I’ve written about how I use holding accounts to separate money from my paycheck automatically along with other creative uses of these holding accounts.   As we come close to ending the 2006 calendar year I’ve made some changes to my paycheck distribution that I’d like to share with you and why I did them.

My pay will now be broken down into four different banks.
Bank A will receive $166.67.
Bank B will receive $126.75.
Bank C will receive the remainder of my pay.
Bank D will receive FSA/HSA account withholdings reimbursement

What’s up with these numbers?

Over the course of the year, Bank A will turn into $4000.   This will eventually become a Roth contribution for 2007.  In the meantime, it will earn 5 pct in a high yield account.

Over the course of the year, Bank B will turn into $3042.  This will eventually become my personal “do whatever I want” money.  I might use it for a quick vacation trip, a new laptop, or something totally frivolous but it’s my money to spend as I please.

Bank C will have the remainder of my paycheck which will be used to pay for normal living expenses: insurance, food, mortgage, clothing, etc.

Bank D will receive the money that is deducted from my paycheck for Flexible Savings Account and Health Savings account.  I’m not sure what the final total will be but this past year it was around $7500.00. This ultimately goes into three components (emergency savings, long term savings and cash investment reserves).