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Here’s how I set up my financial accounts

Ramit Sethi

Disclaimer: This is an older post and my views have changed with time. If you want more recent recommendations, I’ve put my favorite checking accounts and online savings accounts in their own separate blog posts. 

Ok today I’m going to break down how I’ve structured my bank accounts.

If only that sounded cooler.

Anyway, I have 3 main accounts:

1. Wells Fargo

  • Checking account: This is like the inbox of my financial infrastructure–it’s where I deposit everything first, then sort it out. My checking account earns no interest, so I move it stuff out of here regularly.
  • Savings account: I hardly use this account. It’s only for short-term money that I will need in less than a month. For example, if I’m subletting a place out and have a security deposit that I’ll refund in a month, I’ll move it here. Or if I bet someone and the bet comes due in a month, I might keep it here. The downside of this account: The interest rate sucks (it’s only 0.50%). Upside: You can transfer money between Wells Fargo checking/savings accounts in less than 24 hours.

2. ING Direct

  • Savings account: I opened an ING account It’s a normal savings account, FDIC insured, all that. The only difference is that you do your banking online (transferring back and forth, to other accounts, etc). If I need to transfer to or from it, it takes a few days (but is free).I keep the majority of my discretionary savings here. So from every dollar I earn, I transfer a percentage into this account. I might use money here for an emergency fund, mid-term savings like for furniture for a new place, or car maintenance that I know I’ll have to do in a few months.

3. ETrade

  • Investing accounts: These include a couple of different stock accounts and a Roth IRA. This is where all my long-term money goes!I used to have a money-market account, but it was only earning about 1.5% (compared to 3.30% at ING), so I closed it. Now, when I want to invest money, I just transfer it over to ETrade, where it sits until I invest it.

Ok, so that’s the logistics of how I’ve set my accounts up. I wrote so many words above, but what does it all really mean?

Build yourself an infrastructure to make it easier to save.
Here’s how: For every dollar that comes in, I allocate percentages to different accounts. For example (I’m making these numbers up), let’s say I made $100 from a paycheck. I might put

25% in savings
50% living expenses
25% recreational

And you can make it easier by having multiple accounts. I manage all of this stuff in Quicken, so even though I may have $1,000 sitting in my ING account, I can easily tell that $200 is for furniture, $300 is for an upcoming car repair, and the rest is for whatever.

It’s not that hard!! Take some simple steps:
1. Open an investment account. Start sending some % of your income there. Money should almost always flow TOWARDS your investment account, not away from it.

2. Open a savings account and use it to segment your money. Remember, an investment account is for long-term savings. A savings account is for mid-term savings–and if you can’t think of anything you’ll need in the next 5 years, trust me, you will (e.g., a car, a mortgage, a wedding, a new hairdo, who cares). If you want to do it at your own bank (BofA, Wells Fargo, etc), great. If you want to open an ING account, great. It doesn’t matter–just get your money into smaller, more manageable buckets.

3. Allocate percentages. Use your budget to figure out the maximum % of each dollar that you can allocate to different accounts.

The key point of this whole thing: Once you create this infrastructure, your money is MUCH easier to manage. It’s like using shelves on your desk–all of a sudden, your paperwork is easier and more welcoming to deal with. Once you have different accounts and a set % of money going to them, it becomes much more automatic. Then you’re free to start dealing with the more interesting questions, rather than focusing on logistics.

If you have questions, just ask.

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  1. avatar

    One thing I was unable to glean from this post was how you pay
    for things like mortgage, rent, car insurance, groceries, etc. I
    assume you use your checking because ING transfers take a few days?

  2. avatar
    Ramit Sethi

    Right, I keep money for monthly payments in my Wells Fargo checking.

    I know it’s hard to predict how much you’ll spend every month, but after you keep a budget for a month or two, you realize the variance isn’t usually that much. I just keep a few extra hundred in there in case I go over. And if I’m going over even more for some reason, I can transfer from another appropriate account.

  3. avatar

    what is the minimum balance of the ING account?

  4. avatar
    Ramit Sethi

    No minimums, no fees on the ING.

  5. avatar

    I use BofA (please keep the groans to yourself). I have both checking and savings with them. Since I am able to keep higher balances, I use an interest bearing checking account. The rate sucks but it is better than nothing. As long as the balance is over $5000, I’m fine. Everything else gets shuttled to the attached savings account. I earn 1.5-2% on that. That’s the sweep fund, which ultimately will be used to fund a trip to Japan.

