Heyhey's journal

[heyhey]

I am interested by this and have often stopped by to lurk, but I do not have a predictable income so budgeting is difficult and has to be done in retrospect, if it is to be accurate.

I live in UK and have two types of income: a regular £400 per month earned, and an amount from self employment which may be more or less. Sometimes my income from self employment is negative, i.e. I make a loss, because business expenses must be met even if no money comes in. Other times I might make £1000 or more.

I have a small home with a small mortgage. I have a car - it is old, and if it becomes too expensive to maintain, I would not buy another. I do not really need the car, so I am wasting money on maintenance, but I have trouble with the idea of scrapping it before it becomes nonviable, because it seems wasteful and wrong. Nobody else would buy it, it is too old.

My overheads are:
Mortgage £105 per month
Council tax £105 per month
Electricity £52 per month
Water £17 per month
Phone/internet £45 per month
Home insurance £19 per month
Car insurance £20 per month
Car breakdown service £7 per month
Car tax £12 per month
Car MOT, service and repairs £40 per month
= £422 per month

So this adds up to more than my earned income, with nothing for food, home maintenance, or anything else.
Until now I have usually been earning enough extra for these things from my self-employ, but it is unpredictable.
I have approx £3000 savings.

I need the phone and internet for my work.

It is surprising to write this out and see that the car costs so much - without even putting any fuel in the tank.
If I did not have the car, I would have £76 per month which I could put towards food.
But...I am currently spending a LOT more than this on food.
I have a vegetable box costing £60 per month, plus I allow £30 per week, so about £185 per month total.

I have no budget for toiletries, entertainment (I live alone so it is important to go out and meet friends), health costs, home maintenance/cleaning/decorating, etc. I buy these things regardless of how much is in the bank.

The main thing I am telling myself now is that I have two options: cut expenses or increase income.

The emphasis here seems to be on cutting expenses, but I need to do both or I won't have enough to live on. Even without the car, I don't think I could live on £400 a month. I need money for dental work, glasses etc as well as food and maintaining the house. And gifts. It is important to me to be able to give birthday and Christmas gifts.

Other than the overheads, I will track spending in October and report here.

Target = £175,000
Net worth 31/9/15 = £6,058
ETA: forgot to include invested income! Plus approx £18,000 of that. Total NW approx £24,000

[thrifty++]

wow that is a low mortgage cost. Whats your secret? Im guessing you don't live in London.

[heyhey]

wow that is a low mortgage cost. Whats your secret? Im guessing you don't live in London.

Not London, no, but also I have lived in the same place a long time and it is almost paid off

[Egg]

Is the self employment in the early days? Your expenses are pretty low, so to make your situation less precarious you need to increase income imo.

I personally would just smash some form of traditional employment to build up a safety buffer of money before striking out on a venture like yours which sometimes leeches your resources and at best earns you 1000. A consistent income of 1400/m is entirely possible for a hard worker even on the UK minimum wage...

[heyhey]

Thanks Egg. I am giving myself a year with the self employment because it is something I very much want to do, but yes if it is not working in that time, I will go back to a full-time job.

[henrik]

It seems like you should seriously consider giving up the car. You say you don't need it, yet it takes away a fifth of your regular income before any driving gets done.

[heyhey]

Thanks Henrik. I am considering it seriously ... I think I will keep it until March, because the annual expenses are paid until then. I divided them into monthly amounts for the budget, but they are all paid annually, in fact. But I will let it go earlier if it needs any repairs before then.

[heyhey]

I found the car does have a resale value. But I told my mother I was thinking of selling it, and she doesn't want me to. She lives about a 45 minute drive away and she is getting old. There's a bus service but it's not frequent. I think she likes the idea that I could go over quickly in an emergency. So she offered to pay the annual costs - insurance, even repairs. It makes me feel a little trapped but I guess I will keep it. It helps if I think of it as if I have given it to her. So it's her car now, it just lives at my place

On the question of property. I read in the 30 day steps that you don't count the home you live in as an asset. But due to variation in regional property prices, I could sell the home I live in and buy something in another part of the country that was half the price. When I have the rest of the money saved, I plan to do this. Meanwhile I consider that money is invested in my current house. So I feel I am more than half way to my target, even though by the standard calculation I have very little saved. Should I include it in my net worth? Or reduce my target by that amount?

Of course my mother will not want me moving to another part of the country either, but it will be a few years so I will deal with that at the time...

[heyhey]

Freecycle and decluttering today. I've listed 3 things on eBay, joined Freecycle yesterday, and after a couple of Freecycle listings I have someone coming tomorrow to equip her kitchen with plates, bowls, glasses and mugs that I never use. It is wonderful to have all the space. It seems to clear space in the mind, too.

