Where our money goes

Well, I was looking at my accounts the other day and realised I’ve never really shared how I do things, ie how I pay my bills and organise my spending. I guess you can guess that once we started on our debt-free journey, the first thing I did when either of us got paid was put some money towards the debt we were currently trying to retire.

Nowadays, the first thing I do is put money away for one of our goals (yay!).

Our accounts are structured so there is one main savings account, for which we pay $5 a month in an account keeping fee. You may find it sad that the interest rate on this account is a measly 0.1%. Yep, pretty awful. But the features of the account make up for this.

Basically on my account type you can have up to 9 electronic sub-accounts. These are only accessible online and I can transfer between them without charge. I can also make direct debits out of them and/or pay bills online. When I go online to look at my accounts, each of these accounts shows up in a column.

The interest rate in each of these sub-accounts is 3.75% and there are no additional fees, no matter how many sub-accounts I have. So, I have 6 sub-accounts and I pay $5/month in total for them. I think that’s awesome.

Here’s what I do with our money. When our pays hit our account, the first thing I do is transfer cash to the emergency fund account. Currently, this is $200 a week, representing just under 10% of our net income.

Then if it is a pay week for me, I transfer $1300 to our house deposit account ($650/wk). It’s fun to watch this balance go up so quickly.

After that I start on all the other little things. We save $300/wk for `billpaying’ ie stuff like car repairs, medical expenses, phone bills, car registration etc. Have you ever added up all these for yourself and divided by the number of pay periods in a year? If $300/wk sounds like a lot, use an Excel spreadsheet to figure out how much these add up to for your family, and I’ll bet you’ll be shocked (no wonder we used to get wiped out every few weeks when a bunch of bills arrived at once).

Then I transfer $25/wk to a managed fund we have for our son. This may eventually be used for uni (college) expenses, or to help with his own house down-payment. Once a month, $100 gets debited from this account to his fund. It has been losing money nicely since we started it  😦  but we will stick with it!

After that, I have to pay childcare, which for us totals $230/wk. I pay that online. As our income has recently increased, it will soon be $265/wk. Ouch! Luckily, every quarter, 50% of the total amount paid is rebated in a lump sum. Not sure how long the government will be able to afford to keep this up though.

Then the money remaining in the main account is used for groceries, `gas’ and fun/miscellaneous items. Miscellaneous might be anything from charity donations to class photos. I try not to put expenses like class photos in my billpaying budget, because these are things I can choose whether or not to buy, and which I can alter the amount of even if I do.

Currently, we have no credit card payments, no car payments and no mortgage payments. That said, my car is absolutely awful – a lot of people would be embarrassed to drive it. So one midly negative point about getting rid of my car/credit card debt was that it was not as much of an `end’ point when it came to getting ahead as I thought. Often I have needed to beat the temptation to go into debt again after we’ve slaved so long to pay it off! The slog continues, but I think once we have our house deposit sorted and I have figured out how to afford our next vehicle, then it will all start to pay off. Who knows? I must also admit that we tend to meet our goals so much faster now simply because we aren’t getting slugged with interest and we are not paying off crap we don’t even have anymore!

Anyway, here is what each account looks like at the moment:
Main savings a/c: $101.35 (Since payday is tomorrow, I may sweep some of this into the house deposit fund or save it to pay for a haircut and colour).

Emergency fund a/c: $1400.03 (with $200 more coming tomorrow)

House deposit a/c: $5704.31 (Next payday of mine is Tuesday so $1300 more will be added then)

Son’s fund a/c: $150.05 (I stuck some Christmas money given to him in here and have to figure out how to manually add it to his fund.)

Billpaying a/c: $459.98 (But I have a massive quarterly utility bill which might wipe this out completely!)

Miscellaneous: $3.32 ( a good place to `park’ money if I am keeping it for something eg to put the $101 at top if I decide to get my hair cut next week and don’t want the money to remain easily accessible to us!)

Holiday a/c: $0 (we are going on our houseboat adventure in a few weeks so we won’t be adding to this newly created account any time soon!)

Husband’s dream boat a/c: $0  (This is a fun account that hinges more on dreams than reality, because if we had enough money for this, it would really go towards our house deposit, then our emergency fund!). But it costs nothing to have this account here so there’s no reason he can’t dream!

Anyone else want to share how they handle their weekly money split?

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1 Comment »

  1. frugalCPA said

    Ha! I love the dream boat account.

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