Christmas review

We hosted Christmas this year, for a change. Surveying the wreckage, I thought I'd review where we did well, and what was less of a success:

The good:

-The Christmas cake I made – Delia's light Christmas cake – worked out quite well, and will go into packed lunches and serve us for teas for some time to come. I now have various leftover ingredients, such as crystallised ginger, which will need a home, although the angelica ended up, most appropriately, on the top of my sister's lovely Boxing Day trifle.
-The trifle – my sister and I took responsibility for this, but she actually made it. We went for a retro one, with frozen raspberries, tinned peaches and madeira cake on the base, and the aforementioned angelica, flaked almonds and multicoloured glace cherries as decoration.
-The goose – my husband cooked the goose, which we ordered from a nearby farm shop. It was not cheap, but, with its stuffiing of mashed potatoes, (Nigella, Feast) made a great Christmas lunch and yielded plenty of leftovers.
-Wrapping paper – I finally bought brown paper and wrapped many presents with that, prettied up slightly with gold ribbon.
-The Christmas tree – topped up with some new lights and one or two extra decorations (Homebase, 49 p each), the artificial Christmas tree had its seventh year of use.
-Kedgeree followed by warmed mince pies and brandy butter turned out to be a highly satisfactory Boxing Day lunch.
-The presents: with my family, we tried a new system of exchanging stocking type presents - including plenty of chocolate- and each specifying one or two larger items we would like. I, at least, liked this arrangement.

The bad:

-My Christmas pudding, which burnt slightly and stuck to the bottom of the pudding basin, as I stupidly let it boil dry at one point.
-The mince pies: the bought ones were so good, and I so lazy, that I never got around to making any myself. (I'll probably use the mincemeat in an apple crumble instead.)
-The various defects in our home which become apparent when we have a few guests: taps that are a bit stiff, guest towels that are frayed or tatty.
-The frying pan, already nearing the end of its life, which did not survive the festivities.

The ugly:

-My artificial Christmas tree – see above...

A Christmas present crock pot

At his request, I bought my husband a crock pot for Christmas. We're trying it out today, making chilli con carne, in a break from the Christmas leftovers. More to follow on how it works in due course....

Budgeting for the not-very-budget-oriented

I dislike spreadsheets, and it might be said of me that I am 'better with words than numbers'. The concept of a budget, as described by some experts, is therefore mildly horrifying to me. However, I am interested in making sure that my finances add up, and that I am able to pay for things that are important to me, and also to save for the future. My preferred approach is therefore as follows:

Every year or so, or whenever we have a significant change in our finances, we review and update an ongoing list of our fixed monthly direct debits, for mortgage, electricity and so forth, and make sure that this is up-to-date, looking through our bank statements to check that we have captured any changes, and giving some thought to any direct debits we might want to cancel or amend. The list of regular fixed payments includes a separate allowance for each of us, as well as payment to a 'fun', 'holiday', and 'car' jar.

The list of direct debits includes one to an 'annual bills' jar, which is calculated using a list of those bills which need to be paid less often than monthly, for instance car servicing, insurance and car tax. These are added up and the total is divided by twelve, to come up with an average monthly amount. (Money is transferred from the annual bills jar to the current account as these irregular bills need to be paid.)

We then check that the amount we have estimated for non-fixed expenses like travel and food is still appropriate, by looking through our credit card expenses for the last few months, and taking an approximate monthly average.

We check, and update as appropriate, the amount we have listed as income.

Once this has been done, we have an approximate idea of how much money we have spare each month, once essentials have been paid for.

This is where our system becomes rather chaotic; we have never found it practicable or helpful to allocate fixed amounts for different types of expenditure, but instead prefer to operate the 'pay yourself first' system. Under this, and taking account of the calculations above, we transfer out a certain amount of money to savings each month as soon as we have been paid. Sometimes we need to transfer some money back later for particular purposes, but as a general rule this works fairly well, and because the money is not sitting in the current account, it cannot be spent quite as easily. And as both savings and regular payments have been accounted for, the money spare can be used however we see fit, without us having to worry about whether we have over-spent on travel, or entertainment, or eating out, that month. (Over the last month or two, however, I have been trying to get a more precise idea of our spending, by tracking our expenditures on a spreadsheet.)

The paragraph above assumes that there is some money left over for saving once essentials have been taken into account; I will look at the question of reducing monthly outgoings in future posts, as well as the subject of self-employment and budgeting for taxes. I will also include some more expert opinions than mine on budgeting, and its value.

Cooking without waste 2: Basic recipes

This is the second guest post on frugal cooking from Jian.
Every culture and person in the world is going to have a different idea of what a basic recipe is, depending on their answers to the questions in my last post. What might be best, would be for me to talk about what we tend to use, and how we've answered the above questions.
1)Penny and I chop and change our preferred recipes a lot; this comes of reading the paper and recipe books a bit too much, I guess. Still, our basic recipes tend to stay fairly stable, mainly because they're reliable, comforting, and easily made from long-lasting ingredients.
2)I'm quite an improviser myself; I prefer to learn basic principles through practice and then never follow the recipe, and don't plan ahead much. Penny follows the recipes closely, adapting and changing based on experience and common sense, and prefers to plan ahead.
3)We cook for two. It's a very easy number.
4)We have a hob, grill, and oven. We have a kettle, toaster, food processor, blender, rice cooker, and microwave. We have a fridge-freezer. We shop at various supermarkets (Sainsbury's, Tesco, Waitrose) and at the local farm shop, which I think came up in a previous post.
The basic recipes we most often use are:
1)Tomato sauce for pasta, which Penny's mentioned before. Basically needs onions and tinned tomatoes, which both keep well. Useful as the base for a hundred and one meals, including bolognese, chili con carne, puttanesca, jambalaya, vodka-sauce pasta, minestrone, lasagna, ratatouille, and bouillabaisse. Like all basic recipes, practice often to make it as reliably as possible; it's difficult to screw up.
2)Noodle soup. I suppose you could use a packet but really I mean good stock, probably some miso, and dry noodles (of any kind; egg noodle, ramen/lo men/ramyun/etc,, soba, thin rice noodles, thick rice noodles, udon, or even spaghetti or linguini). Add any chopped vegetables (spring onions, peppers, mushrooms, bok choy, bean sprouts), sliced grilled or fried meat (teriyaki beef, grilled or foil-baked salmon, marinated or char sui pork), and anything else that fits with the sort of taste you're going for (seaweed, won ton, a raw egg or two, coconut milk, ground peanuts, chilli peppers, lemongrass, ginger, kimchi) to endlessly customise into a quick, simple, warming meal. For a different take in the summer, try it with soba, cold clear stock, sliced cucumber and pear, and ice: nengmyun. Sometimes, though, only packet ramen will do.
3)Chips. By which I mean oven-baked thick fingers of potato, made like roast potatoes (which, indeed, basically differ only in shape and are more appropriate for some dishes, like roasts). Basically, take some floury potatoes (waxy ones will do, but work less well), peel, and cut into the shapes you want (more or less even and about 2” across for roast potatoes, or long and more like 1” thick for chips). Meanwhile, heat the oven to about 200 and put in a suitable oven dish with some oil in the bottom. Parboil for 5-10 minutes, drain, and then put back in the pan with the lid and shake about so it goes all fluffy on the surface. Add oil (and salt and pepper and even occasionally a dash of chili oil, but that's just me) in the pan and shake to coat evenly. Put in the pre-heated oven pan and cook for about 40 minutes, turning over once or twice, until nicely and unevenly browned and crispy. Serve with suitable main (sausages, with or without some good greens such as green beans or steamed green or black cabbage, or with braised red cabbage; steak, of course; home-made battered fish, occasionally), or as the main focus (chips with two boiled eggs and a nice salad or well-seasoned vegetable like beetroot, red cabbage, or mushy peas work very well).
4)Stew. Now, this takes a while, so it's not really one for the weekday evenings unless you have a crock-pot (which we don't) and can cook it all day beforehand. But diced floured meat (beef or lamb, usually), potatoes, carrots, onions, tinned tomatoes, stock, herbs, maybe some barley, maybe parsnips – hard to go wrong. I quite like making it with a herby scone topping (like a cobbler, but savoury), or with additional spices and flavours (they have to be fairly sturdy to make it through the overwhelming lovely meaty-vegetably goodness) like oranges, chorizo, or chili pepper. Still, a bit wintry and rib-sticking, you wouldn't want it every day.
5)Prepared food. Sometimes, you want to bake fresh bread and cook all day from scratch with beautiful organic local fresh ingredients. Sometimes, you just want beans on toast in five minutes. And there's nothing wrong with that.

