Cash Management at Credit Union

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tictock81
Posts: 32
Joined: Thu Nov 29, 2018 6:54 am

Cash Management at Credit Union

Post by tictock81 »

My wife and I share a Checking/Savings account at our Credit Union. The Savings account is split into 20 sub-accounts, which act as sinking funds for various budget items. It's automated and convenient and prevents us from having too many unhappy conversations about money.

The sub-accounts include things like Vacation, Taxes, Appliance Replacement, Car Replacement, etc.

Example of how this works: 1 day after my paycheck is direct-deposited into Checking, a scheduled transfer for $100 goes into Vacation Fund. Vacation Fund grows over time until I take the family out.

This works really well, but results in a lot ($30K?) of cash tied-up at 0.01% return. I could make 5% by putting it all into a Money Market, but then I lose visibility to the individual sub-account balances. I could track it all by spreadsheet, but that's more effort that I can reasonably maintain.

Any suggestions to get 2%+ return on cash doing something like this? Or another low-effort technical solution?
fabdog
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Location: Williamsburg VA

Re: Cash Management at Credit Union

Post by fabdog »

I could track it all by spreadsheet, but that's more effort that I can reasonably maintain.
Really? I have a spreadsheet that tracks what the money ion our Money market fund is earmarked for, from Emergency funds, to upcoming purchases, to vacations. If I spend 10 minutes in a month on it, there was a lot going on.

If you want to manage buckets and get a better interest rate, make a spreadsheet. Compare 5% to .01% for a year and see if that makes it worth your while?

Mike
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greg24
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Re: Cash Management at Credit Union

Post by greg24 »

30k is $1500 a year of interest you're losing out on. If only 20k could really be moved to a money market, then it is $1000.

Is it worth the $1000 to $1500 annually for you to be able to see your money split into these buckets?
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retired@50
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Re: Cash Management at Credit Union

Post by retired@50 »

tictock81 wrote: Mon May 13, 2024 10:59 am This works really well, but results in a lot ($30K?) of cash tied-up at 0.01% return. I could make 5% by putting it all into a Money Market, but then I lose visibility to the individual sub-account balances. I could track it all by spreadsheet, but that's more effort that I can reasonably maintain.

Any suggestions to get 2%+ return on cash doing something like this? Or another low-effort technical solution?
You have to decide if the "sub accounts" are worth the $1,500 in interest you're missing out on.

$30,000 * 0.05 = $1,500.

What could you buy with that additional $1,500?

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
gotoparks
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Re: Cash Management at Credit Union

Post by gotoparks »

Ally and Marcus let you create buckets which is what you are doing. I don't know the current interest rate but it is more than you have now.
tashnewbie
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Joined: Thu Apr 23, 2020 12:44 pm

Re: Cash Management at Credit Union

Post by tashnewbie »

I agree with others that you'll need to decide whether getting up to an extra $1500/year (at current rates) is worth the time and effort to maintain a spreadsheet. I wouldn't think it'd take more than 5 minutes or so/month to maintain.

Alternatively, I think Ally Bank allows you to create different savings buckets in a savings account. Looks like their savings account rate is 4.2% currently, so less than a money market fund, but better than your credit union.
Lastrun
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Joined: Wed May 03, 2017 6:46 pm

Re: Cash Management at Credit Union

Post by Lastrun »

As the other posters have said:

Best: Use a spreadsheet and whatever the highest savings, money market account, or money market fund you desire currently 5.0% plus
Better: Ally has buckets and a very good tools to allocate, set and track goals for each bucket, in their savings accounts currently at 4.2%
Worse: What you are doing now.
MadHungarian
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Joined: Tue Jan 02, 2018 3:53 pm

Re: Cash Management at Credit Union

Post by MadHungarian »

I do something akin. Credit union with checking + savings (low or no interest). Spreadsheet to manage budget categories&balances. Ancient MS Money software (2004!) which (manually) feeds into the spreadsheet once/month.
The budget category balances are all stored in that credit union savings account. Except that if the combined sum ever equals a significant amount, then i periodically move the excess to my Vanguard MM fund instead, and then at that point it is only 'virtually' in the credit union savings account.
I guess it'd be nice if there were a more automated way to handle that, but you know it doesn't take much time to do, and does help satisfy my urge to fiddle.
I wouldn't want to store everything at Vanguard because there are times when i need instant access to the savings money, and Vanguard transfers have a few-day delay.
Nuestroro
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Joined: Sun Jun 03, 2018 9:44 pm

