How often do you replenish cash in checking?

[Midpack]

I was planning on quarterly, but noted that a beloved poster here replenishes annually. And others may use a $ threshold instead of time. If you're comfortable sharing, what trigger(s) do other retirees here use and why? Thanks...

 

[TromboneAl]

In the past, I always kept a very low amount in our checking account, perhaps $500.

But, now, since returns on money market funds are so low, I usually put about $3,000 into the checking account, and replenish it when it drops to $1,000.

Note, that we buy most things with credit card, and use the VanguardAdvantage checking account for paying bills.

The only purpose of the checking account is ATM withdrawals of cash, and PayPal purchases (I've given up on the hassles of having PayPal take from the credit card account).

 

[fritz]

Threshold (Credit Union minimum B/4 interest on checking account is forfeited). Quarterly dividends are automatically transferred to savings account from Vanguard, and then transferred to CU money market for safety and higher return (CU MMA currently pays better than Vanguard MMA). When checking account interest threshold is close ($500.00), electronically transfer funds from CU money market (enough to last apprx. one month to avoid excessive transfer issues).

 

[Moemg]

I keep two years of cash in Vanguard money market . Monthly I transfer my allotted amount to my checking account . I also have a pension & SS that goes directly to my checking .I used to keep one year in cash but after the meltdown I feel more comfortable with two years .

 

[scrabbler1]

My checking account is my "hub" account which pays all the regular bills. I replenish it monthly with dividends from my investments but keep a $750-$1,000 extra in it (i.e. beyond what I need to meet minimum balance requirements) as a cushion in case I have any small, unforeseen expenses.

 

[donheff]

I keep two years of cash in Vanguard money market . Monthly I transfer my allotted amount to my checking account . I also have a pension & SS that goes directly to my checking .I used to keep one year in cash but after the meltdown I feel more comfortable with two years .

I do pretty much the same. I periodically transfer a sizable block from Vanguard to a money fund at my bank. I have automated monthly transfers from the bank MMF to checking. Today, I cancelled the August transfer since my CC bills are lower than normal and pension funds will suffice.

 

[rescueme]

I keep two years of cash in Vanguard money market . Monthly I transfer my allotted amount to my checking account . I also have a pension & SS that goes directly to my checking .I used to keep one year in cash but after the meltdown I feel more comfortable with two years .

I don't have a pension nor SS, but I do follow the same logic, funding my retirement expenses from my portfolio, on a monthly basis from my tax deferred MM account.

The only difference is that I keep a bit more in cash (3-4 years), but that's only due to the "comfort level" that each indivudial needs to establish for themselves, in their situation...

 

[bizlady]

We are newer to this (just ER in April). We have one year+ in an insured savings account, and the current year in the bank money market. We automated a weekly transfer of expenses to checking. Have always been paid weekly, so seemed most familiar. We will sell taxable investments early next year to fund another year's cash. Decided not to do it this year for tax reasons.

 

[Alan]

I transfer the quarterly dividends from our Wellesley fund to a bank savings account (currently paying ~1%). Any shortfall I make up by selling some of our shares in our VG short term bond fund.

 

[arebelspy]

The only purpose of the checking account is ATM withdrawals of cash, and PayPal purchases (I've given up on the hassles of having PayPal take from the credit card account).

I do the opposite. I don't let PayPal touch my bank account. They're a bad company.

I only use credit cards with them so I get the most protection possible from my cc company.

 

[Trawler]

Not yet ERd but the plan thus far is to have 3 to 4 years of expenses in cah both savings and short term CDs to ride out market down turns. The goal is when the portfolio wich does not include the 3 to 4 years expenses rises from the start point by a certain percentage will with draw to that start point plus any inflation and restock the cash kitty and any leftover will stay as cash in the portfolio to reinvest when maket turns south by a certain percentage. Will also be rebalancing assets based market movement and not time to the goal of buy low sell high. Our portfolio start point will be 25x or annual expense budget (4%) with SS income later on as a buffer.

