Fintech – do you even know what that means? Financial Technology. One definition is Financial technology is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance.” (Wikipedia)
When you’re getting divorced, the financial side of things can be overwhelming, but some of these apps can help you remain accountable, save money and learn how to manage and invest your funds. Hear from the co-founder of Fintech Today, Julie Verhage as she identifies the pros and cons of different financial apps.
- If you use your phone, and are comfortable with online money management, then Fintech may be another way to help you efficiently manage your funds.
- Some apps are for saving money, others are not.
- Do your research find the app that works best for your needs.
OUR GUEST – JULIE VERHAGE-GREENBERG
Welcome to another episode of the exEXPERTS DIVORCE etc… Podcast where we give you all kinds of information and tips on everything divorce. Why? We’ve lived it, so we get it! We’re Jessica and T.H.
Jessica: For today’s podcast, we are so excited to have Julie VerHage, who is the cofounder of Fintech Today, to talk to us all about a very important topic, which are financial apps that are going to help you post-divorce. It’s so common that women have no idea what their financial situation was while they were married, and now have to really get a handle on everything. Thank you, Julie, so much for being here today and sharing this information with us.
Julie: Of course. Thanks for having me.
Jessica: Let’s just jump right in, because like I just said, financial literacy is becoming such an important topic in our country in general. Thankfully, our younger generations are getting a little bit more aware of it, but there’s definitely a huge gap. When people get married, oftentimes one partner will just be the one to handle the finances, and generally it is men. It’s really unfortunate that a lot of women find themselves with absolutely no idea what to do afterwards. We want to find out what resources are out there that are going to actually really be able to help women when it comes to all of the financial things, budgeting, saving, and investing. What do you have for us?
Julie: Everyone comes into it in such a different situation, right? It used to be that everyone got married and you just put everything together, and then the man would take control of everything. Now when I recently got married, it was this thing of what’s actually mine, what’s yours, what do we put together, and what do we keep separate? Essentially, the best thing to do, you alluded to it, is just get a really good picture of where you stand financially. One of my favorite apps to do that is Mint, which a lot of people have probably heard of but might not have used before. You can basically link a bunch of your different accounts on there. You can know how much you have in liquid cash, checking or savings, how much you might have in investments, and how much you might have in debt. On the debt front, Credit Karma is also a good one to use to keep track of your credit score and make sure there’s not any weird, outstanding credit balances like, I never canceled that credit card. I should go on there. Wait, I didn’t take out this loan, this might be fraud? I need to go dispute that or something like that.
Jessica: Hold on a second, so first of all, these are all things you can just download from the App Store, regardless of what you have. So mint has been around for a while, I feel like I used it very briefly a while ago, but let’s help manage people’s expectations.
How long would you say it actually takes to set it up? Once you download it, you have to take the time to put all of your bank account information in there and put all that stuff. Plus, are you setting it up if you still have any kind of joint assets? Are you setting it up with all of that together?
Julie: You can, so it depends. Essentially, you’re not going to have to go in there and manually type in each number and update it all the time. There’s ways for it to actually link pretty easily and then it’ll update for you every hour, every day, etc. The time consuming part, it also just depends on how many accounts you have, right? If you have ten different accounts you need to link, two different accounts, or three different accounts you need to link, that’s going to be different times. It’s just nice, because it can update all the time. Once you put in that hard work at the beginning, it’s done for you. You don’t have to re-go in and do it. The only time you’d have to change anything is if you close an account or add a new one.
Jessica: What is Mint exactly helping us do? Is it helping us just know what we have? Is it helping us budget? What are we putting in there, that we went out to dinner or had our nails done?
Julie: You don’t have to do that, no. It can help you budget, but essentially, it’s just really going to help you get this full financial picture like, oh wait, my checking and liquid assets went up a lot last month or down a lot last month, I should watch that. When everything is split up into a bunch of different accounts or you put things in different places, it’s just so much harder to keep track, right?
Julie: It’s just an easy way to have a one stop shop. You log into it and you can know everything vs. opening up 10 tabs on your computer to check it out.
Jessica: Okay. For Credit Karma, you’re also having to put in all of your stuff or it’s somehow knowing through your credit record?
Because you just mentioned something about you have a credit card that you forgot to close. How would you know that if you didn’t put it in?