Re: Cash Management at Credit Union

Post by Nuestroro »

We use You Need a Budget for this. Essentially, YNAB lets us track how much of an account is for travel, home repairs, etc. Yes, we could use a spreadsheet, but it’s worth $80/yr for a nice UI and iOS apps.
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theRoCK
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Re: Cash Management at Credit Union

Post by theRoCK »

Couldnt one also open multiple CMA accounts like at Fidelity, each account earmarked for those savings buckets, and have automatic transfers setup to each of those accounts from the paycheck? This achieves the purpose of getting the higher MM yields, while also still maintaining each bucket separately, and not have to track it in a spreadsheet or anything. Of course, until SPAXX is available as the default settlement in the CMA, which isnt too far away, the MMF needs to be separately purchased (even without that, the yield is still much higher than the 0.01%).

If I remember correctly from when I opened my CMA account, Fidelity allows you to either rename the account or give it a nickname for display, which can be named to mirror the intended bucket.

Not sure if there is a limit on the number of accounts that can be opened by one person though, so dont know if you can have 20 CMA accounts to mirror the 20 savings buckets!!
NYCaviator
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Re: Cash Management at Credit Union

Post by NYCaviator »

We use the spreadsheet system. Really not too difficult, but you HAVE to remember to update it when you transfer money in or you'll lose track. For instance if I have 5 "buckets" in my spreadsheet, and I move $X into the MM account for bucket 1 and forget to update the spreadsheet and a couple weeks go by, I may not remember which category put the money in there for. This is when it's helpful to use the little memos text box when you initiate a transfer from your bank. Then you can go back and look.

But you need to get away from the credit union, at least for savings. 0.01% interest is ridiculous. I've long felt that most CUs are no different than the mega banks, but just with much worse technology.
Mr. Rumples
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Joined: Sun Aug 25, 2019 7:16 am

Re: Cash Management at Credit Union

Post by Mr. Rumples »

tictock81 wrote: Mon May 13, 2024 10:59 am My wife and I share a Checking/Savings account at our Credit Union. The Savings account is split into 20 sub-accounts, which act as sinking funds for various budget items. It's automated and convenient and prevents us from having too many unhappy conversations about money.

The sub-accounts include things like Vacation, Taxes, Appliance Replacement, Car Replacement, etc.

Example of how this works: 1 day after my paycheck is direct-deposited into Checking, a scheduled transfer for $100 goes into Vacation Fund. Vacation Fund grows over time until I take the family out.

This works really well, but results in a lot ($30K?) of cash tied-up at 0.01% return. I could make 5% by putting it all into a Money Market, but then I lose visibility to the individual sub-account balances. I could track it all by spreadsheet, but that's more effort that I can reasonably maintain.

Any suggestions to get 2%+ return on cash doing something like this? Or another low-effort technical solution?
I do exactly this; I have five categories: my cat's savings account for her health care; insurance; health, car maintenance, new car and house; I do it with a $ Store calculator and paper. I know every month how much I take out of each and how much I add. For example, right now I am recovering from dental surgery; that will take XX out while I add this month X in giving me a balance of XXX. I have reduced the number of categories over the years. The interest goes into the new car bucket.

But I started this system in the 1970's. I do fiddle with a number of tickets and receipts, but I have little else to do these days.
"History is the memory of time, the life of the dead and the happiness of the living." Captain John Smith 1580-1631
Topic Author
tictock81
Posts: 32
Joined: Thu Nov 29, 2018 6:54 am

Re: Cash Management at Credit Union

Post by tictock81 »

Thanks all for your suggestions. I'll look into Ally and YNAB. I appreciate the push-back on if it's worth $1,500/yr to avoid a spreadsheet. Does anyone have an example cash-management spreadsheet format they can share a picture of?
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