The Difference LBYM means

[pihwoah]

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.

I can relate. I don't worry too much about how much $$ is in my checking account for purposes other than paying the bills scheduled for that month. At the end of each month, the excess (less $500 or so for "fluff") goes either into a savings account or investments.

All purchases are made with a cc which makes life so much easier.

 

[Dog]

Scary to find out you only have $10 in checking account....even scarier is the need to find a new high paying job at the age of 55 (assuming the need to replace the $120k salary that was lost). Sounds like he isn't worried.


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[fritz]

Our Credit Union requires a minimum of $500.00 in checking to earn interest (and you don't want to go below it) - it's a joke @ .1% earned interest. The same interest with the required savings account to be a member, but its minimum is only $5.00. We keep them as they are local, and it's nice to have a place to get cash in a hurry, cash a check, and free ATM after hours. Have our SS and taxable account quarterly dividends deposited in the savings. We have an ALLY savings (and checking) account we transfer money to for the .99% interest. This is a pain as you can't move money directly from the savings, and have to move it to the checking to get it to Ally. We don't keep more than about $1k to $2k in the checking as we have a debit card attached to it (ATM usage). We do not link the savings to the checking in case something bad drains the checking account - it could take awhile to get the money put back per my wife, a former banker. Meanwhile, easy to replenish checking from savings with online banking.

 

[Ronnieboy]

I think it is a money management issue too. I would think most everyone on this board would have a clue the rough balance(s) in their accounts and especially know if $10 was going to clear. I'm still accumulating and try to keep 100% invested so my checking is just a grand or two. Worst case we have a line of credit $10k attached to the account and there is no charge for the transfer of funds but interest will start to accrue from day 1, seven percent I think is the interest rate right now. Much better than a bounced check, not that I have seen one of those for decades.

The system is set against people who live paycheck to paycheck though. DD who has struggles pays a fee to cash a check, buys groceries at a convenience store and waits for the car to break down instead of preventative maintenance. When I tell her it's free to deposit a check in a credit union or it's less expensive to buy items at a grocery store I'm always told, "It's only a few dollars" She just doesn't get it.

Lastly, I'm not sure waiting or expecting an inheritance is a valid money plan . I know I'm not expecting one and I believe my siblings are of the same mind, but if I heard any of my kids mention that, I'd say keep waiting cause I'm hoping to die broke.


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[mickeyd]

Each month after reconciling our checking account, I generally drain off all but $1K and stick the rest in our Ally online account to take advantage of the .99% APY. If I need a quick infusion of cash, Ally will transfer it back a couple of days. Our checking account is also backed up by a savings account at the same bank that holds <$5k. Belt/suspenders mode, I guess.

 

[Olbidness]

I keep 25K minimum in my checking which is 6 months of living expenses. The Credit Union pays 1.5% interest on balances up to 25K. Many years ago I would keep 1 month of expenses in checking and 5 months in a Money Market account but MM rates are pitiful now. With a relatively high checking account balance I worry about making impulse purchases but it hasn't happened so far. I wouldn't sleep well with $10 in checking. I started off in that kind of financial condition but didn't stay that way long.

 

[UpAnchor]

I keep 25K minimum in my checking which is 6 months of living expenses. The Credit Union pays 1.5% interest on balances up to 25K.

I think I'm with the wrong credit union...


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[Olbidness]

I think I'm with the wrong credit union...


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It's a sad state of affairs when we see !.5% interest on cash as good thing.

 

[Badger]

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.

I could easily have written this post about my best friend from HS almost to the letter. He knows I have prepared differently and have no financial worries but he has no idea how well. On occasion when he gets into a difficult bind, I play with the idea of giving him a helping hand. Just as I get to the point of approaching him with the idea I find he has directed some new found money toward another instant gratification of some kind and I stop in time. He has had a fair amount of problems throughout the years as we both have that would make anyone depressed but has chosen a different path to try and cope. He methods will never change so all I can really do is be emotionally supportive during the hard times. He's a good person so it is sad that his choices have compounded his stress.

Cheers!

 

[gauss]

I think I'm with the wrong credit union...

+1

Seriously - does the CU mentioned have a limited field of membership? Would you be willing to share the name of the CU?

-gauss

 

[Bryan Barnfellow]

Note to self: in future when traveling with a friend in his vehicle, first check that the hood isn't rusted shut!

Reminds me of the time I was a passenger in my friend's '64 VW bug (which was an ongoing work in progress) and the gas tank fell off right in the middle of a large east coast city (in pouring rain).

That was better than the other time when in the same car the battery, which was inexplicably in the back seat) caught fire and he calmly put it out with a fire extinguisher while still driving! Good times. -BB

 

[Olbidness]

+1

Seriously - does the CU mentioned have a limited field of membership? Would you be willing to share the name of the CU?

-gauss

Community Resource Credit Union (formerly EXXON) in Baytown Texas. I double checked the interest rate, it's not 1.5%. It's 1.78%!

When I joined you had to be an employee or a relative of an employee, I think that has been relaxed.

 

[poorcarver]

Speaking of banks and their "opportunities" I happened to have a high balance in my checking for a few months. Was in the bank for some reason or other and got the full on press to do the Chase Preferred Customer thing. No thanks.

 

[Olbidness]

Scary to find out you only have $10 in checking account....even scarier is the need to find a new high paying job at the age of 55 (assuming the need to replace the $120k salary that was lost). Sounds like he isn't worried.


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I'm envious of people like this. I'd pace a hole in the floor in that situation.

 

[gauss]

Community Resource Credit Union (formerly EXXON) in Baytown Texas. I double checked the interest rate, it's not 1.5%. It's 1.78%!

