How to stop irregular bills sending you back into debt

Key points

• The bills that push households back into debt are usually known ones: car rego, insurance renewals, school fees, servicing, dental gaps and Christmas. They arrive outside the ordinary month rather than out of nowhere.
• Build the calendar before the amounts. Last year's bank statements and emails are a better source than memory, and twelve months of dates on one page is the whole planner.
• Divide each cost by the number of pays before it's due. Car rego of $900 due in nine months is about $46 a fortnight (illustrative).
• The first time through is the most expensive, because some bills have less than a full year left to save for. Four costs that take ~$192 a fortnight in the first cycle settle at ~$135 once each has come around once (illustrative).
• Where the total won't fit, cover the fixed dates first and part-fund the rest. Sinking funds cover what you know is coming, while an emergency buffer covers what you don't.

The costs that push a household back into debt are usually ones you knew were coming. It's the car rego, the school invoice, the insurance renewal that turns up once a year for an amount you'd forgotten was that big. A budget built around the ordinary month has no line for any of them, so when one arrives the money has to come from somewhere, and often that somewhere is a credit card or a new buy now pay later plan. Jenny's school bill with a two-week deadline is one version of it: a real cost, a real date, and not much time in between.

So here we go through the costs that behave this way, how to get them onto one calendar, and how to turn each one into an amount that leaves your pay like any other bill.

The costs that arrive outside the month

Below is where they usually come from in an ordinary Australian household.

Almost every line there has a date attached, or at least a season. The exact amount moves around – a service can come in at $250 or $700 depending on what the mechanic finds – however you rarely learn about a rego renewal for the first time on the day it's due. December is the one a lot of households already handle this way, and spreading Christmas from September runs on the same arithmetic as everything else on the list.

The costs that do the most damage are usually the ones you already knew about. They arrive on a date you could have written down.

Build the calendar first

So before you work out any amounts, list what's coming and when. It's easy to skip this step because the maths feels like the useful part, however the maths needs the list to work on.

Use last year's bank statements rather than memory. Memory gives you the rego and the insurance renewal, and it drops the school camp, the dental gap and the tyres. Scroll back through twelve months of transactions and write down anything that isn't a regular monthly cost, then search your email for "renewal", "invoice" and "receipt" to catch the ones that were paid from a different account or on a credit card.

For each item, four things are enough:

1. What it is: "car rego" or "Year 9 school fees", not "car stuff"
2. Roughly how much: last year's figure, rounded up a little
3. Roughly when: the month is enough, you don't need the day
4. Whether the date is fixed or flexible: rego and insurance renewals have dates you don't choose, while a service or a trip away can move

Twelve months of that on one page is the planner. For most households it's 10 to 20 lines, and the first version takes about half an hour if you're scrolling statements by hand. It's also the part worth keeping, because next year you're updating a list rather than building one.

Turn each one into a per-pay amount

Once the list exists, each line becomes a number: divide the cost by the number of pays before it's due, and set that much aside every pay. Car rego of $900 due in nine months is about $46 a fortnight (nine months is roughly 19.5 fortnightly pays), which is a very different thing to find than $900 in one go.

Below is how that looks across a few items at once (illustrative).

That ~$192 is what leaves each pay in the first cycle, and it's the highest the number gets. Three of those four costs have less than a full year left before they land this time around, so the amounts are compressed to fit the time available. Once each one has come around once and you're saving across a full 26 pays, the same $3,500 a year works out at about $135 a fortnight (car rego ~$35, the service and tyres ~$27, the renewal ~$54, the dental costs ~$19).

Pro tip: Connect your accounts in WeMoney and the stashes you've set up sit beside your everyday accounts, so you can see which bills are already covered without logging in somewhere else to check.

The first-cycle total can look impossible when your pay is already committed elsewhere. The next section covers what to do when the whole amount won't fit.

What if there isn't enough to cover all of it?

Cover the fixed dates first (car rego and insurance renewals have dates and consequences you don't get to move, while a trip away can wait a year). Fund those in full if you can, then work down the list in whatever order suits your household.

After that, part-fund whatever you can reach. Setting aside $20 a fortnight against a $700 service that's six months away gets you about $260 of it by the time the car goes in, which is $260 that doesn't have to come out of that fortnight's pay. Covering part of a bill is worth doing on its own terms, because the gap you have to find at the last minute gets smaller.

Some households will do all of this and find the numbers still don't close, and no calendar fixes that. If essentials and minimum repayments already take the whole pay, your providers have hardship teams and the National Debt Helpline on 1800 007 007 is free and independent. For school costs it's also worth asking the school directly about a payment plan, since many schools have them.

Where it sits beside the emergency buffer

Sinking funds and an emergency buffer do different jobs, and they're separate on purpose. Sinking funds cover the costs you know are coming, while the buffer covers the ones you don't, like the washing machine that dies with no date attached (at around $1,000 the buffer absorbs most single ordinary shocks). If you're building an emergency buffer while paying off debt, keeping the two apart means the rego isn't paid out of the money you were holding for an actual emergency.

The order on payday stays as it is in that guide: minimum repayments on everything first, then the buffer, then the sinking funds, and only then any extra repayments on the priority debt.

Where several existing repayments already take everything and there's nothing left to set aside at all, the repayment structure itself may be the thing worth looking at, because reorganising several expensive debts is sometimes what creates the room to prepare. That assessment has its own place to be worked through properly, and it comes after the calendar rather than instead of it.

Once your accounts are connected, the WeMoney app can do the first part of this for you: last year's rego, renewals, school payments and vet visits are already in your transaction history, so the calendar gets built from what actually left your account rather than from what you can remember. The amounts and the order are still your call, and by this point you know which dates are coming.

Sources

• Moneysmart: Budget planner
• Moneysmart: Urgent help with money

This article provides general information only. It does not take your personal circumstances into account and is not financial, credit or legal advice. Consider your own situation and seek advice from a suitably qualified professional if you need it.