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Showing posts sorted by relevance for query budget. Sort by date Show all posts

Step 5 - Writing up your budget

31 May 2007
WRITING UP YOUR BUDGET
A budget is really a spending plan. Having a budget does not restrict you but instead it gives a feeling of freedom and relief. When you spend according to your budget, YOU make the decisions on where your money will go, YOU decide how much will be spent and YOU decide how much you will save.

I resisted having a budget for years because I thought it would be a restriction and I refused to be restricted in any way. Now I know having a budget gives you a kind of freedom that not having a budget doesn't come close to. Before my budgeting days I used to feel a mild guilt and unease when I spent money, now I know that what I spend has already been allocated for spending and I have no worries when I come to buying what I want. Having a budget is not being tight either. You will still enjoy your life, probably more so, but you'll do it within the controls that you have set for yourself. Having a budget doesn't mean you'll never spend. It means that you'll identify your needs and what you really want, and save money in areas that don't matter so you have money for things that do matter.

(Please note, these downloads are no longer available.)
I have two pdfs for you to download in my downloads section on the right side of your screen - Sample Budget and My Spending Plan. One is a sample budget, the other is a blank form, based on the sample budget, that you can use to write up your own spending plan. In the sample budget, you can see the proposed spending in the left column, in the right column is the actual money spent. As you can see in this budget, it was $82 under budget. That is $82 that was allocated but not spent. This money would go straight towards your debts. You would pay your normal monthly or fortnightly payment and add $82 extra to it. If you are debt-free, you would put this money toward something you're saving for - Christmas, a holiday, a new computer, aquaponics tank, whatever.

You have two types of spending - fixed bills and cash spending:
FIXED BILLS
In MY SPENDING PLAN, you can write up your own budget. The figures at the top are all your fixed bills. Get out some old bills and calculate how much you pay for all your services, insurances, registrations, rent, rates etc over the course of a year, then divide by 12 to get your monthly amount. As you can see in the sample budget, my fixed bills come to $765 per month. That amount is transferred into a special bill paying account every month and is not touched. When each bill comes in, it is paid for out of this account, preferably by direct debit.

CASH SPENDING
Under the fixed bills section, there is the cash spending. This amounts to $655 in my budget. I withdraw $655 from the bank every month. I have a set of ziplock bags on which I've written the amount and the category. For instance - IGA/Aldi and I put $250 in that bag. When I go grocery shopping, I take some of that money, do the shopping and if there's anything left over, put it back in the bag when I come home. I do that for every category I've written - Groceries, Transport, Health, General. You decide what your categories are and you decide how much goes in each one. Just try to make it the least amount possible without getting yourself into trouble. At the end of the month, the left over money - $82 this month, goes to pay off debt or to what is being saved for.

PLEASE NOTE: A month, or monthly plan, actually means every four weeks. Mark this on your calendar because it's important that you transfer your amounts to your bill paying account and withdraw your month's cash every four weeks, not every month.

0

Budgeting - don't be a carbon copy

3 July 2008


Graphic from the Carl Larsen gallery


Whether you like it or not, to live a simply or green life, you must reduce your spending. It's part of the territory. You will get away with not growing your own food, you don't have to keep chickens, goats, make soap, bake bread, sew or knit, you can live in the city or the country, you can work or not, you can be young or older, but the one thing everyone has to do is to reduce their spending. Every time you buy something, you also own the carbon released into the atmosphere in the making of your product, you own the petrochemicals used in it's manufacture and in the transport that gets it from where it was made, or grown, to your home. Living simply will reduce the amount of of money you need to live because you'll be satisfied with less and you'll be making a lot of what you use. Maybe you'll also do some of those things I listed above, like bread baking, growing food and sewing. You'll also make do with less, recycle and mend, and in the process of that you'll give old items new lives and reduce the amount of things you buy.

A simple life costs less than the life lived by most western people now.

So if you believe me when I tell you that you must reduce your spending, also believe me when I tell you the best way to reduce your spending is to have a budget. This is not a scary thing, it's liberating. A good budget will be one of the best tools you'll have to help you live the life you want for yourself and your family. I've said before that a simple life is not about deprivation and being miserable, so with that in mind, when you first start living this way, make your budget a document that will give you the life you want but allow yourself small things that you need to be happy. My only luxury is $10 a week that I can use to buy what I want. Many of you would wonder why I bother with such a small amount, but that is what this lifestyle is about, it's being satisfied with the small things and being happy with the life I live. If you do it well, your life will make you happy and if you do budget for small luxuries like an occasional cup of coffee, I bet you eventually give it up because you'll find other things you want to spend that money on - things that will be more important to you. But if you can't imagine a life now without being able to buy a cup of coffee, a magazine, a bottle of water or whatever, budget for it.

The only things you'll buy from now on will be what you've budgeted for.

This is how we wrote our budget. We got all the bills we paid in the previous year and added them up to make a yearly figure. That was four electricity bills, three gas bills, in the first year we guessed how much petrol we used. We added up our grocery bills, what we spent on medical, optical, dental, the garden, postage, house rates (or rents), water, insurance, phone, Internet, gifts, clothes, shoes etc - everything we spent money on was calculated out at a yearly sum. So we had a yearly figure for each thing - our electricity, our water, groceries, petrol etc. Then, because we shop monthly, we divided our yearly amounts by 12 to give us 12 monthly amounts. That is what we budget for - 12 amounts for our 12 months. If you shop weekly, fortnightly or bi-monthly, divide your amounts up by 52 (for weekly), 26 (fortnightly) or 6 (bi-monthly). Whatever the amount is that is what you have to spend for the period you have chosen.

We keep the money for our fixed bills - the things we don't have to pay in cash, like the electricity bill, phone, internet etc - in the bank. Those amounts are paid by direct debit directly from the bank when the bill comes in. For everything else, our grocery shopping, petrol, garden supplies, dog food etc, we withdraw that amount - for us it's $690 a month - in cash. That cash is then divided up and placed into a ziplock bag that is named for its purpose. For instance, I have one bag for grocery money, one bag for bulk food money, one bag for medical, dental and chemist. The good things about these bags is that you deal with real money, you see what you've spent and what you have left.

Hopefully, you've started tracking your spending because that will play a big part in your budget. When you've tracked your spending for a few weeks, you'll see the pattern of your spending. You'll find places where your money is leaking and you'll be able to stop those leaks. If, when you do your budget, you find you do not have the amount of money you need, go to your tracking, find those leaks or items that are not needed, stop the spending on those things and so you have it to cover what is in your budget. And remember, now you only spend what you budget for. If you've budgeted for your cups of coffee and you can afford them, that's fine, if you cant afford them, you will have to do without. My feeling is that if you've read this far you will be keen to get your money in order. My guess is that paying off debt and living a good life will replace your coffees - or whatever your luxury is - and you won't even notice the absence.

We try to be thrifty with all our purchases so we have money left over at the end of the month. Usually it's around $100. That money is then put into our emergency fund. If we have enough money in the EF, that leftover money goes straight into our savings. But if you're paying off debt, I would encourage you to build up an emergency fund, then put every spare cent towards paying off your debt. Put your left over money as an extra payment on the debt with the highest interest rate.

So that's it. That is my guide to budgeting or creating your own spending plan. I'm not going to say it's easy, I know it won't be, but if you can do this, it will be the thing that makes the biggest difference to the way you live. And as I said before, don't be fooled into thinking you can keep spending and also live simply - it's impossible. You do one or the other. I hope you can reduce your spending, I hope you see the worth of it, because if you do, you will be able to live well on less, you'll pay your debt off much faster and you live a life that is unique and not a carbon copy of all the others in your street.