Making things: Christmas puddings

This weekend, I made two Christmas puddings. I'd never made Christmas puddings before, but as we are having Christmas here this year, I thought it was time to attempt it. I used the Hugh Fearnley-Whittingstall recipe which was in the Guardian, a few weeks' ago. The ingredients weren't particularly fancy or expensive; lots of dried fruit, suet, breadcrumbs and marmalade were the main components.

Although not time-consuming to make, the puddings needed to be simmered for six hours; they have since been topped up with brandy, and will be cooked for another two or three hours on Christmas Day.

It is a good, satisfying feeling to have the puddings ready, though of course it remains to be seen how they will taste.

Cooking without waste 1: The questions

This is a guest post; the first in a series on frugal cooking, from Jian.

Since Penny's somehow formed the opinion that I'm a fairly frugal cook, and good at using up leftovers and ingredients, she's asked me to write something about buying food economically and cooking without waste. Very topical these days. Few cookbooks seem to go out without at least a small section on how to stock your larder with most bang for your buck, and avoiding throwing away food.
I would say we throw very little food away; mostly, the waste we generate from food shopping is packaging, which is a bit of a pain. I think that in order to cook economically, one needs to ask and answer some basic questions about priorities. The main questions one needs to answer seem to be:
1)What do you most often cook, what do you most like to eat, and what do you most like to cook? The three categories do not necessarily overlap much, and it's therefore best to try and make them so as much as you can. Once you know what you will cook, you can be prepared with the right sort of ingredients, and avoid waste. It's a pain to buy a nice ingredient (like bok choy, or halloumi, or venison) that you like the look of, and is in season or on special offer, but to have to throw it away because you didn't have a plan for it.
2)How do you plan your cooking? Are you the sort of person that likes to plan a whole week's menu in advance, with cascading recipes (e.g. spaghetti bolognese to chili con carne and meatloaf, using a tomato-based mince recipe as the base), or do you prefer to improvise? This is, I suspect, as much a matter of personality as anything else, though of course you may be a very well-organised person who's rather chaotic about their cooking, or vice versa. Also, do you follow recipes closely, or do you prefer to make it up more as you go along?
3)Who do you cook for? Cooking for yourself can be wasteful, sadly, since proper cooking for one can be quite uneconomical in ingredients. Cooking for several people will raise the issue of differing preferences, and if some of them are children or eat at different times, things get progressively harder, more expensive, and more wasteful. Penny and I are in the happy position of only cooking for each other, which helps tremendously, but that won't be of much use to you.
4)What cooking resources do you have? Just a hob, or a grill as well, or an oven too? Do you have a kettle or a toaster? How about storage – a fridge, a larder, a freezer, even a chest freezer? How about less common equipment such as a crock pot, deep-fat frier, blender, kitchen mixer, microwave, sandwich-maker, or low-fat grill? What utensils do you have? Finally, what ingredients are available to you at your local shops: what's at your supermarket, do you go to farmer's markets, delicatessens, or ethnic food shops?
That all said, it's clearly going to be very difficult to give any useful advice that's generally applicable to everyone who'd like to cook more economically. I will, however, give it my best shot in future posts.

Christmas present thoughts

I suppose it is because I have been in discussions with my family about Christmas plans, and have just ordered a goose for Christmas dinner, that my mind turned to present-buying. I am keen not to accumulate too many "things", ior to clutter other people up with them unnecessarily, but there are certain gift ideas that I do like. (These are things that I've enjoyed being given, and will occasionally ask for; I'm noting these rather than gifts I have given to others..)

-Consumables - luxurious food items are nice, including pickles, luxurious, though preferably small, chocolate items, mustards, homemade jam, honeycomb honey, Chinese tea. Homemade jams, truffles and so on are lovely to receive. These are the sort of things which I would not usually buy as part of my everyday shopping, but which it is good to have in stock.

-Toiletries - I know it is a cliched gift, but I really like to be given nice-smelling and beautifully packaged soaps, bath oils and lotions. I think that anything for the face or hair is best avoided, unless specifically asked for, as I think many people have their own preferences about such commonly-used items.

-Tights and socks - I sometimes ask for colourful, luxurious or patterned tights, or extra-soft socks. Sounds odd, but they are items which wear out quickly, so a supply of appealing replacements is always good to have.

-Padded coat hangers - although the plastic ones are serviceable - I have completely purged my wardrobe of the hateful wire ones- padded hangers are much better for jackets and dresses, and give a sense of order to the wardrobe.

-Small kitchen items - again, this may be strange, but I have enjoyed being given tea towels, pastel coloured washing up cloths, unusual washing-up brushes, colourful spatulas, and storage jars.

-Books - I am less keen to receive the latest paperbacks, as I am likely to borrow those I am interested in from the library, but it is always nice to receive: unusual books in a subject of interest, particularly if rather obscure, other books by an author I am keen on, and do not already own.

-A single large gift may be preferable to lots of smaller things; this year, my family are discussing buying one collective present for each member of the family, which they have chosen, or at least offered suggestions for, to simplify matters.

Spending my allowance - and a new coat

A couple of weeks' ago, I collected my new coat. I had this made for me by a tailoring service. This sounds very extravagant, and it was certainly expensive. It is early days, but my initial view is that this was a worthwhile investment. (The style is a fairly classic, hopefully understated military one; sharp shoulders, double-breasted, and the coat reaches to mid-calf level. The colour, which is not understated, is a very bright blue.) And because it was made for me it fits me really well, including properly long enough sleeves, which does make quite a difference.

Being solidly wool, it also feels very heavy, rather like being wrapped in a blanket, which is very comforting. (I mentioned this to a friend, who said, and knows from her work, that weighted blankets are often used in psychiatric treatment. I can see this would help.)

All the traditional style books I have read suggest that it is worthwhile having a really good quality coat, and Mme Dariaux, whose book I have reviewed here, recommends a very good quality and brightly coloured coat. My last coat was deep red, with a fake fur collar, and I wore it happily and more or less constantly for about seven years; it is still wearable, but showing its age rather, and had to be mended last year because of a very worn sleeve.

Having spent so much of my allowance on a coat, I will be looking after it properly, with a view to wearing it for many years to come. This means hanging it up on a good hanger as soon as I take it off, and brushing it carefully. At the moment, I am going so far as to put it back in the breathable garment carrier that the dressmakers gave me, after each wearing, but we will see how long that habit lasts!

I will also not be buying any other new clothes for a while, so will have to make the most of the clothes I bought last year and early this year, or sometime before then. I acquired a good stock of shirts last year, and having read India Knight's tip about the use of spray starch in 'The Thrift Book' am hoping to bring some life back into them.

In terms of colour coding, I have a lot of black and purple in my wardrobe at the moment, so various options for reasonably coordinating outfits. (Mme Dariaux's tip, which I have read elsewhere, is to match winter outfits with your winter coat. I can't quite manage that at the moment, but am hoping that the colours I have coordinate reasonably well.)

In the short time that I have owned my coat, two strangers in shops have admired it enthusiastically, so I am encouraged in my belief that I have done the right thing.

The case for personal allowances in a joint financial set-up

I will be writing more about budgeting in due course, including some expert input, but in the meantime wanted to write about personal allowances, as I seem to have had conversations about them with several people recently.

I think that if you are part of a couple, it is a very good idea for each person to have an allowance for their own spending, outside shared household spending. (This is assuming that your finances are generally joint, of course.)

My reasons for this are:

-It allows people to spend money on what matters to them without feeling that they need to justify their purchases to their other half. (I buy more clothes than my husband does; he buys more books than I do, but his habits don't bother me, and hopefully mine don't alarm him, because we each know that this spending is within agreed limits.)

-It encourages spending on things that each of us wants to buy. Illogically, but possibly not entirely surprisingly, before I had an allowance, several years' ago, I used to feel that buying an item of clothing for about £30 was pretty much always acceptable, but I would generally have hesitated in spending more, even for something really worth having.

I wouldn't have considered not buying anything for months, and then buying something costly, even though this might have added up to the same thing in terms of expenditure. Now, though, if I want to spend money on a really expensive item, or save up and buy several things all at once, that is up to me. Also, there is no need for the item to be useful, if it is what I've decided I want.

-It is a way of separating out personal spending from everything else that needs to be paid for, and makes it easier to keep track of your money.

