Why you need to review automated bill payments: Our family budget April 2014

DOUBLE CHECK ALL OF YOUR BILLS

No matter what payment methods you choose to pay your bills with especially if it’s an automated bill payment you must review them.

If we didn’t do just that with we would have paid around $594.96 extra per year for our auto insurance. I can think of many other areas of our finances where that money could be used.

Whether you use a budget or a bill payment spreadsheet if you’re not careful you may be paying more for that automated bill payment like we just did.

If it wasn’t for our budget and reading all of our bills and receipts we may not have caught the error. I know people who have any bill they possibly can set up so the bill payment is an automated bill payment directed that way mainly due to convenience.

What is an automated bill payment?

Well, it’s simple. It’s where you don’t have to do any of the work because the company that is billing you for a service they provided will debit your bank account for the amount of the bill. It’s that easy all you need to do is authorize that bill payment and you wipe your hands clean of paying that bill.

Not really though, unless you don’t care how much money is flowing in and out of your bank account. Just because an automatic bill payment went through your bank account that doesn’t mean that the figures were accurate.

Just this month we received the paperwork in the mail from our insurance company. This is standard procedure at renewal time so we didn’t think much to it. We read it over and nothing seemed to be out of the ordinary, until I was reading over the bank account.

No, the paperwork in the mail did not specify the new payment charges just what the policy entailed. My wife has been with the same company for many years now. I joined in because they were the only insurance company that I could find in Canada that weren’t going to charge me out the nose as a new permanent resident for auto insurance.

They’ve been great to us and yes I do check rates every year to see if we can find something cheaper but so far, no luck so I guess our company is pretty darn good.

I noticed our monthly insurance payment which covers our house and auto insurance went from $211.49 to over $261.07. WHAT? That’s $49.58 more than we normally pay each month. I know rates were supposed to be going up because of all the nasty weather and claims but that was quite the hike.

I realized the problem when I was putting the figures into our Canadian Budget Binder spreadsheet for the month of April. This is when I fired off an email to our insurance advisor who went through all the documents for us.

Typically she would do the work but it seems that some of her work is being given to others to handle these days. When she reviewed our insurance policy she noticed that they added some extras on to the policy which we did not authorize. Ah ha!

She emailed me back to let me know that she would make the corrections to the bill payment and make sure the money that was automatically taken from our bank account was put back in.

Where the money went

Although we had a good month in terms of Income, the money didn’t last long. The extra income was a bonus Tax adjustment that we have been waiting for but all it managed to do was shield us from an extremely expensive month.

The remainder of the balance owing on the central vacuum system that we recently purchased came due. Just waiting for the system to arrive and then it will be installation time. The house/city taxes was also due this month even though we have already budgeted for that in our projected expenses.

Other costs were maintenance related. One of the vehicles required the front brakes to be replaced. I had known about the brake pulsation over the winter months getting worse but held off for better weather.

I replaced the brake rotors, pads and slider pins along with swapping the tires back to all-seasons saving us a substantial amount at the garage/shop. The same vehicle that took the brunt of the winter weather also got some TLC on the inside by being taken to the car cleaning place to get all the salt out of the carpets.

I have still yet to do the oil change on the vehicle and will be a job for the coming month.

Home maintenance was also on the rise after a particularly nasty long winter. I bought driveway sealer because it’s cheaper to do your own. We bought some liners and plants in anticipation of better weather in order to start greening up the outside of the property as well as lawn fertilizer.

Replacement furnace filters, dehumidifier filters etc. all needed to be replaced. This month seems to have been a never-ending maintenance frenzy.

I still have to work on the projected expenses chart for our budget which you can easily do if you use our budget by tracking month by month what you are saving in each projected expense category. I want to incorporate it into the budget but until I find the time I may have to do a simple spreadsheet for our own use.

Without these figures you won’t know if you are on track with your projected expenses or going over so it’s crucial to have these numbers. I’ll make sure I get ours done so don’t forget to do yours and hopefully I’ll have an updated budget sheet by the New Year.

Unexpected expenses

There have been a couple of unexpected expenses too. The direct debit payments or automated bill payments got mixed up at the insurance company so car and home insurance were more than it was supposed to be.

Rogers re-negotiated term also went up due to partial charges although it will stabilize over the coming months. The rise in postage stamps took a chunk out of our budget too.  It’s true though that many people are simply communicating via social media and email rather than sending mail these days.

I had to buy a book of international stamps to send cards to the UK and they had gone up from $1.85 to $2.50 which is quite the increase. We also had associated costs in finalizing our mortgage of which I will get into more on the Net Worth post later this week and will explain the higher miscellaneous category. You can certainly tell that the price rises of services will have an effect on people’s budgets.

Also soon I’ll be sharing some unexpected surprises for Canadian Budget Binder as well… so stay tuned!

Free budget

I’m currently offering 2 versions of our budget and the reason behind it is simple. Firstly, read the disclaimer because what you do with it is your own business so if you mess it up you need to sort that out.

I have not closed off any cells so you can make all the changes you like to the budget to reflect your lifestyle which is what the fans wanted.

