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It is also pretty simple to see how my investments are doing during the year, without having to consider money that was withdrawn.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.