How to track your allowances:

-Until the recent bank charges issue I wrote about with Halifax, we had separate bank accounts into which our allowances were paid, from our joint account. Now, though, we have closed those accounts and set up 'jars' within our offset account into which our allowances go automatically. I think the important thing is to be able to see and keep track of the money somewhere separate from the household accounts.

How much should it be?

-I can't really answer this; it depends on how much you earn, what you have decided it needs to cover, how much income you have, and how much you want to spend. For clothes allowances, I have heard the figure of 10% of net income suggested as an appropriate figure.

A Christmas craft-making event

Last week, we went to a Christmas craft-making evening at a nearby bookshop. The purpose was to make Christmas decorations for their shop window, and to learn how to make them for ourselves. Some of us made snowflakes from pages of remaindered and damaged books, wreaths from polystyrene and yarn, and others made robins from scraps of fabric. An appealing thing about making these items was that they were all quite simple. At the beginning of the evening, many of us in the group were rather self-conscious about our craft-making abilities - definitely me included - but we all relaxed as the evening wore on, and mince pies and wine were consumed, and ended by feeling quite pleased with our efforts.

'The Thrift Book' by India Knight

India Knight, who wrote an earlier book 'The Shops', about her love of shopping, writes here of how she recently came close to bankruptcy, from a lack of attention to her money, rather than low earnings, and thereafter changed her spending habits. She is also keen to encourage preserving resources from an environmental point of view, and her writing is influenced by that.

This book is largely about living well without spending huge amounts, and includes sections on food, clothes, beauty products and so on. It also includes a chapter on personal finance where she explains important financial terms and concepts in a very basic way.

I have a different sort of life from the author in many ways; I do not live in London, and have never had her self-confessed phobia about financial issues. However, there were quite a few ideas I liked, and some useful tips.

On clothes, she recommends buying a small number of quality items of clothing, including possibly vintage clothes, and looking after them well. (She reminded me of the existence of spray starch, and I have now bought some to use on my shirts; it definitely makes them feel newer.) The Lakeland home dry cleaning kit she mentions is something I will definitely be trying out.

On making things, she pointed out many inspiring websites and blogs.

On beauty products, she includes a section on how to look expensive, and useful information on home hair dyeing and the differences, or lack thereof, between some cheap and expensive make-up brands.

She also writes about growing food; this is something I am keen to start doing, but am rather nervous about, and her approach, and the websites mentioned, made me feel this was definitely something worth attempting.

On eating out, she encourages people to go for a set lunch at a really special restaurant, rather than either spending a fortune on dinner at a fancy place, or a fair amount somewhere less inspiring.

In summary, I did enjoy this book. I thought that her perspective, as someone who has come close to bankruptcy, was an interesting one, although many of the tips would only really apply to those who had been used to a high-spending, city lifestyle, involving a lot of shopping and eating out. It would be quite useful for anyone not very interested in, or familiar with, personal finance, as a starting point. Although it is very up-to-date, I actually much preferred 'Orchids on Your Budget', which I found more inspiring.

A weekend away

Last weekend, I met a friend for the weekend. We met halfway between our respective homes, which are very many miles apart. We had both decided that we did not want to spend too much money, while having as good a time as possible, and did the following, to this end:

-My friend found a hotel with good reviews and a reasonable two night with one night's dinner deal, and booked us in for that. (It was a very nice hotel, and the food, especially breakfast, was excellent.)

-She also suggested a book-swapping arrangement; we each bought some extra books with us, so got to read some different things from usual, without needing to buy them.

-I had initially planned to take the train, but discovering that even by booking ahead the cost would be double that of my petrol, I reluctantly decided to drive. (I realise this is not ideal from an environmental point of view, though my car is at least small and pretty fuel-efficent.)

-Driving would mean of course that I wouldn't be able to drive or listen to my ipod, so I rented the audio book of ' The Small Bachelor' a P.G Wodehouse novel, from the library. This was excellently well read and entertained me for very nearly all my journey there and back, and my husband is now listening to it on his commute. £1.50 well-spent.

-For once, I planned ahead and took sandwiches and some extra apples for the journey so that I would not need to stop for food.

-While at the hotel, we took full advantage of the very good English breakfast, which it suited us to eat late, meaning we did not need lunch.

-Instead, we had afternoon tea back at the hotel which took us through to late evening and a plate of cheese and bottle of wine. (I realise that from a nutritional point of view, this sounds pretty poor, but one can't have everything, and this was part of the fun.)

-We were staying a little way out of town, but walked in rather than driving, so as to save the bother and expense of parking, as well as getting some exercise and seeing the sights.

Wasting money on a taxi

Last week, on fireworks night, we arranged to go to the fireworks display in our village with my sister and brother-in-law. As I was due to be in London that day, and had a fairly late meeting, we arranged that I would catch up with the others later, if I missed the train home which would get me back in time to see the fireworks. My meeting did, as expected, end late, but instead of accepting this, and settling for catching a later train, I asked a taxi driver how long it would take him, and how much it would cost, to get me to the station from which my train left. (I usually take the tube.) His answer suggested that we could make it, so I decided to make the attempt. In fact, the traffic was so bad that I ended up missing the train I was aiming for, and catching exactly the same train I would have caught if I had taken the tube as usual. And the cost was several pounds more than the driver's estimate.

I thought later about what I could learn from this, and decided that my mistake had been my unrealistic expectations of the time and cost involved in getting to where I needed to be. I should, had I been sensible, have accepted that I could not make it home in time, and carried on on that basis, but I had attempted to solve my problem with money, and had ended up just wasting it.

The Millionaire Mind by Thomas Stanley, and home-buying

This was the final element of Thomas Stanley's book that interested me, particularly because most people imagine that the wealthy live in huge mansions with swimming pools, and hundreds of bedrooms, and that is evidently not the case.

-Most of the wealthy people Dr Stanley surveyed for his book had lived in the same home for many years.
-Over half of them lived in houses with fewer than four bedrooms.
-They tended to live in 'nice neighbourhoods', where the houses were not newly built. (He describes them as old houses, but this is by American, not UK, standards!)
-This was partly because these areas tended to have good state schools, but also because better historical price information would be available for areas with older houses.
-These people would not take on large mortgages in order to buy a house, in the hope of benefiting from future price rises, because of the risks involved.
-They would not take advantage of a high-earning year or two to sign up for a huge mortgage.
-They would not generally build their own houses, unless they had knowledge in this area – lawyers were particularly averse to doing so! - because of the time, risk and expense involved.
-They would take their time to research an area, and never buy a house in a hurry, particularly not in an unfamiliar geographical area even if they had to relocate for work.

So, in summary, they generally buy old, reasonable-sized houses in nice areas, near good schools, and intend to stay there long-term rather than trying to make a profit and move on. And barely a swimming pool in sight....

Cold cream and vanishing cream

Looking for inexpensive toiletries, I recently discovered the very reasonably priced Boots range of 'original recipe' cold cream, vanishing cream, and so on, which apart from the price, partly appealed for the old-fashioned names. (They don't seem to have an equivalent range for men; I am not sure what this could consist of, except possibly for shaving soap and maybe hair oil, which sounds very unappealing, and always seems to be used by unscrupulous and vain characters in 1920s and 1930s literature.)

The retro Boots range smells good; although the cold cream is rather solid, it is beautifully packaged, in black-lidded glass jars and green and cream boxes with lovely swirly writing.

The World's Greatest Money Maker: Evan Davis meets Warren Buffett

I watched the programme where Evan Davies met Warren Buffett, which was on BBC 2 last week, with some interest. I only knew a few things about Mr Buffett, apart from the fact that he is currently the richest man in the world, is known to be eccentric and to favour a simple way of life.

Although the programme neatly set out the Warren Buffett approach to investing, the things that struck me were the following:

-His investment strategy seems to be amazingly simple, and to involve a great deal of common sense. My lay-person's summary of it is that he believes in buying a small number of stocks which he has researched thoroughly, and where he understands what the company does, and holding those stocks for a very long time. He cited 'The Intelligent Investor' by Benjamin Graham as a key book. (There were some aspects of his strategy, involving insurance companies, which seemed more complicated, however.)

-In some cases, he buys whole businesses, in which case he appears to adopt a hands-off management style, and to be full of praise for his managers; those Evan Davies spoke to seemed genuinely delighted by Mr Buffett's public expressions of his approval.

-He clearly knows who he is and is supremely confident – he came across as someone who is extremely good at what he does, and enjoys it, and doesn't need to pretend to be anyone else. He seemed modest about his peculiar talent, however, taking the view that some people are good at making money, and others are good at singing or other things.

