I thought I would go into a bit of how I pay my bills.
When we bought our first house I estimated that our bills would be about $100.00 a week. Each week from Mat's pay I would put aside a $100.00 and when each bill came in I would pay the bill out of that money that had been put aside.
The problem that I had with doing it this way, I didn't have a clue how much our bills were and $100.00 was grossly under what it should be.
I then had a brain wave and I wrote down all our expected bills for the whole year. Insurances, council rates, phones everything including the regos. Once I had everything tallied, including some estimates for electricity and water I divided this up into a weekly/fortnightly amount. I used to divide it up weekly as Mat was paid weekly, but now I divide it up into a fortnightly amount as he is paid fortnightly. If you are paid monthly, divide it up this way. Firstly I worked out that I needed to more than double the amount we were putting away.
When I first started doing it like this, I would have a schedule of bills that would come in and I would pay the amount on my list. If it was the 15th August I could see on my list exactly who was being paid that day. The problem with this, was some weeks the bills would be higher than others and if that fortnights bills were lower than my estimate, the remaining amount would be spent and then I would have to find additional money when the bills were higher another fortnight. It still left the problem of big quarterly bills and when they came in, I would not have the money to pay it all.
Now my strategy is a little different. I still have the list of bills and now our bills are $400.00 a week - shocking I know. So I have $800.00 a fortnight that I pay out. I no longer wait for a bill to arrive. I pay all my bills every fortnight.
For my electricity, I have estimated that I will have a $1,000 a quarter bill - please let it not be more than that. So that works out at $4,000 per year or $150.00 per fortnight. Every fortnight I bpay $150.00 to the electricity company. When the bills comes out at the end of the quarter, I should have no bill or a very small one.
Same with our water, council rates etc. I pay them all in small chunks every fortnight by bpay. This way I know that when every bills comes in I will have nothing to pay, or maybe even be in credit.
Plus, another good thing about doing it this way - I used to dread the electricity bill coming in. I would close my eyes and then peak a look, making sure that I was sitting down. Now, it doesnt bother me opening the bill as I know I will have basically nothing to pay. Plus it feels like a cheap bill.
How do you pay your bills????
I work mine out similarly. I have a spread sheet with all expenses. childcare, OOSH, bills, school fees, insurance, etc. We work out the weekly cost - which is much, much higher than $400 and deposit it into a bills account. From this account all bills are automatically paid or direct debited. I estimate the total bill cost on the highest bill we receive. So once we get a mega bill, the spreadsheet it updated and the amount increased. We are rarely left short and every time I get a much smaller bill, I spend the money on me! It's my play money for being so good at managing money and my husband doesn't know!
ReplyDeleteCan you tell I'm a bit of a nerd with these things??
I am totally against paying bills before they are due. Usually we all get our bills atleast 2-3 weeks earlier and on total they add upto 24000 per annum (2000 per month). My theory is rather than paying your bills 2 weeks in advance it might sit in your offset account for those 15 days and earn you interest. You might think it's miniscule but if you think all the 15 days it actually comes to $600 per year in interest.
ReplyDelete24000 * .05 ( that is 5.00%) = $1200 per month. For 15 dasy it comes to $600
Jen, even if you look at the bill with your half close eye you are still going to pay that anyway :-)
Jen I actually have a similar concept except instead of paying it off the bills straight away it goes into another offset account that is labelled 'bills' and I only pay them as they come in. The money is always there as we don't touch that account and its a little more offsetting the mortgage (it's better in my pocket than theirs)
ReplyDeleteI was stoked when our electricity bill was $360 for the quarter!! It was basically the same as when we were living in a 2 bedroom unit!