Author Topic: Am I crazy for only having $50 in my checking account?  (Read 4137 times)

khangaroo

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Am I crazy for only having $50 in my checking account?
« on: December 27, 2016, 02:39:46 PM »
I did a search function and found this awesome thread showing what other people had as their checking account balances; instead of resurrecting the thread, I thought I would create a new one.

http://forum.mrmoneymustache.com/ask-a-mustachian/your-checking-account-balance/

From the previous thread, people were keeping anywhere from $0 to $30k with the majority being around the $1-5k range.

I'm not sure if my situation is unique but I don't have a mortgage payment and my graduate school tuition is currently being auto-withdrawn from my savings account. I don't enroll in auto-pay and pay all my bills with a credit card then pay it off with my checking account all in one swoop every 2 weeks when I get paid. I have a budget that allocates where every dollar goes every 2 weeks so I don't have a fear of any overdraft fees and I also have overdraft protection as well. I also keep $40 of emergency cash in my wallet.

I've been doing my bi-weekly budget and keeping the $50 balance for 4+ years now and have never had to touch it nor have I ever incurred an overdraft or checking account fee.

Am I missing something? Is there a risk that I'm not seeing? Is there anybody out there doing a similar thing or do you have a $1k+ checking account balance? Would love to hear your thoughts.

boarder42

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Re: Am I crazy for only having $50 in my checking account?
« Reply #1 on: December 27, 2016, 02:45:38 PM »
my checking account to credit card debt ratio runs as close to 0 as i can get it. and sometimes is negative due to pumping as much money as i can into the market.  but there is typically 3-4k in my checking account.  i dont have a standard savings account b/c the rates are garbage.  if its not owed to someone its invested.

human

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Re: Am I crazy for only having $50 in my checking account?
« Reply #2 on: December 27, 2016, 03:44:43 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.

marty998

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Re: Am I crazy for only having $50 in my checking account?
« Reply #3 on: December 27, 2016, 03:53:03 PM »
I like to start each month with $10k in mine - 4 mortgage repayments for various property loans go out early in the month, as well as previous month's credit card bill.

My bank has a product where your everyday transaction account can be linked to a mortgage and offset the balance. So the $10k is really reducing one of the loans by $10k for the purpose of calculating interest due (and therefore effectively earning 4%+ tax free).

It's interesting to see how this has grown over the years...

- When I was a poor uni student, I'd keep $100 in my account
- When I bought my first property, I'd keep $3k
- Acquire property #2 and it's now $5k
- Property #3 means I need $10k

- Property #4? I'll probably need to increase it to about $13k

johnny847

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Re: Am I crazy for only having $50 in my checking account?
« Reply #4 on: December 27, 2016, 04:15:33 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.

Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

C-note

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Re: Am I crazy for only having $50 in my checking account?
« Reply #5 on: December 27, 2016, 05:19:13 PM »
As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

Or at least have your savings account linked for overdraft protection in case something unexpected happens.

We happen to operate on the month-ahead budgeting strategy so our checking account minimum is always at least one month of expenses that rolls forward as the month moves forward. 
« Last Edit: December 27, 2016, 05:21:34 PM by C-note »

pancakes

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Re: Am I crazy for only having $50 in my checking account?
« Reply #6 on: December 27, 2016, 05:22:28 PM »
I keep $1-250 in my transaction account.

It takes about 30 seconds to transfer money from my savings over to the transaction account so even for a few cents extra interest, why not?

Happy to still be able to get an ok-ish interest rate on my savings at 3% when I see what banks in the US are offering. I was looking back on some old statements from when I was a student and at one point was getting 5.75% on my savings account. Too bad I didn't have much money back then.

JLee

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Re: Am I crazy for only having $50 in my checking account?
« Reply #7 on: December 27, 2016, 05:42:30 PM »
Crazy?  Nah.  Would I be comfortable?  NOPE.  :P

I like having enough of a safety net that if I happen to forget about something, that I won't have any problems.

tomsang

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Re: Am I crazy for only having $50 in my checking account?
« Reply #8 on: December 27, 2016, 05:58:47 PM »
My checking and bank savings account is typically around $0, maybe a few hundred dollars based on miscellaneous deposits.  My bank allows a no fee LOC draw for my checking account overages.  So every time I write a check it draws down the account.  Every time I get paid, I put it against my LOC and in investing.  We have a mid 7 figure net worth and love to use LOC's for liquidity.  There have been a number of times when there was a great deal on a piece of property or investment and I checked our checking and savings accounts and noticed that we had less than $500.  In one case I was able to pull together $300k off of LOC's, 401k loans, and zero interest credit cards within two weeks of the opportunity.