-He is evidently a creature of habit – one of his colleagues said that he was someone who worked out what suited him and then stuck to it; that seems to apply to both working practices and to his eating habits. (He prefers to go to a particular steak house in Omaha, where he always orders the same meal.) It seemed that he had tried to simplify decision-making as much as possible, in many areas of his life.

-He knows what is important to him and what makes him happy – he said that he lived in the same modest house he has lived in for the past fifty years because he likes it and it suits him, and he could not see that he would be happier anywhere grander. 'If I thought it would make me happier, I would move'. Also, he was prepared to spend only a small amount of time with Evan Davies, because he had his order of priorities, and more important things to do in the limited time alive he had calculated he was likely to have left.

-He does not seem to need to show off – his office is in a very un-showy location, and he has a small staff, and an ordinary car. About charity donations, he said that he did not feel the need to leave his name on a foundation, saying that the ability to name buildings was a valuable asset for charities. They need not waste this on him, as he would leave his money to charity anyway.

-His children seemed to live normal lives, and to have no expectation of inheriting money from him, and to be more than happy with that. They were amused by the reaction others had to finding out who their father was.

In summary, I thought that Warren Buffett was an interesting person; Evan Davies summed it up well by saying that was sometimes exceptionally ordinary, and sometimes deeply unconventional. While I have no ambition to be the richest person in the world, or anywhere close, there were some aspects of his philosophy and approach to life from which I felt something could be learnt. I will not, however, be adopting his coca cola and steak diet, nor moving to Nebraska!

Frugal habits

Elizabeth Gaskell, in Cranford - about which excellent book more, another time - observes that most people have odd habits of frugality, for instance in their use of candles, or writing paper, and that there are certain areas where they will go to great lengths to save money, though they may not always be as frugal elsewhere.

Reading this reminded me of my first boss, who told me once that thirty or so years' earlier he had resolved never to buy a biro, and never again did so. He had a nice fountain pen, used for signing letters and for personal correspondence, but for everything else he made a habit of using free pens, picked up whenever they were on offer, and using those. I usually seem to be using a free pen acquired at some conference or other, and perhaps I have also absorbed the notion that pens are something which one should not have to buy.

For another, my mother-in-law, who is extremely careful and orderly in all things, was the first person I had ever met to make rubber bands out of old rubber gloves. I always seem to have a plentiful supply of rubber bands lying around, but do occasionally follow her example, although mine always have jagged edges and look a lot messier and more uneven than hers.

I suppose this is further evidence of how much we are all creatures of habit; I'm not aware that I have any particular frugal ways myself, except perhaps for an occasional fondness for second-class stamps, but perhaps I wouldn't know it; I'd be interested to hear of any other habits that others have observed in themselves or other people.

Possible re-discovery of a family heirloom

Yesterday, my grandmother and mother were visiting, and as we were having tea - coffee and walnut cake made by me; fruit tea loaf made by granny - my grandmother suddenly asked whether the standard lamp in my sitting room might have come from her childhood home. We traced back how it had come into my possession; my parents had given it to us when we bought our first house, and it was, inexplicably, then painted bright blue. ( It was the nineties....I later painted it off-white, which it now is.) My mother had inherited the lamp from her aunt, who had inherited it in turn from her mother, my great-grandmother. So, indeed, it was the same lamp my grandmother remembered from her mother's living room, from the early 1930s.

It was pleasing to think how much use that lamp has given to several generations of the family. Given its age, I thought it would be nice to see how it would look back to its original wood finish, and I have started to look into removing, or having removed, the various layers of paint, so we can see how it looks underneath.

Earning extra income: the rent a room scheme

I was speaking to a friend the other day who mentioned that he was thinking of letting a room in his home to a lodger. I mentioned that I vaguely remembered that there was a scheme allowing this to be done tax-free. I have checked on this since, and in fact the 'rent a room' scheme allows you to rent a room tax free for up to £4250 per year. This is possible whether the home is one you rent or own, although if you rent then it is likely that you will need permission from your landlord before sub-letting.

There are more details on this scheme at the direct.gov website, at the link below.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

Making things: ice-cream

A couple of years' ago my sister gave us a lovely present, of a low-tech ice-cream maker, and so every so often, we make our own ice-cream. (We bought some cream today so we can make some to have with apple crumble, when my parents come for supper later in the week.) The machine we have is about the size of a small mixing-bowl, and needs to be put in the freezer for a while before being used. Once it has been chilled, it only takes about half an hour for the ice-cream maker to turn your cream, sugar, and other ingredients into ice-cream; if you taste the mixture before putting it into the machine, it may taste horribly sweet, but it will taste quite different once frozen.

In terms of flavours, we have added chocolate chips or gratings – creating something along the lines of the straciatella ice-cream we liked so much in Italy, and, another time, peanut butter to remind us of amazing ice-cream eaten at an ice-cream farm in Scotland; another successful flavour was brown bread. (I hope I do not sound too greedy when mentioning the major food associations we have with all our holidays?) By the way, as well as the peanut butter the Scottish ice-cream farm made some other wonderful flavours which we have not yet tried to replicate, including turkish delight and rhubarb crumble..

It is fun using the machine, though it does make quite a bit of noise, and the ice-cream produced is definitely cheaper than the fancy brands we like eating as a treat. (It probably does not work out cheaper than margarine-style ice-cream, but is a rather different experience from that.)

'The Millionaire Mind' and the economically productive household

Following on from last week's post about 'The Millionaire Mind' and vocation, this week I am looking at what this book has to say about household spending. In one chapter, Thomas Stanley analyses the spending patterns of the wealthy, and notes that the members of wealthy households are more likely than others to be in the habit of doing the following things:

-Changing telephone providers to benefit from cheaper deals
-Having shoes repaired
-Having furniture re-upholstered instead of buying new
-Using discount coupons when shopping
-Buying household supplies in bulk

He points out that although doing each of these things may result in a fairly small weekly or monthly saving, over many years, the amounts saved will be significant.

I found one of Dr Stanley's examples interesting: that of a wealthy woman who, together with her husband, lived in a very nice house in an expensive neighbourhood. She bought high-quality clothes, but from second-hand shops rather than bought new; she ate good-quality, healthy food, but used coupons, planning her meals in advance, and cooking from scratch, and did not drive an expensive car. She was happy to spend a lot of money on antique furniture, partly because good quality furniture would last for a long time and be worth repairing or re-upholstering, but also because antiques would generally hold their value over time, if not increase, and could be passed on to future generations.

The lessons I took from this chapter were that it is worthwhile taking a long term view as small habits can lead to significant savings of time; it is worth prioritising what you want to spend money on, and allocating resources accordingly; and that it makes sense to spend money on things which will hold their value, or increase, like property or antique furniture, rather than consumer goods, expensive cars, or cheap furniture, which will not.

A letter about overdraft charges

My bank sent a letter to me this week, telling me that they would soon be introducing more 'straighforward' overdraft charges, under which they will be charging a pound a day, so three hundred and sixty five pounds a year, for having an authorised overdraft, whether for £1 up to £2500. I had to read the letter more than once to check that I had not misunderstood. The account involved is a personal account into which I pay my personal allowance, for clothes, books, and so on. The amounts going in and out are fairly small, but as it has an overdraft limit, up until now I have been pretty relaxed about going slightly overdrawn on it within the limit, when it suited me to do so, and this has cost me a few pence a month. I have learned my lesson now, however, and intend to close my account as soon as possible.

P.S After writing this post, I heard a discussion about this issue on the Moneybox programme, on BBC Radio 4, and there is a relaetd e-mail discussion on the BBC website.

De-cluttering the larder

I have been reading the recipe book "Economy Gastronomy", by Allegra McVedy and Paul Merrett, from which we've cooked some good recipes lately, and have been rather horrified by the figures on the vast amount of food wasted in the UK. Although we are fairly good about using up things in the 'fridge and freezer, sometimes packets or tins get forgotten about at the back of the cupboard.

I'm going through our larder at the moment, finding those things which should be used up before they need to be thrown away, and working out what to do with them.

Amongst various other bits and pieces, I've found the following:

Two packets of barley - there's a great barley salad recipe involving goats' cheese in Economy Gastronomy (p.199), but an even simpler meal is barley cooked in stock with some vegetables or salad and grated cheese. (The barley needs to cook for around half an hour, but needs minimal preparation.)

The end of a bag of couscous - also good with cheese or bacon and vegetables or pesto.

