Monday, January 10, 2011

The Envelope system

Many people use the envelope system or have heard of it, this is how any bill's that come into the house are covered, by setting aside a small fixed amount every week. This stops having to find a large amount of money when the bills come, worse yet all the bills coming in together. This is where it’s easy to get behind in payments, by skipping paying one bill in order to pay another, in the mean time the next bill is accruing.
I sat down with all our outgoing bills in front of me & a calendar, I divided my bill by how many weeks between the issue dates on the bill i.e.: 1/1/2011 - 1/2/2011 so 4 week's if you have $100 bill divide it by 4 weeks & you have your set amount, it helps to add a little more as each bill is different.
Some people keep the money in the envelop till the bill comes in then just pay the exact amount of the bill, which is fine providing you leave any extra in the envelope for a rise in rate's i.e.: power bills in Australia have gone up so one bill could be $100 but the next could be $150.
I pay the set amount onto each bill at the end of the mount. I have a small file I keep with one payment slip for each bill so I’m not fumbling around looking for bills & so I don’t miss any.
My System that i find usefull
If you are behind in a bill divide the overdue amount buy a comfortable amount for you to pay off each week, & your new set amount that you will pay each (week, fortnight, month) call the provider & notify them that you will be paying off your overdue bill off at x amount of dollars & paying x amount of dollars to stay ahead of future bills every pay period you have. You can even ask the provider if they think your set amount is estimated right, they have all your past bills there & can see your average. (They’ll be happy to help.)
I have an envelope for every bill that we have even our shire, water rates & car rego’s. You will soon find how much it takes to run your home every week & set this amount aside. This way when the rates come in you have the money with no worrying & you can start saving for next years, you'll be happy you've set aside car rego money just sitting in the envelop waiting. I have yet to add the car rego’s but minus food & mortgage my home cost $179.33 to run each week, mortgage payments stay in the bank & what’s left is food.
We have decided I can make a small weekly food budget go further by saving it till the end of the month because then I can bulk shop & as we are at the beginning of our month (our month goes from the 12th to the 12th) I have to wait another 4 weeks till I can do a big shop so I have to use what’s in the store cupboard, freezer & what cash we have in the house but more on that tomorrow......

Well hope this may help some of you see were your going this year good luck :-)

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