The Difference LBYM means

[aaronc879]

I let my checking account go down to about $500-700 then I transfer $1000 from my MM then repeat. I virtually never have a transaction over $300 and most months have $500 or less coming out of my checking account for the whole month. Obviously i'm a very low spender and this won't work for most people but it works for me. I've never had an overdraft. Can't think of a reason to let it go all the way down to $10.

 

[marko]

OP's story reminded me of my 54-year-old friend who hasn't had a steady job since he was laid off at 41. He currently lives with his girlfriend and, in lieu of rent and utilities, has been making improvements on her house. He proudly showed me photos of his latest project on his brand-new giant smartphone.

He got a modest inheritance when his mother passed. He used most of it to buy a new boat and fix his Harley. He has lots of "toys," most of which don't run. Prior to the inheritance, he had consumed all his savings and was living on proceeds from the sale of his house.

Since getting laid off 13 years ago, he has worked occasionally as a contractor in his field, which pays quite well. But this has been phasing down to almost nothing. He told me he turned down a 3-month gig recently because he had the inheritance money now. I asked him how long that would last and he said, "well, maybe 6 months, unless I decide to fix the transmission in the truck, so I can haul the new boat to the lake."

He was here for a Labor Day gathering and BBQ at our house. I overheard him telling people he was "retired." He was getting the usual "you're so young" reactions. I just rolled my eyes and flipped the chicken thighs.

One thing I've learned from this forum over the years is that there are several versions of (and several avenues to) ER.

One could say that this guy retired 13 years ago and does odd jobs as needed to supplement. Doesn't sound like he's in any serious debt.

There's tons of people out there who more or less stumble their way through retirement and 'find a way'. Not my cup of tea but it seems to be working for him.

Not to be provocative, but....He should join us here!!

 

[38Chevy454]

OP's friend should be using a credit card, not debit card. That alone would avoid the problem he had, assuming the credit card is paid off or at least has balance available. Of course I am not advocating carrying credit card balance, and should be paid off each month. Plus get the cash back or other airmiles or whatever benefits.


My checking account varies from $5-6K to $200 depending on outstanding bills payments or timing of money coming in. Nothing that being responsible can't handle. I can transfer money from savings if required to cover any short-term need. I do not ever keep a high avg balance, I would guess it is around $1000 avg. Sounds like OP's friend does not keep up on balances, or really understand his finances very well. Maybe he should try to learn some financial education while he is out of work (hopefully short-term for his sake of spending so much!!)

 

[RAE]

But as others have pointed out, OP's relative has more serious money management issues than a low checking account balance.

Absolutely. The issue here is not the guy's $10 balance in his checking account, it's his inability to manage any of his finances. I know more than one person that pretty much fits the description of this guy, and I would guess that most others do also. I hope they enjoy all their toys, big fancy houses, etc., because they will be working until they drop dead (or close to it) to pay for them all....

 

[hurricane harry]

Did you get the truck running?

 

[Totoro]

When working, it makes a lot of sense to me to make a HUGE effort to LBYM and save until one is FI, and to do it ASAP. Becoming FI is not an easy task, but it takes away a lot of the fear of being laid off at a relatively older age.

It's my exact motivation as well. Makes us a big exception and weird folk, but just how i'm wired.

 

[Cobra9777]

One thing I've learned from this forum over the years is that there are several versions of (and several avenues to) ER.

One could say that this guy retired 13 years ago and does odd jobs as needed to supplement. Doesn't sound like he's in any serious debt.

There's tons of people out there who more or less stumble their way through retirement and 'find a way'. Not my cup of tea but it seems to be working for him.

Not to be provocative, but....He should join us here!!

Not my cup of tea either. But you are right... he has no debt, he's happy, he's resourceful, he's employable (if need be), and he has plenty of family and friends in case the girlfriend kicks him out. He's been a great friend for over 30 years. I'm just amazed at the different paths we took and where we ended up. I can assure you he would have zero interest in the topics discussed on this forum.