Red lentils, nearing their sell-by date - 4 oz can be made into lentil soup with a tin of tomatoes, an onion, and about a pint of stock. (Again, extremely easy, to make and takes about half an hour to cook.)

Green lentils - with onions, stock and garlic, could be made into a mush to accompany sausages.

Half a pack of walnuts - will be used to make a lovely coffee and walnut cake - a normal victoria sponge with a dash of strong coffee in both the cake mixture and the icing, and decorated with the walnuts.

Nuts, seeds and dried fruit - I found quite a few ends of packets - could all be added to homemade granola. (By the way, I've found that keeping all small baking supplies like nuts and cooking chocolate in a small box in the cupboard helps to reduce the chance of my buying duplicates.)

"Orchids on Your Budget, or Live Smartly on What You Have"

I mentioned that I had ordered this book a week or two ago; I have now read it, and been delighted by more than the title. The author wrote the 1930s bestseller "Live Alone and Like it" before writing "Orchids on Your Budget". This book is not aimed at those with serious financial problems, but at people interested in living well, responsibly and stylishly on moderate means.

It is filled with creative and inspiring ideas, some of which I will definitely revisit in future posts, but the main points I took from it were the following lessons:

-Don't feel you have to maintain a front of a fancy lifestyle to impress others, while scraping a miserable existence behind the scenes. Instead, forget others' expectations, take down the front and spend the money saved on things you care about.
-Work out what you want, and then work away of having that, whether by generating more money - and she offers many creative suggestions for doing so - or by making savings in other areas.
-Know the difference between real luxuries and habits. E.g don't buy a daily newspaper out of habit if you don't actually read it.
-Don't spend so much on housing, or food, that you don't have enough money for miscellaneous extras, whether those are orchids, holidays or theatre trips, or savings. The author is an advocate of getting a slightly smaller house or flat than you think you can afford; this will save not only on rent or mortgage, but also on the extra maintenance of a larger place.
-Plan ahead, whether in relation to your clothes - she suggests adopting a single colour for your wardrobe each year, and sticking to it fairly strictly - or entertaining.
-Play to your strengths, in terms of your assets and skills. My favourite example was that of a woman with a lovely silver tea service, whose preferred form of entertaining was therefore to have tea parties.
-Enjoy the challenge of doing a lot, and having fun, on a little money.
-Don't assume that you would be happier, better dressed and so on, if you were rich. The author considers that those who know about clothes will be well-dressed regardless of how much money they have; they spend time and effort instead of money.
-Do your social duty; return invitations, even if you can't afford a lavish party, and take responsibility for your problems if you do get into serious financial difficulty.
-Don't follow other people's rules on budgeting too slavishly; everyone is different, and you need to adopt a system that makes sense to you.

Is National Trust membership worthwhile?

I was taken to many National Trust houses and gardens during my childhood, and have had my own National Trust membership for most years of my adult life. Looking through my list of direct debits recently, I briefly considered the value of my National Trust membership, and concluded that this is thoroughly worthwhile. First, the National Trust is an organisation which does a great deal to preserve the English countryside, including many historic houses and much beautiful scenery. Therefore, even if I didn't not use my membership fully, this would feel like a useful charitable donation. Secondly, if I make even a few visits to National Trust houses or gardens each year I will soon save myself more than the cost of membership. Thirdly, because I can visit houses for nothing, if I want to make a flying visit somewhere, or go repeatedly to the same house or garden it is possible to do so without feeling that I am wasting money on entrance fees. (I was taken to a National Trust place near my grandparents dozens of times during my childhood, and never tired of it, and I quite often visit my nearest National Trust garden for a walk.) Fourthly, I find it educational to visit National Trust houses and gardens, always learning something in the process, whether about the history of the family involved, or the plants in the garden or the china or furniture or paintings.

National Trust membership also makes a sense for holidaying in the UK - English membership was, last I heard, recognised by the National Trust of Scotland - as wherever you are staying, you are likely to have some places to visit nearby. In the Lake District recently we found that some car parks were National Trust ones, helpfully saving members a few pounds here and there on parking fees. Alternatively, if you are staying at home for your holidays, you can use your membership for some inexpensive day trips.

Finally, many of the National Trust properties have cafes and restaurants, with good and reasonably-priced lunches and very nice cakes and ice-creams, with an apparent recent emphasis on local produce.

What to do with a lump sum?

I talked recently to someone who had come into a chunk of money, and asked me what I thought it was best to do with it. This is of course a good question to have to answer. I think it makes sense to do some planning and to try and strike a balance between enjoying your bit of good luck now, and benefiting from it in the future. My suggestion would be to do something along the following lines:

1) Pay off any high-interest debts, with the highest interest ones - almost certain to be any credit cards - first, then any other loans, apart from mortgage and student loans.
2) Once that is done, set up an emergency fund if you do not have one already, or top it up if you do. (As mentioned elsewhere, it is a good idea to have about six months' living expenses tucked away if possible.)
3) If you have done both of these and have some money left, I would designate some of the money for fun; a holiday, really nice meal out, home improvements, presents for your family, or whatever. The amount depends somewhat on how much money you have received, what your general financial situation is, and what you would like to do as a treat.
4) Next, you may want to look at your pension. For instance, if you are not paying the maximum into your pension to benefit from your employer's maximum contributions, it would be worth considering doing this for the future, and back-dating these contributions if you are allowed to do so. (If you work in the public sector you may be able to make additional contributions to your final salary scheme, which would be worth looking into, as this could make quite a difference to your final pension.) The advantage of doing this is that it should improve your pension situation in the long term. Because of the tax position of pensions, pension contributions are quite an efficient use of the money.
5) Another option, either as alternative or in addition to 4, is to consider paying off a chunk of your mortgage, although you should check first that you won't incur fees for doing so; this will probably depend on the amount of the planned overpayment, and the terms of your mortgage. Although interest rates are fairly low at the moment, paying off your mortgage will still reduce your outgoings and commitments generally, and will involve a greater monthly saving once interest rates go back up.
6) If that still hasn't used up your windfall then you are very lucky indeed! You may want to look at other investments such as stockmarket-based unit and investment trusts, and you may benefit from specialist investment advice at this point.

The Millionaire Mind by Thomas Stanley, and vocation

I have recently re-read "The Millionaire Mind" by Thomas J Stanley, partly to refresh my memory about this very interesting book, and also with a view to reviewing it here. I realised, however, that it addressed so many themes that I would prefer to write about a few of them in turn. If you have not encountered this book before then I do recommend it; following on from "The Millionaire Next Door", by the same author, it covers the characteristics of those who become wealthy in America.

Contrary to what you may expect from the title, and my description above, this is not a self-help book, and there is nothing gimmicky about it, but instead it is a very detailed academic analysis of how those who become wealthy do so, and the factors in terms of personality, profession, and financial approach which contribute to their success. (The author is an academic and university teacher.)

On re-reading, I was particularly struck by what Dr Stanley says about the importance of vocation for those who become wealthy. I have sometimes felt that one seems to have to choose between earning a good salary and doing enjoyable and interesting work. I have recently concluded, and this was reinforced by what I read here, that it might actually be unwise to stick with a career one does not love, quite apart from the unhappiness involved in doing so, because of the need to compete with others who are more genuinely motivated and enthusiastic, which over time would begin to tell.

I found it very interesting and encouraging to read the probably obvious-to-everyone- else fact that those who are financially successful in their work generally have great enthusiasm for what they do, not purely as a means of making a living, but as a vocation which uses their talents and suits their interests fully. It was also good to read the story of one highly successful sales man who left, or was dismissed from, 9 sales jobs before finding one to which he was ideally suited, and in which he was highly successful and contented.

Making things: granola

I recently tried making granola for the first time. Most breakfast cereal didn't seem to taste of much, but to involve a lot of packaging and to be rather expensive - and the more interesting-tasting cereal seemed very expensive. It is quite a satisfying exercise, and very easy, to make your own granola instead, and a good alternative to porridge - another wholesome breakfast - if you don't have time to cook, or don't feel like it. I used Nigella Lawson's recipe from Feast, although on second making adjusted the quantities, as the Feast recipe involved large quantities of rather expensive whole almonds. As well as eating for breakfast, it works well sprinkled over ice-cream as a pudding. Similar recipes to the one I have used can be found at : http://allrecipes.com/howto/great-granola/detail.aspx

Mending

Today, I have spent a satisfying hour or two mending clothes. I am not a talented seamstress, but have been sewing on buttons and mending tears in a few shirts. It is a good feeling to make these repairs, and to put some garments back into circulation which have been on a mending pile for some time. I have a small sewing kit which includes a twist of threads of all sorts of different colours, which I have had for years. When I come to mend an item, I can generally find a piece of thread of approximately the right colour for the garment involved; I don't need to buy or store reels of cotton of many different colours.

