System Breakdown

The key to financial success is pretty simple: find a system that works for you. This system should include how you budget, how you track expenses, how you save money and how you plan for the future. Some people love using online programs like Mint.com. Some love good ol’ paper and pen. Some use fancy Excel spreadsheets.

This girl uses all three. I was particularly proud of the part of my system that helped even out my income so in lean times I had money to spend that I had earned during more fruitful times. It was pretty basic. I had one main checking account wherein all my paychecks got deposited. And then I had a secondary checking account that got fed a set amount every month from the primary checking account. How much I fed was based on my earnings from my most lean year and worked out to around $300 a week for expenses and $100 a week in savings. Don’t be fooled by the savings, this figure included amounts that get paid out bi-annually like car insurance, or annually like my gym membership. But I was still saving quite a bit and was never pinched for money when I went without work because of this awesome system.

The two accounts I had were with Chase and were free checking accounts. Now anyone who has been with any large bank in the last five years has experience the decline of customer service and basic banking rights. For me, my two accounts were Free Checking Accounts. So they were making no money on me. I got a notice in the mail in November 2010 saying that my Free Accounts would no longer be free unless I met a few guidelines. They thought I would qualify since at the time I was having my paycheck directly deposited into my account. Something that only happened when I worked 32 weeks out of the year.

I called Chase to see if there was a way they would waive this for me. I had had a Chase account for a few years and was a loyal customer. Could they make an exception for a freelancer?

The answer was the loudest No I had ever heard. So I promptly closed my 2 accounts and transferred their balances to a Charles Schwab checking account. My family and I were skiing in Austria and Schwab bank has a high-yield checking account that doesn’t charge fees for overseas transactions. I was only too happy to sign up especially since that’s where my IRA was.

And then I got a job that I thought would mean I was out of freelancing forever. I no longer needed a primary and secondary checking account. This job had a regular paycheck every 2 weeks and I thought I would be happy there.

I was not. In reality almost everyone who worked there was not happy. So the company and I parted ways after 5 months and I was back to freelancing.

I found another secondary account but with a different bank than Charles Schwab and started my process again of the weekly transfers and all that. And it was fine for a bit, but then I started to incur a bunch of overdraft fees because of how the second bank’s timing of Bill Pay worked out. I managed to contest all of them and got them reversed.

But why wasn’t my foolproof system working?

It has taken me about six months but I now know what made it initially so foolproof: both my accounts were at the same bank. So I could transfer money if I thought I was going to overdraft one and it would immediately show up in the account.

To transfer money between these two accounts would take 3 business days. And I was screwed if I found out on Friday I was going to overdraft since I couldn’t get money in until the following Tuesday.

And maybe it was my faulty tracking. The bills were getting paid, but the money wasn’t actually leaving my account when the transaction was scheduled to happen until days later. The bank said that since the Bill Pay function was run by a third part they couldn’t do anything about it.

So I’m now re-evaluating my system. No more secondary checking account. All from one account and some more math (though I feel like I’m doing a lot already). This system was no longer working for me so I’m finding a new one I hope will.

I’ll keep ya updated as I go along!

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