DF and I have been talking about how we're going to structure our accounts once the house sale is final. We both agree it would be a good idea to keep track of how much each of us pay off the mortgage. I'll just keep track of that on a spreadsheet, it will be interesting to see. I might even start printing it out to be motivating and stick it on the fridge.
These are my ideas for account structure:
Mortgage Account: we will make extra regular payments and these won't be withdrawn.
Offset Account: This will be our large savings account and EF. We won't take money out unless we get less work hours per week, something breaks etc or for planned (and saved for!) renovations. The point of this account is so we don't redraw from our mortgage, but it still saves us on interest. I may also, down the track, deposit amounts into this account that I've spent on the credit card and then withdraw when paying the CC. But only with complete control over the CC expenditures!
DF/My Personal Accounts: We discussed having personal accounts that we can access with ATM cards - where each week an amount is deposited automatically into this account. It will be our 'fun' money that we can use for whatever we please and not feel guilty about. Starting amount will be probably $50 for me and $100 for DF, and we will see how that goes. May have to adjust it up or down depending on how we feel.
Mini Savings Accounts: I might set up a couple of these to save for smaller items we agree on buying (so far: a new fridge, chest freezer, air con). It's pointless having these accounts, I know, when we can just add an extra amount into the offset acocunt each week - but it just seems more organised knowing the amount IS THERE and is being saved for, and is for a purpose. It's more peace of mind than anything else, and if it's only small amounts I guess the interest amounts are hardly anything anyway.
Main Account: Where all our wages will be deposited, and where all deposits to other accounts will come from. The mortgage interest payments will also come from here, so I expect to always have a minimum amount in here to maintain.
Credit Card: Will be used to purchase all or most of the groceries, petrol and houeshold expenses. Then I expect to transfer amounts spent from the main account into the offset account (if I'm organised) and then on due date back to the credit card. If not, then the money will sit in the main account. DF suggested keeping ALL reciepts (i am proud! he's doing well and is learning) so that if we spend money on the CC for say, a video game, then that person will know at the end of the month they have to transfer that amount from their personal account.
I like being organised, but what does everyone else think? having limits and set purposes for accounts really helps me keep calm for some reason (you would think it's the opposite!), much more calm than say, having a main account, a mortgage and a credit card. That just SCARES me.
Anyway. Because I'm such an organisational FREAK, I have even made a chart:
new accounts structure :S
January 23rd, 2009 at 10:22 am
January 23rd, 2009 at 12:45 pm 1232714753
Otherwise, I admit we have different accounts set up. We also get an allowance each month ($100.00 each). We were putting everything on our Amex, but am sick of huge bills, so we are going cash this year except for gas/petrol.
January 23rd, 2009 at 02:44 pm 1232721864
January 23rd, 2009 at 05:13 pm 1232730790
January 23rd, 2009 at 10:02 pm 1232748151
i have nominated to have one which is a split rate. i will have half variable and half fixed. the fixed portion you can only make $15k extra repayments over the entire fixed term, and can't withdraw. the variable amount you can pay anything up to less than a dollar owing (if you pay all of it - it will close that part of the loan - which is good and bad). you can withdraw all of your extra repayments for no fee from the variable portion. which makes it like a huge savings account, if you know what you are doing and don't take any more than you need. i prefer to have other sub accounts as well.
homebody: our mortgage payments are interest only for the first few years - it is just the way the loan is set up, and anything extra we pay is principal.
also the offset account is where the whole amount of that account offsets the mortgage - as in say i have $30k in my offset account, then 30k is taken off the balance of the loan for interest purposes and then interest is charged at the reduced amount.
:S hope i helped in some way!
January 24th, 2009 at 12:58 am 1232758711
January 24th, 2009 at 02:16 am 1232763413
January 24th, 2009 at 04:30 am 1232771417
January 24th, 2009 at 04:59 am 1232773142
I like your chart and commend you for the thorough way you have organized your savings. I think it's great for someone so young to be so wise about the importance of saving. I have posted about the many different savings accounts (buckets) I use. Everyone has to find the best way that works for them; what's important is that you are SAVING SYSTEMATICALLY!
Regarding the credit card: do you use one that gives you rewards or miles (an added benefit)?
January 25th, 2009 at 09:08 am 1232874519
and yes the credit card we will be using will give rewards (in various forms - cash, flyer miles or actual stuff). my plan is to use the cc for lots of stuff and atleast earn enough rewards to offset the annual fee of our accounts. i think it is do-able.