Is balancing your checkbook still a thing?

Is balancing your checkbook still a thing?

Balancing your checkbook-  is that an adulting skill you should have? What exactly is a checkbook? Do you still need to do this? What is the digital equivalent?

We answer your hot questions about checkbook balancing, how to do it, and whether or not it matters. Lillian goes also on a bit of a rant about how antiquated the US financial system is.In our mailbag is two listener questions: Tomas shares his debt payoff victories, and Don tells us how his wife negotiated to be moved to a W-2 employee from a 1099 contractor as a nanny. Don asks how a nanny can get a retirement account and a transit benefit.Thank you to our two listeners, Tomas and Don, who wrote in to share their stories!

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Is balancing your checkbook still a thing? (transcribed by Sonix)

Will Romey: This show is supported by generous listeners like you through our patreon. This episode was written by the Tamsen G Association and Chris Giddings. To learn more about ways to support Oh my dollar! and get cool perks like exclusive livestreams and exclusive cat stickers, You can do visit

Lillian Karabaic: Welcome to oh my dollar!, a personal finance show with a dash of glitter. Dealing with money can be scary and stressful. Here we give a practical, friendly advice about money that helps you tackle the financial overwhelm. I’m your host Lillian Karabaic.

Will Romey: And I’m your other host, Will Romey.

Lillian Karabaic: Will, today we’re going to talk about something that might seem a bit like a relic of the past: Balancing a checkbook. Do you balance a checkbook, Will?

Will Romey: Never.

Will Romey: I think in sixth grade, in Home Ec, we were – like we spent a day on how to balance a checkbook which was irrelevant to me as a sixth grader, and I’m not sure if it’s relevant to me now and 2019.

Will Romey: It could be.

Lillian Karabaic: Did you like retain the lessons?

Will Romey: No.

Will Romey: Hard No

Lillian Karabaic: I’m kind of jealous, because I definitely did not learn how to balance a checkbook in school. I didn’t have any financial literacy training in school, which I think is like pretty typical. Umm – So, I did one of our one of our producers here at xray brought up the topic to me “should I be balancing my checkbook? If that is a thing?”

Lillian Karabaic: And I conducted an extremely informal survey on my Twitter

Will Romey: – what was our sample size?

Lillian Karabaic: I think our sample size is like 20

Will Romey: I’ve seen less formal surveys.

Lillian Karabaic: I mean I feel like my thesis heard about that many and it seems like an overwhelming number of people do not balance a checkbook anymore at least they don’t do it in the traditional “break out your checkbook register, get your statements brought to you in the mail.” Ryan tweeted at me. “I’m a little embarrassed, I know neither how nor why nor even, what it is, really.”

Will Romey: Yeah I’m because I write about three checks a month. I pay my rent with check and there’s a couple of bills that I just pay a check, because they never bothered to put him into the autopay. And that’s that’s about it. But all that is registered in my bank statements in the same way. Anything else would be-

Lillian Karabaic: Yeah. Do you do you when you check your bank do you usually just log in online and look at the list of transactions or do you go in and download the PDFs of the statements?

Will Romey: The former. I usually just look at the list of transactions.

Lillian Karabaic: Yeah yeah.

Lillian Karabaic: Well so Qristy, also known as “nextlevelbanana” on Twitter. We’ve talked about before the show – said when I use checks, I did balance my checkbook. Now I write maybe three checks a year and I track my checking account balance using a spreadsheet.

Lillian Karabaic: And Hannah said that it was something she didn’t do any longer, but “as a little kid with my dad after paying bills somehow I thought it was fun. Mostly because I got the stamp the envelopes.”.

Will Romey: Yup, that’s sold.

Lillian Karabaic: Yeah, I mean so I have my own rants about why we continue to rely on weird pieces of paper in order to say we owe people money in the U.S.. And I think it’s important before we get into the nitty-gritty of balancing a checkbook to discuss checks themselves and why we have them. There are some advantages of checks. So they’re a relatively safe way to send money through the mail, as opposed to like stuffing cash into an envelope or even a money order I guess. Yeah.

