Aug

27

is it time for Christmas yet?

Filed Under shopping | 10 Comments 

The answer to that question is no. Of course.

I’m currently avoiding the shops in an attempt to avoid spending money, so I don’t know if the Christmas things are up yet as they seem to be in the US. But, we’ve had the last bank holiday for four months now, and I once again feel that this is the homeward stretch towards the end of the year.

As a sensible personal finance sort of person, I like to have a sensible Christmas. I make a list of people I need to buy for, budget an amount per person, and set up a total list. I also have autumn / winter birthdays to buy for - starting in mid-October. This all falls into the same shopping pile, mentally at least. I prefer to get my shopping completed before the end of November, because I don’t like shopping when it’s busy.

All of this means that I like to get a grip on Christmas hideously early. I don’t start celebrating until the end of December, but I know that it’s coming. I hate rushing around, and gift buying is really important to me, so I’ve started thinking about it already. I’m not the only one, the Houseworks Holiday Plan begins next week. I don’t have nearly enough to do to make that worthwhile - I hate cleaning, and I don’t entertain, but it’s nice to know that I’m not alone in my forward planning.

If you’re the sort of person that can do Christmas quickly, easily and on budget by starting on the 1st of December, more power to you. I’m not. If I’m going to get things done and enjoy myself, I need to leave plenty of time. I’m not ashamed of sorting myself out now (pretty much got a budget for everything decided) and neither should anyone else be. After all, if you’re running round the shops at the end of the year, you can’t complain that you didn’t have enough warning.

Aug

26

fix your finances, save money - step 3

Filed Under savings | 4 Comments 

I hate it when things don’t quite go according to plan. I intended to finish up my personal finance challenge last week, by totalling up the money that I’d saved in my regular bills and then putting that towards my investing and charity funds. Sadly, I was hampered by an RSI-type injury, which left me only able to type long enough to do my day job all week. My hand is much recovered after the break and the typing free bank holiday, but I’ve missed the end of the Olympics.

how much did I save?

Also, I actually didn’t find as many savings as I’d hoped for. I can switch my mobile phone provider and save about £2.50 a month. I can also switch my home phone/broadband provider and save about £12.50 a month, for a grand total of £15 a month in savings. Not a great deal of money

All this assumes of course that I’m not changing the standard of living that I’m enjoying. I’m not cutting back, I simply want to get the same things cheaper. I’ve done it before (I try to do it every year) so the opportunities to save money get less and less.

what shall I do with the money?

£15 a month, is still good money. I could put add it into my investment pot, where over time, it will compound to an inflation adjusted (i.e. in todays money) £17k, giving me an extra £710 a year in retirement income. Which still isn’t an awful lot of money, but would definitely pay for an extra holiday.

Alternatively, I could add it to the amount that I give to charity, which definitely needs to increase. I don’t give nearly as much money as I feel that I should, but I’m often selfish, and increasing my charitable donations doesn’t occur to me. £15 buys a mosquito net preventing the spread of malaria, or pays for 250 school dinners, or does any number of wonderful things via Oxfam (my number 1 charity choice).

What’s important is that I make a decision about where to put this money, and don’t just fritter it away. There’s no point in making savings in one area just to accidentally lose them in another.

If you’ve found savings by cutting back on your major bills, what will you do with this money? And, what should I do with mine?

Aug

21

fix your finances, save money – step 2

Filed Under frugal | 5 Comments 

Breaking through the wall.

In the middle of the Olympics, I thought it would be a good idea to issue a personal finance challenge, one that I need to take myself. It’s in three parts:

  1. Establish how much you actually spend on stuff
  2. Look at ways of cutting costs
  3. Save and invest the extra money that you find

This, is the second part.

In part 1, we wrote three lists that cover all our expenses (averaged by month). Hopefully you’ve still got these. The first list is expenses that we want to cut e.g. bills, the second are expenses that we would like to stay the same, and the third are expenses we would like to increase e.g. charity donations.

look at ways of cutting costs

Ok, so take your list of expenses that you would like to cut. This shouldn’t take too long, but let’s do the easiest first. You might want a calculator to do some calculations.

It goes without saying that if you are willing to cut back on usage, then that will save you money. I’ve assumed that the amount that you use is fixed and you simply want to pay less for the same service.

debt repayment

Option 1: If you have a credit card that you’re paying off, try calling your credit card company and asking them to reduce their rate. Always worth a try.

Option 2: Look at taking out a balance transfer. Be very careful when considering the fees, and make sure you can work out the interest rate that you’ll be charged on the fee, this is usually not 0%. I approximate the cost by calculating:

(1+balance transfer fee) x (1+interest rate) – 1

Otherwise, if your debt is large-ish (a few thousand and up) and you have a good credit rating, it may be worth taking out a new cheaper loan.

This can also apply to mortgages. If you were on a fixed rate mortgage and it has since reset you might want to look into getting a new mortgage as it could be less than you’re currently paying.

gas and electricity

Key words are *shop around*. The gas and electricity coming down the pipes and wires won’t change if you use a different company. If you haven’t switched supplier for a year, chances are you can save money on these. Don’t sign up with the supplier that knocks on your door, actually look and see which will be the best. If you have your bills handy, you can estimate your usage and put that into the comparison calculators:

Money saving expert keeps an eye on the prices and will tell you if now is a good time to switch.

If you’re on a prepay meter, see if you can get the company to switch to a regular meter – this is one of the things that I need to do.

water

There’s only one way to reduce your water bills. Get a water meter fitted and then use as little water as possible. If you have more rooms than people, or everybody is out all day this is likely to work out very nicely. If there are four of you living in a 2-bed house, then not so much.

Water companies should fit meters for free, unless it’s impossible for them to do so, and you can change back within a year – but that’s a one shot deal.

phone, internet and tv

More shopping around is required here, but with slight differences. This depends a lot on your usage and requirements.

You can’t save money on your tv licence unless you’re blind, over 75 or willing to watch in black and white. It’s hard to save more on basic phone line costs as well.

You can save money on phone calls. Understand your current and anticipated usage, and pick a package that suits. Additionally, consider using an override package especially if you make international calls or calls to mobiles.

Saving money on broadband means picking the best package for your usage. This is often a bundled with phone calls and/or tv so work out what’s best as combined and stand alone packages. Orange offer a deal bundled with their mobile phone package – but work out whether Orange are cheaper for your mobile first.

The cheapest digital tv needs a set-top box. Otherwise it’s a straight competition between Virgin Broadband and Sky. Both have combined packages with broadband so consider whether that would offer better value for money.

For mobile phones, consider your actual usage, and use a comparison site for a new deal. Then phone your existing provider to see if they will match it. If you’re a heavy data user then you can’t compare this easily. Fortunately they vary mostly between networks, but not really between packages, so in your comparison add on your data usage costs when picking the cheapest.

My best deal works out to be T-Mobile Combi £15 plus Web and Walk which has a total monthly cost of £22.50, saving me £2.50 per month. And I’m getting a shiny new phone, and I’ll sell the old one via envirofone.

insurance

Two key concepts. Work out how much you need, and then shop around. For home and car insurance, it’s always cheaper to pay upfront rather than monthly, so you should be saving year round for these expenses.

I’ve recently renewed my home insurance, and saved money doing so without altering my cover, so I know that this works.

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