The No Spend Weekend

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In the last few years, there have been a number of high-profile proponents of the full-on, no- holds-barred shopping ban.

A whole year of buying nothing

One of the most well-known is Cait Flanders who wrote about her year of buying nothing in her best-selling memoir, The Year of Less. I discussed Cait’s book when I compared the idea of a shopping ban to a written budget in a previous blog post here.

Writer Ann Patchett also had a year of no spending, which she wrote about in The New York TimesPatchett’s year without shopping enabled her to learn to live with “…the startling abundance that had become glaringly obvious when I stopped trying to get more.” She realised that she already had more than enough and was startled to realise how much time she could save by not actually shopping at all.

A shopping ban can be a really useful way to curb your spending, whilst helping you appreciate what you already have. If you’re paying down your debt Dave Ramsey style, it’s also an excellent way to throw extra money at Baby Step 2.

The “Allowed” list

When you decide to instigate a shopping ban, it helps to devise a set of rules. London-based journalist, Michelle McGagh, bought nothing in a 12 month period: no coffee, no cinema, no clothes and even no transport costs. She pressed her bicycle into service and lived on next to nothing for an entire year.

Writer Gretchen Rubin famously abstains from eating carbohydrates; if she doesn’t eat carbs, she doesn’t have to think about them. A little bit of something in moderation isn’t her style.

So, if you go down the road of a complete ban, you decide your own rules in terms of what is permissible and what is banned from your spending list. 

All or nothing

If you’re someone who needs to take an ‘all or nothing’ approach, a shopping ban might help if you’re trying to be more intentional with your spending.

If you can’t go out shopping without returning home laden with bags of merchandise you hadn’t planned to buy, the ‘all or nothing’ approach might be beneficial. Even better, by announcing your intention, you can also get accountability for your goals: your supporters will spur you on and help keep you on track.

What goes on your essential list is up to you, but it may provide a structured framework to your shopping ban if you decide to give it a go. Cait Flanders decided to allow herself to buy some useful (and very practical) things, including  – in the second year of her experiment – replacement items, essential toiletries and gifts for others.

No spend drawbacks

Initiating a shopping ban for such a lengthy time might bring some drawbacks, however, as Cait discovered during her year of less.

For example, so-called well-meaning ‘friends’ would try and tempt Cait to buy something she didn’t need, or which wasn’t on The Approved List. They reasoned that ‘she deserved it’ or that a little retail therapy was no bad thing. In fact, this was tantamount to offering a reformed smoker a cigarette, a dieter a wedge of chocolate fudge cake, or an alcoholic ‘just one’ drink. Happily for her, a handful of true friends were on hand to help keep Cait on track.

Another potential drawback of a shopping ban is that you also have to deal with situations that could send you off course. That is, if you’re working to achieve a specific financial goal, you’d need to avoid putting yourself in situations where you might blow your budget. For an abstainer, it has to be all or nothing.

As Cait writes, “The toughest part… was having to confront my triggers and change my reaction to them. It always felt like the minute I forgot about the shopping ban was the same minute I felt like shopping again.”

The no spend weekend

Is there another way, though?

You could try a ‘No Spend Day’ where you literally spend nothing, apart from essentials that are already in your budget. That may be relatively easy to do. But many of us, like me, are at their most spendthrift at the weekend.

As Hilly Janes admits in her book Latte or Cappuccino: 125 Decisions That Will Change Your Life, “We spend all week earning our crust so there’s nothing like a bit of retail therapy at the weekend to make those hours spent toiling at work seem worthwhile.”

Even if you’re not buying ‘stuff’ it’s still possible to fritter away your hard-earned cash if you’re not being intentional. So, I propose a ‘No Spend Weekend’ (which has a nice ring to it).

What happens on a ‘spendy’ weekend

Imagine that time period between Friday evening and Monday morning. What might you spend, if you weren’t being deliberate and intentional with your money?

At the end of a busy week, will you get dinner out or maybe purchase a meal deal from M&S or Waitrose? That’s at least £10 (or more) gone.