Lillian Karabaic: Any and even a money order. Money orders have the advantage of they can be canceled so if you’ve if you’ve never engaged with a money order what a money order is you go to a provider of a money order and it is essentially a check without having to be linked to an account. So it’s a third party and you usually pay a small fee. Unlike checks which you don’t usually have to pay a fee for other than to get the checks themselves.

Lillian Karabaic: The fraud risks for checks are well-established – like checks have been around long enough, they’ve been around for like 70 years now. So they’re pretty well-regulated, we pretty much know how to find fraud in checks. They are often the only way to pay government entities. So like things like parking tickets, like checks can often be your only option unless you’re willing to get a money order and then go drop it off in person – and for your rent it might be the only way that you can pay it in the states, depending on your landlord. A lot of landlords will take auto pay now.

Lillian Karabaic: Most mortgage companies preferred to do ACH, especially if you, you know have are paying your property tax or something like that in escrow as well but – for mortgage – for rent it can sometimes be our only option still.

Lillian Karabaic: There are also a lot less likely to fail than like your debit or your credit card since – uh, you only need a pen and paper. Right. Believe it or not technically the checks that you get from your bank or from a third party are are not required. You can legally write a check with seven elements on any piece of paper as long as they have the right things in it. So if you know your tracking and account number and are willing to write them down at the bottom along with some other key information – anything is a check.

Will Romey: Right. Old piece of newspaper. Or a rat.

Lillian Karabaic: Yeah I mean you can write a check on a napkin and deposit it. So I actually don’t because I move pretty often. I actually, just print all of my checks. So I. I print them because I have multiple accounts that I’m paying out of. And you can go pick up you know a thing of check paper, just like you know a business uses at an office max and you’ll probably have enough for the rest of your life.

Will Romey: Right. Instead of paying your bank 25 bucks for 500 Hundred or something.

Lillian Karabaic: For me, annoying because I don’t like to have to deal with the the inconvenience of every time I move, ordering new checks and then get a box of 10 books of checks which would take me the rest of my life to use.

Will Romey: Right.

Lillian Karabaic: And I also have hope that at some point we will modernize our banking system and checks will no longer be real. When I lived in Europe people were baffled that the U.S. still uses pieces of paper that we handwrite in order to transfer money. Since almost all of these transactions for like two decades at this point have been done automatically in Europe. So, you know, if you want to pay a friend you text – you can text the money with a bank transfer in Europe and that’s just quite normal, no nobody pays their rent with a check.

Will Romey: Right.

Will Romey: It is very old school. Well I’ve been I’ve been re-watching Seinfeld from the beginning this winter. Because it’s winter. And there were there were there was one bit I found very dated where he’s complaining about people writing checks to pay for their groceries. So I mean it definitely has even kind of phased out from day to day use. I feel like people mostly use him for bills and for rent and like like you were talking about.

Lillian Karabaic: Yeah. And that kind of harps on some of the disadvantages a ton of places don’t even take them anymore. So when I worked in grocery checks were still one of the most common payment types and that was what 15 years ago and now most grocery stores will not take checks. And that is largely because I became a first line defense against check fraud which was quite abundant in grocery stores and I – everything I know about check fraud I know from being a supervisor in a grocery store.

Will Romey: Cuz what? Well I mean how would I commit check fraud? I just use a fake check without my real name?

Lillian Karabaic: Fake checks out of there. So you know a lot of grocery stores won’t take starter checks which are checks that have the number below 100. But the thing is that you can put any number you want on the top of a check right.

Will Romey: I think I mean we did another episode we mentioned checks I think you talked about yeah.

Lillian Karabaic: Which is a good, good hack. Don’t ever start at zero with your checks even though it feels, you know if you have the choice with what number you start out you know start at 100 or above. Because some places won’t take what they consider starter checks which are the checks you get when you open an account.

