No need for credit cards

In November 2014, I cut up all my credit cards. That was almost three years ago and I’m still alive today to tell my story. I have lived every month without the need to use a credit card. 

I changed my lifestyle. I changed my approach. I changed mindset. You don’t need credit cards. You think you need credit cards, because you can’t keep up with the Jones’. The funny thing is, most of the Jones that you see, at traffic lights, carrying bags and bags of new “things”; have probably not paid outright for those “things”. Its probably on credit. Now imagine their debt figure floating above their head, or car like a video game gauge system. Granted, there are a number of people fortunate enough to have the latest car, latest gadget and newest clothes, but when you look at the statistics and (UK) average wages;  its not mathematically feasible.

The median average wage UK as calculated by our Salary Calculator is £27,000. [source]

If that’s the case and your renting or paying for a mortgage and not to mention everyday living expenses. How could you buy a brand new car? Without inheritance, lottery win or a pot of gold at the end of the rainbow.

Britons spend around £27,500 on a new car
[source]

It is not rocket science, the new car is more than the average salary. That salary is before tax. So then the car is bundled onto a lease. Why? Because you think the monthly payments make it affordable? cheap? in budget? That can’t be further from the truth.

A new car will break down. An old car will break down too. However a used car only cost you £5000? That’s a cheap breakdown compared to a £27,500 – right?

How have I survived a breakdown with no credit card’s? A £1000 emergency fund that’s how! Since having the fund it’s been used once and through small contribution’s over months and months of frugal living it’s now at £5247.00. Still no credit card’s or loans (I have a mortgage – that’s my only debt)

Its incredible the transformation of no monthly credit payments has made. That includes the car payment, which stood at £234.64 per month – back in 2013. That’s when it ended though. It had been for 36 months. A HUGE £8447.04 spent, but I did not own the car. Have I still got that brand new car? Nope.  

Just live on less than you earn. It IS that simple.

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Excess saver

“Would you like to pay an additional €24 per day incase you have an accident or damage the vehicle etc?”

Over 4 days that’s €96. That’s in addition to the €850 excess if there is an accident or damage. 

Fortunately I have the emergency fund funded; and growing. We said no thank you and sure enough at the end of our trip we were €96 better off. All thanks to the growing emergency fund.

Live on less than you earn. Simple.

Be prepared

No matter what day of the week or what time it is my mind can very quickly take me back to the prison of debt. It’s valuable to me personally and helps with the reality of my minimalist debt (mortgage) free journey:

Woke up in a complete panic that even though I had just recieved my letter confirming employment I was in fact losing my job. Dismissed. No questions asked. Just dreaming rubbish as the alarm went off. Horrible dream but one that would create mayhem. 

That was quite a pleasant feeling indeed. So yesterday I withdrew £250. My POA to give the other half £50 and then spend the rest on my train fair. 

Handing over £180 cash felt good. My cash. My earnings. My means of commuting. 

Plus my “no debit card plan” can commence. Even got given change back £11.80

Essentially I now have £31.80 cash that needs to see me until next Thursday (fingers crossed until payday).

I have a budget on Google Drive that I can now utilise anywhere so hoping this shall work. It will work. 

It’s strange because reading back over my debt diaries that I kept, makes me realise I was 110% persuading myself everything was improving. Even when it was not. It really wasn’t.

The only time things really improved, really improved – was when every single piece of plastic credit card got chopped up. It’s funny though because each time I was making progress on savings. Each time I thought I was winning, small wins, I’d get flattened in microseconds. Yet another “emergency” not a take-a-way, but like faults on the car or the garage roof repair.

Without that initial emergency fund complete, there was no hope. The moment the protection was there, I seem to be left alone for longer periods of time. That only gave me more chance to save! The comfort of having paper over plastic for protection was great. 

It honestly feels like you don’t get picked on when you’re prepared. Just like the scouts taught me years ago as boy: Be prepared.

30.4 Days of survival

life-belt-498453_640

Everyday I am moving further away from debt (the mortgage is my only debt), but not seeing the savings grow; I find very frustrating.

It’s frustrating because debt seemed to grow vastly every day. No matter how much you paid towards it, it still went up. That is because there was still bleeding. You’ve got to stop the bleeding to stop debt. The teachings behind a minimalistic lifestyle – less consumption – are of huge value here. It is working seamlessly for us.

Savings growth, for me/us, is a monthly results situation. That’s really when there is a visual difference. However, it must never be forgotten: no matter how slowly the savings grow, it is far better than the rapid decline into debt prison. Never again.

