Home of Slightly Cracked Dreams

I’ve written a lot about personal finance on this site. Budgeting, coming up with money on short notice, financial planning. It’s a bit of a passion of mine (in case you haven’t noticed ).

Nearly 12 months ago I started looking seriously at blogs and sites related to personal finance specifically in Australia. And I didn’t find that many. So I decided to start my own.

Kin’s Money is now up and running, although not as “finished” as I’d like it to be. Pop over and say hi, ask a question or just sit back and soak up the atmosphere.

Another awesome thing about this is it means I’ve achieved one of my goals for 2008. Fantastic!

I’m rabbiting on a bit at the moment about interest rates and mortgages since we’ve just taken one out to buy a block of land, but I’m sure I’ll come up with a few more topics soon enough.

Edited to add link

It’s that time of year again. It starts in May with the Federal Government’s budget, and filters down through state and local governments, as they realise their income and plan around it. And now it’s time for me to review where we’re at. At let met tell you, I’m failing miserably at my goal for 2008 to spend according to our plan. I think my plan is too complicated, and too simple at the same time. Are you confused yet?

Because I’m really not into tracking where our money goes (I’m more of a big picture person) I use a more “gross” spending method. For example, if I allow myself say $200 a week to cover fuel and groceries, that’s how much I will give myself access to. The rest gets put in various places til it’s needed. I guess my problem is I haven’t even been staying on top of those weekly “needed’s” so things are falling apart all over the place.

I’m taking the opportunity to thank Mr Rudd for our extra $15 a week thanks to tax cuts, and quarterly 50% child care rebate, as well as saying goodbye to $180 a fortnight in family tax benefits and take another look at our budget to see what I can cut down on, and how I can put a bit more away each week.

And I’ve come across an unexpected “problem”. See we’ve always been terrible at long term saving. So any “bonus’s” we get from the government tend to go towards larger purchases. A fridge, washing machine, TV etc have all been funded thanks to these in the past, and due to my poor savings history, had planned to continue doing this in the future.

With the 50% child care rebate being paid quarterly I’m faced with a bit of a quandry. Do I take the money and sock it away to go towards larger purchases, or do I filter it back into the budget for larger annual bills (ie car rego, insurance etc) and take those smaller weekly savings amounts (that I have difficulty hanging on to) out of the budget altogether? Do I just take this change and utilise it to compensate for my weak points, or persist in something I’ve not yet managed to master?

I guess what I really need to work on is a cash flow plan, that will hopefully allow me to achieve my goal of following my spending plan.

Kez posed an interesting question last week: What price is your limit for petrol? Which raised a few questions in this household in turn.

Since we’ve welcomed Miss Moo to the clan, things are getting a little tight in the back seat of the old CR-V. With Mr Costello’s bribe incentive thank-you money for naturally increasing the tax-paying population of the future, we purchased the three smallest (ie narrowest) car seats on the market. And there’s still not enough room. I physically have to climb into the car to buckle Kiki in. Which can be dangerous in my fabulous green shoes and a skirt.

As such, added the fact our car is not far off 10 years old, has past 200,000km, and is starting to have things go wrong with it we’ve been contemplating upgrading to a car that doesn’t remind me to update our will everytime it rains and I’m wearing heels.

And this is where Kez’s question comes in. Because the cost of fuel is becoming an issue in our choice of vehicle. Do we convert to gas straight away? Do we go for a diesel engine? What’s the smallest/most fuel efficient car we can get that will comfortably fit all 5 of us?

The answer to the last question stunned me. A Camry/Falcon/Commadore size car is the smallest that will fit us all. People movers or cars/SUV’s/4wd’s that seat more than 5 people are the most uneconomical cars to run. Hybrids are small and for people who don’t have friends have to cart sports/school/swimming bags, 3 car seats, prams and other assorted child friendly equipment everywhere.

Is it that far fetched that a family would want try and be as gentle on the environment as possible?

But this forced me to look at our car usage. What could I cut back? How much do I travel? I was surprised to discover I travel about the same distance as a more urban dwelling person, despite living in the middle of nowhere the country. Buying a diesel would break us even cost wise after about 3.5 years. Since I plan on keeping any car we buy now for a rather long time, that would be ok - but then I see the cost of diesel has risen twice as much as the cost of petrol in the last 12 months, and I wonder when that would stop? Would it be a better option to buy a petrol engine and use the estimated $3k saved over a diesel to convert it to gas? Would it effectively halve the fuel bill?

Kez’s question asked far more than it answered, because unfortunately, for those of us that don’t live in a city, petrol is a necessity that we have to pay any price for. And the question isn’t, at what price would we stop buying petrol, but at what price is it most cost-effective for us to do anything about it.

It was time.

I could feel it.

The questions. Oh my the questions. That. Wouldn’t. Go. Away.

“Can I have some money Mum?”
“Why does she have some and I don’t?”
“I want *insert donut/toy/ice cream/lolly of choice here*”

So I caved.

And assigned pocket money. They’re too young to have a real concept of money, so I kept it simple.

“M&M, how old are you?”

“4″

“Here’s 4 coins” (I gave her 4 x 50c pieces)

“Kiki, how old are you?”

“3″

“Here’s 3 coins” (I gave her 3 x 50c pieces).

“Now, here’s the rules. Each Saturday I will give you 4, or 3 coins. You each must put one coin in this bag as savings. I will keep them in my desk until we have enough to bank. With your other coins, you can spend them on donuts, lollies, or whatever. Or you can save it all for a big toy. OR you can save another coin or two, and leave one for spending on lollies at swimming.” Swimming is about the only place they can buy a lolly for 10c each these days.

