Are budgeting specialists the answer?
Here's a company that says it can take over and solve all your money and debt management problems.
Can't pay your bills on time? Don't know how to budget? Harassed by debt collectors? Run out of money midweek? Credit cards maxed? MyBudget undertakes to fix all these hassles.
In a free three-hour session with a consultant it will delve into your financial affairs, sort through the problems, draw up a long-term budget, list your debts and expenses and prioritise them into the most urgent bills - such as those threatening power disconnection or car repossession - and those costing too much interest.
If you go ahead with the long-term management plan, it will pay your bills and help you achieve savings goals. If creditors are baying, MyBudget will negotiate repayment schedules.
Of course you can do this all this yourself if you have the time, discipline and skills. But MyBudget says many people don't follow through and stay on budget - they give up and land in an even bigger mess.
MyBudget says its job is the "heavy lifting", setting goals and keeping you on target. It says it has the skills and track record and will free you from a reliance on credit.
The system is likened to signing up with a personal trainer or a dietician to get you fitter, rather than needing to have gastric band surgery.
How does it work?
Your pay goes directly into an account MyBudget creates for you and it gives you back what you need for living expenses - an amount negotiated when your budget is drawn up. (All transactions, including bill payments, are negotiated and you must agree to them.)
As they arrive, you forward bills to MyBudget, which pays them on your behalf. It also makes regular loan repayments on your behalf. Separate accounts for savings goals can be set up for Christmas, holidays and medical emergencies.
You can see your account in real time online and view all the payments and transactions as they occur, as well as the account balance.
You will be given a 12-month budget forecast and a detailed payment report. If you need to add a new bill, you can phone or message MyBudget and it will be included in the payment list. That all sounds good.
What will it cost?
It varies depending on how many payments are involved and how much creditor negotiation is required. There is an establishment fee between $700 and $1500, depending on complexity, which is paid off over six months. This is included in your budget.
You are also charged an average $30 weekly administration fee to process income and payments. If you leave before six months are up, you must pay the balance of the establishment fee.
What's the downside?
You will need to check your bills as they come in as MyBudget will automatically pay them. Power bills can often be higher than they should be if they are estimates and not from a meter reading.
What are the alternatives?
Financial services regulator ASIC's website, MoneySmart, offers quite a lot of useful budgeting and saving tools with calculators.
You can set your own budget goals and fill in the MoneySmart budgeting document with your bills and work through it. The site also gives tips on how to handle debts and track spending.
Or you can go to a not-for-profit counselling service. Financial Counselling Australia on 1800 007 007 will give free help but won't set up a bill-paying service.
- For people who struggle with money and budgeting, the service will help get them back on track.
- It automatically pays the bills and, if necessary, will negotiate with creditors.
- The service comes at a cost, which could be the last thing a cash-strapped consumer needs.
- You still have to keep an eye on bills and payments to make sure they are correct.
If you are already in financial trouble, it doesn't make sense to take on additional costs to have your bills looked after.
You can deal with your debt yourself by cutting up credit cards and taking out a personal loan to lower the interest pain.
If you are totally hopeless with your money, ignore your bills and don't have the will to tackle the problem, then MyBudget can help you get your finances on track, but you also have to be prepared to do the hard yards and cut back on spending and leave the credit card at home more often.
MyBudget alone won't solve your financial problems.