Should you use Afterpay?

Recently on a holiday I went out to dinner and sat next to a friend of a friend. As conversation does these days were talking about the power of the internet and how easy our lives have become. To go shopping – you can find something online – Google a discount code and have it delivered within a couple of days . No wonder physical shops are declining – then the magical unicorn Afterpay came up? Have I used it why/why not. My dinner companion was a big advocate for it so I decided to look into it further. Have you used after Pay? I have – all in the name of research. So should you use Afterpay?

Should you use Afterpay? What are the benefits of using Afterpay?
Is Afterpay for you?

 

How it works

A heap of online and physical stores offer after pay. You sign up with Afterpay and they act as a third party to pay for your purchase for you. You have to enter your bank account details and each fortnight you pay back ¼ of your purchase price for 4 payments over 8 weeks. So it effectively like a layby but you get your purchases upfront. And the money is direct debited out of your account – so you don’t forget.

 

What is in it for Afterpay

 

So the retailer gets their money upfront – so they are happy campers. But how does Afterpay make money – they obviously aren’t doing it out of the goodness of their hearts. So although there are no fees if you have the money in your account. There is if you default on their debit. It is a $10 fee each time your default. No matter if you buy a $800 couch or a $7 necklace. So basically Afterpay are hedging their bets that more people will default in one of their payments than have the money in their accounts.

 

Potential problems

 

If you are an amazing budgeter with great self control then I see no problems with after pay for some situations. For example a great buy on a heavily discounted Christmas present in August. Before your Christmas budget kicks in November. However once you have popped your Afterpay cherry – it in my opinion could very easily spiral out of control if your not careful. They make it very easy to use once you account is set up. I know of people who use it everyday and already have found themselves in trouble. So I would proceed with caution. If you do have it – or you find it useful to spread out payments for Christmas etc. Think about downloading their app – so you can manage your payments.

 

My Opinion

 

Since I have used it – would I use it again? Probably not. I still think the best way to go is to have the money first! Especially once you have the purchase you rarely want to spend the money paying it off. BUT I can see its benefits for other people – with strong self restraint.

*This is 100% my opinion and not in anyway affiliated with Afterpay*

love budget mum blog - frugal and budget living blog

Cash Envelope System

How to create your own cash envelope system.  Using a cash envelope system works well, even if you think you are already good with money.  It is a great idea if you go over each week, even if it is just by a little.  Only having cash can eliminate that, helping you save big in the longer term.

How to make a cash envelope system

If you are interested in why I went with the cash envelope system (and you should too) you can read about that here.  But the biggest reason I went cash is because I have a massive savings goal and so even though some of my ‘leaks’ were tiny I wanted to stop them quickly!

So first of all you need to decide you categories.  You can have as many as you like but I think more than 5 may make it a little tricky.  I use a mini folder from Kmart for my cash, but you can use envelopes, or clips to keep your money together.  I also have a coin purse for my coins.  You could use separate coin purses for each category if you want.  Whatever suits you.

My categories are – Groceries, petrol, entertainment, incidentals. Any leftover money goes towards savings. The goal is to keep your budget tight so you don’t have a heap left over so you can keep it in the bank and resist the temptation of spending!

Categories

Groceries this is pretty self explanatory.  All meat, groceries, fruit and vegetables plus cleaning products.

Petrol this category is fortnightly and obviously for me to put petrol in my car.  I put $50 a fortnight into my folder.

Entertainment is any for form entertainment or takeaway for the week. This is the only category that I carry over week to week if I don’t spend it all. At $50 it’s not enough to go out for a family dinner to a restaurant (we rarely do) so if we knew we had something coming up we would try and save previous weeks to help us out.

Incidentals this is our extra category.  It’s $50 a week.  Our incidentals are for expenses that come up with day to day life that don’t really have a category.  For us it could be another sippy cup, or contributing to a work colleagues gift.  I also put it towards ‘extras’ in the shopping if I find a great bargain that I can’t go past like reduced meat.  You could also have an incidentals category for lots of little sub categories like tuck shop money or parking money etc.

I also have a ‘medical’ category that is in the budget however I don’t take cash out for that.  Personally we are trying to have another baby so, the cost of going to the fertility doctor each month changes. Plus general doctors and sickness so while it is in budget, the amount can fluctuate wildly so I keep that in the bank and it is easier for the Medicare rebate as well.

On top of all these categories my husband and I are given an allowance. This goes directly into our separate accounts each week.  This is fun money! It is what ever we feel like, saving it for a new outfit or hair cuts etc.  It is also worth knowing this is also the first category that gets cut if we need to cut costs.

