LIVING ON A BUDGET

5 Steps to Set Up Your Finances When Immigrating to Australia - Part 1

noreply@blogger.com (Anastasia) — Tue, 02 Mar 2010 06:41:00 +0000

This is the first part of a guest post from Australia. Today we will find out about opening an account and transferring money and next time we will get some useful information about how to rent and buy a house in Australia as well as how to get the best deal on Australian credit cards.

Fred is a personal finance writer at Credit Card Daily. He helps people to compare balance transfer credit cards online.

Immigrating to a new country and starting a new life can be both an exciting, but stressful time. However, to make sure you control as much stress as possible surrounding your immigration to Australia, follow these five simple steps to set up your finances.

1 How to open a bank account

To be able to receive the wages from your new job and any benefits you are entitled to, you will need an Australian bank account; plus having a bank account makes it easier to keep track of your funds and make purchases online, over the phone or in person. You’ll also need somewhere for the funds from the bank account in your home country to be transferred to.

Most Australian bank account providers will allow both Australian citizens and permanent residents to open an Australian bank account. Therefore, if you have just immigrated to Australia and are not yet a citizen, your permanent residency should be enough to open a new account, but it is best to double check this when you start comparing bank accounts.

If you open an Australian bank account within six weeks of arriving, you should only need your passport as identification. If you want to open a bank account after six weeks, you will need additional identification documents to help you meet the 100 point identification check required by all Australian banks and financial institutions. Each form of identification has a different points value and you can reach 100 points with any combination of:

· A birth certificate = 70 points.

· Your passport = 70 points.

· Your citizenship certificate = 70 points.

· A drivers’ license, or shooters’ license = 40 points.

· A public service employee identification card = 40 points.

· A Commonwealth or State government financial entitlement card, for example, a pension card = 40 points.

· Land rates for home buyers or home owners = 35 points.

· A card with your name on it, for example a Medicare card, credit card, store card, video hire or library card = 25 points.

· A document with your name and address, for example, car registration, utility bills, rental receipts = 25 points.

If you are opening a bank account with a savings feature you will also be required to provide your Tax File Number so any interest you earn can be reported and taxed correctly. To obtain your TFN, contact the Australian Taxation Office on 13 2861 or visit their website at http://www.ato.gov.au.

2 How to transfer money from overseas

When you immigrate to Australia you can bring your savings with you in cash, but amounts of more than AU $10,000 will need to be reported to customs officials. Also remember that if you are immigrating to Australia and plan to live as a permanent resident or citizen, keeping money in a foreign bank account does not exempt you from paying tax on it and you could be taxed at the highest rate of 45%.

If you don’t want to carry your savings into Australia in cash you can organise for an international funds transfer with one of the many money transfer companies operating in Australia:

· http://www.tranzfers.com/

· http://www.ozforex.com.au/promo/index-sending-funds-abroad.html

· http://www.excelcurrencies.com/

When you choose an international money transfer company, look for one with low fees and compare the exchange rates you can get at the time, and even whether the transfer company is willing to lock in that exchange rate until the transfer has been processed. Also make sure the company has a current Australia Financial Services license for the security of your funds.

Alternatively you can make the transfer yourself by opening a PayPal account www.paypal.com which allows you to transfer funds in from any currency, and out to an Australian bank account in Australian dollars; just keep in mind the PayPal exchange rates are not always as generous as those of the banks or international transfer agencies. You can also obtain the Swift code of the bank which holds your new Australian bank account and this will allow you to transfer funds from an international account into your Australian account, but make sure you compare the fees of a Swift transaction as they can be prohibitive.

Stay tuned for the second part to find out more about mortgages, rental agreements and credit cards in Australia!

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Why Buying in Bulk is Not as Good as You Think

noreply@blogger.com (Anastasia) — Mon, 01 Mar 2010 06:09:00 +0000

Ask most people for a common way to save money on groceries and household goods, and they may come back with this answer: Buy in bulk. While it can be an amazingly simple way to potentially save some bucks, it can also be a buying trap. Here are the 4 misconceptions we typically attribute to bulk buying, and the truth for each.

Myth #1: Buying a larger package usually means that the cost per unit (ounce, pound, etc) is lower.

Truth: It's one of the many reasons people rush to buy bulk, but it isn’t always so.
Just because a bottle of vitamins has 3 times the number of pills in it, it won’t automatically mean that each of them are cheaper than if you had bought the small bottle. Even when the price per unit is clearly marked on store signage or the store shelf, you may need to do some careful sleuthing to determine if it’s a good deal. Price books are a great way to make sure that you’re always familiar with what a “good” price is for any item you buy regularly, and can be made simply from a lined notebook. (Sometimes the best prices per unit happen with the smallest packages!)

Myth #2: Bulk-buying clubs don’t allow non-members to shop with a friend who is a member.

Truth: Representatives from major buying clubs have themselves proven this to be untrue, with statements that bringing a friend is allowed. In fact, most warehouse stores want you to bring a friend in at least once to sample the experience of shopping these kinds of stores. Yes, they’re hoping that the allure will lead your friend to buy their own membership (and sometimes this makes sense), but if you are content to shop in tandem with a relative or buddy, don’t feel like you’re breaking the law. After all, it’s twice the sales for the store!

Myth #3: Bulk-buying clubs can only be shopped in-store.

Truth: Most, if not all, major warehouse clubs can be shopped online (although fresh produce and groceries may not be available via online ordering). This, combined with the addition of several web-only items and the perk of free shipping for some larger items (like furniture, exercise equipment, and power tools), makes it an attractive way to buy your wares without ever leaving your home.