    For taxable investing, I have an account w/ BofA’s brokerage arm. I’m in the process of setting up the linkage b/w that account and the checking account. That way, I can just transfer funds online, as I do with the savings account.

    In the future, depending on the level of segmentation I go with, I’ll probably add a savings account with HSBC since they were at 3.75% a week ago. We’ll see how that looks. But I like the idea of being with a big, foreign bank and HSBC is all over Asia.

  6. avatar

    “I manage all of this stuff in Quicken, so even though I may have $1,000 sitting in my ING account, I can easily tell that $200 is for furniture, $300 is for an upcoming car repair, and the rest is for whatever.”

    Are you implying that you can allocate sub-buckets within an account in Quicken? How can you do this?

  7. avatar

    I quickly glanced through the article “here’s how i set up my financial accounts” and wanted to share something that I started doing.

    I used to have two checking accounts: 1 for household expenses( rent, car insurance, etc ) and 1 for personal expenses (groceries, movie tickets, video games…) This worked great except whenever i went to the bank to deposit my paycheck – the bank tellers would panic not knowing how process the transaction, plus i was paying service charges for 2 check cards, 2 account fees – so i needed to simplify. The solution was to merge into one account and use two transaction registry books for the same account. You can easily tuck them both into the pockets so they overlap (book in a book…) where the staples in the inner one make it easy to distinguish between the two (this may not make sense). Then use one book to track personal expenses and the other for household expenses.

    Now I spend less time at the bank and don’t have to worry about posture problems from sitting on two checkbooks

  8. avatar
    chris sivori

    I stumbled upon the bucket method on my own, and it has been a godsend. I even do things like stash small amounts of cash in various places.

  9. avatar

    I enjoy your website, I think that it is difficult to find valuable information on savings when you are just starting out. I am also a recent college graduate on my first salaried job and I was wondering if you get Roth IRA benefits from your employer, of it’s something you began because it is better to start young. If so, is the upkeep for a Roth IRA dependent on your constant surveilance? Can I leave it like a CD and have it grow over time? I am a novice at stocks and having a Roth IRA seems a bit daunting, but I want to start. Also, why Etrade and not, citibank, or your personal bank?

  10. avatar

    ING Direct has an affiliates program through Commission Junction I think ING approves manually as opposed to an automatic approval to be their affiliate, but I remembered seeing your post about ING Savings Accounts right after I had opened one. I think with their banner you can get a commission of $20 or so. What do you think about blogs and affilates prormas by the way?

  11. avatar
    Ramit Sethi

    Thanks for the pointer, Stephen. I think affiliate programs are ok, but they take a lot of time to set up and I’d rather just write more articles. They seem to work ok for some people, though.

  12. avatar
    Huey Kwik

    Ramit, do you pay any service charges for transferring between your Wells Fargo account to your INGDirect account?

    I use BofA and EmigrantDirect, and I haven’t made any transfers yet, but I think I read in the Terms that they’ll charge for the wire transfer. I’ll try calling them up.

  13. avatar
    Ramit Sethi

    No, I don’t pay fees on those transfers. As I understand it, they’re not wire transfers, but rather electronic transfers.

  14. avatar
    Kyle Cherrick

    So I just linked over to b/c I want to open a savings account soon and I was reading about their “orange savings account at 3.8% APY and all the benefits. The only question I had is that it said in the details that the APY will change according to the market but that it will be a high number. Is this a good account or do you recommend a different account with ING?

  15. avatar
    Ramit Sethi

    Kyle, yeah, that’s the right account.

  16. avatar

    I love INGDirect, but have you considered a treasurydirect account?

    I use my INGDirect account for liquid savings (I use my INGDirect account for liquid savings (<1Month) and I do a repeating purchase of 4-week treasury notes for emergency savings.

  17. avatar

    There is something to be said for fostering conservative saving and investment principles, because those pay off even if you aren’t constantly keeping track of them.

    Case in point – Vanguard Mutual Funds. They have a money market prime fund that is currently paying 4% (it fluctuates, but so will ING’s after april), and paid 3% last year.

    No need to hunt for deals (time=money) when there are institutions who make it their business to keep fees low and yields high. They don’t advertise all that much, and their ads are pretty low key, so you may have overlooked them. It’s worth checking out.

  18. avatar

    I agree with the Vanguard comment above. I keep two accounts; one with Vanguard, where I deposit _all_ money, and one with a local bank, where I transfer just enough each month to cover budgetary items.

