I’m in debt.
Until I started sorting my life out, I had bills coming out of my ears and no idea how I was going to handle them all. What with the maxed out credit cards, store cards, bank loan and catalogue payments and a drastically reduced income, I found myself struggling to keep my head above what felt like very stormy water. I had to tighten the belt, of that there was no doubt.
I knew I’d let my lifestyle get out of hand and by simplifying things I was sure I could get a better grip on my finances. When it came to spending, my main priorities had to be to get rid of the debt and to get my kitchen remodelled and decorated (the latter's a practical need... my kitchen really isn't functional enough for me).
Things I’m finding are really helping me save money are:
1. Keeping track of spending. Knowing exactly what’s going where can be quite an eye opener. Since tracking my spending I’ve cut my grocery shopping bill by almost half (and, as a consequence, am no longer wasting anywhere near as much food), haven’t spent anywhere even close to what I usually would on clothes, cosmetics, hair products, and the likes, and have learned to really think about where my money’s going.
2. Using cash. Each week I take out a fixed amount and that’s what I have as purse money for the week. Bills, groceries and other important stuff are paid out of my current account, but the cash has to pay for personal items, craft supplies, and any small bits and bobs that might be picked up in charity shops, at Wilkos and the likes. Using cash instead of a card feels more like real spending and gives you a better idea of how quickly your money’s disappearing (or not).
3. Using the envelope system. My mum always did this and even though she was on a very tight budget, she never fell behind with anything. When she suggested I did the same, I decided to give it a go. You simply designate each envelope to a specific area (i.e. groceries, fuel, clothes & personal items etc) and spend from each. When it’s empty, it’s gone. That’s that. If there’s anything left at the end of the month then half is carried over to the next month and half is put into my savings jar.
Instead of using real envelopes I leave my money in the bank and use a spreadsheet where each page is an 'envelope'. Money is designated to each and I view each in the same as I would an envelope. I do it this way because I find it both easier and safer to leave the money in the bank rather than have cash at home. Money that's left over is transferred into my savings accounts - my virtual jar - and marked for either the emergency or kitchen fund.
4. Piggy Bank Saving. I have two piggy banks, one for the kitchen fund and one for holidays, Christmas, etc. Every time I've been to the shops (or anywhere else where I've used cash), I put my silver change into the pigs. If I feel I can afford it, I'll pop a pound coin or two in too. When they're full, they're changed up and the money's banked and designated to its "envelope". It's surprising how quickly the money mounts up - I've already saved over £70 in just a few months - and you really don't miss those few coins.
5. Staying home. When you’re out and about it’s easy to spend money. Special offers are everywhere, lunch is often bought out, you buy yourself a drink and if you’re driving you’re also using fuel. Apart from online shopping, there’s little to spend money on at home.
6. Getting the best utility deals. There are so many companies vying for your business these days, you'll probably find one that's cheaper than your current supplier. The same goes for car/home/pet insurance etc. I switched my home contents insurance and went from paying over £15 a month to £9.60 and the deal I have now is better than the original one! Six pounds a month may not sound a lot but that's £72 a year and when that's combined with all other savings, it can mount up to quite a bit. Uswitch.com and moneysupermarket.com can help with most of this.
If you make a lot of calls to mobile phones or abroad, it's also worth signing up with a company like 18185.com. I use them and pay just 6p per minute to call mobiles during the week and 3p at weekends. I can also call my daughter in Norway for just 5p per minute. Believe me, my phone bill has been cut dramatically since signing up!
7. Saving a little each week. Few of us will notice the difference if we transfer £10 a week into our savings account every week but those £520 that accumulate can make a big difference. I certainly don't notice it and I'm on a low income. It's important not to keep dipping into your savings though or you'll never build up a decent emergency fund.
8. Snowballing debts. If, like me, you have several credit cards, store cards etc that need to be paid off, concentrate on one first. Make the minimum payment on the others but throw more (as much as you can afford) at one of them, either the one with the highest interest or the smallest one. My smallest also happens to be the one with highest interest so it was easy to make the choice.
Once you’re clear of these debts, you’ll save huge amounts in interest and will be able to put that money into your savings instead. Unless you pay off your card spends immediately, credit is, without doubt, the most expensive way of spending money.
9. Making food from scratch. Home-made food made from raw ingredients will always be cheaper, not to mention healthier than ready-made meals and the likes. Because of my health, I can’t always make a meal (neither do I need to) but whenever I can, I use raw ingredients as much as possible. I bake my own bread using a bread-maker (well I did, before it conked out, but I'm on the look out for a replacement), and bake my own scones, cakes and the likes. Not always, admittedly, but when I can.
10. Buying Second-Hand. Just because something's been used before doesn't mean it can't be used again. When I was a kid, hand-me-downs were perfectly acceptable but these days it seems that even those who are struggling to pay their debts etc are only happy with new stuff, and often the best of the new stuff, too.
I've picked up loads of things from charity shops, boot markets, eBay and Freecycle - in fact, at least half of what's in my home must have come from those places. By keeping my spending as low as possible I'm able to buy things that I like (no, I don't just buy any old trash because it's second-hand) and still manage my debts. What's more, some of the stuff I've picked up in charity shops and the likes has been brand new! I even got a cooker through Freecycle. It works, it's clean, and it was FREE. Excellent!
11. Giving frugal gifts. Some things are really easy to make yourself, like bath salts and foot soak (see Donna’s recipe here). If you can sew or knit or do other crafts, all the better. If making things isn’t your ‘thing’, how about giving a gift card offering the recipient dinner at your house, or maybe an evening of baby sitting. There are lots of possibilities. I once gave a friend a weekend’s use of the caravan we had and she was thrilled to bits! A cutting from one of your garden or house plants is also a nice gift to give. I've already set up a list of gifts I need to give this year so that I can prepare them in advance, that way there will be no (hopefully) last minute frantic gift shopping.
12. Finding happiness elsewhere. It’s a fact that people - women especially - use shopping as a way to cheer themselves up so by learning to find pleasure in what you already have (and that doesn’t necessarily mean what you own, but what’s in your surroundings), you’re less likely to spend money. I know that when I'm happily sewing or watching the birds in the garden, the last thing on my mind is whether or not to buy a new pair of shoes or an x-box. Men tend to buy to impress. If Joe's got a nice car, Jim'll want a better one, even if he has to get it on credit (which Joe probably did, too).
All of these methods have worked for me in the past and they certainly seem to be working again so there’s no reason why they shouldn’t work for you too.
Time and time again I hear people say “I really must tighten the belt” then do nothing to change their spending habits. I’ve been guilty of it too. But until you actually make some changes, nothing’s actually going to change is it? Frugality is as much a state of mind as anything else.
Cannot people realize how large an income is thrift? ~