Sunday, 25 October 2015
How we cut costs!
In my life so far I have been both very good with money and very bad with money. I have learnt lots of things from the times I literally have only coins in my wallet and even less in my bank account! My mum has always been good with money and has taught us kids various things over the years - some we take on board more than others! When my husband and I met, we both had debts (not huge - but still enough to not be able to get ahead each pay day), and now we are in a good place with our money. We are able to fairly well afford what we want now and we save for the rest. Here are a few tips that work for us:
We don't own any credit cards, or have any overdrafts on our accounts
However when we met, we did! And they were just too tempting. The day we got rid of them the debt and decided to never use these again, was the day we finally were able to get ahead. I understand that some people are good at only using credit cards in emergency situations, but I certainly can't, so it's safer for me not to have them at all!
We save up for things that we want
We spent a year saving for the deposit for our first house. This was important to us to do, and obviously it was important to the bank. I am not able to save without help, so I used a Christmas Club account (which most banks have, and which you can usually only access between November and January each year) and it was excellent because once I had committed to putting the money in there, I couldn't get it back out!
I also save each year for rego for the car, as $1000 is a lot to lose in one hit, and a car is a necessity. Saving for Christmas is another great idea, and I plan to start doing this next year. By putting away $40 a fortnight into my Christmas Club account, I will have $2080 by the end of the year, more than enough for Christmas and rego.
If we do use a line of credit, we are very careful to pay it off well before the interest-free period is over
A couple of years ago, our dishwasher died, and I wasn't too keen to wash up (I know, sounds a bit spoilt lol!), and while we did have the money to buy a new one, when we found the one we wanted, they were offering 24 months interest free. Now this does not mean you have 24 months before you have to start paying, it means they won't charge you exorbitant fees within that 24 months, except for a monthly 'account-keeping fee.' I did the sums and found I could pay the item off within 9 months comfortably, and this suited us well at the time. I also paid off my Thermomix in about 8 months (I used the 12 months interest free option). However, if you don't need the item straight away, steer clear of these 'deals' and save for it. It's dangerous to see a line of credit as a ticket to fill your house with new, nice things.
We buy second hand where we can
All our furniture is second hand, but in good condition. It was inexpensive, and often when we resell it to upgrade, we make money on these items (or barely lose any). While I would love a nice new lounge suite, I know ours will see us through for awhile, and are much better with kids (they are brown - hides the stains!) Buy, swap and sell sites on Facebook are brilliant for finding what you need at a reduced price. Our whitegoods are not secondhand, as often unless you are buying from a friend, you don't really know the condition it's in, often the warranty has expired, and they cost more than they are worth to fix.
Unless I need to, I try not to keep too much cash in my wallet
Cash in my wallet is like a free ticket to spend in my eyes... so I try to avoid it! Obviously I often need cash where I can't use a card, but I try to plan ahead, and get cash out only for specific purposes.
We pay bills and expenses first, as soon as our pay goes into our account (or we use direct-debit)
We have set up most of our bills now (electricity, rates, mortgage etc) to come out of our accounts as a direct-debit, and we always pay more than the minimum to get ahead, especially our mortgage, where we pay as much as we can. If a bill is not automatically direct-debited, I pay it first out of my pay.
We shop around for the best deal
Don't always just use the companies you have always used. When renewal time comes up each year (and your premium inevitably goes up), e.g. with house insurance, call the company you are with and ask whether they can do a better deal. If they can't, use the comparison sites (e.g compare the market - search through google) to find the best deal. Often too, if you have a few policies through the one company, you can get a multi-policy discount. It definitely pays to do your research!
We meal plan and buy items on special
Meal planning saves massive amounts of time and money at the supermarket, and I find I don't waste a lot of food either. See my previous post here on meal planning. I always stock up on items that are 50% off or greater of non-perishables and cleaning/hygiene products, so that when I need something, I usually I have a stash in my laundry cupboards, and then I don't have to pay full price. We also don't eat out very often, and I usually pack snacks to avoid having to grab something expensive on the go. I have a fairly strict grocery budget of about $120 per week, and I try to stick to that as much as I can. Lots of meals can be made larger very cheaply (e.g. by adding veggies to a bolognaise sauce) and can be frozen and used for two-three meals. I also make sure I use what is in fridge and freezer, to avoid wastage and spending more.
We use a budget
Though we aren't too strict with our budget, we know what we must pay first out of our pay-check and then what we have left over for entertainment, eating out, clothes shopping etc. It is interesting to actually sit down and see what money you have coming in, and what you have going out, and where you can cut costs.
We sell items to make a small amount of money
Using buy, swap and sell sites, we sell any unused item or things we no longer need, and this is a great way to make a little bit of extra money, and to also declutter your house. Just be careful not to always spend all that cash on unnecessary items - bank it if you sell a lot of items or expensive things.
Hopefully some of these tips will work for you too! I'd love to hear what works for everyone else!