The Accounts:

* Sweep Account - a savings account where paychecks get deposited. This needs to have 1-month’s pay in it to get started.

* Bills Account - checking account with free bill pay & no atm/cash card.

* Cash Account - checking account with a debit card - never write checks out of this account.
* Short-term savings - this account provides overdraft protection to the two checking accounts. I usually leave about $500 in this account as my buffer. This is the other account on my ATM card.
* Long-term savings - this account is a high-interest account at a different bank from all the others.
* A rewards-bearing credit card which remained in my lockbox and never went in my wallet.

Here’s how it works

1. Paychecks get deposited in the “sweep” account and divvied up from there.

2. A certain amount of cash gets moved from the sweep account to the cash account after the paycheck arrives. That’s the spending money for the two weeks.

3. All my variable bills went on the credit card. Some of the fixed bills went on there like my gym membership which could only be paid by direct debit or credit card.

4. Once a month, enough money to pay all my bills moved from the sweep account to the bills account. I then paid all my fixed bills using automatic billpay regardless of when the due date for the bill was. I also set up billpay transactions to deposit to my Roth IRA and my long-term savings account.

5. After the 1st of the month, I simply paid my one credit card and then “reset” all the accounts to their starting balance. Any surpluses were moved into the sweep account. Short-term deficits came out of the short-term savings account.

6. If the sweep account ended up with either more than 2-months pay or less than 1-month’s pay, then the surplus went to long-term savings or the deficit came from long-term savings.

The system took about two months to set up and get right, but essentially, the only time I spent paying bills was paying off the one credit card and rebalancing the accounts. Essentially, it was set up so that I would “loan” myself money rather than borrowing it from the bank. Also, it required having a bank (in my case a credit union) which gave me fee-free accounts and billpay.

I prefer my system to SB’s because I initiated all the transactions. I’ve had problems with direct debits in the past where the company was notified to stop, but kept sucking the money anyway, and I was forced to close the account.

The link to McCormack’s article does not appear to be good. However, I found it on BusinessWeek:

http://www.businessweek.com/investor/content/nov2007/pi2007119_694057.htm

The article is ridiculous. Every single one of the expenses she discusses can be whittled down to the bone or eliminated altogether. It’s sad that discussions of family issues must be positioned from the upper-class point of view when the upper class is a bare fraction of the population and their experiences are in no way representative of humanity’s in general.

I mean, really. Expensive preschools? Why does a young child need to be in school? In some parts of Europe they don’t even start regular school until they’re nine. Summer camp? Whatever. Expensive school districts? Homeschool your child; chances are good they’ll get a better education anyway. Don’t even get me started about all the crap parents buy for infants when all a baby needs are a few secondhand outfits, a lactating mother, a sling, and a few dozen cloth diapers. (Not even a crib. My daughter’s three and has slept in my bed since birth; SIDS rates are almost nonexistent in cultures in which family beds are the norm.) The biggest expense any family should face with kids is medical, and if we had single-payer in this country, that wouldn’t be an issue. And if more moms breastfed through at least the first two years of a child’s life, that would cut back on medical bills drastically.

The trouble is that our culture truly is not family-friendly. Worse, we’ve come to equate “family-friendly” with “can’t watch anything interesting on TV” or “can’t tolerate weird people,” when what we really need is “workplace policies that do not treat women like childless men” and “acknowledgment that raising children is work [see my above statement again about the definition of work!] and therefore should be honored and respected as a career choice.” But for now, it’s seen as a hobby, even though we would die out if nobody ever had kids. And so this fruitless discussion continues.