Will Romey: So that’s why people normally request an I.D. with a check if you’re paying.

Lillian Karabaic: Yes exactly. And you know to make sure that it’s you to make sure that the address matches Quite often, so the disadvantages of checks is that there’s a time there’s there was a time delay so with a debit card or a credit card they instantly are able to check the account and make sure that there is money in it. And obviously there are some banks that do some sort of sketchy things, where they’ll approved debit transactions and then charge you overdraft fees even though you don’t have money in the account, but you can set it up so that your debit card always rejects if you don’t have money in the account but with checks – it could be up to a week delay, sometimes 10 day delay before that check hits the account.

Lillian Karabaic: I don’t know if you’ve been in this position where you’ve written a check for someone and then they take two months to deposit it? And you’re just sitting there waiting and there’s no information other than what you personally know about that check. Right. So there, they don’t know anything because you’re just writing in a piece of paper and it’s just an IOU pretty much. And it can be super frustrating because you can write a check and they could take a long time to get the information back. You also need to remember to carry them and they’re kind of awkward, right?

Will Romey: It’s a big piece of paper.

Lillian Karabaic: Unless you fold them and put them in your wallet. Which is like a good note there that I kind of have failed to bring you a check multiple times and have ended up just paying you through Paypal.

Will Romey: And how do we resolve it? A modern solution that’s more convenient.

Lillian Karabaic: Right?

Lillian Karabaic: And that is largely because I just keep forgetting to bring check because they’re not something I regularly bring myself. And the other thing about checks is that if someone else writes you one and it bounces you’re going to get in trouble.

Will Romey: Right.

Lillian Karabaic: Because that’s that’s trying to pass what is called a bad check. And like it it doesn’t. This is true with your paycheck too, if your paycheck bounces which happens to people sometimes – especially with all of these companies closing down and things like that you, you can end up in the position where you’re not only out the money that you were expecting to get you’re also out a bank fee. And if you were expecting that money to be in your account and it bounces, which could take it can take two weeks for you to find out that that check has bounced, then if you were making transactions and you were expecting that money to be there and then it wasn’t – then you’re also maybe going to owe overdrafts for those other transactions.

Will Romey: It could be months of repercussions from one bad check.

Lillian Karabaic: Yeah. But it can really really put you under.

Will Romey: So that’s what places charge fees when your check bounces, to recoup the fees they’re charged eg when your check bounces.

Lillian Karabaic: Exactly.

Will Romey: Clunky.

Lillian Karabaic: It’s it’s a clunky, clunky system. And to be fair ACH which is kind of what the debit transactions run through – is the same system. It’s just that it there’s you’re removing the step of the bank needing to receive that piece of paper and then put it into a register, which is why ACH does take a while. Right. So debit card transactions we get the information back instantly but they take a while to actually process, through your account which is why they show up is pending. A lot of the time for several days in your like online bank account. And that’s because, believe it or not the way ACH works is through a series of FTP uploads of a giant CSV spreadsheet containing everyone’s bank account information. And how much the transactions are and the date and that is a giant FTP system that goes between all of the banks that happens each day.

Will Romey: And then that’s the sort of process that each one. In some order.

Lillian Karabaic: It’s linked. It’s all linked up and everything like that but like – it’s bizarre that that’s the way that our financial institutions still function. Which brings us to reasons to balance your checkbook. So balancing your checkbook. Why is it important? Whether or not you have checks. Well. Because banks make mistakes.

Lillian Karabaic: Yes.

Lillian Karabaic: And so what exactly is the concept of balance a checkbook? Can you explain do you remember from your sixth grade home ec?

Will Romey: I would only be speculating I guess you’re just making sure you’ve got enough money in your bank account to cover all your outputs and check your expenditures and checks.

Lillian Karabaic: Kind of?

