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Cushion??

January 7th, 2008 at 02:55 pm

I mentioned yesterday that I budget $160 a week to pay some annual and semi annual bills. They are: property taxes, house insurance, car insurance (5 cars) and car tags (6 tags) I let this sit in my personal checking account which pays no interest.
I really should change this and put this money in my money market checking account which now is paying. 4.1% interest.
I put it in my regular checking account and let it sit as a cushion.
If I put it in a money market account, I will have no cushion in my regular checking.
Cause, I only put in what I need to pay bills.
My question is, how much of a cushion should I put into my regular account? It will have to sit with no interest. I do balance my checking accounts once a month and can monitor them on the computer.
What do you think?

Posted in Uncategorized | 10 Comments »

10 Responses to “Cushion??”

  1. monkeymama Says:
    January 7th, 2008 at 03:06 pm 1199718379
    1199718379

    It depends.

    I only keep $0-$1k cushion (it gets a very low interest rate). The rest I keep in online money markets that I can access in one day. I have never been in a situation where it couldn't wait one day. Which is probably why I let my balance get to $0 too much. Though ideally I try to leave $1k for simplification.

    How long does it take to get money and how much would you ever need? I guess that's what it depends on.

  2. Kyle Says:
    January 7th, 2008 at 03:08 pm 1199718496
    1199718496

    No need for a cushion if you use an on-line interest checking account that has a $1 minimum to get 3-4% interest. That way you can leave your "cushion" of extra cash in the checking account without having to worry about losing money on unearned interest. I use ING Orange Checking (min $1) and pay all my bills online. If you need paper cheques then I also use E*Trade Bank but you need min of $1000 USD

  3. luxliving Says:
    January 7th, 2008 at 03:14 pm 1199718856
    1199718856

    I'm thinking a thousand would be about right for most folks, some would be uncomfortable w/that little, for others it would be too much sitting not earning interest. Consider what you might need CASH for, otherwise, you've got lines of credit, and it shouldn't take more than couple of days to pull money in from online banks, plus you have cash in envelopes if WORSE came to worst.

    I'd ask myself what was I cushioning against and what options could I use if a crunch situation came up.

    We've got our local MM tied to our local checking all at one bank so it's just a matter of logging on to the computer and transfering a bit of cash if need be, PLUS we've tied it so it's our overdraft protection as well, PLUS the bank has a $400 or $500 overdraft on top of that...not likely that we'd go thru all of that w/o some serious thought and time to maneuvar. Our banker knows us well and watches the transactions for out of the ordinary and alerts if there is anything even remotely fishy.

  4. Ima saver Says:
    January 7th, 2008 at 03:29 pm 1199719791
    1199719791

    I do not use on line checking at all. I was really thinking that just a few hundred would be ok! Only once in my life have I bounced a check and that is because I forgot to make a deposit. They still paid the check but I had to pay the charges.

  5. Nic Says:
    January 7th, 2008 at 03:59 pm 1199721591
    1199721591

    We're very careful w/our dollars (translation:TIGHTWADS) so we only have $100.00 as a cushion. My checking and savings are linked, so what isn't spent in my checking gets moved to the savings at the end of the month. Anything over the $100.00 in the savings acct. gets moved to the money mkt. account.

  6. merch Says:
    January 7th, 2008 at 04:48 pm 1199724494
    1199724494

    My cushion is $16 and change. When I write a check or pay online, I transfer that money from savings to checking. I keep a little amount in there incase a fee hits.

  7. all4money Says:
    January 7th, 2008 at 05:17 pm 1199726266
    1199726266

    I have zero in the checking account as a buffer... I check it online EVERY DAY and therefore know to the penny what has cleared and is still outstanding each day. I guess I'm just Type A about it. I keep every penny I can in the money market account to work for me. If you feel better with a cushion, I'd say a few hundred would work just fine for you.

  8. sagegirl Says:
    January 7th, 2008 at 08:55 pm 1199739303
    1199739303

    Growing up, my mother always kept $200 in the family checking account that she never wrote on her checkbook register (pre-online banking days people-does anyone even use checkbook resiters anymore?) Anyway, I only keep $200 in the account for cushion, out of my mom's habit.

  9. Aleta Says:
    January 7th, 2008 at 09:06 pm 1199740005
    1199740005

    Uou definitely have to have the minimum balance there. Also, find out if your bank has accounts for people 50 and older. Sometimes, the minimum is minmal and you can get free checks. I find it easier as another poster said to have my money market and checking in the same bank. All I have to do is make deposits in person. I just transfer the money I need from the money market. In my checking account, I have to pay my electric, water,health insurance (monthly), disability, telephone and internet,and other smaller bills. I also have food money in this account. For some people that might be $1000., for others it might be $2,000. Go over your last years checkbook and see how much you approximately paid out each month and of course I do keep a small cushion there. By the way, my checking account is an interest bearing account as well, but it's small. My larger bills like credit card, insurance, etc. get written out of the money market account.

  10. SingleGuyMoney Says:
    January 7th, 2008 at 09:31 pm 1199741481
    1199741481

    I usually keep about $100 in there as a buffer. I usually balance my account every couple of weeks so I am pretty much balanced down to the penny. No use leaving money in your account and not getting interest on it.

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