Saturday sees you nipping into town, where you pick up a few things you need. Oh, and there’s that coffee stop and the parking charges. Before you know it, you’ve spent a few more (tens of) pounds. You see where I’m going with this.

Sunday is probably the day when you go online at some point. It might be the day when you do your weekly food shop online or when you list things on eBay. But there’s always the risk that you’ll also ‘add to basket’ something that you see as you go about your business.

What a ‘no spend weekend’ could look like

Assuming you work a regular Monday – Friday week (sorry if you don’t), Friday evening could be a very good time to unwind at home, particularly if the weather is good and you can enjoy a meal al fresco. Historically, we always cleaned the house on a Friday evening, but have since resolved to bring this forward to Thursday, leaving Friday night for a more gentle slide into the weekend.

Saturday could therefore be a day to take things a little easier. We typically do a reasonably long dog walk, receive our online food shopping and enjoy some cooking (Enchiladas or Burritos are our favourite Saturday lunch these days). Every other week, I also volunteer with our little dog when we visit our local nursing home (we are Pets as Therapy volunteers). After all that, we usually chill out in the afternoon. See – no room for shopping!

On Sundays, my thoughts turn towards the working week. It’s great to get ahead with preparation for the days ahead but Sundays are also great for family time. And, depending on when your Sabbath falls, using a ‘no shopping on the Sabbath’ rule could support this initiative. And stay away from online shopping sites!!!

If you are going to spend

Remember that buying something or buying an experience will both give you a lift, but it’s the experience whose happy memories will stay with you long after you’ve forgotten anything you could have bought along the way. Buying something for someone else will also promote greater feelings of happiness than if you spent the money on yourself (great news if you’re not looking to bring more stuff into the home). And stick to a shopping list. That way, you’ll avoid impulse purchases.

Paying by cash is also a much better way to curb your spending. Going back to Hilly Janes’ Latte or Cappuccino, Janes reminds us that our brains register fewer negative feelings when using a card than when parting with physical cash. That’s why the envelope system for budgeting works well for people: you can literally see and feel how much you have left.

So, as you head towards this weekend (and I’m hoping you’re not going to be stuck in holiday getaway traffic this ‘frantic Friday’), will you consider a No Spend Weekend?


 

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Make your stuff work for you

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I’ve just finished reading Jojo Moyes’ novel, Still Me. I was a book I thoroughly enjoyed, putting aside the other two books I am also reading to immerse myself in this wonderfully-crafted story.

The third in the Me Before You trilogy, this novel takes Moyes’ heroine, Louisa Clark, on a New York adventure (I can see another movie emanating from this one!).

As both minimalist and avid reader, I’m always on the alert for references to clutter in fiction. How do people handle it? What does it symbolise to them? Can they let go of stuff to live a life of more but with less? Is the stuff they’re holding onto serving a particular purpose?

Margot De Witt

One of Moyes’ fabulous American characters, introduced to the reader in this book, is Margot De Witt. The former editor of a fashion magazine, De Witt’s Manhattan apartment is a veritable treasure trove of immaculately preserved and cared-for clothing.

With an incredible, vast collection of vintage fashion including haute couture items, this “style queen, fashion editor extraordinaire” has held onto everything she has ever owned. As a result, her home has become a rainbow-filled walk-in wardrobe, housing a collection including even the smallest of items such as elaborate brooches, pill-box hats and boxes of buttons and braids (in case anything needs repairing).

For vintage-loving Louisa Clark – the novel’s main character – the Fifth Avenue apartment is a little bit of retro-fashion heaven.

Holding on

But why do we hold onto things that no longer fit or which seemingly have no practical purpose?

In her case, De Witt’s quasi-hoarding of decades’ worth of clothes is a way of blocking out the pain of having been separated from her son – her only child – over many years. Moyes addresses this very directly as she reveals that the character “…had built a wall, a lovely, gaudy, multi-coloured wall, to tell herself that it had all been for something.”

Making sure your stuff works for you

Your stuff really needs to work for you. That is, it needs to work on a number of levels: aesthetically, practically or even monetarily.

Remember, everything you see around you right now used to be money. When you look at it that way, you’re going to want to get the most bang for your buck. So, if your belongings are literally stuffed into a drawer and not serving any useful purpose, why hold onto them?

