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Found 6 entries.

Shaving those Expenses: 10 Things to Think About Cutting Down

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After a few weeks trying to cut a number of expenses, I hereby offer you 10 things you can think about where you might be able to cut your bills or your monthly outgoings.

1) Lowering your Cable TV/Satellite Subscription

Or indeed, cutting it out completely. Think about it, how much time do you watch TV anyway. Not much? Then you don't need either Cable or Satellite. Watch it alot, then you probably need to cut down anyway.

I used to have Cable TV in a previous house which was about $60 a month, now saved.

2) Monthly Insurances

House insurance, contents insurance, life insurance, car insurance, income protection insurance, the list goes on. Every month you give money to someone else such that they can help you out if things go wrong. But how often do you check to see that you're paying the lowest price. You'd be surprised to learn you haven't reviewed your insurance in years.

I am planning an appointment with an insurance broker soon and I suspect I'll get to save somewhere between $20 and $30 each month on my insurances.

3) Utility Bills

With the shake up of most countries power over the past decade or so, it's pretty easy to find great deals on your electricity and/or gas usage. Just shop around and you'd be surprised at how much the smaller suppliers are charging compared with the old incumbents.

I've just change providers and will be saving about $25 a month.

4) Moving to a Lower Internet Plan

If you're not using your internet plan to the fullest, then you probably want to downgrade to the next plan down. This is especially true if you're not downloading lots of large files. You're probably using nowhere near what your plan allows you to.

I realised I was on a 20G plan and in only 2 months in the last 6 did I reach 8G or 9G. I've now lowered my plan to 10G and will probably look at the 5G and just pay for excess bandwidth if I use it. A saving of $25 a month right there.

5) Switching Banks

By switching banks you may be able to save various chunks of money here, there and everywhere. From service fees, withdrawal fees, other bank's ATM fees and a myriad of other fees which all add up, you might save a few bob.

I just switched banks, mainly for my mortgage, but by switching my current account and credit card too, I'll be saving $12 a month on account charges and about $15 a month on not getting credit card insurance. Also, $20 a year on the credit card fee and about the same to be in the rewards program. It all adds up.

6) Switch to Low Power Devices

Switching to low power light bulbs is an easy win, but think about switching your other devices to a low power one too. The washing machine and fridge would be two worth looking at.

Maybe it's not worth it if your current devices are still happy and working but when you have to replace them, it'll be well worth the time investigating the low power options.

7) Switch to Pre-Pay on your Mobile/Cell phone

Switching to pay only for what you use is a pretty good option in most cases. I know people who have switched to metered water and who are now saving a good chunk of money (people who would have in the past been subsidising the people who waste water unnecessarily). Why can't you do the same for your mobile? If you don't use it much switch to only pay for what you use.

I shall be switching to Pre-Pay soon and going from paying $20 a month subscription (+ calls) to paying $6 (to get a special offer) + what I actually use. I'm sure to save around $20 a month.

8) Lowering your Rent

Moving to a smaller place means you'd probably end up paying less rent. You might also have to get rid of some stuff that has been dragging you down the last few years. An increase in savings and an increase in life simplification will work wonders for your stress levels and your daily energy.

Moving from a three bedroom, to a two bedroom and now a one bedroom place has made me open my eyes as to what is important in life. Having stuff and clutter is not on that list. Also saving $220 a month isn't bad.

9) Moving to somewhere close enough to walk or bike to work

By moving somewhere where you can walk or bike to work means you get to save money and you'll probably end up saving time too (since biking is pretty quick once you get used to it). No buses or trains to wait for and no being angry at crazy and unreliable timetables.

Moving into town has meant that I not only have more money to save due to not having to bus ($100) but I also save now that I have sold my car. My fitness levels are up and my savings are bigger.

10) Anything else you regularly pay for?

Whatever you have that you pay for regularly is ripe to be analysed and figured out how much of that particular thing you actually need. Almost everything can be shaved slightly to give you those few extra dollars in your back pocket.