Lillian Karabaic: So it’s really just comparing your statements for your spending from your bank against your own records. That’s it. And so it’s called “balancing a checkbook” because the classic way to do this was your actual checkbook. So it used to be that when you would spend money on your – in the early days of debit cards – and on checks, you would record each of the transactions in this little register that you’d get along with your checks. And I actually continue to use these for – I had to, because I like fancy paper products. I had like a beautiful letter pressed checkbook register that I had in order to encourage myself to every time I was at the coffee shop sit down and enter it.

Will Romey: Oh cool.

Lillian Karabaic: And this was pre-smartphone era. So this was the way that I kept a record of my own transactions. And so with a physical checkbook the way that you would balance your transactions you would take that record that you had theoretically filled out and then you would compare it against your bank statement. And it used to be that your bank statement would be mailed to you every single month along with your canceled checks. These days, most people don’t get mailed statements and they maybe – they usually just check like you do your online them on your online account but.

Lillian Karabaic: You are you still are legally required the bank supposed to provide you with a PDF statement and that will be like you can download it and it will be for whatever the statement period is for your account which is usually a calendar month for a bank account but it would it’ll be from your whatever your statement dates are on your credit cards. So like most my credit cards run on like the 7th. So you know I’ll get my statement date on from the 7th to the 7th of the next month.

Will Romey: Right.

Lillian Karabaic: And the big thing that you’re kind of looking for in this process is – One, you’re trying to make sure that there aren’t outstanding things that you know you’ve written – so checks or something else that hasn’t processed yet – and you’re looking to make sure that the bank didn’t make any errors. So you’re that’s really all you’re doing. It’s comparing your records against their records. Note, in order to balance your checkbook in this instance you need to have some sort of set set of records of your own.

Will Romey: Right, so if I’m using the bank’s records as my records I’m never gonna see a mistake.

Lillian Karabaic: Exactly right. And you’re also not just not you know using it to balance your checkbook. So. So, for example like you know sometimes you write a check to like a nonprofit at the end of your giving or roommate and it takes forever for them to deposit it. But you need to be aware of what that amount is so that you do not overspend.

Will Romey: Yes it always stresses me out at the end of the month. I’m usually the one who collects all my roommates rent and then writes a big check to the bank.

Lillian Karabaic: Umm yea.

Will Romey: And then there’s always way too much money in my bank account in a way that’s sort of stressful because I’m just waiting for you know that two thousand dollars to go away.

Lillian Karabaic: Right right where you’re like this isn’t really my money but I’m just waiting right.

Lillian Karabaic: Yeah no totally. I’ve played that role in many of the houses that I’ve lived in, including like the friends that work service industry and just hand me a pile of cash as their contribution to the rent. And that’s always you know the fun the fun like oh look at me. I’m just dropping 300 dollars of cash off at the bank. So with online banking the great part is that you don’t have to wait for your statement.

Lillian Karabaic: So like it used to be that you would need to actually wait until the you know end of the until the statement came in the mail and it used to actually come with the physical checks canceled like like stamped out as.

Will Romey: I can I think I remember a bank I used to have would send me pictures of the checks.

Lillian Karabaic: Yeah. And then pictures-.

Will Romey: I don’t get that ahead anymore.

Lillian Karabaic: Than it used to be the physical checks canceled and then it became pictures of the checks. And then now most banks will let you click the check and see an image of it, because they have to take images of them as part of their thing.

Will Romey: Right, to process them.

Lillian Karabaic: To process them. And so usually you’ll be able to get a picture of it which is which is helpful. And sometimes you can help identify the “Oh crap they read my roommate’s really bad handwriting wrong and they actually deposited the wrong amount in my account.”

Will Romey: I guess the couple times that’s happened to me they just haven’t deposited it since the numerical number and the written number didn’t quite match.

Will Romey: Match yet.

Will Romey: My grandma is a lefty too I’ve had a number of checks

Lillian Karabaic: Smeared?.

