Help me stash my cash
June 3, 2008 5:22 AM   Subscribe

I am absolutely crap at saving and live pay cheque to pay cheque. This must change. Help me find the best place to squirrel away a small amount of cash each week, where I *won't* be able to withdraw it easily.

Despite my general uselessness with saving, I've become quite good at paying bills. But only because I make micro payments on each bill, each week on pay day. So, I pay $60 for my car loan, $12 for health insurance, $5.50 for my landline… and so on with six or seven different bills. Hurrah! For the first time ever, I am not getting angry overdue letters from phone/electricity/credit card providers.

I've tried to do something similar with savings, putting money each week into online savings accounts like ING. But it hasn't worked, because, well, I can take it out.

I really want to find somewhere, or some sort of investment strategy, where I can put away $25-50 a week for an emergency fund, until I have $1000. And not access it. I mean, I'd like to be able to access it if it's life and death, but not overnight, or the next day, like with ING.

But I'm a complete investing novice and have no idea where to even begin looking for something like this, or what name / names it might have.

Any suggestions for what sort of place I should direct the cash would be great.

And can I just clarify – I'm *not* looking for general advice about being a better saver, like cutting out my daily coffee, or being more disciplined or whatever. I'm looking specifically for advice about *where* to put the small amount of surplus cash I do have so I can't spend it easily. ING and online banking are waaaay too easy to access, so no tips in that direction, thanks! And I'm in Australia, not the US, if that makes any difference in advice.
posted by t0astie to Work & Money (31 answers total) 8 users marked this as a favorite
A lot depends on how your salary is paid. We have a credit union and direct deposit at work; I get a fixed amount sent straight to the credit union each month and never see it; the rest of my take-home pay is deposited in another bank. Through the credit union I can check my balance on line but I do not have an ATM card or any other way to access the money other than walking into a branch; I set it up this way for exactly the reasons you describe. I have since opened another account with a stockbroker that takes a fixed amount out of my account each month, I could have set that up in a similar fashion (transfer money in-easy and automatic, get money out-less easy and time consuming) but elected not to.
posted by TedW at 5:44 AM on June 3, 2008

If you can, set up a direct deposit for your paycheck. You should be able to split up the money between several accounts, so whatever method you choose you can automatically put, say, 5% of your take-home pay into that account. That way it never reaches your checking account/wallet and it's easier to forget about until you absolutely need it.

Without reading your full question I definitely would have suggested an online savings account, simply because it usually takes several days to get your money transferred. By that point the impulse has usually worn off.

If that's really not working, though, consider a mutual fund service like Vanguard. They'll let you set up automatic deposits (again, you can use direct deposit, or they'll take a certain amount out of your checking account every week/month). The good thing about Vanguard is that they restrict the number of transactions you can make (I think it's based on a six month cycle) - they do this to prevent people from trying to play the market but it could work equally well for your situation.
posted by backseatpilot at 5:47 AM on June 3, 2008

I'm surprised that you think ING is too easy to access. I use the savings account and since it takes 2-3 days to get the money back (no ATM card, etc) I find that's enough of a deterrant except in cases of extreme need.
posted by cabingirl at 6:01 AM on June 3, 2008

Response by poster: I thought I'd been pretty clear, but to reiterate - I am *not* looking for advice about a bank account to put money into, or for how to transfer money into a separate account. I am looking for harder to access *alternatives* to bank accounts.

A mutual fund or a service operated by a stockbroker sounds more like what I was thinking of.

Any suggestions about what I might ask for / look for along those lines?
posted by t0astie at 6:03 AM on June 3, 2008

look into the CDs offered by ING. you can setup a monthly deposit into a CD, and it'll keep you from accessing the money (without penalty) for 6 months.
posted by jrishel at 6:08 AM on June 3, 2008

and then you should roll your 6 months of 6 month CDs into 12 month or 60 month CDs.
posted by jrishel at 6:09 AM on June 3, 2008

Is this $1000 something you're saving for retirement, or just general savings?
posted by 0xFCAF at 6:09 AM on June 3, 2008

also, in the US, you could direct deposit money into a Roth-IRA mutual fund, and not be able to touch it (without penalties) until retirement. I'm not sure what the equivalent retirement saving method would be in Australia
posted by jrishel at 6:10 AM on June 3, 2008

Best answer: I'd echo above.. have some of your paycheque sent to an account in a bank on the other side of town, preferably one that's inconvenient to get to. And don't sign up for online banking or get an ATM card.
posted by dirtynumbangelboy at 6:17 AM on June 3, 2008

Response by poster: What is a CD? Is it like a term deposit? I've just had a look at the Aus ING site, and it offers term deposits, but nothing called a CD.

