DISCLAIMER: None of the information provided is law. I share what works for me. Only you can determine what works in your life.
I am here to tell you now... Debit Cards are EVIL. That said, I own one. But the only place I EVER use it is at my bank drive-through IF I need cash after hours. But most of the time, I just go into the teller window and withdraw what I need ahead of time. I PLAN my spending.
Here is a fact. You are more subject to identity theft when you use your Debit card than at any other time. Credit cards rank #2. Why put yourself at risk just for convenience. We all need to learn to slow down. I figure if it worked for my parents... and generations before them, then it works for me. Granted, some things have to moved along with the times, but if you have safer options, why not use them?
The other thing I still use is a checkbook and check register. Yes, I'm sure that makes me a dinosaur.. but I am a PREPARED dinosaur.
If you do your banking on-line and use your debit card regularly, you are missing out on an amazing way to secretly stash money away... and why I have enough saved back to sustain us for the next six months worry-free.
If you bank on-line and use your debit card, the exact amount is subtracted from your account. While this does make balancing your checkbook much easier, you do not have the opportunity to create an imaginary vault in which to stash money away.
I use checks and a check register... the old fashioned way. And I do not balance my checkbook. (I will get to that final point in a moment)
This week I am going to share with you THREE ways to stash money back. If you do even ONE of them, you will be ahead of the game... and better prepared than you probably were before we began this journey.
Here is #1:
Let's start with my husband's check deposit. His company uses auto-deposit. They put the money in our account and we get a hard copy of the check stub. I'm not going to tell you what my husband gets paid. So I'm going to use an example amount.
Amount deposited by his Company - $1574.23
However, that is NOT what I write in my check register. I will write $1500.
That $74.23 gets squirreled away in my vault. I never see that amount again.
Out of sight Out of mind = Security
Think for a minute. If I do that every month for a year, by the end of twelve months I have saved:
$890.40
I have done this every month for the past 4 years... ever since Bob used the debit card multiple times and failed to tell me so I could deduct it from our account! I found out when an entire months worth of checks began bouncing... during the Christmas holidays. THAT was Stressful for me. I will tell you next week how I saved our butts on that one.
Here is #2:
If I write a check for $32.87 I DO NOT subtract that amount from my register.
I subtract $35.00
In reality, I am not going to miss that $2.13. It's in my vault, and I know it's there.. but if I do not SEE IT, then I do not spend it!
I do this with every check I write. By the end of the month I probably have acquired as little as $20 that I do not see. It's there but..
Out of sight Out of mind = Security
What about Auto-withdraws?
I apply the same principle. For example, my Hughes Net internet is an auto withdraw. Each month, they deduct $118 and change from my account. Every month for the past four years I have been subtracting $125. That is almost a $7 difference per month/ $84 a year/ $336 over four years!
I know it's there but...
Out of sight Out of mind = Security
I apply this same principle to all of our auto-withdraws.
So why not just sock money back into a savings account from each check?
#1 - Would you honestly do that EVERY MONTH
#2 - If you can see it, you are more apt to touch it.
Out of sight Out of mind = Security
At the end of the pay period.. just before his next check is to hit the deposit, I put a circle around whatever amount is left. Mentally, I tell myself there has to be at least $25 left. When I get near that amount, I just do NOT spend any more. I WANT that added security. I also strive not to write any more checks for the last 5 or 6 days prior. Then I go into the bank and request my current balance. By this time, everything I've written has probably cleared to this point and their balance is right on target.
Before writing in the new 'adjusted' deposit, I circle whatever is left and add it to a 'savings' ledger. The money is still in my account but it becomes that
Out of sight Out of mind = Security
How is it out of sight? Because I am only subtracting from the CURRENT deposit. Whatever was left no longer exists to me.
By doing this ONE small thing at the end of each pay period I usually have around $1300 at the end of the year. Some months have had more than others. There have been a month or two where there was literally PENNIES to circle. But even those pennies add up!
One other thing I do...
We pay our personal/ property taxes in December. I know roughly what they are going to be. I divide that amount by 22 (because he gets paid every 2 weeks and they are due in December) and I subtract that amount from each check. it is subtracted .. it's 'spent'.
In the register:
where a check # would go, I write SLUSH
Descritpion : RE Taxes
Amount: XXX
Then I have a page in the ledger where I track how much I've subtracted. By December when the taxes come due, I know the money is there.
Out of sight Out of mind = Security
Remember when I said earlier I do not balance my checkbook?
I once told my husband if I had to balance a checkbook, I'd never use one. I'd be strictly cash and the checkbook would be all on him. However, with him gone so much, there are times when I've needed to use the checkbook. But, I had to find a way NOT to balance the checkbook. I DO NOT need the stress.
I KNOW my bank balance is not going to jive with what the bank says because I have that Secret Vault. I have no clue how much is in there. I do not care. I only go by what I track, which is 3 things:
1 - The slush at the end of the pay period
2 - the RE Tax slush
3 - Income Taxes
As long as you keep on top of what YOU KNOW is in your account.. and that there is a SECRET VAULT amount that says you have more than you physically see, you are going to be fine.
For us right this moment, the pay period slush for the past three years is enough to make the immediate payments.
ASSIGNMENT:
Reassess how you pay your bills. Is what you are doing RIGHT NOW working for you AND allowing you to build a cushion?
If you so choose, begin incorporating ONE of my methods into your tracking habits this week. A year from you now, if nothing else, you'll have Christmas money.
Be Empowered!
No comments:
Post a Comment