And as always, and for those of us who have seen the light about all of this, you know that shaving off a little of each bill here and there makes no difference to the quality of life but an enormous difference to your bank balance once added up.

So, get cracking on those regular payments and make sure you shave each of them and save a bit every month. By the end of the month, you'll be surprised at how much you're keeping instead of slipping through your hands.

Labels: banking, insuring, saving

Inserted: 2009-03-24 20:57 (1 year, 4 months ago)

Personal Finance is Not a Destination, it's a Journey

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You've heard the phrase:

Life is not a Destination, it's a Journey

And like life, the road to financial independence doesn't lead you to a destination but instead just takes you on a road leading to a place you'd rather be but never actually getting you there.

Each junction on this road can also be considered a decision making time, a time when you can re-evaluate and a time to look back and figure out what you want to do to keep moving forwards. Forwards of course means heading towards your goals because if you didn't have goals you wouldn't know which way to was the right way to go.

Re-Evaluating Your Outgoings

In this post, I'd like to just concentrate on one particular aspect of these junctions and that is about re-evaluation. In fact even more specifically, re-evaluating your monthly outgoings like bills and suchlike.

Back in one of my first posts, I mentioned in my article on budgeting that I'd been doing various things over the years such that I was spending less on various things. Some of the bigger items I had cut down on were:

• rent (by moving to a smaller flat)
• travel (by moving closer to work)
• food (by not buying as many take-aways and making my own food)
• lots of other little bits and pieces

A few months after that, I also took some steps to make my monthly outgoings even less. I ended up selling my car and instead buying a bike for travel. That action in itself saved me over $250 a month, which is about $3,000 a year.

Can't be bad.

Spring Clean your Outgoings

Even though it's coming into Autumn in this hemisphere, for most of the internet world it is now coming into spring. As well as spring cleaning your house it is as good a time as any to also spring clean your monthly outgoings. This can be done in two ways.

You may want to turn and toss every single little thing but mostly you can just give things a quick dusting to make sure you've still got what you expect. In some cases, you just need to review what kind of plan you're on whether it's electricity, phone or subscription services.

I am currently going through a bit of a spring clean and I figure that by the end of it, I'll be saving well over $1,000 a year extra. Let me go through some of the things I've done in the past couple of months and a few more things on the table in the next couple.

• stopping my DVD mail subscription service
• switching electricty/gas providers to a cheaper option
• switching banks (to one with lower mortgage interest and less charges)
• changing credit card (to one with no fees and lower interest - not that I'd pay them any)
• stepping my internet usage plan to one with a lower price
• changing my home firewall machine from one drawing 100-150W to one which draws 5W
• switching my home/contents insurance to a cheaper supplier/option
• turning off my normal phone and getting a VoIP phone number instead

By doing all of these things, I suspect I can save upwards of $1,000 every year and quite possibly closer to $2,000.

For a start there's a $250/yr saving with switching energy suppliers and a $300/yr reduction by switching to a lower internet plan.

If I get rid of my phone, that's a $420/yr difference, minus about $120/yr for a VoIP phone, that's still a $300/yr saving.

I suspect I'll also save about $360/yr on home/contents insurance and realistically my bank fees/credit card fees will be lower by about $100/yr or more.

Just totting that up, that's a yearly saving of $1,300 without even lifting a finger (ok, I have to phone a few people but not much more than that).

See What You Can Do

If you've been living frugally for a while you might have already done all of these things and more, especially if you've been settled into one house for a while. In which case, maybe you don't need to review your situation.

However, it doesn't hurt to go through each of these things every so often just to see if something can be done. Let's say a new competitor is now supplying energy to your vicinity, it would be a shame to miss that opportunity.

Even just shaving off a little at the top of each and every bill you get can save you a significant amount of money per year. Add 10, 20 or even 30 years worth of compound interest on top and those small insignificant amounts start to add up to some serious money in the future.

So far my increase in savings have been well worth the effort I have had to put in and there are still more of those things on the list for me to go through and switch around or reduce. Overall, I'm pretty pleased already.