    That way all my money starts earning the 4% Money Market yield immediately, and I never see extra money when it comes in. My checking account balance always stays low, which I like because it’s not earning interest. My Vanguard Money Market doubles as an emergency account, because I can write checks on it.

    When I get too much money in the Money Market, I just allocate it into one of the many excellent Vanguard index funds (lately the Target Retirement funds are my favorites).

  19. avatar

    What do you suggest for people who are already in a certain amount of debt like credit cards, auto, student loans…..

  20. avatar
    Anonymous and are both offering 4.25% savings accounts with no minimum balance.

  21. avatar

    The money you put in your Roth IRA, do you invest that at etrade? I sent up an IRA and I’m not sure if I’m supposed to alocate that money to gain interest or what?

  22. avatar

    Good advise.. I currently have 2 accounts set up with BOA and BECU.. but none of them have such a high rate of interest as ING. Does ING have a limit for transactions per month/quarter? I recently found out (the hard way) that BOA starts charging $1 per transaction to/from savings after a certain amount.

  23. avatar


    I think that federal law limits transactions out of savings accounts to 6 per statement cycle, or month, or whatever (this is what I was told when I opened a National City Bank savings account). I know that banks get hit with a charge when you go over 6, so they then charge you. Other than the that, ING does not set a limit that I know of.

  24. avatar

    ING rocks…Last year my daughter was born we put $5 into an ING account to start saving for her. Every paycheck $25 goes into her ING account automatically She is coming up on her 1 year birthday and she has $488.33 in the account. I then opened an ING 2 yr. CD 5.30% and push the gains to her original ING savings account. As it reaches $400 again I will open another CD with the highest interest rate at the time and begin building a CD ladder for her. When the CD’s mature I will keep investing it in CD ladder’s until I learn more about other investments.

    My plan is to have a good start for her and then teach her how to manage and make money grow when she is ready to learn.

    By the way we are debt free except for our house mortgage and I am currently building on my Assets.

    I’m not bragging but I sure am proud, considering where I came from.


  25. avatar

    ING has a limit of 6 on withdraws I found out by getting a letter stating that if I went over 6 again they would have to close my account out. What I did not realize was that the automatic withdraws from ING to another ING counted as well. So just be careful when moving money out that you keep it below 6. When in doubt call up ING and ask them if your not sure.

  26. avatar

    I’ve been playing video games since I was a little kid (I’m 33 now), so when I really wanted to start to save, I figured, why not make it like an online game?

    I set up a savings account which I earmarked internally as “pay off my student loans,” and every single morning, the first thing I would do online would be to log on with my bank, transfer $X from checking to the special savings account, and log off.

    And I mean EVERY morning. Weekdays and weekends. It got to the point where the daily transfer was more important than my morning coffee.

    I paid off my law school loans that way, and have continued to save that way ever since — and I advise it UNCONDITIONALLY. Even if it’s only a $5 transfer each day, you will be shocked at how rapidly it grows (and you can transfer chunks of $2K, $5K, or $10K to an ING Direct account, like “skimming the fat” off the top to freeze it for later, just like bubbie used to do!). If you find that you’re transferring so much each day that you aren’t leaving yourself with enough in checking, adjust the transfer rate (e.g., reduce it by 25% or so), until you can reach a good, solid equilibrium. But try not to let the $ flow the other way, even if you’ve overshot a bit. Bite the bullet while you re-calibrate. Make coffee at home for a few days, instead of stopping at Starbucks. 🙂

    You will be pleasantly surprised at how fun and addictive it will be.

    I promise! 🙂

    – gabe

  27. avatar

    What is the goal of the ETrade investments? Are these long term investments ( >10yrs) or for more intermediate use? I haven’t really seen an explanation of how one invests his funds for non-retirement wealth growth.

  28. avatar
    Jeff Standard


    Investing with eTrade (or any other broker house) can be for a variety of purposes, short-term and long term. Some people day trade stocks out of eTrade (unwise, as their platform for day trading is mediocre), others like eTrade because you can consolidate all of your accounts in one place and have an overview of your finances.

    With that in mind, there are many easy ways to invest in non-retirement growth. You can do medium-term buy and hold positions with stock, where you say buy Microsoft, Dell, and AMD, hold them for a number of years and sell them off when you feel confident. Another common, easy method is to invest in “Income” or “Growth” Mutual Funds which generally appreciate over time, but are more actively managed with shorter-medium term profits in mind, rather than a retirement fund, which is generally passively managed.

