8 ms·

One of the simplest and most effective things I did recently was to split my bank account into two checking accounts, and one savings account. I carry two debit

One of the simplest and most effective things I did recently was to split my bank account into two checking accounts, and one savings account. I carry two debit cards with me that are visually distinct. One is for day to day purchases, and the other is meant for bills and the occasional unusual expense, like maybe tools for a surprise home repair. Each time I get paid (every two weeks) I have my employer deposit the sum into the bills account, and I've set up a recurring transfer on the same day into the spending account. I essentially pay myself a portion of my paycheck. I allow myself to swipe my spending card for just about anything: gas, eating out, games, clothing, etc. But if I decide to use my bills card, that's a conscious choice. I know, right there in the moment, that I'm breaking my own rule. It's kinda shocking how effective this was. Once I had enough of a mental barrier to make me aware of my spending habits, I suddenly felt like I was in control. Once I had a significant buffer built up in bills, and could start reliably skimming the extra into savings, all the financial stress also started to melt away. "It's okay. I've got a bit of a buffer if stuff goes wrong. I can do this."

holtalanm 8y ago
we have a similar system in our household. Each month, my wife and I essentially give ourselves an "allowance" that goes into our own accounts (our main account is joint). Then we put a budgeted amount into savings from the main account. Almost everything in the main account at that point is budgeted for planned expenses. Once our allowance amount is gone, we just wait until the next month. So far, it has helped us immensely in keeping our spending low. We still have the occasional lapse where we end up spending too munch every once in a while, but all in all, it has been a net positive since we started this. I'll give all the credit to my wife, who thought of it. I'm pretty horrible with money, myself.
Johnny555 8y ago
Carrying a debit card (at least by the american definition of "debit card", other countries may have more sane CC security) is a risk in itself -- if you lose the card (or just the number), then your bank account can be wiped out before you can stop it, then you'll start bouncing checks. And since you have a card for each account, they can wipe out your savings too, making it harder to replenish your checking account. You'll most likley get the money back, eventually. I carry only an ATM card (PIN required), no debit card that debits directly from my bank account. (note that this isn't just a hypothetical vulnerability, my company had to give a paycheck advance to an intern who lost her debit card in a bar, had her account wiped out and couldn't get money back from her bank in time to make rent)
- pavel_lishin 8y ago
  Presumably, neither debit card is linked to the savings account. And the whole point of that split is that there is no large amount of money in either checking account at any given point. If someone takes zeta0134's "fun budget" for a two weeks, it shouldn't be any more of a ding than a extravagant night out.
- zeta0134 8y ago
  These are perfectly valid risks, and I'm not sure why you're getting downvoted! Good considerations all around. I mitigate a large portion of this by having the bulk of my funds in savings at any given time, more than enough to cover what would be in bills / spending in case of an emergency like this. I do not carry a card that can pull from savings with a card swipe, so a card thief would at the very least need to coerce the PIN out of me under duress, after which I would hopefully manage to contact my bank before they did too much damage. Of course, a better mitigation would probably be to set up two-factor on the card. Chip and PIN is supposed to protect against this, but in my experience so far, merchants that don't support it get away with a "credit" swipe and a signature, mitigating the security benefits of requiring the pin in debit mode. This is a good critique of the system I've set up, and I'll do some research and see if I can lock it down to deal with these risks properly.
- NightlyDev 8y ago
  Debit cards are quite secure, at least here, but we're many years ahead of the US when it comes to credit/debit cards. The magnetic strip is never used(haven't been used the last 10 years, at least), a PIN is always required at PoS and for many issuers an electronic multistep authentication process is required to order anything online with the card. And if something still where to go wrong then you'll get your money back.
  - Johnny555 8y ago
    And if something still where to go wrong then you'll get your money back. Well... most of the time, unless the bank claims it was your fault because chip-and-pin is infallible... then you have to fight the bank for your money. https://www.thisismoney.co.uk/money/saving/article-2215223/Victim-chip-pin-fraud-Its-YOUR-fault-insist-banks.html https://www.thisismoney.co.uk/money/saving/article-2215223/V...
diminoten 8y ago
By not making use of credit cards, you're losing out on thousands of dollars every year.
- sokoloff 8y ago
  Several hundred? Yes. “Thousands”? Not very likely for most people to be plural thousands per year.
  - diminoten 8y ago
    Most people don't come to HN.
  - soared 8y ago
    Hundreds in ~2% cash back yes, but thousands by not building a strong credit score. All your major financial purchases will cost more if you're not using 1 or multiple credit cards.
    - Aeolun 8y ago
      I don’t know. This appears to only be true (if at all) in a select few countries.
- nunez 8y ago
  More importantly, you're losing out on a bunch of protections that you can't get with a debit card alone (price protection, various warranties, chargeback, etc).

