There might be reasons - political, economical, whatever - for the house market to plummet and energy prices to rocket, but I can't really see why it had to come to this level of severity and in this shortness of time. It somehow feels as if some people 'up there' didn't do their jobs right.
My weekly shopping has risen by about a quarter within a few months. When economy recovers the fill levels of my purse never recover at the same speed. I can understand that production and delivery cost are rising due to energy cost, but that much – that quickly? I have a hunch that stores are cashing in at the moment and already acting on the announcement that things might become more expensive. By the time they actually do, they have made a fortune. So please, please dear politicians: Could you please stop talking it bad and then worse. A positive attitude might help the markets to recover faster.
Well, since I know how much politicians are listening to me, it is safe to assume that we are not over the hill yet, and hence I'm going stingy now. Although this attitude will have a negative impact especially on the local markets; but I can't help it – for example I did support the farm shops so far, but I have to pay 5 times more for cranberry sauce which then doesn't even taste as good as the one from the Lidl store – and it has the same quality of ingredients.
On the telly I saw the other night that they are organising cloths swap fairs, where you get points for what you bring in, and then can choose from what the others brought. Well, in the seventies we called that second hand shop, and at least in the big cities you can still find them. Thus not such a new concept – it looks a bit more posh due to nicer venues, though. I all too often come out of a second hand shop featuring a hefty dust sneeze.
So there are no two ways about it: The economic landscape will change. The small shops – as usual - will be the ones to suffer. And due to general saving the markets will slow down even more. I feel in a mood similar to my ‘rubbish strike’ where I knew exactly the right course of action and then not following it deliberately in the hope to force government into doing something about it.
Now I definitely see the need for supporting small local shops and buying organic. I fully understand that ‘saving’ money is a bad attitude for economy. To keep things going, money has to flow. Well then, dear politicians: Create me an environment where it is safe to do so and you will have me on board again. Until then – I will put my pennies into the jar.
Above I said: I’m going ‘stingy’ now.
I deliberately used the word stingy instead of thrifty! Thrifty is fine, thrifty buys the cheaper product, re-uses things and replaces light bulbs into energy savers. Stingy just says ‘NO’!
So this is all about getting into the right frame of mind. There is one thought that has to become dominant whenever a shop is in close proximity:
Do I really need that?
And stinginess can become an addiction, more and more often the answer will be ‘NO’.
So why should I train my brain for something that still says ‘YES’ to stuff, but the cheaper version of it. I like to start off with the strongest tool. Once my frame of mind has adjusted to that, being thrifty is a walk in the park, and I might even have saved enough so that for the things I real really want, I will be able to afford the good stuff.
'Attitude and Rules'
My Strongest Tool:
This is the
I see something that I like, and I have to touch it. From that I like it more and more, and then I am searching for reasons why I should have it, and THEN I look at the price tag – by then it is already too late, and I even can justify a rather high price.
... and this is
I see something that I like, and I think of a reasonable price BEFORE I touch it... THEN I look at the price tag.
If it is higher than my estimate it is easy
I start ranting at the producers how they dare trying to rip me off, that it is not worth that much money and not that pretty anyway. On doing so, this thing really loses its appeal and I can let lose.
The amount from the price tag I book on the plus side: money saved!
It is a bit harder if the item is within my price range
I pick it up and imagine myself paying for it, thus booking the negative side: money spent!
I then dream a bit about how I would look using it and really enjoy the imagination – hence, I own it for this brief moment. When I do this, people might think that I’m a bit hare-brained, standing in front of a shelf not moving with dreamy eyes, but I just don’t care. This is my moment and I need it.
Then I start looking for flaws. Since I excessively used it in my dream, I know where those lie: The colour might be a bit off my colour scheme, I have a similar one, it is a wee bit too long/short/wide/bulky/tight/high/impractical, there might be a production flaw, it might need dry cleaning. Believe me: there is always something I will find.