Will Romey: No she’s just got awful handwriting.

Lillian Karabaic: Yeah. So yeah the steps are pretty simple. It’s whatever your own records are against your bank, you find all the interest-earned transactions and you add them to your records.

Lillian Karabaic: So those would be something that wouldn’t be in your record right until you check the bank because you don’t. How much interest.

Will Romey: Because that’s information they’ve got.

Lillian Karabaic: So you know on my checking account I get like two cents of interest per month and I inevitably enter it and then I have fun allocating it to a category.

Will Romey: That adds up – in a year, you’ve got almost a quarter!

Lillian Karabaic: I know it’s so exciting.

Will Romey: Buy a gumball.

Lillian Karabaic: And then I also find any bank fees and I add in my record. For me I’m lucky that I don’t have to pay bank fees at my really nice bank. And if your bank is charging you fees for your checking account – switch banks. We’ve said this before on the show. There’s no reason to be paying bank fees.

Will Romey: There’s a a lot of good free options.

Lillian Karabaic: Yeah. There’s so many good free options and but this is actually helpful for me as someone who does this with my credit cards every month that I I I call it “reconciling” As opposed to “balancing.” But I reconcile my transactions and I use this for, I pay annual fees on some of my cards because I do credit card hacking so I have some of the like more fancy credit cards and it’s nice to know when they’re gonna come due right?

Will Romey: Yeah yeah well especially when you doing more complicated things like that I’m sure. Keeping good records is just doubly more important.

Lillian Karabaic: Yes. And for me a lot of the reason that I reconcile and or balance my accounts is because for me I do a lot of credit card hacking and I have to hit a minimum spend on my cards, and this helps me keep track because they’re not going to keep track for me.

Lillian Karabaic: I need to keep track of “Did I hit the minimum spend within the 90 days that I need to?” Because quite often you’ll have to spend like two thousand dollars in three months of opening the card in order to get the bonus miles. Like I said I don’t really recommend travel hacking as a hobby if you’re trying to work on your credit, but it can be a fun hobby if you really like spreadsheets and are super organized.

Will Romey: And travel.

Lillian Karabaic: If you don’t currently balance your checkbook or reconcile your accounts in some way credit card hacking is probably not the hobby for you. So, there is a bunch of different ways that you can do this so if you use something like Mint. So I think a lot of people that use things like Mint or like those automatically connected budgeting software. They’re like “Oh but how do I balance my account, because everything is automatically imported, and so I don’t really have my own records right?” Almost all of those accounts will let you add in information as you pay it.

Lillian Karabaic: So this is really important if you do write checks you would enter that transaction at the time that you write the check. So even mint will let you do that even though Mint prides itself on its automatic, it will let you enter your outstanding check as a pending transaction, and that is incredibly helpful because it will lower the available balance when you check mint so it can help reduce that terror of. “I just put two thousand dollars in there.

Will Romey: But I need to not spend over that.

Lillian Karabaic: Yeah exactly. And it will give you – so mint and many of the other ones – I use Mint is an example because it’s very popular, because it’s free, but there is a balance and then there is an available cash.

Lillian Karabaic: There’s different terms for different apps, but the first amount balance is what your bank knows about, and the second one is available cash which is – it also covers any pending transactions like outstanding checks or something that you know hasn’t processed yet. And the old way that you would do this is that it would look at your checkbook register and you would compare the two amounts. When you balance your checkbook. Nowadays you can just use that available cash amount.

Will Romey: Okay. So I mean it sounds like in a lot of ways, balancing your checkbook has sort of been replaced by certain technologies, but it’s still worth doing if you’re writing a lot of checks.

Lillian Karabaic: Exactly. So when I asked folks on Twitter if they balance your checkbook and the people that that said that they did they almost all said that they did it using some piece of software now so that – nobody nobody said “I, I did it primarily on paper which is kind of the classic checkbook register”

Will Romey: It sounds like something like Bob Cratchit would be doing.