Julie: Yeah, no, that one does it for you I believe. It’s been a while since I’ve set it up. You might have to put in the last four of your social, but it doesn’t do a hard credit check so it’s not going to impact your credit score. You’ll get updates on what your credit score is. It’ll give you suggestions if you want to consolidate into a personal loan or maybe open up a new credit card and then it’ll also keep track of any outstanding credit cards you have. If you’re trying to improve your credit score, it’s great at that too, because it can tell you like you used a smaller percent of your credit card budget last month, that’s why your credit score went up by five points or something like that.
TH: I feel like that’s a whole other podcast, the whole game of your credit score. If you pay it off, or you don’t pay it off, you have better credit if you pay it off over time. It’s such a crazy game. But the first alarm for me, and I do use a lot of apps in general, is security. Now there’s Shop Pay and there’s autofill and everybody remembers your credit card. I already feel that so much of my financial stuff is all over the place and out there as it is. How many more places should it be? Should there just really be one app you use? Should it just be my bank where I link everything through my bank?
I feel like in my head that’s the safest place for it to be instead of a random app. It doesn’t mean these aren’t legit apps, I’m sure they are, but what’re the criteria for determining if any of those apps are really secure? What kind of questions should you be looking to ask or find out about?
Julie: Yeah, well, Credit Karma was actually just recently bought by Intuit, which also owns Mint. They’re both owned by a massive publicly traded company, so you have that sense of security. But totally, I wouldn’t want to just go use some random app, I’d be careful about it. But you also have to realize that all of these guys are being so careful in terms of security because the second something happens, the company’s done. That is the top concern for all of them. I also encourage you not to go out and use like 50 different apps for this either. Do a little research, look at what Mint does before putting in your information, look at what Credit Karma does before putting in your information, maybe one or two others, and then pick one or maybe two of the ones that you want to use and just stick with them.
Jessica: So Mint, your financial snapshot in essence. Credit Karma, know what your credit status is, which is as TH said, post-divorce enormously important, because it’s going to determine anything you can do, get a car, lease a house, buy a house, or whatever you want.
TH: Pay your first credit card. You may never have had your own credit card.
Jessica: Exactly. You may have only had joint credit cards. Okay, so those are two totally different useful – where else are we looking?
Julie: Well, there are other ones you can use. Marcus by Goldman Sachs, so another one that’s a big publicly traded company, that one also has recently started populating your other accounts if you want to add them in there. You can have your Marcus balance and then whatever other ones you add it’ll show you those too. If you feel better using that vs. Mint, that’s also another great option. I think they both use the same platform to connect that information, so both super secure.
Jessica: So is it one or the other? I’ve ever heard of Marcus. That’s just an overall financial snapshot?
Julie: So Marcus does other things. Marcus offers personal loans and savings accounts, and the financial snapshot and budgeting type stuff they’ve recently started doing is totally new. It comes from an acquisition they made a while ago, and they’ve been implementing a bunch of that.
TH: Do these apps also educate you? Fine, okay, let’s assume I’ve never had a credit card, and I don’t even know where to begin. I go on to this app, this is what my lawyer says that I have, or whatever, I get half of this, half of that. I’m going to roll it over, have an IRA, open a bank account, and get a credit card. Fine, and now what? I don’t even know what that means. Do these apps also educate you about your money? Not necessarily can they coach you on it, but what’s the difference between a mutual fund and a Roth IRA, investing, and just educating me also. Because it’s great, it has all my money, but if it doesn’t mean anything to me, then do I really care?
Jessica: You need a financial advisor.
Julie: That is the other thing –
TH: There are apps that will educate you. They define these things for you so that you don’t feel stupid, and you don’t have to call.
Not everybody wants to walk in and be like, I don’t know what this means. You don’t want people to judge you. It’s like, quietly educating you.
Julie: Well definitely as a woman, you naturally go in thinking that it’s going to be some white male that’s going to be like, now there’s going to be a woman coming in here and they’re not going to understand it. Some of them are better at that than others. I would say Credit Karma has a lot of really good blog posts, and then as I mentioned before, there’s a bar on the side that will be like, this credit card you have a very high likelihood of getting approved for. It would be great in terms of where you’re spending, it offers 5% cashback, and we think that would be good for you.
