Another Bill - Don't panic !

I used to panic when a bill arrived because we usually didn't have the money in the bank and had to pay by credit card. By the time we paid that bill off the next wave of bills arrived. No more thanks ! We sat down and tried to work out the best way to put aside money for our expenses without spending it before the next expense needed clearing.

Firstly, we pulled out the previous bills for the last 12 months and calculated the totals and divided by 52 weeks to give us our base weekly expense figure. Mainly the big ticket items such as:

• Water
• Electricity
• Gas
• House Insurance
• Car Insurance
• Medical Insurance
• School Fees
• Land Rates/Tax
• Telephone

Once we had this figure $X we added an extra $20 for variation and increases. We then opened up one of those online only, high interest savings accounts and linked it to our transaction account where our wages are deposited. Each week after our wages were deposited an automatic transaction transferred a set amount into the high interest account.

The money was moved straight away so we didn't miss it as such. Now bills usually come every quarter so this savings account has the chance to build up enough money to cater for the expenses and also earn a nice rate of interest before the next bill arrives. When it does arrive now I don't panic. I simply transfer the precise amount into our transaction account the day before payment and clear the expense online.

This savings account also provides us with a buffer in case of unforseen or additional expenses. We don't withdraw anymore than what is required and if we have enough in our transaction account to clear a bill I won't touch the money at all. The automatic transfer of the money straight after we're paid is what really helps us save. Scared of bills no more !

Credit Cards

With the wide range of bills and purchases that we make it's pretty hard to not have a credit card. It is possible but it means carrying a lot more cash money and sometimes in an emergency you may not have the money on you. For the convenience we choose to use credit cards but use them as wisely as possible:

• Chose a card with an interest free period giving us the opportunity to pay without penalty
• Chose a card that allows supplementary cards for free
• Chose a card that provides an incentive, in our case points towards free flights (this helps us with our vacation planning)
• Chose a card that allows automatic bill payments
• If we have a large transaction on our card we transfer from savings to pay it off because credit cards have the highest rate of penalty interest for us.
• Put any spare cash into the credit card before other debt in order to reduce the interest paid
• We reduced to only one type of card to avoid the multiple annual fees
• If we do have the cash at hand we use it
• Avoid if possible using the card if there is an interest penalty to use it

If I'm unable to pay off the balance before the due date I use a mini plan to pay off the amount as quick as possible. We keep a spreadsheet that tells us based on the current balance how many weeks it will take to pay the balance and the amount we need to pay. For example if we owe $1000 we use a 6 week plan to clear the debt being $166.67 per week.

If we buy something else we'll use a 12 week plan so as to not increase the weekly payment so significantly that we can't live. So if we buy something for $750, we add another $62.50 to the weekly minimum making the new payment $229.17.

It means that we may pay some interest if we don't have much savings at the time however we try and pay off the balance as quick as possible. It's not an exact science however it works for me.

Mom's Finance

Like many mom's we usually get stuck with paying the bills and being the family's default financial planner. Never enough money to pay the bills and faced with important financial issues every day. I hope to blog about the easiest way I and my family deal with credit cards, mortgages, bills, insurances, school fees etc.

Let the financial journey begin says she Mrs BlogWriter.