Investment Challenge Account

Welcome to the investment challenge account series here on The Money Sprout. This page will provide everyone an easy way to follow our progress of building a challenge account. My wife and I plan to use the page to help track our progress and to stay motivated.

For those of you who have not been following our updates, my wife and I decided to start a “challenge account” after following J. Money’s “Challenge Everything” series over on Budgets are Sexy. His recent challenge has inspired our family to do the same, but with a bit of a twist.

As a way to speed up building our dividend income portfolio (aka The Money Sprout Index), we have decided to starting challenging all of our purchases. Any “buckets” of savings that we can identify will then be deposited into this account each month.

Savings discovered from challenging our purchases, however is only part of the equation. In addition to using challenged savings, we will also be funding the account through various side hustles that we create throughout the year. Side Hustles will be identified as any sustainable or one-time sources of income outside my job.

Note – My wife is a stay at home mom, so my job is currently our main source of income.

Finally, we will also allocate any windfalls of money (large or small) to this account. The only exception to the rule will be our tax return. Years ago, my wife and I decided to use our annual tax return to help fund our kids 529 college savings plans.

Update – Starting with our 2014 tax return, we are no longer using these funds to build our kids 529 college savings plans. We have decided to invest the money instead into the Money Sprout Index.

Credit Card Spending Challenge

A new addition to The Money Sprout is the credit card spending challenge. In order to better track our spending and challenge everything, my wife and I have setup a new challenge. We have set a goal to keep our credit card spending to under $1,600 per month for the two main credit cards we are using.

In the past, we have averaged around $2,600 in credit card spending per month. A lot of this spending is for recurring monthly expenses like our cable & cell phone bills. Groceries and other general merchandise are also purchased through these credit cards.

We feel that up to $1,000 could be cut out of our spending. While this may not always be the case every month, we know that there are buckets of savings that we can find. Any savings from our credit card spending challenge will then trickle down into our cash back checking account – which was setup specifically to invest in dividend stocks.

Keep track of our month to month credit card challenges with the articles below –

Tracking our credit card spending is just the first area that we plan to track. As we gain momentum, the plan is to start tracking (and challenging) every single dollar we spend.

Cash Back Checking Account

So where does all that extra money go from challenging our spending? Our new cash back checking account of course.

We are not building savings in this account to earn interest on our deposits. So it does not matter if we opened a savings or checking account.

Instead of earning interest, my wife and I plan to put this savings to work earning dividends instead. Overtime, we will transfer money from this account over to our new Robinhood investment account or LOYAL3 account to purchase dividend stocks.

We could have done this in one of our current checking accounts, but would have lost the visual confirmation that the challenge everything process is working – not to mention our side hustle progress.

The account we have opened up is a Discover Bank Cash Back Checking Account. My wife and I got an offer for a $50 signup bonus to open this account, so that is why we chose Discover bank. Nothing magical here. Just a place holder and visual representation of money moving into the account and then on to our investment accounts.

Everything is free about the account. There is no minimum balance to keep. We can also earn cash back by using this account – which we probably won’t earn unless something changes. The account also provides unlimited free checks, which is actually kinda nice. However, I doubt we will take advantage of that benefit as well.

In case you were wondering – the $50 sign up bonus has been used to help fund future dividend stocks purchases.

Monthly Savings Balances

Here are the monthly savings balances to date for our investment challenge account –

Note – The savings balances listed above are a total of the amount saved in the account plus the amount moved to our investment accounts. The total savings balance listed above may not reflect the exact balance in the account.