The rules

Once you have your categories and amounts sorted you then ready start you cash envelope system. The only rule is once you’re out of money – there is no more money until next week.  Don’t borrow money from the following week otherwise you will be always borrowing or chasing your tail.  If you must borrow money then you can borrow from another category – this is why having an incidental category is great.  It provides a buffer for expenses that can not be budgeted for.

It is up to you what you should do with your left over money.  You can leave it for the following money and still withdraw the full amount.  Or you can withdraw a reduced amount.  Or you can put it towards your saving goal – this is what we do.  I save the cash for a specific reason at the moment it is spending money for an upcoming mini holiday we are going on.

So far it has been great, on average I have been saving an extra $30 -50 per week.  Because I now second think every purchase.  Items like takeaway or incidentals, even though they are in my budget my spending has decreased.  I would love you to give cash envelopes a go and tell me if they make a difference in your spending and savings!

love budget mum

No Spend Month – How To

 

So No Spend April has come to an end! Finally! Next year I might do no spend February, haha. But seriously a No Spend month is a great idea to realise how much you spend unnecessarily and how you can help your budget.

No spend month
How to make it through a no spend month

Why have a no spend month?

We had a couple big  bills come in at the beginning of April.  This prompted no spend April – this and my paid maternity leave ended at the end of April so we wanted to have as much as possible in our emergency fund.

Insurance quote of $3700 – we shopped around here spent $2200 a saving of $1500!!!

New Fence $2200 – this was budgeted for but made a dint in our Emergency Fund.  So we wanted to fill it back up ASAP.

A $900 electricity bill. We have a pool (a pool pump needs to be on more in summer) and a baby that will only sleep during the day if the air conditioning is on.  So it was an expensive summer, we had budgeted for $600 so again more than our budget.

But a no spend month is a great way of realising how much you spend unnecessarily.  By having a goal for savings or to build up your emergency fund it really helps you get it through.

How to have a no spend month
How to have a no spend month

How to have a no spend month

Set goals – is it to have $1000 in your emergency fund, or pay $500 off your credit card then make that your goal so you have a quantifiable goal to reach.

Don’t stock up knowing that you are having a no spend month, that goes against why you are having a no spend month! So try not to over prepare, which may be scary but you need to be honest with yourself and your budget. You are having the no spend month to save money not spend it the month before!

Do not submit to temptation.  I didn’t go to the shops, I even did the groceries at a stand alone grocery store instead of in a shopping centre so I didn’t need to walk past other stores.

If you fall of the wagon, just jump back on!  I didn’t have a perfect month but I had a great month compared to other months!!!  I spent $70 on Kmart another $11 at Target for Winter clothes for the babe (and maybe a top for me)  They were necessities (kind of) so I didn’t go to mad at myself.

Use up items you already have and enjoy finding new uses for them, you will be surprised at your creativity to not buy new items.

Be realistic, if I say I’m having a no spend month I’m still buying groceries. I have a baby, things are bound to pop up, I can not live without groceries.  So instead of spending $170 on groceries I spend $120 and try to use up what I have in the pantry. So don’t give up if you buy something, I bought the baby winter clothes.  He needed them and they were reduced so I was happy.  I didn’t go out and buy myself makeup or lunch.  If you normally buy a coffee everyday, maybe in you no spend month you only buy 2 a week.  I can guarantee you will savour those 2 coffees and you won’t feel like it is all too hard and give up!

Make your own rules, if a no spend month means you can still buy a coffee then that is up to you. But use it as an opportunity to save money that is the goal.  If that means no take out and no excess spending then thats your goal.  Have fun with it, set your goal and reach it!

 

Making Money MAY

How did you go with no spend April?  I’m going to write up how I went soon (I went OK, not great.) Can you believe it is already May? I CAN NOT!!! So let’s launch into May and make some money!

Let's Make some money in Making Money May!!!
Let’s Make some money in Making Money May!!!

As most of you know I am a stay at home mum, I financially have to return to work in October when my baby is 13 months.  Soooo my paid maternity leave has ended and I am now roaming free… haha not really free with a husband and a 7 month old.  But I am financially free of no income, not a great place to be.  So cue Make Money May.  My friend Ashleigh came up with the idea on facebook last night, and I am running with it.

I have already done some cleaning out and come up with some things to sell on Ebay.  So this month I am going to be looking for some extra ways to come up with making money! Here are some ways I have already come up with…

http://www.budgetmumblog.com/20-ways-to-make-extra-income/

http://www.budgetmumblog.com/10-ways-to-make-extra-cash/

Get on the making money Party!!!
Get on the making money Party!!!

I have some great things organised for Making Money in May, so stay tuned! Do you have any ideas on how you are going to make extra money in May?  Let me know in the comments I would love some more ideas!

Budget Mum Blog