checking account – One Dollar Allowance

“Afford”

June 27, 2025June 23, 2025mrsonedollarallowanceLeave a comment

I had an “ah-ha” moment the other day about this word. There’s a difference between being able to afford something and wanting to afford it. So many times, we focus heavily on what people see on the outside. I hear it at work lately – I work with agents, and there are comments made about how people spend their money. Now, I agree with the “I just handed you a check for $20,000, what do you mean you have no money?” However, there’s a flip side. Just because someone pulls up in a Tesla doesn’t mean they want to throw money around.

TRADE OFFS

Mr. ODA and I have money. We can go out to dinner, go on a vacation and stay in a fancy hotel, pay for flights across the country for all 5 of us, buy another house, splurge on a vacation house and a boat. If we wanted to. We don’t.

Instead, we want to look into the future. We decided that the ability to spend time as a family, being there for the kids’ activities, and going on different kinds of trips throughout the year to give the kids experiences is more valuable.

I talk about this concept often in this blog. Every dollar spent has an opportunity cost. Every dollar spent should cause the question, “is this the best use of this dollar?” We joke about how we hesitate to buy a $30 pair of shorts, which you wear for years, yet we’ll spend $30 to eat one meal. Of course, we do have those instances where we go out to eat, but they’re not a constant staple of our household. We know that the instant gratification of that one meal isn’t going to get us to our long term goals. It’s the same concept with the $5/day coffee purchase. It’s not about the literal $5 that’s going to get you on your way to financial freedom; it’s the mentality that comes with making better financial decisions.

HOUSE POOR

When we were shopping for our first house in 2012, the bank pre-approved us for $750,000. We set our limit at $350,000. Why? Because we felt we could scrape together 20% down payment and closing costs for a $350,000 home. If we were under a $750,000 mortgage, we’d have to pay a higher monthly payment and private mortgage insurance (PMI) as a penalty for not having 20% down. At $350,000, our mortgage payment was about $2,000. At $750,000, the mortgage payment with PMI would have been about $3,500. That’s an extra $18,000 per year we would have been spending on a house instead of investments, trips, a new car, etc.

If I said to you, “pay $2000 to your mortgage, and at the very same time, put $1500 into a savings account that you can’t touch,” what would your reaction be? You’d find every excuse not to do that. You may do it for a month or two, but there would be an emergency or large purchase that comes up and you’d justify using that money for that instead.

CAR DECISIONS

While we can “afford” the Tesla, we didn’t buy it to be showy. We bought it to serve a purpose. Unfortunately, the concept of Tesla comes with pre-conceived notions for people. We didn’t pay for an extra color. We bought the base model because we weighed our expectations of using it versus the cost of extra charging needed and such. With the tax credit, our net was $38,000. I’d venture to say your car was about that price or more if you bought it new. So while we can afford the Tesla, that’s what we chose for our family because it met our needs. We didn’t buy an $80,000 BMW just for the name when a $40,000 car meets our needs.

GADGETS & TRINKETS

Maybe your spending is at the hundreds of thousands level. Maybe you’re buying the new Nintendo Switch that just came out. Maybe you’re buying each new game for your gaming system. Maybe you have bought into the influencers that are constantly jamming the latest mop and vacuum down your throat. Do you need 4 mops? Do you realize that you probably just need to actually use the one you already have and that this new gadget isn’t a miracle worker?

Everyone has their thing. There’s something that brings you joy and you’re going to be drawn to purchasing new iterations of it. I get that. But have you stopped and really considered the purchase?

This is where I don’t like the “envelope” method. People who use this concept, whether it’s literal envelopes or separate accounts, tend to overspend. They see there’s money left in an envelope and it goes into “extra” immediately in your head. “I saved this month, so I can buy myself something fun!”