Letting go

In spite of having decluttered so much of my own stuff, there are still some items in my house for me to let go. My ice-cream maker, seldom used, even in summer, now needs to find a new home.

Of course, a kitchen gadget is a small item, but if you’ve been reading the blog for a while, you’ll know that I decided to let go of my car back in the winter. Going without a car has been incredibly liberating, has saved me money each month and has set me free from the burden of vehicle ownership. This reminds me of the adage that is well-rehearsed in minimalist circles: “What you own owns you.”

Investment items

Of course, there are some items you’ll keep because you may genuinely only use them once in a while. They might be investment items, such as a lovely winter coat that you’d wear over many years. Still, much of what we retain in our homes may be stuff for which we no longer have any useful purpose.

Putting your stuff to work

In Louisa Clark’s case, she is able to make Margot De Witt’s collection work for her in a professional sense. At the suggestion of the old lady, Clark is encouraged to start an enterprise hiring out her amazing outfits.

What’s interesting is that, as soon as her son reappears, De Witt walks away from her collection without so much as a backward glance. When it no longer serves a meaningful purpose, it’s so much easier to walk away.

Ask the right questions

So, take a long hard look at your stuff and ask, “Does this work for me? Could I let go of it or even monetise what I currently own?”

These questions are especially useful if you’re working to get out of debt and building your emergency fund.

You may love what you own, in which case simply enjoy it. Even minimalists have to have some belongings. So, take the advice of Margot De Witt and see your stuff for what it is: “Do with [them] what you want – keep some, sell some, whatever. But….. take pleasure in them.”

Note

Still Me is Jojo Moyes’ latest novel, published in 2018 by Penguin Random House UK. Find out more here.


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Minted or skinted?

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It’s a myth that minimalists don’t have stuff. Of course we do.

Some proponents of simple living really do exist with just a handful of belongings. But, for most of us, that’s not how we do it. Rather, we don’t buy things we don’t need; we can be ruthless when it comes to letting go of excess; and we may also be quite frugal when it comes to spending money.

Naturally, minimalists buy consumables like everyone else. What I’m interested in is getting more bang for my buck. Is is possible to find high-performing products that don’t require high-end prices? I think it is…

Fragrance

Minted?

Diptique Philosykos perfume is a gorgeous, woody fragrance, reminiscent of warm Greek evenings. It retails at £115, so is a very exclusive perfume, sold at a price likely to exceed most families’ weekly grocery budget.

Skinted!

Di Palomo’s Fig eau de parfum is a great alternative to the ‘minted’ version. Transporting you to southern European climes, this value-for-money fragrance is a lovely option. Plus, I bought a bottle recently on eBay (it cost me £14.99).

Skin care

Minted?

Dermalogica’s skin care range is world-renowned but – if I’m honest – shockingly expensive. Its Daily Microfoliant looks fabulous but it comes at a whopping £49.50. Who can afford that kind of luxury – even if it does make your skin zing and glow?

Skinted!

Here’s where St Ives Blemish Control Scrub comes in. At just £3 from my supermarket, here’s a high performing product – paraben free and 100% natural – that makes you wonder why you’d ever spend more.

Make-up

Minted?

Years ago, I suffered a great deal with my skin. A beauty therapist I visited for facials recommended Clarins’ Extra Firming Foundation. Although presented as an anti-ageing product, she actually used it on brides, as it always delivered a lovely, radiant complexion. It’s fairly pricey at £34, so I haven’t bought it for quite a while.

Skinted!

Maybelline is available everywhere on the high street at around a quarter of the price of its high-end cousin. Its Dream Satin Liquid foundation is very impressive, providing just the right amount of coverage with a range of natural shades. Currently on offer at Fabled, you begin to wonder why you’d ever buy a prestige brand again.

The maths

Of course, there are reasons why we select prestige brands. You might enjoy the customer experience of buying consumables like this in a pleasant retail environment. There’s the lovely lighting, the helpful assistants, possibly some ‘freebie’ samples, the (unnecessary but oh-so-stylish) packaging and the cute little gift bag to carry as a symbol of your purchase.