What other bills can you think of which can be easily reduced by either cutting back on a plan or switching supplier?

Labels: banking, insuring, saving

Inserted: 2009-02-25 01:15 (1 year, 5 months ago)

Simple Steps Taken to go Car Free

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Over time, I have taken numerous steps to become car free. Each of these steps are small, sometimes infrequent but all of them have added up in the quest of attaining car-free status.

And now they have all now been worthwhile since yesterday, I sold my car and am now officially carless! And you know what, it feels great.

Consideration

The first thing you need to consider is whether your life would be better or worse if you went car free. This one thing is the most important part of this decision since there would be no point getting rid of the car only to have your life become miserable and annoying. Everything you do should be to make your life happier, easier and more fulfilling.

For me, this decision was easy. I've never really been a fan of cars anyway and whilst I took a liking to my car (her name was Latoya because she was a Toyota) I just became sick and tired of the expense she was costing me, especially taking into account her old age and the number of repairs I had to do recently. Poor Latoya.

But after having a few chats with various friends a while ago, I decided that getting rid of the car was something that was definitely on my todo list but I just wasn't sure when. After having that short, sharp snap of car-related expenses back in September it became the final nail in the coffin with me and car ownership.

Having also moved in to town earlier this year this also made the decision to go car-free a lot easier. Transport to both work and almost all of the other places I frequent was now not required and in fact, probably slower.

If it helps, write down a pros and cons list of having, versus not having, your car. This is a good exercise since there might be some things you'd forgotten about. For example, the convenience of being able to drive to your holiday destination might be one but maybe you're more of a flier anyway. How about the reduced ongoing cost of not having a car versus the increased stress of having to ride public transport? (Unless public transport in your area is amazing.)

Add Up your Expenses - and Include the Car Price and Depreciation too

Another way to help you make a decision, is to add up how much the car is costing you vs the cost of having to pay for other travel arrangements. I can almost assume that because you are reading this blog that this particular item on the pros and cons list has a fair bit of weight in the final decision. It certainly was for me once I fully worked out all my costs.

As mentioned in my post about Two Ways Biking Substantially Improves Your Life, I mentioned a few ongoing costs of car-ownership and I'm sure there are probably others I have left out too. (For example, I think the car will have to have new tyres soon so I'm glad I didn't have to pay for that.)

Another item I forgot include in the original cost list was the actual amount of money I'd originally paid for the car. Now that I also have the sold price I can figure out that the car, over the four years I had it, cost me about another $50 per month just for the privilege of owning it. Of course, the longer I kept it, the less this would be but that's also a risk set against any upcoming repairs that might happen and one I was not willing to take. (Rust on the back windscreen and the slightly sticky gearstick are two repairs that will definitely have to be done soon.)

It Doesn't Stop There

As if you need any more convincing, there are also other factors to take into account. In the past six months, I have probably used the car 2-3 times per month and in fact, my friends borrowed her for the majority of this time. Even out of those two or three times I used it each month, two of those were probably unnecessary if a little convenient. When not in use, she would sit on the road gathering rust or having her wing mirror broken off which was no fun at all. All of these things add up to an unhappy car...

...and an unhappy me!

I knew I was having to spend over $250 per month on something I very rarely used and that amount was never going to get cheaper either (apart from the petrol price reduction recently but that's only a fragment of the ongoing costs). No matter how much or how little I used the car, I was out of pocket by a fairly reasonable percentage of my take-home pay, pay that I'd worked hard for and therefore money which wasn't returning the favour and working hard for me.

If you did choose to go car-free, that extra money would be much better off in a savings account, paying off your mortgage or even put into shares or property. Over the year, that saved money could come to something over $3,000 (or a lot more) not including any additional interest payments and that's a quite significant amount. Even just thinking that not having a car will knock years off your mortgage is really quite exciting.

Depending on the Most Reliable Form of Transport - Your Legs

Having always been a walker and now a keen cyclist too, I am relying on my legs more and more. In fact, I've always said that those legs are the most reliable form of transport ever. They've never slowed me up in a traffic jam, never broken down, never deviated from the scheduled timetable - since I set it - and almost always do exact what I want, when I want. They also never say annoying things over a tannoy system to hoards of beleaguered commuters when the points fail or the bus breaks down.

