Budgeting Advice: Ways to Keep your Finances in Check

There’s the old saying that ‘money makes the world go around’, but in reality, it should be ‘money makes your world go around’ as ultimately this resource is what makes our existence more enjoyable. For many of us it’s also something that can be quite scarce or not as plentiful as we’d like and as such it means we need to manage our money as best we can.

Trying to fit this around your day-to-day schedule can be a challenge though, but fortunately for you there are some simple steps you can take to get your finances in order. What follows are a number of approaches for you to consider:

Review your Expenditure

The first thing you can do is review your expenditure and create a chart or list of everything you need to pay for each month. Use estimations on things like utilities and your food bills and see how much this costs against your typical income on a monthly basis.

Implement Cost-Cutting Strategies

With this list of expenses, you can then look at areas where you could cut costs and make savings. Whether this is through being more efficient with your energy and installing a Smart meter to monitor this, or simply cutting down on how much you spend on groceries and treats, you could hopefully start to see an improvement in your finances.

Budget for Different Things

That’s not to say you shouldn’t cut down on everything enjoyable in your life. Make sure you can still budget for social and leisure time, as you should still treat yourself when you can. Just factor this into your budgeting each month and spend money if you feel there are special purchases you can afford.

Seek Professional Advice

There’s also nothing to stop you from looking to external support with your money. If you feel you’ve already tried a number of approaches to save but they aren’t working, then you could turn to wealth management companies such as Sanlam. These firms can assess your situation and help you create strategies and plans to safeguard the future of your finances.

While not all the above will apply to you and your money, the wise move is to start putting at least a few of these approaches into place now to help improve your situation. Eventually, you should start to see a healthier bank balance at the end of each month and hopefully a happier existence for you and any loved ones.

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Have a special someone in your life? And are you getting ready to pop the question? This whole list of promo codes can get you sweet deals at DiamondDelight.com or other online diamond jewlery dealers on the World Wide Web. And you can rest assured that you dealing with conflict-free diamonds. Even if you are happily married, you could probably stand to get a nice diamond necklace or pair of diamond earrings to make your wife the envy of the country club.

What about health products? Do you need herbs to make your remember stuff or lift your depression? You might need vitamins that will help you achieve your best you. MyFavDeals is the place that will provide a whole list of promo codes that will give you savings on healthy juice products supplements and serious stuff to free you of almost any disease.

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So the deal is this: if you need to shop online to get the goods you need, you have to use www.myfavdeal.org/stores to get the best coupons and the best deals. It is the only way to go.

How to Live Your Life on a Budget

Are you in complete despair when reviewing your monthly expenses? Realistically it’s not surprising, for last year the minimum total of expenses for a UK region was a shocking £427.50; with the highest total being £616.30 in Greater London.

If you’re concerned about your finances, perhaps it’s time to cut corners through comprehensive spending to ultimately save those costs. Check out this guide on how to live life on a budget without sacrificing quality.

Road to Change 

Create a Plan:

First off, there’s no point mindlessly jumping straight into altering your finances with no considerations, for you are effectively changing your entire lifestyle. You still need to live, so boycotting all expenditures will simply fail. Start by creating a plan that covers all your current overheads to work out A) how much you’re spending and B) what’s costing the most. Software like Excel is brilliant for producing spreadsheets that are easy to interpret.

Suit Your Circumstances: 

One scheme of planning definitely won’t suit everyone, so make sure yours suits you. Take into account when you get paid (i.e. weekly, bi-weekly or monthly) to ensure your smarter spending complies. Another important factor to reflect on is the amount of people living in your home. Naturally if you live alone you’ll have fewer essential expenses than a family of four so set a limit per person to create an overall figure.

Set Goals:

Once you’re aware of the individual expenses, start setting some goals that’ll help you achieve and most importantly, stick to your targets. These need to be sensible and realistic, for example – reduce expenses on groceries by £50 a month. Putting these goals in a visible place like the refrigerator or a pin board will ensure everyone in the household is aware of these goals; increasing your chances of everyone sticking to them.


Separate Wants From Needs:

Be honest, how many items do consider a need when they actually aren’t? A need is something you simply couldn’t survive without (food, water & shelter); whereas a want covers the things you desire to have that you realistically could live without (expensive holidays and designer clothes). Categorising these separately will ensure you’re saving on the wants and focusing more on the needs.

