Automatic Cash Management
- Automatic Finances
- Automatic Cash Management (you are here)
- Automatic Investing
- Automatic Insurance
The Setup
- One Fidelity Brokerage Account ("brokerage")
- One Fidelity Cash Management Account ("CMA")
- One Fidelity 2% Cash Back Credit Card
- One Chase Freedom Unlimited Credit Card
- One Amazon Prime Visa
How Money Flows
- Payroll direct deposited into brokerage
- All non-mortgage recurring expenses are paid with the Fidelity card
- All Amazon expenses are paid with the Amazon card
- All other expenses are paid with the Chase card
- Bills autopay from brokerage (credit cards, insurance, billpay to household vendors)
- Debit cards and live paper checks written against CMA
Why
We use a brokerage account because it lets us keep cash and investments in the same account. All of our cash, including working capital and reserves, sits in the brokerage's core position. Our core position is FZFXX, a Federal money market fund that pays ~5% interest as of July 2024.
We use the Fidelity credit card because it pays 2% cash back when it's set up to deposit rewards into a Fidelity account. It is also one of the only cards I've seen that can be set to automatically cash out deposits. Ours is set to deposit into the brokerage account. We only use this card for recurring expenses. Non-recurring expenses go on the Chase card because in our experience Chase's fraud detection and customer support is considerably better than Fidelity/Elan.
We use the Amazon Prime credit card for all Amazon expenses. This pays 5% back on Amazon purchases which makes it worth it for us. Your milage may vary.
We have the CMA so we don't expose the brokerage account number every time we write a paper check. This is probably overly paranoid and is the only significant complication in the entire system.
The CMA has "self-funded overdraft protection" turned on which automatically transfers from the brokerage account into the CMA to fund checks and debit card transactions.
The brokerage core position is not FDIC insured. I don't care about FDIC insurance. FZFXX is composed of ultra short term US Treasury bills. If Treasuries are suddenly not liquid enough to withdraw our money our society has much bigger problems.
The CMA's core position is FDIC insured, and the CMA is almost a full brokerage account, but we don't use it as the centerpiece account for two reasons. First, the CMA core position pays shit for interest. Second, the CMA cannot have margin turned on. We'll talk about why that's important in the next post.