    What I find most important about any medium to long term investment is keeping the transaction costs low (Vanguard is good for this, Fidelity has made drastic fee cuts as well), especially management fees for mutual funds, as low as possible (since it eats into your profits) and always consider you will have to pay taxes on everything when you take it out.

  29. avatar

    The fact that you trade through E*Trade shows you haven’t been doing this very long. E*Trade is, bar none, the worst financial organization I’ve ever used. I once wired $40K out and they “lost” it for a full day, with no knowledge of the transaction or where it went.

    Wells Fargo is the second worst, but a distant one. My recommended bank for checking is Bank of America. They do not screw up.

    Recommended broker is Fidelity. Generally speaking, do not choose your broker based on their trading fees.

    Savings accounts are a waste of time. Get a decent municpal money market fund through your broker and you’ll tax-free interest that beats the hell out of a savings account.

    Nice blog name though. Wish it was true.

  30. avatar
    Son Nguyen

    There are many high-yield and CD offers now with much higher rates. Use CD laddering if you plan to use the money. Those banks could be found at

  31. avatar
    Andy Crouch 4.50% yield on their money market, same product as ING’s. ING has good marketing but has never had better rates than VirtualBank, which is almost always near the very top.

    Vanguard’s Prime MM is also a good choice, as others have noted.

  32. avatar

    eTrade? You’d have to be an eTard to use eTrade. They suckered me in to their no-fee IRA accounts a few years ago, then slammed me with fees out of the blue. I took my money out and I’ll never go back. Fool me once etc. I use ING.

  33. avatar

    What’s funny is that just yesterday my friend told me about ING Direct, they are up to 4.3% now. 🙂

  34. avatar
    Mantari Damacy

    My local credit union is awesome. Balance transfers back and forth from checking to savings are instantaneous. Also, an overdraft protection account can also be transfered to/from instaneously, which could be an emergency 14% loan, on demand.

    The downside to all of this is that my savings is TOO accessable. As such, there is a regular flow out of my savings account. I need it to be more inconvenient to withdrawl money from savings.

  35. avatar
    Bob Aman

    I’m a big fan of NetBank, personally. Assuming you do plenty of business with them, you can get as high as 4% on a money market account with them. Of course, unless you move all your accounts over there, it’ll probably be closer to 3%, but that’s still pretty good.

    I really like their software though, which is the main reason I use them. They have code that integrates with other bank accounts at other banks and shows your account balances and credit card balances as such. It’s nice being able to see total assets and liabilities at a glance in once spot.

  36. avatar

    What online or traditional investment firms are recommended for a first timer who wants to invest in a stable long to mid term reasonable yield fund/stock etc.

  37. avatar
    Mark Bigelow

    FOTA, here’s my B of A screw-up story (and why I’ll never use them again):

    I opened a new account with them and got my temporary checks. I used those checks to buy groceries, etc. (basically, one month’s expenses…about 20 checks).

    What I didn’t know was that the temporary checks B of A gave me had someone else’s account number on them. When they found out, they cancelled all the checks, costing me $20 per check (B of As charge) and then $20 – $30 at each store I wrote a check at.

    B of A covered none of this.

  38. avatar

    Mark, I realized after I posted my comment that I’d made a horrible mistake. I realized the only responses I’d get would be some kind of BOFA screw up.

    It’s true, all financial organizations are inherently evil. Best way to organize your money in the modern age is to keep as much money and gold as you can under your matress.

  39. avatar
    Kevin Lee

    I recommend to all my friends to drop the big box banks (BofA, Wells Fargo) and join a credit union. Most everyone is eligible to join. Rates are .25% for checking, .5% savings (under $1000), 1% savings (over $1000) and no monthly fees. I keep only enough in here to pay my monthly bills.

    For a savings account, use ING direct at 4.35%, or, even better, Emigrant direct at 5.15%.

    I don’t like E-trade. Their rates aren’t very good and they charge too many fees.

    For long term investments, use a discount brokerage house like Fidelity or Vanguard. And EVERYONE should have a ROTH IRA with an index fund. Index funds are cheaper and earn a more reliable return than other mutual funds.

    But before you even THINK about opening up all these savings accounts and investments, PAY OFF ALL CREDIT CARD DEBT first. Savings accounts and investments are pointless if you have credit card debt.

