Becoming Domestic

Ever since we noticed our monthly food bills rising without good reason, since we heard more and more about the so-called ‘credit crunch’ and the predicted downturn in the economy, we started thinking seriously about what options we had to make ourselves recession proof.

A brief look at our fixed monthly outgoings identified our rent, food, fuel, insurance premiums and phone bills as our biggest expenditure areas.

An extremely quick win was to have a short and pleasant chat with nice customer service people at our respective mobile phone providers to agree new (and lower) rates for fixed annual contracts (including a free brand new phone each despite my telling them that neither of us needed new handsets).

This is great news as it means a net monthly reduction of about £70 between us plus two swanky new Nokia handsets which we will immediately try to sell on eBay (it worked last time) without even taking them out of the boxes.

Put in real terms the results of these two short phone calls will cause us no hardship (we will still be able to make phone calls and send sms messages which are the only two functions we use on our phones despite them being apparently capabable of so much more) and will save us the equivalent of the approximate cost of twenty new pairs of jeans, ten pairs of good shoes, about forty take away meals, two thirds of a months rent or one week in the sun for the whole family.

Tremendous.

I was a bit shocked to see that we had overspent by £175 on our Housekeeping account but it is not yet the end of the month. My initial reaction was to be cross with myself for not keeping on top of the spending, for not sticking to the budget and for not doing things like menu planning. I also assumed that the overspend was due in part to the fact we have had lots of friends and family come to stay recently and on these occasions we tend to cook some special meals and have more beer and wine than we do when are at home alone and had eaten out several times.

I chatted to Bealers about our overspend expecting him to be annoyed but in fact he wasn’t and instead he mentioned the fact that a friend of ours had written about rising food costs

When I read her blog post & comments from others where recent increases in food prices had been noticed by individuals but downplayed by the media I realised that our overspend was not a one off as I scanned our grocery receipts and looked for where the obvious luxuries had increased the food bill but couldn’t actually find any.

If food and other household essentials are to take a bigger part of our monthly income we decided to take the following action steps to ensure that we are still able to live within our means and not nibble away at our savings.

1. Be stricter with our weekly food shop and prepare meal plans in advance
2. Cook simple, low cost meals (shepherd’s pie, vegetable pasta sauces, risotto, omlettes, soups) instead of fancy meals with exotic ingredients (Thai vegetable green curry, pizzas with pepperoni & mozerella)
3. Use online grocery shopping as less tempted by ‘off list’ things and can also tally up the total before getting to the checkout
4. Eat less meat (especially as we buy organic meat which is more expensive than tasteless factory farmed meat) and buy fewer gluten-free cakey treats
5. Buy zero pre-prepared food. Hard as we buy very little but do usually have veggie sausages etc in the freezer
6. Use the food in the freezer, cupboards at the end of the month instead of buying more food (eg. use the bread machine to use the packets of bread flour instead of buying loaves costing £1.10)
7. Have an emptier fridge so we can see at a glance what it contains rather than having things going off at the back
8. Buy fewer convenience foods for the children (don’t buy many anyway but had got into the habit of buying small juice cartons for lunch boxes but the kids take a bottle of water to school anyway)
9. Buy in bulk for things we use a lot of where possible (eg. potatoes, carrots, beer, meat) at the beginning of the month having worked out approximatly how much we’ll need and try to use no more (just like people used to do in days gone by according to Mrs Beeton’s book of household management)
10. Plant and grow plenty of vegetables we use a lot of or ones that can be used for lots of different recipes (eg. tomatoes, potatoes, carrots, parsnips)
11. Explore the ‘Value’ range at the supermarket - already buy Value butter and this week discovered that the kids don’t care about the Value bourbons in the biscuit tin or the Value fromage frais in the packed lunches.

Luckily for my purse and our bank balance we don’t live near to any shops apart from the butcher, the bakery, a small grocery shop and a few charity shops (full of old ladies’ things mainly). When we lived in East London and I worked in the City I found that the majority of my spare time was spent idly wandering around the shops with no real purpose.

I often came home with plenty of so-called bargains as we lived near to cheap shops like Primark, Matalan, Woolworths, Superdrug, Tesco and Poundland and for about five minutes I would feel great. Over time the house became full of stuff. I had several gift drawers stuffed full of things that could be given away as presents, every cupboard was full and so were all the shelves and the loft and cellar too. The things I bought cost little per item but over time the amount spent was almost certainly huge (especially as the idle purchasing had started when I was a young teenager with pocket money frittering tendancies). Buying everything cheap and new ensured that somewhere in the world factories manufacturing these good were profiting from my spending and that the goods had been shipped around the planet using unnecessary energy. More often than not the new things were broken and therefore discarded shortly after they arrived in our lives and so filled up a tiny bit more of the world’s landfill with non-biodegradable junk.

Recently (about 18 months ago) I’ve been consciously de-junking our lives a little at a time (and still the house is very far from being stark or empty). I’ve taken loads of boxes of books to our local library where they either add them to their collection or sell them for cash, loads of clothes and linens to my favourite charity shop (worth noting that I only found out last week that they will happily take bags of unsellable clothes (ripped, stained, old underwear, threadbare towels, unfashionable things) if they are in a bag marked ‘Rags’. They can sell these for money to another purchaser. We’ve freecycled larger items and sold just a few on eBay and I’ve used most of the things in the gifts stash as gifts for people.

The fantastic feeling each time I get rid of further unwanted things from our lives is very similar to the buzz of previous years after another shopping spree. It feels fantastic to be liberated of things that are neither useful nor give any pleasure due to their aesthetics. For items I have a irrational reluctance to part with I stash them away into a trunk and then several months later I am able to prove to myself that I have lived happily without it and had actually forgotten that it existed at all.

