For over a year from my electricity, gas, water, mobile phone, strata, pay TV and health insurance providers have all shown that I owe $0. In fact, some of them owe ME money! Here’s how…
Sure I talk technology on the radio and TV and others I’ve told of this little scheme say what’s that got to do with anything I do. Well, I’m finally going to explain it once and for all to mates and people reading the site, and you’ll realise that without the technology that exists in our lives, I couldn’t pull off this very cunning plan.
This is not about getting anything for free, it’s about managing your money better. Now I am far from being good at managing my personal finances – I’ve had big debts, and big piles of bills in my time. However, a little over two years ago, I decided enough is enough.
Here’s how you do it – keep in mind this could take a few hours, so get settled one afternoon and really put some effort into it – it will reward you. Get your main regular bills together. Find at least 6 months worth, 12 months is ideal. If you can’t find many, even one is enough – just not as accurate.
I recommend you look for (as a starting point at the very least) your electricity, gas, water and mobile and home phone bills. Gather as many as you have, and add them up by provider.
So, for your “Energy Australia” bill for example, lets say you have four bills, three months each.
- Bill #1 $509.16
- Bill #2 $493.06
- Bill #3 $497.99
- Bill #4 $390.24
Do the same for each provider.
- BILL #1 $110.88
- BILL #2 $105.63
- BILL #3 $131.60
- BILL #4 $135.85
Now add the total of each up.
- Energy Australia: $1890.45
- AGL: $483.96
In my case, both these figures are annual. 52 weeks, 12 months. Keep a note of that too.
Next step – how often do you get paid? Monthly or Fortnightly? Key is to work out the average price of that bill per pay cycle. In my case, fortnightly. So, I’m dividing each biller into 26 equal payments. That means, for Energy Australia – $72.71 per fortnight, and for AGL: $18.62. Do this calculation for each of your billers.
The concept here, you can see by now is simple – pay them as you go, don’t wait for the bill. This works best of course once you’ve actually paid all your bills off and start this for all billers in one go. My advice, as the new financial year rolls round, is to use your tax return (should you get one) to pay off as many of your bills. Make them all $0, then start this process.
Next step, sign up for electronic statements, only thing better than not receiving bills in the mail, is to never have to pay them at all! If your bank has integrated bill viewing, this is ideal. Otherwise, organise electronic billing. The final step is the most important.
Gather the bills together, get all the BPay or direct credit information together. For those with BPay functions, set up a scheduled payment in your online banking system – pay the amount calculated, per pay period, and set it to pay the day AFTER your pay goes in, and repeat for each pay cycle. This means that once your pay goes in, your account is effectively cleared of all the funds needed to pay your bills, and what you are left with is for any other payments and your living expenses.
Each time you receive a bill, the ‘credits’ you’ve made will show up, and in many cases, you will have a positive balance, because for the summer months your electicity usage might not be as high as the winter. It evens itself out.
At worst, you get a $20 bill and you top that up with an easy one-off payment. Monitor the bills because prices do rise (unfortunately) so you might need to bump those payments up now and again.
Even more cunning, if you can afford it, pay more than you need – $5 per pay, or $10 per pay. Then with your account in credit leading up to Christmas 2011, stop payments and use all that money in your bank on a gift for yourself. A Logitech G27 racing wheel, for example. Perhaps a Porsche…
Think of it this way, you can pay your rent, mortgage, every bill, your car insurance, health insurance and if you are completely anal about these things (like me) you could even setup an online banking account and transfer to it each pay period enough to cover other expenses like car servicing etc.
What this may do is make you feel like you have no money each pay. Because the day after you get paid, all these funds get sucked out of your account. In reality though, its showing you exactly how much you have to live off.
Of course, you should do the calculations first – because if your pay can’t cover your regular bills, you might need some other solutions that I certainly don’t have.