User Post: Finance Strategies for people who leave car keys in refrigerators
I am one of the most absentminded people I know. I can never find my keys or my phone. I perenially miss play dates, birthday parties, school volunteer hours and after school pickups. I'm also messy Not exactly a winning resume for the family CFO, yet I'm stuck with the job.
Much as I dislike it, Alfie has entrusted me with CFO responsibility so I've dealt with it and done the best that I can. And somehow we've managed to make all our house payments and keep our kids in shoes without running into loan sharks named Guido. Here are five strategies I use to manage our family finances and make sure we stay in the black:
Auto Pay is my friend
If it weren't for the modern-day miracle of Auto Payments, I would either be paying a fortune in late fees, or be a walking nervous wreck. All fixed monthly payments, such as mortgage payments, life insurance payments, the kids' college fund contributions, ballet school tuition, etc.. get debited directly from our bank account. Also, I put most variable payments like phone bills, utility bills, insurance bills (i.e. the premiums change from year to year) on my credit card so I can review them all together on my credit card bill.
We never let our bank account balance get too big
I know, that sounds counterintuitive -- of course you should be saving lots! -- but what I mean is, we've set ourselves a "working capital balance" in our checking account, we add a buffer, then we periodically reroute any extra cash to a high-yield savings account or cd, or invest it in the stock market. We indulge ourselves with little treats only if we have enough money in our checking account; we don't have easy access to the money in our other accounts, so we're not tempted to blow it all on a weekend in Vegas.
We maintain a home equity line of credit ( HELOC )
If we ever do need to get our hands on a significant amount of money for some emergency, we maintain a HELOC that we can draw upon at any time, at a far lower rate of interest than credit card debt. We've never used it and I hope we never have to, but I'm glad it's there.
We (try to) stay organized
I keep a filing cabinet with folders for bank statements, bills, and anything we'd ever need to reference. With the advent of e-statements, my files have grown considerably thinner, but I still keep paper copies of things that don't have electronic copies. For example, I every year I compile a tax folder with W-9 forms, INT-99 and other forms sent by banks, brokers, etc.. , mortgage forms, charitable donation receipts, vehicle registration forms and a ledger of my blogging expenses, so on the off chance that I get audited, I'll be ready.
We treat credit cards like debit cards
This is probably the most significant way we keep our finances in control: we only spend what we can afford. Yes, we do use credit cards, but only for the convenience and the perks (i.e. cashback, miles, etc..). We pay our credit card bills in full each month (okay, I admit I've procrastinated or forgotten to pay -- usually when I'm on vacation -- and I've ended up paying a late fee plus a couple of dollars for a couple of days' worth of interest, but that's only happened a couple of times in my life). The only time we'd make an exception to that would be if we needed a new car or if we had a medical emergency.
If these strategies can help someone who once flushed her car keys down the toilet, I'm sure they'll help you!
When not losing her car keys, Bonggamom can be found blogging at Finding Bonggamom and Bonggamom Finds.