Food

Create a Food Budget:

The average UK household spends approximately £60.00 a week on groceries, that’s over £3,100 per year… Considering a family with children throws away £700.00 worth of food annually, perhaps you’re buying way more than necessary. Implement a weekly or monthly food budget that sets a limit per person in the household to make the budgeting fairer and easier to manage. Also if you want to be really thorough, it might be beneficial to research each supermarket to gain a comparison on which will work best for you. In May 2016 Aldi once again triumphed over all six leading UK supermarkets, ranking £10.68 cheaper than ASDA and over £20.00 cheaper than Sainsbury’s.

Buy Multipurpose Foods:

Stocking up on your staples is a brilliant solution to making food last longer. Always having staples means you’ll have a variety of cheap meals to cook, allowing you to focus the rest of your food budget on fresh produce. Some great staple foods include:

– Rice

– Cooking oil (light olive oil)

– Butter

– Eggs

– Frozen vegetables

– Tinned fish

– Tinned tomatoes

– Dry beans

– Pasta

– Spices

 

Less Meat:

 

You can save money by skipping the meat and going vegetarian. A recent study identified a vegetarian diet can save you up to £530.00 a year in comparison to a meat diet. However, if you’re not prepared to go cold turkey on the meat, try incorporating some vegetarian meals throughout the week to reduce meat consumption. Cheaper cuts can be sourced through economy meat (sausages, chicken wings, mince and even organ meat), combine these with vegetables to produce both tasty and cheap stews, casseroles, soups and bakes.

 

Purchase in Season:

Fruit & vegetables are at their cheapest in season, so as it is summer you could focus on purchasing: strawberries, cherries, cauliflower, mangetout and asparagus. Thankfully there are vegetables that grow all year: carrots, potatoes, cabbage, celery and sweet potatoes as they can withstand the winter months.

Luxury Alternatives

Exercise for Free:

The UK wastes a total of £37 million a year on unused gym memberships, and with the average membership costing a gym-goer £442.00 annually, are you really getting the most out of yours? Ditch the gym and workout at home for free. Plan your own weekly workout routine (e.g. Monday – run for two hours, Tuesday – do an hour of aerobics, etc.) You could even set up an exercise group that meets in the park every week if you prefer a group workout.

 

 

Eat Meals at Home:

According to a recent study Britons spend £4,000.00 a year on dining out, that’s a ¼ of the average annual living income! Saving leftovers is a great way to avoid having to cook and not spending a fortune in a restaurant. Planning a weekly menu at home will ensure the time duration of each meal complies with your daily schedule.

Ditch the Habits:

Smoking is not only unhealthy, but it costs a fortune. In 2015, an average 20-a-day smoker spent £3,000.00 on cigarettes, that’s almost a year’s worth of food.  This will test how determined you are, for kicking a habit is never easy, but dedication will always prevail. Another habit you could kick are all those work morning coffees. Buying a coffee everyday costs you £519.00 a year, so either invest in a flask or wait until you get to the office.

Clothing Cutbacks:

Clothes are always something we have more of than we actually use; making them a fantastic cost cutting solution. Before you purchase new clothes go through your old garments and choose between the ones you do and don’t wear. Try selling these at car boots or online, that way you can reinvest any money earnt into new garments. Sticking to sale racks and avoiding expensive clothing is essential for making your money go further; the beauty of fashion nowadays is the versatility -nothing ever really ages.

Homemaking

Purchase Inexpensive Furnishings:

There is absolutely no need to splash out on brand new furniture when there are fantastic alternative methods, for example – instead of purchasing a new oak wood cupboard for storage when you can buy plastic containers for considerably cheaper; these can even be decorated with wrapping paper for extra appeal.

Fix & Update Instead of Replace:

Shabby chic furniture is extremely popular right now, so don’t throw away and replace broken furniture, try fixing them instead. If the legs on old chairs are coming loose then retighten the joints; don’t throw them away for the sake of a little DIY. When things the kitchen cupboards are looking tiresome and outdated, add a coat of paint to revamp them.

Energy Saving Solutions:

It costs 7.3p to run ten lightbulbs for an hour, and although this doesn’t seem like a huge amount the cost quickly adds up. To prevent the gradual cost increase, optimise natural lighting for as long as possible by opening the curtains and cleaning your windows. In the colder months, turn down the heating and opt for blankets and hot water bottles for added comfort without the added heating bill.

Accessorise Inexpensively:

Accessorising your home doesn’t need to involve fancy cushions and overpriced candles. Add house plants for extra colour and freshness; these can be purchased very cheaply at almost all supermarkets for considerably less than gardening shop prices. Picture frames are also great for brightening up plain walls without having to purchase expensive wallpaper. If you’re feeling particularly adventurous, you could sew your own cushion and sofa covers for a sense of uniqueness, discarded pieces of fabric can be purchased from most charity shops for a fraction of their original price.

