Remember when the markets last crashed? This article from March 20th, 2008 highlights some of the things that happened then
Another correction in the markets is coming down the pipes, which means more fun and excitement in the financial world. The Canadian dollar drop almost 2 cents on weakening commodity prices, and severe flooding is being predicted here in Ottawa. Now that I have got out all that good news…
Cruise Control Finances
A while back I theorized about how I could put my personal finances (specifically bill paying and debt payment) on cruise control and then not have to worry as much as I do about things. Last week I didn’t have time to keep track of things, being out of the country and now I am thinking I should have figured out a way to keep my “eye on the ball”, as it were.
All my bills are getting paid and such, but I seem to have a need to continuously watch my financial standing to reassure myself that I am not completely “financially out of control”. My theory is simple(r) than most:
- List all my known monthly bills:
- Electricity
- Natural gas
- Telephone(s)
- Internet Access
- etc.,
- Take each bill and divide by 2
- Ensure each and every bill is payable on line (I have a small issue, because my electricity bill is a direct withdrawal on a specific date).
- Every pay day, make that 1/2 payment on each of these fixed bills.
By doing this I normalize the cost of these monthly bills across all of my pay cheques. I also end up getting ahead of things, because by the time the end of the year rolls around, I may well be a month ahead on these bills and I might be able to take a month’s vacation from those bills, or I could fine tune my payments so that I divide my yearly bill by 25.5 and make that size payment instead?
Either way it’s a different way to deal with monthly bill payments, and might make my financial worrying less severe? (yes, Prozac would do the same I guess).
I calculate what my total expense was on a given bill for the entire last 12 months. I then divided that amount by 26 to correspond with my pay schedule. After that I want to get ahead of my bills so I add 10% to that final amount.
Utility A paid
1200 last year
46.15 per pay + 10%
So I’ll pay $50 every pay and be ahead by 10% on last years bill. More than covering for inflation. Also every once in a while I may get to take a break from paying altogether. Since I started this the worry has faded a lot.
I used to divide the total amount I paid in a year by 26 and then pay each bill every paycheck. However, with that method, I’d have to pay a little bit ahead, because I would otherwise be late for some payments.
Now, I use something similar to a “freedom account”. I have an ING Direct account with a $500 cushion. I contribute bi-weekly the amounts of my bill, and I just transfer the amount of my bill whenever I receive it.
With that system, all my bills are paid on time and I get some interest to boot! 😉
An even better idea, I like it. 😀