Hello Dear Reader,
We have a whole mass of expenses this year! We have to keep an eye on our finances to make sure we achieve our financial goals and as we've set ambitious targets it means we have to be extremely thrifty.
To start, we decided to double glaze the entire of our house this year. That means, I've had to spend nothing at all on anything else to achieve that first goal. There are then two major targets of installing a new chimney and wood burner and lastly updating the gas boiler. Those major expenses can't be done by us, we can't get them done cheaply and nor would we want to. A well insulated house costs a lot to set up even if it will save us money and the environment in the long run. Nonetheless, this is a very expensive year and I still have mortgage target to achieve.
My mortgage target is to double the amount of capital set by the mortgage company and halve the duration of the mortgage. Yikes! That's a meaty target! I had to set myself some goals and work out exactly how I was going to achieve them.
We started with a November to November project to give ourselves a 12 month window of when the most expensive work needed to be done. We also set a November to November deadline to pay twice as much off the mortgage capital. Here are our financial targets in all their glory.
1. Windows
2. Chimney and Woodburner upgrade
3. Bolier
4. Extra mortgage payments.
In twelve months!
We then had to work out the total cost for all those ambitious targets and as we'd already set the date target, we had to work out how much we'd need to put aside each month. We also had to meet all of our other financial savings targets so we can keep a fund topped up to pay for: car expenses, vets bills, dental, personal care and household maintenance. There is always an expense each month so the fund needs topping up each month so the balance stays 'safe'.
Where's the fun in all this you may ask? In truth, it isn't a lot of fun but it's just where I have to get on my 'big girl pants' and get on with it. Each month as another set of windows is paid for, or some extra mortgage is paid off then I breathe a sigh of relief that we are getting there. The end of this month sees the last of the windows being installed. The house is already warmer, quieter and draught free. We had a cold and rattly winter with warmth and money leaking through the gaps and I shall be much happier when the first big job is done.
It might all seem a bit extreme but this is how I cope with it. If I have to do something that I don't want to do, then I do it first thing in the morning. I'm the first one in the queue for a smear test, breast scan, dental appointment and so on. I get up feeling sick to the pit of my stomach and go straight there. I'm in, out and done by coffee break in the morning. By lunchtime, I've forgotten what was worrying me in the first place. I have the same philosophy with financial targets. Set them big, set them hard and get them over and done with as soon as possible. It means that within one year of moving in, all the major expenses will be paid for and we can just concentrate on paying off the mortgage.
At the end of the year, we'll have the target of paying off our mortgage completely in five years. To do that, I will divide the total by the 60 months and work out how much I will have to pay off each month. As I will keep the payments the same but the interest will reduce each month, I will actually pay it off a year early. I could stretch out the financial targets and set amounts but I would rather go without for the shortest time possible.
How can we do all of this?
1 We have very low expectations of what our house should look like. I might not like the decor I've inherited, but as long as it's in decent order, I won't change it. I shall keep the second hand furniture we brought with us. We will keep the carpets and the curtains that really suited our old house and not our current one. It's all part of my make do and mend philosophy.
2. We are happy in each other's company. We are at our happiest when we are home together. Any time off work then becomes a holiday and just sitting in the garden reading but being together is as good as a holiday for us.
3 We are handy and resourceful. If we do need something, we'll find it free, second hand or cheap. We'll get things fixed or fix them ourselves or we will make it.
4. We amuse ourselves. We both have hobbies and keep ourselves happily busy.
5. We keep active and we keep busy. It's rare for us to have a spare five minutes so we relish the down time and don't need excitement but infact love peace and quiet.
Finally, the children have grown and flown and we have no one to pay for but ourselves.
Over to you. You may have a financial target. You may be saving for a deposit for a house, saving up for a holiday, an extension to your home or like us, paying off your mortgage. You may do what we've already done and being paying off debts. Just bear these points in mind.
1.Make a list of what you want to achieve
2.Total what it will cost
3 Set a time frame in which do achieve your aims.
4. Divide the total by the time e.g £5,000 divided by 36 months = £138.88 a month
5. Budget for your goals. In reality, you will have to shave £138.88 a month off your living costs.
Now you can, as always, have your say. Who else is a financial planner? Who sets dates, targets and makes sure it's affordable with monthly targets to achieve the long term goal?
Until tomorrow,
Love Froogs xxxx