Consolidate Accounts to Discover “Free money” Part I

free moneyOver the last few months, as part of my 2014 financial plan, I wanted to consolidate my financial accounts to have better visibility how I am doing with my investments.  This process turned out to be more tedious and time consuming than I had originally anticipated, but the reward was also very high.  Below are the step by step process I went through.

Step 1: Take complete inventory of your accounts

Take ControlFirst take a complete inventory of your accounts and holdings, separate out the taxable account from nontaxable account.  Taxable accounts would include brokerage, saving, checking accounts.  Non taxable accounts would include IRA, Roth IRA, 401k, 529 plan, etc.  When I went through this exercise, I was surprised to find out how many accounts we had all together.  Here’s the complete list

  • Taxable accounts
    • Checking/saving accounts (11 accounts total)
      • Wells Fargo (6)
      • Bank of America (2)
      • Capital One 360 (2)
      • Etrade (1)
      • Fidelity (1)
    • Brokerage account (7 accounts total)
      • Fidelity (2)
      • Etrade (2)
      • Vanguard (1)
      • UBS (1)
      • Ameritrade (1)
      • Charles Schwab (1)
  • Nontaxable accounts
    • 401k account (6 accounts total)
      • Fidelity (6)
    • IRA account (6 accounts total)
      • Vanguard (2)
      • Fidelity (2)

That’s a grand total of 18 taxable accounts and 12 non-taxable accounts.  Obviously way too many accounts to mange effectively.  How did we get so many different accounts.  So the next step is to figure out how to consolidate.

Step 2:  Consolidate saving/checking accounts

Looking back, it’s seems so silly we  have so many different accounts.  For example, I have a pair of Wellsfargo High yield saving/check accounts, at the time, higher interest for my everyday money, it sounded like a good idea.  But Wellsfargo’s high yield is no where close to online banks like capital one (formally ING direct).  This high yield accounts is now sitting there collecting dust.  So time to close.

In the end, I decided to keep the following:

  • WellsfargoWellsfargo checking account for daily expenses.
    While I don’t visit my bank branch too often, I still prefer to have the option of having a local branch for services like immediate larger sum of cash, cashier check, traveller’s check etc. that hard to get from the exclusive online banks.  In addition, I have been banking them for 15+ years and have always liked their service level.
  • Bank of American checking account for rental related expenses and income.bank of america
    This could obviously also be done in Wellsfargo, but I already have all the rental income and payments (condo fee, utility, etc) automated, and decided to stay put.  For this checking account, I picked one with low minimum balance requirements as I don’t keep too much money in this account.  The reason being my tenants and property manager often do counter deposit directly into this account.  I have heard of cases where some scammer was able to withdraw the money, while this hasn’t happened to me, why risk it?
  • Capital one 360 saving account for rainy day fundcapital-one-360
    I have been banking with them for a number of years dating back to when it was still ING direct.  It has consistently had one of the highest interest rate and very easy to use.  They have also a range of services like loans, refinance, etc., I’ve used them once to refinance and thought the process was very easy.  The only drawback is that they don’t seem to want to talk you live.  If you are happen with doing thing online without dealing with a live person, it’s a good option.
  • Etrade saving as a pass through account & Fidelity smart cash as a pass through accountetrade
    These two are Etrade and Fidelity’s saving account, respectively.  I don’t keep any balance in there, but do use it as pass through accounts for two reasons.  1) Even with all these consolidation, i will still end up with a bunch accounts which i need to electronically connect to make sure I can move funds easily.  Some of these electronic connections requires savings accounts (like Capital One 360) 2) Safety consideration, I keep the good chunk of our long term investments in Fidelity, I don’t want to make direct connections with other checking/saving account, this passthrough account serves as an intermediary account where i would do any kind of inter bank transfers.  Again, small probability event, but why risk it?

Account counts:

  • Closed: 4 saving/checking account
  • Inactive:  2 account

In the next post, I’ll discuss how to consolidate investment accounts, both taxable and non-taxable accounts.

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