Next up is books. That is tough for me. I love books so much, I have 3 copies of some of my favourite books, in different editions I am setting a goal of listing 5 per day on Amazon - or taking to the charity shop if they're not worth selling. At first it will be easy to pick 5 I don't want to keep, and later I will have developed my "decluttering muscle" so maybe it will never seem hard

[heyhey]

Not so happy with Freecycle now. Me and my clutter are just sitting around waiting for people who don't come when they say they will. Maybe Freecycle is past its best? It is tempting to take everything to a charity shop...

A couple of people have shown up, however, and one person exclaimed over how beautiful something was, which was lovely

On the plus side, I have looked at my food spending and prices, and I can save loads by switching to supermarket's 'value' ranges or just going for things that are cheaper in one supermarket than another. I've seen a lot of references to Aldi and Lidl from other Brits on this forum. I have Tesco and Sainsbury in walking distance, but Aldi and Lidl require the car or a complicated and expensive bus ride. Might be worth a trip from time to time? (I don't cycle - I gave up a few years ago after some scary near-misses in traffic.)

[vexed87]

I have had better luck with Gumtree (also in the UK!) Believe it or not I've had more people turn up when I'm asking for money than offering things for free. I guess for some strange reason people are less likely to pick up free stuff because it is perceived to have less value.

You should consider bulk buying your common used food stuffs, take the time to seek our a local ethnic store. I have saved a small fortune on things like 10kg sacks of potatoes, dutch onions, dried beans etc. Bulk buying meats on sale at costco and freezing has also been worthwhile.

[heyhey]

Thanks, I will try Gumtree next time

I'll check out the ethnic stores too. I always forget about them, but I know they are especially good for beans and lentils.

[heyhey]

Today I went to the bank to pay in a cheque I received in US dollars (foreign currency for me), because I wasn't sure what to do with it. The teller said "fine, just give me your card and I can pay that in for you." So I put my debit card in the hatch thing they use to pass things under the security screen. When she was taking the card out on her side, somehow it fell through a tiny gap between the hatch and her desk, and was completely lost in the unfathomable innards of the partition.

The teller freaked out. She called someone to help look for it, in vain. She apologized at least 10 times. She reported the card lost and arranged for a replacement to be sent to me. She paid in the cheque, in a rather flustered way, then she apologized again. I kept saying, "it's OK, it's no problem." At the end she said, "you are amazingly patient and kind."

Not really. It's just that it really wasn't a problem. I can live without a bank card for a few days. I can manage with the little bit of cash I had, until the new card arrives. If I want something that costs more, I'll wait. This must be quite unusual

[heyhey]

My inc/exp for October:

Income: £1049
Fixed work gig: £400
Variable self employment(1): £597
Misc (mostly eBay sales): £52

Expenditure: £1043
Housing: £231
Utilities(2): 0
Food: £96
Household(3): £180
Insurance(4): £260
Health/personal care(5): £140
Transport: £31
Going out, books, hobbies: £81
Clothes: 0
Gifts: £25

Surplus/savings: £6

Net worth: £24,341
Liquid: £6,443
Investments: £17,898
plus equity in my house.

Target: £175,000

(1) I deduct business expenses before counting the income here, or this would get way too complicated. But in the spirit of reducing expenses, I've identified an easy way to cut my business expenses by about £60 per month, where I am paying for more of a service than I need.
(2) Electricity and phone/internet are charged quarterly, water half-yearly
(3) Includes pressure cooker, £99, and a year's supply of water filters on half price offer
(4) Insurance is for the whole year
(5) Stocking up on vitamins/supplements. I wouldn't do that again to the same extent

This was an expensive month. I was so careful in most respects, but this is approximately the level I was spending at before, without even trying. But I had some special expenses this month. I paid the whole annual insurance premium. I bought a pressure cooker - yes it was a little bit a case of "Okay I'm going to be frugal, so what can I buy for that?" but also, I really do think it will save money in the long term - both in electricity costs compared with running my inefficient old cooker, and because it makes the food taste nicer so I'll be happy with simpler food. I love what it does with meat and beans. Then there was the stocking up on vitamins - this happened right at the beginning of the month before I committed to posting here.

My target for food was £100 for the month and it was pretty easy to achieve just by paying attention. I can easily reduce that further, because for the first half of the month I was still having organic vegetables delivered and buying some luxury foods. I've set a budget for next year, with expenditure averaging £700 per month, and the food target is £80. This should be achievable next month.

I learned so much about my spending patterns! I tracked expenses in the same detailed way years ago as a student, and again when saving for the deposit on our first house with my ex, but then I drifted out of the habit. I forgot how well it works!

Obviously I also want to increase income and I'm working on that, although if I can cover my expenses for the next couple of months I will be happy, and aim to build significantly from January.

Heyhey

[heyhey]

My inc/exp for November:

Income: £971
Fixed work gig: £400
Variable self employment(1): £546
Misc (used book sales): £25

Expenditure: £656
Housing: £231
Utilities: 0
Groceries: £123
Household: £8
Health/personal care: £5
Transport: £19
Entertainment: £171
Clothes: 0
Gifts: £99

Surplus/savings: £315 (32% of income)

Net worth: £25,265
Liquid: £6,994
Investments: £18,271
plus equity in my house.

Target: £175,000

(1) After deducting business expenses

This month looks way better than last because my expenses were very low, but they should have been lower still. My budget for food and entertainment will be £80 each from January and I could have hit that for food and not been much over for entertainment this month. But I was going out more than I sometimes do, drinking more alcohol (this is in Entertainment) and then buying more expensive food to save time. Instead of thinking "Do I need this?" I was thinking "Can I afford this?" and since I knew I'd have no big bills coming in this month, I kept thinking "Yes." Need to change that way of thinking!

The amount for gifts is around half of the total I'll spend on Christmas presents. It's good to have that covered, to help keep expenses for December under control. My quarterly power and phone/internet bills will come in next month.

I listed a lot of books on Amazon and some have sold, but I'm having trouble letting go of my "collections". I want to get those online now if I'm going to do it at all, because a lot will sell in December and virtually nothing in January, on past experience.

[heyhey]

My inc/exp for December:

Income: £1,396
Fixed work gig: £400
Variable self employment(1): £942
Misc (used book sales): £54

Expenditure: £1,184
Housing: £231
Utilities: £291
Groceries: £167
Household: £79
Health/personal care: £145
Transport: £23
Entertainment: £123
Clothes: 2
Gifts: £123

Surplus/savings: £213 (15% of income)

Net worth: £25,030
plus equity in my house.

Target: £175,000

(1) After deducting business expenses

A very high-spending month. My quarterly utility bills came in (electricity and internet/phone) and the rest was Christmas spending - extra food, gifts and going out (entertainment). I was also sick for the first two weeks so I had some health costs for medications, and I stocked up on vitamin C at a reduced price.

I went back to having a vegetable box delivered because I suspected cutting back on vegetables might have lowered my resistance to illness. I've rethought my budget for next year for food, for this reason. My expenditure aim for next year is to average £750 per month (£9000 for the year) with £110 for groceries and £100 for entertainment.

[heyhey]

From Three Men in a Boat, published 1889:

"George said: 'You know we are on a wrong track altogether. We must not think of the things we could do with, but only of the things that we can’t do without.'

George comes out really quite sensible at times. You’d be surprised. I call that downright wisdom, not merely as regards the present case, but with reference to our trip up the river of life, generally. How many people, on that voyage, load up the boat till it is ever in danger of swamping with a store of foolish things which they think essential to the pleasure and comfort of the trip, but which are really only useless lumber.

How they pile the poor little craft mast-high with fine clothes and big houses; with useless servants, and a host of swell friends that do not care twopence for them, and that they do not care three ha’pence for; with expensive entertainments that nobody enjoys, with formalities and fashions, with pretence and ostentation, and with—oh, heaviest, maddest lumber of all!—the dread of what will my neighbour think, with luxuries that only cloy, with pleasures that bore, with empty show that, like the criminal’s iron crown of yore, makes to bleed and swoon the aching head that wears it!

It is lumber, man—all lumber! Throw it overboard. It makes the boat so heavy to pull, you nearly faint at the oars. It makes it so cumbersome and dangerous to manage, you never know a moment’s freedom from anxiety and care, never gain a moment’s rest for dreamy laziness—no time to watch the windy shadows skimming lightly o’er the shallows, or the glittering sunbeams flitting in and out among the ripples, or the great trees by the margin looking down at their own image, or the woods all green and golden, or the lilies white and yellow, or the sombre-waving rushes, or the sedges, or the orchis, or the blue forget-me-nots.

Throw the lumber over, man! Let your boat of life be light, packed with only what you need—a homely home and simple pleasures, one or two friends, worth the name, someone to love and someone to love you, a cat, a dog, and a pipe or two, enough to eat and enough to wear, and a little more than enough to drink; for thirst is a dangerous thing."

[Dragline]

Now THAT is a classic work, and a favorite of many from John Cleese to Dan Ariely.

[themodernchap]

I love 3 men in a boat, I think all of Jerome K. Jeromes stuff is available for free on kindle btw.

[Ydobon]

Your veg box seems extortionate. I go to Lidl (scary car ride and all) and spend less than half of that a month for a family of 3 (me, wife and baby who eats a *lot* of veggies). Unless you have some specific ethical objection to supermarket produce, it strikes me as an easy way to save £30/m, which would be quite a percentage during your leaner months...

Sure you could cut phone/internet as well. We have Virgin TV, fibre broadband and phone for less than that and they're robbing gits!