I was having a conversation with BF this weekend about finances, and one of the topics that came up with this Manulife One account that we have here in Canada. The idea is that everything is combined into one large account (including your mortgage) so essentially you have a negative balance. Then when you get paid, that goes against the negative balance so you save a little on interest. As your bills come out its borrowed back again. The idea is that you are "saving" a bit while your paycheck is sitting there. Mathematically it works but in reality I can't see myself being that disciplined? You need to know where EVERY dollar is going!
But it got me thinking. I could apply the same theory to my sinking funds. If instead of putting them into accounts that only earn 0.5% interest, I could keep track of what is in them on a separate excel spreadsheet and then put the money each month on my LOC. As something comes up, I take it off the LOC and deduct it from the excel spreadsheet. The idea being it would be better to save the LOC interest when the money is NOT in use rather than have it sitting earning no interest.
I'm not sure how I feel about it to be honest. I kind of like the idea of having cash on hand. I can see why it makes sense but I wonder if I wouldn't be tempted to just take "a little extra" if I needed it. Conversely, I wonder if it would make me save more because I HATE the idea of taking it off the LOC? Any thoughts?