Automated Finances

Hello everyone! I recently read the book I Will Teach You To Be Rich by Ramit Sethi. I really liked what he had to say about automating your finances. Has anyone switched to the Charles Schwab Investor Checking Account? If you have what are your thoughts on it? Also wondering what everyone has to say about online only High Yield Savings Accounts like Ally, American Express Personal Savings, and Capitol one 360 Performance Savings?  Thanks everyone for your input!

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  • I love online high-yield savings accounts and have been using them to build savings for about the last 7 years. I think any money that isn't going to be used immediately should be earning interest somehow. In the past I've used Barclays, American Express, and CIT Bank. They're all good...interest rates keep changing, though, so keep an eye on that.

    I have an interest checking account now with Ally that I like, too. I also keep a more traditional brick-and-mortar checking account (no fees) with Capital One as a backup *just* in case I need to do ATM/branch visit functions, but I haven't needed them in a while. Plus Capital One doesn't import into Ynab that well, lately.

    The only mistake I feel I made in the past with high-yield savings accounts was putting too much money into them and just letting it sit there. It's good to have an emergency fund saved up, but any money beyond that could go into a retirement account, market investments, or some other types of investments with higher returns.

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      • PhysicsGal
      • Nerdy female homo sapien
      • physicsgal
      • 2 mths ago
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      The Artist Formerly Known As We are opposites!  My main financial mistake in the last ~10 years was not budgeting my take home pay (thus falling into credit card float-ville and stress when car repairs or insurance need to be paid for) and therefore never saving up cash in my savings, but at the same time I've maintained fairly high retirement savings rate, maxing out my Roth every year since 2009 with automatic investment and investing quite a lot in my work retirement plans as well.  But this bit me in the butt when I had an emergency and had to take on debt.

      If you don't have a Roth, I'd start with maxing that out, because it's so flexible.  Jesse had a really nice tip that I took advantage of recently, go in and up your retirement contribution with your work by 1%, see how you deal with that lowered amount, then in 3 months increase it another 1% if you did fine with the slightly lower income.  Rinse and repeat for awhile until your contributions are at a comfortable rate, but not too comfortable rate.  I started this as soon as I read it, seems like a genius way for me to get my contribution up slowly so that I don't feel it as much.  I had lowered my contributions down to only getting the match because of getting out of debt, am still finishing off my emergency fund, but I thought this was a better way to get back to upping my retirement contributions without feeling the burn.

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    • PhysicsGal Good idea, thanks. I just went and set this up. Many years ago I made automatic monthly contributions to my Roth IRA but never reevaluated the amount, not even when I got promotions and raises at work! I stopped auto-contributing last year when finances got tight, but I'll start up miniscule monthly contributions again now.

      I think there is good value to automating your savings: it accounts for human error and the tendency to spend before you save. However, I think it's really important not to get complacent: I like the idea of revisiting your savings percentage a few times a year and increasing it or decreasing it according to your cash flow and goals.

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      • Yes I can
      • yesican2020
      • 2 mths ago
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      The Artist Formerly Known As  I like these ideas too.  My retirement account is actually not too bad - although I'll still need more - as it was automatically deducted (a legal requirement in Australia).  So since I spent a number of years earning a decent income, it kept being topped up.    It definitely works for me to never see the money in the first place. 

      I'm a YNAB newbie (back after using successfully a few years back and dealing with some financial messes from last year), so I'm now focussing on paying down debt and building a better buffer.  But I definitely want to start adding some automated payments to my retirement accounts in the next twelve months, if only a little one. 

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  • I give Ally a good bit of business, and their checking account isn't bad either.  I do have a local brick-and-mortar account as well, because I do need access to cash and especially because I need access to quarters so I can run the laundry machines in the basement, but the biggest majority of my parked cash lives in Ally.

    I'm completely unfamiliar with the Charles Schwab Investor Checking, what's the deal with that?