  40. avatar

    I agree. I have a very similar multi-tiered account setup that others have mentioned and have been very happy with the balance between available-money and invested-money.

    Many I talk to though complain about being able to find the money to save. The key is budgetting, knowing where your money goes, and then just doing a little at a time as others have commented. I found this online budgetting program to be very good: The only downside is that its a pay service but I trialed it for a month and haven’t gone back. I found it much easier than Quicken or the spreadsheets I was previously doing.

    Thanks for the tips and good luck!

  41. avatar
    Hem Ramachandran

    Your title says, I will teach you to be rich. But what credibility about this do you have? Are you rich? How rich? Is this how you got to be rich? How old are you? When did you get to be rich? Do you own a house? Car? Please explain so that we can trust what you say. From what I read, beyond explaining some of your banking set up, I don’t see anything substantial, sorry to say.

  42. avatar
    Rich Guy

    Rich? This teaches you how to be middle class and stay out of debt. Time to rename the website, buddy.

  43. avatar
    Kevin Lee

    This is just the first step to becoming rich.

    People know that to become rich, you must make a lot of money somehow. But what they usually forget is that SAVING money is even more important to making money if you want to be rich.

    And investing your money banks, savings institutions, brokerage houses, etc. are the first step to saving money.

  44. avatar

    What about using a charge card to manage your money? I use an AmEx Green Card for all my monthy bills / gas / etc. and then pay off my balance in full each month – this really helps me with cash flow – I have money auomatically sent into my ING account from my checking as well – and I get “points” to boot!

  45. avatar
    Rich Dad

    3.3% – Inflation rises faster than that. Savings accounts are for neophytes and conservative people. Put your money to work. Have it work for you. Don’t work for it.

    Get into real estate, buy stocks, diversify. But don’t park you’re darn money!! What a silly blog.

  46. avatar

    Had great expectations when I saw the website URL, but all this teaches you is to manage your own money.

    BTW, I’ve been using the bucket technique for more than 11 years (and I’m still not rich)

  47. avatar

    Rich ? Probably not filthy but better than most. My advice is to stick with credit unions. Good interest rates and they don’t sell your info. Employ locals and don’t pay fat bonuses etc to the executive robber-barons of the day. StarOne CU in silicon valley pays 4.35% interest on savings and 0.5% checking. The savings acts as overdraft for the checking. And the CU credit card has $5 late fee, etc much better than any bank.
    Etrade – OK , but Vangard broker is much better. Watch as brokers are lowering fees but the sweep money-market is 0.1% interest. Schwab & Etrade both are bad at this rip-off.

    Rule #1 – never do business with a company that is setup to screw you. Fleet, Citizens, BofA, Citi are on my sh** list of never do business with. Trust is very, very important in financial relationships.

  48. avatar

    Great advice!

    I’ve been using three separate accounts for over 5 yrs. and it really helps to save some money. Matter of fact, I use Wells Fargo accounts as well.


  49. avatar

    I would love to become more financially organised and I do use Quicken and a Palm finance programme. My problem is that I don’t input regularly enough. I would ideally like to spend half an hour every evening on my personal finances, probably after I get in from work. Have you managed to set aside regular time? How do you motivate yourself to do this? Please see my blog, and you’ll understand exactly why it’s essential tht I manage to do this.

  50. avatar

    That is rich by most standards.

  51. avatar

    I manage all four through Schwab. (Rollover traditional IRA, Roth IRA, savings, and checking). Using multiple interfaces would drive me bonkers. I’m gonna get a Personal 401(k) also through Schwab (I think). 4.5% money market sweeps on all accounts if you ask them nicely. Having a single dollar at bank rate (1%) or even 0% would drive me crazy. Sweep every penny by choosing a brokerage that can meet all your banking needs.

  52. avatar

    Thanks man. I’m 31 and now just starting to pull my head out of my arss. And f that last guy. Maybe he’s a trust-funder or something. The rest of us need a finger to point in the right direction. You are appreciated. Peace!

  53. avatar

    I find this website rather interesting. Even though I know most of this information and I own a house at the age of 19 (reference: “do you own a house?”, thought Id add some “crediabilty”). Its good to get as much information as possible. Maybe his rich is different from our rich, maybe he should explain. Anyway, I leanred some things and consolidated my funds, next step budgeting, :).

