Comments on collectingmycash: Best Personal Finance Idea of the Year

For some people a trick like this can work because...

2008-12-13T16:22:00.000-05:00

For some people a trick like this can work because it is working on the intention of always keeping a cushion in their checking account. I think if this really works for someone, that's great and they should keep doing it.

However, from my perspective, it's just clouding the windshield. Far better in the long run than obscuring the amount of money you have available is knowing actually how much you have available. Then, if you want a cash cushion, keep a cash cushion in your account. Personally, I only spend the amount in my checking account that is above $700. So if I see the balance is going to go below that, I go into "alert" mode.

Combined with keeping a month's worth of expenses in my checking account at all times, this makes it so I don't have to time bill payments with my pay. I can go a month without depositing income into my checking account, and still pay all the bills, and if I do so my checking account won't drop below $700.

It's far better I think to retrain yourself to *not spend your cushion* than to trick yourself with accounting maneuvres.

That being said, there is a place for financial sleight-of-hand if you want to maximize the use of your money and your frugality.

As a corollary to everything I've written above, I make it a point to never let my checking balance get significantly *above* one month's expenses plus $700.

This is because seeing a larger balance on the account can give me a false sense of "plenty" and encourage unnecessary spending. Having a smaller balance (for me, around $2100 at the most) in my checking account encourages me to stick to my budget guns. This is because I have trained myself that $1100 in my account means that I am close to the bottom of my available spendind, and $800 is only $100 above my desired account minimum. If I left larger balances to accumulate, it would subvert this psychological budget trigger mechanism.

So what I do is make a point of drawing off all excess cash (savings) from my checking account once it gets above $2100. This goes to a separate account that I don't look at all the time and earns interest. Drawing off the savings/excess cash from my checking account causes also a appearance or environment of somewhat fictional enforced/scarcity that comes in handy in keeping me "lean and hungry" when it comes to monthly spending.

--my 2 cents

Like I said, it's quirky, but it works for me. I'...

2007-12-18T21:08:00.000-05:00

Like I said, it's quirky, but it works for me. I'm very, very old school too. I still use a check register. I'm new wave in that I use online banking and I check my balance daily.

Doesn't this have effect of having a perpetually u...

2007-12-18T11:14:00.000-05:00

Doesn't this have effect of having a perpetually unbalanced account? And make it easier to miss something that is wrong? I don't quite get the purpose of this. Accuracy in financial accounting is a virtue.

Like eden suggested, maybe arbitrarily marking your account down $100 or $200 is good but this just seems confusing.

My mom always did the same thing and I can remembe...

2007-12-15T10:55:00.000-05:00

My mom always did the same thing and I can remember wondering why she did it. But now it makes so much sense!

Eden, I know what you mean. But for some reason i...

2007-12-15T09:14:00.000-05:00

Eden, I know what you mean. But for some reason it seems to work. Quirky, I guess.

That is a good idea! A while ago I went to the ope...

2007-12-15T08:46:00.000-05:00

That is a good idea! A while ago I went to the opening balance entry in my Quicken data and adjusted it DOWN by $200 so I would have a cushion. Problem is, I know that I did that. :)

Your idea sounds like a good way to 'hide' the extra.

Thanks so much for responding! :) I've added you t...

2007-12-14T21:59:00.000-05:00

Thanks so much for responding! :) I've added you to my post.