 

Ungrateful Ninja…

I went out to dinner with some friends the other night. Yeah, believe it or not, I actually have friends! One of them is a pretty consistent reader/commenter here on PDITF (shout out to MattyIce). We were talking about some of my recent blog posts when he said, “Ninja, you are sooo good looking and you smell amazing”.

Okay, you caught me. He didn’t say that, but wouldn’t that have been really weird if he did?

This was our actual conversation…

Friend: One of my buddies reads your blog and he made some comments to me about your recent budget posts.

Me: Oh yeah? What did he say about them?

Friend: He said you seemed super stressed about your post-marriage budget even though you anticipate having about $2,000 in left-over income each month.

Me: Yeah. He’s right. It does stress me out a little bit.

Friend: He also said he can’t believe you seem stressed about having such a large surplus when he doesn’t even make $2,000 in a month.

Me: Hmmm. I guess I may have came across as a little ungrateful. I should probably blog about this.

Friend: Yes. You should. Because I love your blog and it is what gets me through the day. It’s the wind beneath my wings. I love you. If it were possible, I would want to bear your child.

Yup. That’s EXACTLY how our conversation went down the other night. Moral of the story mi amigos is this: I’m a crapbillion times more excited about my income than I am stressed about it.

If I have ever came across as ungrateful, unappreciative, or even snobby, then I have failed yet again at communicating my thoughts.

Just last week I wrote an article about how it is difficult to verbalize financial success, but easy to communicate financial turmoil. Well, I think this is probably why I may seem more stressed about our budget than I actually am. It’s a lot easier to say “Oh man this variable income thing kinda stresses me out” than saying “Wow, Girl Ninja and I are going to have an incredible income.” I’d feel weird proclaiming the latter statement as people may perceive that as arrogance. But ya know what? I shouldn’t be afraid. It’s time to just lay it out there and tell you how I really feel.

I’ll be 25 when I get married this summer and Girl Ninja will be 23. I expect our 2010 annual income to be approximately $85,000. Next year, 2011, we should hit right around $100K. Our income level for our age is WAAAY higher than I would have ever expected. I am totally stoked on our generous income, but I also believe it’s important to temper that excitement with reality. The reality is, our income could decrease at any moment with the loss of job, medical issues, etc.

With a generous income, a great deal of responsibility follows. How should we save for a house? How much should we contribute to retirement? How much rent is “too much”? When you have a smaller income, or a lot of debt, you don’t have the need to stress about such things. Instead your wondering “Can I afford my water bill this month?” of “Will I be able to make my car payment?”

Now obviously I’d much rather worry about retirement and down payments than putting food in my mouth or gas in my car, but an increasing income doesn’t come without its own unique issues. Transitioning from ‘frugal bachelor’ to ‘upper middle class husband’ is a pretty big change. One that I like to share here on the blog. Please forgive me, however, for focusing on the things that stress me out about the transition, when I should be writing more about the joy and gratefulness I feel.

I’ll do better. Pinky promise 🙂

Some condo owners are crazy….

So Girl Ninja and I continued “Operation Don’t Be Homeless” yesterday. We looked at two different rentals. They both had great potential, but one of them really won our hearts. It is a 1br/1bath condo 100ft from the ocean. It has brand new stainless steel appliances, granite counters, a great layout, a dishwasher, and a washer/dryer (which is pretty rare in small rentals here).

The asking price for the unit is $1,500, which as you know, is the maximum rent amount I’m comfortable with. For those of you who just pooped your pants ’cause $1,500 for a one bedroom seems crazy expensive, please read this article. The condo has been available since April 1st, which means it’s been vacant for almost two months.

Most of the places we have looked at become occupied within a week of being advertised. It seems a little odd that this place hasn’t followed suit. It concerned me so I called my Realtor friend who is familiar with the area. She looked at the place and thought it was about $100/month overpriced.

I gave the property manager a call and told her Girl Ninja and I would be happy to fill out an application if we could rent the unit for $1,400/month. The manager basically said the price is firm and the owners aren’t willing to reduce the rent. I left the conversation frustrated. This lady must be crazy. It has sat vacant for two months and she’s not even willing to negotiate a little? WTF?