But the enjoyment can only ever be short-lived when the dopamine hit has dissolved and you’re left with an empty bank account.

Take these little examples. If I bought each of the ‘minted’ items, I’d have spent a whopping £198.50 altogether.

Even at full price (which I rarely pay) my ‘skinted’ alternatives come in at £35.99.

= Total ‘skinted’ saving £162.51.

Apply this to the rest of your consumer spending

Apply this logic to the rest of your consumer spending and you could really make some savings in your budget.

For example, swapping a supermarket’s own product for a branded one can save you quite a lot off a weekly shop. As you substitute one for the other, you’ll see the cost of your weekly shop come down quite a bit.

If you’ve been reading this blog for a while, you’ll know that we shop online for our weekly groceries. It’s very easy to compare prices if you’re shopping from the comfort of your own home. Once you’ve got added of your items from your shopping list into the basket, take a closer look. You can definitely shave off a few pounds if you make a switch. Plus, the value lines offer perfectly good products at a fraction of the cost.

Of course, it’s only a bargain if you were going to buy it anyway. But being intentional with your purchases will really make a difference, especially if you have a savings goal in mind or you’re looking to get out debt.

Shopping the ‘skinted’ way will make a real difference: all of a sudden, it feels like you’ve got a pay rise.

What sort of substitutions have you found at a skinted price for consumables? Do please let us know by replying to this post, below!


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Things I would tell my 18 year old self about money

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Earlier this week, GirlGuiding UK announced that the organisation would be introducing a new Guides’ badge, aimed at improving the financial literacy of teenagers. You can read about the badge (and other new ones) here.

Since I am not aware of any aspect of the Personal Social and Health Education (PSHE) curriculum* in school that covers personal finance, I applaud the Guides for taking the initiative.

What would I tell my 18 year old self about money?

The Guides’ news got me thinking about what I’d tell my teenage self about money. I am actually 48 years old now. So, I’m 18+30, not ‘Club 18-30’. Ha!

30 years on from my coming of age, here are a few things I would tell my 18 year old self about money. I only wish I had taught myself these lessons earlier.

Always live on less than you own (and save the rest)

The 80:20 rule probably applies here. If you paid yourself 20% of your income as soon as your salary hit your bank account (and did this consistently from age 18), compound interest would do the rest.

When I spent a year in Switzerland, a fellow au-pair (Michelle) always sent cash back home for her pension. Her fantastic example was definitely one to follow. Michelle, I know you were destined to spend the rest of your life in Canada. If you’re reading this, I’d love to hear from you!

Get a rainy day fund

Grandma wasn’t wrong on this one. We all need an emergency fund and I’ve previously written about this to explain why. If you have debt and you haven’t got a ‘starter emergency fund’ then £1k is what you need while you’re paying down your debt.

If you’re debt free, then 3-6 months of expenses, stashed away in a rainy day fund, should cover most unexpected emergencies. Dear 18 year old self, if you don’t have an emergency fund, then Murphy’s Law will apply: what can go wrong will go wrong.

Yesterday, my mum told me that the source of a mysterious water leak in the parental home has finally been found. You can imagine how mum and dad felt when the kitchen floor had to come up. They’d have felt even worse if they didn’t have an Emergency Fund.

Know the power of compound interest

Interest rates move up and down over time. In my teens, interest rates were incredibly high (trebling at one point to a rate that almost crippled my parents when it came to their mortgage). Having had historically low rates in the UK for many years, borrowers have benefited over savers. Nonetheless, money invested wisely will grow and you’ll benefit from compound interest if you stick with it.

When you get the urge to splurge, distract yourself

Wait to buy whatever it is you think you need. Lie down until the feeling goes away (which it probably will). Control your impulses.

If you shop when you’re Hungry, Angry, Lonely or Tired, then HALT! Run a bath, take a nap, call someone on the phone. Go for a walk.

Know your triggers and if you need an accountability partner, find a friend who’ll help you stick to your goals.

In case of emergency, break glass

Make it harder to buy whatever it is you want by making your money a little less accessible. I don’t mean putting your money behind glass (although I have read that some people do this with their starter emergency fund!). I just mean putting it a little more ‘out of reach’.

