I’ve been thinking of starting a savings account for big ticket items like my next car, my next big vacation, etc. Most of the personal finance bloggers have been discussing ING direct, Emigrant Direct, Netbank, HSBC and a few others. But none of these banks gives the highest return on a “savings-like” account. You know who does?

Paypal.

It’s surprising, but when I checked my Paypal account recently, I found that I was earning 4.26 percent on my money–that’s .26 percent higher than the highest internet savings account rate currently offered by Emigrant Direct. Even better–if you use the Paypal ATM or credit card linked to the account, you earn an extra 1 percent cash back.

One caveat: Paypal is not federally insured like regular savings account, and thus could potentially lose money. But I’ve been told that losses are infrequent, making these funds a good investment for when you need a place to store your cash securely and also want to beat inflation.

Instead of opening a new savings account for my big ticket items, I’m going to stick with my Paypal account.

Yesterday I got the urge to see exactly how un-creditworthy I am and applied for an auto loan through eBay’s Financial Center. I hit “submit” and was instantly rejected for my loan–and I only wanted to borrow $6,000. Here’s what I think happened:

1. I just declared myself bankrupt and this site is for people with credit histories better than mine.

2. My primary income (from the university where I work) is low–less than $2,000 a month in fact. Even though my part-time job pays well and brings my monthly income over $2,000 a month, I don’t think lenders give it as much weight.

3. I’ve applied for credit more than once in the last six months.

4. I applied individually. They mentioned that getting a car loan with a trusted co-signer would increase my chances of being approved.

Normally I wouldn’t hesitate to ask my parents to co-sign for me, but since I am not telling them about my bankruptcy, I think they’d find out by looking at the loan paperwork.

After pouting and thinking about my failure for a while, I decided that if I want to buy a car I should save up a hefty down payment so I can keep my interest payments down. Also, waiting to get a car loan will give me time to check and correct things in my credit report.

It’s still hard to believe I can’t get a measly $6,000 car loan. When I think about all the extra money I will have to spend on higher interest rates and annual fees it makes me angry at myself for getting into trouble with credit cards. But at least that debt is gone. And I don’t think I could have gotten that car loan with my credit history BEFORE I filed chapter 7 anyway.

I keep telling myself that this whole experience is an opportunity to really fix my finances from the ground up, one step at a time.

I should stop feeling sorry for myself and concentrate on the positive: my $30,000 debt is gone, and I am able to saved money now!

After a long absence, I am back to blogging feeling refreshed and ready to write. And there’s much to write about:

1. On December 15, I attended my trustees meeting, the meeting with the creditors which is required for discharging debts in bankruptcy. It was a painless–really!–process that took 4-5 minutes. Seriously, I waited in the meeting room longer than my meeting with my trustee. After 5 minutes, the trustee said I was done. My credit card debts are discharged!

2. I started a plan to rebuild my credit score. I don’t want to be passive and let this bankruptcy problem keep me down. Earlier today I ordered my free credit report from annualcreditreport.com. The web site wouldn’t process my request online, so I had to use the telephone service which mails a printed report about four weeks later. I’m not sure why they couldn’t process my request, but at least I can say I did the leg work.

I should have my first free annual credit report from Transunion in four weeks. Starting four months from then, I will order a free report from each of the three credit reporting agencies (Experian, Transunion, and Equifax) every four months. I intend to regularly monitor my credit report and correct any inaccuracies.

3. I finally accepted one of the many, many credit card offers I have been receiving since getting my bankruptcy discharged. They only gave me a $300 credit limit. BUT–they have a 0% APR until September, 2006 and only charge a $39 annual fee for the “privilege.” Even better–the variable rate APR is only 14.9% after that, about what my other cards were charging after my finances started tanking a couple years ago.

I’ve read that to maximize the benefit of this credit card on my report, I need to make small purchases every month and pay them off in full. That shouldn’t be difficult considering the maximum I can be charged is $300!

Reading the fine print of the offer, I noticed that the company actually charges me for requesting credit line increases. I suppose that should be a cautionary tale for debtors: Once you screw up your credit, it will cost you money to fix it.