I put it down, step back just a bit and
With a last poke I shove it back into the shelf while starting a little rant on how I just got away, and almost got ripped off by the shop wanting to sell me that thing that was not good at all.
And then I feel the weight of the money saved in my purse and proudly walk away.
After a day of reverse shopping I will be as exhausted as usual. I will have bought the stuff for which I had to go in the first place, so it will have been successful shopping. I will have all those lovely memories of using these items in my dream – what is nice and feels good. But I will be soooo relieved of not actually having spent the money which will still be in my pocket.
I used to do that with cash, so I could actually take it out of my purse, count it, straighten the edges of the notes, sort them by size and turn them the right way round, feel the bundle, pile the coins, and then put them back into my purse – or re-distribute some of it into my budgeting system. By that time I didn’t even remember anymore what I was tempted to buy.
These days I use debit card – credit card is a big no-no, and is only used for big expensive items for the insurance it offers – so debit card it is, and no cash to cuddle. Hence I have a list where I write it down. It’s just a little sheet of paper in a corner of my desk listing my savings by month. And from time to time I look at it and just feel happy.
'Attitude and Rules'
Know what you have in your shelves and pockets
This has less to do with saving rather then keeping the house in order. I love soapy and creamy stuff. It is expensive, so I always buy it when there is a two-for-one bargain, and since that stuff doesn’t really have a best by date I usually go a bit overboard. The other day I was wondering why I hardly could move in my bathroom: Well, the picture shows an already relieved situation of my stock – and I’m rather embarrassed.
My kitchen cupboard gives a similar picture on pasta and canned veg. That is quite a bit of dead money lying about, and since it is all cluttered I don’t have a clue what I own, hence buying – just in case – again when the next bargains are advertised.
So I sorted through my shelves now, put everything in neat lines – as far as possible – and will now use those things first. In the meantime I will observe what and how much we actually use. Sometimes habits change – like my brand of deodorant. Now I’m sitting on 3 cans of the old brand. Using them will be my penalty for being unreasonable.
By the time the stock is emptied I will know what we actually need. I will still buy 2-for-1, but not 8-for-4, and my new style of shopping list will help me to do so.
The same principle applies for the wardrobe and for the money. In regard to clothes I did my learning a few years ago with Project Rika, and I managed to stick with it because I realised how much easier life became and how much time it saved me. Once the order is established, a review once in a while is quickly done: Chucking torn/worn stuff out, checking through the wardrobe and finding out what makes an outfit. Stuff that has been sitting at the back of the wardrobe since ages might all of a sudden work with new items. The rest goes to friends, family or charity.
I only keep as much as I can monitor and fit into my wardrobe. As soon as things are starting to pile on the floor or the wash basket without ever getting out of there again, or just got stuffed unfolded into the back of a shelf – a new review would be in order.
Well, and to keep the same kind of order in my financial matters I invented the budgeting system.
'Attitude and Rules'
Another Strong Tool:
The Shopping List
A shopping list is an essential tool to be successful in the stingy department. As mentioned in ‘knowing what’s in your cupboard’ one just doesn’t remember whether or not there is enough pasta or tinned fish in storage. Especially if it is stuff that another member of the household is consuming.
On top of it all, one gets tempted into buying stuff while browsing the shelves trying to remember what it was that was missing while preparing dinner the other day.
Shopping lists work best if the shopping is done at a particular day of the week. So all the family members will know by when to put their stuff on – otherwise they won’t have it for another week.
Mrs. Stingy says: Once a Week – That’s it!
Fresh dishes like fish, or certain fruit will be consumed during the first half of the week, and for the rest it’s more the sturdier veg and frozen stuff. Most of the things keep for a week anyway. Even fresh milk does – given that one checks the best by date thoroughly.
The usual shopping list would be a sheet of paper where on shopping day one quickly scribbles a few things that jump into the eye straight away, give the family members a shout – and again having forgotten what was missing the other day.