Myth #4: You can’t find good bulk buys outside of a warehouse club.

Truth: Remember our good friend, Target? They are just one of the many national retail outlets gearing up to offer our warehouse bulk stores some friendly competition. With special aisles dedicated to providing a bulk-buying experience to everyday shoppers, they have much to offer. Examples include 3-packs of boxed cereal, enormous boxes of diapers, and light bulbs by the 20’s! In addition to being competitively priced to bulk clubs, you can save big time by using manufacturer’s coupons (something the big box stores usually won’t let you do) and snagging items on clearance.
Still hoping to use bulk buying as a way to stretch that grocery budget? That’s OK! Be sure to keep these additional tips in mind when roaming the large concrete aisles:

Use it or lose it. Remember that jumbo container of hummus you had to buy the last time you went shopping at a bulk club? If you don’t, chances are good that it’s rotting in the back of your fridge — and wasting you money. Be sure that you’re committed to making every last penny of bulk savings work to your advantage, and use up perishables in a timely manner. (You may want to read up on how even dry goods can go bad if not stored correctly.)
Out of cart, out of belly. Ask anyone who buys yummies from a warehouse store if they are saving money, and they’ll probably tell you that the giant box of fruit snacks they bought were far cheaper per ounce than buying from a retail store. They may also admit that they were eaten just as quickly as the small box they usually buy. If you’re inclined to tear through giant cases of gourmet pecans or, in my case, those jumbo jars of refrigerator pickles, within days after purchase, look to scale back your buying (and your calorie consumption) with a package from your grocerer’s aisle, instead.
Bring a list. There’s something truly dangerous about a store that sells baby formula, frozen mini eggrolls, and firepits within 25 feet of one another. If you’re destined to stroll the aisles that you won’t be shopping from, bring a list, and stick to it! Keep in mind that warehouse club offerings may change from month to month, and the joint supplement you’re used to buying may not be offered the next time you shop. Bring your list, shop the clubs first, then buy whatever is not available or affordable at your local store. If you put all your eggs into the warehouse basket, you’ll end up with quite the eclectic (and expensive) cart of stuff.

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How to analyse your spending and why you need it

noreply@blogger.com (Anastasia) — Thu, 25 Feb 2010 06:44:00 +0000

When you first decide that you may need to structure your finances and get more control over it you very quickly discover that the corner stone of successful budget is a good understanding of your pending patterns.

When I first started I thought it will be easy! How can I not know what I spend?!

Well, the truth was – I actually had no idea… I knew the end result documented on the month end in a fat overdraft but I had no idea how it came about!

I’ve tried several things and none worked in isolation but together they helped me a lot – so here I am sharing my experience with you!

If you’ve been reading this blog for a while you would know that I am not a great support of detailed and painful budgeting or tracking. But some times detailed tracking is kinda necessary….

So, what did I do?

1. Analysed categories.
I have looked at my monthly bank statements and categorised what I could. I also found out that I was withdrawing a lot of cash and I couldn’t account for 30% of our overall spending because of that

2. Tracked daily for a short period.
So, I decided I need to track my daily spending for a several weeks (would never manage to do it for longer!). I had a choice of writing down on a piece of paper or use something more sophisticated. I did both!

I first created all monthly spend categories online (I’ve used a dead simple online free tool - it’s a bit ugly but it allows for USD, GBP, Euros and Rupee and does everything you need for such a basic task)
I’ve allocated budget per category per week (take your monthly budget and divide it by 4.3 – this is your weekly allowed spend) I did it on a weekly basis because I find month a bit too long-term when I am thinking about buying or not buying a latte in the morning!) I also have used moneystrands free online tool and a couple of others until I had to admit to myself that I won’t be tracking my expenses that rigorously for long!
As a converted iPhone user I’ve downloaded a free app (called Spendometer) … There are many more apps, so have a look around!

3. Made go/no-go choices.
After about three weeks I actually got a very good feeling for what and where I spend. I stopped obsessing with my Latté spending as it never amount to more than 0.5% of our earnings. So I kept buying it; but on some days I now buy coffee first thing at work (costs only 1/3 of my Costa Coffee) so – I still feel happy and spend less. I also found out that shopping at Waitrose online is actually often cheaper than at ASDA (so – the most expensive brand proved to be a much better value for money than the UK WalMart version)!

4. Looked for better value for money online.
I used http://www.mysupermarket.com/ to help me see how much my online grocery shopping would cost me where. This site is precious! You type in the whole grocery list at once, it puts everything into your shopping trolley and shows you how much this trolley will cost you at: Sainsbury’s; Tesco, ASDA and Ocado! You than need to click on the shop of your choice and the trolley gets sent over to the online shop for you to complete the order.

What have I achieved so far?

We are adhering to most of our monthly budgets (for grocery, petrol and clothing)
I feel in control of rather than controlled by money
We save enough to cover most of irregular or unexpected spending

I actually can tell you what I am spending money on! I understand how our expenses are coming together and why we might overspend and where to get the extra money if we need to (by cutting spending)

Our monthly budget is achievable and not overambitious, I don’t feel threatened by the whole money topic and most importantly I haven’t abandoned the whole budgeting – money management thing even though this month we ended up overspending.

image by krossbow

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Interview: What's your worst financial blunder?

noreply@blogger.com (Anastasia) — Wed, 24 Feb 2010 06:03:00 +0000

Kelly from Almost Frugal, a great blog with a lot of useful tips, has shared a story about her financial blunder! Do you want to share your story? Just drop me a line!

