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We have told you what FI is and what that looks like for us. Check it out in our first post. Hopefully, you can see what that looks like for your future now, too. Now, don’t get us wrong, we are nowhere near our end goal. BUT, we definitely are closer than we were a year ago. And we want to get you that much closer, too.
But, how do you even start on a path to FI? Doesn’t that require saving all your money. And aren’t we all terrible at saving? Don’t worry, so was Ms. TTF. She once ordered delivery for a glass of lemonade and room service for orange juice at a hotel down the street from her house. But she found her “why” to save and that pushed her to start. Then, she got one simple app and forgot about it. Granted, she does a lot more than just Digit now, but that was an easy place to start.
And if there was ever a place to start, it is with Digit.
- Is Digit going to make you rich? Not alone, no… because getting rich isn’t that easy.
- Can Digit help you begin your wealth building journey? Hell yeah!
- Can Digit help you even if you are already rocking your savings goals? We appreciate your drive and so will Digit, every dollar counts.
How Can I use Digit to Build Wealth?
Digit can jump start your savings goals with, what I believe is the most important factor in getting started AND staying consistent… AUTOMATION.
Digit is VERY easy to set up. In fact, I highly recommend setting it up and forgetting it.
- Download the app
- Enter your information
- Simple bank account sign in through Plaid to monitor and withdraw from
- Choose your goal(s) (or not, a Rainy Day fund is fine too!) and…
- Voila, you are rolling ((in the dough))
Digit takes some time to recognize your account patterns. It monitors bills, spending habits, pay cycles, etc.. Once it has a good idea of what to expect, it starts making small withdraws on a regular basis. They are small, tolerable withdraws. (Did I mention they are small?) And, over time, they actually add up to some impressive savings. They are often so small, it is no more than seeing a cup of coffee deducted from your checking.
For example, in the month of September, Miss TTF’s withdraws were as follows: $4.51, $4.49, $4.41, $4.41, $7.94, $4.94, $2.99, $4.91, $3.42, $3.39, $3.36, $3.35, $3.32, $5.12, $3.26, and $3.26.
Meaning that in just one month, Miss TTF saved a total of:
If this doesn’t seem like much, I want to challenge your thinking a bit more. Over 12 months of saving, this total jumps to $804.96.
Consider the fact that nearly 63% of Americans do not have enough savings to cover a $500 unexpected expense. This beautifully simple app takes the 63% and transitions them into the 47% who can afford an unexpected $500 expense with a modest savings rate. That is PROFOUND!
Now get ready for some numbers and consider this next one for a beat. The average American has a credit card balance of $6,375. On that $6,375, the average interest rate is 16.71%.
I called my credit card company to see how they calculate my minimum payment due. They said the minimum due is the statement balance (the big scary number you shy away from every month) multiplied by 1.5%. Thus giving that average American balance of $6,375 a minimum payment of $95.63 per month. By only making the minimum payment each month, it would take you 191 months, that is 16 YEARS, to pay off that credit card debt. And don’t get me started on any student loan debt…
Over those 16 years, you would pay your balance of $6,375 (aka the principal) and $11,847 in just interest. That makes your $50 date night into a $92.92 dinner that will take you 16 years to pay off.
Digit to the Rescue
But with Digit helping you save an additional $67.08 a month, you can add that to your minimum payment and your story looks a waaayyyyyy better.
You are now paying a total of $162.71 per month towards your credit card. Instead of 16 years, it will take you a mere 58 months, almost 5 years. That is nearly a third of the time it would have taken you with minimum payments alone. And this is just the tip of the iceberg.
Over those 5 years, you will pay down the principal of $6,375 and only $2,905 in interest. Saving you an additional $8,942 more on interest than if you made just the minimum payment. Better yet, you are paying it off 11 years earlier.
So not only are you saving around $60 a month without doing anything, but now you are saving almost $9,000 on debt payments.
Now think of what that extra money could make you?!?! If you paid off your debt in 5 years, rather than the 16 years, you could take that monthly payment of $162.71 and invest it in the stock market. With 11 years of a conservative return of 7%, you would have a balance of $32,975!!
That would be $21,477 of just contributions and an additional $11,497 from appreciation (growth) and dividends. Which, if we’re talking layman’s terms here, that’s free money.
Digit even makes this process as easy as pie with it’s Digit Pay feature. Once you set up a Credit Card Debt goal, Digit will make automatic payments to your credit card company directly from Digit, no transfers required.
So now you know how credit card companies make their money. Let’s take that control back and pay our credit cards off every month. If we can’t do that, let’s let Digit help us pay down our debt and grow our money sooner than later.
If an emergency fund or debt pay down are not your areas of need, there are many other uses and goals for this app. You can save for vacations, birthdays, anniversaries, concert tickets, and anything in between. Digit allows you to have unlimited savings goals. They want to help you as much as they can. You can even prioritize your goals with a “boost” function. This essentially tells Digit that certain goals are more important than others and to save for that goal first and foremost.
No Money? No Problem?
Another great feature about Digit is the low barrier to entry. When we think of wealth building, we typically think we need to have a LOT of money to get started.
