***Let me put a disclaimer on this post...this is how WE choose to do it. There are lots of ways. Some may be more efficient. But this is working for us right now. I am not saying that this is THE way to do it.***
Someone asked about our ING Direct accounts and how we use them. So this post is dedicated to you.
ING Direct is an on-line bank. No building to walk up to and talk to the teller, get a lollipop. Gotta love how virtual everything is.....except the debt. That is tangible. Now, some people are bailing on ING right now because they were recently purchased by Capital One. I have never had a problem with Capital One, so for me, unless something drastically changes...I am fine. Similar banking products exist (SmartyPig, Ally). Choose the one that works for you.
We started with one account. ING lets you "nickname" your accounts, so we called it "home improvement." It was linked to our local bank checking account. We had deposited our tax return last year in the ING account, so we could draw down on it as we did projects. The idea was to figure out the budget, then transfer the money from ING into our main account (local bank) so when we went to the store, we had the "cash" ready to go.
As a whole, it worked well. So we decided to open a few more accounts and use them as saving vessels. We nicknamed each one. We had "camp", "cars", and "current goal." In camp....that obviously was for the kids' camp. Cars (at that time) was a maintenance fund for repairs, oil changes, wiper blades (since then, our car insurance changed, and it now includes our car insurance).
Current goal was for whatever thing we were saving up for. At the time, it was a new computer (after ours fried). We have since renamed this "irregular expense" and use it for bills that are not monthly (car taxes, water bill, trash).
We have also added to the collection. We have "Christmas" and "Lending Club". And right now we have "Party", for the kids birthday. This account will become "Cats" after their birthday, so we can save for vet bills, food, litter.
On a bi-weekly basis, we add to Christmas, Lending Club, Cars, and Irregular. The others are either funded, or are dormant at the moment. We have been trying to concentrate our efforts on one "goal" at a time. So right now that is Christmas. Since the other accounts are constantly in use, they get deposits regularly. We have it set up as an auto-deposit from our main checking account.
A few catches to all of this: 1) When you deposit money, it is on hold for 7 days. So you have to wait a week to access it. 2) Transfers from ING take 2 business days. You have to plan ahead.
Right now, accounts earn 1% interest monthly. Not alot, but it is more than zero!!!
For me, seeing all the money divided up this way is a huge help. I know how much I have for each expense. The alternative would be having it all in one big pile, and then I would have to keep track of how much I have in each category. I just like seeing it laid out this way.
So there ya go....Mysti's guide to ING. If you are interested in opening an account, let me know so I can give you a referral link.
I love this approach. I have an EF, a curveball fund, and a vacation fund at ALLY. I also have a piddly fund at my brick and mortar bank.
ReplyDeleteI have INGDirect as well, but may pull out of it due to the Capital One factor. But I use my INGDirect electric account for my automatic payments, such as newspaper and stuff like that.
ReplyDeleteI like the concept of an online bank, but dislike the hold times. Checks clear in the banking system much faster than a week. Do you really mean "Right now, accounts earn 1% interest monthly" or does the account earn 1% APR, credited monthly?
ReplyDeleteI have heard only good things about ING and Ally. I've never had a Capital One card, so I don't know if the buy out is negative or not. In any case, I like the way you budget with separate accounts. I may have to start doing that!
ReplyDelete@Petunia - we have our EF at a Credit Union. But you are basically doing the same thing as us.
ReplyDelete@Rhitter - I know how you feel about Capital One. Like I said, I never had any dealings with them, so I can't say anything about that.
@Krants - yes, the hold times do stink sometimes. But it also gives you time to think things through, vs impulse pulling of money. And yes, it is 1% APY, sorry that I mis-spoke.
@Christa - if you try it, let us know how it works for you.