 

[Clone]

We keep $0 in the checking accounts. When a check appears, the credit union automatically transfers from the savings account to the checking account.


We don't use debit cards. We have several cash back credit cards that we use in rotation. Almost everything goes across the cards.


We have two checking accounts, although now we could perhaps combine them into one. My account handles a few big expenses (farm expenses), and I am the only one that writes a check against it, unless I tell my wife to pay a bill. We probably only write 10 checks a year on that account. I do pay a few bills electronically from it.


The other account is my wife's domain. She maintains it, she knows what the savings balance is associated with it. She writes all the checks. We electronically transfer money as needed between the two accounts when needed.


When I need cash, I stop by the branch and pull cash. Or I ask my wife to pull cash.


It works for us.

 

[Walt34]

The people living paycheck-to-paycheck always amaze me, especially when they have the ability to do better. My older sister knew a lot of people where she worked with six figure incomes but if their paychecks didn't come out before lunch they couldn't eat.

That said, there was a time in my life when my checking account balance was two cents. Really! But that was a long time ago and now it rarely goes below a few hundred, and if more is needed there's plenty in the savings account to pay for life's "stuff happens" events.

 

[Senator]

Did you get the truck running?

We did get the truck running. I replaced the belt, but one of the pulleys had a bad bearing. It worked, but he was worried about pulling a boat 300 miles, so he dropped it off at the dealership to get it fixed.

 

[HillCountry]

I am suprised at the low number posted here. I have more than 100K cash in my checking/saving accounts.

 

[scrabbler1]

Back in the mid-1980s, when I was in college and first opened my checking account, I already had a linked savings account. I wrote very few checks so I would routinely leave next to nothing in the account and use an ATM to transfer money from the savings account as soon as I wrote any checks. The savings account paid some real interest so I wanted as much of my limited money earning it. I withdrew cash from the savings account.


When I started working FT in 1985, I continued this system but one time I forgot to move money into the checking account for a day and I wrote a check which bounced (the recipient used the same bank as I did so it cleared very quickly) but the bank covered it and hit me with a NSF charge.


This led me to add a bounce-free feature to my checking account, a $2,000 credit line. So, whenever I overdrew from my checking account, the difference would go into the credit line for a few days until I would cover its small but temporary balance and pay a tiny amount in interest, maybe a dollar (which beat a $25 NSF charge).


A few years later, I changed banks and kept this linked feature but the savings account had its own checkwriting feature (which I rarely used because I was limited to 3 checks per month). I had not begun investing my surplus money in other investments but that soon changed.


Several years later, in the mid-1990s, my bank boosted its minimum balance to keep a separate, linked savings account. I didn't want to tie up the extra cash in there at the expense of my outside investments which were preforming much better. So, I consolidated the two accounts into a single checking account, basically eliminating the need for the bounce-free protection because the savings account cushion was now blended with the checking account. Since that time, I simply make sure to keep about $750 over the minimum daily balance amount to avoid monthly fees. The checking account pays little or no interest (the bank changed its terms over the years), no big deal.

 

[Sarah in SC]

Not my cup of tea either. But you are right... he has no debt, he's happy, he's resourceful, he's employable (if need be), and he has plenty of family and friends in case the girlfriend kicks him out. He's been a great friend for over 30 years. I'm just amazed at the different paths we took and where we ended up. I can assure you he would have zero interest in the topics discussed on this forum.

I cannot tell you how many really good friends I have who fit this description, lol. Good people, getting by, and living in the moment. Lots of fun to hang out with, certainly, but not discuss SWR and such. Variety is indeed the spice of life.

 

[RAE]

One thing I've learned from this forum over the years is that there are several versions of (and several avenues to) ER.

One could say that this guy retired 13 years ago and does odd jobs as needed to supplement. Doesn't sound like he's in any serious debt.

There's tons of people out there who more or less stumble their way through retirement and 'find a way'. Not my cup of tea but it seems to be working for him.