Lillian Karabaic: It sounds very like it makes you feel like you’re an adult to hear that like “I balanced my checkbook.” So Kate said “I balance my YNAB”, which is what I also do I reconcile mine.

Lillian Karabaic: Sam said “For my job I do, but it’s obviously a requirement in accounting land.” But Sam says “She does not for her personal life anymore. But she did when she was dealing with scarcity living paycheck to paycheck”

Will Romey: Right. You know if you’re more on the margin I’m sure check bouncing would be a way bigger deal.

Lillian Karabaic: It’s really important and I am but I asked her how she did it and she said she used both a Google Sheet and she used her paper account so. So I think it’s really important if you are in that kind of panic mode about overdraft, then this is a good process, because it’s engaging with your money which we always encourage on the show and you don’t have to call it balancing your checkbook if that’s scary. But if it makes you feel cool and like you’re adulting, call it balancing your checkbook. But really is – what it is is a regular process of comparing your records, against your bank records and making sure there’s no surprises coming up.

Lillian Karabaic: And that’s it, right? So if you are super excited about following the old school methods for balancing your checkbook I will link to an extremely ancient “How to balance your checkbook” thing that I found from a bank in the show notes and then also one of my favorite personal finance blogs “Bitches Get Riches” just recently did a whole blog post that actually walks you through how to write a check. So if you’re if you’re like a Gen Z and you’re like “checks? how do? what do I need to do?” I think it’s a really good way to kind of get get a basis in it. But it’s that simple – balancing a checkbook is really just comparing your accounts to another one and you need to have something that you keep track of your money in to do it.

Will Romey: Interesting. Well it’s good background too for something a lot of us use occasionally at least.

Lillian Karabaic: Yeah. Yeah. I hope that this show becomes outdated really soon because we get rid of the sharks but we have a lot of trouble updating the banking infrastructure in the US, so it’ll probably be awhile.

Lillian Karabaic: Yeah.

Lillian Karabaic: We have two things in our mailbag.

Will Romey: Woohoo!

Lillian Karabaic: Right after this break we’re going to dive into the mailbag for this episode.

Lillian Karabaic: We’re back. Thank you to!

Will Romey: We’re back into the mailbag.

Lillian Karabaic: We’re back and we’re in the mailbag just surrounded by letters and envelopes.

Lillian Karabaic: So what’s our what’s our first piece of mail, Will?

Will Romey: Well our first piece of mail comes from Don and Don says I really enjoy listening to Oh My Dollar! Thanks Don.

Lillian Karabaic: You asked listeners to share experiences of asking to transition from a 1099 contract worker to a W2 employee. I got married at the beginning of the year to a nanny. Her employer had not been giving her employer had not been giving her a W-2 prior and I decided to ask to change the practice in twenty nineteen. I did so in an e-mail below, giving them reference to a third party that could manage the transition.

Will Romey: I thought that was the most appropriate way to go about such a sensitive topic. Fortunately, the employer was receptive and my wife is now a W2 worker. Related to that my wife’s employer cannot offer health and retirement benefits. Fortunately, my employer does and my wife is now on that health plan. I’m wondering if we can create – if we can create accounts for tax advantaged benefits. For example my employer offers a commuter benefit where I elect to have a pre-tax withdrawal for a public transit pass. Could my wife set up something similar manually? Does she have options for creating retirement accounts? Thanks for help. Please keep up the great work on Oh My Dollar!

Lillian Karabaic: Don Don I’m so glad you wrote in! And Don actually included the template that they wrote to the nanny’s employer to ask for this so I will I will link to that because I think it’s really helpful because this is like a super awkward thing, because most likely if you’re in this position, you probably work for a small employer. And in this case you work for just a family right. That’s like.

Will Romey: About as small an employer as you can get.