  54. avatar

    Rich Guy has a point

  55. avatar
    web knight

    umm…. this is kinda basic information… won’t teach anyone how to be rich…

  56. avatar

    I do the same, except every dime I make goes directly from my checking account to my investment account. However, I realize that the majority of you will not particularly enjoy eating at homeless shelters and digging through dumpsters for other people’s leftovers to satisfy your gnawing hunger, so it follows that you might want to listen to this guy instead of me. Just a suggestion.

  57. avatar

    I have a similar setup, except with BofA. I have the following accounts:
    Money Market Savings at 4.73% (btw that’s interest rate, not APY)
    12-month CD at 5.27% interest rate

    I immediately transfer everything into the money market savings except for living expenses. Once a year, I move money from the money market savings to a CD.

    Easy, and works great. It’s so satisfying moving the money over to the money market savings.

    I also charge everything I can to my credit card and pay it off monthly, as I get 1% back. This translates to a huge amount of money annually if you pay rent, gas, car insurance, etc. with it.

  58. avatar

    Have you checked out HSBC direct? Higher interest rates on the same online-only savings set up.

  59. avatar

    I just checked out HSBC’s website and the rates are significantly lower.

  60. avatar

    @lawsaver: Do you have over $2.5M in your money market? That’s the only way I can see to get an interest rate anywhere near 4.73%…

  61. avatar

    Wow, it turns out the interest rates in the US suck. Would never have guessed.

    Over here in NZ, I get 7% interest in my savings account with my main bank, and no fees on that or my cheque (check) account. An the only catch is, I have to use the internet to access my savings account which I’d do anyway.

  62. avatar

    I love having multiple accounts and manage most all of mine through BofA. The only thing I don’t love is the fact that BofA charges $3.00 per EFT when it is to an account outside of the bank.

    I would love to have a better interest bearing savings account, but I don’t want to have to pay 3 bucks everytime I transfer funds.

    Would it be worth the hassle of changing banks?

  63. avatar

    Can i open a IGN account if i live in Puerto Rico?

  64. avatar
    Glenn Clark

    I use Emigrant ( No fees no minimums and only one to two business days for transfers to take hold. Current rate is 5.05

  65. avatar
    Josh Vaughan

    Just put your money in Paypal. It is over 5% interest every month, and is in no danger of going bankrupt for some time to come…

  66. avatar

    Can I just use online banking to budget my expenses?

    (And not use quicken) Here is my example: Set up several checking accounts. acct 1 = the deposit account which would be set up to auto transfer funds to the other accounts that would be assigned for “utilities, insurance, auto, home etc. I would allocate from my budget how much to auto transfer into each account then each budget account would auto pay the bills.

    Another Example:
    All would be checking accounts and 2 savings. Only one would have checks actually written from it.

    CHK Account 1 = deposit account – – – – auto transfer budget money to the accounts below
    CHK Account 2 = misc. Food/Household living – checking/debit – only one that has a checkbook
    CHK Account 3 = loans ie. Home/auto **auto pay
    CHK Account 4 = Utilities ie gas/electric/water/phone **auto pay
    CHK Account 5 = insurance **auto pay
    Savings Account 1 = expected expenses ie. Tires, oil change, repairs, etc
    Savings Account 2 = This would be a sweep account for overdraft protection and can be used for Christmas and end of the year property taxes

    Will a plan like this work to have a worry free budget just using my online banking account?

  67. avatar

    Great article. I just want to learn how to manage my money. I need some serious help!!! I have a lot of income coming in, but saving nothing.

  68. avatar

    Good advice! But…what do you do when your employer pulls a number on you that completely f***s up your well-laid plans? We just learned that the state of Arizona will switch all of us who are paid semimonthly over to a biweeklyl pay cycle. This means that even though I get the same annual salary, for ten months of the year my net pay will drop by $220 a month! That’s $70 less than I was earning 10 months ago, when the state legislature, embarrased by the abominable pay earned by Arizona university faculty and other state workers, mandated a 6% raise. I could barely make ends meet then, and now quite frankly I haven’t a clue how to cope. At almost 62, I’m way too old to get another job; even if I could, the job I have is unique, pay in this right-to-work state is low even in private industry, and I’d be unlikely to do any better anywhere else.

  69. avatar

    I am looking for a way to easily transfer funds from one account to another and vice versa all in one location. Ideally this would let me do so manually (ie special situations) and automattically (ie on Tuesdays do this or if the is > x do that). Do you know of such a system?

