Bills

STUDENT writes:

"here is what I have come up with for my bills..."
______________

MONEY PROF responds:

Good start. You have it half beat just by thinking about listing bills, and having a separate acct.

Prevent these potential problem:

The most IMPORTANT Part: you need to always keep a copy of the items that you listed attached to the household checkbook. ONLY those items come out of there. ONLY.............. no excuses. NONE ever.

For this to succeed the frame of mind needs to be: "Nothing I can ever say is acceptable for an excuse to write a check out of household that's not listed."

The next potential problem I've seen on this program :
At some point you'll need money for the other acct. so you'll look at household and depending on the time of year, or month the bal. might appear high. Sooooooo what a great BS excuse to say you made a mistake and take out some of the money. Nothing comes out that's not listed in advance.

The only hard part of setting this up is the math for the starting point. For example: if car insurance is due in 2 months, don't divide by a year. Be careful with the math. How are car ins payments due?
Same with reg bills. In other words be sure you have the correct amounts in acct., in advance. Suggest using a small say 3% extra overage to cover price increases for the year. ( don't need to do math on each item just add 3% of total).

Highly recommend cutting up credit cards, except debit card.

Then if there is a balance on credit card that you can't pay in full this month ( if so beat yourself up good, then promise yourself would do it again as you're cutting cards)

DO NOT use household acct. for future credit card charges.
But do use household IF you're in hock to pay it off. ( ONLY CURRENT BAL.) Only if bal is an amount you can't pay in the next few months.

Suggest NOT saving beyond a few weeks pay, or even IRA, until cards are paid, as you're probably paying high interest on cards????

I know I sent this to you ( below) before, but reread it anyway:

The first step is to promise yourself you will always have a budget. The next step is to commit to be saving for retirement now. Yes, now. You will be a millionaire if you invest 10-15% ( depending on starting age) of what you earn per week into the stock market. EVERY week.
The easiest way to do that is to have two separate checking accounts. One (called household) is for bills that you don't have much control over, example: Savings, phone, electric, rent, car payment, car insurance, plates for car, etc.
The other is for credit cards, ( which I highly recommend you don't use unless you make payment before you use the card) food, beer, partying, gas, restaurants, clothes, gifts etc.
You compute what the bills are per week and deposit that total amount into household acct. every week, so if car insurance is $520 a yr. then you deposit $10 a week into household acct.
This sound like a pain, but it isn't as you would only compute this a few times a yr. once you came up with what the weekly figure needed to be. Best way to deposit is "direct deposit" if where you work offers this option.

After the correct amount is deposited into household acct., the balance goes into the other acct. The rules are simple, you can only write checks out of household acct. for the items that you listed as weekly deposit items. No excuses to yourself.

In the other acct. the only rule is don't bounce a check.

The important part is the mental attitude: For example "what if I don't have enough money in the other checking acct. to go out with friends for drinks and dinner," then stay home and eat spaghetti. ( because you should have saved for this in advance)
No, not take out restaurant spaghetti !!!!!!!! :)
The box of spaghetti you bought on sale at the Supermarket.