Lillian Karabaic: Yeah right. So this is such an excellent question. So Don’s kind of question in addition to this great. “Like you I’m so happy you’re now above the law with the employer.”

Will Romey: Above the law!?

Lillian Karabaic: It’s great because it’s unfortunately, prior to that the family that was employing them was below the law.

Will Romey: Oh that’s true. Okay. Yeah.

Lillian Karabaic: So unfortunately she can’t establish a commuter account except through her employer as a W2 employee that they – she could ask her employer to just set one up for her at at very minimal cost to them. So if that is something that would make a huge difference it is worth asking about. There’s also special provisions for nanny transportation benefits like literally it is called out in the tax code “nanny benefits.” Many families find that paying for their nanny or a seniors’ caregiver’s public transit pass is like a good benefit and because it will be non-taxable, just like your commuter benefit, it means that you can you know do this without having to pay FICA or unemployment taxes on the value, which saves both your wife and your employer money which is really great.

Lillian Karabaic: So since her employer doesn’t offer insurance coverage, I know that in your case she’s able to get on yours. But for anyone else that is listening, if you’d if your employer doesn’t offer you insurance coverage, regardless of what field you are in you can fill out an application through the marketplace. This does not – You can still get employer coverage through the marketplace if you just don’t like the insurance that your work has. But if they literally don’t offer it because either you’re a part-time employee or they don’t have it, they’re too small. Then you also qualify for the subsidies and various other things like that.

Lillian Karabaic: If they do offer it you would have to pay full freight. But if they don’t then you might be able to qualify for Medicaid, or the subsidy benefits or other cost-sharing provisions that make it more affordable.

Will Romey: I quite like my marketplace insurance right now.

Lillian Karabaic: Yeah I’m a big fan of it. We’re lucky in Oregon because healthcare is such a large industry, here we have a fair amount of options compared to some other states. But, one of the cool things to know about this is that there is a type of plan we’ve covered before. I will link to some of our episodes on it but it’s called a “high deductible health plan.” And what this allows you to do if you have an HSA-eligible one is also open up a “health savings account” and a health savings account is kind of like an extra retirement account or at the very least an extra savings account and it helps reduce taxable income. So it is a good advantage – to follow up on your second question which is “Can she establish a retirement account?” And yes, the answer is totally! She can set up an IRA, which we’ve talked about endlessly on the show. There are two different types of IRA – Roth and traditional and for this year she can contribute up to six thousand dollars per year to those accounts. The traditional IRA reduces your taxable income and the Roth IRA Ray is great if her- if your taxable income is already very low because you do not pay taxes at the time that you take it out in retirement.

Lillian Karabaic: The HSA is similar to the traditional IRA in that it reduces your taxable income. But the other cool part about it is it’s tax free coming out, if you use it for health expenses. So HSA is are really good way to get some bonus. Unfortunately something like a 401K or a SEP IRA is not accessible to a W-2 employee, you do have to be self-employed in order to set up something like a solo 401K or a SEP IRA for yourself. But the as long as you – which those have higher limits.

Lillian Karabaic: So those are nice, but traditional and Roth are both totally available and we have some shows where we’ve walked through how to set those up. The only disadvantage would be since you are married, if you’re filing jointly, there is a phase out at which you cannot contribute to IRAs. If your joint income is really high, that’s into the six figures so most people don’t fall into that but it is something to be aware of.

Will Romey: Great. I hope that answers your questions, Don.

Lillian Karabaic: Yeah I hope so too. And thank you so much for writing in about that. I didn’t I I’m – I’m impressed. Good job. That’s a hard conversation to have.