If cash burns a hole in your pocket, don’t carry cash. Also beware of “wave and pay” – it’s all too easy to flourish that card and up to £30 is gone in an instant.

Be intentional with your purchases

These days, if I do need to buy something, I usually agonise over it (especially when it’s something new and not second-hand). I have to say, I bore my family as I pore over the various options before deciding on whatever it is I need.

My husband has a trick for when you do need to choose something: 1) Find something suitable. 2) Find something equally suitable. 3) Buy the second item you found. Job done!

Oh, and never pay full price. Especially for things like clothes.

Be prepared to walk away

I’m going to make a sweeping generalisation here, but I’d suggest that we Brits don’t care for negotiation when it comes to making significant purchases. We find the idea of haggling terribly awkward, even embarrassing. So, we avoid it.

That said, there have been a few times in my life when I have haggled successfully. One such time was the purchase of a new bed. I had a fixed amount to spend and I could not (and would not) go over this.

We found exactly what we wanted; an oak bed frame and memory foam mattress. The price of the two items together exceeded my budget by just under £50. So, I offered the salesman what I had. He wasn’t prepared accept my offer, so with my (then) little girl at my knee, we thanked him and headed for the exit. Just as I was pulling the door open to leave, the salesman was at my side. And we had a deal.

Second-hand is infinitely preferable

Some things must be bought new. Mattresses (see above); car seats (unless you know where they’ve come from); bicycle helmets; and riding hats (to give you a few examples) should really be bought new. However, so much of what we need can be bought second-hand. I’ve written about this extensively, so I won’t labour the point, but I really mean it.

Let go of your sense of entitlement

Just because X has Y doesn’t mean that Y is right for you. You may not be able to afford Y and that’s 100% OK.

In her book, The Overspent American: Why We Want What We Don’t Need, Juliet Schor exhorts us to “Beware prosperous referents.”

It may be that your girlfriends are remodelling their kitchens, having extensions built or are driving round in fabulous cars. Good for them. Chances are, they’ve put the home improvements on the mortgage and are paying over the odds for their vehicles through expensive car loans. Suddenly, being like them doesn’t seem such a good idea after all.

Get on a written budget

If you want to manage anything effectively, you can’t just wing it. Imagine you’re managing a project involving myriad stakeholders and various work streams. Chances are you’ll use a Gantt chart or project management tool to help you. So, why wouldn’t you do the same for your money?

My preferred ‘modus operandii’ is my dual account budget spreadsheet. I have tried apps (see My First Month with EveryDollar), but time and time again, I revert to my trusty spreadsheet. I like to see everything in one place and my Excel sheet does this just fine. Let me know if you want a copy of it!

Credit is like sex

Replying to my question on Twitter, “What would you tell your 18 year old self about money?” Tarra Jackson replied: Credit is Like Sex. Just because you can, doesn’t mean you should. And if you do, use protection (a budget).

Great answer, Tarra!

Better still, perform plastic surgery on your credit card. Cheaper than botox, you’ll look a whole lot healthier (financially) if you do this. This way, you can also tell your cash, “You can stay money.”

Don’t move up in house before you’ve decluttered the one you already own

One of the reasons excuses we all give when talking about moving house is that ‘we’ve outgrown our current house.’

Is it that our actual family has grown (so, we really do need more bedrooms)? Or is it that we’ve accumulated so much stuff that we need to take stock, purge and reset for the life we now live?

Only recently did we finally donate a collection of children’s books that might not otherwise have seen the light of day for some considerable time. Apply this logic to a whole house and you might save yourself a significant amount of money by not moving.

A minimalist mindset can help you win with money

Recently, I’ve been working on a short eBook on this theme: I do believe that adopting a minimalist mindset can help you with personal finance. When you stop going after things you don’t need (and let go of anything that no longer adds value), you’ll change your spending habits. And that’s something I’d love to have told my 18 year old self.

One final thing I’d definitely tell my 18 year old self is this: If you didn’t get your Girl Guide Savers badge, join as a helper and help someone else achieve hers.