- what was your funniest/worst/biggest financial blunder?

This happened fifteen years ago, but I'm still kicking myself over it! Selling my almost paid off, three year old ford escort (which was financed at 0% interest), for a crappy, ten year old Jeep Cherokee at double digit interest rates. I lost thousands of dollars.

- what did you find so appealing about (why did it look like the right thing to do)?
I wanted to go on a road trip, and a Jeep Cherokee said road trip much better than a Ford Escort! Sigh. I was 22.

- what made you realise it was a mistake?
The second day I had it, it went over a bump and stalled in the middle of an intersection. With horns blaring on every side I managed to get it started again! Many visits to many mechanics later, it turned out that the crank position sensor had an air gap.

- what did you learn out of it?

That it's better to have a car that's paid off and runs well than something fun and sexy! My husband used to drive our 'impulse purchase' car, a Renault minivan, which we bought when I was pregnant with our third baby. We should have investigated it more closely, and just spent a lot of money first fixing it, then buying another car.

- how have you been using this experience from then on?
I now drive a teeny tiny French car (a Nissan Micra), with my three kids squeezed in the back. It's ten years old, but only has 68,000 km on it and runs like a top.

So, and what was worst or funniest financial blunder? Share!

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Step by step of your first budget - What Would I Do Differently?

noreply@blogger.com (Anastasia) — Tue, 23 Feb 2010 06:18:00 +0000

I am now in our second month of living adhering to a budget that I’ve set up. Some lessons I learned so far moved me to write this post.

Knowing what I know now – how would I set up my very first budget?

1. Collect / download itemised bank statements for the last two months

2. I would still ask a friend to help me identifying actual spend based on 2 months of bank statements. It’s way too easy to trick yourself into declaring some of your spending a one off or simply “not seeing” them – you need a help of an outsider!

3. List everything you expect to be paying for in the next 12 months – this one is probably the most important step. Listing all irregular exercises contributes the most to your success.

4. Estimate how much per month you need to save to be able to pay for all your irregular bills on the day each one is due.

EVERYTHING that needs to be paid less often than once a month should be listed as an irregular expenses and a monthly contribution towards the end amount needs to be allocated an a monthly basis

5. Create a savings account where you will be putting all the “irregular bills” money

6. List out all your regular expenses and group everything into following broad categories:

- fix costs (everything that you can’t scale up or down painlessly. This includes most of house related bills, memberships you can’t cancel, insurances, child care

- variable costs: groceries, going out, lunch at work and anything that can be cancelled / amended within one month. Estimate your average spend based on information you were able to get out of your bank statements

- savings: this category should include savings for all your future irregular bills payments, saving for Christmas, birthdays, holidays, emergency fund, etc.

- debt re-payment: could technically sit in your fix cost bucket but if you are aiming to combat your debt pro-actively separating it out into a special category would make more sense as it will increase your focus and hopefully motivation

- slack – if you just starting with money management you should be left with some money left over and not accounted for in any of the categories above.

7. Decide how you want to budget. There are probably more than two approaches to financial planning but the most popular ones are: 4 envelopes and zero budgeting. The idea of 4 envelopes budget is to allow you some flexibility in daily spending without going overboard. Zero budget forces you to budget 100% of your finances.

So if you decide to go with zero budgets you will re-allocate the money left in the “slack” category to any of the other categories: you may decide to overpay your debt payments, save more for Christmas, spend more on groceries, etc. If you were to go with the 4 envelopes you will divide your slack by 4.3 and add the resulting amount to your weekly spending allowance.

8. AUTOMATE your payments for as many items as technically possible! Bills, transfers into your savings account, debt re-payment – everything! It DOES make a difference!

9. give it a go for a month. I personally found it very useful to track all my spending for the first month of our budgeted life. It helped me to stay on track but also helped me determine where I over or underestimated spending.

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No, You Don't Need a Large Emergency Fund - or Convince me That I am Wrong!

noreply@blogger.com (Anastasia) — Mon, 22 Feb 2010 06:48:00 +0000

I recently have written a post about the myth and fallacy of an emergency fund and why I don’t want to have one. This led to a lot of discussion and a lot of people disagreed with my view.
I have just completed a guest post for Penny’s blog about MBTI type and their attitude to money and while researching for that post I also came across an interesting study about the link between the MBTI type and risk.
Since Emergency funds are all about mitigating risks and hedging your bets looking at MBTI type made sense.
Sonya Zichy conducted a survey asking participants about their investment preferences.
In summary - type seems to have the highest impact on risk tolerance, the financial planning process and level of interest in investment issues and less impact on actual choice of investments such as stocks and bonds.

No wonder that I don’t like emergency funds!

I’d much rather prefer to have several insurance policies to cover me for long-term illness, death, structural damage to my property. I mean the math is easy – to have enough money to actually be truly protected in case of an emergency I would need to save for at least five-seven years!

Now, the math is simple – I have to assume that NOTHIG bad happens to me in the next 5-7 years AND in order to save up quickly I will be quite tempted not to pay for most of the insurances as I would try to save money into my emergency fund.

Chances are that if anything happened in the next 5-7 years my emergency fund would cover me for only a couple of months (that’s the idea, isn’t it?) Something that only takes 2-3 months to recover from could have not been THAT bad in the first place!

