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The WMD Savings Plan – The Well Account

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On Monday, we began discussing the WMD Savings method or plan.  If you haven’t read it yet, be sure to read the Introduction to the WMD Savings Method.  WMD stands for Well, Mule and Distributor.  We continued the discussion on Wednesday with an explanation about the Distributor, its role, and how to try to get it up and running.

Today, we are going to discuss one of the more complicated matters which is the Well account.  The Well account is the most complicated because it requires the most planning and thought.  Additionally, you probably will have to make adjustments a few times to get it right.

What Is The Well Account?

The Well account is the account that you draw your everyday living expenses from.  The reason the account is so tricky is that it is easy to under and over-estimate.  The ironic thing about this account is that people tend to under-estimate how much they will need in the account.

This seems like it flies in the face of logic, don’t we typically over-estimate when it comes to money?  Generally yes, but in this instance, most people think their everyday living expenses are less than they actually are.  Or better worded: people don’t think their lifestyle is as expensive as it is.

For this account, you’ll want to estimate how much the following costs:

  • Fun money (movies, coffee, fast food, bowling) whatever your vice is.
  • Groceries
  • Gas, tolls, and other transportation related expenses.
  • Lunch money (I actually include this in Fun Money because eating out at lunch is generally a luxury rather than necessity).
  • And any other daily expenses you incur.


Why do I include fun money?  Most often, people going on any type of cold-turkey diet fail.  You have to allow a few luxuries (not too many!) to keep yourself sane and remind you why you’re alive.

If this all sounds easy, good.  But you better expect to make some adjustments.  You’ll know you probably need adjustments after your account dwindles dangerously close to zero for a few months.  I suggest waiting to make changes just to see if you can adjust to having less money.  The more money you can do without, the more money you’re going to save!

How Do I Estimate the Amount of Money?

The easiest way is to take the last 3 – 6 months of everyday expenses and look at what the worst months were.  You can start with that amount and slowly adjust it down.  Or, if you don’t want to go through all of that effort, you can do what most people do: pick a number that sounds good, and see how it goes.

Once you choose your amount, set up the Distributor to distribute this money into your Well account.  Make sure you have debit card and ATM access to this account so you can actually use the money to live on!

How Do I Know If I Chose Too Much or Too Little?

If the amount seems way too generous (meaning you have too much money left over at the end of the month), then throttle it down a bit.  You want to start making yourself uncomfortable.  You want to get to the point where you’re standing in line wondering if you’re going to experience the embarrassment of a declined debit card (OK, maybe not THAT bad, but close!).

If you’re everyday spending starts to feel uncomfortable, then you’re doing the right thing.  Don’t adjust the money down any further until you get comfortable with this new, slimmer level of spending.  Slimmer is chic now anyway!

If you hit the middle of the month and you have no money left, then you’ve underestimated and you’ll probably have to break some rules (like pulling some money out of the Mule account. Tsk, tsk.).  It will be up to you to gauge how much is too much, and how little is too little.  Be sure to make adjustments where necessary.

What Do I Do With The Rest of My Money?

After you choose the amount that goes into your well account, the remainder should be designated to your Mule account to be used on:

  • Paying the Mortgage, Phone, Electricity, and any other monthly bills by check or automatic electronic draft.
  • The remainder stays in the account and builds into savings.

We’ll talk about the Mule account next time in more depth.  Just work on understanding your Well account for now.  So, until then, keep on reading, subscribe to our feed (link in the first sentence of this post), and keep on saving!

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