This month, I replaced my favorite earrings because the originals were worn out ($12), bought a pair of black shorts because I had none ($14), bought a dress because Mr. ODA needed free shipping 😉 ($20), and two books I really want to read and aren’t available at the library ($20). Before this month’s Amazon order, my previous one was for kids summer pajamas in April. I buy filters for my vacuum instead of replacing it (although I’ll admit that I’ve had my eye on a new vacuum cleaner for about a year, but it’s been sitting at $80 and I know I’ve seen it for less than that). My mom bought me my steam cleaner mop several years ago, and I have a Bona that I bought for myself in 2016. The point here being that I’m stopping and thinking before making decisions, regardless of the amount of money I have available to me.

EDUCATION

It comes down to being an informed consumer. While you can rely on the experts, understand your own goals. When that relationship banker ran our numbers for a house purchase, all he did was ask us our fixed monthly expenses and income (debt to income ratio). Note that our approval was after the changes on how mortgages were approved from the 2008 crisis. It’s a flawed system. But we knew our limits and what our goals were. He didn’t ask us our goals outside of “so you want to buy a house.” At the same time, we were paying towards a wedding. So on top of needing to come to the table with about $80,000, we also needed $12,000 to go towards that wedding. We closed on our house on July 17th and were married on August 4.

We have money in many locations. Currently, in our main checking account, I’m projected to fall below $0 if I don’t have any income before the end of the week. I have a bank account with more than enough money in it, but it just pains me to move money out of that account. I don’t want to set the precedent. I bet if I had kept my business money separate from my personal money, it wouldn’t be as obvious. But we don’t keep things separate because the business income is our family income. So when I had to pay out over $3000 for a repair on a rental house, that ate into my personal checking account balance, so I’ll need to make that transfer.

I listened to the young receptionist at work bark about people spending their money and how someone showed up in a Tesla but can’t pay their $75 office bill. However, I’m observant. I saw that she complained to me that the money in her account showed up on the wrong day so her card was declined at Hobby Lobby. I saw that she regularly came in with a new outfit from TJ Maxx. I’m sure she got a deal, but is a new outfit twice a week a necessity? When she was let go from the job, she turned to “retail therapy.” It’s hard for me to help walk you through the loss of income while you are actively spending.

Personally, I worry, “what if the ability to transfer from our special savings account isn’t there one day?” That’s because I’m looking at the big, big, big picture of our lives, and not what happens today, this week, or this month when it comes to our finances. So that’s why I don’t buy the kids all the cute outfits I see and I don’t buy myself the latest gadget. I’d rather have the ability to go on a trip and do activities with the kids that build memories.

Additional Annual Income

January 9, 2025December 31, 2024mrsonedollarallowanceLeave a comment

Every year, I like to look back at ways we earned income outside of a W-2 or our rental properties. These things include interest earned, dividends paid, and bonuses received on credit cards.

CREDIT CARDS

We opened a new credit card to give ourselves a 0% interest loan when we purchased the hot tub. I’m a broken record on this, but I’ll keep pointing out the availability of this option. Yes, we made this purchase because we could pay for the item outright, but it would be nice to pay for the hot tub over time while letting our money earn more money in other accounts. A sign-on bonus for that credit card and the immediate high purchase led us to $489 earned for doing nothing expect spending money and opening that new card.

Outside of that credit card reward, we deposited almost $1,200 worth of rewards from other cards into our checking accounts. Then we have some cards that earn points instead of cash. These are kept in that credit card’s “bank” of points because they can be worth more if they’re used within the rewards portal (e.g., booking a hotel). Essentially, 100 points equates to a dollar, but it’s not always that because of the bonuses available. With that said: we earned 18,683 points between 3 cards and $73 on another card.

INTEREST & INVESTMENTS

We have two accounts that pay out dividends in December of each year. This year that totaled over $4k. Between two savings accounts, we earned $2,500 of interest payments.

Mr. ODA invests in Treasury bonds. Instead of withdrawing the money after each 4-6 week period, he rolls it over and the interest earned gets deposited into our account. That’s paid us $2k this year.

ODD JOBS & RANDOM INCOME

On top of the things I can project like interest earned and rewards, I also do a few odd jobs throughout the year. Between a part time substitute teacher position, doing surveys, and selling kids clothing and toys to second hand shops, I brought in another $1600. I use this concept as an ‘offset’ in my mind to cover gift giving throughout the year. Mr. ODA brought in nearly $1,000 doing mystery shopper activities for restaurants. Betting on games and doing fantasy football brought in another $700.