As I am married and we both work full-time the earnings would be down by 50% not by 100% - so all we actually need is something in the area of 60% of all our expenses covered for 2-3 months

This equals 2 of my salaries and I could save them in under two years – emergency fund done!

At the same time I will be covered through my insurances and as we are saving for long-term spending (car repairs, holidays, irregular bills, etc.) it is unlikely that I would use this emergency fund for anything rather than: unemployment, time off sick with my child, covering excess on any insurances I would need to use to cover big emergency spending.

Psychologically I feel way more motivated to aim for 5000 savings rather than for 18000. Being motivated means I am more likely to achieve more of my goals.

The probability to both save for emergency as well as to have appropriate insurances in place, continue to overpay on our debt and save for planned spending all at the same time is much higher!

I wonder how many people stop saving for other goals and are not taking out insurances because they think emergency fund is their priority and who are horribly exposed to all sorts of risks if anything happens to them until they have saved enough!

So, my personal advice remains – all you need is a good portfolio of insurances plus money to cover for 2-3 months of expenses (or part of it if you are in a partnership), and enough money to pay excess on your insurances. This is way less than 6 months worth of expenses (or even income) as some “gurus” recommend you save for!

I hope you share your view on emergency fund savings too. Do you wholeheartedly agree with the idea of 6 months savings? Am I being naïve?

image by specialKRB

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Finances and Economy in Pictures

noreply@blogger.com (Anastasia) — Fri, 19 Feb 2010 06:15:00 +0000

This Friday it's all about InfoGraphics. It's amazing how the good ones are able to convey a lot of information in a single picture!

Click on the graphic for larger sizer and better resolution image.

Economy and Unemployment

The Geography of Recession

It's pretty spooky but fascinating at the same time

The Visual Guide to The Financial Crisis

How Your Degree Effects Your Unemployment

Lifestyle and Savings

How economic situation has affected interstate migration

Golden Nest Egg

Take a look at how much you can save over your career if you put your raises into savings each year.

Consumer Fraud in The USA

Calories per Dollar

For those who watch what they eat and what they spend, here’s an interesting infographic that shows the calories per dollar (CPD) of some of our favorite fast food items.

Men + Women = Love

Men vs. Women - a Financial Divide?

Statistics show that men and women handle money differently.

Something for the Valentine's

Valentine’s Day

is so much more than the chance to let someone know how much you love them. It’s also an entire industry that supports businesses with hundreds of thousands of employees.

The Cost of Romance

Flower Power: A Look at February’s Booming Floral Economy

A True Cost of an avarage Wedding.

Ever wondered how much money is spent on the flower girl’s flowers or how much the wedding industry makes on photography?

International Affairs

U.S. vs The Rest of The World
Take a look at how the U.S. stacks up against many other countries in a variety of different debt-related categories, as well as how the debt was accumulated in the first place.

Credit Crunch in UK: an average day

Is the World getting better or worse?
Results may surprise you, have a look!

Who is Buying What?

A look at where people around the world are directing some of their purchasing power.

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Success or Failure - How Color Determines The Fate

noreply@blogger.com (Anastasia) — Thu, 18 Feb 2010 06:13:00 +0000

Recently I have been writing about the effect color has on our decision making. Yesterday I came a cross another article that explores how different brands choose colors for their logos.

Has it ever occurred to you why you feel safer in one store and more energetic in another one? Have you ever noticed that landing on some web page you feel like clicking some button/link and keep browsing the site? While other pages prompt you to stay and keep reading?

Research conducted by the secretariat of the Seoul International Color Expo 2004 documented the following relationships between color and marketing:

92.6 percent said that they put most importance on visual factors when purchasing products. Only 5.6 percent said that the physical feel via the sense of touch was most important. Hearing and smell each drew 0.9 percent.
When asked to approximate the importance of color when buying products, 84.7 percent of the total respondents think that color accounts for more than half among the various factors important for choosing products.

At the point of purchase where we spend on average a mere 0.3 seconds glancing over products on display, using the "right" color can hold our eye long enough to influence our decision making.

Because we aren’t aware of the way color works subliminally we are not defensive and are more easily manipulated.

Good colors for restaurants which stimulate appetite are: orange, pale yellow, vermilion, pale green and pale brown.
Thirst corresponds to a tension between a feeling of dryness and a desire for liquid - in color this translates to a combination of yellowish-brown or reddish-yellow (dry) and greenish blue or blue (liquid). In the proper combination, these colors will trigger thirst. The next time you drink bottled water be aware of the colors on the label.
Advertising uses red to symbolize eroticism.
Prestige is symbolized by violet, wine red, or golden yellow.

What color would be best to wear when going to the bank to request a loan? Red, blue or black, maybe?

image by linh

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Why Should You Use ZOPA?

noreply@blogger.com (Anastasia) — Wed, 17 Feb 2010 06:15:00 +0000

ZOPA is a pioneer in social lending. You might have heard about it as a peer-to-peer lending and I am fascinated by this idea!

It's quite simple: financial transactions take place between the individuals without any intermediate financial institutions. And Zopa is a marketplace where people can lend anything from £10 to upwards of £25,000

Lending and borrowing from person to person like it was done hundred of years ago... But apart from its nostalgic value social lending has a lot of benefits for the participating individuals.

For the lender this means interest rates way above offers of current saving accounts and alike; for the borrower - loans are being made available to a much more lower rate as offered through banks and building societies.

