Friday, 31 August 2012

Frugal friday...

...Get your priorities straight!

When we first turned this place into "Frugal Central", one of the first things I had to do was to go through our budgets....actually, no, scrub that, we didn't have budgets, this was one of our problems! OK then, go through our bank Statements, and draw up a list of exactly what we had to spend in a month, on the mortgage, council tax, water, gas & electric, phone, insurances, food and travel to and from workplaces. that was our "Priority figure" - then we continued listing, only everything from then on was classified as "luxury" - Sky TV, the mobiles, a takeaway here and there, our personal spending money. All nice to have, all things that make life that much sweeter, but none of them essentials.  Once we'd added everything up, the first thing we discovered was that we easily had enough to cover our essentials. Phew. And the "luxuries" we'd earmarked as well. Phew again. The aim back then was to save the money to pay off a loan we'd taken out to buy the car, and to be able to start overpaying on that pesky mortgage. A plan was needed.
Plaque on the pier - Southwold
First step: Draw up budgets, and stick to them. This took us overnight out of a situation where although our liabilities were always met (we are fortunate in that, other than that car loan, the mortgage, and a small amount of personal debt of Mr EH's, we were never the sort of people to run up huge debts simply on keeping up with the Jones's - for that I am eternally grateful) we always found that the amount of month left was slightly too long for the amount of money to service it. We'd also fallen into the overdraft trap - "everyone uses their overdraft, don't they?!" (they don't, the banks like you to think they do though). Once we discovered that it was possible to have money left over at the end of the month, we were fully up for trying to make the most of it. Takeaways became an occasional treat, magazine subscriptions were cancelled, and we started thinking about what shopping we actually needed before going to the supermarket.

Famous fish & chips - cheaper than the restaurants!
Second Step: Start working through where savings can be made. We had a tin where we put "Money we had made a conscious decision not to spend" - so not buying a photography magazine (me) or another beer in the pub (Mr EH) - £3 or so in the pot. Hand washing the car rather than taking it to the jetwash? £4. Not having a chinese on a friday night, but instead eating food we already had in the house? Wow - we're into double figures, now!  We decided early on, too, that we would put aside any "money we didn't know we had" - in other words, money that we hadn't expected to have, into savings, ready to hurl at that loan when the time was right - that mounted up surprisingly quickly. Expenses from work, claimed back several weeks after spending them, mileage payments for personal travel for work, on one occasion a sizeable rebate from our energy company - all got stashed away into that account.

Third Step: Analyse and question everything - energy bills are a good one here. we'd been blindly paying the amount we were told each month, without questioning it, OR thinking about the fact that as our supplier never quite "got around" to reading our electricity meter, there was every chance that their figures might be a bit out. They were - to the tune of about £300 in overpayments! I read the meter, and after a bit of a battle, got the money refunded to us. That went into the savings account, as did the amount saved every month when the monthly Direct Debit was reduced to the correct level. I started doing online surveys - they don't pay much, but every little helps, as they say, and using cashback sites wherever I could. we still do this now - with payrises or money shaved off utilities - we figure that as we never had it before, we won't miss it if it heads straight off to the mortgage! Go through your bank statements - make sure you know what EVERYTHING  that leaves your account is for, and that each and every payment is for something you need, or still use and can afford.

Cheers! Here's to the savings!
If you're struggling - remember, you MUST prioritise paying your rent or mortgage, your council tax, and your essential utilities plus insurances and road tax etc on any vehicles you might own. You SHOULD have insurances for your house, contents and any animals. You HAVE to eat. Beyond that though, it turns to the areas of WANT and LIKE - believe it or not, you could exist without a mobile phone and Sky TV, if you really had to!


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