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How We Optimized Our Banking

There’s a reason I’ve been mentioning ING Direct so much recently. It’s because I’ve been using ING a lot lately.

In the last few weeks, I’ve been streamlining and cleaning up a lot of little things in my life–from my clothes and my books to my e-mail and our banking.

Our banking was in real need of some centralization. We each had checking accounts from before our marriage (separate institutions), we had a joint checking account at Wachovia, a joint checking at ING Direct, and a Orange Savings account. 5 checking/savings accounts. Thank goodness for Quicken, which let me keep track of what all the accounts were doing.

The problem wasn’t the number of accounts, it was that we didn’t have a philosophy of how we were going to use them. We never bounced a check, but there was general confusion about what was being deposited where and what was being paid from where.

When I was closing down my pre-marriage checking (the one that had a monthly service fee!), I decided to take the opportunity to straighten out everything else too. So now:

  1. Micah is closing his separate checking (because it’s a student account).
  2. We both set up all our direct deposit to go into our ING Savings
  3. We agreed that we’ll use the ING debit cards for spending (I’ll monitor the Electric Orange to make sure it has enough of a cushion while keeping most of the money in Orange Savings).
  4. We agreed that we’d use the Wachovia checking to pay the rent and anything else that needs a physical check. ING mails checks for the Electric Orange, but we like the certainty of dropping it off at the office ourselves.
  5. Therefore we will always keep enough to cover the next month’s rent + a buffer in the Wachovia checking.
  6. I set up two sub-accounts (which I’d been meaning to do for a while) to automatically save $10 & $15/month for renter’s insurance & car repairs respectively. I gave them both some starter money, the renter’s insurance should have just the right amount for when our insurance comes due in January.

I’m feeling very pleased with all this. One thing I’ll note for Quicken users, though, is that moving your money around leads to all kinds of craziness if you don’t label it right away. In the category “Internet,” it says we spent something like $1.5k. Which is just a bad way of automatically labeling a transfer. Also, it shows income and outflow of basically all the money we have, since it was being shifted around.

Micah won’t actually close his account until he’s sure his direct deposit has switched from his student checking to ING. We plan to open personal checking accounts in the future as well for something like individual “allowances,” but we don’t yet have a time frame on that. Perhaps this winter? The thing is that we wouldn’t really be putting much in those at this point. But it’s considered wise in cases of death, divorce, or dismemberment (I needed alliteration!). And however unlikely the last two may be, the first is a possibility even if not a probability.

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{ 5 comments… read them below or add one }

Jennifer September 11, 2008 at 12:44 pm

That is a great post describing how you do your banking. It is almost identical to how my husband and I have things set up. The only difference being that we don’t use ING, but another bank that has an online-only high interest savings account. Your comments on setting up individual chequing accounts are definitely a good idea. We have been really slack in some of our ‘what-if’ planning and I think I might mention the bank account idea to my husband and see if we can arrange something.

I totally understand what you mean about accounting programs not behaving correctly when you do things like that. We don’t use Quicken, but ours would react in the exact same way.

Budgets are Sexy. September 11, 2008 at 3:09 pm

if i weren’t with USAA i’d totally hook up with ING. i’m a “one bank whore” haha….i have 13+ accounts w/ USAA cuz i like to see everything in one place 🙂

may not be the best way if you’re one to get mad interest and find the best brokerage, savings, iras, etc, but so far it works for me. nice and easy to xfer money and account for everything each morning. So woohoo!

deepali September 12, 2008 at 11:01 am

This is great and easy to follow. I do the same thing with my Etrade account, which does let me have paper checks. I also have my IRAs set up there, so it’s quite neat. I am actually debating moving another older IRA from Fidelity over to Etrade….

Rick Vaughn September 14, 2008 at 7:27 pm

Sounds like a great deal. I had no idea that ING was doing debit cards???

Quicken is a great program but it sounds like with all these accounts of yours you might need a personal accountant.

thinkingthing September 14, 2008 at 11:57 pm

ING ShareBuilder also has some low cost IRAs that may be of interest to full-time freelancers.

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