Sunday, June 19, 2011

Starting Out With Savings...

Yes, this is our Australian currency. It's plastic. It can go through the wash and live!


This week, Awesome and I have started our plan to become debt-free and live on what we have.


Inspired by this post at The High-Heeled Housewife, I started to do some more research in to what it would take for us to start paying down our debt and living on what we earn.


First things first. I think there are seasons for which having debt may be a necessary part of life. Studying at Uni, for instance, carries a relatively small amount of debt in Australia and for some people, carrying a student debt which is interest free is smarter than using your 15% interest credit card to pay off your "free" loan.
Debt can be important to cash flow. It can be necessary to have debt in order to ensure that bills get paid and that direct debits don't overlap and cause the headache of overdrawn accounts. In a given year, when I was single, I managed my money well and accounted for every in and out - after all, I was the only one who was spending the money. When I got married, I found it more difficult to keep track. In our first year of marriage I paid around $200 in overdrawn account fees, simply by not keeping on top of the ins and outs of our accounts. What a waste! If having some bills come out of a credit account in the short term and then paying them off the following week is what stops this from happening - then that makes sense to me.


Over the next couple of posts, I want to explain our problem, and our new system to you. I think that Gen Y particularly has a problem with budgeting and saving for the future. I'm hoping that our experience might be helpful for others!

3 comments:

  1. Great idea. I think this is something we need to work on too - well after all the shopping in New York next week hehe. Neither of us still really have that much of an idea of what the other is spending. I think it was just we expected we'd tell if we were going to purchase something outrageous, but little things still add up too!

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  2. I have a $56,000 Fee-'HELP' (ha!) debt and I'm not so sure it's ever going to get to zero. Apparently, it doesn't attract interest, it's just 'indexed' each year to represent real value which is strange as I'm pretty sure I haven't earnt any more money. I really don't understand how it works and it really bothers me.

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  3. Loz - it definitely takes a while to get all your ducks in a row when you get married, especially the money stuff. No matter how alike you think everyone handles money differently!

    Jess - the HELP debt isnt really designed to be paid off, at least not on its own. it's tax free so you get it taken out by your employer before you get paid. if you have to have some debt (ie if you can't afford to pay it off today without going into other debt) then you may as well keep it. It's the cheapest money the government will ever charge you for. Having help debt won't affect your ability to get a bank loan in the future as they look at your net income, not gross.... Overall it's actually not a bad thing to have and unless you get a job with 100k plus salary, they we never make back what you borrowed....

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