SUMMARY

So with minimal effort, we brought in about an additional $14,000 in the past year! That more than pays for our hot tub purchase. It more than pays for our Christmas gifts, and even birthday gifts paid for through the year.

When I consign, it takes several hours to prepare. But I do those items that way because I can earn more money with less stress. For consignment, I’m preparing my items, logging them, printing labels, and then dropping off. Once I drop off, all I do is watch my sales. If I try to sell these items on mom-to-mom type forums, then I have to manage each individual item, follow up on people who need to pay/pick up, and then set out my items and wait for them to actually follow through. It’s just a lot more mental energy even if it may be less physical hours of work.

Outside of the consignment effort and my very part-time job, everything else was fairly passive. We earned a lot of money just by buying other things. We earned a lot of money by just having a savings account with a decent yield. We earned a lot by Mr. ODA investing in Treasury bonds, which takes a few clicks every few months.

The first step should be to ensure your money that’s not in use is in a saving account and earning interest. After that, a credit card with rewards earned should be used. Teach yourself discipline to count your credit card swipes the same as swiping that debit card in your checking account. You’d be amazed at how much those small bits add up.

Service Fees

November 9, 2023October 20, 2023mrsonedollarallowanceLeave a comment

I truly wonder if everyone knows they can pay their bills without paying fees. It really bugs me when there are no ways to pay your bill online without a fee. I don’t like that so many people probably pay it, accepting the fee as necessary instead of finding another way. For the sake of this information, I’m assuming you can hold a basic checking account, financially.

What started this post is my sewer bill. Every month, I receive an email from the city government. If I click “pay invoice” in their email, it brings me to a screen that shows there’s a $1.95 fee for paying, even with a checking account and not a credit card. From that screen, I can’t log into my account. However, if I go back to the email, click their “customer portal” link, then I can log in and pay with a linked checking account for $0 in fees. I put effort into figuring out the account set up here. Had I not, I would have thought they required a fee to pay online and set up a bill pay in my bank account. However, I don’t like paying by sending a check, because it sits outstanding for an unknown period of time until it’s cashed and processed; I prefer the option where it is pulled directly from my checking out immediately so I don’t have to keep track of outstanding checks.

With that, I wanted to share some things I’ve experienced and how I make sure it doesn’t cost me anything additional (unless it’s financially beneficial) to pay my bills.

PAYMENT OPTIONS

There are usually several options to pay a bill. These may include electronic payments via your bank account being linked, credit card payments, in person transactions using cash or check, or mailing the payment with a check. Processing payments costs a business money. It can cost them from a third party provider or by having staff to manually process transactions.

Most placed provide an electronic payment option these days, where you can without the use of a credit card. While I’ve seen an uptick in the number of places allowing payment via PayPal, I’m referring to ACH and EFT transactions. The automated clearinghouse (ACH) is a nationwide network that depository institutions send each other batches of electronic credit and debit transfers. The electronic fund transfer (EFT) is used to move money from one account to another electronically. EFT is an umbrella term for all digital transactions, whereas ACH only refers to transactions used through the automated clearinghouse. In many cases, payments made via ACH or EFT don’t have transaction fees, but some do.

An ACH/EFT payment requires you to provide your bank account number and your bank’s routing number. The company you’re paying is able to draw funds out of your account through this system. Having your bank account information tied to a company makes it vulnerable to data leaks and could cause some people concern. There’s also generally less protections for money drawn directly via your bank account than the type of fraud protection you receive through a credit card.

In general, processing a payment via ACH is cheaper than via a credit card. ACH payments have a flat fee per transaction, whereas a credit card company generally charges a percentage of each transaction. For a $100 transaction, it could cost a company $1 to process via ACH, or if could cost $3 to process via credit. That $2 difference can add up quickly to the bottom line.