Both walking and cycling were the forms of transport I decided to concentrate on the most to help me out in the post-car era. I could say I was lucky in that most of my destinations are within walking or cycling distance but that would be wrong, In reality they are close because I specifically moved to this exact area for exactly that reason. All part of the plan, a plan which has been brewing for a year or more, with action taken over the space of six months and a final transaction yesterday to conclusively be rid of that four-wheeled contraption.

A Plan for Post-Car Blues

As shown above, I took a few steps to make sure I put myself into a situation where I could get rid of my car but there are other things to think about too. Maybe you'll find things slightly more inconvenient because you'll have to take the bus or train instead of driving but actually you don't have to make it harder on yourself by not owning any petrol-fueled transport.

Firstly, you could do what I did and buy yourself a bike. I managed to get one in the spring sales (in this hemisphere at least) and as I've said before, it's already brought a lot of joy to my life, both for exercise and for social engagements with other bikers. Essentially I have prioritised that a bike is more important to me than a car and therefore, I'm happier because of it.

Not to mention that I have already lost some weight and can feel that my stamina is steadily increasing.

Of course, you also have the option of public transport, which admittedly requires extra planning, but it's hardly a burden. If I can plan to retire at 40 then I can certainly plan to take a bus somewhere on a Sunday morning.

It's also not a bad thought if you remember you can still take cars every now and again. A taxi for a quick trip here and there doesn't work out to be too expensive (factoring in your lack of tax, parking, maintenance, insurance, breakdown cover and all the other things) or even hiring a car on the odd weekend for that jaunt away isn't going to break the bank either. In fact, you'll still probably be saving around half to three-quarters of what you were consistently spending every month and in some months near to 100% of that stays in your bank account!

All in all, no matter what transport you take during the course of the month, you'll be much better off than you were before.

Added Advantages

After selling the car yesterday, I also figured out a couple more advantages which, even if they are only small ones, still add up to extra happiness. Firstly, I was able to get some money back from my insurance company to the tune of $240 as reimbursement of my pre-paid yearly policy. It was a lovely parting note to my insurers and one that my Emergency Fund will be very happy about.

Secondly, when signing the official papers, I had to take my car key off my keyring and hand it over. And you know what, in that simple act, I went from having two keys on my keyring down to just one key and it was an amazing feeling. Simplifying my life in a most unexpected way made me smile and actually brought a little bit of joy to my face. Realising that you've just gone down from having a set of two keys to a measly one was much more fulfilling that I'd ever thought it would be.

Almost halving the weight of the keyring already makes me happier and certainly puts me one more step on the road to a life of simplicity and financial independence.

What would you do? Can you go car-free? What stops you, your family, your location, your job or something else?

Labels: planning, insuring, saving, living, travelling, selling

Inserted: 2008-12-04 22:41 (1 year, 7 months ago)

Income Protection: Do you need it?

You have read about your Emergency Fund, you started it or you might already have enough stashed away for those times in need. "Surely that's enough" you might think, but why not think further down the line.

Further Ahead

What if you're unable to work for much longer than 3 months? What if you're stuck at home for 6 months, a year perhaps. If it was longer than this, would you be able to cope?

As always, it depends on your circumstances. I know a lot of people where this wouldn't be a problem. Granted, they would have to live on one salary and would obviously have to make adjustments to their expenditure but it's definitely possible.

Income Protection

Notice in the above paragraph that I was referring to 'them'. In the majority of couples I know, both of them work. But I don't have that privilege since I am single. Therefore, I have to take out extra insurance. For that, I have Income Protection.

Have you heard of it? Me neither until a few years ago. Only when I bought the house did getting this type of protection made sense but in reality it's important no matter what your circumstance.

