Sense to Save

How we use our checking and savings accounts

J.D. at Get Rich Slowly is discussing checking accounts today, so I thought I’d chime in and tell you a little bit about how we use ours.

We use our checking accounts to pay bills and do our regular shopping. Pretty basic, yeah? We don’t earn much interest from it, but that doesn’t matter since the money isn’t in our checking accounts for long, since hey, bills are due every month, ya know?

There is a small rewards program linked to our accounts, and from time to time we’ll get a gift card to a restaurant or store.

We try to do “zero-based budgeting,” where every dollar has a specific purpose. There’s not really extra money laying around. If it were just hanging out without a task, we’d send it to a specific savings account instead. That way, we won’t be tempted to spend it on something we don’t really need or want.

We do most of our banking with a traditional brick & mortar bank. Our accounts are set up like so:

- Kacie’s checking
- Main checking
- Charity
- Baby savings
- Car savings
- Emergency fund and additional savings

All of these accounts are linked to one another.

My checking account has a debit card specific to the account number, and I use it for groceries, gas, and general household shopping. Keeping it separate from the main checking helps us to track where the money is going. We don’t keep much here — just a few hundred dollars, as that’s all it usually takes per month to shop for our needs and wants.

Shane has the debit card for the “main checking” account. The bills are paid from this account, and we also have paper checks for this one. We pay most of our bills online, but it can be handy to have an actual checkbook. Shane gets paid monthly, so as soon as the money is in that account, it’s sent all over the place.

We take 10 percent and send it to our charity account, $277.33 to our car savings account (that’s enough for one double payment, and we’ll increase that after the new year if we can), some money goes into my checking, some money goes into savings, and a small cushion of $150 to $200 is left here to cover unexpected changes to our budget, and for Shane to use as he pleases.

At the end of the month, our checking accounts are both quite low. We do this intentionally. If we had more money left there, we might be more inclined to spend it on things we don’t really need. That’s why we make a conscious effort to put extra money aside into savings early in the month and as we get little windfalls.

Our charity savings is where we sock a percentage of our income as we receive it. We don’t always give to the same cause, so having it separate from our other funds helps us to remember to donate it, instead of it being absorbed into the day-to-day spending.

The baby savings fund was originally created so we’d have about $1,000 to buy whatever we needed for our son. There’s a few hundred left, and I don’t plan to add to this account unless it looks like we need to. We have pretty much everything we’ll need for those first few weeks (and longer, I hope!) so we can use that money to buy more diapers, nursing things, or whatever else we decide we need. It has been tremendously helpful having this account separate from our main checking or savings accounts.

Our car savings account is probably going to change soon. As I mentioned, right now we’re just sending double payments to our car loan for the time being. Instead of setting it aside, I can just write a check at the beginning of the month and send it on its way, rather than let it earn a wimpy .4 percent interest or whatever. Once we’ve decided to send all extra funds to the car loan, we can then reinstate this separate savings account.

For now, I think we might just put our “insurance savings” there instead. Rather than make monthly payments to our various insurance companies, we pay our policies in full and pay ourselves each month. Right now, the insurance savings is being sent to our emergency savings account, but it’ll be better to keep that separate.

Finally, our emergency fund is earning 4 percent interest and is available to us if we need it. I’ve been putting additional money in that account to take advantage of that interest rate, but it doesn’t have a specific purpose at this point. We might use the extra for things around the house, some new clothes, or maybe we’ll eventually send it to our car loan. Not sure.

We used to have our emergency fund in ING Direct, but I transferred it when this 4 percent interest offer came about, and I’m glad I did. ING Direct is now offering just 2.75 percent interest (I think). Our 4 % offer ends in March, so depending on what the rate is, it might be worth it for me to move it back (or somewhere else, even).

Whew! So that’s how our accounts are set up. How do you do yours?

Free fast food, free photo book, and a roundup

If you pick up something to eat at Arby’s or Wendy’s, take a look at your receipt. You might be able to take a quick phone or online survey, and for your time you’ll be rewarded with some free food. At my area Wendy’s, you can get a Frostie Float. At Arby’s, you can get a cheddar melt, I believe.

I don’t know if other fast food chains are running similar promotions, but it might pay off to take a look at your receipt (front and back) just to make sure!