Using credit cards

I recently read an article on get rich slowly - www.getrichslowly.org - where the author suggested abandoning using credit cards and using cash instead. I thought this was an interesting suggestion, although one I might find it inconvenient to implement in practice, but I do agree that it is best to simplify one's credit card situation as much as possible. My thoughts on using credit cards are as follows:

1) Credit cards are a terrible way to borrow money; the interest rates are huge compared to any other type of loan.
2) Credit cards can be a useful way to pay for many purchases, but only if you already have the money for them.
3) It is worthwhile signing up for a credit card with reward points or airmiles. (Mine gives 2% cashback.) These benefits are only worthwhile if you pay off the full balance every month, however, as they would not come close to offsetting the interest payable.
4) Having used various cards in the past, I have now simplified my situation to the following; using one Mastercard for all household bills and most large items.
5) I have online billing, meaning a) you can check the state of your account at any point, and b) it is set up to pay the full balance every month, so you don't need to bother with a bill and worry about avoiding late fees. If you do not have this option, make sure that you have a way of keeping track of the due date of payments, so that you avoid running up charges for late payment.
6) If you need to have a back-up card, for instance for travelling or to pay for large one off items, keep it tucked away somewhere safe, and not in your wallet, when not needed.

Business travel, and money

I went to Germany for work this week, and while away gave some thought to my rules on business travel and money. (The day I set off was also the day that the next phase of the MP expenses scandal began!) I find it quite easy to fritter away money while travelling; here are my thoughts about how to avoid doing so.

1) Keep a container of miscellaneous currency, and make a habit of checking it, and taking relevant currency, when you go away.
2) Designate a wallet or envelope for expenses for your trip when you set out, so that you have all your receipts in one place.
3) Try to avoid spending money on anything that while potentially justifiable, you won't feel comfortable claiming back on expenses. (E.g extra snacks, slightly expensive lunches, or taxis, if the policy is to use public transport.)
4) Make sure you get receipts for anything that you do intend to claim back. (I felt slightly embarrassed reminding the air steward about the receipt for my airline bottle of water this week, but it was a very expensive bottle of water, and I had this article in mind!) If you are in danger of forgetting why you have kept the receipt, write on it.
5) Be prepared for time waiting around by taking plenty of reading matter, so you will be less tempted to succumb to airport newsagents and book shops.
6) Be careful about phone calls home from abroad; if you are entitled to claim the costs of a phone call home, keep the appropriate records; be aware of the hotel or mobile phone company's charges for overseas calls.
7) If you are expected to use your own credit cards for large items, e.g hotel bills, take the opportunity to pick up reward points, or airmiles.
8) If you have the opportunity to do any personal shopping, take advantage of this to buy things that may be cheaper, or better, than at home, if you have decided you can afford to do so. However, do make sure you are up-to-date on the exchange rate, and watch out for hidden sales tax, not marked on goods in shops, in some places.
9) When you get home, return any unused currency to your miscellaneous box, and fill in and submit your expenses claim as soon a possible.

Book Review: "A Guide to Elegance" by Genevieve Antoine Dariaux

This may sound like a frivolous book to be reviewing for a blog supposedly about personal finance, but actually I found the advice it contained extremely useful and practical, assuming that the topics of clothes and style are of interest to you in the first place. As I have mentioned before, I find clothes-buying an area where I am naturally inclined to spend money.

This book, whose full title is "A Guide to Elegance for every woman who wants to be well and properly dressed on all occasions" was originally published in 1964, though was updated and re-published in 2003. Though some of the advice, written as an A to Z of clothing-related themes, harks back to a more genteel era, with the suggestion of different outfits for morning and afternoon, cocktail parties and weekends away, sounding in many cases more like 1934 than 1964, much of it remains entirely applicable.

Mme Dariaux considers that Frenchwomen tend to have far fewer clothes than their American counterparts, partly because they are less exposed to advertising, but that the garments they do own tend to be of far better quality. She notes, and this was one of my favourite points in the book, that a woman's aim should be to own a single perfect outfit for every possible occasion, and that there is no stigma attached to wearing the same dress on many occasions.

Other advice is to invest fairly heavily in a good quality, and ideally colourful, winter coat, possibly bought with a skirt in a matching colour, as this should last for several years, and to take the opportunity of a prosperous phase in life to acquire some good jewellery, handbags, a gold compact, a nice umbrella - rather than to buy fashionable dresses which will not stand the test of time.

Under the heading of "budget", is the surprisingly short list of items that the author considers essential to a woman's wardrobe; this is expanded upon in the "Ideal Wardrobe" section.

Her advice on bargains is that whether an item is really a bargain has little to do with its initial cost, and everything to do with how much use and pleasure you derive from it over time. The author also wisely counsels against buying anything, particularly in a sale, because it is bound to be "useful"; you should love it.

In summary, I thought this was an excellent, and very encouraging book. It left me feeling that if I could manage to take a long-term view, plan, and save up for clothes that I really wanted, I would end up better dressed, without having spent too much, and with less clutter in my wardrobe.

The local shop

About a year ago, a small food shop opened in a village a couple of miles away. This was quite an exciting development, as until then we had been dependent on a not very interesting or convenient selection of food shops. The village shop sells fairly local fruit and vegetables, meat, and cheese, as well as a small selection of everyday grocery items.

We try to support this shop by visiting fairly regularly, buying fruit and vegetables, occasionally meat, bread and special cheeses where needed, essentially those things where it feels worthwhile to buy really good quality local food. As a special weekend treat, we also sometimes buy almond croissants; these are huge and the best I have ever had. For a recent family picnic, we bought a meat pie, good cheese, and a large crusty loaf.

Another advantage I find to the village shop is that it is quite refreshing to have fairly limited choices about to buy, as the shop is extremely small; this makes shopping trips very quick and straightforward.

Out of hours, we go to a local co-op to stock up on other things, and we occasionally - maybe every month or two - go to a discount supermarket to stock up on non-perishable items, like tinned tomatoes, kitchen towels and cleaning supplies, which it seems worthwhile buying cheaply and in bulk.

Making things: greetings cards

I am not very skilled at crafts, lacking artistic ability and not being handy, but I like the idea of making things, and generally enjoy doing so when I do attempt it. A while ago, I bought some cardboard, rubber stamps - one a futuristic swirly pattern, and one a rather pretty rose, and some red ink, with the intention of making some greetings cards. I have just tried doing so, and made a few rose-stamped cards. The ink pad had dried out rather, so I added a little water, in the end possibly too much, so the roses ran slightly, and one looks rather more like the man in the moon than a flower. But the exercise was quite satisfying, and I was mildly proud of some of the results, which I think are usable. And the craft materials I bought have at least now been put to some use.

"Orchids on Your Budget, or Live Smartly on What You Have"

I spotted this wonderfully-titled book in Vogue earlier this week, where it featured in a money-saving feature. It is about living elegantly on a small budget, and was written in 1937. I can't wait to receive my copy....(Sadly, this was not featured in my library catalogue, but I decided that it sounded worth buying.) I will report back in due course.

Lifestyle deflation

I used this term in an earlier post, but didn't explain what I had in mind. I have read various references recently to 'lifestyle inflation" meaning the tendency for one's spending requirements to expand with a growing income. I have been thinking back to when we first started working, ten years' ago, and had two small incomes, yet felt better off in many ways, and certainly much less cluttered up by life, than we do now.

Part of it is of course the benefit of hindsight, but I also think that our expectations and needs were much less, and simpler, than what we have become used to as the years have gone on.

Life was not entirely simple back then; we had a house, but it was brand new and low-maintenance, and contained IKEA furniture, some books, a few clothes, and not much "stuff". We had a car, but only one, and lived close enough to work for me to walk there. (Not an advantage in every respect.) We still lived a student-y lifestyle, and our tastes in meals out, clothes, food and furnishings were less sophisticated - possibly in a good way - than now.

Something I have been trying recently is to intentionally deflate our lifestyle. I've reduced my clothes allowance - only just, so cannot yet report on how painful, or manageable, this will be - and will be trying out a much cheaper hairdresser than usual. (I had been going to a lovely hairdresser, but the cost was high.) We are intentionally eating out less than had become our habit. So far, I do not feel deprived, but we will see how it goes. I definitely think that there is an element of habit in many of these expenses. While I do not want us to feel deprived I think, like the routine of buying lunch mentioned elsewhere, that it is possible for something which should be a treat to become an everyday "need", and then it is no longer appreciated, and just leads to further treats seeming normal.

