Our money saving choices stem from our main goal, which is to buy a house/plot of land to build on. This is the biggest hurdle in our path to self sufficiency, and in order to make it remotely feasible we had to take a pretty hard look at our finances.
At some point around the time I fell pregnant (organised people would have done this before considering a family, but we like to break with tradition) I sat down and really went through our outgoings and our debts - a jumbled assortment of small debts including a credit card, graduate loan each and overdraft apiece. All pretty small, but the total was horrendous. I knew we needed to pay it all off as soon as possible in order to (a) be comfortable and (b) contemplate buying somewhere at some point in the distant future.
I'm telling you all this boring background only so that you're aware that I'm preaching from the point of view of having some idea what I'm talking about. I'm not an expert by any means - if you want pages and pages of money saving ideas and expertise, the Money Saving Expert website and forums are a fantastic starting point - but I can hopefully give you some ideas for getting the basics sorted.
So, assuming you fell into category (a) last night (the gleeful, spending-less-than-you-earn one, you smug git of whom I am very envious), I would recommend this plan for the excess:
1) Increase any credit card payments that you set as the minimum in your original budget. Increase as much as you can bear to
2) Overpay on any other debts (except mortgage) that won't penalise you for paying early (some personal loans give you a little bonus at the end if you don't over or under pay, so there's no point paying extra on these - read the small print)
3) Overpay on your mortgage - imagine how much richer you'll be. If you overpay your mortgage by only a few pounds a month you can save yourself really quite a significant sum in terms of reducing the total interest you pay (I can explain why further if you want, but it's not hard to work out)
4) Have some fun. Give to charity. Do whatever you want!
If you fell into the rather larger option (b) category yesterday, the plan is a little more involved, and a bit less fun:
1) Your first challenge is to make your outgoings at least equal to your income, if not less. Look at every single item on the budget in turn and consider how you might reduce it. A few things you can consider:
i) Consider moving house, if you pay extortionate rent for space you don't really need. huge step, i know, but effective. We live in a two-up-two-down terrace, and it is plenty big enough for two of us and a baby (soon to be toddler). You have no real need for a spare bedroom if you have a sitting room that can fit an airbed in it. Realistically we could have survived in a one bedroom place, but we didn't need to make those kinds of cuts, and since Teddy's a pretty light sleeper, I'm glad we didn't have to.
ii) Look at every single utility and check on USwitch or another price comparison site to see whether you can save on it. Change where necessary, but remember to keep budgeting the old amount until the new provider has proven to be cheaper.
iii) Look at your food shopping bill. I can almost guarantee you can save money somewhere here. By altering our eating habits slightly, we've managed to keep our food shopping bill exactly the same (if not slightly less) over the past 12 months, despite moving to almost entirely organic food and the increases in food prices. In many ways we eat better than we did. I'll look at ways to save money with food shopping one day this week, as it's one of the biggest hidden expenses (ever fallen victim to the Waitrose Effect? Well known scientific phenomenon, happens when you go into Waitrose for a pint of milk and come out with £30 worth of goodies).
iv) Cut back on luxuries. I'm sorry, but you really don't need to spend £30 a month on clothes, £5 a month on make up, £10 a week on wine, £5 a week on coffee, etc etc. These luxuries are the things that often come as hideous shocks when you add up what you actually spend on 'one offs' or 'little treats' over the course of a year. You need to keep cutting these down until your expenditure matches your income.
2) If you have any credit cards or other debt for which you have only filled in the minimum amount on the budget planner, you really need to try to cut down your spending even more, and up the amount you are paying on this debt. Otherwise you'll be paying it off for the rest of your life, and paying loads more interest than you have to. Prioritise your debts and pay off those with the highest interest rates first.
3) The worst case scenario here is that no amount of cutting will make your outgoings match your income. I'm afraid I'm not an awful lot of help with that, but if you really are in huge financial difficulties, I again recommend visiting the Money Saving Expert Forums, where there is lots of advice on dealing with creditors, bankruptcy etc etc.
The most important thing to realise is that things will only change if you actively make them change. If you want to pay off your debt or build up a house deposit, and you're not currently earning enough money to do so, I'm afraid you're going to need to make some sacrifices in order to change this situation. All the wishful thinking in the world won't save the money for you.
Having sat down and made all these grand plans, I'm afraid you also need to implement them. If you've budgeted £20 a month on clothes, and you've bought a £10 scarf, then I'm terribly sorry but you can't order that Boden dress, even if it's only £15 in the sale. Wait till next month - if it's still there, buy it, if not, important lesson learned about priorities. More tomorrow (or later on today, if I actually get round to writing it) on actually sticking to the budget once you've made it.