20

Budget - good news

19 May 2008
Hanno and I spent two hours on our budget yesterday. We checked old bills and we had our little (solar) calculator running hot. We put 2 and 2 together, checked our answers, then checked again. We are spending LESS than we used to. Call off the hounds, our financial throats haven't been cut, we are doing fine. I'm sorry to alarm everyone.

Let me explain.

Our petrol costs have risen, our food and grocery costs have risen, but almost everything else hasn't, in fact, many of our costs have fallen because we're wiser and more frugal than we used to be.

Our new budget is listed below. The way we organise our money is that we have a certain number of costs that we keep in the back. They are in the first section below. Our other costs are paid in cash, so that money is withdrawn every month and put into my trusty zip lock bags. Each section has its own bag, for instance, we have a bag containing $125 marked 'Aldi', a bag containing $125 marked 'IGA', a bag containing $30 marked 'Chemist' etc. During the month, money is taken from these bags when we do our shopping.

GENERAL EXPENSES - STAYS IN BANK
(Per month)
Each bill is paid by direct debit when it comes in or kept in the bank until we need it

House and water rates 95.00
Insurance - house, car, health 225.00
Phone - Landline & Mobile 40.00
Internet 40.00
Electricity 53.00
Gas 15.00
Rego, tyres and maintenance 84.00
Vitamins 80.00
Clothes and shoes 20.00
Optical 25.00
TOTAL 677.00

CASH WITHDRAWAL FOR ALL BELOW
Money withdrawn from bank and put in ziplocks

GROCERIES
Aldi 125.00
IGA and markets 125.00
Chook and Dogs Foods 50.00
Bulk food/ flour 40.00
TOTAL 340.00

TRANSPORT
Petrol 150.00
TOTAL 150.00

HEALTH
Dental 20.00
Medical 25.00
Chemist 30.00
TOTAL 75.00

GENERAL
Garden Supplies 30.00
Pocket Money - HH & RH 80.00
Postage 15.00
TOTAL 125.00

TOTAL MONTHLY SPENDING $1367.00 or $342 a week or $49 a day

In our old budget we were paying more for various services so that is were our current savings are. Here is the old budget, this is the first part of the budget that we keep in the bank:

House and water Rates 156.00
Insurance - house, health, car 295.00
Phone - Landline & Mobile 95.00
Internet 40.00
Electricity 67.00
Gas 25.00
Rego, Tyres and maintenance 87.00

TOTAL = $765.00

As you can see, we've added $125 to that section and we're still $88 under our previous budget. We are also saving $100 a month on this budget.

We've decided to keep our food budget the same and try to stay within in for the time being. We'll review it again in six months time.

There is a lot to be said for small steps each day. They really do add up. All those small savings in electricity when we turn off lights and appliances at the wall - that's where some of these savings have been made. More savings were made by baking a few things at the same time, by cutting back on water, and being mindful of our phone usage - using emails more and the phone less. All small, almost insignificant savings, but when added up, have made the difference for us between make and break.

So yes, our fuel and food prices have risen but we can cover those rises with savings from other areas. I have to tell you, it was a surprise to both of us how much we'd cut back. The proof for us was in all those bills we looked at from the past year - they were all less than the previous years, even though the costs of utilities is rising as well. We are not living a lesser life because of those cut backs. We don't feel deprived. Quite the contrary, we feel enriched, satisfied and confident, knowing we can change for the better and stay within the meagre boundaries we imposed on ourselves.

I will go ahead with the Etsy shop and the extra writing and see if we can make a bit of money for our holiday and maybe some to be put aside for a new computer that we'll probably need in the next year or two.

To answer a couple of questions raised earlier:
  • The trip to where I work is up a steep mountain road, a motorised bike would not be an option.

  • I belong to no church but I like the idea of tithing. As someone else suggested, I give to my community with the work I do at the Centre.

  • RachaelC, the hen and chicks are from Brazil. They were a gift.

Again I want to thank everyone for the thoughtful comments on our situation. We really have built a great little community here.

28

Simple Living Series - Managing your money

13 January 2010
Most people hate budgeting.  I did too.  I used to think that making up a budget would put restrictions on me and I didn't like the sound of that.  But when we did up our first budget, I was surprised that instead of feeling restricted, I felt liberated.  I knew we had money put aside for our bills and what I had in my purse and in the bank was available for spending.  Soon after we started working to our budget, I stopped thinking about having money to spend, I was more concerned with not spending.  I wanted to get off the consumers' bus and make my own way.  I saw more value then in buying needs instead of wants and I still feel that way.


Before I write about how Hanno and I budget, I'd like to first write about money in general.  Please remember that living simply is not about being miserable.  It's the opposite of that.  It is giving yourself the time and the opportunity to find happiness and to build it deep within your life.  I like the idea of sacrifice, I liked the idea of having to give up things to help me get started.  Giving up the things I'd always had was like a line in the sand for me; a definite point when I could say: THIS is me now, I am not a mindless shopper, now I buy things for a purpose.  Those who have been reading here for a while will know I'm talking about giving up British Country Living.  LOL!  It's such a little thing but I loved that magazine, still do!  I no longer buy it because that was my line in the sand - that was the point when my new life began. If I bought it again it would be a step backwards for me, a betrayal of my beliefs.  In many ways it's my guage of authenticity.  But that is me and you are a different kettle of fish. If you are struggling with your money, if you're in debt or saving for a deposit for a home, I have no doubt you too will have to give up things you love to reach your goals.  However, if you are debt free and have more than enough money to live on your sacrifices will be more symbolic than practical, but significant and important just the same.

Most people know what they earn but very few can tell you, with accuracy, how much they spend each week.  To work that out for yourself, you need to track your money.  This is a real eye-opener.  Get yourself a little notebook and pencil and take it with you every time you go out.  EVERY TIME  you spend something, write it and the price down in your notebook.  If you buy an apple, groceries, a cup of coffee, a magazine - whatever, write it down.  If you cheat on this, you're cheating yourself so please be accurate so you gain a genuine understanding of where your money is going.  You'll have a bit of an idea after a week, after a month your spending patterns will start to emerge.  Who knew that having a cup of coffee five days a week would cost you about $750 a year.  That's an extra mortgage payment.  Tracking your money will clearly show you that all those tiny amounts add up to a lot of wasted chances to be debt-free.  I'm not saying that you give up all your pleasures, but there are sacrifices to be made, you decide what you will sacrifice.  And always keep in mind your long term goals - to be debt-free, to be able to work if and when you feel like it, to travel, to help your children, or whatever your goals are. 

When you sit down to do your budget, this money tracking notebook will be important.  If you can't stretch your budget to cover what you need it to, go to your notebook and see what you can give up to pay your bills.  Don't just look at the single price of anything, judge it instead by the price, multiplied by the number of times you will buy it in a month or a year.  Along with Country Living, we gave up a few other things and pay TV which was then costing us about $80 a month - $960 a year.  We've never missed it.