 

[Onward]

Annually into short-term bond fund, then monthly into checking.

 

[FIREd]

I do it every 6 months.

 

[jebmke]

Once a month. I keep my checking account balance very low. Toward the end of the month I have the amounts due for credit cards (most of our spend) and I also know what the direct debits will take in the first week. Spouse piles all other bills in a stack so I know what those will take. I sell off muni bond funds at the end of the month and transfer what I need to USAA bank account around the end of the month. Direct debits hit week 1, spouse writes checks week 2. I ACH to credit cards week 2. I leave a about $200-300 cushion remaining after the credit cards suck out their piece in mid-month.

I used to keep higher balances but soon realized that with this method, there is no need to leave much in the bank.

 

[REWahoo]

Every other week.

I set up an automatic distribution from Vanguard to our checking account. The every other week pay schedule was what we'd become accustomed to over the 27 years I spent w*rking. Seemed to me to be easier to keep on doing what I'd been doing...

 

[easysurfer]

I simulate a monthly paycheck for myself put automatically transferring an amount each month from my Vanguard Prime money market account to my checking account. The money market account is my two years living expeneses account. This amount is determined by how much money I have in assets at the end of the year.

 

[W2R]

I simulate a monthly paycheck for myself put automatically transferring an amount each month from my Vanguard Prime money market account to my checking account. The money market account is my two years living expeneses account. This amount is determined by how much money I have in assets at the end of the year.

I use Vanguard Prime the same way. Since it pays very little interest, and since my bank savings account doesn't pay much either, I just move the year's spending money (equal to the previous year's dividends, in my case) from Vanguard Prime to my bank savings account in early January.

Then, like you, I transfer an amount (1/12th of that January withdrawal, in my case) each month to my interest bearing checking account (also with very low interest) to simulate a paycheck.

I don't withdraw any more from Vanguard at all for the rest of the year, for any reason.

Disadvantages:
1) I essentially get no interest on any of my cash, so I can see room for improvement there;
2) My interest bearing checking account is pretty big by this time of year because I haven't been spending it all. At the end of the year, I'll move the excess to savings and withdraw that much less in January 2012.

Advantages: (mostly psychological!)
1) There is no way to make a mistake and withdraw too much. I determine how much on the 1st of January, withdraw it, and then Vanguard is closed!
2) It is extremely clear to me exactly how much I have left for the rest of the year.
3) It is also pretty simple to see how my investments are doing during the year, without having to consider money that was withdrawn.

Edited to add, after reading Johnnie36's post below: This is only how I handle my Vanguard taxable investment withdrawal. I also get a (very tiny) pension check on the 1st of the month, and I get a regular check from my TSP (=401K) account on the 22nd of the month. My withdrawal method for the TSP is the "equal monthly payment" method and it is the only way I can withdraw, now that I have elected this method. It is done automatically for me, and I can change the amount once a year if I want to.

 

[JOHNNIE36]

I see how you operate when pensions and SS are not part of your budgeting. So, it's really different for us. First of the month my pension from megacorp is direct deposited into regular checking at B of A. On the third Wednesday of every month, the SS for DW and me are direct deposited into regular checking account. Then on the first of the month and on the third Wednesday of every month I pay the bills on line through B of A. If there are any shortfalls, I transfer funds from our money market account at Ally. Everything is done electronically. No check writing of any kind. Stamps are only purchased for birthday cards and Christmas cards. I'll have to qualify the "no check writing" statement. Checks are on hand to pay workers for renovations to the house, landscape projects, etc. They don't take credit cards. Maybe write a check once a month. On line banking is a great out for me. I remember sitting down and writing all those checks every couple weeks. That was a crock.

 

[obgyn65]

I am not retired yet, but intend to do so in 2012 and my plans include a "replenishment" on an anuual basis.

 

[easysurfer]

I use Vanguard Prime the same way. Since it pays very little interest, and since my bank savings account doesn't pay much either, I just move the year's spending money (equal to the previous year's dividends, in my case) from Vanguard Prime to my bank savings account in early January.

