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ethan-bloch

Automate Saving Using Digit with Ethan Bloch

 

Want to save money but don’t want to feel it in your lifestyle?  CEO of Digit, Ethan Bloch explains how they’ll make that possible.

Digit will put aside money that you don’t need to spend but aren’t necessarily saving either.  It takes the pain out of saving. If you need the money back, you can text Digit and have it back in one business day.

You link your checking account information to Digit.  It looks at things like when you get paid, recurring bills, transaction history and takes that information to decide on a small amount that could be put aside without hampering your usual activities.  Digit’s average transfer is $23 every three days.

You need to use an active account in order for Digit to work so don’t link it to a secondary account where you just have money sitting.  If you do have such an account, someone ain’t heard.  Please listen immediately to our entire back catalog to find out why this is bad.

Digit primarily works via text messages.  The money is stored in a custodial account that is FDIC insured.  Wells Fargo is one of Digit’s partners.  Digit does keep the interest accrued because it’s completely free. So that sweet, sweet 0.01% is all theirs’.

Digit started because the founders decided to create a product they wished already existed.  It can be hard to learn Lesson One of personal finance which is to pay yourself first.  Digit takes the decision out of your hands.

Digit is still not open to everyone yet.  They were finishing the integration with banks and want to open to communities that have the most need for Digit before opening to a wider audience.  But, because you are LMM’s listeners you can get it now!  Go to the link in the show notes to sign up.

Show Notes

Digit:  Saving without the pain.

Keegan Ales Hurricane Kitty:  A heavily hopped India pale ale.

Forbidden Traveler Apple Ale:  A crisp wheat beer brewed with real apple.

Digit LMM Offer:  Be among the first to sign up for Digit.

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  • bythedog

    I’m trying to figure out how one might use this. Since I wouldn’t be making any interest, it seems to me like it would be for super short term saving. The best I can come up with is that I might use something like this to find my “savings leaks” (I’m coining that). So, suppose I put x amount of dollars into Betterment each moth, and through using this I find out I can put x + 100 dollars into Betterment at the end of the month. Does anyone have any other ideas about how to take advantage of this?

    Oh, and you guys shouldn’t worry too much about not responding to e-mails right away. You’re giving FREE advice!

    • Andrew M

      +1 on the email comment!

      • You know I love you Andrew, right?

        • Andrew M

          Always, just don’t let your wife see our bro-mance on here, lol

    • This system is really for those who don’t save money at all. Those who think they can’t save because they have very little in their checking account. Putting money away into savings isn’t about making interest for most people. It’s about the protection it provides. Many, and I mean many, people don’t save anything at all. This can help them and show them they can truly save.

      For those of us who already save, this is probably not going to be the way to do it. I would rather put my money into my Betterment or Motif account and earn bigger returns.

      • I’m with Grayson here – it’s definitely focused on helping people save who don’t already. I will say that it’s a good intermediary between your Betterment or Motif account.

        That said, who can’t use a little help saving? I know as tight as I can be with things money still occasionally seems to fly out of my wallet.

        • I will actually probably use it to fund my investing accounts. It will show me the money I have just sitting around.

          • Same, plus it isn’t like a bank gives me any meaningful amount of interest on my savings account. Not sure I understand the difference between 0% and 1% ;)

          • Haha! What, you don’t like earning a penny for every $10 you have saved? Big money…

      • bythedog

        Great points, Grayson.

    • For the record, I wrote an article called “Plug Your Savings Leaks” in Feb 2013 (http://www.listenmoneymatters.com/plug-your-spending-leaks/) but who’s counting ;)

      My impression from Digit (been using it for a few weeks) is that it is a more intelligent version of Acorns. The difference is that it doesn’t immediately invest the money so you have the ability to send it to Betterment or Vanguard. I like this better than Acorns cause fee wise, Acorns is actually pretty damn expensive.

      Thanks for your support on the whole email thing. I love talking with fans and helping where I can but sometimes I get a bit carried away with other stuff like redesigning the whole site (coming Feb 1st).

  • Andrew M

    I tried it as soon as LMM mentioned it, figured to give it a try.
    Know what I found out? I’m OCD control freak with my money, and as soon as it took a little out, I just didn’t like it. Not because it’s a bad idea or a bad system, but I must know exactly what’s being taken out and roughly when it will be taken out.

    I use Acorn, which is also automated, but I can look and see “oh, I’m getting close to the $5 deposit, and this is why, sweet.”
    I think I need therapy. :-

    • Hah! I’m not too different although I’ve been trying to channel my money OCD towards research and finding ways to automate or amp what I’ve already got going. Gotta trust your past OCD moves were good and leave them be. For what it’s worth, Acorns isn’t all that different in its “taking action on its own approach”.

      • Andrew M

        I know, but I know how it comes to it’s conclusions and I can manually do it if I need to.
        I really should get into Betterment though, just need to convince the loving wife and use your link.

  • Evan Windsor

    I make almost all my transactions on credit cards, then pay the full balance of my credit cards from my checking account once a month. Will this work with Digit or would this arrangement confuse digit too much?

    • It wont confuse Digit and with one of my accounts where I do this Digit basically wound up giving up and didn’t try to save anything. It needs data to make educated decisions and from what I can see it sooner errs on the side of caution than “over saving” if there is even such a thing.

    • Hey Evan, I’m the same way and Digit works well for me. Albeit I’m one of the founders ;)

      As long as you have that credit card bill hitting your checking account and other bills and income Digit is still quire effective.

  • This was a lot of fun. Thanks again for having me on the show!

    • Andrew M

      Thank you for being on here and interviewed by the LMM guys.