Cutting the Tether: Banking and Finance Made Easy(er) for Liveaboards
One of the cruising liveaboard’s greatest challenges has to do with managing finances while away from the home port. The simple tasks of staying in touch, getting cash, receiving bills and paying bills were impossible. Although many liveaboards would typically want to bring their lives and all of their possessions with them for total self-sufficiency, bringing too much money was ill advised and even illegal in entering another country’s territory with more than a certain amount of cash ($10,000 US is the common limit).
All of these problems were tied to our inability to receive and send our mail. Unless there was a land-based person to receive your mail and pay your bills, you would find yourself up the river. Even with the Internet, evolving software technology and security concerns prevented a full scale rollout of location-independent internet banks, or banks designed for people who would never walk into a single branch.
Those challenges are now behind us.
Automatic teller machines (ATMs) began to change the world by allowing customers to get their money and make deposits from anywhere in the world. In the second generation of changes, we were given direct deposit and electronic bill payment. In that transition, practically every reputable financial institution began to take automatic deposits from any source, and offer online statements, electronic check writing and bill payment programs. Programs such as Money and Quicken rose in prominence, allowing you to download all of your information into your local computer allowing you to carefully monitor your accounts, reconcile your balances and act as an all-in-one interface with your financial institutions.
Today, the third generation is well underway with the latest round of innovative changes. The first is the electronic receipt and delivery of mail by companies such as EarthClassMail (www.earthclassmail.com). This is not the same old mail forwarding company, but a company that can act as your permanent address to receive and deliver your mail electronically – no matter where you are.
The second is that several financial institutions are beginning to permit their customers to deposit checks without ever having to physically visit a location (not even an ATM). For instance, if you have an account with USAA Bank, you can deposit your checks by simply scanning (or photographing) the front and back of the check and emailing USAA the photographs. Earthclass mail has another innovative solution in which it offers a service of an automatic deposit of any check received in your mail to an account you have set up with Wells Fargo (hopefully more banks will become part of their program). In this case, you wouldn’t even need to physically receive the check in order to make an instant deposit.
The third innovation, now beginning to see greater use, is something known as an account aggregator. Account aggregation simply means that you can visit a single site to learn about all of your accounts, from regular bank accounts, to brokerage accounts, IRAs, 401ks, stock options, frequent flier accounts, loan accounts, etc. Some aggregation services also display emails and contact lists. With these different program, you have the tools to be entirely location independent. Go cruise. Go live.
Of course you should choose your financial institution carefully. Some online banks offer high interest rate savings plans (such as ING Direct) without having to lock up your balances by purchasing a long term certificate of deposit (CD) and can work with any of your other banks and brokers. And there are lots of other options as well.
- Many banks allow you to check your balances online and provide a full service of bill receipt and payment. Bill payment programs allow you to send anyone a check by simply typing in the details online. Cash can be obtained via automated teller machines although most (but not all) charge a fee if you are not using the bank’s own ATM. The primary disadvantages with banks are that they offer few investment options and tend to pay a very low rate of interest. In the U.S. deposit accounts are insured by the FDIC to certain limits.
Full Service Institutions.
- Brokerage companies such as Fidelity, Schwab and E-Trade (there are countless others) allow you to make deposits into your account just like any bank including through mail and direct deposit, and allow all of the same bill payment services as banks. Brokerages offer other benefits, including the ability to earn a higher rate of interest on cash balances and provide access to a virtually unlimited number of investment choices. Also, many brokerages are beginning to offer free ATM withdrawals and even reimburse service charges charged by the owner of the ATM.
- A large number of institutions are offering an account aggregation service, a service that permits customers to access every account that they have through a single web page. The kinds of accounts that can be viewed include bank account balances from a nearly unlimited number of banks, credit card balances, outstanding loans and mortgages and they even track multiple email accounts and frequent flier mileage programs. Popular programs are offered through Bank of America (My Portfolio), and Fidelity and Schwab offer other popular systems as well. Most are built on the same platform and are similar in function.
- I’m obviously sold on electronic mail delivery. For instance, earthclassmail will receive your mail in a secure facility, open and immediately provide to you electronically only what you want them to, forward only what you want them to, and deposit all checks you receive. I will keep an eye out for competent competitors but as of now don’t see any that are reputable and capable of being around for decades to come.
Security is a risk, particularly with the greater use of email, credit cards and online tools. This is certainly a very significant issue not only for all of society, but particularly for people who are forced to access the internet through a computer belonging to someone else or available for public use. Watch out for prying eyes (especially in Internet cafe’s). Use an anti-virus program. Use adaware and spybot software (both are free) to periodically check your system for unwanted visitors. Use an account aggregator to take routine snapshots of your accounts and consider the nearly instantaneous account reconciliation tools offered by Money and Quicken. And seriously consider the use of some kind of credit monitoring service. Be smart and aware, and remember that security is best managed with vigilance, so consider dealing with providers who offer some protection from identity theft – and don’t forget to review your statements and check your activity whenever you can so that you can put an end to any potential problem as quickly as possible.
But with all of that said, the future is upon us. If you embrace it, for the first time you may be able to finally cut that tether.