You all know I'm not a financial adviser, all I can tell you is how Hanno and I work out our budget and how me make it work for us.  There are many other ways of doing this, but this is all I have experience with.  When we first started, we got all our bills from the previous year so we had a good idea of what we spent on fixed bills like electricity, phone, internet, land rates, insurance etc.  Our budget is a monthly budget because we usually do our grocery shopping once a month.  So for our insurances - health, car, house etc, all of which are paid yearly, we divided each bill by 12 so we had a monthly amount.  We did that with all our fixed bills - the electricity bill was quarterly so we divided that by four to give us a monthly amount.  When we had worked out a monthly amount for every fixed bill we had to pay, we added all of them up to give us a monthly amount that we had to have in the bank to pay those fixed bills.  For us that was around $800.  Then we had to work out our cash spending for things like groceries, fuel, medical and medication costs and pocket money.  For us that was around $650.  So we knew we needed $1450 every month just to cover our every day costs ($363 a week).  If you want a weekly budget, divide your yearly amounts by 52, or 26 for fortnightly.

We have a bank account where we transfer $800 a month for our fixed bills and we withdraw $650 in cash.  That cash money is then divided up into ziplock bags labelled "groceries", "animal food", "garden and postage", "fuel", "medical", "bulk food" etc.  If you want to use this kind of system, which is very easy and efficient, label your bags for the things you spend your cash on.  So with  your cash bagged up and the fixed bill money sitting in the bank, when your bills come in, you know you have the money there to pay and it takes the worry out of wondering if you'll be able to pay the bills.

Hanno and I have $50 each a month for pocket money that we can use however we like.

When we go out to do the grocery shopping, we take the money from that bag, and from the gardening bag if we need gardening supplies, or the animal food bag if we buy their food, and when we return with our supplies and the receipts, we put back the change into the bags in case it's needed again during the month.  Don't leave it in your pocket or purse. We often have money left over in the bags at the end of the month, that money is put into our holiday fund or if we're not saving for anything, it just goes into the bank.  When we have a sum large enough, Hanno transfers it to our ING online account, which gives a higher interest than we would get at our local bank.

Even though I used to think budgeting was a real horror, I now see it as a necessity and a bit of a game.  You can do things like trying to reduce your grocery bill each month or decluttering your home and selling things on ebay or at a garage sale.  That money can be used to pay off debt or go into your general savings.  I guess my message here is don't let money control you. You take control and you will not regret it.  Stop thinking "poor me", be proactive and deal with what you have in the most effective way you can.  We all have to take responsibility for our own decisions, either now or down the track a bit.  If you've been spending like a drunken sailor, giving no thought to your long term future, now is the time to stop, think about the life you want  to live and start making the sacrifices that will make it happen.  I'm here to tell you it's not half as bad as you think it will be, and the rewards, oh my, the rewards of sacrifice and budgeting are wonderful.

Please feel free to add how you manage your money.  Sharing what you do may well be the one thing that helps someone else.

Tomorrow we'll talk about paying off credit cards, change jars, emergency funds and various ways to reduce your household costs.

48

Budgeting - take control of your money

4 July 2013
It will take at least a month to get an accurate idea of what you're spending on non-essentials. It's worthwhile putting the time and effort in to do it though because it will give you real figures to work with instead of guessing it and being wrong. When you're dealing with your money, you need to work with reliable figures. And for that reason, I encourage you to be truthful, no matter what that truth is. You also have to be thoughtful and kind. If you're doing this exercise with your partner and one or both of you have been overspending, blaming each other does no one any good. Start your budgeting in a positive frame of mind, agree that there will be no blame, you're doing something about your financial situation and that's the important thing.


Now you're ready to take control of your finances and you do that by creating your own budget.

To create a budget, you have to know all your annual expenses. If you have access to last year's bills you're in a good position. You need to know how much you spend on internet, phones, TV, electricity, water, rates, rent/mortgage, insurance, health, education, clothes, food, petrol, entertainment, pets, gardening and anything else you pay for during the year - either once or many times.

On a piece of paper or a spread sheet, work out what your categories are and list them according to whether they're paid in cash or in response to an invoice or bill. You'll have three lists:
  1. what you pay for services like insurance, phone, electricity etc.
  2. items you pay for in cash - groceries, petrol etc.
  3. a third list of items you don't need every month but still have to put money aside for
When you make up your lists, you'll need to work out how much you spend every year on each of these items, then divide that amount by 12 to give you a monthly figure to put aside. You don't have to have a monthly budget, set your up according to how you are paid. If it's monthly, do a monthly budget. If it's fortnightly, do up a fortnightly budget - for this you'd add up your yearly expenses and divide them by 26, because you'll be paid 26 times a year. If you get paid weekly, divide your yearly amounts by 52.

Tracking your spending
Now, why did you track your spending? When you write out your budget you may find you don't have enough money to cover your expenses. If that happens, go to your tracking records and see what you spent on non-essential spending. Hopefully, that will cover your budget short fall. If it doesn't you'll have to reduce what you're spending in other areas so you can live within your means. Look at items such as groceries - maybe you can cut ten dollars from that. Look at phone bills. Do you need an expensive phone? Do you need a phone at all? Look at entertainment, you may have to cut down on that until you get your budget sorted out.

For example - your list may be similar to this or different. 

Monthly bills
  • Rent/mortgage payment
  • Insurance - health, car, home, life.
  • Electricity
  • Water
  • Rates
  • Phone
  • Internet
  • Car registration 
Monthly Cash
  • Groceries
  • Petrol
  • Travel
  • Education
  • Entertainment
  • Garden supplies
Extras are not needed every month, but money has to be put aside to pay for these items:
  • Clothing/shoes
  • Haircuts
  • House maintenance
  • Car maintenance
  • Hobbies
  • Annual holiday
When you have your three lists you'll need:
  • money in the bank to pay your bills
  • cash in hand to buy groceries, petrol etc
  • either money in the bank or cash to pay for your extras
Your bank accounts
Set up your bank accounts to facilitate your bill paying and to earn the highest amount of interest. You can pay your bills using a credit card (paying it off each month to avoid interest payments), debit card, cheque or direct debit and if you have enough money in the bank in your bill paying account, this will work well for you. We have a bill paying account that our pensions go into - yours could receive your pay. This is the account you use to pay your bills as they come in. You leave enough money in this account to pay the bills you know you'll have to pay this month as well as the bills you've budgeted for but aren't due this month. What is left is transferred to a higher interest account.

We have a higher interest ING account and the money that doesn't have to cover bills is transferred to that account. We get better interest in this account and we can also withdraw cash for our monthly cash needs such as groceries. We also withdraw money from here to pay in cash for any of our extras - haircuts, house maintenance etc.

Cash envelopes
When cash is withdrawn from the bank, ours is put into envelopes/jars/ziplock bags under their budget categories - groceries, petrol, garden supplies etc., so I know exactly how much I have to spend in each category. When I go shopping, I take money from these envelopes, do my shopping, and return any change to the envelopes. During the month, I can see the money dwindling and I know exactly how much a I have left to spend. Whatever is left in the envelopes at the end of the money can be added to our savings.

It will take you a few months to have this system rolling along effortlessly but when it does, it works very well. Tthe first thing is to get those lists happening. There is plenty for you to get started on. Remember, be truthful, be kind if you're doing this with your partner and make sure you include everything. This isn't easy but if you work out a budget you can live on, your life will be much easier.  Good luck!

