Was wondering on how folks handle their finances
with respect to large scheduled payments during the year
ie - real estate taxes, insurance, college tuition, IRA's, etc
Next year, we will be paying our real estate taxes directly.
They are $3,700 x 2 payments...May and August
also - have the semi-annual car insurance.
and then the college payments...
Currently just have a bunch of money stuffed into ladder CD's and MM funds.
Some brokerages let you set up monthly deposits into any checking
account, then you can permit the billers to withdraw from the checking
account (it doesn't have to be a fixed withdrawel amount). I wonder if
I am missing an opportunity for those few billers who allow regular
charging of credit cards without surcharge. It is still surprisingly
easy to have a credit card that rebates more than a percent of your
charges, and some even automatically deposit that into your brokerage
account. So you can stand back and watch your money go in circles...
It's possible to get a comprehensive picture and establish a bit more
control, using spreadsheet columns to set up income less expenses.
There's no way to make the big payments look pretty.
Income Jan Feb
. 5000 5000
Groceries 600 600
Clothing 200 200
College 1400 1400
Net (1900) 2800
Cumul (1900) 900
Any categories you like, but if you carry this over year after year,
leave yourself some room for re-categorizing, and I strongly suggest
making comments in individual cells, so you know what you spent what
on (e.g. if you bought a TV and slapped it into "Furnishings" then
bought a patio set at a yard sale, you want to be able to distinguish
between the two, and a comment "TV 1200; patio set 250" will do that).
It takes some very careful thought to get the setup right, but that
work and tweaks turn into a simple and useful record. You can use
estimates of income and expenses to project future years month-by-
month (and plan vacations , consumption, or savings).
Fully comprehensive records are hard, but a "Cash Expenses" category
will take up some of the fudge. Summary totals for income and expenses
(such as those in checking or other accounts that you can reconcile
balances to) should be within a few percentage points of your budget
numbers. The more you simplify your cash flow, the easier it is - e.g.
one checking account, one credit card. If you really work on it, you
could set up exact accounting and formulas to supporting schedules (CD
interest, fund income ... credit card, checking ...).
Don't forget to physically transfer $$ into checking.
My last reply might not have been clear. I'm a big fan of automatic
everything - almost no manual transfers or payments or bill approvals.
Everything gets swept up from automatic deposits, interest, dividends,
etc. Payments are automated, such as eftps for federal taxes (beware,
I got email from some fakers pretending to be them).
And to further simplify, almost no formal budgeting or recordkeeping
is needed (I am too ruthlessly pennypinching for my expenditures to
need second guessing). If most of the money outlay is channeled thru
an account or two, just review it for typical monthly spending. Then
review quarterly or yearly payments, such as for taxes, and come up
with an (automated) monthly transfer amount that builds up plenty
ahead of time for your greatest crunch time.
And most of the outlays can be automated without even an approval
needed. I only make an exception for the local gov't payments which
demand a surcharge for e-payments, but I ought to get over that.
Finally, regularly review the progress with one of those financial
consolidation web pages that logs on to your umpteen accounts and
shows current status of income, balance, outflow in a one page
P.S. A help in this process is to never, ever, ever automatically
reinvest for taxable mutual funds. While it may be true that
historical statistics show reinvestment is key to returns, you would
be better off consolidating dividends and investing in something else
(to rebalance or redirect your asset allocation). Or use it to pay
expenses without having to create yet another taxable liquidation. All
that over and above the tax basis headaches that auto reinvest can
In article ,
Another account to which you make monthly equal deposits whose sum is
equal to the sum of your real estate taxes, home owners insc., tuition
etc. . Now draw from this account as these payments come due. Keep it
simple, going after the highest yielding account may not be worth the
aggravation of transferring money.