Although I would love to help every single fan with their budget I am unable to do so but I am always willing to answer any emails you send me so don’t be shy.

This was after all meant to be our personal budget and although I would love to customize it for every fan that wants to use it but, I’m afraid I cannot.

I’m not selling this budget or hope to make any money from it so enjoy this free budget and I hope that it works for you as much as it does for us.

Canadian Budget Binder Budget Spreadsheet

You can download the free budget spreadsheets here.

• Budget 1– You can use the pre-existing categories or you can use your own if you wish and you have the option to use projected expenses or not. Please read all notes left around the budget for tips.
• Budget 2-Everything is pre-set so you have to use the pre-defined categories but this budget will generate year-end budget figures where the other one won’t but you must use the categories already in this budget. If you change anything you will mess up the formulas and year-end figures. Please read all notes left around the budget for tips.

I’m always open to feedback but be polite as you don’t want to hurt my feelings Get started and don’t procrastinate. Test it out for a month and see how it goes. There is never any harm in trying something new in life.

You either love it or hate it, which is a fact with anything.

What type of budget do you use?

Our budget plan

How we budget our monthly expenses I often have fans ask me how to budget money and what we do in order to save so much money but the reply is that it’s not about the money it’s about the process involved.

It doesn’t matter if you are using a cash only budget or you use your debit and credit cards throughout the month if your budget doesn’t balance then you likely have budget issues you need to review. You need to learn how to be your own money manager because no one else will care about your money more than you ever will.

We don’t always save as much money as we would like every month but most importantly we are not going into debt because we are budgeting our money.

One of the most important things we did for our personal finances was that we never let the budget deter us from reaching our goals.

Sure we’ve had crap months but we made up for it or we learned from our mistakes just like anyone else would. Budget failure only occurs when you give up on the budget which should not happen as long as you give 100% into making sure you reach your goals. Sometimes fans email and ask me if living on a budget in Canada is any different from living in other countries.

To be honest I’m going to say, probably not. If I still lived in the UK I could use this exact budget to meet all of my needs. Below are links to the budgeting series which I wrote while designing our spreadsheet.

I’m not a financial planner/advisor so I can’t tell you how you should budget but I can show you how we budget our numbers. I’m just a regular guy just like everyone else; some might call me a budget or numbers nerd.

Our budgeting series

Please take the time to read through the budgeting series and I hope you take something away from the information.

1. How We Designed Our Budget Step 1– Gathering All the information
2. How We Designed Our Budget Step 2– Categories
3. How We Designed Our Budget Step 3– Tracking Receipts
4. How We Designed Our Budget Step 4- Note-taking
5. How We Designed Our Budget Step 5– 5S Organization
6. How We Designed Our Budget Step 6– Who Does What and When?
7. How We Designed Our Budget Step 7– Balancing Our Budget
8. How We Designed Our Budget Step 8– Knowing our Coupon Savings
9. How We Designed Our Budget Step 9– Reading Our Bills
10. How We Designed Our Budget Step 10– Projected Expenses

Budget changes April

Our Rogers bill we be going up by approximately $5 after haggling a new deal with them this past month. This month’s bill shows adjustments and the bill in May will be lower but still won’t be accurate until June.

I never count on the number they give me until I actually see it on the bill which is why I’m waiting to enter that in the budget so I can review it and make sure it’s correct.

The difficult part with this is when you have the bill as an automated payment you risk them taking more money out than you have in the bank account similar to what happened with our insurance this past month.

Although they will fix any errors you may have to wait to get that cash back or even worse if you didn’t have that money in the bank you risk going into over-draft which some banks charge a $5.o0 fee or your payment not going through.

Budget percentages April

Our savings of 9.96% includes savings and investments. Our projected expenses this month is at 19.94% which now includes some increases due to overspends explained in the 2013 year in review. The total April 2014 Household Budget Percentages comes to 100%.

Budget percentages month by month

Expenses breakdown

This is simply a breakdown of our expenses which has helped us to understand where all of our money goes. I appreciate that you enjoy this budget update each month but I do hope you view this as an educational tool rather than comparing your own financial numbers as we are all unique.

Sometimes we wish we had more money to budget with but understand that we only have what we earn and if we want more, we need to earn more. Spending less than we earn and budgeting our money has been the easiest way for us to pay down debt and save money.

1. Chequing– This is the bank account where all of our debt gets paid from.
2. Emergency Savings Account– This is a high-interest savings account.
3. Regular Savings Account– This is a savings account that holds our projected expenses.
4. Monthly Budget Total: $5352.51
5. Monthly Net Income Total: $9331.69
6. Total Coupons Used: includes every discount attained during the month = $0
7. Projected Expenses: These are expenses we know we will pay for throughout the year = $1860.68
8. Total Expenses Actually Paid Out: $7350.07
9. Total Expenses Actually Paid Out: Calculated is $9331.69 (total net monthly income) – ($120.94 (cash savings) + $1860.68 (projected expenses)) = $7350.07
10. Actual Cash Savings Going Into Emergency Savings:Calculated is $9331.69 (total monthly net income) – $7350.07 (actual expenses paid out for the month) + $1860.68 (projected expenses) = $120.94

Saving money

What are Projected Expenses? – We project expenses throughout the year so we have the money saved. PE= A projected expense is money which is automatically saved each month so it is ready when the bill comes in or when you need it as in the example below.