Asking the Family for Help

It turns out that you pay extra for Income Protection to kick in immediately but you pay less if it only kicks in after a certain amount of time, say three months. The bank asked if I had family that could support me in the case of not being able to work until the Income Protection kicked in. I said "Yes" but actually, I wouldn't want ask them for help since they do enough for me already. Of course I will ask for help in extreme circumstances but not if I don't have to.

Overall Protection

If you do as I have, you should be covered no matter what the circumstance. If for example I was diagnosed with a long term illness - one in which I couldn't work anymore - three things would kick in:

• my emergency fund would keep me going for the first three months
• I would be paid a lump sum from my insurance, to help with medical bills
• my Income Protection would pay me a percentage of my salary from 3 months ongoing until the illness cleared up

As you can see, my plan should work out okay and let's face it, if something were to happen to you, organising and figuring out your finances will probably be the least of your worries. Income Protection is not necessarily for everyone but for me it is pretty much essential, so yes, I do need it.

Do you have Income Protection? Do you have another form of insurance which can help you out in the case of illness? Let us know.

Labels: insuring, saving

Inserted: 2008-09-21 13:47 (1 year, 10 months ago)

If you lost your job, would you be okay?

If the answer is yes, then this post is probably not for you. If the answer is no, then you probably want to continue reading. If the mere thought of losing your job (whether being sacked, made redundant, becoming ill or something else entirely) makes you a little queasy, then this is the first step on the road to being able to answer "Yes, I'll be fine."

But who is it, I can hear you cry, who can answer yes to such a question? The answer is simply those who have already thought about this question and taken steps to prepare for such an event. It is those who have foreseen that sometimes life doesn't quite go according to plan. It is those who have made plans in the recent past to help out if such an event occurs.

The Answer

Emergency Fund.

It's as simple as that. No fanfare, no trumpets, no ticker-tape parade, no nothing. It's not a very exciting answer I'll give you that but it is an important one. Have you ever heard of such a thing? Maybe, maybe not but you have now. Here's a quick run down of what an emergency fund is.

Essentially, it's a savings account. An account from which you can draw money relatively easily since if something were to go wrong, you'd want to be able to get your hands on such an asset as quickly as possible. It's liquid and it's close to hand. Not too close mind, otherwise you might be tempted to spend it but far enough away to be an inconvenience to get your hands on it. Certainly not something you can draw from with a plastic card of any description.

And this is where I own up. I don't actually have an emergency fund. Well, at least I didn't until last week. I opened an online savings account last week and actually started it off by putting in the minimum amount required to open it. That's the first step in the ladder to having an all-singing, all-dancing (but still tearfully dull) emergency fund. Granted, I'd never thought much about this before but as part of my recent monetary review I decided that this kind of fund was something of utmost importance.

Starting Off

As always with saving, the hardest part is actually starting off. Once you've gotten over that hurdle, the rest comes easy. Siphoning off some of your paycheck just as soon as it enters your main account is probably the best way to do it and making it automatic makes it 100 times easier. That way, you just don't think about it and then learn to live and survive with whatever you have left in your account until the next paycheck.

My plan started well with opening the account. I put the required minimum in to the account and then a few days later received all the information I needed to log on. A day or so after that, I received my paycheck this month and immediately transferred 10% of my net salary straight into my emergency fund.

How much is enough?

This question is in two parts:

• how much should I transfer each paycheck?
• how much should I save up in my fund?

As always with such questions, the answer very much depends on your own circumstances. Also, different people have different opinions so you should (as always) sit down and have a think about what is important to you, both in everyday life and in the situation whereby you find yourself without a job. Some people may be able to scrimp and save more if they are not earning an income whereas others may not want to save as much in normal circumstances.

For example, my plan is to siphon off just over 10% of my net pay each month and I shall keep going until I have 3 months worth of net pay in my account. Yes, I know this will take a while and I might try for more than 10% but that is my initial aim.

Other figures to consider range from saving 5% to 20% net pay each paycheck. Or maybe a percentage of your gross pay. In some cases, people recommend 3 months of expenses, others 6 to 9 months of gross pay. Whatever you decide, the important thing is to do something. Figure out what you can afford, figure out what you will need in such emergency situations and go from there. You can always adjust these figures as you learn more about your finances.

