Financial Trickery

[Jluke]

What tricks do you use with your finances?

I basically trick myself into "living paycheck by paycheck..." I have been doing this for 15 years now.

Disclaimer: Usual caution of knowing yourself and what your financial mindset is. Not sure if this will be helpful to anyone (and not a duplicate thread) but wanted to share and hopefully spark some conversation and sharing of ideas.

***
I get paid every two weeks. Typically, Pay1 I will leave $450 (pending Roth contribution) plus $100 cushion in the checking account; the rest goes into the money market account. Pay2, I'll leave $500 for car payment (rounded up from 463) and move the rest to the money market account unless the credit card is due. My checking account usually has $100-200 in it.

I charge everything on a rewards card; pay it off monthly and use the rewards towards the statement balance (easy $500+ each year). Never carry a credit card balance. If you do, don't use this tactic.

When the credit card is due I usually wait for a paycheck, then transfer the difference from the money market to the checking account and pay in full.

In one month, I will only withdraw about $60 in cash. Once you have it in cash, you've basically spent it and there is almost no chance you will put it back in the bank as savings (unless you roll coins).

For each interest bearing loan, I have an amortization schedule in excel. One tab that is Actual; one or more tabs where I can play with the numbers to see impact of extra payments.

For my car loan, I make the payment online. As soon as I see the payment due become active I pay it - usually a month in advance. Saves some interest since it is calculated daily.

I have a strong handle on our budget after years of tracking each penny. Now I just track the money in my savings accounts (month to month difference; then year to year difference) to make sure I am on the plus side; taking into account big expenditures when my savings balance doesn't increase.

However, I still track some of our monthly spending via the credit card summary (groceries, gas, dining, daycare are main categories)

The money market tied to my checking account (credit union) is a revolving account where I easily move money in and out as needed and can make my mortgage payment directly from this account. I treat the money market at capital one as a one way account; money goes in and very rarely leaves that account (though some of you who read my other thread know that I am looking to move some of this to work in my favor).

[JoeP]

Not really a trick, but we pay ourselves first. What this means is that retirement savings comes out of our pay as a non-negotiable expense. We don't even feel it.

Also, almost all pay increases get allocated into retirement. So if I get a 3% raise, I will bump up my 401k contribution percentage so that my take home pay looks almost the same after. We can only do this so many times until everyday expense increases tighten our budget to the point where we actually need to use some of that raise money post-tax.

[autoxer]

The best thing I have done is to automate my investments & savings. Since it doesn't require any regular effort, I can't get lazy or forget. As soon as the paycheck hits, money is transfered to the retirement accounts, the brokerage account and the savings account.

For my car loan, I make the payment online. As soon as I see the payment due become active I pay it - usually a month in advance. Saves some interest since it is calculated daily.

Are you sure about this reducing interest? My experience with car loans, is that they would apply any surplus towards the next months bill, instead of putting it towards the principal amount.

[MonkeyMama]

Save raises and income increases - pretend like they aren't there. When getting married we have never ever spent second income. Treat it like gravy and it's gravy. Spend it and you won't remember how to live without it.

[Jluke]

Are you sure about this reducing interest? My experience with car loans, is that they would apply any surplus towards the next months bill, instead of putting it towards the principal amount.

Need to instruct to apply extra in monthly payment towards principal. Honda Finance made it easy - when paying online, the "standard payment" has its own entry, then "principal only payment" is a separate entry. Lower principal than expected = lower interest in the long run.

Evidence by how the payoff amount changes daily.

[tripods68]

There is no trickery or gimmicky in our family finance after paying off all our DEBT (cars, loans) Except the mortgage. Things are lot more easier and manageable because we kept a lot in our money instead of going to pay other lenders or credit card company.

We have two income going into 1 checking account; maximizing our retirement contributions funds at 15%. Most of our bills are set up automatically beginning of every month including our kids 529 plan. We socked away multiple envelopes to pay like groceries, toiletries, car repairs, entertainment, the rest goes to ROTH and savings.

[Nika]

My trick is in "maintaining" my EF.

So it is invested, in different accounts/institutions. The market goes up and down.

So lets say I have 18K in one mutual fund account, and I record it as 18K I have access to in an emergency.

When the market dips, and I now have less in that account, I feel I have to "top it off", to maintain it at that steady 18K, so I save what I need to, and cut back on spending that month to bring it back up to 18. Than, when market recovers, that invested difference will push the balance closer to 19. Than, I top it off a little bit to try to get to 19 faster, and than 19 is my new benchmark to maintain if market goes down again.

That is my trick to keeping my investments growing - this strategy forces us to invest when the market is dipping.

[Jluke]

My trick is in "maintaining" my EF.

So it is invested, in different accounts/institutions. The market goes up and down.

So lets say I have 18K in one mutual fund account, and I record it as 18K I have access to in an emergency.

When the market dips, and I now have less in that account, I feel I have to "top it off", to maintain it at that steady 18K, so I save what I need to, and cut back on spending that month to bring it back up to 18. Than, when market recovers, that invested difference will push the balance closer to 19. Than, I top it off a little bit to try to get to 19 faster, and than 19 is my new benchmark to maintain if market goes down again.

That is my trick to keeping my investments growing - this strategy forces us to invest when the market is dipping.

Thank you - great trick and exactly the type of info I was hoping to get from the original post!

[ua_guy]

Retirement contributions and health savings (HSA contributions) come out before I even get a check. It's a surefire way to stay on track and to keep me living on reduced percentage of my income. My contributions have been such a sizeable amount of my paycheck at certain points that I've treaded water elsewhere. Everything gets paid on time, of course, but things like low interest car loans get paid at their regular rate and not accelerated, and our EF may only get contributions enough to top it off, not grow it substantially.

I remember a year ago I was having a moment of stress with my significant other saying it feels like we work so hard and have nothing to show for it. Well, we do, but it's all currently in the form of account balances and meeting projected savings goals. When my checking (clearing) account scrapes bottom every month, it's a false bottom. It's a floor designed to cover expenses and nothing more--the rest gets put away.