Planning

I've been working quite hard recently, including some time away from home, and consequently haven't been as well-organised in various respects as I might have been. As well as being inefficient with time and energy, my lack of proper forward planning has also led to some financial inefficency.

For instance, I recently ignored the telephone calls from the car insurance company about my renewal until the last possible moment, meaning that I didn't have time to shop around properly for a quote, as I had intended to do.

I've also forgotten to take my packed lunch in to work a couple of times, and therefore had to buy lunch out. I used to feel that a bought lunch was a nice treat on those days - two or three a week - when I was away from home. Nowadays, except on these few recent occasions of forgetfulness, I am in the habit of taking a packed lunch, and save buying lunch for a special occasion, usually a social gathering.

If I am in a hurry I am also more likely to leave making travel arrangements to the last moment, so not being able to take advantage of cheaper rail fares, as well as more likely to eat out for convenience rather than pleasure.

When things are going well, I enjoy planning ahead, and find it quite easy to do so, but I have noticed that my natural instinct is to put my own affairs on hold if feeling under pressure, and find myself living from one day to the next. I'd like to think it is partly the result of a conscientious nature, but is probably not ideal for my own health and happiness, and this is something I am resolved to work on. (A classic example of this is my old habit of leaving my expenses claims to languish for months before submitting them - though that is one habit I have now more or less broken.)

Savings - different purposes - retirement

I've tackled emergency funds, paying annual bills, and saving up for large purchases, and this time am going to begin the subject of saving for retirement. (Remember - I am not an expert, so deal in these questions in fairly broad terms...)

In summary, while most of us working now may receive some kind of state pension on retirement, it seems likely that the vast majority of the money we need to live on in retirement will have to come from our own resources.

There are various possible sources for this income, the most obvious and generally applicable being a pension, to which we will have contributed while working.

There are essentially two kinds of pension; one, a 'final salary' pension which is based on receiving a proportion of the salary you are earning just before retirement, for the rest of your life, and often involves a lump sum being paid on retirement as well. The proportion of your salary which you will receive will depend on how many years you have been a member of the scheme. Final salary schemes are currently available to those working in the public sector, as well as in a very small, and declining, number of large corporations. The advantages are obvious, and the contribution you will have to pay as an employee relatively small compared to the benefit of a decent, guaranteed income in retirement. It may be worth making additional contributions in order to get the maximum benefit from these schemes, if you join late and can afford to do so.

The second type of pension is a 'money purchase' scheme. Under this scheme, employee and employer will usually each contribute a percentage of the employee's salary into a pension fund, which will build up into a sum that can be used to buy an income for the rest of the employee's life when he or she retires. Usually the pension will be held with a financial institution chosen by the employer, but the employee will often have a choice about which funds they invest in, and which are most appropriate will depend on your age, and how much risk you are prepared to take.

The pension contribution offered by different companies will vary, and companies generally match the employee's contribution up to a certain maximum, normally around 5%, maybe up to 10% if you are lucky. It is worthwhile thinking about making the maximum contributions in order to get the greatest benefit from the employer contributions, if you can afford to do so. On retirement, the money in your fund, which will hopefully have grown considerably over the years, will be used to buy an income for the rest of your life, called an annuity. There are various factors which will influence the value of your money purchase pension, including how much you have managed to contribute, which funds your money has been invested in, how much these have grown, and annuity rates - the rate at which it is possible to buy an income - at the time you retire.

Public libraries are wonderful things....

I am not the most patriotic of people, but I do greatly appreciate the UK public library system. I have always visited my local library regularly, to stock up on general reading material; I enjoy reading greatly, and can get through several books each week. However, until fairly recently, I felt somewhat limited by the selection of books in my local library, which as I live in a small town, is not huge, and I would be tempted to supplement the books I borrowed with online purchases.

However, when I lost my library card a few months' ago, and went to sign up for a replacement, I found that the library now offers online reservation services. If you are not already using these, then I strongly recommend investigating them. You can search your county's library catalogue, find out where any copies of the book you are interested in are held, and if the book is not held at your local branch, summon it to you.

This service costs 85p, at least in my county, but will have the book delivered to your local branch within a few days, if it is not out on loan. I find that using this means that there are many books which I do not now need to buy, and am changing my book-buying approach. Now, I buy those books I have read and decided it is worth owning, as well as those which I strongly wish to read, and cannot find through my library catalogue. (This is sometimes the case for US personal finance or business books, for instance, though most fiction I am interested in is available.) I find that many books I read I may enjoy, or get useful information from, but I really do not need to possess a copy.

Another advantage of the system is that if I feel the need to do some online shopping, as well as other spending-deferral techniques which I will discuss more later, I find that reserving books via the library catalogue is a good, and wholesome-feeling, alternative to buying them.

As well as books, libraries can be a good source of DVDs as well as audio-books on CD. I recently hired, for little over £1, an audio book which lasted for most of a trip to the Lake District and back.

While I am in the library, I may take the opportunity to flick through the magazines they subscribe to - yes, I enjoy Good Housekeeping, especially the recipes - and the various newspapers held there.

Lifestyle deflation - a simple meal involving tinned tomatoes and not much else

When I think back to the food I ate during my childhood - and I think I ate particularly well - it seems to me that the meals we ate then were a lot simpler than the meals eaten now. This was during the seventies and eighties, and although we had some instant meals, butterscotch angel delight, miniature frozen pizzas and mousses being among the greatest treats, pretty much everything we ate was made from scratch. My parents were, at times, at least semi-vegetarian, so we did not seem to eat much meat at home, and our meals seemed to be quite economical. We virtually never ate out, had few take-aways, or even bought cakes, and our ready meals were limited to the occasional pizza and chips. Like my mother, both my grandmothers are good cooks, and we ate many post-war type meals cooked by them.

Meals I remember with particular fondness were: bacon, egg, macaroni and peas with plenty of tomato ketchup; a bean and vegetable stew, baked potatoes topped with paprika and grated cheese, apple crumble, homemade chocolate sauce, millionaire's shortbread (though we did not know it by that name and called it "Granny's chocolate stuff), and macaroni cheese.

One of my all-time favourite meals, an incredibly easy, comforting and economical one, still one of my favourites, begins with tomato sauce and pasta. There are million recipes for tomato sauce so you hardly need mine, but here it is anyway.


Tomato sauce and pasta

For two people, cook one small or half a large onion on a low heat in sunflower oil, possibly combined with a small knob of butter, for around ten minutes, after sprinkling lightly with salt. You do not want the onion to brown, but become translucent, and when you taste it, it should have sweetened and lost its raw onion flavour.

Then add one tin of tomatoes, chopped if you have them, but if you are using whole tomatoes, it is best to mash them up with a spoon to break them up. Add a chopped or minced clove of garlic at the same time. If you feel like adding any other vegetables, and have some lying around, you could add some sliced peppers or mushrooms at this point, as well as a dash of oregano or basil if you have it. Bring the sauce to a simmer, and cook for 10 minutes before putting pasta on to accompany it. Spaghetti is good, but you can use whatever pasta you like, or have to hand. (Or a mixture of the ends of bags, as long as you start with the longest-cooking pasta, and watch the timings carefully.) As the sauce is not a very filling one, I suggest you err on the generous side in your per person pasta allowance. (I normally allow 75g per person, but you might want closer to 100g.)

Serve with grated cheese: cheddar or parmesan are both good, or I like a combination of the two, but again, whatever you have is fine. Alternatively, you could chop up a piece of mozzarella and stir that into the sauce just before you serve it. If you have any pesto you could serve a dollop on the side. Equally, if you have any salad leaves those would be a good accompaniment. You will definitely want some freshly ground black pepper.

Ice-cream and chocolate sauce

The pudding I associate with this main course is ice-cream and chocolate sauce. To begin, take your ice cream out of the freezer. I suggest using vanilla, whatever kind you like. Whilst I now prefer to avoid the margarine-style of vanilla I associate with my early childhood, you definitely do not need to use anything fancy. If you would like any accompaniments with your sauce - crunchy cereal, sliced almonds, sliced bananas, tinned pears - get those lined up now.