  70. avatar

    FOTA, Hem Ramachandran, Rich Guy, Enjoy15 and any of the other goofballs I missed:

    None of us know the financial/economic background of the people who posted before us, so it’s pretty immature at best, malicious at worst to knock this site for any of the reasons you gave. Have any of you been paying attention to the news on how personal debt in America has been spiraling out of control? Somewhere in between learning to crawl in diapers, and walking across the dais to graduate from college, the significant majority of Americans in their 20s never received sound financial-planning advice. What Rammit is doing, is starting, what should be, a discussion. He, and many other financial gurus out there, can point to the door, but it must be you and you alone that walks through it.

    Negative posts and name-calling are a waste of everyone’s time. Don’t like e*trade? Understood —they’re not the best out there. Tell us why? Don’t just tell someone they’re a moron for using them.

    Conversation, remember? Tell me why you use whatever bank/broker you do— then we have a discussion.

    Me? I have two checking accounts with Capital One, one for a rent house I own, one with direct deposit for my job. That’s where the money starts out. For short-term savings, I use Capital One’s High Yield Money Market–been using it since Sept., and the fluxuating interest is b/t 4.8 and 4.6%.
    To answer a question by
    AvatarKava: I have less than $200 right now in that HYMM account, and if you have a checking account set up with them, you can transfer money back and forth (limited to six withdrawals a month) within 2days.

    I think Rammit never mentioned 401Ks, (always invested in only index funds, duh) because we, as the working class, can’t count on whatever company we work for to feed us when we are old. Same reason he didn’t include social security into this mix. No, continue putting into a 401k whatever the max your company will match, but don’t even count it as part of your paycheck.

    Instead, for the long-term retirement, use an online broker. I’ve never tried e*trade or Ameritrade; I use Scottrade for my ROTH IRA and TradeKing for my 2-5year savings…and both seem to work for me.

    But unless I would’ve known the very basics of the stock market, I wouldn’t have felt comfortable jumping into it. How I got that security was first, setting up my own banking structure flow-chart (like so many described above), then reading as many financial investment books as I could. Investing for dummies, etc.. if you are just starting out, I recommend phil town’s Rule #1: a great primer for getting into stocks.

    I can’t speak for Rammit or anyone else who posted, but I know I’m not locked into using any one of the firms I spoke about. Right now, Chase is offering $100 to get a checking account with them for my direct deposit; I might take them up on it. And if a broker comes out with trading fees lower than 4.95, I might switch from TradeKing… because each of these businesses have their faults. That’s why it’s important to read and understand the fine print.

    Heck, if you don’t know something, google it. My guess is, that’s how most of you came across this site in the first place.

    good luck investing!

  71. avatar

    Glenn, I appreciate the much-needed message in your last entry. You make for an excellent moderator. I am curious if you have your own website, blog or url?


  72. avatar


    Why did you pick Scottrade over E*trade, or TD Ameritrade. My company is with Fidelity. I left this company and I am debating about where to rollover my 401K to a Roth IRA.

  73. avatar
    Matthew T. Christiansen

    My financial structure is very similar to that of Ramit Sethi. My primary account is a checking account with Bank of America. I live in New Jersey and work in New York City. I find Bank of America to be the most convenient bank for this area and they do not charge me any fees. I also have an Emigrant Direct Savings account. I used to use ING Direct but their rate is 4.5% while Emigrant Direct offers 5.05 % for what I find to be the exact same service. My third financial account is Charles Schwab. When ever I get paid I always pay all of my bills and then transfer the rest of my money, less spending money, to Emigrant Direct. I maintain a very small balance of a few hundred dollars at Bank of America. Another difference that I have is that I buy all of my stocks at Charles Schwab on margin. The catch is that I never by more stock than I can cover with my savings in Emigrant Direct. As soon as I make a purchase, I transfer my Emigrant Direct savings to Bank of America and then to Charles Schwab. The margin cost generally ends up only costing me a few dollars on a purchase of 8 or 10 thousand dollars. The main thing to understand is that you never want to buy stocks on margin that you cannot cover within a few days because the interest rate of Margin accounts is generally ~10%.

  74. avatar

    Wow your account setup is exactly like mine. Or it used to be until recently. I had opened the Wells Fargo college student account which came with a credit card when I started college. After getting a part time job while still in school I opened up the ING savings account and I love their referral program…I’ve tried to get all my friends to open an account there.
    A few months ago I found out about the no fee CITI credit card which gives you points for spending money so I looked into their bank accounts as well because I wanted to keep my credit card and checking account with the same institution. To make a long story short, I’ve shifted from Wells Fargo to Citi bank and you can also get points from using your debit card and online bill pay which is free. They also have a referral program which gets you like 5000 points for getting someone else to sign up for it. Their customer service has also been awesome.
    Thought you’d like to know 🙂

  75. avatar

    It’s a good idea to have several accounts. I consider it to be a fair way to save money for those who need it. May be it can be the right choice for those who can’t get used to putting the money by.

