Hello Dear Reader,
You'll have to excuse me! I'm feeling very, very smug! It's Christmas in a few days and other than spending small amount of money on token gifts, my salary is totally intact. I have a mortgage free month so I'm making the most of it to put money towards savings.
It's too easy at this time of year to get caught up in the moment. There is temptation every where! Lots of lovely cheese and food in the supermarket. Loads of sales and offers but with money in my pocket, I just have to hold fast.
We have a lot to save for. We had the quote today for our new wood stove. The stove, lining the chimney, a new cowl, baffle plate, scaffold to the roof and chimney and labour will cost of £3500!!! That seems like an insurmountable amount of money to find. I'm guessing that all my windows will cost that much too. I'm hopefully wrong. We will dig into our savings to pay for what we consider to be most essential..............keeping warm! So, before I do anything else, I need to replace seven thousand pounds as soon as possible.
I'm a great believer in getting rid of money on the day we get paid. This means there is nothing lurking in the bank to spend on anything else. I allow myself a 'float' of £60 a week for fuel and food. I can give myself this tiny budget because we have a freezer full of food, I shop for a lot of staples from Approved Food and I keep a really good store in my house.
I also keep an annual budget and set aside money each month to pay for 12th of that amount.
When my car needs servicing, I will have saved that money in advance. When the car tax and insurance is due, I have saved that money in advance. I put money aside for the few birthdays I provide for and allow a small budget for the equally small amount of Christmas presents I buy. I budget for my exercise regime and now for my monthly hair and beauty expenses(my eye sight is just too bad to do it anymore!)
I immediately set aside all the money that's left to go into savings. I think it's disastrous to wait until the end of the month and then set aside what is left. Everyone will find little ways of allowing the money to drip away. I have had to turn down seasonal social activities as I genuinely don't have a spare penny to spend on so much as a coke and ice! Everything has gone into savings and will go towards making my house 'green' and economical to heat and run. Each month we'll aim to save half the amount of our combined salaries to go towards initially eco-retro fitting our home. Secondly, the savings will go towards upgrading the electrics. Today, we had our boiler serviced and found out that it would last another year or so. We also had plumbing installed in the utility area for a washing machine and in readiness for a sink in the downstairs bathroom. All this is coming from savings but we will have to build that savings fund up again!
By this time next year, I anticipate that half our combined salary each month will go towards over paying our mortgage so we meet our financial target of being mortgage free in five years.
My advice to anyone, who is now debt free, is to build a savings habit!
1. Never use a loan or credit card. Some banks offer new customers fee free overdrafts for one year. If yo move and need work done, then use that facility but only if you are totally disciplined and can pay that off within the allowed term. Only ever use a credit card if it has a cash back facility and you are disciplined to pay if off in full every month!
2. Know your budget. Check every bill throughout they year. Birthdays, Christmas, new school terms, new school shoes and uniforms happen every year. If new school shoes and uniform costs you £500 for all your children each year, then you will need to put aside £41.66 a month to achieve the total in time for the new term. Car Tax £150+ Car insurance £200 + new tyres £200 + Car service £150 + Contingency for car repairs £300 = £1000 per year! You will need to set aside £83.33 a month to have that money ready. Always get used to having an annual total and dividing that by twelve. Get used to paying that money into a savings account on pay day! (On a personal note, we set aside £100 a month into our car fund for the aforementioned expenses.)
3. Budget for a savings fund. After I have paid for the renovations, I will set aside a mortgage over payment every month! In my case, I will be paying an extra £500 a month on my mortgage which means I will be paying twice the usual payments from my mortgage capital each month. I never leave myself spare money and just spend from my salary each month. I have allotted funds which have specific use and I hold firm and discipline myself to not spend it else where!
4. I watch people spend lots of money at the beginning of the month and then run out mid month and spend the rest of the month eating baked beans on toast! Never spend week three's budget in week one! It might sound simple but only spending the budget per week is an essential way to get through the month! Try and make a week's budget last two weeks to build up a tiny fund for items such as underwear, toothbrushes and toiletries, you will get used to it.
5. Learn to control your impulsive behaviour! If you can't resist spending then don't go into any shops! Never buy anything on the day you decided you wanted it. Leave it a few days. I set myself the rule that if I think I need or want something that I wait until the following weekend. Usually, I've forgotten it by then and that saves me money!
Over to you. How do you allocate savings? Or how do you allocate debt repayments? What methods do you use to exercise self control over yourselves?
As ever, I look forward to hearing from you.
Love Froogs xxxxxxxxxxxxxxx