To make the sauce, for two people, put a desert spoon of margarine into a small saucepan on a low heat, then add a desert spoon of golden syrup, melt the two ingredients together, then stir in a desert spoon of cocoa, and simmer very gently for about 30 seconds. You want the sauce to bubble very gently, but not to boil. Then pour over the ice- cream, and leave for a few seconds to set, before adding any accompaniments, and eating.

I have not actually calculated the exact cost of this meal, but it is very little indeed, and its comfort and nostalgia value is considerable.

Clothes shopping - clippings file

I love clothes shopping, and find it easy to spend money on clothes. I am making a conscious effort to do so less, partly to save money, and partly to reduce waste; it is so easy to find oneself accumulating excess possessions, and does not feel particularly healthy or environmentally friendly to do so. I find planning ahead a bit does help, and this is a topic which I will address in future posts.

When I receive mail-order clothes catalogues in the post, I have adopted the habit of quickly skimming through them, and tearing out pages showing any looks I like, and putting them in a clippings file. When I have time, and feel inclined to do so, I review the torn-out pages, analyse what about the pictures appeals to me, whether the outfit is one that would suit my shape and colouring, and then try and work out how to create a simliar effect with my existing wardrobe. I generally find that I have most of the components for a similar ensemble already, or I may decide that the addition of one or two small items would make a difference. In that case, I write a note in the notebook I carry with me, for future reference. For instant, this week I admired an outfit which was essentially a smart shirt, tank-top, and trousers - a combination I wear often - but with a patent belt added. Rummaging through my wardrobe, I found a patent belt belonging to another dress, which I decided would work well for this.

I do something similar with online sites, looking at garments that appeal to me as part of a combination, where the website allow this function. I then bookmark the page concerned for future reference. I have, though, recently unsubscribed from the all clothes-shopping e-mails that I used to receive, so that I now make a conscious effort to visit websites of interest, rather than finding myself drawn into them unintentionally.

Book review "Anybody Can Do Anything" by Betty MacDonald

I don't buy many new books these days - I'll write more about that in another post - but on a recent trip to Hay-on-Wye spent many happy hours browsing through the secondhand bookshops there, and as many the books were £1 or less each, I picked up some interesting bargains.

One of them was "Anybody Can Do Anything" by Betty MacDonald. It was an old-fashioned red hardback, and I was drawn to it as I am susceptible to self-help books, and the idea of a 1940s self-help book was rather appealing. I randomly opened it, read a paragraph or two, laughed, and decided to invest 50p. Anyway, it is a marvellous book; not a self-help book but very topical, as it is an autobiography of a woman in depression-era America, with stories about the bizarre jobs her resourceful, if rather bossy, sister Mary finds for her and other members of the family, and the economical lifestyle her family adopts. I particularly liked the idea of her mother's Saturday evening chilli evenings to which a random assortment of friends are invited, and the clothes-sharing system operated between Betty and her sisters, under which whoever wakes up first gets the best outfit for the day.

It is a very heart-warming story, as the title suggests, and I did find myself believing that anybody really can do anything; Mary enlists her mother to write a radio play, which runs for years; their brother undertakes a series of swaps of his possessions which get him a car so beautiful that Betty's colleagues won't speak to her after they've seen her in it, and Betty herself, hilariously self-deprecating about her lack of office skills, eventually becomes a successful writer.

(Since reading the book, I have discovered that it is part of a popular series, beginning with "The Egg and I", which describes her experiences of marriage to a chicken farmer; I am looking forward to reading that, and the rest of the series.)

A bizarre coincidence: driving home one evening after discussing this book with my sister, who loved it, too, I heard it being read as Radio 4's "book at bedtime".

Savings - different purposes - saving to spend

Today, I'm tackling saving up to buy something in the future. For example, you may wish to save up to buy a car, or home improvements, or perhaps a wedding or holiday. I have also saved up for an occasional expensive item of clothing, and in one case a watch. I contend that these expensive purchases don't make me financially irresponsible; I didn't use credit to buy these items, but chose to save my personal spending money to buy them in place of a number of smaller, more forgettable, treats. (While saving up for the watch, I decided to forgo new clothes for several months in order to buy it; maybe a sign that my priorities are a little peculiar, but it worked for me.)

Anyway, my point is that if you want to buy something expensive, it is, in general, with some exceptions which I will tackle in future posts, more efficient to buy it with money you already have than to borrow the money to do so. And while you are assembling your cash, you may as well get some interest out of it.  You will probably want to keep the money somewhere accessible, although if you are planning fairly long-term for your purchase, you could sign up for an account with some notice attached, if that gets you a better rate.

My recommendation would be to consider the following: using your Cash ISA allowance if you are a taxpayer and have not already done so; using an offset facility on your mortgage if you have one; or, failing either of these, using an ordinary savings account with a good interest rate. Unless you are planning fifteen or twenty years ahead, I would not invest the money in anything stockmarket-related.

You might also consider buying some premium bonds with the money.  There are sites you can visit which show how to calculate the effective interest rate, and this may be worth considerable. I had quite a few bonds for a while, but wasn't lucky enough to win more than a very few small prizes, so I eventually decided to cash in all but a couple of them. (This was rather illogical of me as the more bonds you hold, the more likely you are to win, but after all I am not a computer!)

I suggest deciding to save a certain amount towards your goal each month, bearing in mind what you can afford and when you plan to buy the item, and setting up a direct debit to the designated account each month. If you have the chance to name the account to suit your goal, which is sometimes possible, that may help you.  As mentioned in a previous post, I use my mortgage offset account to save, and have recently set up a "car" jar, into which I will save a small monthly account towards the next car I expect to buy several years' from now. 

Finally, it may be that it is unrealistic to save the full amount you need for the purchase in question before the time you need the money, but even if you are able to send 20% or 30% of the money needed, that will reduce what you need to borrow, and therefore save interest, and will help you to get into the habit of planning ahead.

Savings for different purposes - the emergency fund

The next category of savings I'm looking at is the emergency fund.  Unlike the annual bills fund, this money is intended not to be spent, all being well, but instead to serve as a back-up fund for use if you lose your job, become ill, the roof falls in, or a similar emergency arises.

I would suggest putting your emergency fund in an account with the best interest rates you can manage, while still keeping the money accessible on either no, or very little, notice indeed.  (You may be confident enough to rely on credit cards or overdraft facilities to tide you over until you can access your fund, but I'd strongly suggest not tying up the fund for too long.) If you are a taxpayer then it is definitely worthwhile making use of your cash ISA allowance for this purpose.  Alternatively, if you have an offset facility on your mortgage, you can use that, as I do.

In terms of the amount, the sum of six to eight months' living expenses is often recommended by experts. Depending on your income and other commitments, that may be an ambitious target, but is I think a good one to aim for.

Savings - different purposes - annual bills

While I've long recognised that saving was a sensible and probably virtuous thing to do, and have been in the habit of saving money where possible, it has taken me quite a few years to work out that there are several different categories of saving, which it makes sense to treat separately.

In this post,  I'm looking at annually recurring bills: saving for these this is not really saving at all, just spreading the cost of household bills which need to be paid for irregularly.  I used to find that my savings account would get a severe beating in mid-summer every year, when several insurance policies, car servicing, not to mention holiday costs, all fell due around the same time. A few years' ago I read somewhere about the idea of an "annual bills" jar.  The way it works is very straightforward; you need to add up all the bills which you need to pay less often than monthly, estimate their amounts, ideally add a bit to allow for miscalculations or increased premiums, divide the total by twelve, and then set up a direct debit from current account to savings for that amount each month.  You can then transfer money back to the current account to pay the irregular bills, as they come up.

Another advantage of this approach is that it should avoid the temptation to sign up for any regular payment schemes which you may be offered with insurance and similar; they usually include a hefty amount of interest and are therefore best avoided.

If you like, as well as annual bills you could include a payment for Christmas and Summer holiday expenses, as they are also recurring and standard; I used to lump these categories into my annual bills budget though I have recently, possibly over-fussily, set up a separate jar for holidays.

Why am I doing this?

I'm a mid-thirties British woman with a long-standing interest in personal finance, developed through reading and practice over the last ten years in particular, my working career so far. In this blog, I will attempt to record what I have learned about the larger issues of financial planning, as well as ideas for money-saving on a smaller scale.  I'm particularly interested in personal finance as a tool for individuals to build some security, and have the freedom to choose work, and a way of life, that suits and pleases them. I am an interested amateur rather than a professional, so please approach my comments in that spirit.  You are unlikely to find specific product recommendations here, but may find recipes, book reviews, and my thoughts and advice.

Aside from personal finance, my interests include literature, particularly classic detective fiction, as well as fashion and food.