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  • I've got everything automated and I switched to Charles Schwab Investor Checking last year. Zero complaints. I've had it for a few years but I switched to it for my main checking account. I also have Barclays and Ally for my online savings accounts.

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      • jenmas
      • jenmas
      • 2 mths ago
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      Superbone I think there is some room for nuance in this. If I'm saving up for something that I will be buying in a few years, it might be worth the risk of putting the funds in the market rather than a HYSA (it depends on your personal risk profile and your ability to build in some cushion to your targets). If I'm saving up to replace my roof next year, that money might be better off in a savings account or perhaps a no-penalty CD because the time horizon is so short and the risk of having a big loss right when it comes time to spend the money could be a problem.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
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      jenmas That's why we keep 6.5 months in cash plus certain other categories that total about another 3.25 months take home at present. The rest gets invested in stock funds only. We hold all bonds in retirement accounts.

      But I only recommend people invest budget money if a) they are already investing in a taxable account with money dedicated purely for investing so that they aren't really putting their budget at risk, just the long-term money. Most people don't have the stomach for the volatility of the stock market when it's the money they are planning to spend.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
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      jenmas Oh, definitely. I was speaking for myself.

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  • TheTabby said:
    I'm completely unfamiliar with the Charles Schwab Investor Checking, what's the deal with that?

    It's got a lot of benefits and no fees. There are a few branches here and there but think of it as an online only bank. (I've never been in a branch.) One of its original benefits has been pretty much removed which was it had a 0.4% interest rate for a long time. However, it's now 0.03% which is 0.01 or 0.02 higher than the big banks but obviously negligible. But it has no foreign transaction fees, free checks, and all ATM fees are reimbursed. I've had no issues with them.

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      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 2 mths ago
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      Superbone Shhhhh they will take away the pretty if too many people use it! 

      But seriously, I just deeply enjoy shoving my card into an ATM all over the globe. I never, ever change cash anymore. I just get where I'm going and withdraw. Peso, Renmibi, Dollar, Rupiah, Baht, Euro...whatever. Also their customer service is amazing. Although I am still laughing about when I was trying to set a travel advisory before jumping on a transpacific flight and I had forgotten that I had just deposited the insurance money from my car. It had netted out to zero in YNAB, so they asked for my account balance as identification and I gave them a number that was 7 grand too low and the person was like, "Um....yes but did you maybe make a deposit a few days ago?" Could hear her thinking lady, how did you forget about this amount of money?

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
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      WordTenor As far as I know, it's not a limited resource. 😄I would think they would want more business, not less.

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      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 2 mths ago
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      Superbone I know I just like to tease. ;) It's a rhetorical strategy aimed at people who really ought to get this account! 

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
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      WordTenor Ah! A little bit of the ol' reverse psychology, eh?

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  • jenmas said:
    I think there is some room for nuance in this. If I'm saving up for something that I will be buying in a few years, it might be worth the risk of putting the funds in the market rather than a HYSA (it depends on your personal risk profile and your ability to build in some cushion to your targets). If I'm saving up to replace my roof next year, that money might be better off in a savings account or perhaps a no-penalty CD because the time horizon is so short and the risk of having a big loss right when it comes time to spend the money could be a problem.

    Another thing to think about if you do invest funds is when to get them back out of the market. Let’s say you’re planning on buying a car in 5 years or more. When you get within one to two years of making that purchase and the market is in a good place, you might want to start taking those funds back out and putting them back in a HYSA so they’re ready to go when you are.  You don’t want a market downturn to prevent you from making your purchase when you planned to.

    Alternatively, as you get closer to purchase time, you can start putting less funds into the market so that you’ll have the cash available and don’t have to touch your market funds. 

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 mths ago
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      Superbone I much prefer the cash flow approach to taking taxable event withdrawals. It's a similar approach to cash flowing the checking account for the day to day budget operations, but obviously on a larger scale.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
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      nolesrule Yep, probably best to save the selling of stocks until that is your sole income if possible as to lower the tax hit.

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