Having lots of LOC's at various banks, access to 401k loans, and other means that you have zero need for money in savings or checking earning .5%.

seattlecyclone

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Re: Am I crazy for only having $50 in my checking account?
« Reply #9 on: December 27, 2016, 06:13:21 PM »
I have all my credit cards and a few other things set up to auto-pay out of the checking account. I've stopped maintaining a savings account because interest rates are so low and it doesn't seem worth my time to transfer back and forth all the time for a few extra dollars per year. I instead keep the checking account at a comfortable level where I'm sure I won't have that much taken out in the next month. That level tends to be a couple months' worth of typical spending, so that also acts as an emergency fund. When the account gets bigger than that, I'll invest the difference.

Retire-Canada

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Re: Am I crazy for only having $50 in my checking account?
« Reply #10 on: December 27, 2016, 09:42:19 PM »
I frequently have less than $50 in my checking account. My mortgage comes out of a different account where I keep my tax $$. I invest all my spare cash. If I suddenly need cash I either use tax money and pay it back next invoicing period or use my LOC. I rarely need cash so it's not much of an issue.

I don't see what the risk would be. I can access $30K out of my LOC if I ever needed it and have hundreds of $K's in investments. Cash sitting in a bank account would just be eroded by inflation and offers no utility.

human

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Re: Am I crazy for only having $50 in my checking account?
« Reply #11 on: December 27, 2016, 10:18:53 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

The Money Monk

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Re: Am I crazy for only having $50 in my checking account?
« Reply #12 on: December 27, 2016, 11:04:13 PM »


Am I missing something? Is there a risk that I'm not seeing? Is there anybody out there doing a similar thing or do you have a $1k+ checking account balance? Would love to hear your thoughts.

My bank (USAA) has a option to set up a credit card as overdraft protection, so in the rare event there is some kind of charge I didn't know about, or miscalculated, if there is an overdraft it just charges it to my card with no extra fee.

This prevents me from having to have much money in there 'just in case'.

I would see if your bank has something similar.

Even if not though, I would guess the risks are minimal. If you don't have bills auto-paying from that account, there isn't any particular reason to have money in there.


johnny847

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Re: Am I crazy for only having $50 in my checking account?
« Reply #13 on: December 28, 2016, 07:17:55 AM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

http://www.nextadvisor.com/blog/2015/08/21/why-six-withdrawals-savings-account/

Mr. Green

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Re: Am I crazy for only having $50 in my checking account?
« Reply #14 on: December 28, 2016, 12:37:48 PM »
If you have your cashflow on lock then sure, why not keep only $50 in your checking account. It's not earning you anything just sitting there. I suspect most folks don't have everything locked down to the penny though. I always like to keep $1,000 in the checking account, because I can have surprise items pop up without having to pull from savings. When we were earning big money that would be my baseline. Then once a month, when all the bills were paid, we would sweep anything over $1,000 into investments. Since I was tracking all of that in spreadsheets I didn't want to be constantly moving money in and out of accounts for the sake of keeping the balance low.

human

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Re: Am I crazy for only having $50 in my checking account?
« Reply #15 on: December 28, 2016, 12:47:37 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

http://www.nextadvisor.com/blog/2015/08/21/why-six-withdrawals-savings-account/
In that case why even have a savings account? Do banks in the us even offer decent interest rates?

JLee

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Re: Am I crazy for only having $50 in my checking account?
« Reply #16 on: December 28, 2016, 12:49:19 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

http://www.nextadvisor.com/blog/2015/08/21/why-six-withdrawals-savings-account/
In that case why even have a savings account? Do banks in the us even offer decent interest rates?

I don't.

mskyle

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Re: Am I crazy for only having $50 in my checking account?
« Reply #17 on: December 28, 2016, 12:51:54 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

http://www.nextadvisor.com/blog/2015/08/21/why-six-withdrawals-savings-account/
In that case why even have a savings account? Do banks in the us even offer decent interest rates?