We review our projected expenses at the beginning of the year to set up our yearly budget and adjust as we go along if a new projected expense arises and needs to be added to the budget. Sometimes we remove a projected expense as well so it’s very important to keep an eye on your expenses.

This has happened on many occasions but it’s bound to happen as we can’t predict everything we have to pay for over the course of the year. The important part for us is that we are saving for these expenses and we no longer have to stress about taking money from our savings to pay for them. To learn more about projected expenses read Step 10 in my budgeting series.

When we spend the money in a projected expense category we move that money to our chequing account in order to pay for that incoming expense.

We pay money into the projected expenses account continually throughout the year even when bills come due as it’s revolving so as one bill gets paid the money continues to come in from the other categories all year-long. So the $1860.68 gets paid into the projected expense account every month no matter what. It seems to be easier to track our money this way but you can do what works best for you.

Projected expense example

If for example our clothing category was a projected expense we have a budget of $50 per month for the two of us. If we spend $30 on clothes for the month that means we need to pull $30 from the projected expenses account to pay for this expense or we move only $20 to projected expenses for the month and leave the $30 in your chequing account.

It’s up to you how you do it as I mentioned above. I’m hoping to put together a projected expenses spreadsheet to track the expenses all year-long otherwise you need to do that to make sure you don’t overspend what you haven’t saved or will save over the course of the year.

It’s a fairly easy process and becomes a lifestyle change for your finances but the most important part is that the money is available and saved, which means potentially less stress.

This means we should have $600.00 per year for clothing to spend. We have to track that expense as we spend it manually but hopefully for our 2014 budget I can incorporate that into our spreadsheet so it tallies the numbers up as we go along. That way we will be able to know exactly what we’ve spent as an ongoing total.

Our numbers

Below you will see two tables one is our budget and the other is our actual budget for the month of March. This budget represents 2 adults and no children and includes all of our investments.

Budget for April 2014

If it is highlighted in blue that means it is a projected expense of ours. You will also see our budget does not include the emergency savings as this is factored in at the end.

Actual budget expenses for April 2014

You will notice we didn’t put the amount going to emergency savings as we have in the past into the actual budget which was a total of $120.94

April 2014 Goals

Sometimes I think I am being too optimistic about my numbers but if I don’t reach them I try harder the next month. Stay positive and that’s all you can do apart from bringing the best you can for your readers.

I’m not competing with nobody when it comes to the blog as this is my hobby and my fans are the people who keep me here. May is going to be a very busy month for us so I better get a move on and hopefully the weather will cooperate.

• Income tax- Pass ( I do our own taxes)
• Clean interior and exterior of vehicle professionally- Pass
• Get the backyard cleaned up-Fail (the weather has been rubbish with lots of rain)
• Finish front yard reno with a few plants, rocks- Fail, doing that in May
• Swap out winter tires- Pass
• New brake pads and rotors- Pass
• Hang two flat screens in spare bedrooms-Pass (just need to hide the wires now)
• Complete projected expenses tracking sheet for budget- Fail (working on this in May)
• Reach 2700 Twitter Followers- Pass
• Reach 6265 Facebook Followers- Pass
• Reach 1750 Pinterest Followers- Fail (oh so close)
• Reach 1230 Blog Followers-Fail (oh so close)
• Read a chapter in my personal finance blog- Fail (will I ever finish this book?)
• Help a new blogger with a task or question- Pass (I helped, but not a new blogger yep! Many helped me too)
• Get moving with renovations when I can find time- Pass (Purchased more bits for the bathrooms)
• Continue Spring cleaning- Pass (ongoing)
• Connect with a new blogger- Pass (Yes I connected with a few new bloggers)
• Reach 1550 Followers Facebook for The Free Recipe Depot– Pass (almost at 2000)

May 2014 Goals

• Fix a couple odds and ends on vehicles
• Get the backyard cleaned up
• Put the screens back in all the windows of the house
• Put all summer furniture outside
• Put all the plants outside on the deck
• Buy new blinds for garage window
• Install window shade for spare bedroom (you know those silly half-moon windows.. hate them)
• Get the potted plants ready for hanging
• Buy the rocks to finish the landscaping
• Buy mulch and some other bushes or shrubs for backyard
• Seal the driveway
• Finish hiding the wires for the televisions
• Redecorate the spare bedroom (almost done)
• Search for more deals for the bathroom reno
• Reach 2900 Twitter Followers
• Reach 6300 Facebook Followers
• Reach 1760 Pinterest Followers
• Reach 1230 Blog Followers
• Reach 2100 Followers for The Free Recipe Depot

Budget updates month by month

In case you missed our budget updates from the start of the year I will list them all here each month.

• December 2013
• January 2014
• February 2014
• March 2014

That’s all for this month check back at the beginning of June 2014 to review our May 2014 budget to see how we made out with our numbers and if any changes were made.

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