I learned this trick when we were getting out of debt. I am not the one to write down every little expense that I make in a register to where I can tell if I am meeting my budget or not, so I take this different tactic and it works for us. I have talked about this before a bit, but wanted to dive into it deeper here. We have an account setup at Capital One 360 (Which used to be ING Direct). Honestly, I liked it more when it was ING Direct. I don’t know if it was all the orange that they constantly threw at you or maybe they were just more fun!… Nonetheless, we stay with Capital One because the nuts of bolts of what they offer still works great.
The Automatic Savings Plan with Buckets
So here is what we do. We setup frequent and “automatic” withdraws from our main checking account which is where our pay checks are deposited. Since both of us work, we ultimately get 2 pay checks coming in and the beauty of it is that they come in opposite of each other. It means we get paid every week, which is great for budgeting purposes. So each week we have a set amount that comes out the day that our paycheck is deposited. We have created savings accounts at Capital One 360 for each expense that we need through out the year. These are our “Buckets” of money that by the time the expense comes the money just magically builds up just in time to pay for the expense. Here is the break down:[Read More…]