Why ATM Fees Now Make Me Smile

I travel a lot, and while Wainwright Bank here in Boston has been great, I was just so rarely near one of their ATMs when I needed cash, that I often had to swallow obnoxious ATM fees.

As they say, you don't know what you've got until it's gone (true story: I saw them in concert in 1987. Twice.), and I had no idea just how annoying those fees really are until I stopped paying them. OK, I technically do still pay the fee, but every month I now get all of those fees refunded:

    01/31/2008    ATMREBATE    ATM Fee Rebate    $10.75

Schwab's not the only bank to offer ATM fee rebates, and now may be a great time to find one that works for you.

Taking the Plunge: Is a Joint Checking Account Right for Both of You?

According to the server logs, 10% of the search queries used to get to this blog have to do with joint checking accounts, including queries like "married add to checking account" and "dual savings checking account". Clearly a topic of interest.

So assuming you're married, soon-to-be-married, or living with a partner in a long-term relationship, should you take the plunge and set up a joint checking account? Or should you keep separate accounts? In a word: Yes.

Of course, everyone's situation is unique, so you may want to adjust accordingly, but here's what's worked for us:

• Open a joint checking account under both your names, and get a debit card for each of you
• Keep or open a separate, individual checking account for each of you. If you're married, be sure to work with your bank to set up the accounts so that if one partner dies, the account goes to the other partner.
• Classify your monthly bills, identifying all the ones that are truly joint expenses like rent, cable, insurance, groceries, etc. (including any joint savings you might be doing for something like a down payment) I'll call these household expenses.
  
• Decide what percentage of the total household expenses each of you should contribute. This should be weighted according to your relative income: if you both make about the same salary, then just split it 50/50; if one partner earns $60,000 and the other $40,000, then the higher-earning partner should be picking up 60% of the household expenses.
• Have your household contribution direct-deposited into the joint account, and the rest deposited into your personal account (if your workplace won't split deposits, you may need to set up an automated transfer through your bank; another option is to open all of these accounts through ING Direct, which offers great rates and easy online access, including automatic transfers).
• Pick one partner to manage the joint account. The other partner has the obligation to share timely information about any purchases they make (designate a drop-box for receipts). But what if having two cards causes an overdraft? Simple -- you do have that $1,000 padding, right? Since my wife and I did that, we haven't had a single overdraft, despite the occasional crossing of wires.
• Finally (and perhaps most importantly), since the shared expenses are taken care of, what's left in your individual account is, well, yours. That means you can spend that as you'd like without consulting your partner, no matter how silly they think your purchase might be (no way I could have justified my $100 pocket notepad, but I love that thing and use it almost every day).

Though having multiple accounts does add some administrative overhead, the benefit is that you avoid a lot of potential friction caused by -- how shall I say this -- differences of opinion on appropriate spending.

Comments welcome on what joint-account setup works for you.

The Power of Padding (your checking account)

Over the past 3 years, my wife and I have done a lot to improve our financial wellness, from online banking to Roth IRAs (however small the contributions).

But perhaps the single most useful things we've done was also probably the simplest (note I didn't say easy -- running a marathon is very simple: you just run for 26 miles; that doesn't make it easy). It was a tip we'd heard in one form or another before, but really picked up from the excellent book, All Your Worth.

The tip? Pad your checking account with an extra $1,000. Most financial books recommend saving 3-months' worth of living expenses as an "emergency reserve". I don't personally know anyone under 30 who has actually managed to do that, though I'm sure they're out there somewhere. And if they are, they have little use for financial advice books, since they probably wrote one. But $1,000? Sure it took us longer than I'd prefer to admit, but we did it. And it made a world of difference.

No more worrying about bouncing checks, or rushing to make a deposit before a bill was due. Just a warm fuzzy feeling knowing that if the car broke down on a road trip and needed a new radiator, we were prepared to handle just such an emergency without a credit card.

The (admittedly minor) contribution I'd like to make to the suggestion is in the mechanics of how to fool yourself into forgetting that $1,000 is there. It's very simple: just make an entry in your checkbook as if you'd written a check (or actually write the check if you'd like) to "Cash Reserve" or something similar. In fact, if you don't currently have an extra $1,000 to put into a reserve, then writing checks in smaller increments for a few months might be a fairly painless way to build one up. This way, when you balance your checkbook, you don't have to remember to add (or was that subtract?) the extra money -- it just shows up as an uncleared transaction.

In the grand scheme of things, it was a pretty minor thing. But it was a great milestone to reach, and gave us the motivation to go further toward setting and reaching our financial goals.