Friday, December 31, 2010

Spending Less

Spending less... what does it mean to you?

To some it means spending less than they do now. To others it means spending less than they earn. Others still believe spending less applies not just to money but to the time spent acquiring that money.

To me, "spending less" is a combination of all three. I aim to reduce my current spending level so that I can maintain the level of my outgoings despite inflation. I aim to spend a lot less than I earn so that I can pay down my mortgage and have cash savings and, as I reduce my debt and other liabilities I can reduce the amount of time I have to work in a 'real job'. This frees up time and energy for projects that are more fun and more fulfilling but more importantly, should the economy take another downturn, I already have a lifestyle that thrives on less income. Spending less is the batting that adds weight to my personal patchwork economics.

Spending less is also a subversive practice. We're constantly bombarded by corporate advertising showing us how wonderful our lives will be when we have the latest 4WD vehicle or 3D television or overseas holiday or cupcake maker, or... the list goes on and on and on. To choose to spend less is to choose your financial well-being over the corporate world's financial well-being. To choose to spend less is to choose to be debt free not a slave to a bank's asset ledger.
Newspapers and magazines

Where to start?
Once again you need to know where you are before you can map out where you want to go. The simplest method and one you've no doubt already heard of, is to track your spending. Note down every single cent you spend for at least a fortnight, a month is better. It's not rocket science but it can bring about a quantum shift in your perception. Where's your money going? Which areas surprised you the most?

Some of the usual culprits are:
  • Food and drinks when you're out and about
  • Parking meters
  • Lottery tickets.
If your employer reduced the hours you work and therefore your income, which of these expenses would be immediately slashed or completely removed? Can you do that now? Are there any areas that you're willing to voluntarily slash in order to have cash in the bank or pay down debt?

Once you have the numbers in front of you, you can start to make choices. What will you choose?

Tuesday, December 28, 2010

2011 - Preparation Time

As the new year approaches it seems natural to want to set some goals and lay out a plan to achieve those goals.

My goals for the coming year fall into three main categories: health, money and personal achievement.


The saying goes, if you don't have your health then you have nothing, or something very similar. Watching my father be consumed by pancreatic cancer and the affect his illness and subsquent death had on everyone around him, health has become a very high priority for me.

Luckily, making health one of your big rocks can also be a huge money saver. Buying (or better still growing) fresh produce and preparing it simply is much cheaper than buying a pre-prepared and packaged meal. Buying cheaper cuts of meat (gravy beef, lamb necks, etc) and creating slow cooked stews and soups is also cheap, healthy, filling and most importantly, nutrient dense.

The Health plan for 2011 is to:
  • Ramp up the kitchen garden so we can increase our intake of fresh, organic vegies
  • Reduce our sugar intake
  • Remove all commercial convenience foods
  • Increase our sun exposure to optimise vitamin D
  • And make exercise an integral part of our lifestyle.

Like it or not, money or more specifically debt is the chain that keeps us shackled to a job or lifestyle that steals our spirit. I'm lucky, my only debt is my mortgage but that debt also attracts liabilities like rates, insurance and maintenance. I could avoid the debt and the liabilities by renting but I'd also be at the mercy of the market and the landlord. No thanks! My mortgage is about half the average and therefore very manageable but some of the large maintenance tasks are now due, like replacing the tin roof.

In 2011, the challenge will be to undertake some minor enhancements, some major maintenance and pay down the loan.

Specifically, the Money plan is to save money by:
  • Spending less - on everything
  • Making every litre of petrol (gas) work hard by only using the car when necessary and making sure it's a multi-purpose trip
  • Earning more where and when I can
  • Learning how to do more of the maintenance tasks myself.
Personal Achievement

We all have dreams that we'd love to see come true. In 2011, I will set aside time to work toward making one of mine come true. Finding the time to dedicate to a purely personal goal can be a challenge. Work, family, friends and life in general all make demands on the time we have.

