Wednesday, March 15, 2006

Bonus, part 2-- and a question

Ok, I actually have the moolah now, so I can tell you that my bonus was taxed at 25% (federal) as opposed to the 16.4% that is withheld on my normal paychecks. Between the bonus, my tax refund, regular paycheck savings, and an expense reimbursement, I somehow have over $17,000 in my savings account so it's time for a transfer into my higher-interest account at Presidential Online Bank.

As for the question, I wonder how others manage their checking accounts? I transfer money in only to pay bills and try to keep the average balance as close to zero as possible. My bank doesn't penalize me for this, as the account is linked to other savings and CD accounts that meet the combined minimum balance requirements. But I have noticed that others mention keeping a cushion-- such as in this post at Hedonic Adjustment. Time for a poll!

How much money do you keep in your checking account?
As close to $0 as possible.
Up to $100
My entire paycheck goes into my checking account and it stays there until I spend it.
Free polls from


Anonymous said...

Your bonus is actually not TAXED at a different rate than your other pay. It's just the withholding on a bonus works differently. The witholding is an estimate of what you will owe at the end of the year -- so if they took out too much, you will get it back.

Anonymous said...

I use fidelity for my banking (money market, checking, stocks, etc) with free checking, that's also where my paychecks go. For running around money (cash) I have a local bank acct with Chase, and use the ATM. I can transfer $$ from the fidelity acct into the chase acct, but usually have 500 - 700 balance. Otherwise I use my Am-ex card whenever I can, (including metrocard), better than cash since I can accumulate those member rewards/miles (I'm working on a first class ticket to Aussie land)

I'm surprised how much money I've saved this way.

Mike said...

I keep my paycheck in there until I get another one. What's leftover I transfer to savings.

Knowing my luck, if I tried to maximize my interest like that I'd just end up getting overdrawn. I'd do it your way if my savings was linked to checking so that it would cover overages without fees.

Anonymous said...

I actually direct deposit my paycheck into my money-market account. I then move money into my checking account as needed to cover bills.

This ensures that I'm getting as much interest as possible on my cash balance - and also forces me to feel the "pain" when I move money to checking, since that's almost as good as losing it.

To do this though requires actively managing your cash in Quicken. You need to know when your bills are coming in, and move money ahead of time. I tend to move money about 2x per month.

Your mileage may vary.

Single Ma said...

Right now I have $3.24 LOL

It's a non-interest bearing checking account for bills only. I don't write checks, I don't carry a debit card, and I pay bills online so no overdraft worries. However, I do have it connected to a CC for protection...just in case.

Caitlin said...

I get paid twice a month and have it deposited into my checking account, but then it gets spent down to zero pretty quickly as the bills roll in (mostly via ACH) so my balance is usually under $100 most of the time. I do not aim to have a cushion in my checking acct since it pays no interest. I do have overdraft protection and I can now pay credit line transactions off using the online interface (it used to have to be by check, in person at a branch...sheesh) though I don't ever aim to make use of it, it's rescued me a couple of times and cost me very little since I paid it off within a few days. (unavoidable snafus...not caused me by)

mapgirl said...

I channel my direct deposit into two different checking accounts. One is where I pay all my regular bills, and has no monthly fee with direct deposit. The second is for depositing random checks and also has no monthly fee for direct deposit. I link both out to a savings account and try to funnel the extra out to savings. Now that I'm doing another Paycheck Challenge for 2 weeks, I'll probably stop putting extra money into savings, and just do the automatic withdrawl.

Tiredbuthappy said...

I used to be a close-to-zero girl. I had all my bills scheduled to come the week I got paid (once a month at that time). Once all the bills and rent were paid, and $$ transferred to my savings account, I was almost down to zero just a couple days after getting paid. Then I'd put all groceries etc on the credit card and pay it off the next month when I got paid.

Now, though, I share my checking account. Since we both tend to let a little time go by before recording our ATM withdrawals and debit purchases, we keep a $1000 cushion. The resulting harmony is well worth the lost interest.

Adventures In Money Making said...

since i have my mortgages on the rentals paid automatically from my checking account every month i keep a lot of money in there just to make sure nothing ever bounces.

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