At some point around the time I fell pregnant (organised people would have done this before considering a family, but we like to break with tradition) I sat down and really went through our outgoings and our debts - a jumbled assortment of small debts including a credit card, graduate loan each and overdraft apiece. All pretty small, but the total was horrendous. I knew we needed to pay it all off as soon as possible in order to (a) be comfortable and (b) contemplate buying somewhere at some point in the distant future.
I'm telling you all this boring background only so that you're aware that I'm preaching from the point of view of having some idea what I'm talking about. I'm not an expert by any means - if you want pages and pages of money saving ideas and expertise, the Money Saving Expert website and forums are a fantastic starting point - but I can hopefully give you some ideas for getting the basics sorted.
So, assuming you fell into category (a) last night (the gleeful, spending-less-than-you-earn one, you smug git of whom I am very envious), I would recommend this plan for the excess:
1) Increase any credit card payments that you set as the minimum in your original budget. Increase as much as you can bear to
2) Overpay on any other debts (except mortgage) that won't penalise you for paying early (some personal loans give you a little bonus at the end if you don't over or under pay, so there's no point paying extra on these - read the small print)
3) Overpay on your mortgage - imagine how much richer you'll be. If you overpay your mortgage by only a few pounds a month you can save yourself really quite a significant sum in terms of reducing the total interest you pay (I can explain why further if you want, but it's not hard to work out)
4) Have some fun. Give to charity. Do whatever you want!
If you fell into the rather larger option (b) category yesterday, the plan is a little more involved, and a bit less fun:
1) Your first challenge is to make your outgoings at least equal to your income, if not less. Look at every single item on the budget in turn and consider how you might reduce it. A few things you can consider:
i) Consider moving house, if you pay extortionate rent for space you don't really need. huge step, i know, but effective. We live in a two-up-two-down terrace, and it is plenty big enough for two of us and a baby (soon to be toddler). You have no real need for a spare bedroom if you have a sitting room that can fit an airbed in it. Realistically we could have survived in a one bedroom place, but we didn't need to make those kinds of cuts, and since Teddy's a pretty light sleeper, I'm glad we didn't have to.
ii) Look at every single utility and check on USwitch or another price comparison site to see whether you can save on it. Change where necessary, but remember to keep budgeting the old amount until the new provider has proven to be cheaper.
iii) Look at your food shopping bill. I can almost guarantee you can save money somewhere here. By altering our eating habits slightly, we've managed to keep our food shopping bill exactly the same (if not slightly less) over the past 12 months, despite moving to almost entirely organic food and the increases in food prices. In many ways we eat better than we did. I'll look at ways to save money with food shopping one day this week, as it's one of the biggest hidden expenses (ever fallen victim to the Waitrose Effect? Well known scientific phenomenon, happens when you go into Waitrose for a pint of milk and come out with £30 worth of goodies).
iv) Cut back on luxuries. I'm sorry, but you really don't need to spend £30 a month on clothes, £5 a month on make up, £10 a week on wine, £5 a week on coffee, etc etc. These luxuries are the things that often come as hideous shocks when you add up what you actually spend on 'one offs' or 'little treats' over the course of a year. You need to keep cutting these down until your expenditure matches your income.
2) If you have any credit cards or other debt for which you have only filled in the minimum amount on the budget planner, you really need to try to cut down your spending even more, and up the amount you are paying on this debt. Otherwise you'll be paying it off for the rest of your life, and paying loads more interest than you have to. Prioritise your debts and pay off those with the highest interest rates first.
3) The worst case scenario here is that no amount of cutting will make your outgoings match your income. I'm afraid I'm not an awful lot of help with that, but if you really are in huge financial difficulties, I again recommend visiting the Money Saving Expert Forums, where there is lots of advice on dealing with creditors, bankruptcy etc etc.
The most important thing to realise is that things will only change if you actively make them change. If you want to pay off your debt or build up a house deposit, and you're not currently earning enough money to do so, I'm afraid you're going to need to make some sacrifices in order to change this situation. All the wishful thinking in the world won't save the money for you.
Having sat down and made all these grand plans, I'm afraid you also need to implement them. If you've budgeted £20 a month on clothes, and you've bought a £10 scarf, then I'm terribly sorry but you can't order that Boden dress, even if it's only £15 in the sale. Wait till next month - if it's still there, buy it, if not, important lesson learned about priorities. More tomorrow (or later on today, if I actually get round to writing it) on actually sticking to the budget once you've made it.
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