Digit takes that intimidation factor away by not having account minimums. Meaning you can have a big fat zero in there if that’s what you need… We do recommend at least one dollar though, c’mon.
It’s also better than your savings account for obvious reasons (Does your savings account text you with GIFs making it rain? No). Plus… there’s no limit to the number of withdrawals you have in Digit.
Now the no account minimum helps a lot to getting started but what if you Digit thinks it can just take what ever it wants or what if you have big purchase and can’t afford losing any money to Digit right now? Don’t worry Digit has implemented quite a few features since they started to save your butt whenever needed. Let us explain a few of their best features:
- Overdraft Reimbursement
- Maximum Daily Savings
- Low Balance Protection
- Pause Saving
If you are using the extra savings from Digit to help pay down your credit card debt, you can use the Auto-Withdrawal feature to your advantage. You are able to set a day of the month to have Digit automatically withdrawal the whole balance from your Digit Savings Goal of choice back into your bank’s checking account.
Keep in mind this is the date that it initiates and does take a few days to hit your checking account. And watch your balances as Digit doesn’t always save the same amount every week.
Anyways, Digit, being the intelligent company they are, realized we humans are imbeciles (not really of course) and would still mess it up. So what did they do? That’s right, they came to the rescue once more. Insert lightbulb here and you have “Overdraft Reimbursement.” In essence, if an “automatic withdrawal,” not to be confused with a manual withdrawal, overdrafts your funding account, Digit will reimburse you…..once you prove beyond reasonable doubt that it occurred as a result of an automatic withdrawal. Be prepared to put a little work into this one.
Maximum Daily Savings
I’m not going to lie, October was a good month for Miss TTF on the income front. She adjusted her regular savings goals but not enough, apparently. Luckily, Digit made up the difference for her by saving upwards of $50 on 3 consecutive days. If that scares the absolute bejesus out of you, don’t worry, Digit feels you. They added a Maximum Daily Savings feature that you can set to $5 if you want, even $20 if you’re daring. But really, set it to whatever you are comfortable with and remember you can always transfer the money back at any time if it takes a bit more than you’d like.
Low Balance Protection
If you are infamous for letting you checking account overdraft or get below the minimum balance, Digit has your back! You can set the minimum you want your checking account to ever hit and Digit will not only stop withdrawing but they will put money back into your checking if it gets below your set amount.
Say your minimum balance on your checking account is $500 to eliminate the fees. If it gets to $495, whether you just paid rent or bought an ice-cream, Digit will initiate a $5 transfer back to the checking account to bring the balance back up to the $500 you had set it to.
Waiting to make a large purchase or you don’t feel comfortable saving while you are on vacation? You can simply just pause Digit from saving any money. I don’t recommend doing this often, but I did do it while I was on my 3 week vacation, too.
Why Would Anyone Not Want Digit?
Now that we have explained all the ((freaking)) genius features of Digit, we want to talk a little bit about the arguments against it…
And then dispel the s@#% out of them.
1. Overdraft Possibilities
Great question… but read above, people.
2. Charging you to save
Now, the biggest knock on Digit: they charge you a nominal fee ($2.99 per month) for helping you do something you are not naturally good at, don’t have time for, and may not like to do.
Ggggaassspppp….how dare they?
I don’t really get this one, to be perfectly honest. $2.99 per month, $36 per year. Let’s run down the list of things you have spent $3 on that added next to nothing in value to your life… coffee (but really a milkshake from a coffee shop), energy drink, chips from the gas station, pack of gum, fast food lunch, drink at the bar (which is likely twice as much), candy bar, soda, Uber/Lyft rides, parking, ice cream, bottled water, etc. ((et-freaking-cetra)).
Do you see what I mean? None of these add any true value to your life, but the habit of saving can change your life exponentially over time. So why “pay to save” as people will air quote it? You should pay to save because you likely don’t save or don’t save enough. It is that simple. You pay for every other convenience in the world, why not one that has real value?
Please, I beg of you, don’t trip over dollars to pick up pennies.
Digit even rewards you every 3 months with its 1% annual savings bonus. The amount is based on the average daily balance over those 3 months. So, the more you save, the more you earn.
It’s Go Time
So if you are ready to start saving, whether its for emergencies, your kids, or a rocking vacation to the Bahamas, just download Digit.
We challenge you to set it up and forget about it. You can even delete the app so you aren’t tempted to see your balance or withdraw any money. Can you go 3 months or even a year without checking it?
You’ll thanks us later when you decide to open the app after a year’s time. Just be sure you are seated and perhaps, have a beer at the ready so you can toast to Digit on a job well done.
Even if you are an aggressive saver, there may still be room for you to “trim the fat,” if you will. Since I have optimized to save near the 50% mark, Digit is not always pulling out those extra $3.00, let alone $25.00. Rather, it helped me edge out that extra $15 per month, with small savings of $0.63 or so here and there. Granted, I am a bit obsessive about saving, so that extra couple of bucks may not seem exciting to you, but that monthly $15 in 10 years time will be $2,661.
At the end of the month, I pull out the money and place it into my brokerage account. What brokerage account you ask? Well, that question will have to wait just a bit longer…
Happy Savings TTF community!
Let us know how you use Digit in the comments below! We’d love to hear all your creative ideas!