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I have a question for you!

June 1st, 2007 at 03:48 am

We have a mortgage offset account and every cent we have goes into there. The result being I don't know how much we have in each category of spending, it's just 1 big pot of money that can be withdrawn at any time. So we save interest but I don't know what we have to spend on things. So I have been thinking about it and I was wondering if it would be better to save for each category of spending. I have about 5 savings account available that I can save for different things. I'll just have to work out a budget and figure out the amounts I need to save. So do you think that would be better to separate the money out or should I continue just putting it into the offset? The savings accounts pay 6% and the mortgage costs 8.07%. What do you think?

5 Responses to “I have a question for you!”

  1. Tightwad Kitty Says:

    I would be putting aside a emergency fund, so that you have got some money outside your offset account and pension to full back on. Aim for a minimum of $1000 it may take you a while to save this amount.

    Kitty

  2. disneysteve Says:

    What is a mortgage offset account?

  3. lowincomelady Says:

    A mortgage offset account is a savings account that is linked to the loan account. Whatever savings you have reduces the amount of interest you pay. So if you have 18000 owing on the loan but you have 5000 in the offset account, you only pay interest on 13000.

  4. shadon Says:

    I would keep the money in the offset account. Not paying 8.07% interest is way better than earning 6% interest and make a spreadsheet up with columns of all the items you want to save for (electricity, furniture replacement, water, etc) and allocate an amount to each item every pay. When you spend on that item (say you pay your electric bill) then minus it from the relevant column.

    I'd take my own advice but we have fixed 100% of our loan until May 2009 so we lost our redraw facility until then.

  5. lowincomelady Says:

    Hi Sharon, yes I posted to the Simple Savings forum and that's exactly what they suggested as well! So I have been doing it for the last week or so and it is working out well, we have come in under budget so far! This way it doesn't matter if it goes on the credit card or comes out of the offset as long as we don't go over in the categories.

    By the way I registered my own domain name a couple of days ago www.lowincomelady.com that goes to my blogspot blog. I fixed it up a bit too, I've been working on it the last couple of days!

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