blogPg13_lendingInst.html eMONEY: A USER GUIDE

CONFIGURING YOUR BANK ACCOUNT

I purposely buried the following information deep inside the blog because I didn’t want it to appear to be a promotional gimmick.

When I originally set up the system I now use, it was with my local credit union. And I have had no problems. In retrospect, my choice of institutions was pure luck (or mantra), because when I began to write this blog, and realized that not everybody would be able to hook up with my local credit union, I knew I would need to find a more universally accessible institution. I researched several nationwide and online banks.

What I found was that, without exception, every other brick and mortar lending institution imposes restrictions on minimum balances, or the number of accounts or transactions permissable per month. So I looked to the online banks.

I didn't want to support those that routinely break the law with impunity, because they're "too big to fail", according to the politicians they own (Bank of America, Chase, CITI Group, UBS, and Wells Fargo), but I did look at all of them, and they, too, have limitations.

But there is one that does not. And not only does this bank accommodate everything I need to, there are no insufficent funds fees, AND, their customer service force is superb! And their mobile app is faster and easier to use than my Credit Union's. If I had unlimited resources I could not have created a bank it more perfect for what I do.


BUT WAIT! THERE'S MORE!

Here's the kicker. This bank is currently offering a promotion for referrals. For every individual I refer, and who opens an account, the bank will credit their account $100, and credit my account $100. That's right. If you open an account with them - it doesn't even need to be set up like I suggest - they will give us each $100. If you're having trouble making ends meet, this is free money. For me, it's a way to derive supplemental income, compensation for sharing what I know about handling money, at no cost to those who need it most. All together now; “I believe something good is going to happen for me today”.

If you're this far into the blog, you must have recognized some value in it. When you're ready to take the plunge, email me at the link at the bottom of this page and I will set up a referral. I’m not interested in collecting anyone’s private information. Nor do I know how. I’m not compiling a mailing list. I’m just a guy sitting in his upstairs office, writing a blog, listening to the cows bellow, breathing clean, Brown County Country air, who had a good idea, fleshed it out, and might have found a way to make money without charging anybody. Help me help you.

I don’t know how long the promotion will last. Forever, I hope. If we miss the boat - no harm, no foul. Being in the right place at the right time is all about answering the door when someone knocks. S/he who hesitates is lost. The opportunity of a lifetime goes to the one waiting expectantly for it.

Whether or not you go with the bank referral, the basic idea is as follow:


CONFIGURE YOUR ACCOUNT TO MIRROR YOUR SPENDING PLAN

Take $10 and your ID to a bank, savings and loan, or credit union.
1. Tell them you want to open an account.
2. Say you want a regular savings account, a free checking account, a debit card, and 16 savings sub accounts.
3. Obtain the bank routing number and account number.
4. Register for online access.
5. Deposit five dollars into the checking account, and five dollars into the regular savings account.

BACK AT LA HACIENDA

1. Log onto your bank account.
2. Review your accounts (IUCU automatically assigned sub account numbers 001 and zero0 51 to regular savings and free checking, respectively).
3. Under "services", choose "rename accounts".
4. Rename the accounts as follows: a. IN
b. OUT
c. 10%
d. FOOD
e. HOUSING
f. CLOTHING
g. UTILITIES
h. HEALTHCARE
i. TRANSPORTATION
j. COMMUNICATIONS
k. EMERGENCY
l. HOLDING

DIRECT DEPOSIT

With the regular savings (income) account number and bank routing number in hand, contact your employer. Say you would like to receive your paychecks by direct deposit. Provide the bank Routing number and account number to which you want the deposit made (to the account number/savings, or to the account number/sub account number).


Direct Deposits made to an earner's Holding account are, on either the first or the 16th of the month, whichever comes first, distributed (Allocated) among the various Sub Accounts.

In households with multiple income earners, earnings are Allocated "pro rata" (in proportion to income). In other words, s/he who earns more contributes more - unless agreed otherwise.

CHOICE OF LENDING INSTITUTION

Online banking is what makes household budgeting a technological powerhouse.

HERE'S HOW IT WORKS

The line items on the interface refer to bank savings sub accounts. There is a sub account for each expense item in the budget. As income is deposited, an amount (determined by your Spending Plan) is allocated to each sub account, where funds are allowed to accumulate until payment is due.

The checking account is used for deposits, and the checking account is used for withdrawals. Savings sub accounts (one for each line item on your expenses lists) are used to set aside in advance funds allocated for future expenses. When a bill comes due, or when an expense arises, you simply transfer it to the appropriate account for disbursement. You control the money flow. When it arrives, you assign it to a sub account. When a bill comes due, or when an expense arises, you make it available for payment.

Forms of Payment can only be explained in terms of the banking environment.

Savings sub accounts: a savings account for an individual expense. There will be one sub account for each expense item. (Monthly Payments and Occasional Expenditures). Each expense has its own sub account; every expense on the Monthly Payments list, and every expense on the Occasional Expenditures list, they all have their own sub account.

This is an oversimplification of course, ideal for purposes of illustration. But not likely to exist in reality. What is much more likely a scenario is this: Typically, annuity income arrives the first of every month. Social Security checks arrive on the second or fourth Wednesday of the month. Salary income arrives either monthly or bi-weekly, and hourly-wage income arrives bi-weekly or weekly.

In household with multiple income earners, double the events. Only with different dates of deposit, and for different amounts.

The regular savings account is used for deposits. The free checking account is used for payments. Money comes in and is distributed among the various subs accounts (Saved In Advance). There it is allowed to accumulate until payment is due - at which time it is transferred to the checking account, where it will be available for payment.

ALLOCATION

When income is deposited into your account:
1. Transfer 10% of the amount deposited to the 10% sub account (money in this sub account is to remain untouched until you retire).
2. Transfer to each of the remaining sub accounts the corresponding amount listed on your spending plan. If your pay is other than "monthly", use the reverse conversion table to determine the amount to transfer (amount per month, Divided by 30.4375 days per month, times the number of days per pay period).
3. If after allocating funds according to your spending plan there is money left over, transfer all but five dollars to the "temporary hold" account. Make adjustments to your spending plan to accommodate the surplus.
4. If there isn't enough money to complete the allocation process, make adjustments to your spending plan to accommodate the deficit.
5. Note: you will need to retain a minimum of five dollars in both your regular savings account and free checking account.





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