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!