20

Managing your financial life

19 February 2018

February, week 3 in The Simple Home

The Gender Pay Gap
Throughout the developed world, there is a significant difference between what men and women earn. In Australia the gap is currently around 17 per cent. All through their working lives, women usually earn less than men even when doing the same type of work; they move in and out of employment during the years they have babies and often work part-time when they do return to work. As such, a woman’s overall lifetime income is much lower than a man’s. As well as being unfair, this means that women’s superannuation is much lower than their male counterparts, putting them in a precarious situation as they age. I wish I had a solution to this problem. I wish we had politicians who were strong enough to stand up and work towards a solution. I don’t have the answers, but I do have some suggestions. 

The list below is mainly targeted at women who have chosen to be at home to raise children or those who leave the workforce when a baby is born.  It could also cover men who choose the same path.  The main point of this list is to protect people who are working within a relationship for the mutual benefit of the couple and their children, who do not get paid.

75

Last words on the budget

20 May 2008
Hopefully this will be the last post about money for a while. Our budget is an important part of our simple life. It gives us a spending plan and organises us so that we don't overspend in one area at the expense of another. If you haven't written down your expenses yet, it's a very good thing to do. It's a bit scary being confronted with your real expenses but if you're to live an authentic life you need to know exactly what you're spending. I won't lie, it's boring doing it, and it takes a fair bit of time, because you have to go through all your receipts and bills from the previous year so you have a realistic basis on which to build your budget. But in the end you have your money map and that is just as important to you as your garden tools, your sewing machine, your transport and your recipe books.

I resisted making a budget for years, thinking it was a restriction, but it has proved instead to be a means of showing me what we're spending on necessities and how much of our money can be spent on wants - or put into a savings account. The good thing about making a budget is that you choose the categories. If your sewing, knitting, coffee, books are important to you, you have a category for it in your budget. You can then buy what you want when you know the money it there, without dipping into food or rent/mortgage money. Managing your money well will help you live simply.

There were a few comments on the 'vitamins' category in the last post. It's difficult to explain something with one or two words but the vitamins are in fact emu oil capsules and pure oil, Q10 capsules and a multivitamin. Both Hanno and I take emu oil and have done for years. I take it for arthritis in my ankle, Hanno takes it for the general aches and pains of old age and to lower his cholesterol. After he had his stroke, he came off Warfarin after a few weeks because his blood was being thinned by the emu oil. Emu oil is Omega 3, 6 and 9 oil so it does a lot of good for hearts, brains and skin as well and we will keep taking it, even though it's expensive. The Q10 was recommended by Hanno's cardiologist, it's almost $50 a bottle. I've been taking mutivitamins since my children where born. That was back in the day we used to buy fruit and vegetables from the supermarket which I believe have far less vitamins and minerals due to their long time in cold storage. I still take one a day for those times I don't eat properly and I still feel they do me good.

Renee, we have a general list of staple foods that we buy once a month. When we buy fresh fruit and vegetables, we buy what is in season. It's the freshest and the cheapest. We spend $250 a month.

The price of petrol in the UK is incredible! We filled up last week and it was $1.35 (.66 pounds) a litre. The taxes in the Netherlands are a good idea but I would hate to pay them. You seem to have very progressive laws over there. What does your government use that car money for? Is it an environmental tax?

I use an Excel spreadsheet for my budget but you can use any software you have or simply write it on a piece of paper.

I'll be returning to non-money subjects tomorrow and I'll breathe a sigh of relief doing it. ;- )
36

Controlling your money

24 January 2008
There's no doubt about it. Almost everyone has money problems at some time in their life. We all use the stuff, it is a requirement of modern living and for the most part, we don't get much of an education in how to handle it. Usually our lessons are by trial and error and many times we learn a lesson too late to avoid a financial disaster.

Hanno and I made the choice to live on a very meagre budget. We have no debt, an emergency fund, we have money invested and we have shares, but we choose to live frugally. Our total budget for the month is $1370, of which $765 is left in the bank to cover bills and $605 is withdrawn in cash to spend on our needs. The $765 covers car, house and private health insurance, phone, internet, electricity, house and land rates, car registration and maintenance etc.

This is the breakdown of the cash withdrawal - $605:
  • Groceries $290
  • Fuel $120
  • Health $50 (includes vitamins, doctor, pharmacy)
  • General $145 (includes garden supplies, dog and chook food, clothing, pocket money)

The only amounts that are always spent are fuel and pocket money, everything else we usually underspend on. We get $80 a month ($40 each) pocket money. That may be spent on anything we desire, or saved for a double whammy the next month.

The one thing that allows us to be so frugal, apart from our attitude to spending, is our stockpile. Stockpiling allows us to live well on food we usually buy on special and if we are running short on money, we can stop spending on food altogether and live off the stockpile. I was please to see others say they do this in the previous comments.

Let me say here loud and clear: being thrifty is not about being cheap, miserly or being poor. It's more about recognising our own needs and not exceeding them. Now for me, my needs might be that I require to eat healthy food, buy local fresh dairy products, a new car every few years, broadband internet and enough wool and cotton to knit. Your needs, on top of what you need to stay alive, might be organic food, pay TV, a motor bike and good clothes. Or maybe you're more into travel, so a trip overseas every three years, dance class for your daughter, soccer club for your son, 5 magazine subscriptions and 6 books a year. It could be anything within your means. The choice is yours, and you make that choice after you've done up your own budget to find out what money you have left over after you've paid EVERY bill you know you'll receive during the month.

Everyone makes their own choice because we all have difference circumstances, desires and needs. But when you make your choices, you stick with them and you don't add other choices on top. That is when you get yourself into hot water. Unless you're a millionaire, you have to recognise the fact that your money is limited. You have to live within your limits.

This is where personal responsibility comes in. You are aware of the choices you make and accept the consequences of them. I'm sure a lot of us would like to go through life like we did as teenagers - buying whatever we wanted, doing whatever pleased us. If something goes wrong, someone fixes it. There comes a point though that we make a transition to a more mature point, where we think carefully about what we are able to do and what we can't do. We examine our income, write up budget and make our decisions on what we can do within the means we have available to us.

I know there are some of you who will be saying: I deserve a treat every so often. Or, I want to enjoy my life! Maybe you do deserve a treat, but I think you also deserve to live a good and decent life, unburdened by debt. How much of life do you enjoy when you have too much debt? Doesn't the burden of paying off debt dampen a lot of life's joy?

A number of you have allowed me to take you by the hand with advice about other things. I wonder if I can do it with money and budgeting. Do you trust me enough to believe me when I tell you that a budget will help you organise your money? Will you follow my lead on how to manage money? I wonder. This is a tricky one.

I would like to pass on to you three things that will help you:

  • Stop spending.
  • Make a budget and stick to it.
  • Stockpile

But you have to supply the personal responsibility and you have to find the joy of life and not just the pleasure of spending. I know it's much easier for me to write these words than for anyone to act on them. I know it can be done though, because I have done it myself. I used to be a spender and now I'm not, my attitude to spending is completely different now.

I also know I'm at a different stage of life to a lot of you, but that is what I mean about making your own choices. YOU decide what your choices are and as long as those choices are within your means, and you stick to your choices and not keep adding others, then I'm sure you can manage your money well

Tough times are predicted in coming months so some good decisions now may change your life. Are you game enough for this? Can you organise your money instead of it organising you? I wonder who can do it. I'm happy to offer my help if you need help. If you get stuck on your plan or your budget, email me and we'll see what we can sort out together. Good luck everyone.

Niki at rural writings is also writing about money at the moment. Check out her post here.