I think the alternative to Roth-IRA here is superannuation - I already have that through my employer's compulsory contributions. Once the money goes in there, it doesn't come out 'til you retire for good, which is a bit *too* long term. Although, in the new financial year, I am going to ramp up my voluntary contributions to that also.

The $1000 is an emergency fund. After I've stashed $1000, I want to start saving the deposit for a flat. So far I've made it to a whopping $700 before there was... an emergency. (A real one - surgery.) It was really, really hard to scrape that $700 up and I'd like to avoid temptation and get the money together as soon as I can. Hence the quest for a place I can put cash and *not* get at it.
posted by t0astie at 6:18 AM on June 3, 2008

Just set up an ING savings account and have a couple hundred dollars automatically taken out of your paycheck and transferred to that account. It takes about three days to get money out of an ING account so it's not easily accessible and the interest rate is the highest you can get without a minimum balance!
posted by lintacious at 6:22 AM on June 3, 2008


"I'd like to be able to access it if it's life and death, but not overnight, or the next day, like with ING"

posted by dirtynumbangelboy at 6:25 AM on June 3, 2008

Best answer: oh.. t0astie.. I understand what you're asking for; my suggestion was predicated on the difficulty of getting to the other side of town to physically get into the bank to withdraw money.
posted by dirtynumbangelboy at 6:26 AM on June 3, 2008

Response by poster: Yeah... I really am looking for alternatives to bank accounts that would, ideally, take a *substantial* amount of hassle and time to get my hot spendy hands into. Much, much harder than ING and/or a separate bank account. That's what I have now. And it does not work for me.
posted by t0astie at 6:32 AM on June 3, 2008

Do you have a sibling or relative close to you? Someone you trust unquestioningly? Give that person a monthly deposit to store safely as he or she chooses. Instruct this individual not to return the money to you until it has reached a specific dollar amount or tragedy befalls you to the point that no other funds are available. Banks are required to give you your money pretty much whenever you want. A little sister can tell you "no" a thousand times a day without feeling a hint of remorse. Again, though, make sure this is someone you trust to a) give it back when it's time and b) give it *all* back.
posted by Help, I can't stop talking! at 6:47 AM on June 3, 2008

Could you get a bank account in your parents name/relative/friend so they would have to withdraw it for you if you wanted it? They could then act as a buffer zone
posted by rus at 6:47 AM on June 3, 2008

Maybe have your parents open an account and send the money to them on the condition they won't withdraw it unless you really are in need of it?
posted by hungrysquirrels at 6:50 AM on June 3, 2008

Damn, too slow, rus beat me to it
posted by hungrysquirrels at 6:51 AM on June 3, 2008

(yep, a CD - certificate of deposit - is a term deposit. different countries, different jargon)
posted by gaspode at 7:01 AM on June 3, 2008

Response by poster: Oh dear... the ING term deposits looked really good - ''avoid temptation'' indeed! - but the monthly thing would be a problem. I'd never hold onto the cash for a month. Whatever I do, it's got to be weekly.
posted by t0astie at 7:14 AM on June 3, 2008

If you're OK giving up on the idea of interest, you might consider a piggy bank.

I'm totally serious.

Old ceramic piggy banks didn't have a stopper; to get the money out, you had to break them. So find an antique bank, on eBay or somewhere. Pay some money for it--maybe $50 or so. Every week, fold up a bill in the largest denomination you can stand, and slip it into the slot. Nothing easier. To access your money, though, you'll have to smash your antique with a hammer.

I know this sounds silly, but symbolism matters. Speaking as someone who shares an unfortunate tendency to dip into the savings account, I'd find it a lot more difficult to destroy a physical object, than to access any account that can be gotten to with a phone call. And it's all-or-nothing: you can't siphon off little bits at a time, thinking you'll make up the difference later.
posted by neroli at 7:17 AM on June 3, 2008 [2 favorites]

in the US, you could direct deposit money into a Roth-IRA mutual fund, and not be able to touch it (without penalties) until retirement

Strictly speaking, that's not true. After you've had a Roth account for five years, you can take up to $10K in distributions tax and penalty free to buy or build your first house.

From the spelling in the original post, I also suspect that the writer isn't in the US.
posted by joyceanmachine at 7:18 AM on June 3, 2008

does your employer have a stock purchasing program?
a lot of these programs take a certain percentage out of your paycheck once you sign up and award you shares at a hefty discount at the end of the quarter or six months. you can get the money back but it requires time and filling out forms and will only be paid out upon the next billing cycle, which makes impulse buys pretty tough to pull off.

also consider making larger contributions to your 401(k). many employers match the first 2-5% of your input, which is free money in the bank, and even some after that. you can always get out the money if you really really really need it but it's time consuming and hurts financially since you're missing out on all the potential interest earnings. putting money into a 401(k) while still young is the best thing you can do anyway.
posted by krautland at 7:31 AM on June 3, 2008

Are you in a Credit Union? Do they have something like a Christmas Club account, where you put money in all year, and have a nestegg at the end that you could roll into a short term CD (Certificate of Deposit). You get dinged pretty hard if you cash in the cd too soon, so that might work. But you usually have to buy them in chunks of 1,000 or more.

