Category Archives: Savings and financial planning

Are you trying to achieve Financial Independence?

A lovely, kind reader has sent me some scanned copies of some actual issues of the Tightwad Gazette. I am really excited to read them – thanks so much, Gill! In one of them there is an absolutely fabulous article about financial independence (FI). This is a concept I only recently became aware of when I read a book Your Money or Your Life, by Vicki Robin and Joe Dominguez, recommended by Ilona from Life After Money. I whizzed through  it, but have yet to work through all of the exercises in it. This article has inspired me to have another go.

Frugality goes only so far

I am very frugal and strive to save as much as I can, but I don’t earn enough to save the kind of money that will enable me to retire very early. I am simply hoping to save a decent contingency fund and buy a camper van. Yet I am sure following the programme towards financial independence  in Your Money or Your Life would enable me to achieve this more quickly.

In the book there are many stories of people striving to save a large amount of their income (sometimes as much as 50-75%!) and aiming to retire in their 30’s and 40’s, quitting the rat race to pursue activities that make them happy and fulfilled. They do this by reducing their outgoings, living frugally and seeking to increase their incomes through various means and investments.

Step into the Frugal Woods

The internet is awash with people attempting to do the same today. There are blogs and Twitter accounts aplenty inviting you to follow their journeys to FI and offering to show you the way.
One that was recently recommended to me by a reader is Frugalwoods.com, which I am enjoying immensely. It is well written and inspiring and, once again, leaves me wishing I had come across the idea of frugality many years ago. Take a look!

I have signed up to the Amazon affiliates scheme so if you choose to click through and buy books on my recommendation I will earn a small commission

Just say no!

Since I have been on my journey towards simplicity and frugality I have learned a lot – about myself, the people around me and society in general, especially our attitudes towards money. There is no doubt that we live in a spend now, worry later society. It is still easy to get credit, with lenders seeming to be rather casual about whether we can afford to pay our debts back or not. 

The pressures on us all to achieve the perfect lifestyle are huge! We measure success in terms of wealth: we need to live in a nice house, drive a new car, wear designer clothes, have an expensive annual holiday. If we get married we should look at a £20k budget minimum. We might even consider a few thousand on plastic surgery to sort out our perceived imperfections. 

You might achieve all of these things yet lie awake at night in a fit of anxiety worrying about how you are going to pay for it all. You only have to look at the dramas the rich and famous endure to see that all this surface stuff is no guarantee of happiness, even if you can afford it. 

So, number 1 on my list of ways to save money is – learn to say no! To yourself, your children, your partner and to friends and family. Your girlfriends invite you on a weekend to Amsterdam – you have a huge overdraft but could add it to the credit card…don’t do it! Your daughter wants a new tablet NOW. She can save up for it or wait until Christmas! You have to go to a smart work do or a wedding and NEED a new outfit. Do you? Is there really nothing in your wardrobe that will do? Ignore the TV ad telling you that a new sofa before Christmas is essential. You parked your bum on the old one perfectly happily all year so why take on a major expense with all those presents to buy?

If you have a supportive partner helping you control your finances you are very lucky. If you don’t then you need to sit them down, show them the current state of your bank balance and make a plan together. If you can get your partner on board (and children too if they are old enough to understand) you are in the first step to getting your relationship with money back on track. If you can’t, your relationship with each other is bound to suffer horribly. 

Whatever you need to save money for, to pay off your debts, to retire early, to save for a house deposit or your wedding, or just to get by, saying no will be key. I don’t mean you can’t have any fun. There are so many experiences in life that cost very little or even nothing. It’s not about deprivation, it is about accepting your financial limitations and being more creative and appreciative of what you have. This is very liberating!

This is my intention. I will see friends, I will have a cheap holiday and I will buy a small number of inexpensive things when they are really needed. But gone are the days when I will max out the credit cards to book a break, feel pressured to meet friends in an expensive restaurant or be persuaded to have a store card with a high interest rate when I want to purchase clothes.

How about you? Can you say no?

So this is why we need an emergency fund!

Everybody needs an emergency fund. Most of us crash from month to month just hoping for the best, totally unprepared for situations such as the car breaking down, sickness leading to a loss of salary, or a big household item needing replacement. I blogged the other day about how we are focussing on increasing ours this year with some determined saving. Three things happened at the weekend that brought this need into sharp relief. 

First, I noticed that the drain under the kitchen window was blocked. I poured boiling water and soda crystals down it but nothing happened. Mr S prodded and poked it for a while and it finally cleared. It appears that a piece of some kind of plastic packaging got blown under the cover. A minor issue. No plumber required thankfully. 

Later in the day the washing machine began to act strangely, making odd noises and refusing to spin. The machine was an inexpensive one we purchased five or six years ago and I feared the worst. I tried it on various different programmes but it then stopped altogether and  locked itself shut with a load of laundry stuck inside, including my daughter’s work uniform. Yikes! Mr S came to the rescue again. He managed to drain it manually and open the door so that I could retrieve the soggy clothes. We put it through a short cycle with nothing in it and it worked ok but still made a few strange noises during the spin cycle. I ran another load through and it seemed just fine. Mr S thinks the blocked drain backed up into it and temporarily messed it up. So another escape. No expensive call out or, even worse, new machine required!

Finally, we came home from seeing my parents to find the house freezing and the boiler off. This has happened several times over the past month so might be more serious. Each time we have managed to reset it, sometimes having to take some water out of the radiators to manually adjust the pressure. I will call the plumber this week to look at this. He is a friend now as we have been using him since he was newly qualified so we know he won’t rip us off. He has already adjusted it at no charge and thinks he might need to replace a sensor. Hopefully that won’t cost too much. As long as we don’t need a new boiler!

So we will work even harder on the contingency fund , just in case!

Changing the subject, DD2 showed a bit of girl power on Saturday, attending one of the many marches across the world aimed at the awful Donald Trump, showing him that the mysoginistic, intolerant and racist undertones that seem to be part of his thinking won’t be tolerated and aren’t acceptable. I wish I had gone – I love a bit of people power!

Have a good week everyone!

Making a financial plan

A colleague at work told me today that she and her husband have been saving for seven years for a house deposit. They have now saved £25,000 and are about to exchange contracts on their first house. They only got married a few months ago and had a beautiful wedding so were saving for that at the same time. I think this is a real achievement as they were also paying rent and have fairly average  salaries. This is the way it is now if you want your own place – it requires discipline and determination. 

In the same spirit, we are trying to save more and spend less. Now that we have a lodger giving us a bit of extra income this is suddenly so much more achievable.

First each month, we do of course pay the bills. The mortgage, council tax and utilities are all set to go out within a few days of being paid. We pay our bills monthly where we can.  I know we would pay slightly less on things like insurance and road tax if we paid in one go, but we don’t want to purchase on a credit card unless essential and a monthly direct debit for these things helps us budget. I know all the bills will be paid shortly after we do and we can relax. We are working towards having the money in advance to pay for these kind of things, but we’re not there yet.

Next we put money aside for birthdays, holidays, car expenses, Christmas and a contingency fund. We are aiming to save 10% of our income. We have one account for the contingency fund and one for all the other things we are saving towards.

If we continue to live as frugally as possible and make extra money where we can, we should be able to put more away sometimes.

So that is the plan. The contingency fund got used on, well, contingencies last year. I hope this doesn’t happen again but in the end that is what it is for!

Do you have a financial plan for 2017, and have you an emergency fund set up?