TH: Right. That’s what I’m talking about. You need a quiet coach so you don’t have to walk into a place and be intimidated. Then when you feel like you can walk in and ask questions that you’re not going to be judged by, which sucks, but that’s the truth. It’s good to have somebody lift you up first.
Julie: Right. The other thing is if you apply for a credit card and don’t get approved, that hurts your credit score. Having that certainty that you’re going to get approved with like a 95% accuracy, before you even fill out an application, is super helpful, especially for people with lower credit scores, which are the ones that are worried about it in the first place.
Jessica: Where are we going after Marcus?
Julie: After Marcus, you mentioned IRAs and retirement and other things. Something like a Betterment or Wealthfront is really good.
They both allow you to go in and continue to have that full financial picture, again, pulled through that same firm that does it for Marcus and Mint, and others. It’s a company called Plaid if you want to look them up. But essentially, you can be like, I need to save $10,000 extra to put on a down payment, or I really want to go on vacation, or my kid’s college fund, and stuff like that. You can set goals in there, and it’ll let you know if you’re on track or not, and what you can do to try to change that.
Jessica: So those are similar, those two, Betterment and Wealthfront?
TH: I like that one. I like that because it keeps you accountable.
Julie: Yep. I use Betterment. Wealthfront is essentially the same thing. I know the team at Betterment really well, and the CEO is just an outstanding human being. He recently stepped down just to be the chairman, and they brought on a female CEO. Maybe you’d prefer that one instead, just because of the like #MeToo power, but its goal is essentially the same thing.
Jessica: What about some stuff that’s going to help someone with saving/budgeting or, I know I’ve read things before about whatever you do, you can round up the purchase and a couple extra cents go here. I think people are curious about that kind of stuff.
Julie: Yeah, Acorns and Stash are two that are probably the most popular on that front. The other thing to keep in mind, almost every single one of these that offers a checking and savings account that I’ve mentioned, offers a higher interest rate than you would get on your JP Morgan, Citi, or Bank of America account.
Jessica: Stop there for a second. Just for people who know nothing about anything financial, can you explain the significance of that and what exactly that means?
Julie: Yeah, so when you put money into your JP Morgan account, it is FDIC insured, but it’s probably earning zero on the money that you’ve put in there. It’s just sitting in there, and it’s not even earning inflation or anything like that. Marcus, Wealthfront, Betterment, Chime, like a bunch of others that I haven’t even mentioned yet, they offer anywhere from like 0.3 to 2% interest rate, which means the money that you put in there is actually earning something every single month. If you put $10k in there, you might get a check for like $50 at the end of the month. You’re like, oh, cool, that’s $50 I wouldn’t have earned and there’s no fees ever. You don’t have to keep a minimum balance in there like a lot of the other big banks make like you have to at least have a direct deposit of $500 or you have to keep $10,000 a year, otherwise you have to pay a $25 fee, nothing.
Jessica: You keep saying JP Morgan, but I’m thinking like Citibank, Chase –
Julie: Same thing.
Jessica: Same thing? So anywhere that you might just have a savings account, is the catch that through these apps it’s not FDIC insured?
Julie: No, it is. It’s still FDIC insured.
Jessica: So why wouldn’t someone do that?
Julie: I have no idea.
TH: Can you explain what FDIC insured means, please?
Julie: It means anything up to a $250,000 balance is completely safe if the bank fails or anything like that. It’s not like you’re just going to lose that money. It’s there.
Jessica: Right. Okay, so Acorns and Stash are places that you can open accounts –
Julie: And do like the roundup feature?
TH: How does that work though? Take us through the steps of that. What does that mean?
Julie: I’ve never used it personally. I just know about it because I work really hard at saving money, so it’s not something I ever really needed that much help with, but a lot of friends love using it. Essentially, every time you go and buy a cup of coffee for $4.30, it’ll put 70 cents in your savings account, rounding up to that next dollar. It’s just an easy way to put money in there without even thinking about it.
TH: So it’s tracking your spending through your checking account but has nothing to do with your credit cards?
Julie: Yeah. It doesn’t have anything to do with your credit cards, just your checking and your debit cards.
TH: Okay, okay.
Jessica: Just so I’m not getting confused, that’s where you can open up an account that you’re saying would be in lieu of your standard checking account?
