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Two Checkbook System

This is a repost of an early blog entry, describing our use of two checkbooks.

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Right now we operate using two checkbooks.

One checkbook, Checkbook Number Two, is for paying regular bills and saving for certain annual expenses. These include the mortgage, insurances, property tax, medical expenses, auto repair and maintenance, phone bills, utilities, garbage, cable (basic only!), Daisy's school expenses and some of her recreational activities, the newspaper and Christmas.

The other checkbook, Checkbook Number One, is used to pay the other expenses. These include groceries and gas, clothing, gifts, church contributions, household expenses and the credit card.

I originally set up this system when I left paid employment and we dropped to one income. I didn't want to get caught short and not be able to pay the mortgage or fix the car (or my teeth - sigh). Using a spreadsheet and a year's worth of bills I determined how much should go in Checkbook Number Two. What was left was put in Checkbook Number One.

This system has worked marvelously. We basically ended up with a built-in emergency fund in Checkbook Number Two and have not run short when needing the car (or teeth) fixed.

Checkbook Number One has run short by $200 to $500 per month for several years. This worked because we had some savings. Now that savings is depleted, our income will not go up in the foreseeable future, and we will need to make some different choices to keep from going into debt.