Life is short, we all know that. Over time, small tweaks to financial habits can build up into a bureaucratic nightmare. That’s what I think happened to me and it caused an unnecessary burden. At the time of my decision, I’m sure getting that bank bonus was a great idea. I’m sure opening this new cash back credit card that is slightly different than my hotel points credit card appealed to me for some reason. There is nothing wrong with adding layers, cards, rewards programs like Swagbucks, etc. and I don’t want that to be the takeaway here. But for me, it has become too much. I want simplicity and efficiency with my financial habit. In this article, I identified three pain points in my current finances and propose solutions and action items for each.
Method #1 – Consolidate Bank Accounts. My mom opened my first bank account for me when I was a teenager. It was the local National City Bank, the once proud Cleveland bank that was a victims of the financial crisis. My mom allowed me to upgrade to the Cleveland Browns debit card to show my diehard fandom. Possessing that card was a badge of honor and I loved getting to show it off every opportunity I could. Now PNC, it is one of the four banks that I currently use for a variety of reasons. My fiance and I opened a bank account at another large bank in the area to begin our “house” account to cover the costs of the wedding and begin saving towards our first mortgage (which by the way, we are in no rush to buy a home!). Bank number two was officially opened! Then, I was introduced to the wonderful world of online banking by…you guessed it…Lanny! We use Capital One Investing as our trading platform versus others such as Acorns or Robinhood. Capital One also offers a checking and savings account that has a great interest rate and it makes transferring funds into your investing account a lot easier and more importantly, faster. When I’m ready to buy, I have access to capital. The last bank account is for the business and is at another financial institution.
Wasn’t that exhausting to read? That is a lot of user names and a lot passwords to remember. Reconciling my cash between the four accounts is consuming more time than I want or have, to be honest. I started reflecting to see what caused me to spread my capital among so many different places. I chased promotions and higher interest rates. It was great at the time and now I find myself asking “Was it even worth it?” Is my time worth the extra 50 basis points on a few thousands dollars in a savings account? Is the amount of time spent transferring capital between accounts and having to constantly check my balances really worth that $150 sign up bonus?
So what is my corrective action here and how am I going to fix this? After my wedding, I am going to try to reduce the number of bank accounts from four to two, nearly 50%. We will work with one bank with a physical presence in the area and keep our Capital One Savings accounts because of the benefits it provides for investing purposes. Shockingly, the fact that Capital One does not have a physical branch in Cleveland has not bothered me one bit or disrupted my banking experience. With the new mobile deposit technology, the need for a physical branch is dwindling. But that is a completely different topic and article. Sadly though, it looks like I may be cutting up my Cleveland Browns credit card for good in an effort to simply this aspect of my life. Don’t worry though, I won’t be cutting my fanhood!
Method #2 – Better Manage Credit Card Usage. This complexity is driven by my desire to earn as many hotel points to reduce my out-of-pocket expenses for our honeymoon. Currently, I have four credit cards (If you haven’t noticed, I love having things in sets of four). One credit card is a cash back card (Chase Freedom), a points card that can be redeemed for gift cards (PNC), a card tied to a hotel chain to maximize the benefits of traveling for work, and a legacy card I have had since my mom opened my first bank account (This one has been cut and I don’t use it). Since I am looking to cover our honeymoon resort with hotel points, I am using my hotel credit card for almost everything.
I know what are you thinking, what on earth is so complicated about only using one credit card to maximize the benefits? It is the co-mingled usage of the credit card for work and personal stuff. When I travel for work, I put the expenses on my credit card, fill out a re-reimbursement form, and receive the cash in a later paycheck. This has its pros and cons. Using my card allows me to rack up points really fast and I get to keep the benefits. The con, and this is a big con. If I don’t enter the expense by a certain date, then I may have to wait two paychecks to receive the re-reimbursement. It is an issue when I stay in a hotel for an extended period, rack up a huge tab, miss the expense deadline because the hotel is not charged to my card until the end of a stay, and am forced to carry a balance for a long period of time. It wouldn’t be a big deal if I used this card for business purposes only. But when I couple the business expenses with my daily living expenses, the credit card bills can become very large and could cause me to use reserve capital to pay the large bill while I wait for the re-reimbursement to be paid out during the next paycheck. After all, I force myself to pay my credit card in full each month to avoid shockingly large interest expenses. The mixed use has also to caused me to not submit business expenses for re-reimbursement because I am unsure if the expense was for a business or personal purposes. There have been instances where I have eaten expenses because I don’t want to submit a personal expense and have the expense eventually rejected by the company. When that happens, I have to re-reimburse the company at a later date. Nobody wants that to happen.
My desire to earn as many hotel points created this convoluted credit card situation that has become a nightmare to sort through on a monthly basis. After my wedding, when I have maximized my hotel points and ideally paid for the honeymoon in points, I am going to split my credit card usage. I will have one credit card for personal expenses and one credit card for business purposes. Splitting the usage will allow me to better manage the expense re-reimbursement procedures and hopefully avoid the headaches described in the previous paragraph. This doesn’t come without sacrifice though. Certain cards offer bonuses during certain quarters on a type of expense or a one-time 10% cash back offer if used at X store. At this point though, I am willing to sacrifice earning the better credit card bonus on certain transactions in favor of simplicity.
Method #3 – Changing Payment Due Dates – This one actually just hit me. I pay three credit card bills a month, rent, three utilities (gas, electric and internet – although I am not as lucky as Lanny who just slashed his bill), a car payment that I loath and would love to end, and insurance. What’s sad is I don’t think any single one of them fall on the same day. What this means is that I have to be cognizant of and remember all the different payment dates for each of these bills. Autopay for some makes this a lot easier of course; but that doesn’t mean that I just blindly pay the bill without reviewing the actual expense.
So I had a thought here on how to fix this. When I log into each account, there is an option buried in the menu asking me if I would like to change my payment date. Why not adjust the payment date for bills to fall one two days of the month? I get paid twice, so I could split the expenses evenly to correspond with my pay date schedule. Then, instead of logging on and reviewing my bills near each respective pay date, I could commit a focused few hours two times a month, review the expenses, schedule payments when needed, and move on with my day. Plus, this method would prevent me from having to balance cash flow and payment date since my due dates do not always correspond with pay dates. My corrective action here will be to adjust payment dates to two pay dates each month. I know I could do this by scheduling payments for a certain day of the month on a recurring basis. But why not make it official? Let’s see how this works once implemented, I’ll keep you all posted.
What are your thoughts on my situations? Am I over reacting here? Can you think of any other solutions or methods to simplify my finances? How many credit cards do you own and manage? Do you play the credit card points game and use many different cards to maximize the benefits? Or do you prefer simpler finances? Is my solution to Method #3 ridiculous? Do you schedule your bills to be paid in blocks? Or do you have different due dates for each bill?