28

Shopping for food

12 March 2018
March, week 2 in The Simple Home

This week we'll focus on shopping for food and I'm guessing that will mean vastly different things to most of you. Some will be buying everything they eat, some will be producing a small amount - maybe herbs or eggs, some will produce most of their food and many of us will buy raw ingredients so we can home-make some of the products we used to buy.

A popular meal here and very easy to make and freeze - lasagne.

I’ve gone from being an ordinary housewife, using my food budget to provide as much as I can for the money I have, to being someone who looks for fresh food that’s produced locally and ethically. I only want to buy into a food chain that considers kindness and quality of life in close alliance with nutritional values and profit. I always check labels and never buy products from compromised locations such as China and Thailand. I silently sigh every time I pick up a food product that I know is grown in my own country, but it has been imported from somewhere else. We are shooting ourselves in the foot doing that.

57

Budgeting for the first baby

8 November 2012
Both images are by the wonderful Swedish artist Carl Larsson from here.

Today I have an email from a reader who is due to have her first baby in March next year. "Jill and Jack" have been earning good money and have a mortgage but now with the baby on the way, they're finding it difficult to reduce their spending and prepare for the big event. I thought our wonderful Down to Earth community here would be able to give "Jill and Jack" a good idea of what the first baby costs and how to reduce the general weekly expenses while waiting for the baby. This is part of what Jill wrote:

We are very used to earning good money and are now confronted with dropping to only my husband's very good wage of around $100,000 p.a. So I've spent this evening working on our budget ...  We anticipate that the mortgage repayments will drop somewhat as we renegotiate our loans in November I believe.

As it is, I felt we were doing well to only have one old reliable car with Jack riding to work each day... and not spend a lot on clothing or cosmetics... but on doing our budget tonight I'm realising that we've been living over my husband's wage for several years at least. We haven't really tracked what we spend, other than putting a cap on our individual 'sanity allowances'. I know I have spent a lot on organic food and alternative health. We waste food and hope to do more home cooking - I have been eating more intentionally while pregnant.

(They have a good emergency fund but the sanity allowance (pocket money) Jill writes is $200 a week.)

Generally, we aspire to tithe 10% (which we've done consistently) and invest 10% (we haven't done this in the past several years).

Baby plans:
I like the idea of not being forced back to work by money but rather by interest or previous employers 'needing a hand'. We plan to have two kids which I guess might mean that I'll be at home for 5 years. I now have an ABN and can consult from home but don't know if this will pan out or if I'll want to distract myself from the kid(s).
Family have a lot of second hand gear for us and we'll get significant presents from older family eg. prams etc.

Key questions:
- How much should it cost us to live well? Particularly the food budget!
- How much do kids cost? In the first year of life and later?
- Should I be planning to go back to work, or can we easily live within Jack's salary still tithing and saving for our future?

Jill's email was much more comprehensive than the summary given above but it was much too long to include all of it. I don't want to give any advice on the cost of setting up for a baby other than to encourage Jill to accept all the secondhand and pre-loved clothes and equipment that she's offered. 


I do want to address the change of mindset though, Jill. It's a change that will take you from being a young couple who have worked hard and had the good fortune to buy a home and many of the other things you want, to being parents with the responsibility of raising a family. When you think about it, up until now, you two have been the children, buying what you want, going out and enjoying life - as you should. Your baby will change that. Not only in monetary terms but also in the amount of spare  time you'll have. There are many parents earning a lot less than you who have children, so it certainly can be done. I think it's best to consider the kind of parents you wish to be then work out from there. Work out what kind of life you want for your family - money is just the means to get the lifestyle you want. One thing I do know with certainty is that there will be change and sacrifices coming and there is no way around that. Some of them you'll love, some you won't love but they'll just be some of the changes that a baby will bring.

I hope you can address the matter of food wastage. You can do that by sticking to your budget and with menu planning and stockpiling. I believe fresh food is better for you than organic food that has travelled a long distance. Try to find a butcher and fruit and vegetable market and develop a relationship with the owners. There are a lot of growers who aren't certified organic and yet they grow their produce with no insecticides and herbicides, and if they're local, they'll be fresh. You need your food to be full of nutrients and fresh food is more likely to have them. There is a section in your budget for gardening, maybe you could enlarge on that, put in a vegetable garden and grow organically.

It would be great if you did track your money from now on, maybe for a month or two to see what you're both spending. I bet you'll be surprised. You have a lot of guessed items in your budget and you need to know the reality of it. For instance, you're spending $2000 a year on dental on top of your health insurance, and $15,600 a year on food for just the two of you. One of the sacrifices you both make may be that you halve your sanity allowance to $100 a week and put the other $100 towards your mortgage.

And now it's over to our dear readers. If you have any useful information for Jill and Jack, please take the time to comment. I am sure they're not the only parents to be or new parents reading here and there are many experienced parents here with a lot of knowledge.  Good luck!

62

Organising your money

26 February 2018

February, week 4 in The Simple Home

This is the last week of our money month. I hope you've sorted out what needs to be done, organised a budget and thought about where you're headed, financially. Most of the activities we've addressed this month are simple exercises that will put you on track towards a healthier financial future.  The one thing that will make these things make sense and appear to be easy to set up and maintain over a long period of time is changing your attitude towards money. Many of us grow up thinking we deserve good things and that we should keep up with our brothers and sisters and the next door neighbours.  There is sometimes a feeling now that if you don't look like you have as much as everyone else you're not as good, or a failure. That's rubbish. Although we like to think that things are fair and equal, they aren't and I doubt they never will be. So get rid of those negative thoughts if you have them and just focus on what you need and what you have, everything else is irrelevant.

43

A simple life

28 September 2016
I think Hanno and I have been pretty succesful in changing our lives from one of stress, expense and disorder, to a life of relaxed contentment, getting value for money, routines and organisation. It wasn't easy at the start, mainly because I didn't know then what I was looking for, but now it's just how we are. A lot of people ask me about how we settled into this way of life, how we paid off our debt and how we maintain a lifestyle that gives us so much. The hardest thing is changing how you think about success and what you believe you're entitled to. If you continue to believe you should have everything your friends have, if you always reward yourself for doing the hard yards or if you can't get your spending under control, you'll struggle to live simply. On a more general level it's got a bit to do with self-control, moderation, prudence and cutting back where you can. You work to use less of everything - less electricity and water, fewer products, less waste and packaging. I'd also add less travelling and only essential flying, although very few people seem to agree with me on that. For me, it's in my top ten.

Recycle furniture
 If you have the time, grow some of your own food.
If you can't grow a lot of food, grow herbs and fruit. They don't take a lot of time and they'll save you money.

Giving up buying everything you want is difficult because not only do you give it up today, you're giving it up over and over again for years. You're always cutting back and looking for ways to use less. You will get used to that but it's tough when you start. We've lived this way for many years and now cutting back is more about getting value for money instead of buying the cheapest of everything. I look at my budget as a whole instead of individual prices and if I can buy everything I need with my budget, I'm happy. That might mean a bit of juggling some weeks - I might not buy something so I can afford fish or a better cut of meat, or it could mean living off the stockpile for a couple of weeks so we have the food money for something else. We know what we can afford and stick to our budget, but when it's needed, a bit of juggling helps us to always stay within budget while having all we need.  And that is a choice for us.