A more thorough approach is a sheet of paper where family members scribble things onto throughout the week. They will be in different hand writing, hence hard to read, might not have amounts going with it and the items will be found distributed across the whole shop.
Ha, there is a hiccup!
One usually would zig-zag through the shelves in order to not miss anything, hence walking between shelves one actually shouldn’t visit at all – like ready meals. However, these damn shelves are so long – who knows what is at the other end, so better visit it – right?
The best shopping strategy is: Shopping the Perimeter!
Well, it's people on a tight schedule who are thinking about stuff like this. My allocated time slot for food shopping is one hour before work, no time to waste then. Now, for the shopping list that means one has to have it in the order of the shelves, right?
Before I go shopping I have a quick look through the list if something still needs ticking or if something is on there that got ticked accidentally, maybe hubby couldn’t find what he was looking for – hmm, he might have had to bend a bit to see it.
This way I know exactly what is in my cupboard, I know exactly what I need and whether or not I should go for the 2-for-1 deals on offer, I’m done with the shopping in a jiffy since I don’t have to think a lot about it anymore, and I don’t get tempted.
Once in a while we do a review, though. Detlef just loves to compare prices and he is much better in calculating stuff than I am. So if he does the shopping he informs me on other cheaper/better products and amends the list accordingly. Since he volunteered to do so, he got put entirely in charge for maintaining and printing the list, and for me the whole food shopping thing is easy peasy now.
I already use the term 'most powerful tool' for 'revers shopping', so the 'budgeting system would deserve the term 'most marvellous tool', and hence it has it's own chapter.
The Pep Talk
I like to watch these shows on the telly where desperate people have to go through the misery of having to learn how to save money, and who in the end always are sooo happy! I would like to know how many rolls of film they have to throw away until they eventually can show a successful case.
First advice these poor people usually get is: Keep a shopping diary.
I hate shopping diaries!
They are a useless, time consuming enterprise, and they are made to create guilt. People are told that the purpose is it to show them where the money goes - duh? people basically know where their money goes. I don't need to know AFTERWARDS what went wrong and then made feel guilty of it. I need to be encouraged beforehand. I need reward rather than being told off.
She loves luxuries. To HAVE money means freedom and independence. So I love it for what it is: MONEY!
Time vs. Money
However, one has to be prepared to invest some time into my system. As I mentioned before: Whenever money is to be saved some time and/or effort needs to be invested.
The system has to be set up and then maintained. The aim is to figure out what's in the purse and to keep it tidy as mentioned above. Once one is used to it, things become habitual and hence easy.
Breaking it down!
Time Unit: 1 Month
The trick lies in braking the budget down. Since I am getting paid monthly the time unit I am working with is one month. Everything that is not happening on a monthly basis has to be tweaked into monthly.
Macro Management - The Biggies
These are all the big chunks of money one needs for big things like house, car, pension. They need a savings plan and a long term view on things. Decisions about those we always take together discussing all the options first.
Mezzo Management - Daily Living
This makes the main part. The amount I can put away for the 'Biggies' really depends on how well I'm doing here. It deals with the monthly shopping, replacement of household appliances and luxuries like holidays (this one could be put into Biggies as well), gifts, beauty, clothing,...
Since we both stick to the same system we take decisions here individually. Replacing a dishwasher we usually discuss, but I once went to get one the same day it broke down. We want one, we need one for maintaining our lifestyle, I knew that it was budgeted anyway - off I went. Time saved!
Micro Management - Value the Penny
That is counting the pennies! The aim is to save up for erratic non-monthly cost like dry cleaners, shoe repair, hairdresser. These things have the bothersome habit of cropping up all in one month, providing a quick death to the monthly budget.
This one I manage on my own and nobody dare touching ...!
The Order of Things
This first step is entirely about gathering information, and it starts with a list of cost - every single bit. It is a sorted list: On the top it has things that one 'has to have' with a rather fix amount like mortgage/rent, energy and water, then moves on to the cost one 'has to have' but are flexible in amount like household, fuel, school clothes and ends with the cost for things one 'want's to have' like club memberships, magazine subscriptions, beauty appointments.
