Hello Dear Reader,
It's that time of year again. It's the time of year when people take stock of finances. Some people might repeatedly ask the question, where does my salary go? Whereas a more helpful question to ask might be, what do I want my salary do for me? I'm reminded of this as you wrote to me and you have a pension so when I write about salary, that can mean 'the money you have' each month. It's the time of year to be your very own 'National Audit Office'.
The National Audit Office exists to scrutinise government spending . You might wonder, as I do myself, why we need another layer of bureaucracy to keep a check on government spending? Why can't they audit themselves? Why do we need a bunch of pen pushers, telling another bunch of pen pushers how to spend the nation's money? Here's my ten pence worth. One person's good idea is another person's pile of shite. And, no one's perfect. Somewhere, in a cupboard, in the shed we've all, at sometime or another contributed to our own pile. So, as governments come and go someone needs to stand back and hold a mirror up to make the point that: it won't last, it's not needed, it's not good value and sometimes shout....'really?"
So, how do we audit ourselves. How do we work out what's good value, what's needed, what's important and how do I make my salary ( the money I have) work for me.
Here's what I do. I say this as it doesn't say, this is what you should do.
My monthly audit starts with the two of us sitting down and discussing the month ahead. What do we have to do this month? What do we have to put money aside for and more importantly to check that we still want it and even more importantly to us, do we still need it? You see, we are researchers. Nothing is bought without a lot of planning, thinking, trying it out, giving ourselves a cooling off period, renegotiating the the needs and wants and then and only then committing to saving for whatever we have deemed is important to us. We might discuss this month what we need this time next month or even next year and then leave it as we walk away and think on it. No impulsive purchases which are often not a good idea any way and end up adding the pile of shite that no one every really needs or any longer wants.
We don't have to rein in spending, on the contrary, we have to take time to convince ourselves that we can or should spend at all. In times gone by, we didn't have any money so this was easy. We couldn't afford it, we didn't have the money so we just had to do without. I know, we were in debt but that came from: property renovation, car purchase to commute to work and playing the property market just before the crash. In hindsight, we wouldn't do it again and haven't done anything like this since. None of it came from a spur of the moment desire to go eat, holiday, visit, party somewhere we couldn't afford. It was a sobering and expensive lesson.
Our auditing isn't about what we spend our money on, our auditing is where we keep a check on our own behaviour. Do we still have the same focus? In our case, that's retiring when we initially thought we could and not at 68. Our other focus is to live well beneath our means so we can save more than we spend each month. We evaluate all we have which means a physical audit as well. When I have a look around, I have enough bedding, cutlery, crockery, clothing, furniture and month on month I have no need for any more. We evaluate what we need or want to replace and sell or give to charity anything we no longer want or need. We no longer do many things, such as going to the theatre or cinema so don't need to weigh up what we should see or where we should go, we just don't do those things any more. The last film we saw at the cinema was Notting Hill and that shows just how long ago we last went.
So, in our auditing we try to make sure that we use our salaries efficiently so that we get the best value for money in everything we buy. Have we got the best energy deals? Have we bought our food for the best price? Are we driving our car using the eco features? Do we have the right amount of pressure in our car tyres so they don't wear out too quickly? Are we having timed showers so we don't use too much water? Have we put a jumper on before burning wood in the stove so we make our wood supply last as long as possible? Our spending has to be effective. Anything we buy now really needs to last us ten years until we retire and move to France. It'll have to limp along, or be made to last or repaired so it does last. I make regular trips to France so I make sure we travel at the cheapest times, even going another day if that makes a more economic journey.
Being your own National Audit Office will not mean to you what it means to me. Economy to me is different to your economy. I'm happy to eat a simple home cooked diet, I'm happy to have my laundry drying in front of the fire, I'm happy to go for walks, read, listen to music, dine at home with friends to afford to save money. That's what we've decided is important to us so we can afford regular trips away and save towards retirement.
If it were 2009 all over again, this is what I would do all over again. Sell everything I didn't need or want. Cut up every credit card. Start snowballing my debts. Get another job and get more money into the family finances. Get a lodger and rent a room out. Turn off the central heating and only heat the room I lived in. Menu plan, don't waste food, eat the leftovers, buy frozen, cook from scratch, batch cook. Give up takeaways, eating out, buying clothes. Mend anything that breaks. Wear more clothes if I got cold. Read magazines and books online from the library for free or go there and borrow them if you have to time. Give up days out, cancel any trips out with family and friends. All over again, I would do what ever it took to pay off debt and earn more money. If it were 2011 all over again and I'd just got debt free, I'd spend the next two years paying every penny that I put towards our debts paying off as much as I'd paid off in debts to reduce my mortgage by so that I could move in 2013 and further reduce my mortgage by over half. I wouldn't have done anything differently. But that's us.
Even though you asked me to comment on your financial situation, I really can't advise you or suggest as you have to evaluate what your needs and wants are. We lived through many many years where wants were never a consideration and all we could do was work towards our needs. It was that experience and the experience of paying off debt and living debt free that helped us evaluate what was important and what we could really live without. I don't need to be entertained, I don't get bored and I'm very content with who I am, what I do and what I've got.
What I can suggest is that you can constantly become your own National Audit Office where you scrutinise your spending and make sure you use whatever income you have efficiently, effectively and with economy. Some of your decisions will be tough, it could mean a serious life style change or it could lead to a simpler happier life.
Until tomorrow,
Love Froogs xxxxx