As you may know, back in 2017 I wrote a big, massive, giant long post about getting my finances in order. I thought it was time to give a little big of an update on what worked and didn’t work about my 2017 decisions.
I am NOT a financial adviser.
This is what I have done based on my own research, my own personal situation, my own comfort levels, and my own risk tendencies. I highly encourage people to be engaged in their finances but I also highly encourage you to critically assess your needs and consult with qualified and hopefully not-being-sued-advisers who were the cause of the banking royal commission.
I share this for general knowledge. I think the accepted legal term is for entertainment value but I think that wording is fucking stupid in this context and I won’t use it. Apart from above, where I just used it. Hmm.
2020 Finance Review
General Financial Goals
Firstly, a note on goals. Pay off debt is usually the first thing you hear. A random thought I had is that pay off debt is terrible first line advice. My debt is manageable and affordable at more than the minimum repayments.
I decided to focus on the one expense I cannot delay, get assistance for, get from somewhere else – rent. My goal is to have three months of rent money saved up in cashey money. I realised that people with a mortgage can sometimes access hardship provisions but nothing like that exists for renters that I have ever heard of.
I chose three months of rent (not total expenses, just rent) as a goal after seeing a friend get screwed around by Centrelink for three months when they had a simple and totally eligible claim for unemployment.
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Bills
All of my bills (loans, bills, insurances etc) are broken down into amounts that match my salary pay period. I put the amount of money required into a bank account, which is not attached to an ATM card. Most bills auto debit from that account but some I pay manually by choice because I want to review the bill for anomalies first (phone/net and electricity). I don’t like auto debits that come off of an ATM card that I use. It results in unpredictable balances.
Emergency Fund
Is in a fee-free bank account. I have an ATM card for it. This is for the “oh shit unexpected expense this pay period” type of stuff. An unexpected script, fuel, public transport. That kind of smaller size of unexpected.
Big Emergency Fund
Is in a fee-free bank account that is not attached to an ATM card. This is where I am saving the three months of rent money I mention above. I put a minimum of $10 per pay in there. I also put any bonuses, tax refunds, profits from freelancing, and other such chunks of money in. The other way I fund it is by putting whatever is unspent of my pay each pay period into this account. Sometimes that is nothing, sometimes that is something.
Internet Card
As mentioned, I don’t like debits coming off my day to day ATM card. I also don’t like minor things coming out of my bills bank account. So I use a separate free-free bank account for internet stuff. This includes things like Netflix and Stan, cloud backup software for our computers, things I support on Patreon (also you can support me on Patreon!). I fund it each pay period to cover the debits.
You can read more posts about money here
Insurances
Oh, so fun. Everyone’s favourite topic. Here’s where I ended up with insurances:
- Life and TPD – higher than default amounts, through my main super fund. Fully underwritten.
- Trauma – private company, fully underwritten. Roughly two years salary.
- Income protection – limited amount included by default in my main super fund. Also have a non underwritten, cheap, small private policy that provides for one year only with lots of conditions attached.
- Private health – still don’t see the point in hospital cover as I couldn’t afford to pay any gaps. Did upgrade my extras policy to a higher level and different fund. Has been handy with my increased physio needs, though does have preferred location bullshit to navigate.
Resources for Insurances:
- Things I wish I had done differently when researching life insurances
- MoneySmart insurance section
- Why is insurance so secretive?
- CanStar life insurance section
- Insurance is anti-health
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Superannuation
I’m not going to go into a whole bunch of detail here other than to say that I got my accounts down to only three. And I am keeping them as three. Most people will disagree with that and I don’t care; this has been an active choice of mine because reasons. I have issues with the superannuation system. But seeing as I have no choice but to be within it, I’m happy enough with how mine are set up.
And that’s how my finances have ended up in 2020! Any tips, questions or thoughts?
Good for you! I’m struggling a bit with private health – it just gets more and more expensive and covers less and less….but for now we still have it.