As a lender you choose the rate, risk level and time period you wish to lend your money for. You transfer the money into ZOPA account (a segregated RBS account, meaning that it does not form part of Zopa's assets) from where your money gets lent out. The borrower checks current lending rates, applies for a loan in a way very similar to the one used by banks. Loan is "reserved" for the borrower until the final credit checks are being performed. And if everything goes well money is paid into the borrowers' account within several days.

ZOPA operates in UK, it was operating in the US but has scaled the operations down due to regulatory difficulties facing by all peer-to-peer providers there.
It now expands to Japan and Italy (a bit of a weird choice in my opinion, but here we go). In UK ZOPA got a lot of positive press coverage ranging from BBC to Money Talk by Fool.co.uk.

How does it work?

It works a little bit like an online auction.
Borrows register, get assessed and put out a request for a loan. They declare what the loan is for, how long for they want to borrow money and how much interest they want to pay for it. Everyone who wants to borrow at Zopa is identity-checked, credit-checked and risk-assessed. Zopa works with Equifax (one of the credit rating agencies) to work out three separate scores that should help lenders make an informed choice when they choose the borrowers.

At the same time lenders decide what type of borrowers they are prepared to lend money: credit rating, term, etc. Once a listing becomes 100% funded, you can see that the overall interest rate will begin to fall as lenders compete with each other to be included in the loan.

For example: a pensioner is asking for £2000 to clear overdraft. He wants the loan for 24 months and would like to pay 7.9% in interest. His request got 100% funding and you can see how the overall interest rate has dropped even below his request to be 7.3% four hours before the end of this "auction".

As a lender you don't have to offer the full amount asked. In the example above there were 262 lenders offering amounts anywhere between £10 and £500. Offering smaller amounts helps spreading the risk of bad debt. As with the banks there still will be borrowers unable to pay the loan back and as it is with the banks hedging your bets is the key. Hence Zopa would always suggest you spread your money between many borrowers. So when you lend £500 your money gets spread between 10 people.

Zopa works with a collections agency that chases any missed payments on the lender's behalf. This is the same process that banks and other financial institutions use.

What Can You Earn?

At the moment the average rate enjoyed by lenders on money lent over the last 12 months(after fees and before bad debt) is about 7.9% with 11.7% being the interest rate offered to young people (under 25) for 60 months loans. Lenders pay an annual equivalent 1% fee on the amount they lend to borrowers. A lender lending £1,000 at 7% would earn £70 of interest each year if the money is always lent out and paid back. They would pay a fee of 1%, or £10, in total.

Now, you may think a lot of the positive press and a nicely done web site does not mean that it all works. Zopa has a user forum so I had a look around to see if people are complaining. They don't. Some of the lenders have posted their lending books to discuss their success as well as some set backs from defaulted loans.

Looks quite good, doesn't it? I feel soooo tempted to give it a go!!!

Would you? It's a bit of a strange feeling just to give your money to other people even though it's all regulated and kind of secure ... And even though I am a bit wary I also find the idea so cool ... I don't know... I can't decide if I should try it or not... It makes sense to invest at least £500 to hedge the risk of bad debt and the money would be not really available if I needed it as the loans are given out for at least 12 months ...

What would you do? Should I do it?

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Review: Your Money or Your Life - And Why I Don't Like this Book

noreply@blogger.com (Anastasia) — Tue, 16 Feb 2010 06:24:00 +0000

I first read about this book in an online review on GetRichSlowly blog. It sounded very interesting and over a short period of time I came across several posts referring to this book as their inspiration.

So, I decided to give it a go and read it. Being in my first month of budgeting and conscious spending I got the book from the library rather from Amazon.

I was very glad that I didn’t have to keep it and could give it back as quickly as I could...

Yep, I didn’t like it at all!

I struggled to find any negative reviews about this book, so I guess I am on my own ...
I in particular dislike author's approach to calculating your real hourly wage! The logic is simply flawed!

Vicky argues that in order to estimate what we really earn we need to subtract from our hourly (or day) gross earnings:

Taxes
Cost of commuting
Office lunches
Office attire
Cost of recreation we use to wind down after a stressful day
Cost of food we bought to cheer us up
Cost of training courses we went to in order to increase our earnings
Cost medical insurance (or medical bills that were cause by stress)
Cost of anything we use to counter act stress or depression caused by work (computer games, cable subscription, etc.)

Now, while I do agree that office lunches and commuting costs should be taken into account I think education, clothes should actually be added to what you earn! If my employer is sending me on training I am adding to my market price as a professional and I might use it for my personal development – the latter should be priceless.

Vicky sais that we pay for everything in this life with our life energy and so the time we spend unwinding from stress is actually a cost.

There is nothing wrong with this statement per se. But it is wrong when it’s being considered in isolation from the rest of the life! It creates an impression that there are better / other activities that don’t “cost” our life energy; it makes work looks really bad, nearly toxic!

People make choices to what job they apply and accept. For example I have an hour commute each way every day. Vicky would say I need to add this as a “cost” of going to work. But I love these two hours! It’s my time, I can spend it reading, blogging and day dreaming. If I were not to go to work I would not have these two hours a day!

One of the commentators to Vicky’s book suggested that the costs of “fiver for a colleague’s birthday” should also be added to the cost of working ...

I suggest you add the cost of dating, the cost of having protected sex, the cost of dead-end relationships and disappointing friendships to your overall bill – life is quite an expensive thing, no wonder we end up paying with all we've got in our life energy and die at the end ...

I wonder if Vicky knows how to avoid dieing too?

