Planning for a decreased, or decreasing, income

One of the reasons I started this blog was because I had decided to change jobs, and do something different. (More on that another time.) I have now left my full-time corporate job, and am working as part-time freelancer for my old employer. So far, the resultant drop in income has been manageable, but I am preparing for the fact that in a few months' time, I may well have no income at all for a time. And my husband works freelance, currently on a contract until mid-May. And when he finishes that, we would like to take advantage of some free time by going travelling for a few weeks.... Hence my heightened interest in saving money.

So far, we've made a few changes, which I've written about here:

-Trying to keep track of everything we spend, on excel. I think that we spend less as a result, and it is a useful exercise.

-Starting a weekly food jar. I mentioned this briefly, and will no doubt write about it more at some point, but allocating a set amount of cash, and using that to pay for all food, is something we've been doing for the past few weeks. So far, it is working well and we have stayed within budget each week, and quite enjoyed the process.

-Reviewing all our regular outgoings more stringently, and making another attempt to cut, or reduce, those that we think aren't really necessary. (Having read more about pet insurance, I cancelled that, as it is true that I cannot envisage a situation where we would be able to actually claim on it. However, the cat may now develop a rare disease needing expensive treatment....)

-Saving as much as possible, and in my case making full use of my ability to contribute to a pension, while I can.

I do think that having more time to spend on watching our outgoings and planning ahead, and so far being happier and less tired, means that we 'need' less to live on at the moment. Fewer meals out, less impulsive shopping to cheer me up, more time to plan meals and so on.

If we do end up living on one income for a while, then I'm determined that even if things are a bit tight in other areas, we a) keep allowances, even if they are small ones, for personal spending, and b) that we both keep paying into pension schemes. (His is automatic, and a much more valuable scheme than mine in terms of benefits, but I will keep up a contribution of some kind even if I am not earning.)

Clothes buying, and resisting the urge to splurge

I haven't posted anything for a while, because I have been on a work trip to the US, from which I returned a couple of days' ago.

While there, I couldn't help noticing how very well-dressed and groomed the people I saw were, and possibly as a result have been battling the urge to go out and spend money on clothes, make-up and so on since my return.

I have bought a pair of pointy-toed, purple shoes, which I had had my eye on for a while and went into the sale at a very good price, and which I had money in my allowance for, but have otherwise resisted temptation.

Here are some of the things I do when the urge to buy things comes over me:

Bookmarking links to things that are of interest. Sometimes I stalk them, see if they go in the sale. By that time, if they are still available in the right colour and size, I may have lost interest in buying them, if not, I should be able to get a better price for the thing.

Writing down the details of things I want. This works both ways: if have a list of most-needed or wanted items, I am less likely to stray from it when I do come to buy something. Also, if I have somewhere to record details of things then I can avoid an impulse buy, and return to it at a later stage, if I want to.

Unsubscribe to shopping e-mails: ignorance can be bliss!

Avoid going shopping, unless going with someone else who will discourage you from buying things, or go window shopping, or go without a credit card.

Browse my library catalog if I feel in the mood for an online spree. It sounds ridiculous, but it really works. Doing this, you might rack up some reservation fees, but even if you try probably won't be able to spend more than a few pounds!

Either do something else - cooking, or housework, or reading - or give into the shopping in a controlled way, perhaps by buying something small, and enjoying the process of choosing, and the experience of going shopping.

Also, having an allowance for personal spending really helps; it means that you feel able to spend a certain amount on clothes, make-up and treats, but you know your limitations.

Reporting back on the crock pot

A week or two ago, I mentioned the crock pot we had got for Christmas. As we have been away quite a bit lately, we have only used it a few times. However, we have made two batches of chilli in it. The first time, I used a recipe which didn't involve browning the meat or onions before adding to the pot, and in which the crock pot was left on the low setting for eight hours. The result was edible, but rather insipid in taste and appearance, and generally rather disappointing.

The second time, Jian browned the meat and onions first, started off the cooking on high for half an hour, in the interests of speeding up the cooking time, as well as improving the flavour, and then turned it down to low for several hours. This worked really well, and smelt delicious as it was cooking, which was nice for me, as I was working from home that day.