Julie: Yes. Yep. And they have investment accounts as well, but they also have checking and savings. Yep.
Jessica: Okay. I wonder, just off the top of my head, I bank at Citibank and I can go to the ATM whenever I want and it’s free vs. getting charged to take out my own money if I use another bank. I just wonder if there’s something like that if I have one of those other accounts that I’m going to Citibank or wherever an ATM machine is, and it’s costing me $3 every time I want to take out money. I guess that’s where it kind of hits you in the end?
Julie: Yeah, Chime has 75,000 ATMs across the country that are free. On the app you can go look, and mine is like three blocks away. There’s another one where not a single ATM is going to charge you a fee.
Jessica: Which one?
Jessica: All right, tell us about SoFi.
Julie: SoFi, like literally, these all are essentially the same thing. The good news is you have lots of choices to make, but essentially, from someone that covered this for a while, they all started out in their niche little areas and converged on this exact same thing. SoFi does personal loans, does retirement, does checking and saving, does investing etc. It started out as a company that was just refinancing student loans though and just kept expanding from there. The same thing with Betterment, it started out as a robo-advisor, so something that was essentially like your financial advisor but a robo that would automatically make decisions for you. You didn’t have to talk to someone and it would, like I mentioned before, keep you on track in terms of here’s what your goals are, when you plan to retire, or when you plan to take this money out to buy a home, and things like that. Now it does a bunch of different things too, the checking and savings and whatnot. I could probably list like 50 different ones of these that you’d have to choose from.
Jessica: Well, it’s funny you say that because we’re kind of running out of time. In my head I’m like, we haven’t even scratched the surface. I feel like we need to come back and revisit this and go through more about this, but I do have one last question. This is not really related to the apps, but kind of, so for me personally, and I know I might be really old school, one way that I feel really good about kind of keeping track of my spending, honestly, is using cash. I know that I can take out X amount from a bank machine, and I can go out and use it for my incidentals during the week. The more things I pay for in cash, obviously, the less that’s going to show up on my credit card at the end of the month. While the logic may not make sense, and I’m spending the money either way, it’s very easy for me to forget that I spent $500 on cabs. All of a sudden my credit card bill is way higher than what I thought it was going to be.
So I do like using cash. My question is with some of the apps that you’re mentioning, it doesn’t apply if you’re using cash, and these things only work, correct, if you’re using the app or some kind of an automatic pay through a card for that to actually happen, correct?
Julie: Essentially. Acorns and Stash might be a little bit better at that, but someone like a SoFi, or a Chime, they’ll send you daily updates on how much is in your checking and savings account, but they’re not going to give you an update like, your credit card balance is this. I’m not 100% certain, but you probably could go into your Amex or Capital One card, whatever you use, and figure out a way to set up an alert for what your balance is every single day. Once it crosses a certain threshold then you know. My issue with a lot of these big incumbents is they’re just not as user friendly as a lot of these smaller guys that I cover. JP Morgan doesn’t send me a nice update every single day with my balance unless I go into its website and do a bunch of searching to figure out and then it sends me an email. Chime sends me a notification on my phone every day at 10am with my balance, and it’s just nice to kind of know. Because then if I know my credit card is going to charge on there tomorrow, and it’s $1500 and I only have $1300 in my checking account, I go in and move over from savings to put over before I get a fee.
Jessica: Right, that’s great. But I also meant like Acorns isn’t going to work for me if I’m using cash because I’m not rounding up. I’m just saying that out loud for anyone out there who’s like me who likes the idea of using cash. Keep in mind what you’re doing when you’re going to be using these apps, because you may not get the full benefit of what it is you’re downloading it for if you end up not using the associated cards. Anyway, this is all amazing information. Thank you so much. I think it’s going to be really helpful to so many people from the ExExperts community. Is there a place for people who want to kind of look up these different things? Where can they go and look and find information in a one stop shop place to be able to get what you were talking about?
Julie: As Jess mentioned, I’m the co-founder of Fintech Today, which we cover everything in Fintech. There’s a lot more than just the information you need, but you can go to our website and find out a lot more about all these guys and make sure anything you’re thinking about using feels safe and secure and you get that reassurance.
Jessica: Amazing. All right, we’re going to schedule the next one and have you come back and tell us more. Thanks, Jules.
Julie: Thank you.
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