Yeah, I know some folks who fit this description also. It may work for a while, especially while you are still in your 50s/early 60s, but what happens when you get older and can't do those odd jobs anymore? And you've pretty much exhausted your savings? Or even more serious, what happens when you get older and get really sick, with no health insurance?

It would be interesting to check back with folks like the guy described above in 15-20 years, and see how he is faring then. My guess is not so good.

 

[marko]

Yeah, I know some folks who fit this description also. It may work for a while, especially while you are still in your 50s/early 60s, but what happens when you get older and can't do those odd jobs anymore? And you've pretty much exhausted your savings? Or even more serious, what happens when you get older and get really sick, with no health insurance?

It would be interesting to check back with folks like the guy described above in 15-20 years, and see how he is faring then. My guess is not so good.

I agree. But people like that always seem to land on their feet, albeit not in as good a shape as you or I might find acceptable. There always seems to be some GF that comes out of the woodwork or some odd life-saving windfall. Then end up knowing someone who knows someone and they get public housing and meals at the church across the street.

Again, not what how I'd want to live but.....it's RE without the FI

 

[W2R]

Yeah, I know some folks who fit this description also. It may work for a while, especially while you are still in your 50s/early 60s, but what happens when you get older and can't do those odd jobs anymore? And you've pretty much exhausted your savings?

Social Security maybe?

I would never try to live like these people live! But they seem to manage somehow. Not my cup of tea.

 

[RetireAge50]

This guy is not on food stamps. He has/will have a brand new house on the lake, drives a convertible, $200k+ family income, goes fishing with his family. What is the big deal he has $10 in checking. Might have $2 million portfolio and a wife with a pension. Or not, who cares it is his life.

 

[Senator]

This guy is not on food stamps. He has/will have a brand new house on the lake, drives a convertible, $200k+ family income, goes fishing with his family. What is the big deal he has $10 in checking. Might have $2 million portfolio and a wife with a pension. Or not, who cares it is his life.

Nope, not even a million. He is planning on having a million by the time he is 60. And he does have an USAF pension at 60 as well.

It doesn't matter how much he has in checking, but when a check (or debit card) bounces, there is a major problem being able to retire in any kind of lifestyle.

 

[FANOFJESUS]

OP's story reminded me of my 54-year-old friend who hasn't had a steady job since he was laid off at 41. He currently lives with his girlfriend and, in lieu of rent and utilities, has been making improvements on her house. He proudly showed me photos of his latest project on his brand-new giant smartphone.

He got a modest inheritance when his mother passed. He used most of it to buy a new boat and fix his Harley. He has lots of "toys," most of which don't run. Prior to the inheritance, he had consumed all his savings and was living on proceeds from the sale of his house.

Since getting laid off 13 years ago, he has worked occasionally as a contractor in his field, which pays quite well. But this has been phasing down to almost nothing. He told me he turned down a 3-month gig recently because he had the inheritance money now. I asked him how long that would last and he said, "well, maybe 6 months, unless I decide to fix the transmission in the truck, so I can haul the new boat to the lake."

He was here for a Labor Day gathering and BBQ at our house. I overheard him telling people he was "retired." He was getting the usual "you're so young" reactions. I just rolled my eyes and flipped the chicken thighs.

Great story ROFL

 

[purplesky]

I just got back from a fishing trip with some relatives. One of the relatives had a vehicle issue and it required a new serpentine belt, as the old one broke. He is 55 years old, about 10 months younger than me.

We could not get the hood open as he had not used the truck in a year or so. The latch was rusted shut. We eventually did get it open and went to get the new belt. He had not used the truck much, but of course he needs it...

We went to the auto parts store and picked up the belt and a few other items. ~$65 total. His debit card was declined, so he used a different one. On the way back in my truck, he called the bank to see what happened. Evidently he only had ~$10 in the account…

This relative just got laid off due to the company trying to save money and reduce the higher paid ($120K) employees. He received ~$6300 for vacation balances and deposited the check in the ATM, so it was not immediately available. But I would NEVER let my account get that low. Especially if I got laid off. He had 2+ weeks official notice, and many more weeks unofficial writings on the wall. When my balance gets below $1,000 I get worried. (Meanwhile, I wish for a layoff and severance. He gets an additional 8 weeks)

How can you only have $10 in the main bank account WTF? His wife also makes $100K+ a year. He is interviewing for a new position at a different mega-corp.

