Monday, 5 July 2010

A bid for freedom

Last month we managed to pay off over £500 off debt. This included a couple of hundred pounds to close a credit card, a regular loan payment and dribs and drabs to various other accounts. To get to the stage where we could pay off so much in one month and not be totally deprived is wonderful.

A few years ago, before the credit crunch, we were bobbing along paying off just the minimum payments and going into our overdrafts every month. Around 2006, I remember seeing the front page of The Economist magazine. I knew nothing of finance and economics back then, but I remember the title splashed across a row of foreclosed cartoon McMansions was something along the lines of 'Time's up for the American housing bubble'. I remember it gave me an uneasy feeling, not least because we as a nation tend to follow where the US leads on just about everything, bonkers financial models included.

At around the same time I came across the concept of peak oil, in National Geographic of all places. The more I read, the more I realised that we were heading into a period of huge financial instability. I began to take debts more seriously; but whilst a step in the right direction, our efforts were half hearted.  Falling pregnant with Gus, whilst a shock, was actually our saving grace. We ploughed our efforts into paying off debts, moving them around to zero interest deals and paying a small amount into savings each month. We are aiming to have cleared the remaining credit card and overdraft by the end of 2010, and perhaps pay off the loan early if it is cost effective to do so.

To get to this point, our mindset has had to drastically change:

  • I think the most valuable thing that we have done is to write a realistic budget. We have been doing this seriously since february and it is in this period that we have paid off the most debt, which can't be coincidental.
  • We pay extra debt repayments at the beginning of the month, before we have a chance to fritter away the money.
  •  We generally withdraw cash to pay for everyday things instead of using a card. This makes it easier to shop in our local grocers and we do spend smaller amounts at a time. I still have the bizarre idea that it isn't fair on the shop to spend less than a fiver on my card, which as the big chains don't charge for small amounts, is absolute madness on my part.
  • We do an online shop every 2-3 months for our bulk goods. I started doing this in the run up to giving birth, we stocked up on dry goods and 200 tins of cat food (I kid not) so that we didn't have to do much shopping in those first few months with a new baby. It worked out brilliantly. I hate supermarkets, I hate spending money on petrol to travel to supermarkets and I like having everything on hand that I need to prepare a meal and get me through a few lean weeks if need be (and  look at the panic buying that ensured following the snow last winter). I also don't impulse buy when I shop online.
  • We now buy the best quality we can afford, or we buy second hand, we freecycle and most importantly...
  • ...we ask ourselves whether we need the thing in the first place. Less stuff = less stuff to maintain and less clutter.
  • We eat very little meat and lots of pulses and eggs and things. Vegetarian is definitely cheaper.  I have also started to work out what constitutes a healthy portion of something so that we waste less and still get everything we need from our food. 
Scones I made for Father's day

    • We cook a lot from scratch.
    • We save our pennies, literally, in a glass flagon on the mantelpiece. As a result of usually withdrawing cash to pay for things, there is always change left over; and it is amazing how quickly it tots ups. In the aftermath of the bank run on Northern Rock I think it is a good idea to always have some cash in the house.
    • I read forums, such as the Old Style Money Saving board over at MSE, which are invaluable for support and ideas. Blogs such as Down To Earth and Tipnut are full of good ideas too. Having a few flesh and bone friends around you who are interested in a more frugal and sustainable way of life is a bonus if you can find them (or convert them!).
    There are many things we can improve on and we still have a way to go. So my money saving goals to the end of 2010 are:
    • I will take a packed lunch into work. This brilliant tool has told me that not only would I save about £450 pounds a year, but that that £450 represents 1.5 weeks of my working life.  I will also make sure I have sweet treats and baked goods around the house so that we do not go out and impulse buy.
    • I will start making my own laundry powder again. I used to do it to wash Gus's nappies and saved a pretty penny, then just got out of the habit. I am actually pretty good on the green cleaning front though. Admittedly it only saves a few pounds a year, but that is better than nothing and I find it fun in a geeky way.
    • I will work through the craft stash that I have before I buy any more. I will also start creatively recycling as much as I can so that I have craft materials to work with. 
    Salvaging seed beads from my favourite, but unfortunately worn out, bag.
    • I will look carefully at our energy usage and try to cut back. I particularly want to make sure that we use less heating in winter, which means a bit of DIY and sewing over the next few months.
    I have many things that I want to achieve and these money saving ones overlap with many of my other goals. But ultimately, having no debts means that we are in effect, free human beings - which is a good place to begin a new life from.

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