It's a good question! For me it's mostly historical (I *used* to get good interest on that account) and a psychological thing - that's money I shouldn't plan on using during the month. I keep a few $K emergency fund in a savings account, but otherwise all my money's in checking or invested.

johnny847

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Re: Am I crazy for only having $50 in my checking account?
« Reply #18 on: December 28, 2016, 01:16:28 PM »
Well you have a savings account, checking and savings accounts are pretty much the same these days. Does it really matter which one you use? I have nothing in my savings account and just keep barely enough in my checking account to avoid BMO banking fees. Everything else is invested.

I only opened the savings account because every time I called my bank or went there a million people asked me if I wanted to open one.

As a public servant in Canada I always thought I wouldn't have a problem with minimal cash on hand. I'm not so sure anymore, Phoenix is such a problem that I'm not sure I'll get paid if ever I get another promotion.


Definitely matters if you're in the US and you have more than 6 ACH debits from your savings account each month. It's not allowed under Federal Reserve regulations. Do it once or twice and you get assessed a fine from the bank. Do it multiple times and the bank closes your account.


As for the original question, I don't think it's crazy so long as you continue not to overdraft your account.

I have to say I have no idea what that even means. Can't pay for things from your savings account? WTF?

http://www.nextadvisor.com/blog/2015/08/21/why-six-withdrawals-savings-account/
In that case why even have a savings account? Do banks in the us even offer decent interest rates?

They do generally speaking offer higher interest rates than checking accounts, but they're still poor.
The best savings accounts right now offer about 1% interest. The best checking account offer maybe 0.1% interest (unless you have a rewards checking account like I do which earns 3% - but only on the first $10k, and only if you jump through some hoops every month).

EDIT: It is precisely because of this reduction in liquidity relative to a checking account that savings accounts offer more interest (in general).

johnny847

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Re: Am I crazy for only having $50 in my checking account?
« Reply #19 on: December 28, 2016, 01:20:24 PM »
It's a good question! For me it's mostly historical (I *used* to get good interest on that account) and a psychological thing - that's money I shouldn't plan on using during the month. I keep a few $K emergency fund in a savings account, but otherwise all my money's in checking or invested.

Yeah I can see the psychological aspect.

I do chuckle whenever I'm asked on a cc application if I have a savings account. They don't ask for the balance, or my net worth, but they do ask if I have one. I have several savings accounts, but they have $0 balances (I used to use them and just never closed them because there's no fee to keep it open).

Rimu05

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Re: Am I crazy for only having $50 in my checking account?
« Reply #20 on: December 29, 2016, 01:56:32 PM »
I can't imagine having only 450. My checking pays all my bills and is what is set up for auto payments and also direct deposit for work. I tend to have though $200 after every bill is auto paid.

I have a transaction limit on my savings account so I do not link it to anything. My savings account is for emergencies, I don't like touching it.

Cativa

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Re: Am I crazy for only having $50 in my checking account?
« Reply #21 on: December 29, 2016, 03:04:52 PM »
I keep anywhere from $15 to $200 in my checking.  It earns me nothing, so I keep the minimum in there.  Its basically a flow-through account to other things.

I keep $250-$1k* in a traditional (US) savings account.  It earns very little, but its better than the checking account, and I can transfer the funds to my checking account in about 30 seconds in a pinch.  I keep the money here as an "I effed up the math in my checkbook" buffer, emergency funds, etc.

The rest of the emergency funds are kept in online savings accounts and CDs.  Much better interest rates, but a pain in the arse to get to in a hurry.



*To keep the account free, I have a monthly deposit of $10 auto deposited.  Once the balance reaches $1k I pull out $750 to invest, and start all over again with $250.

Runner77

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Re: Am I crazy for only having $50 in my checking account?
« Reply #22 on: December 29, 2016, 06:20:17 PM »
I don't think you are crazy. I have one checking account and no savings account. I am paid bi-weekly and my check is direct deposited into my checking account. I pay any outstanding bills, leave a balance of $100 and invest the rest every other Saturday. I also do not have any bills automatically deducted.

Retire-Canada

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Re: Am I crazy for only having $50 in my checking account?
« Reply #23 on: December 29, 2016, 07:33:09 PM »
I don't think you are crazy. I have one checking account and no savings account. I am paid bi-weekly and my check is direct deposited into my checking account. I pay any outstanding bills, leave a balance of $100 and invest the rest every other Saturday. I also do not have any bills automatically deducted.

I pretty much do the same at the start of each month. The only thing that comes out automatically are my mortgage payments, but they come from an account where I throw my tax payable $$ which get sent to the Gov't every 4 months. So I don't need any $$ left in my checking account.