Money, Money, Money

The next chapter of Simple Mom‘s Organized Simplicity deals with Money. This is a subject that can make me go hot and cold. In the past, I have definitely taken the head-in-sand approach. We have never been very good with money and have always liked our gadgets, holidays and shopping in general. For years, we had the means to not be too concerned about the debt that we had.

Then we had a baby, moved house, changed jobs and bought a new (and needed) car all in the same year. I have gone from a full-time position to working 2 days a week. We had banked on clearing a lot of our credit card debt when we moved but other expenses sprang up, like needing a new boiler at the new house and all the other baby things that are needed (which is a lot, even when you are lucky enough to have so much from friends).

Now we are living only just within our means – there is not a fat lot over once our necessary payments have come out. We have had to change our whole spending outlook. We have had to do a lot of shifting around of funds and scrimping where we can. The key ways which we have made changes or plan to make changes are:

  • meal planning and careful grocery shopping: this has halved our grocery bills. We used to never pay much attention to prices and would think nothing of dropping a DVD in the trolley. Now I use a calculator as I shop and aim to get each shop under a certain amount. This makes me focus on only buying what we need;
  • handmade giving: gifts are undoubtedly better if they are thoughtful and handmade rather than bought and perhaps unwanted. This Christmas, I really want to make a lot of presents so that people can see how special they are without us having another credit card bill to pay.
  • eBay and bootsale: selling our unwanted items has a double-whammy effect of decluttering and helping with cashflow.
  • intentional spending: using our family purpose statement to help inform our spending decisions
  • credit card review: have a look at all aspects of our credit card debt including interest rates and repayments.

The following steps show how are dealing with this last issue:

  1. interest rates: take advantage of 0% balance transfer deals – nearly all our credit cards are on 0% for the next year or so;
  2. smart repayments: avoid the minimum repayment trap by setting up fixed standing order payments on credit cards rather than direct debits to cover just the minimum payment – this tip doesn’t mean you pay any more per month than you are paying now on minimum payments but it makes clears the debt quicker with less interest. Using this method in conjunction with the Debt Snowball Plan below seems to be the most effective in my opinion;
  3. one by one: tackle the debts one by one starting with the smallest amount first. This Debt Snowball Plan was originally recommended by Dave Ramsey and explained by Simple Mom as:

paying the minimums on all debts except one, which you pile on any extra funds you have. When that one is paid off, you take the money you piled on the first debt and put it towards the second. Then you do that with the third, and so on and so on, until all your debt is gone.aim to be debt-free (not including our mortgage) in five years.

Once we made a decision to spend more intentionally, it felt so good to have the burden of keeping up with the Joneses lifted. We can be thankful for our lovely house and not dwell on others who have bigger and better houses. In fact, being envious of other people in general is not very productive. When I catch myself doing this, I tend to look at what those people do for a living. I ask myself: would I be prepared to work those hours, do that training or do that job.  Chances are, the answer is ‘no’ so I can’t very well expect to reap the benefits without making the sacrifices that others make.

Every new thing we want just adds to the things we have to maintain or clean and that in itself is a great way of watching what we buy. We have enough TV and films to watch on DVD to last us an eternity (or at least a year or so) so we can hold off from buying that new blockbuster that we want to see until we have made a dent in all the things we already have.

We aim to be debt-free (not including our mortgage) in five years. I also think we will have given our attitude to money, spending and material possessions (which only equal more clutter) an extreme makeover which will serve us well for the rest of our lives and allow us to teach more thrifty values to my daughter as she grows up.

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2 thoughts on “Money, Money, Money

  1. Carys says:

    Ah, money. If we had enough, I’ve not got enough, if I was rich…the list can go on!

    This is something that we’ve been having to focus on alot lately. We’ve never been ridiculously well off – don’t get me wrong, we managed perfectly well and didn’t have to use credit cards to buy everything – but we didn’t have bucket loads of cash to chuck about. We were (as you said) the, “chuck a DVD into the basket, don’t worry much about buying food, go out for dinner, cinema”…etc etc. Little and often spends, really.

    Now, I’ve given up my job and we manage on N’s salary. I’m aware of many things when it comes to this – that this is a choice I’ve made, rather than been forced to make. That N getting a better job gave me an opportunity. I do feel quite guilty about it, alot of the time. But it’s also made me evaluate how we were before, and how we are now. I don’t make impulse purchases anymore. Anything we want that costs above £10 is discussed beforehand. I plan all meals for the week, and often try to make meals that can last a few days (soup is a particularly good one there) and I buy all our food at Lidl – it’s actually more than halved our food bills, shockingly. We don’t go out for dinner, spend more time with the family and just generally think more carefully about how we use our money.

    Worryingly, the biggest change? I look at our bank account about 3 or 4 times a week. I never,ever looked at it before. Now, I can’t imagine *not* checking it! I’ve found it’s the easiest way to assess how we’re doing, and to stop me just buying whatever I want. Who knew it was so simple?!

    I think what you say about Evelina is really important, and it made me think about my parents. My parents are pretty well off. Despite people thinking this makes me rich by proxy, the money is theirs, not mine. My Dad worked incredibly hard for decades to provide for us, and to give them (he and Mum) the life they have. I know it’s fashionable to hate on the rich people, but my Dad worked damn hard for it and paid a hefty price in other ways. My point is mainly that Mum and Dad made sure I understood value. I never had pocket money, I had a job from 16 and worked every summer during University. When I was unemployed, I didn’t get handouts from them, I was on the dole. I’m deeply grateful to them for not spoiling me, essentially. It’s so important to think about money in relation to how it affects your children, and it’s clear that you and Rich will give Evelina so much more than just material possessions 🙂

    Oh christ, this is like an essay! I’m so sorry……

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