*Teachers, if I’m wrong, then please do tell me. I really don’t think our 16 year old has had any such education at school, but I’m open to learning that I am mistaken.


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My first month with EveryDollar

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I’ve written before that we follow a ‘dual account budgeting‘ approach when it comes to personal finance. This simply means running two current accounts in parallel.

One account is for all regular payments (e.g. our household standing orders and direct debits). The other is for all other “discretionary spending” for other items in the budget that will vary, so which require a higher degree of control.

Simplify your finances

By running two accounts, managing our monthly budget becomes much simpler. The first account is topped up on pay day, then it pretty much runs itself.

This leaves only the second account to manage whose spending categories are reduced to a small sub-set of headings, as follows:

  • Food/groceries
  • Transportation
  • Mobile phones (I’m on a pay-and-go arrangement, not a contract)
  • Lifestyle (costs associated with hobbies, pet care, hairdressing, clothing etc.)

So far, I’ve normally used a spreadsheet to manage our finances. However, as a regular listener to Dave Ramsey’s podcast, I was curious as to whether or not the EveryDollar app would work for us.

What’s different about EveryDollar?

EveryDollar is designed around a zero-based budget. That is, every month you decide (in advance) how you’re going to allocate money to each of your particular spending categories.

The name stems from Dave Ramsey’s approach to budgeting: if you give every dollar a name and tell your cash where to go, you’ll win with money.

In my case, I need an app called ‘EveryPound’ but that doesn’t quite have the same ring to it! So, EveryDollar it is!

Creating your budget

When creating your budget, the idea is that you input your income, then allocate your expenditure by category so that the latter totals the former. It’s a bit like a contemporary take on double-entry book keeping: both income and expenditure have to balance.

This allows you to:

  • Pay down debt
  • Allocate money for savings, including a sinking fund
  • Plan for upcoming monthly spending
  • Stick to your budget

I was already creating a zero-based budget with my own spreadsheet, but the EveryDollar app has a simple and visually-appealing user interface, so I decided to run both systems in parallel throughout March/April to see which one I preferred.

What’s a sinking fund?

One option you can select when setting your budget in the app is to establish a sinking fund. This is essentially a mini savings “pot”  for things you know you’ll be paying for at some point in the year. It’s like a virtual piggy bank.

In our case, that’s £125 per month towards the annual service for our family car (plus anything else car-related)/, as well as a fund for Christmas. I trust that £1500 in total will be more than enough for both vehicle and Santa, but we’ll see!

By establishing a sinking fund, you don’t have to raid your emergency fund if, for example, you suddenly need a complete new set of tyres. You can also budget throughout the year for bills such as a your annual travel insurance policy or car insurance (cheaper than paying monthly).

With EveryDollar, I wasn’t sure if I needed to account for the £125 as a transaction (in which case, would this be “income” or an “expense”?). So, I experimented and found that the app just accounted for the £125 going into the ‘fund’; I didn’t have to record it as a transaction at all.

A slice of the cake

Another feature of EveryDollar is that it shows you what proportion of the whole a particular budget heading represents.

So, if you’re nerdy like me and you want to check what percentage of your total budget you’re devoting to a particular category, you can check. The app tells you what proportion of the ‘cake’ you’ve planned to spend, as well as how much you have remaining. That’s esimportant if you’re paying down debt and are intentionally on a tight budget.

By splitting my expenditure across two accounts, it makes it a little more tricky to work out what I’m spending as a proportion of the whole on each category.

I had a mini moment of panic when I saw the percentage apportioned to food and groceries, but when I did the maths (across the two accounts), I was relieved to see that what I’d allocated was less than 10% of the whole.

If you’re curious what Ramsey recommends, you can find a guide on the EveryDollar website.

Linking up your accounts

One thing I can’t do is link up the EveryDollar app’ to our bank account. To do this, you need to pay for EveryDollarPlus (and I don’t believe this would work across the Pond).

Instead, I track my spending by recording a transaction every time one hits my account. This way, I can keep a close eye on that particular category and check what I’ve got left.

