended the call shortly after before agreeing to anything. Not only are they making a killing on me, they want to really bleed me out for as much as they can while ignoring me and explaining nothing.
How do the banks even get away with this? I can only imagine that with so little competition and so much laziness of the bank customers of switching around they can get away with something like this. Well….Change is nothing new and change is something I am more than happy to go thru. I made the quick decision of ending my services at the bank, I needed to move my business somewhere else where it actually matters. The question then is where do I move my finances? To another bank perhaps? Well, no! They would probably have the same type of costs for me. So am I destined to be with a bank that will treat me like crap (I still get a bit upset thinking about it)?!?
Here is the happy news! No….I don’t have to stay with the bank or any bank for that matter. What I have already started to look into but never pulled the trigger on, is to change my financial structure completely. First of, what do I mean when I say, my financial structure (FS)? For me the FS consist of few very definable things. It is your loans/mortgage, your bank accounts, your debit/credit cards and finally your savings. As an example I can look on my own FS:
My Financial Structure
I used one and only one bank to complete my FS. My FS consist of below parts.
1. Mortgage, I have a mortgage on my apartment that is handled by the bank. It is pretty much straight forward mortgage with a 3 month floating rate of 1,4 %.
2. I have a simple salary account that I deposits my salary in and pay different invoices and of course the interest from. I also have a simple saving account that I usually* deposit money into every month for saving and/or investing. These two accounts exist in the same bank and with 0 % and 0,05 % interest rates. Thank Swedish central bank (With low interest on mortgage comes low interest on saving accounts).
3. I use a debit card. This card is from the bank. Nothing fancy, it is connected to the salary account and I use it for my everyday costs like food and clothes and so on. No credit cards….Or, I think I have one that I have never used. It is part of a the full solution package with the bank.
4. Savings, I have a small extra pension fund and a stock portfolio in the same bank as everything above. I have access to most stock markets and can buy stocks pretty much from all over the world.
5. Bonus. Insurance!! Some of the banks offer insurance through their fully owned daughter companies that they will offer to you at a rebate if you have all of your business at the bank.
As you can see. I have my complete FS in the same bank. In other words, I am paying a lot of money to have my FS in the same bank. You get it served on a platter and I admit it is very comfortable to have everything in one place with easy access. I can use my cell phone and the banks app to handle 95 % of all my financial transactions. It is smart, available and in all honesty, not that incredible expensive. However, which I’ve known now for a while but been to busy(lazy) to pull the trigger on is to optimize my FS. There are better deals out there for my FS.
1. Mortgage, I looked around and could find a company that only deal with Mortgage. They asked for the same information that the bank asked for and after some quick discussions was willing to offer me an interest rate that is slightly better on 1,37 %, also they let you decide how much you want to amortize. An option that was fixed in my previous bank. It leads to more flexibility. So, I’ve signed the paper to move my mortgage, the biggest cost for me and the biggest income for my previous bank. (FU old bank)!!
2. I will also move my bank accounts. There are two solutions I am looking into. One is to have my salary account with a bank that is not a full service bank. They offer better interest (More than 0 % that I had currently) and if you connect a debit card to their account you will be able to use their bonus point system where you ones a month get a gift card to use at one of the biggest grocery chains in Sweden. I do 99 % of my shoping there. Also, the bank account is free, in my bank I had to pay a small fee of 39 SEK each month to be a customer there. I don’t even know how I could have been so stupid to pay this.
3. Debit card and credit card. I got a new debit card. It’s free and it gives me a small bonus on purchases. I will admit to it being a quick fix. I took the best deal out there that is free and will give me points. I have yet to look into credit cards. There are 100 of i credit cards out there with different deals and bonuses connected to them. My only thing now is to investigate which deal would suit me the best? Maybe even use multiple credit cards?
4. Savings and stocks. I have opened a portfolio in a company called Nordnet. They are primarily focused on stocks and funds. Which is great, as it is in that type of business I want my stocks and funds. They have a cheaper transaction cost whenever I decide to buy or sell stocks. Also the selection of stocks is even better. So win win.
5. Insurance. I never had insurance in the bank before. So no major change here. This is more for everyone out there who is using their bank for there insurance. I’m telling you. There are better deals out there!!!
So my FS has changed a lot this month. I have moved everything out from the bank or I am in the process of moving everything out and closing everything down. I believe I have optimized my FS a lot compared to before. The pros with this new structure is that I have a lot more flexibility, I can move my finances around and get the perfect balance for the current situation. The costs have gone down. I probably should crunch the numbers to see exactly how much and see what the annual savings would be. I’m guessing it will be surprisingly a lot. Finally, I get to leave a dead end bank that seems hell bent on treating there customers as lazy and unproductive herd of cash cows. Well no more. I will be a champion of change regarding the FS of everyone’s life. Screw the banks! They screwed you enough. Cons….are there any cons? Of course. The biggest one would be that I no longer have an easy access to everything in one place. I have spread it out and will have to check into multiple sources in order to get the full picture of my finances. Also, different companies have different IT solutions, that aren’t as good as the banks was.
Mr Bankman. Thanks for actually giving me the motivation to finally pull the trigger on changing my FS. I am glad you wanted me to save as much money as possible and to stop being lazy with the finances. I was unaware of how effective your neglect and screw you attitude would be in motivating change for me and for hopefully a lot of future FS optmizers out there. I hope you continue this drive of pushing people out of your bank and making sure we all take a hard long look at our finances. I owe you one mr Bankman, stop by anytime you would like to discuss what an ass banks are these days.
So how does your Financial Structure look like? Have you optomized it enough?