Here are a few reminders of what we can do to help simplify and live within our means:
  • Spend less than you earn. Not just today and this week, but all the time.
  • Look for value for money instead of penny pinching.
  • Make up a workable and realistic budget and stick to it.
  • Start a food stockpile.
  • If you don't have enough to pay your monthly bills, cut out unnecessary expenses like mobile phone, cable TV, magazines, coffee at the cafe, bottled water and drinks etc.
  • Cook from scratch.
  • Never waste food, eat your leftovers and have a couple of meatless meals every week.
  • Take lunch and a drink to work and school.
  • Recycle, reuse and repair.
  • Monitor your electricity, water and gas use. Learn how to read your meters.
  • Turn off lights and TV when you leave the room. 
  • Turn off stand-by appliances when you're not using them and when you go to bed.
  • Stop buying cleaning products and make your own using soap, bicarb, vinegar, washing soda and borax.
  • If you haven't already done it, think about putting in a vegetable garden. If you've already got one, think about adding fruit and herbs.
  • If you have no space to grow vegetables, buy your fruit, vegetables, eggs and honey at a local market. The prices will probably be cheaper than the supermarket.
  • Check out your local butcher shop. The prices will probably be lower than the supermarkets and the quality of meat better. 
  • Try bulk buying with a friend to see if it works for you.
  • Teach yourself to knit and sew. There are many sites on the internet with very good instructions, tutorials and sometimes, videos. 
  • Make your home the kind of place you want to spend time in. Invite friends around instead of going out for coffee or drinks.
  • Be content with what you have. If you're tempted to buy something you can't afford, think about how you'll worry when you can't pay your bills and how that stress will affect you.
If you've already got a garden, think about adding a few chickens.
Plant fruit trees.
Make do with what you've already got. Repurpose and recycle.

Focusing on budgets, buying and growing food, cooking, baking, cleaning, all contribute to how you feel each day. Setting targets for yourself and reaching those targets gives you a feeling of control and achievement. It may not be how other people live, it may require juggling, but you'll slow down, live how you want to live and regain some balance in your life. At the beginning, not every day will be good but the certainty of your chosen path will keep you going until things improve. Take small steps towards your new life, be proud of each achievement and you'll slowly create a different sort of life. It won't be the same as the way I live, it will be your unique work in progress, a life that you've pieced together knowing what you need to thrive so you can live the way you choose.
32

Cutting the cost of grocery shopping

20 May 2014
I'm guessing that most of us try to live well without spending too much money. Some of us are forced via our circumstances to do it, some make a philosophical decision that they want to live that way. One thing is for sure, if you cut the amount of money you spend, not only on food and groceries but also on the modern trappings of life, you'll be able to pay off your debts sooner and you'll also be helping to reduce green house gasses as well. Bravo!


Living well on a small amount of money is not about the big choices. It's a series of consistent decisions to live on the budget you've defined for yourself. It's about shopping for bargains and making as much at home as you can. If you have the time to make some of the things you now buy, you'll save money, and probably get a better product. If you can reduce your grocery bill, you'll be able to make consistent savings every time you shop. So let's talk about the everyday decisions we all make.


The first decision is about organising your money, and that just means making up a budget. Now if your eye just glazed over and your pulse started to race, it's not as bad as you think. YOU set your own limits, YOU write your budget according to what money you have coming in and what you need. YOU are the main definer of your fate. If you've been pretending that the B word is for everyone else, think again. Budgeting will help you live well, help you pay your bills on time, calculate what you have to spend and generally keep you on your financial track, whatever that is.  Some of us can get away with no budget, but it's so easy to fall back into those modern day spending habits, a budget will keep you focused. And it gets easier the longer you do it.

But let's focus on shopping now. Staples, or the ingredients you need to make up recipes, are the real foundation of your pantry and stockpile. They don't change from month to month - flour, tea, coffee, sugar, butter, honey, dried fruits, oats, rice, spices etc. Work out what you use as staples and keep your supplies topped up when you shop. It's the fresh food such as vegetables, fruit, dairy, meat, fish etc that will change. When you prepare to go shopping, check what's in the fridge that has to be used, make up a menu plan, then work out when you'll shop. If you get supermarket flyers in the post and check out the bargains that way, then you'll wait until you have that week's flyers and make up your menu plan according to what's on special and what you already have in the fridge and garden. Then you'll do your shopping. I think it's a better idea to check the fridge so you don't buy what you already have, then go shopping with a list of the staples you need. I like to see what's in the shops, especially the seasonal foods, and buy what is cheap because it's in season and fresh. But whether you shop after seeing what's available or already have your meals planned before you go shopping, always shop with a list of what staples you need so you don't have to run back to the shops during the week to buy a pound of butter, flour or some onions.

I encourage you to shop for ingredients rather than frozen meals and you'll save money if you don't buy convenience foods such as washed salads, sliced or grated cheese, bottled cooking sauces or packets of prepared spices. By doing the work of washing, grating and making up your own recipes, you'll save a lot of money and develop your skills in the kitchen.

Now that we shop at Aldi, I find it's only the meat specials I'm interested in, and then only the free range meats. If they have nothing I want, I usually end up at the butcher shop because he has better quality meat, it's local and often cheaper than the supermarket meat. I encourage you to check out your local butcher and green grocer and don't just rely on the supermarkets. Another quick tip is to not always rely on meat as your main meal protein. Legumes, grains, fish, eggs, tofu and dairy products are all valuable and reasonably cheap sources of protein.


In most circumstances, but not all, stockpiling will save you money and time. It works for us but doesn't work for my sister, Tricia, because she lives alone and tends to shop for what she needs every couple of days. But if you're part of a small, medium or larger family, or a group of students, stockpiling should work for you and you'll always have food on hand.  There is a post here about stockpiling.



If you have some land, another food strategy that will save money as well as give you the best organic fruit and vegetables, is to grow your own, or some of it. If you do this, you'll also have to learn about when to harvest, how to manage your harvests so you don't waste anything and often that means you'll learn how to preserve in jars and freeze your produce. There are many posts here about that as well. The best way to search my blog is to look in the search facility in my side bar.  Type in the word or phrase: "stockpiling", "menu plan", "soap making" etc and a list of posts should appear.

I just want to remind you that it is rare to make big savings doing this.  It's all about consistent, regular small savings when you do the grocery shopping, but menu planning, shopping for bargains, stockpiling and buying less because you grow it and make it yourself, will all make a difference. So don't think small savings aren't worth it, they add up. When you look back over a year, you'll be surprised just how much you were able to save by sticking to your plan.

Tomorrow we'll talk about, and share, our recipes and thoughts on frugal food. I look forward to reading your comments about today's topic. I'll see you again as we carry on this important discussion tomorrow.

31

Living on one income

7 January 2014
Written January 2010

Getting finances organised and controlled is one of the early actions of most simple lives, even for those who have no need to budget their money. There are many people who strive to live more simply while earning a good living. They need to practise moderation and reduce the stuff they're surrounded by. The challenge for these people is to live to their values and, like those of us who have to budget, get the money organised so we can concentrate on the important task of living.

The last bowl of summer's fresh green beans.

While not everyone gets married or lives with a chosen partner, most of us do and that can be an important part of a strategy that supports and assists living on a budget. It is a common assumption nowadays that it takes two wages to raise a family. But for many families, where it has been decided that one parent should be at home with the children, they have made it work on one income, even with a number of mouths to feed. If you are undecided about whether this would work for you, sit for a moment and work it out.

