Feeling broke

Discussion in 'Living Room' started by Lizzie, 3rd Jun, 2019.

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  1. Lizzie

    Lizzie Well-Known Member

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    Today I paid:

    1 rego
    1 water bill for rental
    1 mortgage payment for rental
    2 strata levies
    4 rates notices

    Total = $7,200

    **sigh** I guess it's only money
     
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  2. SatayKing

    SatayKing Well-Known Member

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    FWP in that you have money.
     
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  3. Propagate

    Propagate Well-Known Member

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    About 20 years ago I got fed up with the seemingly constant "surprise" bills taking lumps out of my savings (if/when i had any).

    So, I added a tab in my spread-sheet and noted every single annual bill, then divided each by 12 to come up with a monthly figure that I needed to put aside to have the bill amount in full each year when it fell due.

    For each one, I then pro-ratered where we were in the year to that date and put money in the "pot" for that bill from my savings based on how far through the year we were. My minimal savings took a hit initially as I was effectively seeding every pot.

    Once seeded, my monthly allotment went into my savings account each month and split down between each 1/12 of each bill on my spreadsheet.

    From then on, aside from say a blown hot water service, I've never been caught short for a bill or felt annoyed at using savings to pay bills any particular bill essentially always has its allotted amount in the account ready to go.

    Over the ears I extended it to things like setting aside a monthly amount for car servicing etc.

    That way, any money left in my checking account at the end of each month I knew was genuine savings and not needed for an up coming bill.
     
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  4. Lizzie

    Lizzie Well-Known Member

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    Great idea - not caught short - just prefer it coming in than going out
     
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  5. Propagate

    Propagate Well-Known Member

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    Totally agree! Just became a mindset change this way though, once the allotment is in it's little pot it no longer becomes my money in my head, it just sits in the offset account then when the relevant bill comes in, it gets paid and I don't feel like I've been the one to pay it (if that makes sense?).
     
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  6. Marg4000

    Marg4000 Well-Known Member

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    We did this also.

    First read about the idea in a book by Noel Whittaker back in the 1970s or 1980s. “Making Money Made Simple” or something like that.

    Incidentally, Noel was the one to first promote the idea of fortnightly mortgage payments instead of calendar monthly. At first many banks would not allow it, but it gradually caught on.

    His basic idea was to put aside the mortgage (or rent) money, the allowance for bills, and allocated savings from each pay. You were then able to spend the rest without too much concern. Worked for us.
    Marg
     
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  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've been though some tight spots. I recall one evening (a long time ago thankfully) with my wife when we're looking at our bank balances and trying to figure out how to get ahead.

    We'd just paid a car registration or something similar. The observation was made that this was one of those bills that only came in once a year and that it would be okay next month.

    The problem is that every month is like that. It's the car rego, an insurance bill, the dog needs surgery. There's always an exceptional bill and if you're trying to live from one month to the next, you'll always feel under pressure.

    You need to take a look at the bigger picture. Put some money way every pay packet to cope with the various things you spend money on every day, week, month & year. Then put an amount aside with every pay packet as has already been suggested.
     
  8. JLK

    JLK Member

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    Highly recommend the method that @Propogate mentioned above. Been doing it for 6 months and it changes the way you react to bills :). Pretty easy with most banks these days to have multiple accounts for keeping everything separate too.
     
  9. The Gambler

    The Gambler Well-Known Member

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    I do like this, but I feel it has one very small flaw. If you're paying off a loan, you're actually hurting yourself by not paying bills at the very last moment. I personally do an 6 month spending projection to find out my overall monthly balances so that I don't need to put money aside every month, I just know what my minimum balance is for each month. My system takes more dedication I think though.
     
  10. Propagate

    Propagate Well-Known Member

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    It's a bit academic though @The Gambler - seams most of our bills have a 10-14 day window to pay them, so in the grand scheme of things, holding on to a $750 rego bill for an extra 14 days saves what, about $1.20 in interest on the PPOR loan?

    The saved monthly allowance isn't in a separate savings account, it's in the main offset account but listed as an item on my spreadsheet, so all the saved monthly bill monies continue to offset the PPOR loan up the the date any given bill is paid. Same with our savings, it's not in a separate account, it's in the one offset account but itemized separately on my spreadsheet for tracking.

    When a bill comes in, I usually just pay on the closest next working day that I'm sat at my desk in front of the computer.
     
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  11. Propagate

    Propagate Well-Known Member

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    The beauty is, you don't need more than one account. Just leave all your money in your one offset account. Your "separate accounts" are just lines on a spreadsheet allocating different amounts of your one big pot to individual items, be it bills, savings, holidays, whatever.

    I could probably do an empty version of my sheet if anyone is interested, it's become a bit of an animal over the years but would give an idea. MIght take me a while to make a blank/example version of it through.
     
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  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I have a client at the moment that has done a budget and transfers $3200 to a separate account each month for the big bills.

    The lender saw the regular transfer and asked about the $3200 'liability' because they saw an ongoing transfer. We gave them a copy of that account showing bills being paid, which lined up nicely with her declared living expenses.

    Once they understood that this wasn't a liability but excellent money management, that loan got approved very easily. It also made my job very easy.
     
    Last edited: 3rd Jun, 2019
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  13. Cimbom

    Cimbom Well-Known Member

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    I do a similar thing - just pay an instalment of bills each fortnight. I might save a few dollars of interest if it was kept in the bank account but I prefer to do it this way.
     
  14. Propagate

    Propagate Well-Known Member

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    Trouble is, quite a few places add a not-insignificant amount on top to pay by installments. If I recall, AAMI were shockers for that, adding several hundred dollars per year to our home insurance policy for paying monthly. If you've got a few IP's in the mix too, that adds up to a good chunk of money per year.
     
  15. Cimbom

    Cimbom Well-Known Member

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    That's for things like quarterly utility bills, council rates, etc.
     
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  16. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Build in a buffer, a generous one for this sort of thing.

    If you don't spend the money after 12 months, then treat yourself. :)
     
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  17. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    If the funds are in an offset account, it's perfect :)

    This sort of money management is exactly what we teach in our (for the moment) free online course. Link in signature if anyone wants to check it out.
     
  18. TMNT

    TMNT Well-Known Member

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    I must be the only here. But im

    Have an estimate of how much each rate/reg/water bill is,
    When i get the bill, I just see if its roughly right,
    Then just pay it off.
    I've got to pay it at Some point, what's the point waiting, plus my cards have the interest free period ,
    Plus I dont have to worry/plan the date to pay it.

    Open the envelope, pay it, never have to think about it again
     
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  19. The Gambler

    The Gambler Well-Known Member

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    Open the envelope? Old School!
    My bills arrive in my online bank or via email then I just set up my online banking to pay my bill a few days before it's due.
    For me, internet banking has been the best thing to happen in the banking industry since the introduction of ATMs.
     
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  20. Jezzah

    Jezzah Well-Known Member

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    My wife manages our bills and accounts so I am not sure on minor tactics but we do discuss our financial strategy. As for bills they are tough for us as we are mostly living off my wage with her taking care of the kids at home (which we rent).

    The recent rate cut hasn't helped as we have a significant amount in a term deposit that will take a hit.