Comments on: Driving Off the Lot in a Used Sub-Compact… http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/ Personal Finance Blog with a Silly Name Thu, 24 Jul 2008 16:57:50 +0000 http://wordpress.org/?v=2.1.2 By: William Ferrell http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-13869 William Ferrell Fri, 09 May 2008 07:04:20 +0000 http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-13869 I actually tend to keep my checking accounts this low, too. I use them only when I need to actually write a check to someone (that's the rent payment, and my vehicle's tag renewal once a year). Many checking accounts (mine included) don't pay interest on the money that sits there. Those that do usually offer a very paltry return rate (1% APY or less) or have extreme requirements (extreme to me, that is, at least compared to what they offer -- $1,000 minimum balance for 2%? No thanks) to earn interest. My cash reserves sit in savings. Paychecks and other income go into checking but are immediately transfered out to the online savings account, leaving just enough in checking to cover the rent check. A low-balance checking account has a benefit that is very, very handy: anyone that tries to pull off something fraudulent (using a stolen/copied check to do an EFT from the account, etc.) fails, even for low amounts (GreenZap, a supposed PayPal competitor, got bought out last year by a company called "DCL Env, Inc.," who has now used the bank information they bought to try to nail *every* customer for $19.95 or $19.97), because there isn't enough in the account to cover it. The net effect? The most I can ever actually be liable for is an overdraft fee if someone succeeds in pulling this off, and if I can demonstrate it's fraud (pretty easy) even that gets waived. Had I left hundreds sitting in the account, I might not have immediately noticed an unauthorized draft; an overdraft though generates a phone call and a piece of snail mail to get my attention. The only bummer with this is banks tend not to value customers like me that do this. Don't expect freebies or even an exceptionally helpful staff if you have problems. These tools you describe in their gimpy little car *do* sound like real winners, though :) But not all of us with low checking balances are broke :) I actually tend to keep my checking accounts this low, too. I use them only when I need to actually write a check to someone (that’s the rent payment, and my vehicle’s tag renewal once a year). Many checking accounts (mine included) don’t pay interest on the money that sits there. Those that do usually offer a very paltry return rate (1% APY or less) or have extreme requirements (extreme to me, that is, at least compared to what they offer — $1,000 minimum balance for 2%? No thanks) to earn interest.

My cash reserves sit in savings. Paychecks and other income go into checking but are immediately transfered out to the online savings account, leaving just enough in checking to cover the rent check.

A low-balance checking account has a benefit that is very, very handy: anyone that tries to pull off something fraudulent (using a stolen/copied check to do an EFT from the account, etc.) fails, even for low amounts (GreenZap, a supposed PayPal competitor, got bought out last year by a company called “DCL Env, Inc.,” who has now used the bank information they bought to try to nail *every* customer for $19.95 or $19.97), because there isn’t enough in the account to cover it.

The net effect? The most I can ever actually be liable for is an overdraft fee if someone succeeds in pulling this off, and if I can demonstrate it’s fraud (pretty easy) even that gets waived. Had I left hundreds sitting in the account, I might not have immediately noticed an unauthorized draft; an overdraft though generates a phone call and a piece of snail mail to get my attention.

The only bummer with this is banks tend not to value customers like me that do this. Don’t expect freebies or even an exceptionally helpful staff if you have problems.

These tools you describe in their gimpy little car *do* sound like real winners, though :) But not all of us with low checking balances are broke :)

]]> By: Brainy Smurf http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-13920 Brainy Smurf Fri, 09 May 2008 12:20:19 +0000 http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-13920 True. I mean, you do hear all of the local banks advertising "FREE" checking with no minimums, so perhaps it's something I should consider but, for me, I like to have access to at least a few hundred dollars from any ATM at any given time. I suppose that is still possible using a savings account to draw from, but I don't have my accounts set up that way... And that's probably a good thing -- the more difficult it is to get at, the better. ;) True.

I mean, you do hear all of the local banks advertising “FREE” checking with no minimums, so perhaps it’s something I should consider but, for me, I like to have access to at least a few hundred dollars from any ATM at any given time.

I suppose that is still possible using a savings account to draw from, but I don’t have my accounts set up that way… And that’s probably a good thing — the more difficult it is to get at, the better. ;)

]]> By: William Ferrell http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-14087 William Ferrell Sat, 10 May 2008 05:02:40 +0000 http://pantsinacan.com/2008/05/08/driving-off-the-lot-in-a-used-sub-compact/#comment-14087 Hear, hear, and that's *exactly* why I've set things up the way I do. The simplest way to avoid any possibility of impulse buys or temptation wrecking a budget is to make your money as "immediately inaccessible" as possible. Yes, there are occasions where having access to a few hundred dollars is a good thing, but these are very easy to anticipate. Otherwise, every drop of income goes into savings except what I use to pay the rent and the bills, and to buy groceries. If I can convince myself it's worth transferring some cash out of savings (or to keep some extra cash out when transferring *into* savings) for some random gadget or purchase, then fine, I'll do it. It took me a year and a half to actually, finally convince myself that it was okay to spend $600 to get my vehicle's air conditioning repaired. And I live in central Florida where it's friggin' humid and hot and sticky. :) Hear, hear, and that’s *exactly* why I’ve set things up the way I do. The simplest way to avoid any possibility of impulse buys or temptation wrecking a budget is to make your money as “immediately inaccessible” as possible. Yes, there are occasions where having access to a few hundred dollars is a good thing, but these are very easy to anticipate. Otherwise, every drop of income goes into savings except what I use to pay the rent and the bills, and to buy groceries. If I can convince myself it’s worth transferring some cash out of savings (or to keep some extra cash out when transferring *into* savings) for some random gadget or purchase, then fine, I’ll do it.

It took me a year and a half to actually, finally convince myself that it was okay to spend $600 to get my vehicle’s air conditioning repaired. And I live in central Florida where it’s friggin’ humid and hot and sticky. :)

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