If your employer is large, and has a pension fund, they may have personal finance experts available. Most investments are geared to larger sums, but maybe a Roth IRA would work. It allows you to withdraw the principal without penalties, although there are tax details. I think a financial adviser would be a big help. The "free" ones tend to make money on selling products with bigger commissions, so if your credit union or employer offers it, you'll get better advice. Smart project; good luck.
posted by theora55 at 7:54 AM on June 3, 2008

So here in the UK, I would probably open a notice account, that is, one where you have to give x days notice to get the money out - probably with a building society, and preferably by post for that extra time delay on getting access to the money. It is (usually? or always?) possible to get money out quicker by paying some kind of fee, but if you could go the 'trusted person' route, you could get them to keep hold of your passbook, if the thought of having to pay for your money isn't enough to stop you. Of course, I don't know if this kind of thing exists in Australia, so good luck.
posted by Lebannen at 7:57 AM on June 3, 2008

Best answer: I think in Australia, if you want to avoid having access to your money quickly whilst still being able to access it in a dire emergency, you're a bit limited.

You could set up something like the ING account to get to $1000 for an initial payment into share portfolio or managed fund and then keep contributing to that fund every month. That way, to get out of the fund, you have to sign forms and wait a while for them to cash out the value of your share in the fund.

For example, a managed fund can be topped up each month with a payment of a few hundred bucks but you will need a larger chunck of cash to open it in the first place.

You've said you managed to get $700 into an ING account before so, can you bite down and make it to $1000?

The real problem you're facing is that you want the restriction of a term deposit but you want to be able to contribute over time (something a term deposit won't let you do - you need to lock in a wad of cash on day one and keep it there for the term to gain interest.)

If you think this barrier of entry is too high then, perhaps do what other people suggest - get your parents or a friend to open and account and give them the final say on whether you get access to it.

Or set up a progress saver account with one access card and no internet banking then take the card home and freeze it in a big container of ice or leave it at a different house or a place you don't visit regularly so it'll take a few days to get to it (via defrrosting or organisng to pick it up next time you're at that house)

Then, when this mystery account has enough money - start investing in your managed fund.

Through a combination of making it difficult to access the money, having it not touch your main account but go straight into your emergency fund account and then eventually getting it into a managed fund which you can top up regularly, you'll be on your way to having that emergency fund that is going to grow over time...
posted by moocheen at 8:10 AM on June 3, 2008

I would try and set up a system with multiple ING Term Deposits - no minimum deposit and no fees, and you can have them roll over when they mature. Start one tomorrow for 30 days, then start another one next week, and so on until you have four separate 30-day term deposit accounts. If you can handle keeping the cash for a couple of days after payday (assuming you get paid every Friday, the end of the 30 day deposit would be a Monday, for instance), you can arrange it so they automatically debit more money from your regular account, add it to the amount that just came out of the term deposit and begin a new term deposit.

This sounds awfully complicated (mostly because of 30 days not fitting perfectly with a weekly pay schedule), but I don't know of any product that would suit you out of the box. I would check it with ING before attempting to set it up.
posted by jacalata at 8:44 AM on June 3, 2008

And then I got inspired by the Credit Union comment above - Bendigo Bank do have a Christmas Club account: withdrawals cost $15 each except for Nov/Dec/Jan, no restrictions on deposits.
posted by jacalata at 8:50 AM on June 3, 2008

If you are good at paying bills every paycheck, then set up a situation where your savings strategy is a bill that needs paid.

This will work bestif you can secure a $100 signature loan from a bank; but if that's not possible then ask someone you know for a $100 loan. Try to avoid friends/family who may let you get away with a late payment now and boss would be a great person to borrow from. At any rate, once you have the $100, go and immediately purchase a term deposit. Set up a payment schedule with your lender that involves paying off the loan in weekly installments of $25. Once then loan is paid up, start the process all over again.
posted by wabashbdw at 8:55 AM on June 3, 2008

Best answer: umm...and just to continue the verbal diarrhoea, the government is apparently about to set up First Home Saver Accounts, tax-advantaged savings accounts through super funds that receive gov't co-contributions and can only be withdrawn to buy a first home or rolled over into actual super. Available in October, supposedly.
posted by jacalata at 8:55 AM on June 3, 2008

If you have no self-control then you have no self-control. If ING is too easy to access than anything short of giving the money to someone who will refuse to give it to you is not going to work. Its just as easy to cash out a 401k to those without self-control.
posted by damn dirty ape at 9:48 AM on June 3, 2008

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