One of my goals for this year is to get organized. I decided to revamp all of our bank accounts at Bank of America. First thing I did was close the savings account, which paid 0.5% in interest and came with all kinds of fees and minimum balance requirement. I also closed my wife’s checking account which also had a fee of 5.95 a month without direct deposit.
I opened 2 new joint checking accounts online with no fees, no minimums and no direct deposit requirements. Now we have a total of 3 accounts with them:
Bill Paying Account: This is a checking account for “liabilities” only. All bills are paid from this account and this is the only account that we have checks for. Once the money is in there, it can only be taken out by bill pay or check, this way we don’t have to worry about overdraft fees etc.
Spending Account: This is one of the new accounts which will be used for all check card purchases. We both have a check card linked to this account and I can monitor this on a daily basis.
Savings Account: This is the other new checking account (no fees) which will have $500 dollars in it at all times. This is our new emergency fund and it is funded! This account will be linked to my HSBC Direct account where we plan to keep our real savings and earn high interest.
All accounts are free and we don’t have to worry about any kinds of fees or direct deposit requirements.
What do you think about this new approach, is it more simplified?
HS
7 comments:
No, it's not simple. We have one single account that everything goes in and everything comes out. I'm anal about keeping things accurate to the penny though and don't pay fees. I have actually been able to eliminate all manual check writing and use online bill pay for all our bills. The only thing I don't do is a whole lot of 'automatic' bill pay things. I keep spreadsheets with our budget, planned vs actual and always allow a buffer.
The three account system I have heard about before, but not like this. I'm aware of the his/her and then joint accounts for bills. To me it's a lot of work to try to manage all of this and track where the money is going. Since you opened the accounts with no fees/no min/no DD (not sure how you pulled that off) you might as well give it a shot for a few months. I do have an offer to open a new Chase checking account and receive $125 just for doing it. Hope it all works out and just like you, I hate the bank fees too.
I think it's a great idea, which one do your salaries get paid into?
Is there automatic transfers to the bill and savings assounts on payday, so whatever is in the spending account is yours to do with as you please?
I have heard of this way to manage accounts before - knew a young couple that met on the Internet that were doing it. It seemed to work out okay for them, but the husband would leave work and take about an hour going from one bank to the next to first cash his paycheck, then deposit the required amounts into the other two banks. We don't have direct deposit at my job (yet - one day I'll make that happen) so he had to do it manually. But that way he had his own spending money. He was always saving up for some big thing, like a Blackberry or gaming system.
the only flaw I potentially see is that you both have debit cards linked to second account. Why not just take cash each week for both of you, to avoid accidentantly withdrawing the same money (i.e.-you see $120 balance and take out $60, the same day your wife sees $120 balance and spends $80 or something) this will avoid a insuffient fund fee.
I have 2 cds that are my emergency fund. And my boys each have there own savings account as well. In addition I have 2 checking accounts with the same bank. One is for regular monthly bills, one is for my freedom account (accounted for irregular expenses, such as gifts, car repairs, etc.)
In addition I have a business checking at another bank. I am self employed, so I deposit all my income from work in that account, then I write myself a paycheck (the same amount) twice a month. This keeps things organized for tax time.
All our direct deposits go to the bill paying account.
I'm hoping this system works out I guess I need to give it some time.
HS
Good luck with this, HS. We still own a house in Houston and I'm about to pay the property taxes. SCARY.
Personally I like this approach. I use three accounts (bills (with a sub savings account attached, his, and hers) and find that it works very well.
We ran into an issue several years ago where my hubby overspent from our joint account (by $12) and luckily I decided to check minutes before our mortgage payment was to be automatically transferred. From that point on we established the bills account.
It helps with all of those possible problems as any overspending or issues are directed to the "spending" account(s) which are completely removed from your important (read: vital to your credit rating and life as you know it) recurring payments.
Good job on getting rid of the fees as well. I have yet to find anyone who can truly rationalize paying outrageous fees to their bank. If you are busting your behind to pay off my debts, you sure can't be dishing out dollars just to manage your own money.
Post a Comment