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Old 11-09-2008, 03:06 PM   #21
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I'm actually not worried a bit. Just curious what everyone's take is on the 'mental accounting' situation. I'm actually quite pleased with the way it works for me...the whole process developed on its own and I have been saving quite a bit for some time.

I know that I am saving $$...that's a fact. But where the mental 'deception' comes in is when the only account I have that is not on autopilot reaches the low 'trigger'. Then I find myself being more frugal to be sure all my auto-pilot stuff keeps rolling. At the end of each year I take a glance at all my assets as a whole and am AMAZED at what can be saved by being on auto-pilot. I KNOW ahead of time what will be saved, but I would never have done it if not for the auto-deductions. Hope that makes sense
I agree it works for you.

Do you have all this stuff written down somewhere in case something happens to you (temporary or otherwise) and others need access?
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Old 11-09-2008, 03:30 PM   #22
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for the record, I have also never balanced a checkbook . I look online, but don't record purchases as they're made. Perhaps that quality is somehow tied into my mental accounting defect! Because I do know at any time what my balance is within a hundred or so...and I keep track mentally....thus 'mental accounting'
I've got a tenant in one of my houses you uses the internet to check her balances too, obviously never balanced her checkbook. She probably doesn't even have a check register to balance. She used to bounce her rent check 6 months out of 12. She got so embarrassed about it that she now pays the rent with a cashier's check.

I'm not suggesting you're as casual with your REAL accounting as she is, but with insufficient cashflow, I doubt mental accounting will work.

I also have several accounts: personal checking, education account, rental property account, security deposit MM account, savings account, USAA checking and savings account (I just can't let go of those old USAA accounts), Fido checking account with MM fund, and Vanguard MM account. In other words, way too many accounts. But, except for the USAA accounts, they each have their purpose. Could I do it with fewer? Absolutely! Should I? Yes. Will I, probably not, except for the education account when DD graduates next spring. But cash in the mattress? I draw the line there. I do keep a safe deposit box with a few goodies in it. Oh, I forgot about the bag of coins in the ... never mind.
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Old 11-09-2008, 04:03 PM   #23
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I agree it works for you.

Do you have all this stuff written down somewhere in case something happens to you (temporary or otherwise) and others need access?
no, but thanks for pointing it out. I actually started last sunday while my wife and i were working our our wills. i've gotta get it finished! thanks again for reminding me
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Old 11-09-2008, 04:10 PM   #24
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I balanced my checkbook for a while when I got my first big job out of college - 1966.

heh heh heh - which reminds me I've got two checking accounts in Slidell(pre Katrina) which I need to check and possibly close out.

Saint's lost bad. Rats!
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Old 11-09-2008, 04:22 PM   #25
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I balance my check book once a month. Entering the data makes things visible to me and when Turbo tax time comes it makes taxes really easy. I know some people download their accounts directly into quicken but I don't. Then I have one account with the credit union which I designate for specific purposes. There is a 'travel' subfund, car repair/replace subfund, re tax, insurance and several others. Sometimes I 'move' $$ between these funds but I try to mentally keep them separate. So what is the difference between budgeting and mental accounting?
Then once a month I add up the credit union, DW's IRA, my TSP/IRA, the Roth, the trading account and total our financial assets. So far YTD we are down 18% although this includes paying for a looong road trip and paying down a travel trailer, our only debt. But having the specified 'funds' makes it easier to control spending and also permits spending for what has been saved. So it works for us, at least so far 8 months into my retirement.
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Old 11-09-2008, 05:23 PM   #26
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Originally Posted by thefed View Post
I'm actually not worried a bit. Just curious what everyone's take is on the 'mental accounting' situation. I'm actually quite pleased with the way it works for me...the whole process developed on its own and I have been saving quite a bit for some time.

I know that I am saving $$...that's a fact. But where the mental 'deception' comes in is when the only account I have that is not on autopilot reaches the low 'trigger'. Then I find myself being more frugal to be sure all my auto-pilot stuff keeps rolling. At the end of each year I take a glance at all my assets as a whole and am AMAZED at what can be saved by being on auto-pilot. I KNOW ahead of time what will be saved, but I would never have done it if not for the auto-deductions. Hope that makes sense
For what it's worth, I'm big on spreadsheets but I know it isn't for everybody. If I don't have a spreadsheet, I think back and say "where'd all my money go?". I haven't thought "wow, look how much I saved!".

If mental accounting is helping you save a lot of money though, I think that's what counts. I'd say keep it up! Saving is the name of the game, and I'm not so sure it matters how you get there.
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Old 11-09-2008, 05:39 PM   #27
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Hey, if the "mental accounting" works for you, go for it. DW has an aunt who does the same thing with cash in various envelopes.

We just use Quicken and a spreadsheet, although there are mental categories of "savings shall not go below $X, checking shall not go below 0" and "this much is set aside for a new vehicle", etc. I did once run the checking down to two cents (no min. balance required) but I've always been meticulous about balancing the checkbook, and I married an accountant, so if possible she's worse than me. Once the savings gets above a certain level it's skimmed off to less liquid investments, like a motorcycle.
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