Has anyone ever done this?

You have a checking account, that you pay bills out of and have an automatic draft to savings every paycheck.

You also have your allocated amount of "cash" for food, gas, clothing - monthly basic expenses - automatically pulled to another checking account.

This is the one where you use the debit card. You don't have a debit card for the bill-paying account.

Just wondering about whether that has helped anyone stay on budget.

I am thinking about it because I just opened an Electric Orange account...going to have some work payments sent directly there instead of worrying about getting to the bank and depositing checks. And, it gets me paid faster. I really need to keep it as "the biz" account. But, I started thinking about having one that is used like I describe above...just to keep us spending a certain fixed amount on those items.

Anyone done something similar? It's sort of like envelopes, but with actual checking accounts. I vaguely remember a discussion here on this topic...

I think it is a great idea! I have a little something similar because I tie most of my online transactions to one account. Then, if someone "breaks in", they can't empty out my entire bank account.

I think I may set mine up to do just what you are doing. That make so much sense! I would stink at carrying cash around. I always promise myself that I will so I can show the kids how it works. :lol: I just alway use my debit because my hands are always full of a wiggly baby and it is so much easier.

I have the same two first accounts that you listed. I have found though that I always tend to go over budget with my debit card because I know there is more money in the account and it is harder to see how much I have left in each category.

I think I am going to go to a cash system for food, household, and entertainment so that I can physically see what I have left. We will still use debit for gasoline because I am not going to unbuckle three kids from carseats just to go in to pay for gas.

We also do electronic bill pay for all of our bills other than Dr., dentist, and chiropractor and that has made life alot easier.

I wanted to add that I think this would work for me because I don't tend to overspend on the CC. Either way I see the CC or the Debit card as "real money". If that is in question, it might not be the best idea.

I'm not at all suggesting you have a problem. I'm just saying why it might be a problem if CC's are a problem--which I don't know if they are. How's that for a disclaimer? :hahaha:

We can split dh's direct deposit into as many as five different accounts. We have one main spending account and one that is solely for paying the mortgage. The mortgage one is awesome, we have been doing it for about 5 years, I wish we had always had a separate one for it. That's our biggest 'bill', I don't have to think about what's in the checking account and how much I need to save for it... We have a little more taken out than we need and have a savings account that we can transfer into when we get a surplus. (or I can get cash if I really need it for some reason..though lately this has kinda been our vacation fund.) Those are both at a different bank than our 'main spending account'. If we ever have to do another car payment I'll add it in also. Since I just pay the one bill out of it it's easy to balance and keep track of.

We have part of his check that comes to my personal account. This used to be my allowance and the grocery fund, but lately I've been just transferring it into our main account. I think we are going to start leaving some in there and make it into our medical expense account, since the first of the year we'll be paying 100% till we hit our deductible. We also have savings account attached to our main account, which we use for unexpected expenses and it keeps us from over drafting. (free transfers)

We also hope to open another account, maybe ING, I've heard you can label your savings into subcategories w/them? But that will probably have to wait till I start bringing in some income, or something gets paid off :)

So, we're heading toward categorizing things, it seems to really help me.

Anne

I essentially do that with my credit card. I pay all my bills online through checking and charge everything else to my credit card. I also have savings automatically drafted out.

How long is ING going to hold your deposits? They hold transfers for an annoyingly long time. Not that I need what is on hold, but it bugs me since they essentially do a wire transfer and the money is there with no chance of bouncing. I think it is to guarantee that they make money on it.

Anyway, I have a checking account, a savings account at the same credit union, and a second savings account (freedom account) there that is for planned annual expenses (I think you guys call it sinking funds?). Each payday I transfer what we don't need for bills into the savings account (anything over the budgeted zero sum amount, and anything extra from staying under budget). Once a month (2nd payday) I make the transfer to the freedom account. Then I have an ING account (but not the checking) that has automatic transfers to it, and I transfer from the CU savings into it as well. Oh yeah, I have an ING account with automatic transfers for the property taxes. The interest is far better at ING and that was the largest part of my FA, plus I only access it twice a year.

Your plan sounds workable.

We have our normal chequing account that's linked to a debit card, and that's where we deposit Dave's paycheque. It's for groceries, gas, normal spending. We have another account that is just for automatic payments. So our mortgage, insurance payments, property taxes, van payment, etc., comes out of there. I know that every paycheque I need to transfer a certain amount into that account, and it keeps us ahead of the game so I'm not bouncing payments and trying to keep on top of what is going out when.

Kerri

My husband gets paid twice a month and we can make allotments to certain accounts from his paycheck. We don't have any CC debt (except for a military CC) and I know how much all of our bills will be each month which really helps me with budgeting.

I have 3 accounts: 2 checking and 1 savings. 1 of the checking accounts is for paying bills only. I have an allotment that goes in there the 1st of the month that will cover all of our bills and they get paid on the 1st. I have another set allotment that goes into savings. There's also an allotment that goes into an account DH has for himself, an "allowance" of sorts for him every month. Then the rest of the money goes into my primary checking and everything else comes out of that - groceries, clothes, gas, etc. I will sometimes transfer some of that to savings as well. It has worked out well for me. I've been able to save a lot and my bills have never been paid late.

My husband gets paid twice a month and we can make allotments to certain accounts from his paycheck. We don't have any CC debt (except for a military CC) and I know how much all of our bills will be each month which really helps me with budgeting.