  76. avatar

    Thanks for the great advice to have several accounts. I might be putting this tip to great use in the near future… Thanks again

  77. avatar

    I have quick question. Do you recommend using your credit card to charge your monthly expenses such as your electric bill, phone bill, association fees, and etc or should you pay those expenses directly from your checking account?

    Thanks… I love the site.

  78. avatar

    Here Is What I Do.

    I have an ING savings acocunt where almost all of my paycheck is direct deposited… A small allowance is direct deposited into my BOA account each week for me.To get that money each week all it takes is a simple trip to the ATM machine. That small amount is for me.. coffee, donuts, newspaper, etc. ALL of my purchases like gasoline, grocerys, dry cleaning, etc, are charged to my Chase Freedom Card which I pay in full every month.

    Now about the monies direct deposited to INC savings. I sub divide my ING savings account into little accounts via my Quicken program. For example I have a RENT HOLD ACCOUNT, CAR GAS HOLD ACCOUNT, INSURANCE HOLD ACCOUNT, DISCOVER CHARGE CARD HOLD ACCOUNT, PHONE BILL HOLD ACCOUNT, RENT HOLD, GROCERY HOLD, and so on. Quicken automatically adds my deposits and transfers enough money to each of the sub accounts. In other words each week 1/4 of my rent goes into my rent hold account, 1 /4 of my monthly typical gasoline bill goes into my GAS HOLD ACCOUNT, and the same for the others. What is left over goes into a “MY MONEY ACCOUNT’ where I can save it for big purchases or spent for whatever I want. An example to show how the Chase Card works… Everytime I charge something… lets make it grocerys… I transfer the amount charged from my GROCERY HOLD ACCOUNT to CHASE FREEDOM HOLD. If I buy gas I move the money spent from GAS HOLD to CHASE HOLD. The amount in the CHASE HOLD is always the same amount as in the CHASE CHARGE ACCOUNT. The actual Charge account being a debit and the CHASE HOLD being a plus amount.

    Everything is deposited and withdrawn to/from the MAIN ING INTEREST ACCOUNT. This makes for only 1 account to reconcile.

    About the middle of the month I get all my bills together and see how much I need to transfer from each account to totally pay all my outstanding bills. If my Chase Freedom balance was $1,000 I transfer $1000 from my CHASE HOLD into my ING MAIN ACCOUNT. (Thats the name for the sub account where all the deposits and actual withdrawals come from. Since the ING savings account is limited to the number of withdrawals you can make I opened a second INC account…. A checking… Umlimited withdrawals and FREE BILL PAYING. Lets say all my monthly bills added up are $4,000.. I transfer $4,000 from my ING MAIN savings account to my ING checking account. Then I AUTOPAY all my bills through the checking acocunt. You get less interest in the checking account than in the savings account. I only keep enough in the ING checking account to cover my bills. After they are all paid there is usually only a few dollars in there.

    Then there are the little trick I can do…. On the months that have 5 pay periods.. I get most of that money free and clear… Only the things I buy every week like grocerys and gas, get deducted. So I get an extra “free” windfall from that.

    If I ever run out of cash the middle of the week and my BOA account is empty I take a trip to the grocery store and buy a “few things”… Charge it with my Discover card and get up to $40 cash back.. (no interest on the cash advance).

    Works for me. I do not have one bill that I cannot autopay with ING.. even my landlord is paid with an ELECTRIC CHECK. Whatever bills I can pay with my Chase Freedom I do as I get the 1% to 3% rebate.

    I have been doing this for 5 or so years and never had a problem. It might seem a little difficult.. it is not.


  79. avatar


    What Quicken program do you have that allows this? I’ve had a heck of a time trying to get this plan in action.

    thanks for your help!

  80. avatar

    Hey Ramit,

    So do you use E-Trade to buy into VFINX? I recall from your book this is one of the index funds you use. E-Trade charges $19.99 to buy this fund, do you pay this each time you add money to it?

  81. avatar

    Awesome! This is a very informative blog, I read most of them myself.

    Thanks for sharing this blog.