If you have to pay for child care, transport, work clothes, hair cuts, makeup etc, and your job pays a minimal amount, it will probably save you money not to work. Always do the sums. Don't just assume that any job will be good for your family. Make sure it will actually be worthwhile. If your work related expenses add up to $300 a week and you're making $350 or $400, ask yourself if that is a valuable use of your time and efforts, because there is another way.

Real raspberry jelly.

If the parent earning the smallest wage stays home, it is then their job to run the home like a small business. It is their job to make a budget and stick to it, scan the flyers for grocery bargains, stockpile, learn the skills necessary to make healthy bread and nutritious meals from scratch. On these things alone, the home will function on less money. If you were going to earn fifty or a hundred dollars from that job you were offered, you should be able to save that amount with prudent shopping and cutting back.

Unless you are super organised, your grocery bill will increase when you work. You'll buy different foods because you need the convenience of them. You'll need to streamline your household activities because you won't have as much time to spend on chores and the children. Convenience foods usually make an entrance in those circumstances.

If you're in the position now of trying to decide whether to work, give this a try before you make the decision. Of course, there will be those who tell you that you should work, but you don't have to listen to them. If you're young and have always thought of yourself as a worker then being at home with your children will be just the challenge for you. You will be taking control of your family money and it will be your job to buy everything you need to stay happy and healthy on budget, you will pay the bills, on time, now and every month, you will make important choices every day about what your family consumes and it will be your job to stretch every penny until it hurts.

This is an interesting and significant job. You'll re-skill yourself in the kitchen, you'll learn to sew, mend and knit. Instead of buying new curtains or dishcloths, you'll make them. Gone are the days when you'd clean with spray and wipe chemicals, in your home that cleaning is done in a gentler way. You'll be cutting up old sheets for cleaning rags, sewing on buttons, repairing rips and generally making everything last longer. If you've never taken control of your home before it will be very liberating and exciting. Despite what your friends say, you won't be bored because your days will be filled with a purpose - to make you home comfortable and warm, to teach yourself life skills and to show your children, by example, how real life is.

Homemade soap and natural bristle scrubbing brush.

If you're trying to decide on whether to go back to work, or if you're already working at home but have stalled a bit because you have no role models and are unsure of your first or next step, I'm here to say that being a homemaker is enriching and life enhancing. It can help make your family a strong and tight unit, it can help provide the warmth and security necessary for a growing family and it might be the making of you. It was for me.

This way of life is not just for those who choose to stay at home. If you're newly married or in a relationship with no children and you're both working, try living off one wage and using the other to pay off debt. I know Little Jenny Wren and her family have always lived this way, even when she was working outside the home. I think those of you who read her blog would agree, she has built a beautiful and joy-filled life. This is not just a great budgeting strategy, it is a good way of moving towards the life you want to live.

So if you're at this point of your life, dive in. It will not be easy - you'll work more - but it will be satisfying, enriching and life enhancing work. You'll be stepping away from what is expected of you, but that will give you the unique opportunity to build the life you want, instead of trying to fit into the one size fits all life that is on offer in every shop, on every main street, in every Western country. Don't listen to the naysayers - building a life at home is an active and positive step towards a way of life that gives more than it takes. Dive in.
15

Simple Living Series - Living on one income

18 January 2010
Getting finances organised and controlled is one of the early actions of most simple lives, even for those who have no need to budget their money. There are many people who strive to live more simply while earning a good living.  They need to practise moderation and reduce the stuff they're surrounded by.  The challenge for these people is to live to their values and, like those of us who do budget, get the money organised so we can concentrate on the important task of living.


 The last bowl of summer's  fresh green beans.

While not everyone gets married or lives with a chosen partner, most of us do and that can be an important part of a strategy that supports and assists living on a budget.  It is a common assumption nowadays that it takes two wages to raise a family.  But for many families, where it has been decided that one parent should be at home with the children, they have made it work on one income, even with a number of mouths to feed.  If you are undecided about whether this would work for you, sit for a moment and work it out.

If you have to pay for child care, transport, work clothes, hair cuts, makeup etc, and your job pays a minimal amount, it will probably save you money not to work.  Always do the sums.  Don't just assume that any job will be good for your family.  Make sure it will actually be worthwhile.  If your work related expenses add up to $300 a week and you're making $350 or $400, ask yourself if that is a valuable use of your time and efforts, because there is another way.


Real raspberry jelly.

If the parent earning the smallest wage stays home, it is then their job to run the home like a small business.  It is their job to make a budget and stick to it, scan the flyers for grocery bargains, stockpile, learn the skills necessary to make healthy bread and nutritious meals from scratch.  On these things alone, the home will function on less money.  If you were going to earn fifty or a hundred dollars from that job you were offered, you should be able to save that amount with prudent shopping and cutting back.

Unless you are super organised, your grocery bill will increase when you work.  You'll buy different foods because you need the convenience of them.  You'll need to streamline your household activities because you won't have as much time to spend on chores and the children. Convenience foods usually make an entrance in those circumstances.

If you're in the position now of trying to decide whether to work, give this a try before you make the decision.  Of course, there will be those who tell you that you should work, but you don't have to listen to them.  If you're young and have always thought of yourself as a worker then being at home with your children will be just the challenge for you. You will be taking control of your family money and it will be your job to buy everything you need to stay happy and healthy on budget, you will pay the bills, on time, now and every month, you will make important choices every day about what your family consumes and it will be your job to stretch every penny until it hurts.

This is an interesting and significant job.  You'll re-skill yourself in the kitchen, you'll learn to sew, mend and knit.  Instead of buying new curtains or dishcloths, you'll make them.  Gone are the days when you'd clean with spray and wipe chemicals, in your home that cleaning is done in a gentler way.  You'll be cutting up old sheets for cleaning rags, sewing on buttons, repairing rips and generally making everything last longer.  If you've never taken control of your home before it will be very liberating and exciting.  Despite what your friends say, you won't be bored because your days will be filled with a purpose - to make you home comfortable and warm, to teach yourself life skills and to show your children, by example, how real life is.

Hopmemade soap and natural bristle scrubbing brush.

If you're trying to decide on whether to go back to work, or if you're already working at home but have stalled a bit because you have no role models and are unsure of your first or next step, I'm here to say that being a homemaker is enriching and life enhancing.  It can help make your family a strong and tight unit,  it can help provide the warmth and security necessary for a growing family and it might be the making of you.  It was for me.

This way of life is not just for those who choose to stay at home.  If you're newly married or in a relationship with no children and you're both working, try living off one wage and using the other to pay off debt. I know Little Jenny Wren and her family have always lived this way, even when she was working outside the home.  I think those of you who read her blog would agree, she has built a beautiful and joy-filled life.   This is not just a great budgeting strategy, it is a good way of moving towards the life you want to live.

So if you're at this point of your life, dive in.  It will not be easy - you'll work more - but it will be satisfying, enriching and life enhancing work.  You'll be stepping away from what is expected of you, but that will give you the unique opportunity to build the life you want, instead of trying to fit into the one size fits all life that is on offer in every shop, on every main street, in every Western country.  Don't listen to the naysayers - building a life at home is an active and positive step towards a way of life that gives more than it takes.  Dive in.


41

Moving from two incomes to one

3 August 2007

If you've decided to move from two incomes to one so you can stay at home with your baby, you'll enter a period of review. Now would be an excellent time to overhaul your lifestyle and shift from the modern mainstream life to a more simple way of living. Before you are pregnant, and while you're both still working, make up a new budget. Try to live on one wage and use the other to pay off debt. This might be the first time you've really limited your spending and it will be difficult, but when you feel that it's getting too much for you, think about why you're changing your spending habits and how much you'll benefit from it when the baby arrives.

