Thursday, May 6, 2010

Switching accounts

Lately i've been tapping my "Emergency fund" account very frequently, usually for repairs or to cover miscellaneous expenses like school stuff, gifts.etc. I put 2000lps every quincena on that account and I usually take out about 1000 to 1500 from it.
At the same time i've request my coop to take 600lps every quincena and put it in as "voluntary savings" which can be withdrawn at any time I wish, after filing out the necessary paperwork. THis one was supposed to be my "Freedom Account" to cover the expenses i'm paying with the account previously stated.
It seems natural that the one account which is easier to access be the one that I actually tap into the most. So even though it might seem like a setback i've decided to swap labels on them and have my bank account be the "Freedom account" for car repairs, gifts, school expenses, home repairs, etc.
At the same time I will now label my coop voluntary savings as my "Emergency Fund" since I will access that only in case of a real "Emergency" like unforseen medical expenses, accidents, etc. I would probably have to use a credit card to pay up front since taking that money out requires at least a half day of processing (even though I manage the coop too!). But this paperwork makes it harder for me to take money out in a whim and makes it easier to build up a nice amount. Some other coop members already have 20,000lps or 90,000lps in voluntary savings!!
I will increase my coop voluntary savings to 1000lps every quincena (400 more) and leave the new "Freedom Account" at 2000lps per quincena. The good thing is that both are taken deducted automatically from my pay by my employer. Although for the change I have to wait a bit since the person that does it is on vacation until June.


La Gringa said...

That sounds like a logical move -- to make the "Emergency" funds harder to access. Do they pay a good interest rate? I'm thinking when you refer to 'coop' you are referring to something similar to 'credit unions' in the US, which are usually a sort of savings and loan company for employees of a certain company or other defined small groups.

Anonymous said...

Good move indeed! and just forget that it's there. Out of mind, out of reach


Steve Smith said...

Financially speaking it makes more sense to not save but put every extra penny into paying down the debt. You are paying much more interest on your debts than interest earned on savings. For your emergencies, just use a credit card as needed.