A new month

As the new month rolled around, you’d expect me to have done the budget for April. However, I’m waiting until pay day (the third week of the month) to prepare my budget for April/May.

I know that some EveryDollar users are comfortable running their budget to align with the calendar month, but my ‘fiscal month’ is 24th to 23rd. This means my monthly headings are going to lag behind; until 24 April, we’ll still be in “March”. Maybe that’s a good thing. It still feels like winter!

Setting an intention

Of course, one of the aims of the app is modify users’ spending habits. Right now, the jury’s out. So, I’m going to carry on with my comparison of app versus spreadsheet. Let’s see, as the rest of April unfolds.

Do you have a favourite way of managing your budget? Perhaps you use an app like EveryDollar or have tried my dual account budgeting approach. Let me know by replying to the post, below!


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Why I’m performing plastic surgery on my credit card

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Many years ago, I applied for a credit card that offered 2% cash back on all purchases. That was pretty generous, so you can tell how long ago that was!

Every month, we would use the card for all of our discretionary spending (that is, anything we bought on a week-by-week basis such a food, fuel and so on). We’d pay off the card every month in full. Then, once or twice a year, we’d get a decent cheque in the post with our cash back amount.

As we always paid off the balance in full, the credit card company actually made little money from us directly.

When I’ve used a credit card

I still have a credit card but I don’t use it for everyday purchases. Instead, I have used it for that one-off, occasional or unusual purchase such as our daughter’s prom dress.

However, because of the ease with which one can use a credit card in this way, there’s always a nagging thought in the back of my mind. Every time I do this (even for a relatively modest single item of expenditure), I‘m borrowing against next month’s income.

In effect, I’m creating a shopping hangover.

A change of heart

So, I’ve had a change of heart. The fact of the matter is this. If we’re going to win with money in the long term, this is what I’m going to do.

I’m going to perform plastic surgery on my credit card. Yes, I’m going to cut it into little pieces and throw it away.

Now, some of you still use your credit card in the way I used to. You tell me that you find it easier to track your spending this way (although, for me, I can’t understand this).

For me, it’s crunch time and here’s why.

What the research shows

Research shows that credit cards are ‘friction free.’ That is, handing over a card is less painful psychologically than handing over actual cash. In an article for Psychology Today, Scott Rick explains that people tend to spend more when they use a card than they do when handing over actual cash: “Experimental research….suggests that credit cards can stimulate overspending: People are often willing to pay more for the same product when using credit than when using cash.”

Indeed, Rick cites a range of psychological factors, which compel consumers to use a card over cash.

Even though I don’t put a lot on my card, I know that when I previously experimented by cutting up my card, I definitely spent less money overall.

Business Travel

“But what about business travel?” I hear you ask?

I once attended a work conference, which across the pond in Anaheim, California. I took my credit card for ’emergencies’ and actually ended up having to use it when I found my employer had failed to pre-pay my bill.

At my hotel’s reception desk, ready to check out, but fully expecting my account to have been settled, I learned that the transaction hadn’t gone through. Worse, the time difference between California and England meant that there was no-one in the office back at home to sort it out. I’ll admit that this was a time when I was glad I had my personal credit card.

However, this does not deter me from my plastic surgery. What I’d do in the future is request a corporate card, rather than rely on my own personal card, which required me to claim this expense on my return. No corporate card? No travel!

But a credit card’s for emergencies!

In my last post, I wrote about why I believe we all need an emergency fund.

In fact, a fully funded emergency fund should contain 3-6 months of expenses. So, if we have a fully funded emergency fund, we shouldn’t need to use the ‘shopping hangover’ method to cover unexpected bills.

The post-Christmas hangover

As the nation anticipates its post-Christmas credit card statements, I decided to do some research on card spending. What I learned really shocked me.

The UK’s spending habits

In October 2017, an article in The Independent warned that credit card lending was on the increase, in spite of warnings about the high levels of UK household debt. In the article, journalist Ben Chu cites regulators’ concerns about the extent to which households are turning to credit to finance their consumption.

Indeed, in the previous month, we saw headlines suggesting the UK was experiencing a ‘debt crisis’, as household debt had increased by 7% in the preceding 5 years.