holtalanm 8y ago

we have a similar system in our household. Each month, my wife and I essentially give ourselves an "allowance" that goes into our own accounts (our main account is joint). Then we put a budgeted amount into savings from the main account. Almost everything in the main account at that point is budgeted for planned expenses. Once our allowance amount is gone, we just wait until the next month. So far, it has helped us immensely in keeping our spending low. We still have the occasional lapse where we end up spending too munch every once in a while, but all in all, it has been a net positive since we started this. I'll give all the credit to my wife, who thought of it. I'm pretty horrible with money, myself.

Johnny555 8y ago

Carrying a debit card (at least by the american definition of "debit card", other countries may have more sane CC security) is a risk in itself -- if you lose the card (or just the number), then your bank account can be wiped out before you can stop it, then you'll start bouncing checks. And since you have a card for each account, they can wipe out your savings too, making it harder to replenish your checking account. You'll most likley get the money back, eventually. I carry only an ATM card (PIN required), no debit card that debits directly from my bank account. (note that this isn't just a hypothetical vulnerability, my company had to give a paycheck advance to an intern who lost her debit card in a bar, had her account wiped out and couldn't get money back from her bank in time to make rent)

pavel_lishin 8y ago
Presumably, neither debit card is linked to the savings account. And the whole point of that split is that there is no large amount of money in either checking account at any given point. If someone takes zeta0134's "fun budget" for a two weeks, it shouldn't be any more of a ding than a extravagant night out.
zeta0134 8y ago
These are perfectly valid risks, and I'm not sure why you're getting downvoted! Good considerations all around. I mitigate a large portion of this by having the bulk of my funds in savings at any given time, more than enough to cover what would be in bills / spending in case of an emergency like this. I do not carry a card that can pull from savings with a card swipe, so a card thief would at the very least need to coerce the PIN out of me under duress, after which I would hopefully manage to contact my bank before they did too much damage. Of course, a better mitigation would probably be to set up two-factor on the card. Chip and PIN is supposed to protect against this, but in my experience so far, merchants that don't support it get away with a "credit" swipe and a signature, mitigating the security benefits of requiring the pin in debit mode. This is a good critique of the system I've set up, and I'll do some research and see if I can lock it down to deal with these risks properly.
NightlyDev 8y ago
Debit cards are quite secure, at least here, but we're many years ahead of the US when it comes to credit/debit cards. The magnetic strip is never used(haven't been used the last 10 years, at least), a PIN is always required at PoS and for many issuers an electronic multistep authentication process is required to order anything online with the card. And if something still where to go wrong then you'll get your money back.
- Johnny555 8y ago
  And if something still where to go wrong then you'll get your money back. Well... most of the time, unless the bank claims it was your fault because chip-and-pin is infallible... then you have to fight the bank for your money. https://www.thisismoney.co.uk/money/saving/article-2215223/Victim-chip-pin-fraud-Its-YOUR-fault-insist-banks.html https://www.thisismoney.co.uk/money/saving/article-2215223/V...

diminoten 8y ago

By not making use of credit cards, you're losing out on thousands of dollars every year.

sokoloff 8y ago
Several hundred? Yes. “Thousands”? Not very likely for most people to be plural thousands per year.
- diminoten 8y ago
  Most people don't come to HN.
- soared 8y ago
  Hundreds in ~2% cash back yes, but thousands by not building a strong credit score. All your major financial purchases will cost more if you're not using 1 or multiple credit cards.
  - Aeolun 8y ago
    I don’t know. This appears to only be true (if at all) in a select few countries.
nunez 8y ago
More importantly, you're losing out on a bunch of protections that you can't get with a debit card alone (price protection, various warranties, chargeback, etc).