Tuesday, December 11, 2007

'Tis the season for cash flow slip-ups

I'm trying very hard to keep this a "cash-only" Christmas. I've written about this before, but basically I'm trying not to create any new debt with this year's Christmas purchases. So far, I've been managing this well. I've been using my Freedom Account, and diligently tracking my holiday spending. I think I'll pretty much break even.

As a result of this "spotlight" that I've placed on my holiday finances, I've been moving cash between my accounts pretty much constantly. I've mentioned before that I use my line of credit as a sort of money merge account; every time I make a purchase with my credit card, I make a payment in the same amount to my line of credit, reducing the interest-bearing balance on that account, and then I pay my credit card in full using my line of credit at the end of the month. I've been making very good use of this system for the past few weeks.

In addition to my two chequing accounts, online savings accounts, line of credit, and credit cards, I have a savings account with my primary bank. In order to avoid the wait times involved with moving funds between my chequing and online savings accounts, I decided last week that I would use this "extra" savings account as a holding area for my holiday funds in between purchases. This account earns next to no interest, but it's convenient because it's at the same institution as my chequing and line of credit, so transfers are instantaneous.

Yesterday afternoon, as I made my third transfer in as many days from this savings account to my line of credit, I suddenly remembered the fee structure for this account. The account comes with two free debit transactions per month (including transfers to other accounts at the same institution), with additional debits costing $1.25 per transaction. My cash flow shenanigans had just cost me $1.25.

On the one hand, it's only $1.25, and I did catch on before I made more than one non-free transaction. However, it really rankles me that, when I thought I was being so clever and attentive to my finances, I could make a dumb mistake like this. It's entirely my fault, as I have known about this $1.25 cost since I opened the account; it just slipped my mind (mainly because it's been so long since I used the account).

Let's hope that I've learned my lesson, and this will be the last "stupidity tax" I see this season.


Brian Dorion said...

Hah! Ya gotta love the TD Canada Trust Companion Savings account.

Loonies And Sense said...

That obvious, is it?

Brian Dorion said...

I've got one too. I'm looking at getting away from TD though. I'm not happy with the $12.95 fee for the Infinity account. But my line of credit and consolidation loan are there.

I opened up a PC Financial Chequing account and a savings account, that I will eventually switch to, once I've paid off the line of credit.

Aaron said...

There are several other ways you can decrease your HELOC balance. Ever heard of a credit card loop? They're easy and effective. And that's just one. More information at www.ThePayground.com