Read the rest of this entry »

One of the upsides of being hugely pregnant and on maternity leave while the kids are at school & a completely clear diary free of rushing around doing things is the amount of time available to do things one usually never gets round to. While the rain is lashing down and the wind is howling I’m staying warm and dry in our home office (soon to be home office/baby room/guest room).

Last week we were the delighted recipients of a beautiful (if you like shabby chic) cream two-drawer filing cabinet from a generous Freecycler. It was perfect timing for us as we’d just reached the point where our trusty one-drawer cabinet would not accept a single extra piece of paper yet we needed to create some new files. This week I’ve been merrily drinking tea by the gallon while I take each file and review its contents, its label, its position, discard outdated papers and noting anything needing actioning.

We’ve taken the opportunity to make a comprehensive list of all the bank accounts, pensions, insurance schemes in a password protected spreadsheet along with their policy/account numbers, login details and the like. Very reassuring. I’ve added a lockable/fire & flood proof safe or document store to my birthday wish list so I can print the information and have a hard copy stashed away in case of emergency along with our birth certificates, passports etc. Read the rest of this entry »

Unfortunately I wasn’t taught early in life how to manage my money, how to save, or how to manage a limited household budget. I now realise these are essential life skills. I swear I’m not going to let history repeat itself and will ensure our kids will know about how to manage money from an early age.

Already I make sure they understand that the cash point gives us access to OUR money which is stored in the bank rather than free handouts whenever we fancy it. We also give them 50p pocket money each week (when they ask for it!) which enables them to buy comics or charity shop treats rather than relying on pestering me until breaking point to buy them a treat.

It has only been in the past 18 months since leaving my silly City salary behind and managing to have a fine standard of living on Bealer’s (self-employed) salary alone that I have finally learned the basics of spending less than we earn and anticipating/saving for things we want in the future.

Strangely, despite Bealers also having nobody show or tell him how to keep on top of personal finances, he has been the one who has taught me the most about staying on top of bank statements, categorising spending into regular/fixed essential spending (utilities, rent/mortgage, insurance) and discretionary spending (diy, meals out, travel, gifts, car repairs) and most importantly making sure we always have enough for important things like car tax, Christmas food and unexpected disasters.

Even when we were footloose and fancy-free both earning fairly good London salaries and had no kids to worry about Bealers was really good at reconciling online bank statements, paying off credit card bills in a timely fashion and working out how our fairly consumption-heavy lifestyle (plenty of foreign travel, loads of meals out, new bathrooms, books, CDs, loads of clothes) would be financed. Meanwhile I treated money like water - it trickled quickly through my fingers with the sense that there was plenty more where that came from. I would never have a clue what my bank balance was until the cashpoint refused to give me cash, whatever I fancied I would buy it (tropical holidays, new things for the house, shoes, nights out). A recipe for financial ruin apparently but fortunately stopped before any real damage was done.

When our twins arrived in 2003 we were amazed to see a whopping £10,000 worth of savings be frittered away within 6 months. Goodness knows on what. We did buy a new 2nd hand car, huge amounts of brand new baby equipment, nursery fees, holidays etc but nothing really tangible for such a huge sum. I guess it’s irrelevant now but as we’re expecting a new baby very soon it is interesting to note that we have changed hugely in the past 5 years and certainly will not be saying goodbye to large sums just because Junior has joined us (see ‘Thrifty Pregnancy/Baby‘ posts).

The top tips we have for managing our finances now are as follows. They work for us, are constantly under review as to whether there are better ways of doing it.

• We use our main (joint) current account as the primary account for receiving all income and handling all regular direct debits and standing orders
• We know how much & when monthly direct debits/standing orders are leaving the account(listed in a spreadsheet by date of month and category: Insurance (Life, car, house contents and building), Communications (phone, broadband, mobiles), Tax, Utilities (Water, TV licence, electricity, gas), Misc Debt (loan repayments), Mortgage or Rent
• We know how much income is coming in each month & immediately take 10% from this and syphon off into a high interest savings account
• We have a realistic Housekeeping budget kept separate from main current account (we have a separate bank account but are now trialling having monthly housekeeping money held as cash in a jar) to cover food, medicines, kids clothing, school expenses etc. We eat homecooked food and regularly plan our meals so that our weekly grocery budget is less than £50.
• We each have a small personal cash account each for ‘pocket money’ type spending (eg. beer money, cinema trips or any other luxuries hard to justify to your significant other). Use any left over each month from this to save up for big personal treat.
• Regularly visit list of anticipated discretionary spending for the coming year (eg. holiday, car MOT, Xmas food & gifts) and adjust as the predicted number become actual (eg. MOT for car predicted to be £200 was only £70) or unexpected unavoidable costs occur (eg. boiler repairs £250)
• We hold a float of £5000 in online saver account to use as an overdraft instead of using the banks overdraft facility
• Aim to have contingency fund of 3-6 months salary/expenses built up in high interest, instant access account for emergencies (unemployment, critical illness etc)
• We have a fairly clear idea of our financial goals (eg. always spend less than we earn, regularly save 10% to gather compound interest of the years, have enough to live on when we retire, not save huge sums for the children to inherit, one day have a second hand sports car and speed round a race track at weekends, enjoy some foreign travel) and periodically discuss these with each other
• At the moment we are not owners of a house and have decided for the short to medium term we are better off both financially & standard of living by continuing to rent instead of pay off a mortgage. We are lucky that we rent a nice house for a modest rent, have no maintenance worries and a landlord who likes us and has no intentions of selling the house. We keep reviewing this situation and occasionally look at houses for sale in our area to see whether we would be better off moving to a house we owned.

It feels so much nicer to be in control than breaking into a cold sweat at the merest mention of financials. I’m grateful to Bealers for getting us to a point where we can hand on heart say we manage our finances well.