Going slightly further back in time, the sheer volume of annual card sales is revealed in the UK Cards Association’s report of April 2017. I was staggered to read that, in the month of April 2017 alone, 315 million purchases were made on a credit card (up on the previous year’s figures by 41 million transactions). The overall total of money spent on a credit card that month was £16.8 billion (versus £15 billion the previous year).

What the hell were we all buying?

The report shows we’re using credit cards for a whole range of goods and services from food to fuel, with a marked increase in the use of cards (both debit and credit) over cash in these categories.

What if you have to use a card?

If you listen to Joshua Fields Millburn and Ryan Nicodemus’ podcast, you’ll have heard them say quite clearly: “If you have to use a card, you can’t afford it.”

In my case, if I decide to use a credit card, I’m swapping convenience for a shopping hangover. And I no longer want to do that.


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Why we all need an emergency fund

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Happy New Year 2018!

January’s blog post theme

During the month of January, I’m going to be thinking about money, as we have set some specific financial goals for our family in 2018.

It follows that my blog posts may follow a bit of a financial theme in this first month of the new year.

Holiday listening

In particular, I’ve been listening to Dave Ramsey’s podcast over the holidays. Ramsey’s consistent, straight-talking and sound advice has benefited thousands of people worldwide and his simple series of Baby Steps has helped his readers, listeners and YouTube watchers get a grip on their finances and – in Ramsey’s words – “Change their family tree.”

Baby Steps

The Baby Steps help break down Ramsey’s plan into manageable chunks and build momentum. Indeed, the small wins that can be achieved early on in the programme through these Baby Steps help psychologically with motivation.

Baby Step 1

The very first of the Baby Steps is to start an emergency fund of $1000 (or, in the case of us Brits, £1000).

This should be done as fast as you can.

If you’re already a seasoned declutterer, you may find this easier than you think. A good rummage through your garage, wardrobe or loft may yield some excess stuff you no longer need, so you may soon be able to pull together the funds to get started.

If, like me, you’ve already learned to let go of stuff, freeing up unwanted items to contribute to this initial £1k may not be too much of a challenge. It may take only the effort of cleaning them up, photographing them, then listing them online on sites such as ‘Things for Sale in Kenilworth’ (our local community site on Facebook) or eBay.

Why Baby Step 1?

Ramsey’s approach is to establish this beginner’s emergency fund so that if you have a genuine and unforeseen expense, you won’t have to go into debt to pay for it. In a later Baby Step (#3), a fully-funded emergency fund of 3-6 months worth of expenses is put in place, but this starter fund is where we begin.

When you need an emergency fund

Between Christmas and New Year, we had a sudden and unwelcome fall of slushy, grey snow. We came down for breakfast the morning after Boxing Day and noticed something was odd about the hedge that usually sits against the wall by the side of our kitchen window. The supports to the hedge had given way in the wind and snow, so the prickly shrub had lowered itself forward over the border, covering all of the smaller plants and herbaceous perennials beneath.

Thankfully, with some significant effort (and 6 hours’ commitment), my lovely husband managed to shore up the woody stems, drill new supports into the wall, and push the hedge back into place.

However, this unexpected job reminded me that we weren’t quite as lucky when the fence blew down.

When the fence blew down

On the other side of the garden, we share a boundary with our next door neighbours.

One very stormy night two or three years ago, our shared fence decided it was no longer fit for purpose, leading to an unexpected but essential replacement. This cost about £375 per family, which our emergency fund was able to cover easily.

The point of this is that, whilst you’re taking steps to get your finances into good shape, the last thing you need is a mini-emergency to set you back.

In 2016, research by the charity Shelter found that 37% of working families in England could not cover housing costs for more than a month in event of job loss. Ramsey’s approach is designed to mitigate against this and putting an emergency fund in place is a first step in the right direction.

Do you have your emergency fund in place?

If you haven’t done so already, I’d encourage you to get your emergency fund in place.

So, when the metaphorical fence blows down, you’ll have the financial resources to deal with it. Plus, there’ll be no call on your emotional reserves either, as you won’t be stressed about how you’re going to pay for it.


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