I have 3 accounts: 2 checking and 1 savings. 1 of the checking accounts is for paying bills only. I have an allotment that goes in there the 1st of the month that will cover all of our bills and they get paid on the 1st. I have another set allotment that goes into savings. There's also an allotment that goes into an account DH has for himself, an "allowance" of sorts for him every month. Then the rest of the money goes into my primary checking and everything else comes out of that - groceries, clothes, gas, etc. I will sometimes transfer some of that to savings as well. It has worked out well for me. I've been able to save a lot and my bills have never been paid late.

This is exactly what I'm talking about - thanks for sharing! (And everyone else who shared their system...I'm glad to hear I'm not the only person to think of this. I figured it had to have worked well for a few people here.)

Stacy, :hahaha: - I'm so sorry, I didn't mean to get you hypersensitive with my rambles in the other thread. I thought of this because we DO think of the debit as "real money." But I'm not confident enough to just spend on the credit card then pay off because I think that will be a recipe for us overspending. For us, debit card good, credit card baaaaad.

When we have paid the bills immediately after the paycheck comes in (which is what I usually do, 2x/month), we know we have $X left over. We do very well staying within that budget for food, gas, etc. Our problem comes in when we just don't have enough after bills to, say, pay for the 30k mile service on the car ($350) or an unexpected dental bill or a several-hundred-dollar chunk for winter clothes and gear. I know the solution already - it's to make more income, because we are usually dealing with only maybe $200 left over each paycheck for food, gas, clothing, etc. (Getting at what I was talking about in the other thread. Really think about trying to develop sinking funds for the occasional expenses and feed and clothe everyone on $400 a month. Not going to happen. Also, gas eats up almost half of that just with dh's commute.)

If that amount left over quadruples or more, obviously we're going to have some money to work with as far as sinking funds. But I can also see us writing the zero-based budget in a spreadsheet, but then seeing that number after bills are paid and slide, zap, slide - the debit eats it all up. Just because it's there.

Cash hasn't worked well for us in the past because dh does most of the shopping and he often forgets to grab it on his way out the door. Then, he buys groceries on the debit, without me realizing, AND the cash gets spent. It just sucks all ways around. He likes to use the debit.

So that's why I was thinking a "food/gas" account that I can say to him, "Here's the debit amount for next two weeks: $300. That's for food and gas." and I can check the amount and say to him "Okay we're low, we're done food shopping till payday, we'll eat out of the pantry." I can see that working well.

Kimberly, about ING. Check out Electric Orange. It looks really really cool. They don't hold deposits forever. Transfers take 2-3 business days (between it and your linked checking). I have not had a check deposited directly yet but it looks to work *just* like a "real" checking account - no indication that there would be a hold on the funds deposited. You get a debit card and if you want, a small no-fee (but yes interest) overdraft line.

Anyone thinking about signing up for ING savings, please let me know and I'll send you my referral link! Thank you! You don't have to have a minimum amount to open an account, I don't think. I have had like $5 in one of our savings there for a while. We have three subcategories of savings; one for K, one for J, and one that was our House Fund. We made several hundred dollars in interest the year we were renting because our down payment was in there earning interest. That was pretty cool!

I've had just $25 a paycheck drafted automatically into ING since September, and I've almost repaid what I had to take out of it to close on our loan. Without even thinking about it. I just upped that to $40 because that's the amount of dh's raise. So now his "extra" will just get sucked right into the savings without anyone "noticing."

Anyway the Electric Orange looks really good. You can send paper checks, send electronic checks, transfer to savings, mail them paper checks to deposit or deposit them at your local checking then transfer them into EO, you can electronic bill pay online. I was going to open another account at a brick and mortar bank, but why? It's just one more envelope to open every month!

It looks like you only get one Electric Orange per ING customer, which is annoying because I would like to set up one for the biz, and one for the "spending account" like I mentioned, then use our local checking for paying bills. So I may end up getting yet another account after all, but maybe just an additional checking at our local bank.

Thanks for all the input! Sorry for the coffee-fueled ramble. ;)

Stacy, :hahaha: - I'm so sorry, I didn't mean to get you hypersensitive with my rambles in the other thread. I thought of this because we DO think of the debit as "real money." But I'm not confident enough to just spend on the credit card then pay off because I think that will be a recipe for us overspending. For us, debit card good, credit card baaaaad.




:lol: I was being a little silly (with the seriousness of the thought behind it.). :D Glad you got my sense of humor.

I too, love ING. I had the account for 2 years with barely anything in it. I'm using it a lot more now. I keep our emergency fun and car fund in it. I just had to withdraw for the new refridgerator and it did only take 2-3 days.

we both work and we both have direct deposit which is split to go to separate accounts. my pay goes into two checking accounts. 3/4 into the one I pay car payment and larger things from, 1/4 to the one I use for gas, groceries, and savings. The second account is linked to my ING savings so I can transfer savings over monthly.
Sawyer has his check put into three accounts. two checking and a his ING savings. he works it about the same as I do.

oh and we keep our finances separate. we each have certain household bills we pay, and we each pay for our own extra stuff. I have control issues. :)

I think I am going to go to a cash system for food, household, and entertainment so that I can physically see what I have left. We will still use debit for gasoline because I am not going to unbuckle three kids from carseats just to go in to pay for gas.

This is what we have done in the past.(not sure why we stopped?) I really liked doing it this way. I am not sure if it was because I had the cash in hand, but I was very careful about how we spent it. Plus we always had some left over at the end of that pay period. When we just used the debit card, we seem to go through our funds much more easily/quicker.