Apr 22, 2009

pay rates quarterly

I was staring at our budget for the entire year looking for some magical way to reduce the outflow of cash. While we could do with sticking to our $50/fortnight take-away/dine-out budget instead of abusing it and more, I focused more on the fixed items, such as rates and insurance.

It hit me. I could actually earn money if I were to pay my rates (property tax) quarterly. We have been paying by direct debit fortnightly, taking out $74 from our current account like it should. If I saved that, or at least $80 rounded off, That money can earn us some nice interest in the bank.

My council splits annual rate payments into 5 instalments. With $1,927 a year to pay, that is $385 per instalment or $37.06 per week.

If I were to save $37.06 each week at 3.5%pa from 1 July to 15 Sept, where 17 Sept is the first instalment of the new fiscal year, I will have $396.32. As I only need to pay $385, it means I over-saved by $10.05 and earned $1.27 interest in 3 months.

A total of $11.32 extra may not be much only if I didn't have any other savings to start with. Because we have some cash saved that we can top up with $80/fortnight, we'll earn more interest.

I also realised one more thing. Our budget for the entire year is already laid out and we already know what the leftover money is after all fixed expenses. When I updated the budget with this new strategy, the instalments can actually be taken out of our paycheck instead of our savings! That's even better!

Next to tackle: insurance!


  1. Wow, that's quite detailed. That is irritating though, that fortnight thing.. I once had a friend tell me about that.. drove me mad

  2. Hi FB! At first fortnightly budgeting can be tasking but because we're paid that frequent it made sense to adjust accordingly. Fortnight structure sure gives that feeling that I pay debt quickly.