Simple Solutions to living cheaply. No.3

Hello Dear Reader,

Here's my sewing room! I've tidied it and sorted out left over fabric. When I started quilting, I would cut some fabric and sew a few blocks and then went back and cut some more. I now make life easier by cutting every thing I need to start with. I don't like doing it, it's the boring bit of quilting. You can see that these are not the greatest fabrics. They are old pillow cases, shirts, pyjamas, there's a few odd nice bits, but the rest are what I have.  If you go to Bonnie Hunter's blog, you'll see my next project as I take a scrappy trip around the world. I'm going big next time and will be making another queen sized project. 

Sorry for another quilting analogy but if you want a simple life, then you have to:

3. Get the big jobs done first.

I'm writing this in response to a dear reader who said they'd never had a budget, what was a budget? and where did they start? If this is you then you've got a really big job ahead of you. You'll need to come back to this as you'll probably need a clear day and then a lie down in a dark room when you've finished. How, and well you may ask, does getting the big jobs done first help me live a cheaper and simpler life. My life is simple. I pay all the bills the day I get paid, I know exactly how much there is for energy, food, clothing, days out and anything I need. There isn't any money for anything else. That's good or bad depending on your perspective, remember....by now I've paid all my bills, I owe nothing more than my mortgage and I have all I need. In these times, that makes my life very simple and I have a clear budget.

Ok, so getting back to the request, firstly what actually is a budget? The starting point is how much money do we earn? If you are in a partnership, you are on a hiding to nothing if you don't do this together. This is not a relationship counselling session as I can only speak for ourselves, but this is our home and we jointly fund it. This is our life and we jointly fund it. A budget is the working out of how we pay for everything we need with the money we have. A budget is not decided after buying everything we want and then wondering how we are going to pay for it. Far from a budget, that's just plain silly! 

So, have you done that? Do you have a clear joint figure of every penny that comes into your home every month. That might be variable due to you having an agency job or being self employed. The figure you will have to work with is the minimum possible figure. There is no good budgeting on a 'good day'. You'll have to start with the worst day. 

Ok, on to step two of setting a budget. Find all your bills, all your direct debits, every phone bill, every single debt you owe and take a deep breath first as you are going to have to add up everything you HAVE to pay every month! You do not need some of it and you can decide later what can go, such a phone contract where you never use all of the minutes or the SKY contract where no one watches half of the channels. 

This maybe a shock to you. You may have never done this before. You may have no idea of how much in debt you really are but I'm going to ask you to face up to it. Now on to the third step; how much in total do you owe? Look at everything; the bank loan, the student loan, the credit card, the car finance, the credit cards and the overdraft. You will need this figure to work out a budget as none of that money is yours and you need to pay it back or you will be a slave to it for the rest of your life.

When Dearly Beloved and I did exactly what I've asked you to do, it was a sobering moment. What stretched in front of us seemed totally unattainable. How could we actually have what might appear like a life to anyone else, pay all of these bills, pay off our debts and make a future for ourselves. We had to set a budget.

I don't know what Georgey boy is smiling about as setting a budget is all about breaking the bad news. You take figure A (how much money we earn) and then take away figure B (how much money we have to pay out) and then we have to work out how we are to live. The UK treasury sets a budget once a year and so should every family unless circumstances change such as a growth or loss of income, if that's the case, then you have to rewrite the budget. 

Here's my budget. I have a running total of all the income and then I deduct all of the household bills which I pay every month, on the first day of the month. I then leave myself £280 in our current account to pay for diesel for the car and food for the month. It means an average spend of £35 on food and a set amount of £35 on diesel. I then pay money into a savings account to pay for the annual bills such as car tax and insurance and home insurance. I then over pay my mortgage and leave ourselves with £77.33 disposable income a month or £927.96 a year which is far more than enough for two people to do as they please with. 

It was a big job to do in the first instance and we didn't like it! We now have all of our paperwork in one file and an excel spreadsheet that can be adapted if our circumstances change. We live simply so we can pay off our mortgage in eight year and have our home paid for before we retire. My only regret about the way we live is that I wish we'd done it earlier. If you look at my budget, we didn't save any money or over pay our mortgage when we were paying off debts, everything we had plus the extra income we used to have went to pay off our debts as we would never live in the simple freedom that we do now until all the debts were gone

Once you know everything you have and then everything you have to pay, which of course includes any debts you have, then and only then will you know how much money you can spend on food, transport and 'any thing else'

Some of you may be so far along the route that I'm on that you're mortgage free and you use your thrifty ways to pay for the things you like such as travel. You may have visited this blog for the first time ever in your attempts to find advice of how to live on less money. I'm sorry if this blog might seem a bit gloomy on your first ever visit but I'm living with the results of paying all my debts off, over paying my mortgage and by living cheaply, I have a simple life.

I'm now off to while away an hour or so at my sewing machine, whilst listening to music without a care. I might live without much (my choice) but I live a simple peaceful life.

Over to you Dear Reader,

What budgeting advice can you give to help people stay on track with the finances and to help them to live for less?

I'm on Radio Cornwall tomorrow from 11am to 12 noon GMT and I'll be sharing my frugal New Year resolutions and asking people to phone in with their ways that they will save money in 2013. The studio number is 01872 22 22 22, or you can email radio.cornwall@bbc.co.uk or text, 81333 starting your text with Cornwall. It would be lovely if any of you could share your money saving hopes for this year and let us know where you are texting or emailing from. It would be especially wonderful if you could email or text if this is they year that you are going to pay off as much debt as you can so we can give you a huge cheer from the studio. If you want to send your email now so you don't forget then set the subject as for Frugal Queen. Here's the link to listen again for seven days 

http://www.bbc.co.uk/programmes/p012ddjq

Until later,

Love Froogs xxxxxx