When I joined you had to be an employee or a relative of an employee, I think that has been relaxed.

Thanks! It looks like the geographically based field of membership requirements to join may be met by many of our Houston area board members.

-gauss

 

[Cheesehead]

The only folks who would have a lot of money in their checking account are ones who haven't been the victims of ID theft yet. My acct was hacked and the thieves spent at OUT-OF-STATE five separate stores, each one in a DIFFERENT COUNTY, always in an UNINCORPORATED AREA, each incident A HAIR UNDER $1000, so they knew what they were doing!

When you go into the bank to complain you learn that this is one of the few crimes in our country where you are assumed guilty until the bank figures out you're telling the truth. You won't be dealing with the friendly folks in your branch, rather, you will be dealing with Loss Prevention at HQ. It will take WEEKS to get reimbursed. The bank tells you to file a police report but...the cops will tell you to take it up with the police in the jurisdiction that the money was illegally spent. And that's why the thieves chose out-of-state and specifically each time in a different county. PLUS...I had to deal with sheriff's offices since it was always in unincorporated areas, and they have less people skills than regular cops. In fact, they don't give a hoot about an out-of-stater since you can't vote for sheriff.

So in sum, it can happen to you too. It is a lot harder to deal with than credit card fraud. It will take many, many hours of your time.

 

[Olbidness]

The only folks who would have a lot of money in their checking account are ones who haven't been the victims of ID theft yet.

I'd prefer not to have my emergency fund in my checking account, but with Money Market rates what they are, it's what I've decided to do.

All of my liquid assets are accessible on-line, one the many risks I have to manage and mitigate. "I rolls the dice and takes my chances"

 

[Cheesehead]

I forgot to mention, the perp on the security tape, and it took a couple of weeks to get the security video, was not me at all, so that helped resolve it.

And if your funds are in a business account and the thieves comes in through the use of a hacked debit card, in most states the bank has no responsibility to make you whole. Check that out. Not something they like to mention...

 

[Markola]

occasion when he gets into a difficult bind, I play with the idea of giving him a helping hand. Just as I get to the point of approaching him with the idea I find he has directed some new found money toward another instant gratification of some kind and I stop in time. He has had a fair amount of problems throughout the years as we both have that would make anyone depressed but has chosen a different path to try and cope. He methods will never change so all I can really do is be emotionally supportive during the hard times. He's a good person so it is sad that his choices have compounded his stress. Cheers!

+1. I find that as the years roll by of us being LBYMers and most of our friends, well, not doing that, I have to consciously fight my judgment or appearance of judgment. It's increasingly difficult as we all enter our 50s. One dear friend, recently divorced at 52 due, in part, to money instability issues, approached me for help to learn how to budget because he knows I save and invest avidly and that " I can squeeze the buffalo off a nickel." I agreed to the conversation but started it by saying I am just offering advice as requested, not judgment. He's a contractor who owes a different friend $10K for a truck, which has had repair problems that he can't pay without debting. It was a good conversation and I thought I got traction. However, the next time I saw him, he was over the moon about his new $800 bicycle that was such a good deal. I smiled and said "congrats", but I wasn't totally honest. I have decided my friendships are more important than money and, somehow, people muddle through their old ages and he will, too. I have just taken a different path that I believe in strongly, but I am not inherently superior.


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[jazz4cash]

+1

Seriously - does the CU mentioned have a limited field of membership? Would you be willing to share the name of the CU?

-gauss

I'd like to join too, but I'm not seeing that extraordinary rate on their site. No matter as I am not eligible anyway.
EDIT: Checked again and found 2 pct on balances up to 20k! Wow!

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[Music Lover]

I've been an LBYMer for most of my life and have watched a friend slowly destroy his financial well being bit by bit over the years. We both earn the same (MegaGovt). I have no mortgage and no debt and will be retiring comfortably in spring with a solid COLA pension. In spite of several foolish decisions, somehow 15 years ago he was just 8-10 years from being mortgage and debt free but then decided to sell and build his dream house. Unfortunately, he sold just before the housing market doubled prices, which also doubled the cost to build. He is now 52 with a mortgage 4 times his annual income, and to make matters worse, he is now planning on retiring early and taking a huge penalty on his pension that he can't afford to take...in fact, retiring with full benefits might even be cutting it too close. And, of course, he also wants to replace a reliable paid off vehicle that has just 120,000 kms (75k miles) on it with a new one.

 

[Danmar]

Not sure why these type of threads are so popular here? I guess it makes us feel good knowing we are so much smarter than all these "losers". I am as guilty as the next guy in this regard.

 

[Olbidness]

Not sure why these type of threads are so popular here? I guess it makes us feel good knowing we are so much smarter than all these "losers". I am as guilty as the next guy in this regard.

For me it's a reminder of how far I've come. It feels good to win with money and I wish everyone would. My son is the only one I actively try to educate and all I'm trying to do is show him my mistakes so maybe he can avoid them.

LBYM is a lifestyle choice not everyone is willing to make.

 

[Danmar]

For me it's a reminder of how far I've come. It feels good to win with money and I wish everyone would. My son is the only one I actively try to educate and all I'm trying to do is show him my mistakes so maybe he can avoid them.

LBYM is a lifestyle choice not everyone is willing to make.

Agree. I gave up giving unsolicitated advice to all but my daughter years ago. She is actually better at LBYM than I was at her age. Hard not to be smug.

 

[dunkelblau]

I have to admit that I sometimes envy people who can live so close to the edge and still sleep at night. They must have what I would consider to be extraordinary optimism and confidence in their future.

That and the fact that they seem to enjoy what they're spending on. I topped out on my "S-curve" long ago so the surplus was for naught. I didn't see that coming when I was a young adult.