In 2011, I will make time available by:
  • Turning off the TV - the greatest time waster ever invented!
  • Establishing routines to ensure everything (well, mostly) gets done
  • And, scheduling time specifically for working on my personal goals. 
Using patchwork economics to ensure that every little bit counts will be a guiding principle for my 2011 goals. Each tomato, capsicum and pumpkin that comes out of the kitchen garden and onto our dinner table is another patch added to the quilt. Each trip taken on foot rather than in the car, each book borrowed rather than purchased, each dollar saved rather than spent adds more patches. It is the small things done regulary that make the biggest difference.

What are your goals for the coming year and have you thought about how you will achieve them?

Monday, December 13, 2010

Rising Fuel Prices

The concern with upward trending fuel prices is the flow on effect.

Living in a regional area, public transport seems to be focussed on school kids and shoppers not commuters. So, I'm faced with little choice but hopping in the car to get to work. Every extra dollar I pay for fuel is either a dollar I don't spend elsewhere or an extra TWO dollars I need to earn. With tight budgets in most households, I'm pretty sure I'm not the only one thinking this way.

The flow on effect is that it impacts other non-negotiable areas of the budget, where the same equation of either redirecting dollars or earning extra can be applied. Pretty soon, all the money earned is directed to must haves only (food & shelter), consumer loans go into arrears and the household budget (and economy) springs a leak.

When fuel prices go up it creates a negative feedback loop that doesn't stop until the price goes down again, like after the Global Financial Crisis (GFC) in 2008. These bumps on the graph leave behind a lot of wreckage and lots of people and businesses either wont recover or wont be recovered enough before the next bump completes.

Building resilience and self-reliance into your daily life is the most economically responsible thing you can do.

Fuel prices are the bubble in the level. Our entire economy is based on cheap fuel so when the balance tips toward higher prices - everything tips. Another GFC is not impossible and this time most of the developed world is carrying huge debt from bailing out big business. Where will the next round of bailouts come from? How will they finance them when all credit sources are exhausted?

I don't think you need to be a fatalist/doomsayer/'The end is nigh' type to see the logic in finding a way to soften the impact of another global economic meltdown. 

Along with mortgage interest rate rises, fuel price increases are a great motivator for adding another patch or two to your own patchwork economics.

Monday, December 6, 2010

Waste Not, Want Not - Banana Muffins

Like many people whose parents were born during the great depression, I was raised with the adage "waste not, want not..." as a permanent echo. This seems to be a value we've lost. How often have you cleaned out the fridge or pantry and discovered a whole basket load of food that needs to be thrown out because it's either past its 'use by date' or has at the very least, seen better days? Have you ever totalled up the cost?

In the spirit of not wasting anything if I can help it, I do my best to ensure perishable food gets used as it comes through the door rather than going into the fridge (this is easier when you have a kitchen garden) but there are always occasions when I find myself with food that either has to be used today or put in the compost tomorrow.

Bananas are a regular feature on that list. Here's a great idea for using some over-ripe bananas. These muffins are 'Texas' sized in Robert Gordon muffin wrappers.

Banana Muffins sprinkled with rapadura sugar and ready for the oven

Banana muffins straight out of the oven
The recipe for the muffins is a simple one:
1 + 1/2 of plain flour
1 tablespoon of baking powder
1/4 cup sugar
2 tablespoons of melted butter
200 mls whole milk
1 egg
2 mashed bananas

Preheat oven to 200 degrees Celsius.
Mix dry ingredients together in a bowl.
Mix milk, egg and melted butter together in a jug.
Using a knife, stir wet ingredients into dry ingredients until just mixed.
Spoon mixture in muffin pans and bake for 15-20 mins for normal size muffins or 25+ minutes for Texas sized. I usually sprinkle some rapadura sugar on top before baking for some added texture.

What food item regularly features on your throw out list? Why? And, can you find new ways to use the ingredient rather than throw it out?

Asking these questions and then acting on the answers can add another piece to your own patchwork economics. Money you don't throw out is money that can be used constructively to build a resilient financial future for yourself and your family.