A timely read

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I have just been reading about car finance deals soaring to an all time record high, which ties in nicely with my previous post about consumerism. My thoughts on consuming less is very timely indeed. The problem I see with the car finance deal, is that you are essentially thinking it is the best deal out there, but how much does a 3 year warranty, 1 year insurance and no more than 10,000 miles per year really cost? Surely financing a car is more expensive than paying for a car outright with cash?

A second hand car is not the end of the world. It’s just not what the Jone’s are driving. Who cares? No body, but you. I have had a car on finance and it is fair to say; I won’t again. If I’d just been able to fast forwarded to where I am now. Know what I know now, I never would have done so.

Take your current car payments, mine some 4 and a bit years ago, were £264 per month. Now save that for 6-10months. That’s £1584–£2640 in cash that is saved. “What am I meant to drive in the mean time?” Buy something cheaper. “How, I have no money?” This is the vicious circle that (I know) “pushes” you into taking out finance. So “find” £500 to get yourself started. There are numerous vehicles out there for around £500 and if you rock up with £400 cash in your hands, you could probably walk away with the £500 car and £100 in change. A quick search online gave me 2,288 cars under £500 – they won’t all be perfect, but there’ll be one for you. One located:

£500 Volkswagen Golf 1.6 SE 5d 105 BHP TRADE CLEARANCE – GREAT VALUE

If you don’t ask, you don’t get.

Buy the car and drive it until it goes pop. Even use the £100 towards a good servicing, to lengthen its service to you. It’s a car! Not a person. It is meant to be used and used until it is no longer usuable. We, as consumers have a responsibility to slow down in our mindless consumption – the earth is only so big and can only disppose of so much. Where will the “unwanted” stuff eventually go?

That car, based on the £264 saved over two months, gives you £528. Now imagine that the car lasts you 12 months. That there would be £264 saved, over the coming 10months giving you potentially £2640. Even if you could save only half of that, it’s £1320. Although the bracket is slightly higher; there are 23,861 cars available at £1,500 or less! So in theory, in a year you could have purchased another new (second hand) car. Keep repeating this method (use the car until it goes pop) and before you know it – you would have a brand new car, but with no finance. Obviously the newer the car that you keep purchasing the longer it is likely to last. Don’t forget though, brand new cars go down in value before you have driven off.

This is similar to what Dave Ramsey talks about over and over again. Get rid of your car payment. Live on less than you earn. It works. It is as simple as that.

 

How many clothes have you got…

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I keep reading about how debt is a huge problem. How people don’t earn enough to get out of debt. Wages are too low. Families, couples and single people can’t save – perhaps due to debt, outgoings, just don’t earn enough etc. Living on or below minimum wage doesn’t help either. Sadly there are millions of people in this boat. Then reading that if you don’t have enough savings to get a credit card for an emergency?! Without going into the detail or pulling in loads of stats; this whole piece is wrong in my opinion.

Just stop. Stop. Think about it. Everything that is raised in the news (about this topic area) is about savings, debt, minimum wage, the breadline etc.

Let’s just stop and forget all of that for 5 minutes (to a lifetime).

For 5 minutes think about consumption. We as consumers, consume too much. I’m talking everything from food, new smart phones, new cars, plastic toys to clothing (and many many more). But why? Think about the behaviour behind it all. The mindset. The reasoning. Why consume so much? Surely it isn’t rocket science? Maybe for 5 minutes if we stopped consuming, or better still, in our lifestyle consumed with 110% purpose and need we’d be better off.

With less consumption comes less spending. Less spending means less consumer debt. Less need for loans, credit cards and financial prison. This would then mean more money at the end of each month, rather than too much month remaining and not enough money.

I am no financial expert. I am not offering financial advise. I have no money qualifications. I did have – at its peak – £40,291.54 of debt: credit cards, personal loan and student loan. This did not include the mortgage. As of today, I have one debt, the mortgage – I see this as a good as repayments are thankfully low. And almost 3 years later I have stayed out of my overdraft. This does make me a real life debt expert, as I faced personal financial chaos. It was my fault. Essentially from what I have learnt, I do have some knowledge of what not to do. The best way to learn in life is via your mistakes. However, don’t let the mistake become too big. It will become a life sucker. I know. I’ve been there. I’m still reminded of it. Oh, and I have not had a single credit card or personal loan in almost 3 years too – I had 4. Never again. I digress.