The only other recipe we have tried is a 'pulled pork' recipe - not something I'd tried before - which we found on the internet. This involved no pre-cooking, but the meat and vegetables were cooked on high for the whole cooking time, for four hours or so. This was also very good, though a slightly longer cooking time would have made it even better.

In summary, so far the crock pot seems worth having, although it is another gadget to store...

Frugality versus conspicuous consumption - or what about a middle way?

I've just read Thomas Stanley's latest book, 'Stop acting rich, and start living like a real millionaire'. Although it contained some interesting information, I didn't enjoy it as much as his other work. My intepretation of his views is that unless you are a 'glitteringly rich' person, there are really two options in terms of how you live. You can either consume mindlessly, for status related reasons, or you can be frugal. What I didn't think rang true about this was that people have different priorities, and perhaps some of their consumption habits are about appreciation of real and lasting quality in certain areas of their life, for which they are prepared to pay more, while they may be frugal in other things.

I wondered how Dr Stanley would categorise me, as I think my lifestyle is, like many people's, a mixture.

-I always pay off my credit card. have no debts apart from mortgage, save money regularly, and have always contributed fully to a pension
-I spend most evenings eating home-cooked meals and watching programmes recorded from television, or reading books - many of them from the local library
-I usually take a packed lunch to work
-If eating out, I often use vouchers when going to a pizza or pasta restaurant; otherwise I may well eat at a noodle bar for around £5 for a main meal
- I have very rarely spent more than £10 on a bottle of wine; I have recently started buying wine in bulk from Majestic.
-I buy cheap cleaning materials, tinned tomatoes, tissues and kitchen towel.

On the other hand,
-I have recently bought a new coat - written about at length here - at great expense. I bought this not for status, and in fact it does not have a recognisable label, but because it is a beautiful thing which I intend to wear for many years.
-When not eating at a chain Italian or noodle bar, I sometimes go to lovely restaurants or gastro pubs, and eat steak or venison pie.
-My last holiday was in a rented cottage in the Lake District... but I have spent a weekend in New York.
-I like buying some food at Waitrose as a treat.

I could go on. My point is essentially that I am concerned by a mentality which promotes frugality in every area of life. I absolutely agree with the view that there should be more to life than spending money, and many of the things I enjoy are free, or cost very little. However, there are experiences and possessions which can enhance life, and I would query an approach which would deny all of these to someone with reasonable financial stability. (This does not apply to anything bought on expensive credit, especially credit cards; I think elimination of such debt should always be a top priority.)

My preferred approach is to eliminate debt, establish some savings, and a pattern of saving, and to allow some luxuries, prioritising those areas where you feel that spending money will enhance your enjoyment of life, and spending less on things that do not matter to you as much. It is of course possible to minimise spending in all areas, but unless you are doing this with a specific goal in mind, or as a short-term solution, is that really going to lead to a happy life?

2010 so far: snow, food, and financial resolutions

It has been a while since I posted anything, partly because of the distractions of Christmas and the New Year, and also because of a week away last week - of which more later.

Now I am back to reality, with the slight excitement of the snow - which I for one am still enjoying - to mitigate the usual January flatness.

In terms of goals for 2010, I haven't made any specific financial resolutions, as I have noticed after many years of error that as soon as I make something a resolution, I lose all desire to do it. Instead, we are trying out some new ways of doing things.

One thing, that I started in November and am going to try and continue for a few more months, mentioned in the budgeting article, is the practice of recording all our expenses on an excel spreadsheet. This does have a slightly preventative effect as far as spending is concerned, but also provides information on where small to medium sums are going each month. (I'm noting where the money was spent, as well as its category.)

A second new thing, which I've read about in various places recently, is the idea of an envelope system for expenditure. We are already using virtual envelopes - specially-named jars within our mortgage offset account - to save up for cars, holidays and fun, but I thought that this was impractical for food, as we would be constantly transferring small amounts of money in and out of the current account for each food purchase.

So instead, we have started a cash jar for food, which we will top up with a set amount each week. The idea is to see if we spend less money because we are using cash, which feels more real than cards, and also because we know that once the jar is empty we can't spend anything more until the next week's money becomes available. This is a new initiative for this week, only started on Saturday, so it is too early to say if it is working, except that we currently have well over half our budget left, as well as over half the week left for it to last!

(Tonight's dinner, to which I am already looking forward, will be toad in the hole with green beans, from 'The Pauper's Cookbook'.)