So, I have a pretty good system set up for our personal finances. I have a system for paying bills and for our savings that works off of our spending plant. But, every once in a while things go surprisingly wrong.
At the end of last month, February, I was getting ready to do some work travel and I made the decision to pay our home mortgage March payment in February. What was I thinking, well it seemed like I had lots of cash laying around our joint checking account, I knew I was traveling and I figured let me just take care of that big bill now instead of later.
Big mistake! Several auto transfers and other obligations drafted after I made this payment and I, of course, came up short. And further, of course, I had to try and fix this mistake while traveling. Ugh, ugh, ugh.
Two weeks later, I am still undoing the damage that was incurred.
2 comments:
I'm not understanding your system.
1) Why is a fixed payment due on a specific date (in this case, the mortgage) not paid automatically thru a bill pay system or an automatic draft? That should happen without you ever having to think about it. And the payment date should be a few days before the last day before you incur a penalty, so not necessarily the 1st of the month.
2) How are you experiencing unplanned or unforeseen debits to your bank account? I'm guessing that this is from the debit card. For people who care about their finances, a debit card may not be such a great idea. Besides the perks that come with credit card use -- cash back, extended warranty, flight insurance, limited identity theft liability, etc -- the credit card company is giving you a free 52-21 day loan. All you have to do is pay the balance in full every month. And, for budgeting purposes, you have a list of all the charges and roughly 21 days to pay off the balance, so no surprises to the bank account.
3) Once you remove the debit card use, you can set up a spreadsheet, enter your bills and the date they're automatically debited from your account (you do have that set up, don't you?) and you'll always know at least 15 days out the exact amount of money in your checking account. Keep check writing to an absolute minimum and avoid cash withdrawals (not much you can't pay for with a credit card these days).
I realize your rental income may be a bit irregular, but didn't you say you have a separate account for the rental properties?
Finally, do you not have overdraft protection on your account? That's usually free if you have a credit card with the bank.
This is why I'm such a strong advocate for using CalendarBudget.com to forecast projected account balances in the future upon input of various debits or credits (whether recurring or otherwise). I wouldn't be able to reliably predict my cash flow without this wonderful tool.
(No affiliation to their site/service, by the way ... I'm just a huge fan of their easy-to-use web-based interface.)
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