How to get out of debt: Part 4

The bipolar budget:

I am calling this the bipolar budget, because my wife is bipolar, and she blames her lack of financial control on her bipolar. Whether it is the reason or not, it makes a good title. But the truth is this system will work for anyone.

If you are a person who just can’t have money without spending it, then the thing that you need to do is to hide it, or make it inaccessible to yourself.  I found the best way to do this with internet banking.

Internet banking typically has no fees, so you can transfer money between accounts as often as you like. The Dutch ING bank made this popular in North America with the commercials with the “guy with the accent” telling you to “Save your money”, and you know what, he was right!   🙂

The Canadian branch was then bought out by Scotiabank in 2012 and was rebranded Tangerine in 2014, while the US branch by Capital One who rebranded it Capital One 360.  So, why the history lesson? Because I found that the system I setup with them works. There may be other internet banks out there with similar services, and if you know of one, please let everyone know in the comments below, but I will describe why I use Tangerine, and how.

ING had the highest interest rate that I found at the time, and it had no fees, so I did save money, and it grew.  But that is not all. I used its automatic transfer to pay my bills before I have the chance to spend it.  I do have a normal bank as well, but I try to do as little with it as possible to avoid the fees.

So, I set up the following bank accounts:

  1. My internet banking chequing account. It is called a chequing account, but I don’t write cheques on it, I use Interact / Debit, so I will call it a Debit account instead. My paycheque goes in here every second week, and it has automatic transfers to take the money out before I can spend it.
  2. My wife’s internet banking debit account. It is actually our joint chequing account, but that is only so I can transfer money into it, she does all her shopping with it.
  3. My wife’s joint internet banking savings account. I transfer money into it, and it transfers out to her personal, pet and other accounts.   She can’t spend money from here, she has to transfer it to her debit account when she needs it.
  4. My wife’s pet account.   Obviously for pet food, etc.   Again she needs to transfer money out to spend it.
  5. We both have personal internet banking accounts, but currently we don’t put much if anything in them. I have some birthday money in mine, but I have no monthly personal budget.  Whatever is left after my paycheque is divided up I can use for personal, but I try to put into savings.
  6. My internet banking savings grocery account, is used to transfer money to my wife on a weekly & daily basis, so she can’t overspend.  Weekly she gets about $150, and daily about $7 for the little things that come up, like running out of milk.
  7. We also have one old fashioned joint chequing account. My wife’s disability pension goes in here at the end of the month, and I pay the monthly expenses from it.

The down side of the separate accounts is that you need to estimate how much you need before you go to the store, vet, etc. so you can transfer the money.  We do use internet banking on our smartphones, but it takes time to transfer, and the people behind you in line are not always impressed.  But if you only transfer the money before you go to the store, you know that you can’t overspend, and you have to put a few things back if you don’t have enough.

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