He is also going to tear down his lake home and build a larger lake home (in addition to his regular home). He showed me the plans. $600K for just the house. It has a sauna, steam room, 3-car garage, etc. He needs the three car garage as he ‘needs’ one car each for him and his wife, a convertible and a truck.

He said he should get some money from an inheritance in a few years to pay off about half of the mortgage.

He plans on retiring in 5 years or so, and maybe picking up a job at Home Depot or other place like that. Yeah, right… Plan on working until 90, or a large inheritance.

I am maxing out my 401k and Roth($30,500) and buying $20k in mega corp stock at a discount each year.

But I only keep an average balance of $1000 in my checking account so I can relate with your friends situation.

I use my Fidelity Amx card for almost all purchases and I never use checks or my debit card.

I don't like a big balance in my main personal checking account.

 

[gauss]

How can you only have $10 in the main bank account WTF? His wife also makes $100K+ a year. He is interviewing for a new position at a different mega-corp.

Has he ever involuntarily lost a job before?

I could see how this sort of disruption/transition could cause a breakdown in other areas of his life (such as the low bank balance).

I have occasionally "not fired on all cylinders" when I have had enough things happen in my life simultaneously and cannot operate my normal systems (which have plenty of robustness baked into them).

Only the most immediate and urgent things get done. Major loss of efficiencies can happen while operating in this "reactive" manner until eventually things get back to "normal". Very stressful (but probably a function of an individuals own personality-temperament)

-gauss

 

[gauss]

I cannot tell you how many really good friends I have who fit this description, lol. Good people, getting by, and living in the moment. Lots of fun to hang out with, certainly, but not discuss SWR and such. Variety is indeed the spice of life.

LOL

 

[gauss]

Several years later, in the mid-1990s, my bank boosted its minimum balance to keep a separate, linked savings account. I didn't want to tie up the extra cash in there at the expense of my outside investments which were preforming much better. So, I consolidated the two accounts into a single checking account, basically eliminating the need for the bounce-free protection because the savings account cushion was now blended with the checking account. Since that time, I simply make sure to keep about $750 over the minimum daily balance amount to avoid monthly fees. The checking account pays little or no interest (the bank changed its terms over the years), no big deal.

FWIW, CapitalOne 360 Checking (formerly Ing Direct) still has a very attractive "bounce-protection" feature available.

Line of credit with no annual fee is linked to checking account. No fees to make transfers (either manually or automatically if the need arises) and the interest is very nominal.

A few years ago it seemed that many banks and credit union were falling all over themselves to eliminate lines of credit not backed by hard assets.
Probably a fallout from the credit crisis.

-gauss

 

[Senator]

Has he ever involuntarily lost a job before?

I could see how this sort of disruption/transition could cause a breakdown in other areas of his life (such as the low bank balance).

Not the first time, but not always unexpected in some tech industries that come and go with project demand. Even so, I would have a larger stash on hand to be able to cope with the occasional downturn. I am sure there was a bit of stress due to no money. That is his life, even since we were roommates in college. Never any money.

And I won't even go into the story of the window I got pushed through this week.... Unprovoked aggression, no alcohol. The Sheriff did a nice job though.

 

[scrabbler1]

FWIW, CapitalOne 360 Checking (formerly Ing Direct) still has a very attractive "bounce-protection" feature available.

Line of credit with no annual fee is linked to checking account. No fees to make transfers (either manually or automatically if the need arises) and the interest is very nominal.

A few years ago it seemed that many banks and credit union were falling all over themselves to eliminate lines of credit not backed by hard assets.
Probably a fallout from the credit crisis.

-gauss

My bank, Bank of America, still has its bounce-free checking credit line which I haven't tapped into since I consolidated the linked accounts nearly 20 years ago. No annual fee, of course.