There are 3 banks I will need. Now, I know what you are thinking. If I have at most $250,000 – what would I need 3 accounts for? Well, there will be a number of reasons. Let’s look at the accounts I will need. First is my checking account. This is the account where most of my investments will deposit into. It will be my current checking account, and I will continue to follow the same process that I am doing now to pay for bills, and other items. My carry card will be used to purchase whatever I will need to purchase, and every month, I will pay the card in full. Even with the income I would generate from this what if, my carry card will be more than what I will earn in a month, so things can get ugly really fast if I am not careful.
The second account will be a Money Market Account. This is for taxes, and nothing more. Every month, my investment fund will deposit 25% into my Money Market account, and the rest in my checking account. If I need to send more such as from the rental property, or property taxes, those will also be added. With a Money Market account, you can only make 6 withdrawals per month. I will have federal, state, and property taxes to work with. Those three things can be paid all in one moth. If I should have more taxes, I can pay them in separate months. While I am sure that I could acquire a debit card for the account, I will decline because the checks will be the only way I will pull money out. This will show a paper trail of my payments, and settle any disputes there. I don’t consider this as my money, but the government’s money, and I am just holding it until they ask for it. Any taxes that can be paid online, I will do so.
The third account will be a $25,000 emergency fund. This will be used in the event of an emergency. If something unexpected takes place, and it needs to be addressed immediately, I will transfer the money from the savings account to the checking account. I will then write a check, or use my debit card to pay for solving the emergency. Keep in mind that $25,000 is not a lot, and the roof needing to be repaired can cost $10,000 alone. I don’t see that happening as everything will be brand news, but that is an example.