Personal Finance Setup

Mar 20, 2024

I am sharing my personal finance setup as I think it's optimal for me and possibly other folks. This post isn't really about investing or any long-term financial planning. Instead it goes over my setup for day to day finances and spending.

Personal Finance Setup

I have a few goals with this setup. First, I want to have a checking account that I can ACH withdraw from for credit cards and other bills, but which has a high interest rate on cash sitting around. Many checking accounts offer little to no interest and if you want interest you have to move money into the account in advance of withdrawals. That's a pain to do frequently, so I generally keep a month or two of expenses in my checking account so I don't have to micromanage it.

Second, I want to have high credit card rewards. In the US, credit card fees are essentially a monopoly ripoff that adds a few percent to every transaction. I want to get as much of that back as possible.

Finally, I want everything to be as automated as possible. I don't want to have to think about moving money around or paying bills. I want to set it up once and then forget about it.

Checking Account

For my checking setup, I use Fidelity. It's a little of a strange setup at first, but ultimately can be set up to work identically to any other checking bank. With this, I can have money sitting around in checking that is in the meantime invested in a money market fund. This fund is currently yielding about 5% interest.

The setup for this is two separate accounts:

The setup is a little strange at first, but ultimately it works just like any other checking account. You can set up direct deposit, bill pay, and ACH transfers just like any other bank. The only difference is that you can earn a much higher interest rate on cash sitting around.

There is the small annoyance of double entries for all withdrawals. The withdrawal hits the Cash Management Account, which shows as a negative balance. Then the money is automatically pulled from the Individual Brokerage Account, which zeroes it out. It's a little annoying, but ultimately doesn't require any manual steps once setup.

Some minor missing things on the Fidelity side are: 2 factor auth using a security key (via the App is supported) and Zelle.

Some additional links:

Bank of America Credit Cards

Bank of America has a few credit cards with up to 5.25% cash back per category or 2.625% on everything. There are a few hoops, however, that make this a little more complicated than just getting a 2% cash back card.

The rewards on the cards are multiplied by up to 1.75x based on your relationship with Bank of America. This is based on the total amount of money you have with them, including investments.

To get the 1.75x multiplier, you must have $100k of assets with Bank of America. This doesn't have to be cash however, it can be investments via a linked Merrill Lynch investment account (Bank of America owns Merrill Lynch). You can use ETFs to invest with no fees, such as a Vanguard Total Market ETF.

The everything card is the Premium Rewards card. It's listed as "2 points for every $1 on travel & dining" and "1.5 points for every $1 on all other purchases". Points can be redeemed for 1c each. With the 1.75x multiplier, this is effectively 2.625% cash back on everything and 3.5% on travel & dining.

The card does have a $95 annual fee, but it also comes with $100 in annual Airline Incidental Statement Credits. This can be used for buying a $100 digital gift card on American Airlines and then spent the next time you fly with American. This effectively makes the card free if you fly frequently enough.

The category card is the Custimized Cash Rewards card. It's listed as "3% cash back in the category of your choice" and "2% cash back at grocery stores and wholesale clubs". The 3% category can be changed once per month. With the 1.75x multiplier, this is effectively 5.25% cash back in one category.

The best part is that the "online shopping" category is very broad. It includes stuff like Amazon, or even many stores if you buy online and pick up in store. Anything that is coded as an online purchase will get the 5.25% cash back. This is even better than Amazon's own card, which only gives 5% cash back on Amazon purchases.

The limitation is that the 5.25% is only on the first $2,500 of purchases per quarter. This can be worked around by having multiple cards. There is a list of affinity cards that work exactly the same way as the base Customized Cash Rewards card. You can get multiple cards and set each to the same or a different category. This effectively gives you 5.25% cash back on $2,500 * number of cards per quarter.

Another gotcha with these cards is that Bank of America's website isn't great. In particular, setting up autopay is not at all obvious, but it can be done. Some instructions here. Once you've done it once, it's set and forget.

Finally, if you want Zelle, you can use a Bank of America checking account to do that. It doesn't have any interest, however, so I wouldn't keep much cash there.

Some additional links: