Best Financial Year Ever…but for all the wrong reasons

I started this blog as a way to chart my venture from the red to the black. For a long time I had been steering the good ship “Frugal Funghi” slowly towards the calmer waters solvency.

About six or seven years ago I started this quest to be clear of debt. My epiphany came when the wife and I were looking to buy a new home. This was back around 2007 or 2008. I knew then that I would not be able to afford the repayments of any mortgage due to our credit card, must have now, lifestyle. Yes I had the income, but the outgoings and minimum credit card repayments were hamstringing us.

I decided then that things had to change. I was the sole occupant of the SS “Frugal Funghi”. Within about 18 months I was totally free of debt and I thought everything was going to be great. Then the wife dropped the bombshell (or should that have been “torpedoed me”?). Her level of debt, which she failed to ever mention to me, was five times as much as mine! I had two choices; either sail away in my boat, or throw her a life-line. I chose the latter even though she sincerely offered me the former and would understand if I did disappear over that horizon!

With hindsight being so badly in debt was an eye-opener. I have learnt so much through reading books, newspapers, blogs, watching Youtube and listening to others either in real life or on podcasts. I know full well that I would not have done any of this if my circumstance at the time were different. I would not have known any other way. Heck, I’d probably still have a small debt somewhere and would have accepted it as the norm!

So for the last 7 years we have chipped away at that debt mountain. I have devised strategies to tackle it. I saw and chased opportunities that others thought were a waste of time – all to save 5% off of a grocery bill or to get 3% cash back for using the same petrol station etc. I even learnt to use debt to my advantage and play the banks at their own game by borrowing off of one credit card (at 0% interest of course) whilst saving that real cash I would have used instead in a higher 2-3% interest account (I am planning to do a post to explain this in more detail – for clarity the “spend” that I am referring to here is not for “wants” or luxuries, but everyday needs like groceries and petrol etc.). I also learnt to cut back on the must-have-now culture. I was an Apple fan-boi for a very brief period during this time. I was one of these who just had to have the latest iPhone! The last phone I bought (notice I said bought?!) was from a second hand shop. It is the Google Nexus 5. I bought it in September 2014 for about £80 less than the advertised price on the Google store. When it was shown to me it looked pristine. I asked about the history and was told that it was brand new. Someone had it as an upgrade and promptly sold it, unused, for some quick cash. Their loss, my gain! I still have that phone today and it still looks pristine and it does the job too!

Rolling on to the start of 2015. Land fall was in sight just over the horizon. We only had about £5,000 of unsecured debt left. If all went to plan we would make it to the black by the middle of 2017 – a mere 18 months away. That was so doable. I started to look towards a five year goal. It was simple, by 2020 I was to have enough money to start some sort of serious savings and investment plan. My 12 month goal was to have enough money squirreled away for those rainy days. My 3 year plan was to have about £3,000 to £5,000 saved. I thought these were realistic.

Then a series of unfortunate events started to happen.

Just after the new year we received a little windfall from the sale of my wife’s grandmother’s house. She had passed away in 2013, and it had taken 18 months for the house to be sold. It was a modest amount which paid for this year’s summer holiday to Kos. Yes, a bit of an oxymoron going on here I know, but in our defence we only went abroad every other year. But this small gift allowed us to keep pushing our finances forward without having to take that one step back.

The holiday itself came and went. We also received another lump sum cash amount, this time because of a flight delay. We were given £1,400 for the inconvenience of waiting over 6 hours for our return flight to depart. So not only had the holiday in essence been bought for us, we also made a tidy profit on it too!

But the real kicker came in July this year. Sadly my father-in-law lost his fight against cancer. Even though it was expected, it was still painful when it came. He was a good man and will be missed by many. This Christmas is going to be tough. With his passing we received another windfall. The difference this time was that if managed correctly that money could be life-changing. Equally, if squandered, it could all be gone in the blink of an eye. The amount I’m talking about here is a modest sum. The wife or I won’t be giving up work any time soon on the back of it. Don’t get me wrong, I am not being smug or happy about this turn of events, nor do I want to seem ungrateful. I would gladly hand it all back to have the father-in-law with us again, even for just one minute. But putting all that aside, I am glad that I was in debt and that our finances were in such a poor state all those years ago. Because of that situation I now appreciate the value of money. I do intend to continue to look after our family finances in the same manner and I do still intend to keep looking for those little savings that can be made or exploited.

The father in law once promised “To see us right” if anything should happen to him. His promise has turned out true. For that I will be forever be in debt to him and that is the only debt I hope to carry from this point forwards.

 

Life is Like A Box of Chocolates…

We all know that famous line from Forrest Gump don’t we? Well those who have seen the film will do.

Like probably countless millions of other people I have some time-dump games on my phone that I open up when I have a few minutes to spare. My current games are Township (a Farmville-esque game) and Dominations (like Clash of Clans without the constant raids every 2 minutes). These games are Freemium – i.e. you download it for nothing, but have the option to make in-app purchases if you want to advance quicker in the game. In short you spend money to gain a fleeting material advantage.

Now think about that for a moment…

I have never paid for an in-app purchase (in a game) ever, especially in these 2 games. I recently waited 4 days for my little minions to progress from one “Age” to the next in Dominations. I could have spent real money to get in-game credits to complete that task now, but I waited – playing the long game. Budgeting and saving are just like that – the long game. I used to have the must-have-now mentality and that is why I got myself in to such financial difficulty in the first place. Since becoming a budgeting fanatic I find that not only do I save more money but I find myself looking for opportunities to make that money work harder.

Life certainly is like a box of chocolates; you can scoff them all down at once, of be more frugal about it all and savour those chocolates one at a time and make them last longer!

 

It Has Been a While…

Sorry folks, haven’t been around here much. Been meaning to get here and all but real life kept getting in the way.

I have been up to quite a bit on the financial front in the last few months, but equally I feel like a charlatan. The wife was given a financial “gift” earlier this year and that has helped us tremendously on our journey towards financial freedom. It wasn’t a life-changing amount for us, but for others it could so easily have been – so I chose my words carefully. It was enough to pay for our holiday outright and to clear a few of those niggling debts that I was paying off “bit by bit”.

Talking of holidays… we had some good luck again whereby we were given compensation that we were entitled to because of a flight delay.

Sadly a close relative has recently passed away and although it was expected it is still quite a raw emotion to deal with. As the estate is still being sorted out the wife is aware that she may be receiving a (to us) considerable sum in inheritance.

Maybe you understand why I feel like a charlatan? Finances, the same as life can’t always be bad luck, sometimes you just have to get a break.

But notwithstanding all of this I have still be working hard, trying to find the best deals, trying to save money. About 2 months ago I changed energy supplier because they promised to beat my current (dual-fuel) deal by £30 a month. This deal was recommended via a well known Money Saving Expert site. Last week I opened a new HSBC bank account using their switching offer. They even offered me “preferential” credit card. At first I declined it, but when I was told that I will get a £25 cash back offer as soon as I made one transaction, well hey, where do I sign? From this little venture I will net £265 for 60 minutes work (as that is how long it took to complete the applications). To top this one off I also get an introductory 12 month rate of 6% for a savings account. Get in!

And this morning I finally cut the umbilical cord of satellite TV. My current deal expired yesterday and I was paying £21.50 for the privilege of terrestrial TV (the wife loves her soaps!) and the Disney Channel. That’s it. Sky dangled another 12 month offer in front of me and for that briefest of moments it was tempting. But I had that steely resolve today (I have been working myself up to this moment for about 6 months!). I refused their offer, cancelled the TV package and then bought a new Freesat box direct from Humix. Offsetting what I would have been paying Sky, that box will have paid for itself in 7 months!

So there we have. I do hope to expand on some of this with some future posts.

Happy budgeting and saving people. I do hope that if you are going through your cycle bad luck that your fortunes soon turn for the better.

 

Man Cave

Another Easter has come to pass and another tradition comes around – the sorting out of the Man Cave aka our garage. This year will be different as I am getting fed up with having to sorting the garage out on an annual basis. But I have to say that this year it is tidier than it was last year!

 

Everything was taken out and some “shelving” was bought. After trawling the internet for some ideas I happened across a DIY site and settled for this solution.  Plans were drawn (to a 1/10th scale) – as everything has to have some sort of plan in my life…

 

And the wood (some CLS timber sized 36mm x 63mm) was bought (along with the wood glue and some screws)…

The total cost was £72 in total – £60 for the wood and £12 for screws and glue. Once built, the resulting area dimensions are W: 2.4m, H: 2.2m, D: 0.5m. So that’s quite a big storage area created very cheaply. I did look at buying some second hand metal shelving bays – they would have cost me £180 to cover the same space.

 

But I did think that I’d share some of my ingenuity; the home made cycle rack and the garden tools caddy.

