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Ramit’s 12-minute guide to automating your accounts (video)

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This is an oldie but goodie, and one of the most important videos I’ve posted in my 100+ YouTube videos.

In this 12-minute video, I show you how to set up your bulletproof personal-finance system to automate your accounts.

I cover the entire system in extreme detail in my personal finance book.

To find out about the psychology of automation — including how it affects your money — check out my section on automating your personal finances.

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Ramit's 12-minute guide to automating your accounts (video)

This is an oldie but goodie, and one of the most important videos I've posted in my 100+ YouTube videos. ...

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33 Comments on "Ramit’s 12-minute guide to automating your accounts (video)"

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GadgetBoy
6 years 2 months ago

Good video – for passwords, check out KeePass. It is a great program that will not only store all your login information and urls, but will also generate random passwords for each. I then keep a copy of the database both on my home network and on a portable thumb drive. All I have to remember is the main password to open KeePass. I talk about it briefly here – http://tinyurl.com/25xhunn

KeePass also has a Droid app, so it also resides on my phone.

Peter
Peter
6 years 2 months ago

I use KeePass and find it great for the many accounts I have to keep track of. Makes the whole process simple.
I also keep a copy on my thumb drive.

Elle
6 years 2 months ago
If you want to know why automating your finances is a practical move, consider my personal example. We’ve juggled a lot in the last 6 months, including buying a house, having a relative move in, and fitting in some extra work. The good news is our cash flow hasn’t suffered (it’s actually improved) and the main reason is that our bill pay and finances are pretty much automated. Without automation we would probably be late on some payments. We developed this system so we can check our balances once a week for 5 minutes to make sure everything is running… Read more »
Money Smarts
6 years 2 months ago

We have a system like this setup at our house. 401k gets taken out automatically pre-tax. Paycheck is transferred and automatic transfers to savings/roth are taken out a few days later. We use auto bill pay for our bills. it works great – automation is a man’s best friend!

Jonathan Butterworth
6 years 2 months ago

Thanks for the great tips Ramit! Automation makes things so much easier. One question that may be a little off subject: do you continue to build your credit if you don’t carry a balance on your credit card?

Jonathan Butterworth
6 years 2 months ago

Thanks good to know.

Joshua Heckathorn
6 years 2 months ago

@Jonathan – In addition to Ramit’s comment, you should understand that you don’t need to carry a balance on credit cards to continue building your credit profile. What you do need to keep an eye on is your credit utilization ratio (proportion of total available credit you use) since it accounts for a large chunk of your FICO score. Keep it under 30%, or preferably under 10% if possible.

Rose M
6 years 2 months ago

Very good point Joshua. That’s exactly what our mortgage lender was looking for when my husband and I applied for a mortage — 30% or under. We use our credit cards to earn points rather than using our debit card for safety reasons. Any balance we have only exists for a very short time because we have the cash available to pay for the purchase, before we use the credit card.

GadgetBoy
6 years 2 months ago
@Rose M Watch your credit limit though… We have a card that we used for points purposes. The limit was $10K and we were charging and paying off approximately $4K per month. A review of my credit report looked like I was carrying a balance that was 40% of my limit. I called my credit card company and asked them to bump my limit to $20K. I explained to them that I felt it was hurting my credit score. They saw that I have a high credit score and that I always clear the card at the end of the… Read more »
Mehul Kar
6 years 2 months ago

I’m 21 and in college. I’ve always used debit cards. I have part time jobs all year and don’t have any big expenses. So I haven’t gotten a credit card yet.

Why do you say you don’t like debit cards? i’ve been using Mint to keep track of what i spend on and so far everything is working great.

i tried searching this site for debit cards, but when i search the site crashes for some reason. (using google chrome).

Vish
Vish
6 years 2 months ago

Another reason its better to use credit cards is…if in case if there’s a fraudulent charge you’re protected…debit cards normally don’t offer those protection…money gone is gone or may be difficult to get it back…

Joshua Best
6 years 2 months ago

Is there any easy way to pay a mortgage using a credit card?

BT
6 years 2 months ago

One thing that changes this system is having access to a Roth 401(k). I try to max out the 401(k) limits on my Roth 401(k) first before maxing out my Roth IRA.

BT
yupfin.com

SF
SF
6 years 2 months ago

I’m working to build a setup like this.
How would you suggest a self-employed guy like myself implement this? I’m paid lots of different times of month, by various people and can make wildly differing amounts one moth to the next.
Thanks
sf

ChaChing
ChaChing
6 years 2 months ago
In your case, I’d suggest using two checking accounts, one that has only automated withdrawals (Roth in Ramit’s example, mortgage, CC bill), and one that is more easily accessible (for guilt-free spending, ATM, less predictable bills). You will likely to have to maintain a bit of a nest egg in the ‘first’ checking acct to ensure you have enough to cover the scheduled withdrawals during lean months, so you might consider one that pays a higher interest rate. I used this technique when I first automated our family finances years ago. I gave my wife the checkbook to the second… Read more »
Allan
Allan
6 years 2 months ago
I love the information I’ve been getting from the Blog, Ramit. I think I’ve finally got the wife convinced that ‘your’ way is easier than writing out all the bills from memory in a spiral notebook every week or so. I let her do it, because she does a great job for the time it takes. Thought I’d share a few details, just to see if you’ve got some suggestions. Wife gets a semimonthly check in the mail, which unfortunately depends upon her hand writing her hours in and returning the timesheet to the office, AFAIK there is no option… Read more »
Danny
Danny
6 years 2 months ago

hey ramit

i bought ur book and is a follower of your automation. I have a quick question. What do you mean by “good checking account”? I currently use BOA checking account just because they have a lot of ATM around me so i can avoid getting withdrawal fees.

Thanks

Danny

golferfred
golferfred
6 years 2 months ago
This is a very risky approach!!! As someone that worked for a bank I can say that this approach is very risky. The risk is that you’re advocating that you set up for entities to REACH INTO your accounts to draw money. This gives away the power to take money. In order to set this up you have to give out your routing number and account number. NEVER give out that information to anyone! Even though the company you’re giving this info to is reputable they have people working for them that may not be. The correct approach would be… Read more »
Carter
Carter
11 months 12 days ago

I give out those numbers all the time. So do you. They’re written on every check anyone has written in the last 105 years, and if there were an easy way to steal money with just an RTN and account number, we would have a fraud epidemic. But there isn’t, and we don’t. Your account number isn’t an all-access pass to the money inside, and the RTN is publicly available if someone knows which is your bank.

I’m far more concerned about services like Mint.com, which store your actual account login information. Giving that information away is inviting trouble.

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[…] I’m always recommending personal finance guidance from this book by Ramit Sethi because he gives great advice.  There’s a Youtube video of him explaining PF automation here. […]

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