Comments on: A Simple Way to Feel Wealthy on a Middle Class Income

By: red rabbit

red rabbit — Mon, 01 Feb 2010 20:21:18 +0000

Here is my basic financial routine:

Retirement/savings – 20% if my income; auto-deducted into the appropriate accounts and left untouched

Bills – I get my paycheck every two weeks. As soon as it is deposited I pay all of the non-auto-deducted bills that have a balance regardless if it is due or not. Then I check all of the accounts that are auto-deducted and make sure the right amounts are being taken out at the right time. All of this takes only 10 minutes. I only have to think about bills for about 20 minutes each month, the rest of the time is mine.

Spending – I have a petty cash account that I use for groceries and other day to day purchases. I put in a specific amount and keep to a budget, any that is left over when the next paycheck comes in gets dumped into savings.

That’s really about it.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Tue, 02 Jun 2009 18:06:51 +0000

I am loving the input on different ways to implement this general concept. I plan on writing about them in the near future. Thanks and keep them coming.

By: threadbndr

threadbndr — Tue, 02 Jun 2009 17:39:25 +0000

I do something similar – I have a “bills” account that everything but one or two small bills come out of (entertainment type items like the newspaper subscription and netflicks). I also have my transfers to savings set up to come from that account. Like vh, I budget that funding to be the high average, so that over time a small cushion builds up.

The other checking account is a ‘daily use’ account and contains what I can spend on daily life – gasoline, grocery, spending money, eating out, theater tickets, knitting yarn – whatever I want to spend it on. I do track my spending, but as long as the TOTAL is within the budget, I don’t worry much about individual categories. Small cushions tend to build up in that account as well and then are spent on a planned splurge – right now that’s going to be a season ticket to the local community theater.

By: Bret

Bret — Mon, 01 Jun 2009 19:09:06 +0000

This is definitely the way to go.

I pay myself first, then I pay my bills, then I live on the rest.

As you said, it’s a great feeling when all of the bills are paid and the rest of your money is all yours to enjoy. It’s hard to explain this to others, but it’s the only way to live.

By: Funny about Money

Funny about Money — Mon, 01 Jun 2009 00:13:28 +0000

There’s nothing like listing to-do’s and seeing them disappear one by one to lift your spirits and relieve stress!

I use something more like your Plan B, which is to pay all regularly recurring bills from a special bank account, into which enough cash is deposited to pay the total of the highest historic amount of each bill. However, instead of arranging to have them paid at the beginning of the month, I arrange to be billed between the 15th and the 20th. That way, the dratted semimonthly pay periods don’t scotch me up: by the 15th, no matter how far out-of-synch with reality the precessing paydays happen to be, there’s always enough to cover all the bills, which are automatically paid.

The advantage of setting aside the highest possible amount the bills could cost is two-fold: 1) in any given month, enough is available to cover even an outrageous set of bills; and b) because I do not let the utility companies to average costs over the year, electricity, gas, and water are significantly lower than usual. This allows a nice “cushion” to build up in the bill-paying account, in effect “snowflaking” some extra savings. Once in a while, I move this accrued savings into a higher-paying account. So, in a way, I’m literally saving money while paying bills.

By: richgirl

richgirl — Fri, 29 May 2009 15:09:53 +0000

I’m a dork and go one step further: I pay bills the week I get them, if not the day I get them. The extra interest earned by delaying payments amounts to pennies, which is not worth the mental aggravation. I’d rather free up that brain space for other things.

By: Gail

Gail — Thu, 28 May 2009 19:37:08 +0000

For the past 5 or 6 years I’ve been making it a habit to set aside an hour or so the last week of every month to draft a simple projected income/expense report for the following month. Just this one habit has been tremendously empowering–it’s brought me much peace of mind and a sense of control over my finances like nothing else has. And since I started doing this my savings rate has increased dramatically. I know at the beginning of the month exactly what bills need to be paid, where the money is going to come from to pay them, and how much positive cash flow I’m going to be able to generate to be added to savings that month. But I feel that there are many good methods to pay bills and each person needs to find a system that works for them–and stick to it. Even if you don’t choose to pay all your bills at the beginning of the month (or this isn’t possible or practical), just getting a handle on the situation at the beginning of every month can make a positive contribution to one’s financial mental health.