When you're pregnant, decide exactly when you'll stop working so you have a goal in site. If you have any credit card debt, try to pay it off while you still have those two pays coming in. If you only your mortgage to pay off when you stop work, you'll be in the best situation you can be in. If you stop work while you still have credit car debt, or other high interest debt, it might be wise to consolidate those high interest debts into your home loan.

When you stop work use the short amount of time you have before baby arrives to reassess how you shop and make some adjustments to help you save money. Sit down with your partner and make up another new budget. This will be the budget you'll live with for a few years, so think about it carefully. Both of you need to do it together. If you can save money on your grocery bill, you'll save a considerable amount as it will be ongoing saving. Read as much as you can about stockpiling and if you have the cash, invest about $200 - $300 in starting a stockpile. Buy those things that are on sale that you use frequently like toilet rolls, toothpaste, soap, bread, butter, canned goods, meat, flour, rice, pasta etc. And even if you don't add to the stockpile for a month, you'll save yourself going to the supermarket so much with your newborn.

If you have a second car,
sell it.

Review your expenses - now
is the time to be ruthless with your expenses and cut off all those extra monthly bills:
  • Stop dining out and buying takeaway.
  • Put expensive family holidays on hold for a few years.
  • Stop buying so many gifts. Make up a list of those people you feel you must continue to give to and keep it at that. Start making homemade gifts. You might feel a bit strange at first but most people love receiving something you've made yourself.
  • Stop buying magazines. Join the local library for a never-ending supply of books, magazines and DVDs.
  • Do you really need a mobile phone? If not, get rid of it.
  • Pay TV is a luxury you can say goodbye to until you're in a better financial position.


When baby is born, and if you're Australian, claim all the government benefits you are entitled to. I think the baby bonus is about $4000 now, make sure you claim it, and also look into parenting payments that will be ongoing until your child goes to school. Those readers in countries outside Australia, make sure you know what your government gives you when your baby is born, and after it in the form of family payments.

Remember that you'll only have real success with your new simplified life if you change your attitude to spending. You can't expect to live the way you used to, there are many things you'll give up. But I can assure you that after the initial shock of not having the things that used to take up your spare time and make things easier for you, you'll settle in to a new kind of living that doesn't rely on those things. And once you're used to your new life, I know you'll love it.

If you go back into the archives here, I've written about budgeting, emergency funds and change jars. They'll all help you save for your new lives. Don't be afraid of budgeting - it is the one thing that will organise your thinking about money as well as the money itself. And despite what a lot of people think, a budget frees up your money instead of taking it away. H and I have a tight budget, we do this voluntarily, and even though we live on the very small amount of $355 a week, we still save $150 a month, we still have holidays and we still have private health insurance. It can be done.

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Losing a job - the transition from two wages to one

21 September 2009
Hanno asked me to thank you all for the lovely birthday wishes sent his way on the weekend. He is 69 now, the last year of his boyhood. Next year he'll have to start acting more sensibly. ; - 0 We drove down to the beach to have lunch with our friend Diane and god-daughter Casey. For those of you who remember Casey's accident (she was in a bus hit by a drunk driver two years ago), she is still in a wheelchair and has not been able to work since. But it's always good to see them, they are two of our most favourite people, and we talked and laughed for hours over lunch and drinks. Hanno is a member of this club and they had sent him a letter wishing him a happy birthday, offering a complimentary lunch and drink; of course we took up the offer. It was definitely a good way to spend a weekend birthday.


The Christmas knitting has been stepped up a notch. This is a pure cotton and bamboo (the aqua bit) dishcloth.

I received an email last week from a young lady here who is very upset about the prospect of losing her job. She wanted to know what I thought her best course of action would be and asked me to help her and her husband through this difficult time. I sent her a reply telling her my thoughts but said I would also post about it today and see if all of us could workshop this problem for her. Together we should cover all angles.

This girl is 29 years old, married for two years, pregnant and due to have their first baby in February next year. The pregnancy was planned, what they didn't plan on was that she would lose her job before she had a chance to resign. Her job finishes mid-October and she will get a payout of about $4000. Her husband has a good job that is stable, which is good news, but they have nothing for the baby yet and they don't have a stockpile.

I suggested that from now on, even though she is still being paid, they live on his wage. They might as well get used to it now and be ready when they only have one stream of money coming in. Her wage should go in the bank until they work out a plan of action. I think the priority is to sit down and make up a new budget - a realistic one that covers two adults and a baby. They only have five months until the baby arrives and during that time they'll be equipping the nursery, buying and making clothes, blankets etc. When they sit down to do the budget, they'll have to work out what they can get rid of. They have two cars, three phones - one landline and two mobiles, pay TV, no stockpile, no emergency fund, no health insurance and nothing ready for the baby.


The beginnings of some muesli bars made on the weekend.

It sounds pretty grim but the husband gets a good wage that I feel should be enough to get them by and pay the mortgage as long as they sacrifice a few things and live frugally. She said they are committed to living a green and simple life but have just made that decision; she found us and this blog two weeks ago. If they are that way inclined anyway, I think they should be okay with this.

My suggestion to her was to get rid of everything that isn't necessary to their present circumstances. They bought the second car for her to get to work. They'll be able to sell that when she finishes work, they think it's worth about $7000. I think that money should be put away for their emergency fund. They should get rid of one or two mobile phones. I know young people are really connected their phones, but are they really necessary? When their contracts are up, at least the most expensive one should go, I would like to see both go. Pay TV - out! There is enough drivel on regular TV to waste time on, no need to pay for more. I know this sounds harsh but they need to conserve money at this important period of their lives. In a few years, when things stabilise and they're more settled, they can get it back if they want to.

I would suggest the $4000 she gets as her payout should go to pay extra off the mortgage and everything they sell should go towards extra payments too. Getting rid of the mobile phones, TV and extra car will save a lot of money, probably the equivalent of her wage. So hopefully, if they budget well, and live frugally, they should get by quite well on what he earns.

When her paid job finishes, she should consider her job to be manager of the household funds, being able to feed the family healthy food on a weekly budget, searching the op shops and thrift stores for baby clothes, rugs, a pram and cot and paying all the bills on time. She will become a homemaker, with everything that implies. It will be her job to work to her budget, fluff up her nest and make a wonderful home, and I hope she finds satisfaction and contentment doing it. A first baby is such a special time for a family, this should not take away from such a special event. I see it as a challenge. She can use the time between mid-October and February to organise the home, to learn how to sew and knit, to start using green cleaners, to build a stockpile. Maybe she could also make cloth nappies/diapers. Does anyone have a good site with patterns and instructions? I wouldn't start a vegetable garden, not yet. But that could happen in the years to come. But now there are plenty of things to occupy her each day - learning how to cook from scratch, working out how to shop in a different way to get the best value for her money and getting ready for the arrival of her baby.

What started out as a catastrophe could be the catalyst for this young family to change how they live. They can build a good life, but it will be a frugal and simple one, one that is more environmentally sound and dare I say it, one that is more enriching. This will be an equal partnership in every sense of the word - one partner working for a wage, the other managing that money and the home for the benefit of all, while they build their family and future together. Sure, it would be a shock to hear you'll lose your job but once over that, with a few safeguards and budget strategies in place, I think this family will cope well. What do you think? What advice can you give this young couple?


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