Why mention it though? Well since watching the minimalists documentary, my behaviour, mindset and most importantly consumption have completely altered. Thanks to my consumption altering, my savings are growing and I have become increasingly happier day-by-day. My worry, anxiety and stress diminished. I sleep far better. I read more. I have more time. I have more space.

In conclusion, I think, we should stop focusing on the debt, wages, savings etc. We should focus more on our consumption, living on less than you take home (earn) and stop trying to be like them. They’re probably up to their eye balls in debt, work all hours and never have time. With less consumption the debt, wages and savings will from my experience adjustment for the better.

Did you need to buy the new smart phone; really need to buy it? How many clothes have you got now, with tags still on?

My Frugal Month: Traction

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It has been a very fulling journey over the last 28 days. Knowing the direction I needed to go in, knowing what I wanted to achieve from My Frugal Month and I feel without doubt, I have picked up awesome traction. 

Along the journey I have failed and succeeded. The failure comes in the form of temptation, losing focus and giving paper to a shop assistant. Essentially handing over our cash. Not forgetting, that cash, that £100 split over four weeks was our one salary “spending” money. There was at no point a dilberate necessity to spend it or save it. It was purely about using the money with intention and purpose. Making the decision of giving that cash away worthwhile, not worthless. Give purpose to every “thing” that was to come into our home. This too is part of our minimalist journey.

We’ve spent the last 5+ months removing worhtless stuff from our home. Minimising our possessions that add nothing but clutter. We’re looking towards our life with clarity. Living a more simplistic lifestyle. Living a worthwhile existance. Giving back purpose and meaning to experiences. In making these gradual changes – no one likes change – we’ve been able to succeed with (give a couple of days) a frugal month. We’ve lived off one salary for the month.

With May just around the corner, with all the beginning of the month outgoings set to leave the accounts; this month has been a single salary triumph. We’ve essentially been able to go the distance, learn from our actions, mistakes and decisions.

The aim has been all about one salary living in preparation for having a second child – no news. We’ve gained valuable traction in our combined frugalist minimalist lifestyle.

This was my frugal month… 

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.

My Frugal Month: Week 3

What a difference a week makes. The end of week two saw another positive end, however the first day of week 3 was a fail. Not forgetting, the aim of our Frugal Month is to live off one salary. It is not to become a recluse. So if we do spend on miscellaneous items it can only be from the envelopes. That’s exactly what happened on week 3. 

It is strange because it feels wrong, like cheating or being unfaithful. It is not at all. However, reaching the end of the week once again there was no high five, but definitely reflection. When was the money spent? Why was the money spent? Immediately, I can say it was used as investment to try and kill a disease on our 50+ year old apple tree. Living off the land is cheaper than buying.

I have certainly learnt some intetesting lessons this week too. One of which being: we never seem to spend during the week. Our weakness is the weekend. Finding this out certainly helps us in the long run. Three weeks in of living Frugal, I can definitely see the positives and benefits. Hopefully this preparation will aid us as a family when/if we have a second child – no news 

This is our Frugal Month…

30.4 Days of survival

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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

The new registration plate: it’s not something to be jealous of

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Every March and September we play the number plate game. It helps with long journeys.

Rules are simple:
The first one to spot a new plate gets:
1 point for car
10 points for an emergency vehicle
5 points for a motorbike

Flip this game on its head though. Every new car – 0 to 4 years old – you see, don’t look at it with jealousy. Immediately think what are your repayments on that! The truth is probably a crazy amount. No it’s fine they are tiny – the lump sum at the end isn’t. Plus what’s tiny; £200 per month? That’s £2000 in 10 months. Just save your cash and get a cheap car. Cars are depreciating rapidly in value every month, week, day and minute you drive them.

Imagine no car payment. The only winners of car payments are the folk selling them. Go buy with cash and everyone’s a winner.

The likelihood is the person driving the car does not earn the £28,973 – UK average new car price 2012. The UK average wage (in 2014) was £27,271

How do they own it? How do they afford their mortgage/rent? Food? Fuel? Insurances? All their needed outgoings? Not to mention the tax and national insurance deductions? Plus the car cost?

Debt. Simple. Credit. Loans. How someone selling the car can’t see the maths not adding up I don’t know – wait a minute: commission.

If that new car breaks down – great it’s under warranty – but the amount of value lost since driving home that first day. That is a seriously expensive warranty. Think about it. Drive an old car and save your monthly repayment instead. Don’t be jealous of the a colleague driving that shiny new car. It’s not actually theirs – well the laws of averages means it’s unlikely.

It’s not something to be jealous of.