Well, being the PF dork that I am, I came home and started crunching the numbers. I’m convinced our offer was completely fair and needed to be reconsidered. You all know I’m a huge advocate of “putting yourself out there” so I decided to send the property manager an email asking her to reconsider our offer. Here’s that email…

Hi-

This is Ninja. I talked with you a few times today about the condo you have for rent. I know when we spoke earlier, you indicated the condo owners are not willing to negotiate. Girl Ninja and I are hoping you will reconsider our offer.

We both graduated from (insert college here) and have lived in San Diego for the last six years. I’ve worked for the Federal Government as a Special Agent for the last 2.5 years and Girl Ninja is an elementary school teacher. We would be the perfect tenants as we both have extremely stable careers and would never have a problem paying the rent on time. We take our financial situation very seriously and have excellent credit (mine is 760 and Girl Ninja’s is over 700 as well). We will be debt free on July 1st, when I send in my last student loan payment. Neither of us smoke, drink, or even party. We are extremely clean and quiet. Furthermore, we have excellent track records as far as renting is concerned. I have lived in my current apartment (which is a month-to-month lease) for the last 31 months and Girl Ninja has never lived in one place for less than a year.

The condo has been available since April 1st which means next week it will have sat vacant for 2 months. That’s a $3,000 loss of rental income for the owners. Sure, our $1,400/month offer may sound low at first, but if you run the numbers it really isn’t.

If the owners rented to us at $1,400 for a 6 month lease, they would be agreeing to take a $600 loss during that time. Again that may seem like a big loss, but it is a lot better than remaining vacant.

If you multiply $1,500/month by six months you get a total rental cost of $9,000. If you divide the total cost ($9,000) by the total number of days in those six months (182) the condo’s daily cost is $50.

I’m breaking the numbers down to make this point: If the condo goes unrented for another 12 days ($50/day x 12 days) the owners would incur a $600 loss of rental income, and potentially much more. With our offer they guarantee only a $600 loss. By waiting for a full price offer they risk losing thousands in rental income.

If they think they can get the condo rented within 12 days, then that is in their best interest, but if it remains on the market any longer, it would have been better financially for them to rent to us. The question is not “Is our offer too low”, but really “How long until they will find someone willing to pay full price?”

Girl Ninja and I would be more than happy to help minimize their losses by becoming the tenants, but we have to do it at a value that we feel comfortable with.

If you could at least look over the numbers and speak to the condo owners about our offer, GN and I would be forever grateful.

I’d love to talk this over with you.

Thanks,

Ninja

There you have it peeps. It’s really hard trying to communicate financial information in an email without sounding condescending and/or redundant. How do you business folks do it?

If the condo had only been vacant for one or two weeks, I would totally understand why they’re not interested in negotiating, but it’s been available for 2 months now. I don’t expect them to accept our offer, but I personally think they would be CRAZY not to? Hey, it doesn’t hurt to ask…right?

If you were the landlord how would you handle the situation? Am I overlooking something here? Or are they as stubborn as I think they are? Any advice? Do you have any negotiating stories (good or bad)?

I’ll be sure to let you know if I get a response 🙂

WTF is a budget?

There is one thing that always reigns true in the world of personal finance: Everyone does things differently, especially when it comes to budgeting. I’m convinced, no two budgets are the same. Here are a few of the different budgeting methods I’ve observed…

The anal envelope:

This method is no joke. It’s not for the faint of heart as it requires some serious discipline. Essentially you create a different envelope for all of your various expenses (rent, food, car, etc). After you’ve categorized your expenses, you put in a predetermined amount of cash in to each envelope every pay period. For example, if you allow $50/month for entertainment, you’d put $50 in cash in your entertainment envelope. Pretty straightforward. The hard part is not wanting to spend more than what you put in the envelope. Once you’ve spent the $50, it’s gone. No going to the ATM or using your credit card. Not even if that camera you really want is on sale. There is very little flexibility in the envelope system. Let’s just say it’s not for me.

The guess and check budget:

Ahh, this is my kind of budget. All you have to do is get out a piece of paper (or use excel) and itemize all of your monthly expenses. Instead of putting the budgeted allotments in envelopes each month, I use a guess and check method as I go about my spending. For example, if I feel like I’ve spent a lot more on dining out than I normally would, I cut back for the rest of the month and survive on PB&Js. This method is definitely more flexible than the envelope system, but it also allows for overspending if you aren’t careful. I generally stay within my allotments for each category, but every now and again I’ll get a little crazy and spend some money I probably shouldn’t have. If you don’t have some solid discipline I would not subscribe to this method.