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Higher Education and its Costs

noreply@blogger.com (Anastasia) — Tue, 16 Feb 2010 06:01:00 +0000

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Russian Women and Their Money

noreply@blogger.com (Anastasia) — Mon, 15 Feb 2010 06:01:00 +0000

Penny Farthing, in her personal finance blog, published an interesting article about money in Japan and it inspired me to write a similar post about money and Russian women!

In traditional Russian families it is very common that women look after the day to day budget and men tend to get some spending money handed out.
Both man and woman are likely to have saved some money from their salaries without disclosing it to their partners. A man would call it...

... "zanachka"which could be translated as "stacked away" and women usually refer to it as "something for my hair clips" (which may sound like a small sum - but it usually is a substantial amount of money, way more than men use to put aside).
Men tend to save their money in cash, while women tend to buy something valuable with it or invest it.
Russians prefer to buy their food at the local markets that are usually open 7 days a week and sell everything from meat to chocolate. Russians tend to buy food in bulk and usually are skilled in cooking meals from left overs so that not much gets wasted.
Russian men are expected to pay for all large purchases, as well as for the wedding. Often women would keep money they have earned to themselves rather than contribute it in full into the family budget.
One reason for such a disproportionate contribution to the budget may lay in the fact that divorce settlements are usually not very favorable to women as the Russian family law does not know what a alimony for an ex-wife is. Alimony is only paid for children until they reach 18. So Russian women are brought up being aware and prepared to deal with a possible financial shortfall if they decide to get divorced.
Credit cards are usually pre-paid (banks require you to pay money in and won't let you go overdraft). Paying by credit card is not as wide spread as in the Western part of the world. Using your credit card is still seen equal to taking out a loan.
An average Russian prefers to save up for a large purchase rather than to take a loan to be able to afford something. People who take out a loan to afford a holiday are being talked about and usually are perceived as "poor" (not being able to save upfront) or "stupid" (spending over their means).
Money and earnings is something that before Perestroika was easily discussed and talked about. This was partially due to the fact that everyone knew what others were earning as well as how much their rent would be, etc. More recently money has become an uneasy topic to discuss but it is still discussed more openly than in western Europe.

Dating Russians

At the same time Austin from Foreigner's Finances has written a guest post for ptMoney where he discusses benefits of joined accounts for couples. I do agree with his idea in general though it might be not such a great idea if you are in a relationship with someone from a different culture!

Why?

Well, let me give you an example of a relationship between a Russian woman and let's say a UK man (any western European man would do, actually). It's quite common to share all the costs of living between partners here, in Europe and in the US. It's a different story in Russia!

As I just mentioned men are expected to pay for most of the purchases as well as for rent, holidays, restaurants, etc. It is actually seen as an affront to a man if a woman pays for something in his presence. It might be seen as an attempt to say to this man that he is not masculine enough, not "a man" really ...

Now imagine what happens if a man suggests to share the cost of a holiday or to pay in turns when they go out? While your Russian girlfriend might accept your suggestion and even agree with your view on the shared budget I am pretty certain it will leave her with a bit of an uneasy feeling about your relationship.

My suggestion - if you are dating an eastern European woman you may want to approach the financial burdened sharing topic with some caution and may be give it a bit more time before expecting your other half to contribute to the joint spending...

image by prokudin-gorsky

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344 Tips to Help You Save from All Over the Internet

noreply@blogger.com (Anastasia) — Fri, 12 Feb 2010 06:13:00 +0000

This week's Friday list is dedicated to Saving Money!

As I am not blogging over weekends I hope the links below will give you enough food for thought and action!

Some posts and sites in my Friday selection are not new and been around the internet for a while. I have selected the sites below to give you good, useful, entertaining read over the weekend.

10 Shopping Tricks That Stores Hate - A seriously good article on how to shop more for less from Consumerist

Top 10 Ways to Trick Yourself into Saving Money from Lifehacker. While every person's financial needs are different, anyone can set up simple systems to help themselves stop buying what they don't need and almost automatically save money they'll need later

Force Yourself To Save! 15 Painless Ways To Pay Yourself First - Digerati talks here about some interesting ways to fool yourself into saving money.

10 things you shouldn't buy new - MSN Money asks why we should waste money on shiny packaging and a fancy store when you can find it online and 'pre-owned' for a fraction of the cost?

Little Steps: 100 Great Tips For Saving Money For Those Just Getting Started - I had to include this article since it got 159 comments! Each of the tactics described are simple little moves you can make to improve your financial situation.

118 Ways to Save Money in College - a long list of both practical and creative ways you can save some green while you’re going to campus.

The Cheapskate Guide: 50 Tips for Frugal Living - confession of a cheapskate at Zen Habbits

Top 10 Tips for Talking Your Way into a Better Deal - negotiating tactics to use next time you want to get more for less.

21 Money-Saving Sites from Around the Web - A list compiled my Get Rich Slowly with even more sites recommended in the comments

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What Budgeting can Learn from Dieting

noreply@blogger.com (Anastasia) — Thu, 11 Feb 2010 06:45:00 +0000

Getting spending under control has something very similar to loosing weight. Spending money gives us a "good mood" kick as a piece of chocolate does too. As with dieting - budgeting is all about helping spend less than you earn (eat less than you normally would), it's about identifying why you overspend (overeat), what triggers your behaviour and what to do about it.

One of the major success factors for long term weight loss is the ability to stay motivated. Budgeting and financial self-control over the long period of time requires motivation too. All too often people set goals and feel really energised for a while before abandoning them.

What happened?

