Hello Dear Reader,
We are about to get probably, but I'll eat my dog's gravy bones if I'm wrong, the most draconian budget in my lifetime when George Osborne steps out of number 11, brandishing his red briefcase. Politics aside as I know people are still smarting from the 2008 crash and still blaming international banking; it's a budget based on the premise that we have to reduce the public spending as the economy is still far from recovery. I don't envy his job, if it were me, then I might be tempted to stop public spending on anything that wasn't essential...forever! Of course, every government, household and individual will have a different view on what is and isn't essential and there's another political debate. This isn't a political blog but one where I share my personal financial views on how I choose to live my life. It isn't about anyone else's.
As I wrote a few days ago, we live with financial uncertainty and no body has a secure job. None of us can think that we will have a job next month or next year. When you live with that uncertainty, you treat money very differently. I paid off the last penny of debt in 2011 and haven't borrowed a penny since. Now I make my money, my personal spending make me money. I now calculate every penny I spend and do what ever I can to never pay full price for anything. We also make sure we save every penny we can as well as overpaying our mortgage as much as we can.
We aimed to reduce our mortgage by half which we did when we downsized and now we have a small house, small mortgage and small bills aim to reduce our mortgage in half the time. There is no way we can do this without going without. However, just as if I were the Chancellor and you can all thank your lucky stars that I'm not, we have and can make do without anything that's not essential. Our holiday is not essential, if I needed the money else where then I just wouldn't go. We didn't go the year we moved, or the year after when we were double glazing and installing a wood burner into our house. However, we researched, found cashback discounts, got a 10% discount on the ferry and will take everything we need and will have a thrifty holiday.
If we were not thrifty, if we weren't over paying our mortgage then we could take ourselves somewhere hot and all inclusive and laze on a sun lounger sipping cocktails. As ever, even the holiday has to fit into our budget. I continue to do the little things and it's also the little things that I don't do that help me stay on budget.I read newspapers online, the savings might seem minor but it saves me £1 a day - £365 a year. That with totals a week's stay in my holiday accommodation so I really think that saving was worth it.
My budget for the coming year is as follows.
1. Over pay my mortgage by £333 a month to take capital payment on my mortgage to £1000 a month, reducing the capital over all by £12,000 a year.(Those figures are approximate, it will be around £1000 a month and around £12,00 a year)
2. Set aside £210 per month into medium term savings for a holiday next year, to include dog boarding for three dogs, ferry and accommodation for three weeks. If our circumstances change and we can't afford to go, then we won't go and the savings will be moved into our long term savings.
3.Set aside £30 a month to pay for next year's home and car insurance. That just goes into our overall savings account as it taken out to pay the insurance in one go. We always get a cashback six months later as we don't claim. Obviously if we did, we wouldn't get it back. the cashback goes straight back into the bank and usually it's around £50 per policy as we buy then through Quidco.
4. Continue to watch our water and energy meters to monitor spending and usage to £150 per month maximum.(Water, gas and electricity). We also have to pay £110 a month in council tax which we will continue to pay by direct debit
5. Keep our total expenditure to £500 a month for: all food, transport, personal grooming, clothing, dog grooming and health costs. It'll be the total amount per month that we spend throughout the month on diesel ect.
6. Save everything else! We still don't put money into ISAs in case our situation changes overnight so it just stays in a deposit account. We also don't have enough to spread across more than two banks (I wish!). At the end of the year, if we're still both in the same situation, take half the savings and pay off a chunk of mortgage.
I write personally but it's good for us to keep careful control of the budget. We have a mortgage so still have personal debt although we see it as good debt because we'll own a house at the end of it. We are still working towards owning a house outright and being mortgage free.
As for George Osborne's budget? We'd all better buckle down as it's going to be really rough!
As ever, I love to hear from you.
Until tomorrow,
Love Froogs xxxx