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.

Now that I am not sending all my money to creditors, I have more for myself. I’ve been planning a budget and investment plan.

Here’s my financial state of affairs in a nutshell:

- Savings account: $270.51 (I’ve already made one cent in interest! Wowza! I’m rich!)

- Checking account: $307.93

- Cash: $145

- Money is now trying to find me: I just got a $300 paycheck from a part-time consulting job over the summer that I haven’t yet deposited. As well, I have a $350 check for my last apartment that is due any day. Both will go into savings to start my highly liquid emergency fund.

- I will get paid for my main job on the November 1, but before I do, I need to set up direct deposit on my new FREE Washington Mutual account.

I’m not of a superstitious person, but I have to admit I might switch teams if this keeps happening.

This weekend, my friend Sarah was visiting from out of town. As part of her sightseeing tour, we stopped into a Tibetan Buddhist shop–there are a ton of them in my college town. I saw they had a wall of incense, and knowing I needed to buy some, I picked out a fragrance called “abundance.” It smelled good and I thought “what the hell, it can’t hurt.”

We came home and I burned it, then weird money things started happening to me:

1. I finally decided to switch banks, and found I could get the same services I had been charged $6/ month for at Wells Fargo at Washington Mutual for FREE.

2. I decided I needed some longer-term savings accounts, and found ING, which gives over 150% higher returns on savings accounts and certificates of deposit than WAMU.

3. I was reading up on personal finance and found free money! ING is giving referral bonuses to new accountholders. They’ll give me $25 for opening an account and saying this guy referred me.

4. I decided to open an account at Sharebuilder and found out that for $25, they will give you a $25 check to invest plus a ton of free informational goodies to teach me about investing, including The Automatic Millionaire by David Bach and a one-year subscription to Money magazine. I figure after reading this stuff, I will be well-equipped to invest my money intellegently.

5. I called my insurance company to change my address and ended up saving over $170 a year by changing my address and raising my collision deductable by a mere $250.

6. I went shopping for clothes with my friend, and got an amazing 3 pairs of jeans and 2 shirts for only $150. What’s even better: I paid cash, which I hadn’t done in years. It felt terrific paying cash, knowing that I bought what I could afford, and that I paid it off without incurring any interest. That night my friend and I went to a party and everyone said I looked great. Awwww…

Life after bankruptcy is good.

I am starting to get excited about what this bankruptcy means for me: an extra $600 or so that I can save, invest, and spend on myself. I’ve decided I am going to take my finances seriously. I’m going to build an emergency nest egg and and begin investing for retirement.

My financial to do list:

1. Change banks I hate my current bank, Wells Fargo, and want to fire them. Part of my hatred for Wells Fargo comes from the fact they charge me $6 a month for online bill pay when I know I can get that for free at other banks. Part of it has to do that they charged me a fortune in bounced check fees and I just want to be rid of them. Too many bad memories.

So I’m starting two new bank accounts this week: Washington Mutual with free checking and online bill pay and IDG, who pays more than 100 percent higher interest rates on savings accounts than most other banks. The Washington Mutual account will be where my direct deposits from the university will go. I’ll keep enough in there to pay bills, and the rest I will withdraw for cash and transfers to my IDG savings accounts.

2. Begin investing immediately: I scoured the internet looking for information about what a first-time investor should do to begin investing. I researched investment strategies and investment brokers. I live on a pretty limited income (only $1,500 a month from the university plus money from second jobs) so definately needed a discount broker.

I looked at quite a few reviews, and finally decided on Sharebuilder. With their $12 a month standard investment plan, they give me 6 buys a month–just $2 a trade. Plus, they will administer my Roth IRA for free. Sharebuilder really specializes in serving beginning investors who want the benefits of automatic investing and low costs. They make mass buys on Tuesdays, and won’t allow you to buy on any other days. This allows them to save a lot of money, and they pass it on to the customers.

3. Make a budget: Probably the hardest part, but still a necessary step.