Money Management - Offset Account?

Hi All,

I am interested to hear how people with a 100% offset against their PPOR have their accounts set up to manage their everyday cashflow? Do you leverage the use of a no-fee credit card? How do you distinguish between savings, holidays, everyday expenses and money set aside for next IP purchase?

For context, my wife and I have our first IP (in the accumulation phase) and have typically used the barefoot approach of having multiple savings accounts to help separate out the purpose of funds which makes it easy to distinguish however I have heard that incorporating the offset approach may be more financially beneficial over the long term.

Thanks in advance

 

I have multiple offset accounts against my PPOR loan - 3 at the moment, but can do more. I use them to managed funds, as you say. I have 1 as the main "buffer" account that should not get touched, 1 for saving, and 1 as a transaction account. One of the main reasons for me was so we don't have an account with a massive balance that has a card attached.

Cheers,
Inertia.

 

Use a lender that allows multiple offsets. There are a few that allows this now - It's perfect for the BFI way of managing personal finances.

 

So I keep all free cash that is not going to be used within two weeks inside an offset facility, I don't personally use multiple "buckets" or accounts to separate, I have a very good understanding of requirements for funds & structure my cash accordingly.

wish you all the best!

 

All you need is a spreadsheet.

In essence you've got one big "pot", but if you write your spreadsheet properly that pot can be split down within your spreadsheet into as many pots as you want, doesn't matter where the actually money is. The money in the bank totals $xxxxx.xx and as long as your spreadsheet follows that total, you can split your spreadsheet into as many "sub accounts" as you want.

Done it this way for 20+ years, works great. I'd send you my spreadsheet but it's an absolute beast after all these years ad very tailored to my own circumstances.

 

If your bank doesn't allow multiple offsets on the one loan, ask if you can split the loan so that your have more than one loan for the asset. Then put an offset against each split.

Back, when I first started out (before offsets), I had multiple savings accounts for different purposes. As time went on, these were switched to offsets. These days I have two offsets in use, all the rest are for excess funds offsetting loans, but don't have a defined purpose. I use my 'everyday' account for general spending, and my 'investment' account for all investing. All rents go into the 'investment' account, and all investment expenses come out of it. I also pay myself a monthly 'wage' from my 'investment' account, into my 'everyday' account.

 

We keep everything in the one offset and use a budgeting app (YNAB) to track what all the individual dollars are allocated to.

 

What type of card do you have for everday purchases and bills?

 

My transaction offset has a debit mastercard. We do still have ING cards which we have been using since they first came out - we could probably get rid of it, but I like the redundancy of having an alternate bank if required, so we are still using that one for most day to day expenses (the CBA transaction offset pays the bills).

 

Is the transaction offset different to the other 2 offsets you have

 

Albert Einstein referred to Off-Set Accounts as the 9th wonder of the world

 

no, they are all the same, that is just the names I have given them. They could all have cards if I wanted.