Imagine having no debt. Nothing. Mortgage free. Zero loans. Zero credit cards. Now you’ve lost your job. Essentially your overheads are food, water, fuel (gas, electricity, petrol/diesel). No one is going to take your home or car or other assets. They. Are. Yours. Granted it would be different if you’re renting.

If you were renting though, but had saved, at least you’ve got something. Something is better than nothing.

Take your savings, divide that by your budget outgoings, times that by 30.4 and this shall equal the days you can live on “something”. The aim: save 3 to 6 months. Example:

2000 (saved) / 2000 (budget) = 1 X 30.4 (average days in a month) = 30.4 days of survival

My frugal month: emergency fund

I listened to some more Dave Ramsey and the minimalists podcast today. One thing I liked to hear about is the classic emergency fund. Get it nailed in a month. Pull that £1000 together like your life depended on it.  It kind of does. 

Debt can, I know, drive you to unthinkable lows. Fortunately, I saw the light at the right time and saved my wife and child from a journey that no one should be faced with. Now we’re on that positive frugal journey. A more meaningful life with less (and more experiences and money).

It got me thinking though. Once you’ve saved that £1000 emergency fund. Why not add a baby step 1.1 to the pie. Baby step 1.1 for me personally would be the average car fault repair cost. After all, if you can save £1000 in one month, you could definitely save £1250 in two. Then pile the other cash in to your next baby step.

So I had a look around and found some interesting data on car repairs, average costs: UK Average was £220.Ranging from £166 to £241. I completely get it. I totally understand where baby step 1 helps, but for me personally I’ve had bad luck one to many times. So I don’t see any reason why not to add that additional £250.

As it happens my emergency fund has been used several times and I do keep the £1000 one separate. It currently stands at £1128.67. I top it up monthly by £30. 

This is my frugal month…

My frugal month: Day 2

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The second full day nearly over and the envelopes are still untouched. We had a mixed day of sunshine and showers. It can only be April showers.

A great second day considering it is a weekend day too. Start the day off with a movie on Netflix. This is a budget item, which is mostly paid for via the £5 credit I obtain each month from my current account. As I don’t go into my overdraft I get given credit. Netflix therefore costs £2.49. We don’t go to the cinema anyway – so Netflix is our cinema. We watched ‘Bee Movie’.

Then we had an earlier than planned sleep for our child. As planned, I hit the garden. The worst thing about frugal times have got to be the loose ends. Don’t leave yourself open to “downtime” the moment you stop you’ll find yourself tempted into spending. So instead, garden. I started with the strawberry runners I planted out from last years purchase (£5.99 for 6 plants). I now – thanks to the runners – have a total of 19 successful strawberry plants. That’s basically 31p per plant. Not to mention the fruit they’ll give us. They essentially grow like weeds, but good weeds.

Gardening is a win for both adults and children. You get to keep on top of it, get some exercise and the children get to join in. They learn, get muddy, dig, play and help. Children love to help! Once the strawberries were repotted. We moved onto the carrots and beetroot. These were placed outside to climatise. Sadly the carrots weren’t planted out today – another day perhaps. However, 55 beetroots were and I cannot wait to see them grow. Once again that’s more food. Not to mention the cherry tomatoes, money maker tomatoes, courgettes, onions, red onions, shallots and garlic that are already growing. They all need time, but time that costs nothing. Perfect for the frugal months.

How did we afford all these vegetables? seeds? plug plants? Simple. They were factored into the weekly food shop. We are very fortunate to have a garden now, where we can grow food. We spent 10+ years in a flat and we couldn’t then.

Once I’d tended to all the vegetable based jobs, I moved onto a few general garden basics. Like deflowering the camellia, well those that had reached the end of their life. Repotted a fuchsia plant ready to plant out later in the year.

Whilst I was still out in the garden the wife spent some time baking. Instead of buying wine, flowers or a cake for tomorrow; we decided to bake. So she and our child made lots of cup cakes and decorated. Before we knew it, it was time for dinner (homemade meat balls) and then bath time. Time to tidy up from the days frugal fun, whilst the wife continues to make curtains for our dinning room.

Tomorrow; Church, a play date and meal – hence the cup cakes – and hopefully a bike ride for me to keep the legs warm. I now try to ride to and from work Mondays to lower weekly fuel costs.

This is my frugal month…

My frugal month: Day 1

Making use of the envelope method with our “spending” money. So all outgoings that are needed are covered. Some minor savings for me personally are covered too. Really nice to keep the emergency fund growing for the 3 to 6 months. Anything that falls outside of the budget will have to come from the cash in the envelope. Budgeting  £25 per week for 4 weeks.

Why, because we’re trying to live off one salary in preparation for potential baby number 2. No news yet. Hopefully the minimalist journey I’m on will aid my frugal month.

This is my frugal month…