Know & Sort
Everything goes on this list. This is not the time to put blame or to think about saving. At this stage I 'only want to know and sort'. I used bank account statements from a few month back, to find all the cost I have. So nothing gets forgotten.
Now that the we have the numbers and we are happy about our deals, I sort the list whether it is monthly cost including all the erratic stuff, or less frequent than monthly payments.
Calculate & Divide ...
For the 'less frequent than monthly' payments I create a new list as shown below, fill in the numbers (here I obviously used fake, easy to calculate ones), add it up, divide by 12, and there I am: That's what I have to put away every single month to be in the clear.
Then I write down what I will have saved/spent at the beginning and the end of each month (blue line). The first list starts in January with £30 and since nothing is to be paid then, I still have it at the end. Hence February starts with the 30 quid from Jan plus the new ones making it £60. However, this month I have to pay travel insurance of £65, so I'm dipping a bit into the minus. This is how I work my way through every month.
I guess you are catching my drift. Just to dip into minus by 5 quid in March would be all right, but for my flavour the minus 50 in June is just too much. The more that it dips again in October. It's just unfortunate that some payments are big and come in a bulk, while I wasn't able to save up enough.
If I would have started the whole process in July it would have worked out well and fine. However, I can't help it that I was ready to go with the new system in January, so I have to give my list a head start of £50.
... and Add & Subtract!
Obviously these 30 pounds have to go into my monthly budget as a fix cost. In doing so I never will have to worry again, that I might not be able to pay for any of those things, since I have saved up for them already.
The list has the fix cost on top and the erratic cost at the bottom ... and again - using fake, easy to calculate numbers here!
School Clothes, Special Needs Food and Fuel are the ones which have the least flexibility - so they stay.
Household money very much represents lifestyle for me, so I leave it alone for the time being.
Clothes: Well, it's hard but I will cut back to £20 for the both of us. Getting myself into 'Reverse Shopping' mode will help, and I might be able to save up a bit throughout the year from other sources.
OK - the same for the facials - they have to go. And the hairdresser I can stretch to 10 weeks (will stick with the colour though) which brings it down to 5 visits = £250, so let's make that £20 per month as well.
And then there is this item 'Saving'. One should never live on the edge, so this little bit is my buffer and is not to be touched.
Controlling the Money Flow
So far nothing really annoying has happened. Nobody got blamed, and I only had to reasonably agree to cut back on clothing and beauty treatments.
As payback I gained some peace of mind, because I have taken care of all my fix cost, and will not run into overdraft given that I now get the nitty gritty bits sorted, and will stay within my budget.
this is the story of a pile of envelopes
All the fix cost will be dealt with by direct debit. So all I have to do is to check that the bank statement is correct and to observe if there are price raises.
It's the flexible cost where things can go wrong easily, because the decisions are usually made in tempting situations and not at home at the kitchen table.
Now the 'Attitude and Rules' bit kicks into action. And for the rest of it it's: Envelopes, loads of them!
Breaking it down even more!
Micro Management is about breaking the household money down the same way I did it for the annual cost. The task is to separate the mere cost for food and essentials like toilet paper and soaps from other stuff.
And for that I need envelopes. Each one nicely labelled collecting their allocated cash per month - and again; the numbers are fake and easy to calculate:
The things from the budget list above
Things that have to come from the household money. Well, one could have put them all into one big household budget, but it's easier to do the assessment when things are broken down a bit beforehand. But if you would want to give this system a shot, you may want to play around with how to group things together, to make it work for you. Here is my break down of household money:
That will leave me with £480 for food shopping per month, thus allowing for £120 per week.
These little savings boxes are brilliant. They firstly give peace of mind in case one actually would need medication or a shoe repair, AND they will accumulate 120 quid per year without hurting the budget a lot. Be honest, how often have you spent a tenner without even realising.