Then, like you, I transfer an amount (1/12th of that January withdrawal, in my case) each month to my interest bearing checking account (also with very low interest) to simulate a paycheck.

I don't withdraw any more from Vanguard at all for the rest of the year, for any reason.

Disadvantages:
1) I essentially get no interest on any of my cash, so I can see room for improvement there;
2) My interest bearing checking account is pretty big by this time of year because I haven't been spending it all. At the end of the year, I'll move the excess to savings and withdraw that much less in January 2012.

Advantages: (mostly psychological!)
1) There is no way to make a mistake and withdraw too much. I determine how much on the 1st of January, withdraw it, and then Vanguard is closed!
2) It is extremely clear to me exactly how much I have left for the rest of the year.
3) It is also pretty simple to see how my investments are doing during the year, without having to consider money that was withdrawn.

Edited to add, after reading Johnnie36's post below: This is only how I handle my Vanguard taxable investment withdrawal. I also get a (very tiny) pension check on the 1st of the month, and I get a regular check from my TSP (=401K) account on the 22nd of the month. My withdrawal method for the TSP is the "equal monthly payment" method and it is the only way I can withdraw, now that I have elected this method. It is done automatically for me, and I can change the amount once a year if I want to.

In my case, my checking account doesn't pay interest. Actually I prefer it that way since interest is so paltry and I don't have to deal with the tiny interest statement at tax time. I don't mind the no interest as I view the checking account as purely for bill paying.

I didn't get a full pension as I FIRE'd before eligible. When I FIRE'd, I took the lump some from that pension, and my 401K balance, put that into an existing IRA and then from that used a portion of that in an annuity. The amount I get from the annuity, I factor that into my simulated monthly paycheck.

 

[mickeyd]

All of our income flows thru our checking account.

All expenses are ACHd thru our checking account.

It is all automatic.

All I have to do is monitor the inflow/outflow and skim off the top any balance over $1K/. What I skim off monthly goes to savings.

 

[GregLee]

Since direct deposit pension payments flow into our checking account faster than we spend them, for now, my wife and I have the opposite problem of how to diminish cash in checking. I haven't figured out what to do, yet.

 

[JakeBrake]

I keep a rolling 30 day average of bills payable in Quicken. I keep enough money in my local bank checking account to pay all bills for 30 days.

When the bills arrive online or USPS, I set up a payment for the due date (and not before) with my bank's online bill payment service. I have no automatic recurring payments or automatic debits from my checking account. I've had bad experiences with those and my way, I'm forced to look at every bill as it comes in. I pay most daily expenses with credit cards. When the credit card bill comes in, it is added to my rolling 30 day projection and paid in full when due.

I withdraw sufficient funds from my Fidelity and/or Vanguard MM retirement accounts to cover the 30 day projections. So, the amount I withdraw varies from one time to the next. Very frequently I check past expenditures in Quicken for the last month, last 12 months, and last year.

I also keep cash accounts in two local credit unions and under the mattress in case something happens to Fidelity and Vanguard.

 

[FreeAtLast]

Intresting thread as I am about to change things around. I have had the same checking account for years and a few years ago when times were good it was paying
a rate of 6% on the first 25k. It has gone down to about 1-2% but still not bad for today. I am semi-retires so a small weekly paycheck is going into it via direct deposit and I take a draw on my investments on a monthly basis.

 

[TromboneAl]

I do the opposite. I don't let PayPal touch my bank account. They're a bad company.

I only use credit cards with them so I get the most protection possible from my cc company.

That's interesting. I had always used the CC with Paypal, but that meant that every transaction involved several extra steps ("Are you sure you don't want to get the extra protection, blah blah"), and then 50% of the time it would fail, possible due to using a ShopSafe virtual credit card number. I do think that their goal was to make me use the checking account, and they indeed finally wore me down.

What are the reasons you are wary of PayPal?