The cycle rack cost me nothing – I had the wood, hooks and string already available. The hooks (loops) were unused from curtain poles – a quick pull with pliers and viola, instant hooks! The only thing I am considering adding is some vertical pieces of wood to stop the front wheels of the bikes turning.

The garden caddy is another unused off-cuts of wood project. I saw (no pun intended) online that someone converted a wooden pallet in to a storage solution, and from that an idea was born. The shelf was quickly cobbled together whilst talking to a neighbour – he was quite surprised what I made in the 5 minutes we were stood talking!

The result was something like this…

 

The wood in the bin will be going as soon as I have a wood-burner in the garden and the pram and car seat on the right have new homes to go to also. I may not be able to get a car inside, but I can now get in without risking life and limb!

I was quite pleased with myself really – even if it did take me 2 days of hard graft! The next Phase is getting all the clutter down from the rafters, shifting through it, and seeing what is charitable, eBayable, or skipable. That’s May Day Bank Holiday already boxed off.

 

Happy New (Financial) Year

The 6th April has come around and here, in the UK, it is the start of another new tax year.

Everything has been reset, and for me that means my expenses mileage clock has set back to zero too. Last year I amassed about 3500 miles. That doesn’t sound like a lot but when you start talking money it accounts for over £1500 additional income. This forthcoming year I should be nearer the magic 5000 mile mark, which will equate to over £2200 extra income. Sweet.

Unfortunately my savings situation doesn’t allow for me to get all giddy over the thought of tax-free savings. Maybe next year with that one.

I hope you have your budgets and financial goals set for this forth-coming year. I certainly have. My budget is maintained over a rolling 12 month period i.e. on the first of every month I review this month’s budget whilst updating the monthly budget for the same month next year. Using YNAB certainly helps me with that one.

My financial goal for this coming year is to end the year with a positive net-worth. This excludes the inherited debt burden which will be cleared by mid-2017.

Happy New (Financial) Year to all my readers.

 

Loving the 14th

So the 14th March has come and gone. What was so significant about this then? To some, it will have no significance. To others it may well mean a lot. But to me I get very excited around the 14th of each and every month!

Why? Quite simply the 14th of every month is the day I can reconcile my YNAB budget and accounts,  with some degree of certainty, for the remainder of the current month whilst being able to plot the following month’s anticipated income and expenditure so I know where I am with our money. Also, as a side note, reconciling my accounts using YNAB takes me a matter of minutes (about 15 in total) to complete!

The 14th is the day when my Sky (please don’t judge – I was foolish once and the contract is up in September!) estimated bill becomes the actual invoice due, and our cashback credit card gives us some money back for using it relentlessly (so long as we pay, in full, the amount owed – which we do, religiously!). Everything else between the 14th and the end of the month is accounted for down to the penny, with the exception of car fuel and food shopping costs. They are always a variable cost, despite being well budgeted for.

The scores on the doors for this month is that if we stuck rigidly to the budget then there is scope for a saving of £942. In reality though that will not be achieved. We are going on our family holiday in May and the wife is already eyeing up new wardrobes for the kids and my car needs some long over-due repairs prior to it’s MOT test at the end of April. So I fear that my joy at having a massive chunk taken out of the family debt burden will be somewhat short-lived. At least I have already sown the seeds of managed expectation on how much should be spent on any new clothes – at least that may not be as painful as it could be come the end of the month!

Do you have a favourite date of the month when it comes to managing your finances?

 

What Time Is It Mr Cook…

So Apple have reinvented the watch and no doubt, come the release date, there will queues of people camped outside every Apple store to marvel at this new fan-dangled contraption in hope of being “the first”.

Personally, I think I will pass. I turned my back on anything Apple almost 3 years ago,when they made my iPad 1 obsolete within 18 months. I paid nearly £600 for it, brand new. I was lucky that I managed to flog it for 1/6th of that value when they said that they weren’t updating it with whichever version of iOS was going to be the latest one at that time. My iPhone had already been replaced with an Android device just before this fateful event. But even if I did still have an Apple gadget I still would not be bothering with their latest marketing gimmicky tool.

People! It is just a fancy watch! What tangible benefit derives from owning such a thing? Oh, it means that you don’t have to take your phone out of your pocket to do some task or open an app, or look at the time maybe? Whoop-de-bloody-do! The one thing it will do, with some certainly, is that it will diminish your bank balance to the betterment of a company that already has profits the size of the GDP of some mid-table second world country!

This is the new me. The old me would have been suckered in by the hype, by the bollocks, the marketing and I would have increased my own personal debt to have this latest “must have” gadget.