If it accumulates to more than £50 I tend to take the access out and do something nice with it: Add it to the clothes budget, go to a restaurant, ...
The same for the excess fuel. When there were no extra trips and one might even have saved a bit from the regular fuel - one can do something nice with it.
The pocket money is - well, pocket money. However, sweets and treats are not included in the food budget anymore; hence if one wants it, one has to pay for it - and that makes one think whether or not one really wants it.
Hmmm?!? DVD or chocolate? Saving to top up the clothes budget or getting a bottle of wine?
See the difference to the shopping diary?
With the diary one would swim free using terms like 'cutting back on...'
The pocket money allows for everything - within the budget. Since it is cash one knows exactly where the boundaries are. And suddenly 'Reverse Shopping' is the best thing ever. I even can taste the chocolate cake. Then I imagine how many calories it has, that the next holiday is approaching ... and all of a sudden it is the easiest thing not to buy the treat but to save up for this gorgeous bikini I will be able to wear.
This scheme teaches something else rather wonderful:
I still want to have things, and of course I want to have them instantly: But I won't go for it. I only will satisfy my desire if I have money left over for it. I never will forget my first dishwasher. I hate washing dishes - what a waste of time, back hurting, finger nails breaking. I had to save for a whole year to get one. Every penny went into it and even Detlef chipped in. The moment it came delivered, it was standing there all white and neat, and the fist load of dishes shiny and clean... Pure joy! We took good care of it and it lasted us 15 years.
Savings are made for a purpose. So the allocation is clear from the beginning. A small saving like above will act as buffer. If I would need to get rid of debt I would add a second 'saving' item. In our real budget Detlef and I have agreed on an amount that we want to save per month, and that is NOT TO BE TOUCHED. We are absolutely religious about this.
Once the salary comes in it automatically gets transferred into a savings account. It either is growing until we will be able to replace the car - we don't even like to buy those on credit - or it is used for big emergencies. If it grows too big we pay a part of it into the mortgage.
Hence this is an exercise to think about where one wants to be at a certain point in future, and what is needed monthly to get there. Every different purpose gets a separate budget, thus keeping things flexible.
Monthly tasks and getting addicted
A final list
So far I have fixed my annual budget, my monthly fix cost and my estimates, and I know that if everything goes well, this budget will work for me. Nevertheless, this has to be checked monthly. I might have done better and actually saved something - and I need to see that!
I choose to start this checklist at the beginning of the month. By that time the salaries have arrived and the mortgage and a few other things have already been paid. The rest I have to subtract - including:
That means that if there would not be a salary coming in February, I would be left with 995 quid to live for the month.
Initially that sounds brilliant, but would make me nervous. How quickly can things go wrong? So I always aim for at least one salary left in my bank account. In an emergency this gives me 4 week window to to review and sort out a new budget and my life, without having to touch my savings.
But that might be just me and my thirst for stability, freedom and independance!
To happy saving!
Money, Money, Money
comment by: Imoladate: 11/09/08
fantastic articles about money...really loved it. Brilliant idea shopping the perimeter!!! I have to try it straight away, my fear is what my kids are going to say about it, leaving them at the end of the aisle. I'll let you know. But I can be so quick, they won't even realise, right???
Money, Money, Money
comment by: Rikadate: 14/09/08
He he, just imagined you whizzing around like in a fast forward movie.
However, might be worthwhile thinking about inventing some sort of game with the kids. E.g. the bigger one responsible of keeping an eye on the trolley and being body guard of the smaller one, while the later has the task to hold on to a certain item of utmost importance, which is not supposed to get far from the trolley as otherwise somebody might come and steal everything. This way the little hands would be occupied and not grabble in shelves and they might even feel horribly important and helpful. Topped up with a bit of cookoo-bahh game ... could work ?!?
Or find a slot to go shopping without the kids, be as fast as a breeze, and do some real nice playing with the kids using the time saved :o)
enjoy a cuppa and a magazine ;o))
Live & Let Live
Motivation & Fun