Click HERE for Part 2
I want to start this post by saying that the cupcakes that I blogged about making yesterday were a massive success! Although it did take me two full hours and a lot of energy! I know it is not polite to give kudos to your own cooking, but the cupcakes were unreal!! All credit goes to The Alchemist who kindly confirmed today that it was OK for me to display her recipe.
After reading Nelson’s recent post about plagiarism over at Financial Uproar which is targeted at another PF blogger (I won’t name and shame) it prompted me to send an email of to check with the recipe’s author that it was OK. I think she appreciated it and hopefully some other readers will follow the links to her site to read about some of her other master pieces!! It is a good reminder to any writer or freelancer that content should be unique and that re-writing others work is just not acceptable. It does make it challenging to think up original ways to talk about what is essentially the same subject – Personal Finance! I am going to try and make my posts even more personal in an attempt to engage readers better. While my ideas are definitely not entirely original, I promise you that they are semi-so!
Why Should I Cut Back on Basic Spending?
It’s all very well mastering the act of reducing impulse buying and unnecessary purchases (clothes, electronics, music, etc.) but we all need to address our base spending. What better way to make myself accountable than to disclose some of my own monthly outgoings and discuss what I could do to reduce them!
|Car Insurance (2 Cars)||£80.00|
|Mobile 2 (with iPad)||£50.00|
Reducing Individual Monthly Outgoings
I’ll start from the top and explain each item individually:
- Mortgage – This is a fixed cost for 3 years – 2 years remaining. We currently have an interest rate of 4.19% and fully intend to make over-payments over the next couple of years. Upon the fixed rate ending, we will qualify for the SVR which is pretty uncompetitive. Our plan is to remortgage (this time with more equity and hopefully with the house increasing in value) into another fixed term agreement.
- Council Tax – Again, this is a fixed cost. We could move to a different county or neighborhood, but the rates are relatively standard. Unfortunately it has transpired that about half of UK councils are planning to ignore the tax freeze and increase rates this year.
- Car Insurance – I spent a LONG time comparing prices for the best deal. We have a dual car policy (which saves 10%) and the relatively high costs here reflect that a) London is expensive and b) Mrs Scot had a car accident about a year ago. Our policy came up for renewal recently and I managed to negotiate a further 10% discount just by asking for it. (OK it took more persuading than that.. but I LOVE negotiation).
- House Insurance – This is an area that I realise we can reduce spending on. We are in a 12 month agreement which concludes at the end of March. After reading Jeremy’s post over at Modest Money I am going to check out the possibility of combining car and home insurance for further discounts! That said, I will be sure to exploit every search engine for home insurance quotes to make sure that I bag the best deal!
- Mobile Phones – I recently blogged about my mobile phone dilemma – essentially as to whether we should upgrade to the iPhone 5 (from 4S) or convert to a sim-only monthly contract. As voted by the readers, the Sim-Only approach won and we reduced our monthly bill by around £60! The iPad contract finishes in December which will save an additional £30 per month.
- Contact Lenses – We are most definitely getting the best deal on these and they are unfortunately expensive. Mrs Scot switches between glasses and contacts and doesn’t use the daily disposables. I see this as a fixed cost for now.
- Gym – This is where the current dilemma lies. While we are planning to go tonight, I’m not sure that a couple of times per week justifies this cost. I have a free gym at work that I use almost daily, but the hotel-leisure gym next to our home is definitely a luxury. We both love that it has a pool and will use it when it gets warmer etc. but there is a new 24/7 gym that has opened near by which costs £35 per month. That is a saving of £60 per month, which is pretty hard to ignore. What do you think guys?
- Electricity / Gas – Considering British Gas just announced controversial record profits we definitely pay too much for energy! That said, we are slowly working on lots of energy saving approaches to cut energy usage – especially following SS energy saving tips for appliances! We will continue to pay a monthly subscription to our account which should cover the increased winter usage.
- Sky – TV/Broadband/Phone Line – This is a pretty fixed cost. We have the entertainment package which we definitely make use of and a high-speed broadband connection. This is another well negotiated price which I see as a relatively flat cost. We both enjoy the high-speed broadband for downloading and streaming and enjoy recording programs to fit our hectic schedules. Sure, we could cut some costs here – but we don’t want to!
- TV License – This is another fixed cost that we are legally obliged to pay. We pay monthly to avoid bulk payments as there is no interest charged.
- Fuel – Unfortunately we both have long commutes and regularly visit family. We will endeavor to drive even more economically! For now, this cost is relatively fixed until our situation changes. I do my best to make plans that don’t involve extensive driving at the weekends anyway!
- Loans – These loans are for vehicle repayments. We have a fixed rate deal on both of these and will pay them off within a few years. The rates are very competitive and again, these are fixed costs for now.
- Food – We both love food, but this is an area we are constantly trying to squeeze. We do all that we can to save money on food – including all the tactics of bulk-buying where it makes sense, cooking in bulk and freezing, using ‘reduced sections’ in supermarkets, planning our meals around upcoming offers at the supermarket etc. We bought a LOT of meat (including 8 kg of chicken) recently so will only be buying vegetables for the next few weeks. This budget also includes our money to go out for meals… we have a dirty little secret – we both love to eat a kebab once a week or so. 😀
I always like to work out the monthly savings that can be made and then calculate an annual saving. While this figure is impressive, more hard-hitting is to calculate the pre-tax value of that saving – i.e. the pay rise equivalent that you have just given yourself. Saving £60 a month on the gym is £720 in a year, but if you consider a 40% rate of income tax – that is equivalent to £1200 extra on your salary!!
Next time you think that it is only a tenner a week – consider that this equates to almost £1000 pre-tax salary! It certainly makes you take contents insurance quotes more seriously! I always think in a pre-tax mindset these days and I make some very different decisions that I used to.
What is your top saving tip for monthly expenses? How much did you save?
Click HERE for Part 2