The “WTF is a budget” budget:

Unfortunately, this is probably the most popular budgeting method in our culture. The people who use this method couldn’t spell budget, let alone live on one. They are usually broke, stupid, and stupidly broke…. but hey, at least they have 786 pairs of shoes they never wear. They don’t keep track of their money at all. They often don’t know how much they make and they definitely don’t know how much they spend. This is not a good plan. It’s financial suicide. If you’re a member of the “WTF is a budget” club, you better figure something out quick ’cause a financial disaster is brewing.

What kind of budget are you rockin’? Do you set aside a predetermined amount each month and stick to it religiously? Do you have an idea of what you’d like to spend, but don’t follow it to the “T”? How do you budget for the irregular expenses like car maintenance or haircuts? I’ve never really figured out a good way to set aside money for things that don’t occur on a monthly basis. Any budget tips, tricks, and helpful hints are always appreciated.

I suck at communicating

Apparently I am a pretty crappy communicator. Yesterday’s post left a bunch of you asking “Why is there no entertainment section in your budget?”. Pretty valid question, seeing that I didn’t account for fun, vacations, or household supplies in our budget. Did I forget to include this stuff? Nope. I just do things a little differently.

Since I severely sucked at explaining the budget yesterday, I thought I’d do my best to make it clearer today. Take a look…

Does the infographic help clarify things? It’s important to remember that budgets come in all shapes and sizes, so I’m sure mine looks way different than yours. In fact, J Money has compiled a ton of different budget templates, so you can use the one that best suits you.

Alright, on to the question “Why don’t I account for tampons sponges, clothes, and movies?” The answer is simple. I don’t want to. Hah! How’s that for straightforward? Everything I included in our “expenses” category has little month-to-month variation and is a necessity. Our income MUST ALWAYS exceed these expenses, ’cause if it doesn’t, we are going to have serious financial issues.

The very bottom section of the budget is titled “Left over”. This money then becomes our discretionary income. We can do with it what we want. Referencing the example above, we should have about $2,000 after all of our bills are paid. This money will be broken down to pay for things like haircuts, sunglasses, weekend trips, gifts as well as to save for things like a home, a car, and new furniture.

I personally HATE the idea of having a line item in my budget for “household supplies”, “entertainment”, or “vacations”. These costs are not fixed and can vary greatly from month to month. Instead of making guesses for each variable expense, I much prefer putting all $2,000 of discretionary income in to my savings account and then take when needed.

I realize many of you probably HATE that I don’t budget for all the same categories you do, but this is how I’ve always done things (Girl Ninja is on board with this plan as well) and I don’t think anyone would say I’m a reckless spender. We are both natural savers and understand every dollar we spend, means one less dollar we have in the bank. Our frugality allows us to live outside of a spreadsheet. Maybe this makes me a budget hypocrite, but I don’t really care. In my defense, however, I religiously check Quicken to make sure I’m spending reasonable amounts in each variable category (ie electronics, gifts, toiletries, etc). Did you really think I would not keep a watchful eye on our money?

A few other things to note from yesterday’s post.

Many of you recommended Girl Ninja seek out part time employment, in the evenings, to help stabilize her income a little bit. This is probably because I said we would  “scrape by” if she only subbed 2 days out of the month. What I failed to make clear, was the odds of that happening are virtually zero. Over the last 45 school days, she has been able to work all 45 of them. Basically I was being a big drama queen yesterday, and probably made it sound like Girl Ninja will be unemployed, when that really isn’t the case. My apologies for any confusion. Plus, if she picked up part-time night work, that means I would be home alone at night, which is NOT COOL in my book. How the heck would Operation Make-Baby-Ninjas ever come in to the picture if our schedules were opposite?

Another common theme across yesterday’s comments, was the recommendation to decrease tithing until we get a better handle on our financial situation. Again, solid advice, but not really our style. We both share the belief that tithing needs to be something that we do every month. And for us that means 10% of our income. This means before we do ANYTHING with our money (including contribute to retirement or pay rent) we commit 10% to our church. I know many of you will think that’s crazy, or possibly even that we are weird Jesus freaks, but it’s a personal decision we BOTH made and are excited about. (Remember, it’s called personal finance for a reason).

It seems that I totally blew it yesterday and failed to bring my main concern to light. My primary motivation for yesterday’s post was to ask “How do you budget with a variable income?”. I received a bunch of great suggestions on how to increase our income (GN part time work) or decrease expenses (find a cheaper apartment or tithe less), but what I really want to know is How do those with a variable budget navigate life? What’s the secret?

If I confused the crap out of you (figuratively and literally) again today, let’s just pretend these last two posts didn’t happen and we can start with a clean slate for tomorrow’s post… deal?