Will Romey: Our next piece of mail comes from Tomas. Tomas says some good things have been going on in my life that I wanted to share with you. In the last couple of months. I’ve paid off three thousand dollars in various credit card balances, travel, bike stuff, car stuff, house stuff. Then Audrey and I paid off our final balances of school loans at $3,800 each using the savings we’d started together a couple of years ago. All this has resulted in my credit card score jumping 30 points. I’m finally back in the 700 Club. Your financial advice and frugal living inspired me to take more control of my stupid spending and take care of all my financial obligations. I’m effectively debt-free again. Now we are stowing away more money per paycheck, planning for the next car repair or whatever it may be and shopping for a house. I think your financial advice stuck with me because you live so frugal and realistic. It’s not advice coming from someone that has millions in stocks, bonds and all those other financial games that are not under my realm of possibility anytime soon.

Lillian Karabaic: Ahh, thank you Tomas. Someday I hope to have millions in stocks and bonds. I’m working on it. I’m working on it.

Will Romey: Slow goal.

Lillian Karabaic: And you, too, can can get rich slowly. By investing. Anyway, I’m so happy to hear that this all has helped you and you’ve made progress on your credit cards and you’ve paid off so much debt! That’s so awesome. So I’m proud of you from afar and honored that you shared that. Thank you for sending it in. Yeah.

Lillian Karabaic: While we were recording my dad tweeted at me and he felt it was really important that I include him, so he said “I am an old school quickbooks desktop user, more than 25 years. I manually enter each receipt, very rarely download, unless I check it against my receipts first and then I reconcile when I get the bill to verify the auto payment.” Well I guess apple, tree.

Will Romey: That sounds like your dad! *laughs*

Lillian Karabaic: I will say I have. *laughs* My dad was self-employed for most of the time that I was growing up and I remember that there was like a time each month when he was doing his expenses and like doing invoicing and everything where he would grumble about it for several days leading up to it and then he would lock himself in his office for like six or seven hours on some Sunday or something like that. Doing all the accounting and everything. And so I always had this very like oh this is a monthly activity that you do when you’re doing your expense reports and everything.

Will Romey: Nice.

Lillian Karabaic: Yeah I don’t know, I don’t know if I had positive associations with them but I did believe it was a monthly things.

Will Romey: You had associations with it. It was something people did.

Lillian Karabaic: I’m sorry. So yeah even though school didn’t train me on financial literacy my parents totally sat me down and taught me how to balance a checkbook.

Will Romey: That’s true. That’s almost more important.

Lillian Karabaic: Yeah. Thanks a lot folks. This is the financial privilege I was raised with. I think that wraps our show, Will.

Will Romey: Yeah it was that was we covered a lot of ground.

Lillian Karabaic: Are you excited about balancing your checkbook now?

Will Romey: Nahhhh – I’m not convinced I really need to with what I use it for but I think I’ve got a better idea of when I would.

Lillian Karabaic: Yeah. I love doing it in YNAB. I would also say I have an account with my partner where we have each other as credit cards in YNAB and so this allows us to split transactions like at the grocery store and easily without having to actually transfer small bits of money, and we try to reconcile every month. We don’t always get to it but we try to reconcile every month between the two accounts, because we use a really silly system but we actually use our to do list app that were both shared on as our shared ledger.

Lillian Karabaic: And when one of us goes to the grocery store with the other is not there or something will enter the split transaction as a to-do item for the other person and then we’ll check it off as we enter the register transaction.

Lillian Karabaic: It’s kind of a hacky system but it works for us

Will Romey: I mean all you need is somewhere you can write down some numbers.

Lillian Karabaic: Yeah. Exactly.

Will Romey: The rest is details.

Lillian Karabaic: Exactly and the to do list is like it works when we’re not in the same country yeah.

Will Romey: Which is frequently topical for you guys.

Lillian Karabaic: Yeah, well that wraps our show for today. We love hearing from you. Please remember to e-mail us your financial worries or successes at or tweet us at @anomalily or @ohmydollar.

Will Romey: Our producer is Will Romey, myself. Our intro music is by Aaron Parecki, and your host and personal finance educator is Lillian Karabaic. Thanks for listening. And until next time remember to manage your money, so it doesn’t manage you. And maybe balance your checkbook!

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