If I had hospital cover, I’d probably be scared to let go of it because I’d assume I would need it right after I lapsed it!
Ness
I’ve just been through my own finance check up and have made some changes to starting planning for the future.
I’m one of those ‘if it’s too good to be true..’ kind of people so my plan is very low risk. Also low return but I am comfortable with that. The big thing for me was rediscovering my offset account and topping it up in a big way this year.
SSG xxx
Because I’m on a contract that ends in about 18 months time, I’ve also started using the redraw on my car loan so that if I do end up unemployed, there’s ‘cash’ sitting there to cover a month or two of loans. Thankfully my car loan is very affordable though.
I’m really torn about the private health – when I got my cancer diagnoses, it allowed me the luxury of staying in a private hospital but I was still massively out of pocket for consults and surgery. That said, I always make good use of the dental and optical benefits every year. I feel like it’s a very expensive security blanket!
I think you’re bang on with the 3 months rent thing, it’s such a great buffer and you have peace of mind knowing that whatever happens you’ll be able to have a roof over your head.
If I could save $5-10k for out of pocket expenses (basically if we were dual income) I would probably buy the hospital side of the cover. For now, extras has to do.
Three months is taking some time though – I’m probably at about one months rent saved after 8ish months of saving! Still… this stuff takes time.
Good on you for getting your finances in order, it’s something many neglect for lots of reasons. Breaking it down as you have makes it less of a huge job and you can keep track of where the money is going. #lifethisweek
I hope that the small and sustainable steps pay off over time.
I’ve got private health cover and I get grumpy that it keeps rising and I barely use it. Of course, I’m getting to an age where it’s probably worth keeping it. (And usually when I think of ditching it I’ve got something going on in my life… like the heart-related stuff now!)
My mortgage is my key debt but fortunately it isn’t huge. Every so often I think about downsizing (again) but in reality the one thing I consistently like about my life (at the moment) is my house, so I’m loath to do that. I am pretty much paying the minimal amount though. (And, had to redraw on extra payments when I needed to replace my car earlier this year!)
Paradoxically, I guess it’s good if you aren’t needing to use it. But then it does look like more of a ‘wasted’ expense.
Damn! I’m in awe at your financial skills. I keep thinking I need to get my finances in order, do my budgeting etc but I struggle. I’m not too bad with it and continue to pay bills, have insurances etc but I do wonder if I’m ok if shit hits the fan. Goals for the rest of 2020 I suppose – see financial adviser and shit sorted!
It can be really awkward to get ahead though. Like in Qld you can pay rego quarterly like I do, but it debits a month in advance of the due date. So the first time you actually need more cash on hand to make the budgeting work in the long term.
We’ve really struggled with the private health thing of late – but we’re both getting on (I’m 53 & Grant will be 59 this year) & he played soccer for over 50 years so I see knees at some point on the horizon. These days we’re on one income (mine) but have buffers in place for those unexpected things. Our expenses are substantially less up here than they were in Sydney – I think we live more simply.
I think if I either earned more or we were dual income and could save a $5-10k buffer it’d be worth it to have hospital cover but seeing as it’s taking me long enough to save 3 months rent (not even 3 months expenses) it’s just not all that viable.
I remember when you did that post. Good work here. I admire your discipline and your ability to compartmentalise. We are doing ‘ok-ish’ but we are eating into money from our house sale now almost 5 years ago because of ‘rent’ payments. Nevertheless we are OK. We are both needing private health insurance as options & for my surgeries in 2017-18 we were not out of pocket for anything. We are, however, on a very limited income and look for ways to curb any tendencies to ‘shop on-line’…we have a rule. No spending at night. The next day is often a cooler head and less likely to buy what we may have seen on-line the night before. Mine tends to be related to art and ahem, some ‘bargains’ for clothes.
Thank you for linking up for #lifethisweek and I look forward to seeing you again next Monday when the optional prompt is 26/51 Best Time Of Day. 29.6.2020 Take care, Denyse.
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