If you really, really, REALLY want this new toy – and that is all that it is, an expensive toy, then wait. Give it six to twelve months. You’ll be able to get your hands on one a lot more cheaply on eBay, at CEX or any other such resellers. Look at it like this, the iWatch 2 will probably be due out next year anyway. I’m sure that it will be marketed as a slightly better, slightly faster and slightly lighter than the old, mundane and clunky iWatch 1, with one major difference being that any new watch will cost a lot more than it’s predecessor!

I am on the road of getting out of debt and I want it to stay that way. So no Mr Cook, I won’t be buying in to your vision of the future nor indeed to any other manufacturers vision of that future either. The only future I envisage is where I’ve placed that few hundred pounds I’ve saved, by not buying your latest mechanical machine, towards my shrinking debt pile.

 

World Book Day, And How I Re-Learned To Sew!

Today is World Book Day and, if you are unfamiliar with the occasion, children are encouraged by their schools to either attend in fancy dress or in their pyjamas for the day. The idea behind the fancy dress is that children must pick a character from a book. This year we only had the eldest child, my 9 year old daughter, requiring an outfit of some description.

Ordinarily in the Magic Mushroom Frugal Funghi household this would be a cause of:

a) a mass panic (on the day before the event) – as in “Why didn’t we know about this sooner?” and,
b) “What character do you want to dress up as?” – this would usually be some form or another of either a Princess or a Superhero (last year it was Supergirl).
and then followed by:
c) let’s buy from the shops whatever outfit is the decided upon.

No matter which outfit was decided upon, we would always convince ourselves that whatever we bought was “a good bargain” and “value for money”. Why? Well usually this was because it was the easy option and secondly it was anticipated that said outfit would be played with endlessly afterwards.

In reality neither of these statements were true. The buying of an outfit was the lazy option and the outfit usually ended up with the rest of the previously purchased outfits: at the bottom of a toy box or wardrobe!

This year we decided to be different. My daughter decided that she wanted to be “The Cat In The Hat” and we had five days to make the outfit. A quick search online and I knew what I was dealing with. Supplies needed were:

1.  a black top – already had
2. a black pair of pants – already had
3. white card (for the hat) – £4
4. some cardboard (for the hat’s rim) – obtained from work
5. red paint – already had
6. white fur – already had
7. red ribbon – £1
8. face paints – £5
9. sewing kit!
10. a whole lot of patience

So in total we spent £10 for the supplies that we didn’t have. The face paints will come in useful for some other occasion, and the red ribbon will be kept safe to be reused for another outfit, so the only “disposable” cost was £4 for the white card.

And I spent about 6 hours in total making it. Yep, I re-learned how to sew after putting needle to cloth, fur and silk ribbon – something I haven’t done for years (if you exclude the odd detached button!). Initially the Little Miss did help out, but she soon got bored and wanted to play The Sims!

 

 

All in all my daughter was happy with the completed outfit. She had a great World Book Day, and her classmates loved wearing her hat (and yes that, along with my haberdashery skills, survived the day too!). So if my daughter was happy, I was happy – even more-so when I think of the fun that I had making the outfit and of course the little saving I made in doing so!

 

How I Saved £700 Without Even Knowing It!

Last week I had the misfortune of decorating The Forth Bridge, aka the landings and hallway of our house. I call it the Forth Bridge because it is the second time in less than 3 years since I first decorated it!

This area of our house is no mean feat when it comes to splashing a lick of paint across the walls. Three of the walls are so high that the corners can only be accessed with the assistance of ladders and, because we have 3 floors (which is typical of the modern-day “town house”), there is an extra set of stairs that require glossing. Also, this time round, the wife wanted the main entrance carpet replaced with wooden flooring.

Before tackling this project I had the brainwave that the walls would be painted back to their “show home” original cream. Now this is a complete U-turn for me. I had been badgering the wife since day one of moving in that we needed to lose the show home look etc. We tried this on stairs and went for a coffee type brown, in a “one coat” paint no-less. It was disgusting in terms of both colour and texture. If I was honest I was glad to see the back of it (don’t tell the wife this),  even though it took two coats of magnolia (the vanilla ice-cream of all paints in my opinion – a good job that I like vanilla!) to get rid of it. The beauty of this brainwave is that firstly the magnolia paint, as a cost per litre, is probably the cheapest paint off of the shelf (and the most mass produced) you ever find. Secondly, you will never have to remember what the exact colour is when you have to touch-up a particular area, especially if you you’ve used similar off-colours around other rooms in the house (and you forgot to label the tins before storing them away – doh!). And lastly when it comes to redecorating, you’ll only ever need one fresh coat of paint – unless you leave it till the paint is peeling off of the walls!

