His, Mine, and Ours: How We Pay Our Bills and Budget

Recently I wrote about our rough draft plans for our tax refund. I got some nice feedback and some interesting thoughts on it. The post also sparked another conversation between my husband and I.

I decided to share some information about how our accounts are set up and the idea behind our budgeting.

Curious to see what’s under our hood? Here are the accounts by ownership:

How we organize our joint accounts:

ING Checking: This is the account where we pay our ‘joint’ bills like rent, groceries, light, Internet, etc. We prefer this account as it has no minimum balances, no fees, and it earns interest. This has deposits from both of us. I deposit on a weekly basis and my husband deposits bi-weekly. It goes with our paycheck schedule and it works well. We have a buffer built in just in case something crazy comes up.
ING Savings: This is our emergency fund/sinking fund/housing fund account. We like to keep the money together in the bank and then we ‘separate’ it on a budgeting spreadsheet. I like to see a larger number, as it gives me motivation to make it grow. The interest rate is more than 10x higher than out previous Bank of America savings account. As of today, though, it is now 3.65%. (*sighs I loved my 4.1%) Any leftovers we have from the checking are sent here. Our tax refund was going to go in here, but my husband is persuading me to use it to severely pay down my car loan. If we do that, then after it’s paid off, I’ll redirect the money to the savings account as payment. With the Fed expected to cut down the interest rate within a month, paying debt seems to be the financially smart choice. This is by far my favorite account and we’re strict about the one way traffic: money only comes into it.

My individual accounts:

Local Credit Union Checking: (It’s so local, that if I mentioned it, you’d know where I live and I’m not cool with that.) I have my job direct deposit come into this account and then I transfer everything out from here. I’ve had good customer service from them in the past and a branch is only 5 minutes away from our apartment.
Local Credit Union Savings: It’s slightly higher than average, but not by much. This is just a buffer if something is need for checking like extra gas money. This is the least active of my bank accounts.
ING Savings: I have my emergency fund over at ING Direct to have it grow faster than it would in my credit union account.

His individual accounts:

Wachovia Checking: It’s where he pays his bills like eating out, computer upgrades, gasoline, etc. I open the mail, so I have an idea of the balance and what not, but I kind of ignore this account. It’s his personal account, so what he does with it is fine by me for the most part. If he buys a flat panel TV from this account great, if it came from the joint, then I’d be concerned.
Wachovia Savings: Same as above. I have a general idea of what he has, but I don’t stress over it. He’s an adult and he’s financially responsible.

How We Budget Our Accounts:

I think the key for us is keeping it easy to use and easy to change. We use a Google Spreadsheet for our joint budgeting. It lists our deposits and expenses for the month. We also add a buffer in case we go over. Using Google for our spreadsheet is great as we sharethis free spreadsheet and it notifies the other one of any changes.

We review this on an as needed basis, if someone gets a raise or works more hours, etc. To determine how much each deposits, we go by monthly income and come up with a percentage and then use that to calculate deposits. Here’s an example:

Person 1: $5000/month
Person 2: $3000month
Total Income: $8000
Bills: $6000/month

Person 1 brings in 62.5% of the income. That’s 5000/8000.
Person 2 brings in 37.5% of the income. That’s 3000/8000.

So here are the deposits:

Person 1 deposits $3,750. That’s just multiplying the bills by 62.5%
Person 2 deposits $2250. “”

It is a system that is a bit more fair then just splitting it 50/50. People do it differently. This is what works for us,so we’ll continue with it for now. Any other ways of managing deposits that you found work?

As for my personal accounts, I use spreadsheets mainly and I’m trying out Wesabe‘s community feature and using Mint to keep track of my eating out spending (I’m trying to be more efficient in this area).

My husband has spreadsheets and GnuCash. He likes it (I thinkJ, I’m not a mind reader, I just see him using it). I find if you do what works for you, then it actually sticks. I don’t like to use GnuCash, but I’m addicted to spreadsheets.

Our bills are automated with the exception of the cell phone bill, which will change next month. When a bill is off, like when our power bill was higher than normal, I just log in and change the amount. It takes less than 5 minutes.

We like our little system and it’s working for us. It’s by no means perfect, but perfection is the enemy of good. It’s better to do something and improve it bit by bit.

How do you set up your account? Any tips, suggestions, thoughts?

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Photo Credit: massdistraction