Kids often surprise us don’t they? M&M put two more coins in her savings bag, and has kept one coin. Kiki “me too” put another coin in her savings bag, and has kept one to spend. We went through their room and found two small coin purses, which live in my handbag with each of their “spending money” in it (they are little after all, we can’t have them losing it all the time - plus at their age I will get to approve all purchases).

I know they don’t get the concept of money, and how much things are worth, but perhaps they do have some good foundations for money practices building already. I mean, of the $3.50 I dished out today, they’ve decided to save $2.50. It won’t be long before they’re ruling the world. Next step - donations and charity.

Pocket money isn’t as scary as I thought.

A few weeks ago (before our plans for moving were completely screwed up changed) we saw a financial planner. After the sale of our house we have a reasonable amount of cash currently sitting in a fairly high interest account. Since we don’t envisage settling anywhere long enough to be worth buying a house in the near future (now it appears at least five years) we thought we might do something constructive with it.

Being a small town, I knew the financial planner, by reputation if not in person. So I was a little sceptical. She has, however, come up with a solution that I think I can live with (being very risk adverse), AND a few ideas that should end up saving us $10k - $15k a year. Which is huge when you think about it.

Being the increadible conservative I am, I have checked out everything she said, and I will be seeing the accountant this afternoon to ensure that it’s all correct, before we make any moves. But, within a couple of weeks we’ll be “investors”. Which is a little scary considering what the market is doing right now. Or we might be getting a bargain. I guess that’s part of the whole risk thing she keeps talking about.

And now to figure out what to do with all the money she’s saving for us. Maybe a holiday somewhere….

One of my goals for 2008 is “to manage our money according to the spending plan we have worked out.”

I am useless when it comes to budgeting. And equally useless at tracking spending, without which a budget is effectively a pretty piece of paper (well, mine always look pretty ). I just don’t have the patience to work it all out. I wish I did, but it’s just not me.

So how do you manage your money when these avenue’s don’t work? Do you just give up and spend until there’s no money left? Nope! I’m going to share what I do, in the hope it helps someone else who’s struggling to stay focused on the budget.

We have a budget. It’s rather simple at the moment (a first for me ) and has some 24 categories. But never fear, because I don’t keep track of how much is in each category. Or how much I spend in each category. I have a far simpler process than that.

I have 4 main accounts. 3 of which are high interest savings accounts, the other is a low fee transaction account with unlimited electronic transactions and a visa debit card attached. The 3 high interest savings accounts are variously labelled: Christmas & Birthdays; Bills; and Savings.

Each week on payday, all our income (which coincidentally comes in within 24 hours) is paid into the transaction account. A portion is paid into the Bills account (usually the biggest portion) and as many direct debits as possible are set up to be drawn on this account the following day (allowing for everything to be delayed due to public holidays or some such). These include electricity, phone, daycare fees, insurances, and hopefully when we get settled, rent. A further portion is sent to the Christmas & Birthdays account to save for Christmas & Birthday presents. A specified amount to cover food, fuel, spending money and entertainment is retained in the transaction account, and the remainder paid into the Savings.

I obviously have other accounts, but these are the main one’s used for our weekly transactions. What this means is, if a bill comes in that isn’t automatically direct debited (such as car servicing/repairs, or a medical bill) a b-payment is set up where possible, or if not, the amount is transferred from the bills account to the spending account, and the bill settled immediately.

This allows me to not accidentally spend extra money, because I know the money in our spending account has to cover food, fuel, spending & entertainment money for the fortnight. I generally take the spending money out in cash, and let Hubby do what he likes with it (and I try and save as much of mine as I can - doesn’t always work though). I then on payday, or soon after, make sure both cars are topped up with fuel, so we shouldn’t have to buy more in the next fortnight. I know then the money left in the account must last until the next pay day. Every other purchase, including clothing, must be thought out and pre-planned. I won’t be able to tell you at the end of the year how much I spent on take-away, or anything like that, but I will know that I haven’t been short of money to pay the phone bill because I overspent on clothes.

I call this method Divide and Conquer. I can conquer my bad spending habits, and equally bad monitoring habits, by dividing the money and automating as much of the process as possible. I don’t necessarily agree that this is the best way to budget, or track your money, but for someone who struggles mightily with monitoring anything (I’m more of an idea’s and planning person - in case you didn’t notice ) this method is the most low maintenance I have found that still allows me to manage my money according to the budget.

And as today is the first pay of the year, and I have just finished my first round of transfers, I am 1/26th of the way towards achieving one of my goals for 2008. Definitely a good start .

It’s only taken us 7 years to get our acts together. Well, we didn’t really, it was kind of handed to us by our wonderful in-laws. Have I mentioned lately how much I love them? Oh yeah, I have. Anyway. They offered us their second car for a bargain price, to be paid when the house sells.

So! We’re a two car family. No more late nights dragging the girls from their beds to the car to pick Hubby up after a call-out. Or juggling work, study, kids and stuff with the one car.

Of course now I’m going to need to find the extra money in the budget somehow. But I’m sure the money’s there. Somewhere.

In the meantime, we have two cars. YAY!

Wow, I did get behind in this. Last weeks figures were as follows:

Savings from petrol: $18.90
Savings from groceries: $14.30
Total Savings $33.20 bringing my new total to $68.90

Although I did discover something wonderful last week. At first I was a little disappointed when I realised I hadn’t been paying for childcare weekly like I usually arrange to, but when I questioned the centre about it, the director told me I was in credit, and she still owed me 5 weeks of care. Do you think I should claim all $800 worth that I haven’t paid as part of my savings challenge? No, I didn’t think so either. Fortunately, any spare money is automatically in our offset account, so at least it’s working for us.