Honestly, I’m doing just fine.
This is more of a way to manage my cash flow than anything else. I have my entire paycheck deposited into my savings account, then withdraw to my checking as need be for rent, credit card bill payment, car insurance, student loan, etc.
Instead of automatically directing a certain amount or percentage of pay to my retirement accounts, I take the, er, more scenic route. Basically, I look at my savings & checking accounts, I mentally review my upcoming expenses, then I transfer the money. I’m not sure if it’s the most efficient way of doing things, but it works for me. There’s the tiny thrill of satisfication I feel when putting money in, for the lack of a better word – manually – that doesn’t come with automatically scheduled transfers.
I don’t think that my savings rate is negatively impacted by not automating. For January, I made payments to my retirement portfolio ($500 in 2008 Roth IRA) & money market fund ($200). I am looking to make another $600 to the MMF before the month is over. So if all goes well, the total savings for January will be $1,300.
Perhaps in a couple of months, when I have more of a handle on my monthly expenses, I’ll set up automatic transfers.
Clothing Hiatus Update: Still on it! By the way, I haven’t eaten out at all so far this week. So what if my meals consist of a couple of breakfast bars and instant mashed potatoes?
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When you do this, you are taking control of your money, instead of the opposite, when its automatic, the biller takes control. What if their are charges that are incorrect, or A new payment date is suddenly assigned without notification? This gives you time to correct them by giving them a call. It save waiting for a refund after the fact which might take weeks! So I see absolutely nothing wrong with this line of thinking. Plus, you gain a feel for the numbers, which means you can control where your money can go to. As long as a proportion of your cash is going into investing and saving, your ahead of the game.
I love automatic savings – I can always move the money back if I need it. Yet I find it overcomes periodic inertia, the days you don’t feel like doing it…and the savings balance grows anyway!
It also keeps me investing when the market is down, so I don’t do like everyone else and run scared when there’s a buying opportunity.
Hey, if it works for you, no need to rock the boat.
Do you direct deposit in a regular savings acct or your MMF? If regular savings, the risk I see with taking the ‘scenic’ route is that you’re limited by law how many times you can withdraw from a savings acct in a month. I think it’s no more than 3x, maybe 5x. Can’t remember which, but I know it’s a small number. Any more than that is either restricted or assessed a penalty.
I do the same thing. I have lofty goals to save as much as possible on a somewhat low income.
Currently I have my car payment set aside with my credit union, an amount to cover automatic payments (school loans, toll tags) to my brick & mortar bank, and the remainder into my ING checking. I simply look at my balance, guage what my expected spending is going to be until the next pay period, and throw the rest into savings.
I don’t think automatic would work for me. I’m somewhat recently in control of my finances (just paid off my credit card, yay), and I take great joy in making that payment myself, with my own hands. Seriously, I got giddy when I made the last payment to my credit card. And I get a little bit of that giddiness when I make the transfers to savings.
Automatic-schmautomatic. It takes all the fun out of doing the right things. Time saving? Who cares – I work 70 hours a week and *I* have time for it!
Love the blog, by the way. Nice to see someone my age with goals and motivation!
Single Ma, it’s six withdrawals per month. This should be plenty if she plans, say, two withdrawals per month (once per paycheck). There’s still more than enough extra to handle any emergencies.
My method is even more extreme. I don’t deposit into my retirement accounts periodically at all. I just put in a big lump sum once per year. I do deposit into the accounts I save and invest in for that, though, and that I do every paycheck (though not automatically since I like to have control over the flow – I always put in the amount I would put in if I set it up automatically, but sometimes I like to send extra over).
ETA for a correction. The law also includes MMF. If you make excessive withdrawals or exceed the monthly withdrawals limit in any 3 months during a 12 month period, your acct can be closed or converted to a checking acct. The assumption is that savings and MMF are intended for deposits/savings, not withdrawals. So be careful.
I only have an automatic withdrawl for my Roth IRA because I would forget (or skip months). I put everything into my savings accounts with a single click of a button….I would hate to bounce a check because I forgot about one of the zillion automatic deductions out of a checking account. I find it a lot easier to sit down with a calculator and move the money myself.
instant mashed potates! yummmm.