Last Monday, I logged onto our checking account expecting to see my husband's paycheck sitting there. I noticed our mortgage had been paid, but there was no paycheck. I called my husband to see if he knew anything about it. He didn't, and since we don't normally check our account on payday, we weren't sure if this was unusual or not (did it normally post later in the day, we had recently increased his 401(k) contribution...did that affect it, etc?).
However, after asking around at work, it was determined that my husband's pay schedule had been changed, and we were not notified prior to it happening. If we lived paycheck to paycheck, we would have been scrambling...our mortgage had already been paid after all with no paycheck in the account to support it.
But, thankfully, not only do we have an emergency fund in another account, but we also keep a buffer in our checking account against something like this happening. Yes, we earn a very small percentage of interest on these buffer funds, but it protects us against overdrawing our account (and hefty overdraft fees) when something unexpected like this happens.
Do you keep a safety net in your checking account as protection? How much do you think is enough of a safety net?
Buffie
We keep a buffer in our account too. Only our credit union allows us to keep it in a savings account and they will transfer the money for free to cover any "overdrafts." This way I get a slightly better interest rate since it's in savings. The savings account linked to our checking account is also not our true savings account where we keep our emergency money and other budgeted savings.
This came in handy recently when a $500 check that was supposed to be returned to us was cashed. Nothing bounced and the money was there so it wasn't a big stresser for me. We just had to wait for them to send us a refund check.
Ashley
We have a checking account that earns 4.0% APR, so we leave all our available funds in it. However, I only show a balance of our "spendable" money in my register. I use Quicken to keep a record of what funds we have available in which "accounts": Long-Term Savings, House Fund, Vacation Fund, etc. At the end of each month, I "transfer" the funds to each "account" from our "main account". It's nice to know we have the "extra funds" there if something happens (like your situation), but we don't "see" the funds there, so we're less likely to spend them.
Corrie @ "Cents"able Momma
Wow...that's a great rate - 4.0%! My money market account doesn't earn even close to that right now. I would definitely use your system, if I could. Thanks for sharing.