There are some instances where you’re charged for sending a check. Honestly, this makes sense to me. The company needs to pay someone to physically receive your check, process the payment, and apply it to your account. The service fee for everything being processed electronically is the surprising one to me. Our city government requires you to add $2 to your car registration payment sent via check/mail. You can pay in person for no additional cost (without the $2 fee). When we lived in a small town in central Kentucky, I would just go to city hall, park for free, wait for a few minutes, and pay via check in person. From leaving my house to getting home, the entire transaction took about 15-20 minutes of my time. Now we live in a bigger city. It’s a 25 minutes drive downtown, parking was $1.75, and there was a long line. The ~90 minutes of my time and having to pay to park in a parking garage were not worth the $2 savings, so now I pay via mail with that convenience fee added to my bill.

Our pediatrician doesn’t have an online portal at all. This is surprising to me because 1) it’s 2023, and 2) it’s a gigantic practice. They provide an option to pay using a credit card over the phone or in person, but it comes with a 3.99% processing fee. There are usually credit card processing fees, but what gets me here is that I can’t pay via a draw from my checking account through a portal. I have to send a check or pay in person with cash or check. One time I paid with cash, and they were confused that I wanted a receipt for it. Since physical checks cost me money to have in my possession, I retain these for when I have no other option. I use my checking account bill pay to send a check. Without fail, I need to be in their office between the time they send the statement and they process the check, meaning I’m hounded to pay the balance. No. The check is on the way. They also take at least 4 days from receipt of check to credit my account. OK, I’ve digressed into a rant again.

CHECKS, CHECKING ACCOUNTS, BILL PAY OPTIONS

Most checking accounts at major financial institutions offer a bill pay system. This is a free service as part of your checking account. You set up a “payee.” This is where you enter the company or person’s name, the address a payment will be sent to, and a phone number for the payee in case there’s an issue with the payment. Your bank sends a physical check to the payee on your behalf (which also saves you postage!). When you need to send a payment, you select the date you want the check to arrive. Since a physical check is sent, it sits outstanding until it’s cashed by the payee.

If you have an account number, there’s also an option that may be available for ACH payments. I have a few payees set up where no physical check is mailed, and my bank processes the payment via the ACH, which I like because the payment is immediate for the day I schedule it.

There are two main benefits of this service. First, there’s a financial benefit. The bank sends the check on your behalf, meaning you don’t have to have an envelope and postage to send it, nor do you have to keep physical checks on hand (we opened a checking account a few years ago, and they charged $17 to have checks for the account). Second, it provides a guarantee. If for some reason the check is not received, there are stipulations that may allow your bank to cover any late fees or similar fees incurred due to a lack of timely payment. I had sent a very large check to a company. Weeks later, it hadn’t been cashed. I went to the bank to discuss, and they issued a stop payment and reissued the check. In this case, there weren’t any fees incurred on my account for late payment, and the company was understanding. My bank also noted that based on the amount, it was flagged for review, and during that review, it may not have actually been sent/processed for payment. I appreciated that I had the paper trail through the process to show what I had done, rather than no receipt or proof of attempted payment if I were to put a paper check in the mail.

CREDIT CARD PAYMENTS

Some companies may embed their credit card service fees within their prices. For example, if you buy something at Kohl’s, there isn’t a “credit processing fee” line item on your receipt. Most large companies prefer the guarantee a credit card provides for payment. When a credit card is swiped, the approval (or denial) is immediate. Accepting a check carries a risk. The company has to process the check after the fact, and if there’s insufficient funds to draw on in that account, they incur a fee for that attempt. So they’re charged a fee and don’t get the payment.

I’ve tried to pay a few people via credit card, so I ask what their fee is. Someone offered to accept a credit card if I split the fee with him. Well, I get 2% rewards on my credit card, so any fee less than 2% would still yield me a positive result. That was a special circumstance though where it was a large payment that needed to be made quickly (e.g., not trusting mail/check).

SUMMARY

Be aware of your options. There may only be a “free” option to pay in person for some (few) companies, but do your due diligence to ensure you’re not being overcharged for simply paying your bills.

I’m going to preach over and over again to pay your bills on time, minimizing interest payments on balances, and without processing fees, all the while knowing your checking account balance and outstanding payments.