In quite a few cases the decision to start saving, to get control over spending, to combat debt comes from a particular event, from something unpleasant (credit card declined, loan refused, etc.) This negative event triggers our wish to do something about it, to get far away from this uncomfortable place.

We start looking into options, read about other people's techniques, research what professionals have to offer. We make some choices and set goals (reduce debt, pay off credit card in full, start an emergency fund …. Loose 10 kilos, get into the summer dress from for two years ago, do at least three sessions a week in a gym) … After adhering to the new routine for a while we start allowing ourselves to overstep self-inflicted boundaries on occasions like Christmas and summer holidays.
Slowly we start spending more, saving less and credit cards get used more and more often (a chocolate cake here, a bottle of wine there, and than there is Christmas and other social occasions where eating is part of the ritual).

Away Motivation

What kept us going so far was a so called AWAY motivation. The reason it is able to motivate is not because of the possibility of getting something, but rather due to the prospect of avoiding something.

Getting out of debt is a typical away motivation. Once we start getting further and further away from the unpleasant place of being highly in debt, the pressure for change start to ease and our habits may return.

What do you need to stay on track?

Towards Motivation

You need to complement your away goal with a towards to one.Moving toward motivation is, as the name suggests, motivation from desiring to move toward, obtain or achieve something. When you give out rewards or incentives for doing something, it is using moving toward motivation. This type of motivation is all about pleasure. To BUY a house, to receive a monthly pension of a certain amount, etc.

In our example the goal of getting out of debt needs a "bolt on" of a toward motivation… "and with the money I won't need to pay towards my debt I can than save for a better house, more pension, a debt free holiday"

The more debt you repay the closer to your dream holiday you get - once the pain of being in debt stops hurting the pleasure of a great holiday takes over.

Read more about budgeting:
Emergency Fund and Why You Don't Need One
Which Budget Personality Are You?

image by loiclemeur

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4 Steps to Tackle Debt Successfully

noreply@blogger.com (Anastasia) — Wed, 10 Feb 2010 06:37:00 +0000

It’s certainly easy enough to get yourself into debt, but when it comes to becoming debt free most people struggle for their entire lives without ever fully experiencing a debt free existence.
There are many ways to deal with debt but following four steps I found most useful for us, so I wanted to share them with you.

1. Identify Your Debt

Listing ALL your debt might feel quite unpleasant but sometimes eyeopening. There are several ways how you can pay off your debt quicker but all of them would require you to know exactly how many holes you need to plug first.
List your debt considering following categories: mortgage, bank overdraft, student loans, store cards, consumer loans (paying off furniture, car, etc.), credit cards, friends and family, tax (for self-employed)... Anything else?

2. Decide How Much You Can Spare
Some of your loans will have a set amount of money and a predetermined length of repayment, others would operate on a minimum payment basis. Do your sums! I have listed all our loans in a table where I could note against each loan monthly minimum payment, loan term, interest rate, overall outstanding balance.
You are looking to establish the minimum you must pay towards all your debt (so if you are currently overpaying on your credit cards you still need to write down the minimum payment they would accept).

Now look at your income and spending, identify how much more than the minimum payment amount you can contribute towards repaying your debt.

We used this Statement of Affairs calculator to establish our monthly outgoings as well as to calculate our net worth and the amount of money we could dedicate to debt repayment.

3. Prioritise Your Goals

Now you need to decide how you want to repay your loans and other debt. Here is a quick overview of the different approaches to debt repayment currently "on offer".

With the debt avalanche method, you pay off your debts by interest rate, tackling the highest rates first. The avalanche is the mathematically superior approach because you will pay less interest and can get out of debt quicker.

Debt snowball approach - here you order your debts by size and pay off the smallest first. The theory goes that quick wins will keep you motivated. You throw as much money as possible at your chosen debt while paying the minimums on the rest. When the targeted debt is gone, you apply the same payment plus the minimum to the next debt, and so on. The amount you apply to your targeted debt grows as you pay off each bill, and you pack together those little victories to make a big dent in what you owe.

The debt snowflake, can supplement the other strategies. When you snowflake, you look for little ways to trim your expenses. Brought lunch with you from home today? If you were "snowflaking," you would apply the £10 you'd saved on lunch directly to your debts, either the same day or at the end of the week (hopefully combined with other little snowflakes of savings).

We use a mix of an avalanche and a snowball. Because we got some money back from one of our loans we had money spare to repay the overdraft on one of the bank accounts which was also the most expensive debt on the list.
Now we are repaying two loans and two credit cards. One of the credit cards receives only a minimum payment and the other credit card gets all extra money that we have allocated for our debt repayment.

I used the snowball calculator to create our payment schedule. This particular tool allows for change in payment terms (in particular in interest rates). This is very useful if you have cards with introductory low/zero interest rate offers that expire after a while. The tool puts loans with 0% at the top of your list allowing you to repay them while introductory offer lasts.

4. Automate Your Payment

We have direct debits coming out of our joint account so that 90% of our payments are automated. When we recently moved some of our debt to a 0% credit card the small print on this new card (Virgin card) said that the moment we miss a payment remaining credit on our card will be subject to 18.6% interest charged until all the money is paid off.
At the same time Virgin does make it quite complicated if you want set up a direct debit and the only option they offer you to set up over the phone is paying the minimum amount. If you want to pay any more than that it get very confusing and involves paperwork.

It makes me wonder how may people missed their first payment just because the direct debit didn't work and now facing interest charges on their transferred loans ...

By paying off one debt, re-prioritising other payments and increasing overall amount available for repayment by only 10%, we cut the time we will be paying off by nearly two years!

