Offset Accounts

[Crowaholic]

I have a home loan which is an off-set style account. Yesterday I sat down and worked out all of my expenses and calculated I have $900 per fortnight available after the expenses. I want to start saving this and putting it towards 'luxuries' for things such as entertainment,holidays,buying clothes etc etc but I have found that having it in the off-set account is quite confusing as there are always payments going out for the home loan,insurance etc etc. so I never exactly know how much money I have available for these luxury things. Any experts know a way around it?

 

[whythelongface]

What about working out a weekly budget allowing for everyday living including your entertainment, personal expenses such as clothes, putting aside money for a holiday etc. Then you can do a 12 month spreadsheet indicating exactly when your payments are due including estimating all expenditure based on what you have entered into your budget. You can then determine approx. how much money you will be able to save.

 

[sniper77]

A home loan with offset account is a fantastic option for those who manage their finances well. In a perfect world you should aim for the following.

Eg. Loan of $200k with offset account balance of $5k. Interest being calculated on $195k.

1. Set-up a 'cash/withdrawal' account and budget a $ amount to be paid directly each payday.
2. Direct the remainder of salary into offset account.
3. Loan repayments automatically will be direct debited.
3. Use Credit card to make purchases and clear credit card monthly by using the money in your offset account.

This way, if you have a quiet month expense wise the offset acocampaigner will have more $'s in it and thus reducing the interest amount calculated. You will have months where you have rates, car rego etc etc and you will cop a hit as you may pay more interest but not on the full loan amount.

Unless you can find a savings account that earns greater than home loan interest, keep the surplus funds in the offset and use your credit card, but make sure you clear it and not pay any interest.

An excel spreadsheet is all you will need to determine your ins & outs and give you some direction on how much you can save etc. But keep it in the offset account.