Track Your Personal Finance Account Mix

by Kevin on July 21, 2009

How complicated have your finances become? How many various accounts do you have open: checking, savings, certificates of deposit, rewards credit cards, student loans, 401ks, IRAs… the list could go on and on.

I’ve never been one to shy away from an additional account. At the same time I don’t want to juggle several savings accounts at the same time. Keeping it mostly simple works for me.

But what about you? How many accounts are you juggling right now?

Sketch Out Your Account Mix

Give yourself a test and sketch out how many accounts you have, and how they are connected. It might look something like this:

accountmix

It’s a pretty simple exercise, obviously.

The problem you run into is when you’ve got two checking accounts, three savings accounts, three credit cards, a handful of student loans, and four investment accounts.

Do I really need to say this? That’s too much. Way too much.

Our Account Mix

Here’s what our account mix looks like:

  • Checking: two (one brick-and-mortar for writing paper checks, one online with ING Direct)
  • Savings: two (ING Direct and Virtual Bank)
  • Certificates of Deposit: one (at ING Direct, leftover from our CD ladder)
  • Investment: four (401k at work, two Roth IRAs, one taxable investment account)
  • Credit Cards: two (American Express Blue Cash and Chase Amazon Visa)

Overall I’m pretty happy with this. Of course I can justify the reason for each account. I specifically opened the Virtual Bank account with the $100 minimum to get the $20 bonus for free. Plus I wanted to refer my readers (13 of them so far – $260 for me, $260 for them). Admittedly I don’t use it for traditional savings. That’s what my ING account is for.

We’ve kept the taxable investment account open because we have one small investment that is a loss at this point. It doesn’t cost us anything to keep it open. When the investment recovers or we suddenly need the funds we will sell the investment and close the account.

Consolidate Bank Accounts to Simplify Your Life

If you find yourself in the sort of situation where you can’t remember which checking account your paycheck is direct deposited into each month just consolidate them.

Go from three checking accounts to one. Drop a savings account and bring all your money together. Consider how many real benefits you are getting from three credit cards and consider closing one (as always, being careful to not negatively affect your credit score).

Fill in the Gaps

If you sketch out your account and notice you are lacking something… what, no savings account? … intelligently pick a new player to add to your banking team.

We’re actually considering doing this. I’m considering restarting our CD ladder with Ally Bank.

Additionally we are considering closing our checking accounts and moving to a high-yield rewards checking account. I’ll tell you about that in my next post.

{ 7 comments }

TheDebtHawk.com July 21, 2009 at 5:53 am

Great post. I think that everyone should map out their financial accounts like you have done. There is no better way to see your entire financial network than to see a picture of it.

I have done a similar thing for myself. Then, I sat down with my wife and we went over it together so we both knew how all of our accounts work.

Phil July 21, 2009 at 9:48 am

I just did something similar myself – hoping to find ways I might consolidate accounts.

As my primary checking and savings are at the same credit union (and they play nice together online), my setup checking and savings in your example.

With everything coming into savings (an interest bearing account), I transfer out to non-interest checking only what I need to pay the bills. This helps keep my average monthly balance in savings higher, which means a little more interest, and the money NOT meant for bills stays a little less accessible.

Phil July 21, 2009 at 9:50 am

Sorry, I meant to say – based on your example – that my checking and savings have traded places. Income comes into savings – and is then transferred out.

Golfing Girl July 22, 2009 at 7:55 am

I must respectfully disagree. If I consolidate, I’m also not very diversified. My husband and I have different companies for our Roth IRAs so that if one performs poorly, we’re at less risk. We both have 401Ks, a joint mutual fund, and annuity (it was a gift from a grandparent) and each of us have joint checking accounts. Also, I keep an additional checking account open in my parent’s hometown so that if they want to give us or our daughter monetary gifts, they can make a deposit instead of sending checks through the mail.

In addition, I carry 3 credit cards in my wallet and an ATM/debit card (Amex Blue Cash for rewards, Visa for vendors who don’t take Amex, and a business Visa for work related expenses). I also keep a Marriott Rewards Visa that’s been open for 10 years in my file at home in case my wallet is stolen and I must cancel the first three. I’m sure this helps my credit rating that it’s been established for so long.
As for savings accounts, I have an online higher yield account (ING) for emergency but also have $1000 in my primary bank savings account that earns almost nothing but is readily available with no 3 day waiting period like ING.
I liken this strategy to not keeping all of my eggs in one basket. Granted, you can’t be scatter-brained and make this work, but it works for me. Basically, if you can name all of your accounts off the top of your head, I think you’re okay, but if you forget several while trying you probably need to consolidate. Same goes for life insurance policies and the like.

Kevin July 22, 2009 at 8:36 am

@TheDebtHawk: I agree. Especially for people that are just flying by the seat of their pants.

@Phil: Gotcha. We decided to put it into checking simply because of the limit on withdrawals from the savings account (6). I figure the interest we are missing out on is a few dollars at best.

@Golfing Girl: Disagreeing is fine! I disagree with you 🙂 I’ll address your points individually.
1. Roth IRAs: Your IRAs are an account, not an investment. So if one account performs poorly it is due to the investments, not the account. You can remove doubt of accounts performing more poorly than others by using index funds. Accept being average.

2. No problems with the various accounts to make it easy for grandparents, etc. Same thing with keeping the old credit card open.

3. Why would you need $1,000 cash immediately? Having $100 in your wallet might be nice, but if the financial system grinds to such a halt that credit and debit cards are useless I think we all have bigger problems. You’re sacrificing only $14 in interest at ING so not a big deal, but I always curious as to why people do this.

Golfing Girl July 23, 2009 at 9:11 am

KEVIN: “but I always curious as to why people do this.” (referring to keeping a sum of money in a low yield account that is immediately available)

To answer your question, I think my husband and I keep $1000 “on hand” more out of opportunity than for emergencies. Let’s say I see a fabulous deal on an item or get a great discount if I can pay cash but it’s a very limited time.
Here’s an example:
After calling around for quotes, we had a tree trimming service come out and take care of a dead tree that was endangering our deck and roof and had them grind the stump as well. As an afterthought, I asked if they also offered a “cash discount” when I was on my way home from work to meet them. Sure enough they took off $100 when I mentioned cash. So our $600 job suddenly became $500 since I had cash readily available. ING wouldn’t work in this case.
We also keep $200 “petty cash” at the house since neither of us seems to ever carry more than $40 in our wallets. This has proven useful when a neighbor has a garage sale and we see a great deal on a crib, lawn mower, etc. It will also be useful if all the ATMs go down for some reason in a disaster situation. Just some food for thought.

Kevin July 25, 2009 at 10:03 am

@Golfing Girl: Interesting. Like I said it doesn’t sound like you’re giving up too much in interest (at least with an ING account). Even then $1,000 is a lot of money for me personally not to know exactly where it is. (Then again I am really good at misplacing cash.)

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