In total this little project cost me a little over £300 – of which approximately £200 of that was spent on the flooring (and associated materials). We got a good deal on the flooring – 60% off the RRP at Homebase plus a further 15% discount applied due the sale starting and, through a works discount scheme, I was able to preload a gift card and save an additional 8%. I know the flooring was a high expenditure, but the quality is good (100% wood as opposed to laminate) and it is for a high use area so it needs to last. With 2 kids and a dog around it would not be cost effective to have cut any corners (pardon the pun) on this one.

The remaining £100 was for standard decorating supplies along with wallpaper (2 rolls) and paint (a 10 litre tub of magnolia).

So how, exactly, did I save £700?

It was through a conversation the wife had with one of our neighbours. She had just had their Forth Bridge decorated too. But unlike me, her husband is not as adept to turning his hand to doing a spot of DIY. She decided that a decorator was needed, who charged £70 a day, and took 10 days to complete the task. OK, OK, she has one extra set of stairs more than we do in our house, but still, I was laying a floor! And I finished the job in six days! 700 mushrooms staying in the bank and all my own handiwork – don’t I feel all manly and empowered!

In reality the task was easy until it came to laying the floor. But I would insisted in laying it in a certain way, which wasn’t necessarily the “easy way”, then I had to shave off 1cm from the bottom of each of the 3 downstairs doors to ensure a snug fit – so the flooring took me 2 days. But I was rumbled by another neighbour who refused to feel sorry for me after I bemoaned too much about the wife “cracking the whip”. She seemed to have got the measure of me; “I was too tight to get someone in!”

And when it comes to saving £700 too bloody right I am!

 

You Need a Budget, no seriously you do!

I mentioned yesterday how I started to manage all those mushrooms by the use of a budget and that that helped me get a focus on what I doing.  It initially started with a spreadsheet that acted as a yearly overview, eventually progressing to being complimented by the use of computer program then lately the incorporation of tablet apps.

After managing my personal finances in this manner for some years. I stumbled upon a system called You Need a Budget (known and pronounced as YNAB) by happen-chance. I wasn’t looking to change my approach in controlling the finances – I was doing fine, just fine! I only found it because I was looking for a new software solution after my previous system stopped syncing correctly between devices and was randomly losing data.

I tried the YNAB free 34 day trial. Yes you do get a whole month to see how it works! And that is as in the full works, unlimited transactions and/or accounts, all totally free. I am not going to repeat the YNAB 4 Rule Methodology here, but it’s safe to say that once I got my head round their system and fully embraced their zero budget logic it was an epiphany; opening my eyes to all that I had been doing wrong for all these years. There is also a great community over on their forums with many people who are more than happy to help, whatever the question. They also provide free webinars that cover a whole host of topics (with chances of winning a free copy of YNAB – which I didn’t know about until after purchasing my version!).

Anyway, I digress… gone were the shackles of my old system. My monthly reconciliation used to take me at least 2 hours! 2 hours every month just to balance the books. That was crazy. YNAB showed me a way to have flexibility and how it was possible to move mushrooms around to meet any emergency. I now had a clear way of forecasting my disposable income and I can have funds set aside for those unanticipated financial problems. It almost seemed like a weight had been lifted from my shoulders.

I have been an avid user of YNAB now since June 2013. I like to think I am very competent in the system but even I, some 18+ months later, still get surprised by the power of this methodology.

Thanks to the YNAB way of life not only can I clearly see where my problems lay, I have also been able to amass some spare mushrooms to sit there in our “family pot” but through the concept of  accumulated interest they can still grow me even more mushrooms! And yes, this is whilst I’m still chasing down that large debt.

I could go on, like a born-again Evangelical, about YNAB. But I fear that this post is way too long already and I don’t want to bore the pants off you. All I will say in finishing is that if you are serious about wanting to tackle your personal financial woes then give YNAB a try. What have you got to lose? I promise you won’t regret it and you will sign up for the paid version well before your free trial comes to an end. I know because I did! And when you do sign up for the full version click here to get $6 knocked off the full price.*

 

* For the purpose of clarity I am in no way sponsored or paid directly by the developers of YNAB. I just love the product! This link is a referral code whereby you get $6 knocked off and I get given $6 for sending you their way!