Let me just re-iterate that again. No matter how much you siphon off, no matter how much you save you'll be in a massively better position than you were before if you had answered no (or worse) to the earlier question. Until you can say "Yes" to "If you lost your job, would you be okay?" then you probably need to save a little more.

I have my fund, what now?

If you've been saving little by little to get your emergency fund, don't stop there. Don't then start leaving that in your normal account for it to sit there saying "Spend Me". That would be like starting a hobby and giving it up the next day. Instead, keep on shaving off that percentage of your income and keep building up your savings with it. Since you've taken that amount of money out of your regular lifestyle there is no need to put it back in. You can survive without it so keep taking it out just as soon as your paycheck hits your account.

What you do with it then is, of course, up to you. Once you are at this stage, you'll be able to answer - with one hand on your heart and the other on your wallet - a wholehearted and resounding "Yes, I'll be completely fine."

Labels: insuring, saving

Inserted: 2008-09-20 23:20 (1 year, 10 months ago)

Tired of Expensive, Depreciating and Wasteful Cars?

Would you just love to get rid of yours?

Well, that's pretty much what I'm going to be doing later this year. I am living in town now, I walk everywhere (and I mean, pretty much everywhere) and have used the car just a handful of times in the past four months or so. Could I do without the car completely?

Absolutely, yes. I might still have to hire one every now and again but let's look at the list of things I won't be paying for:

• the car itself
• road tax
• Warrant of Fitness
• insurance
• petrol
• repair and maintenance
• breakdown cover
• Christmas Tree air-fresheners

(Okay, I've never bought one of those Christmas Tree air-fresheners but you get my gist.)

That's a lot of things to be paying for when you really don't use the car much. As I said, I've been thinking about getting rid of it for a while but the past three days have pretty much confirmed to me that I'm done with cars. I never really liked them in the first place (I only learnt to drive when I was 28) and I'm pretty convinced I'll be better off without one. Here's why.

Three days ago, I got my car back off a friend of mine who had been borrowing it (better someone's using it than no-one). It was probably about time I filled it up so I whacked a full tank of petrol in.

BANG! $71.67

Not much compared to some people, but it is a small car after all.

The back brake had been rubbing slightly and of course, since I now live in a narrow street in town, someone had knocked and shattered the driver's wing mirror (why do people do this and not leave a note). So I took it in to the garage yesterday. "Nothing wrong with the brake " I was told, "But we got the wing mirror done."

BANG! $168.19

Lovely.

I had a quick chat with the guy. I wondered how he liked Japanese cars compared to European. Then he came out with it "I took it for a test drive, the brake was fine as I said, but you need a new clutch."

Woah there. What? Right, well you better keep the key then. "Just do it" I muttered. About $400 he reckons.

Got there tonight to pick my wonderful Latoya up. Straight away, took him longer than expected, blah blah, I'm a mechanic (actually, he's a pretty nice guy and I like to think I trust him) this, that and the other.

BANG! $634.27

"I'm sorry. Baking powder. Come again! Just once more for me. I'm not sure I heard you right. I'm afraid I have poor hearing these days, you know, being almost 33."

In just three short days I have spent almost $900 on a car I hardly ever use. My friends who tell me I might need the car in the future are wrong. She's getting sold. I shall keep her a little while longer but really I no longer need a car and I hope that whatever I do in the future, that will still hold true. Once sold I shall be buying a pedal bike and the accessories I need to go with it. At least if something goes wrong with the bike, the most you're ever going to pay to fix it is to buy a whole new bike (which in itself is unrealistic in the short term).

And when I need to hire a car those few times a year, it won't bother me that I'll have to pay slightly more to get all the above things included since I know I'll still be saving money over the space of a year compared to owning one.

Could you do without your car? On what occasions would you need to hire one?

Labels: insuring, spending

Inserted: 2008-09-19 22:09 (1 year, 10 months ago)