Wednesday, May 10, 2017

Changing banks

The first step of The Barefoot Investor's finance guide is ditching your old bank and moving to a cheaper online bank. Even though I rarely use 'foreign' ATM's I probably do rack up about $10 a year in these fees, plus my lovely big 4 bank charged me an account fee on a few occasions when I was home on maternity leave and not depositing $2000 a month into the account! They refused to refund the money... not happy Jan!

So the thought of saving some money, plus setting up a new system of banking for me and my partner that would be 'set and forget' was appealing. I particularly like the Barefoot's use of two transaction accounts: one for daily expenses and one for 'splurging'. My partner doesn't spend much on coffees and eating out, and I always feel a bit guilty that I'm eating into our money. However, he likes to buy records. By having a separate splurge account each we'll be able to spend what we want, on what we want, up to a limit. It will be a great way for me to track and prioritise my spending.

So we agreed to set up the accounts with ING. What I didn't expect was the sheer effort involved with switching banks! I have spent many, many hours over the last week or so setting up accounts and amending our direct debits. The fact that I had no idea what the account logins or passwords were for most accounts added to the pain factor.

To give you an idea of the number of changes, here is a list of the changes I've made. They include regular direct debits, apps that include payments (Uber etc) and incoming money (ie. Centrelink, Medicare):
  • Rent - set up recurring payments in new account and cancel old
  • Childcare -  set up recurring payments in new account and cancel old
  • Swimming lessons - fill in a hard copy form with new bank details
  • MYKI transport pass - amended auto top up online
  • ATO - amended via MyGov
  • Centrelink - amended via MyGov
  • Medicare - amended via MyGov
  • Health Insurance - direct debits amended online
  • Uber - amended via the APP
  • PAYBYPHONE - amended via the APP
  • Online Wine Shop - direct debits amended online
  • Mobile phone -  direct debits amended online
  • Internet - direct debits amended online
  • Netflix - direct debits amended online
  • The Age - direct debits amended online
  • Citylink - direct debits amended online
  • iTunes/Apple store - details amended online
And I'm sure I've forgotten some, so I've left some money in the old accounts just in case!

I also closed down my credit card and old savings accounts. The banks make this VERY difficult to do! I had to go into a branch and plead my case. For the credit card they even had to make a call and they tried the up sell! Let me say that it is a lot easier to open an account than to close it.

However, I had one win. I convinced the bank staff member to have a read of the Barefoot Investor and to consider switching to a no-fee online bank!

Wednesday, April 26, 2017

I cut up my credit card!

I've been out of debt for many years now (the day I paid off the last of the credit card debt was a proud one!). However, I've always kept a credit card 'just in case'. 

I had a $7000 limit (completely unnecessary) and used it for situations where I was a bit short on cash. For example, when I had a crazy dental bill (I have bad teeth), 'needed' a new outfit for a job interview, had to buy things for my consultancy for which I'd be reimbursed later (airfares, hotels) and occasionally for things that I didn't want my partner to know about (embarrassing!).

However, today I chopped up the card, changed all the direct debits from the credit card to our joint savings account, and reduced the limit. I would have totally cancelled the card, but it seems that this needs to be done in writing or by actually going into the bank. (Sneaky.)

And what brought on this recklessness? I've started reading 'The Barefoot Investor' book! I'm pretty excited about his approach to managing money and have started implementing the steps. His dialogue on debt and credit cards is pretty interesting - particularly how they suck young people in and how having a credit card debt is ingrained in our society.

Anyway, I'm pretty confident that once I set up all the bank accounts he recommends, and also put into place all his strategies, I won't need to rely on the back-up of a credit card.

It's made me totally re-think how I run the money side of my (very small) consultancy. Up until now I've used my personal bank account for all the income receipt and expenses. Problem is, the income disappears very quickly (extra money = excuse to splurge) and I never have enough money to cover the bills (in particular the annual insurance premiums).

So now I've set up a separate online transaction account (free, no fees, and it takes about 5 minutes) with an attached online saver account (for better interest rates). I plan to save the next few payments so that I have a buffer, and then I can start transferring the income straight into our joint account (to be siphoned off to the various accounts).

Yay - no more need for the card! I think it's also going to make me more accountable not having that back-up option. It's a bit scary, but I reckon I can do it.


Saturday, April 22, 2017

Back on the horse

Well, it certainly has been a long time between posts. Nearly 6 months in fact! I've been very slack, not only with blogging, but with my budget.
In December I went back to work (3 days a week) and life got a bit crazy.

Out went meal planning, monthly shops and tracking our money. In came expensive childcare, bought work lunches, excessive numbers of bought coffees, and even the odd take-away meal.

I also found just being part of a workplace to be expensive. My workmates have a penchant for Uber Eats (expensive delivered lunches) and fancy lunches out, after work drinks, as well as lots of contributions to gifts (engagement/baby/leaving).

For a completely different reason I've just given notice at said workplace and might be unemployed for a bit. This has given me the much needed motivation to get our finances sorted again!

Step one was reviewing our spending and preparing a budget, which I did the other night. A big shock was how much childcare really costs. I knew we were paying around $200-$400 a week, but I hadn't really computed that this is a LOT of money each month and across the year. It makes me wonder why we weren't saving that much beforehand...

Anyway, it seems the reason we kept running out of money in our joint account is that we were budgeting around $1500 a month less than what we were actually spending. Whoops!

Life changes. The kids have gotten older and have started doing pricey activities. They also eat more and our eating habits have also changed (isn't it annoying how being super healthy is more expensive?!). And the expense of working again and childcare have massively increased compared with last year.

This is a good reminder that budgets are not stagnant or set in stone. They need to be regularly reviewed and they need to be realistic. A review of your actual expenses can be a nice/scary reminder to reign in poor spending habit and to help you get back on that horse!