Also, you’ve probably seen this promotion already, but if not, I wanted to highlight it:

You can get a photo book for free (but you do have to pay for shipping) from Shutterfly or Inkubook.

To see the details for the Shutterfly offer, visit Thrifty Florida Mama, but hurry! You need to have the coupon code in your shopping cart by tonight. For the Inkubook, visit Simplemom.

I think these could make wonderful gifts, and I’m planning on working on my “free” books this weekend.

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Karen at Living Well on Less wants to know: Would you buy it if it wasn’t on sale? This is such an insightful post. I used to head straight for the clearance racks and if I found something that was a great deal, I might buy it simply for the sake of a bargain. Wrong way to do it! If we don’t love an item and if it doesn’t have a specific purpose in our wardrobe, it’s a waste of money, no matter how much it costs.

Today I went to Old Navy to get some maternity jeans. I looked in the clearance section first to see if there were any. There weren’t. Next, I grabbed a few regular-priced jeans to try on. I didn’t look at the tag until after finding a great style in my size and trying them on. Ouch, $32.50. Fortunately, I had printed a 30 percent off “friends and family” coupon, making them $22.75. Since I desperately needed some decent jeans to get me through these last few weeks, and since the price was acceptable to me, I bought them.

I did not buy a bright blue T-shirt for $2.80. The color was all wrong for my skin tone. And, I really had no need for another maternity shirt. Even though it was pretty cheap, it would have been a waste of money and closet space.

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Glblguy thinks that tipping is getting a bit out of hand. I’m happy to tip at least 20 percent to restaurant wait staff if the service was good. And I usually give a few dollars extra to my hair stylist. But tipping a coffee barrista? Or ice cream shop employee? You’ve gotta be kidding me.

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Here’s some ideas on funding your 401k while in debt. Generally speaking, it’s a good idea to always contribute enough to get a full company match. That is, of course, assuming you can pay your bills on time and eat decent meals while doing so.

From the Money Life Network:

Beware of this fast food marketing ploy at My Investing Blog. Sneaky fast food people.
Homemade pesto at Remodeling This Life. Looks delicious and easy to make!
Now is a great time to convert your traditional 401k to a roth 401k at Milk Your Money
Nevermind an economic stimulus package — save yourself! at Free From Broke
Home inspections: For existing and new construction homes at Prime Time Money
Is it a good idea to get a 401k loan to pay off debt? at Bible Money Matters

A frugal way to be fancy? Or not

Some of you may have heard of Bag, Borrow or Steal. You can rent designer handbags, jewelry and other accessories. Some items cost as little as $15 per week to rent. Others, you can expect to pay several hundred per week to use.

Personally, I don’t care so much about designer items. I’m just not that fancy. Unless a bag has its designer’s logo emblazoned across the front, I probably wouldn’t be able to tell you who made it. And in my humble opinion, some designer goods are kinda ugly.

As far as jewelry goes, I tend to be a minimalist. I’ll wear my wedding band and engagement ring, but that’s it on most days. Sometimes, I’ll put on a pair of earrings — maybe some pearl studs or silver hoops.

If I ever go to a super-formal black tie event, I don’t think I’d have appropriate jewelry to wear. If I was unable to borrow something from a friend, I might consider renting some earrings, perhaps.

For $222 per week (plus insurance!), you could rent 2 cts. worth of diamonds for your ears. These studs retail for $10k. Um. I don’t think I could rent anything that pricey. What if I lost one? That’s pretty expensive to replace.

How ’bout these studs from Tiffany & Co. for $159/week (retail $4,625). Lovely.

These earrings are nice, and are $50/week. About $1,500 retail value.

Then again, you could always go the CZ route and just buy a pair of cheaper earrings. Here’s some pretty drop earrings marked down to $69. Or some CZ studs marked down from $100 to $30.

Wearing real high-end jewelry or some other accessory might be fun once in awhile. I just think I’d be too worried about damaging it or losing it to really enjoy it. Plus, for the cost of renting something, I could just as easily buy a pretty piece of low-end jewelery.

Maybe a good alternative would be to swap accessories and jewelry with your best-dressed friends.

What do you think about the site? Would you use it?