If everything goes to plan we will be debt free by June 2012!

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America's Recovery

noreply@blogger.com (Anastasia) — Wed, 10 Feb 2010 06:11:00 +0000

It's not all doom and gloom!

click on the image to enlarge. image by pelosi

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16 Steps to Your Most Successful Budget Ever

noreply@blogger.com (Anastasia) — Tue, 09 Feb 2010 06:48:00 +0000

DO NOT START WITH EXPENSES – START WITH YOUR GOALS

The reason why so many people abandon their budgeting ambitions after just a few weeks is because they have been advised to do it in a logical but unfortunately uninspiring way.
Personal budgeting looks like another branch of accounting and financial forecasting but actually it is much more about personal development, self-awareness and pure psychology.

One of the most successful coaching gurus, John Whitmore, uses a GROW model to help his clients achieve their goals and change their lives. And as Dave Ramsey says “money is 80% psychology” – so I suggest to combine the two and use GROW model for your personal finances. And here is how!

Have a look at the 16 steps that will help you set up your first financial plan that you also will adhere to long enough to see its true benefits!

GOAL – defining what you want to achieve
1. Establish your financial goals.
Forget your expenses, bills, debt repayments for a moment. Define what you want to achieve by the end of your financial year (being 12 months from the date you start budgeting) and beyond (ideally for the next three to five years).

2. Define your goals in detail.
How much do you want to spend on your birthday? How much would you like to spend at Christmas? How quickly do you want to re-pay your debt? When do you want to buy a new car by?

3. Set your priorities.
I know that you’ve heard 100 times that you first need to re-pay your debt, in particular on credit cards, BUT some of you might be comfortable paying credit card debt a bit at a time. It’s your call really, however if you decide that carrying debt around affects your outlook on life, your mood and hinders you to achieve other goals, than it might be a good idea to tackle debt first.

4. List your goals starting...
... with the smallest one and ending with goals that don’t have an end date (e.g. you are likely to have car repairs and service costs each year so you may want to have a rolling saving goal rather than create a car maintenance goal each year anew). I have talked about snowball saving last week in detail.

5. Allocate your contribution.
Use your gut feeling – how much can you save toward each goal? Divide the amount by months (or weeks) remaining and see how the result feels – do you think you can pay in that much/little?

REALITY – exploring the current situation, relevant history and future trends

6. Check out your bills.
Only now is it time to look at your current expenses. Some expenses are like evil trolls – now you see them – now you don’t. These trolls are also known as irregular bills. The best way to hunt down 99% of your expenses is to list what you pay during each YEAR, not a month! List all your planned expenses, write the amount and the date it’s due. Important: Divide the amount by months/weeks left until the due date. This will give you the amount you need to “save” each month to be able to pay your irregular bills when they become due

7. Estimate your spending.
OK, this one is a bit frustrating, sometimes… My personal advice that worked wonders for me – ask your trusted friend to do this bit. Why? They are likely to be objective; they won’t “overlook” an impulse buy because they don’t feel anything when looking at your numbers. They don’t feel ashamed, guilty, or anything else – for them your bank statements are first of all just numbers. Use your bank statements to estimate an average spend per category for the last couple of months. When I did this bit I found out that I used to take 30% of my money as cash during the month and there was no way I could track what on earth I spent that money on…

8. List Your Earnings.
Please, please, please – check out the web, local authorities, and charities to find out if you are entitled to something you are not claiming! Child benefits? Childcare vouchers? Tax credits? Tax deductibles? Grants for house improvement (e.g. for solar panels, better boilers, etc.) Overpaid your taxes last year?

9. Establish your “state of affairs”.
That’s the obvious step: first see how much is left after you have paid all your bills and saved for irregular payments; now have a look how much is left (if anything) after you have deducted your monthly spending on daily outgoings. I use a state of affairs calculator online. It's pre-set to be in pounds but would work for everyone as long as you don't deal with multi-currency

OPTIONS – coming up with new ideas for reaching the goal

10. What are the options?
Have a look at your goals you’ve identified earlier. How much money have you allocated and how much is left in your current “state of affairs”?

11. Paying off debt?
If one of your top priorities is to pay off debt – now is the time to decide how you want to tackle it. Snowballing? An Avalanche? Leave it as it is? Can you move some of your debt to a 0% credit card? Can you consolidate? The best debt repayment snowball calculator I came across on the net - this one takes into acount that some of your credit cards may have a 0% introductory offer. It creates a schedule for you that aims to pay off thst "free" debt first.

WHAT/WHO/WHEN – deciding on a concrete plan of action

12. Reducing the cost.
This one is one of the most rewarding steps on the way to your best budget ever! It doesn’t matter if you overspending or not – the less you pay others the more is there for you (to spend or to save)! Start with less painful stuff. Re-negotiate contracts, look for better and cheaper providers; investigate if you’ve been overcharged and if and how you can claim your money back. What insurance policies do you have and how many do you actually really need? Cancel stuff (subscriptions, memberships, etc.) you haven’t used in the last two months.

13. Structure your spending.
How does you financial health look right now? Are you able to achieve your goals on time? Do you want to achieve them quicker? Have you been paying overdraft charges in the last couple of months? The first month of your “new you” allocate spending amounts that fell like “yep, that’s I think how much I spend” you will find out quickly if your gut feeling was right.

14. Choose your approach.
How do you want to plan for your future? Do you like total control? Prefer rough estimates? Choose structure over a loose framework? Choose what works for you! There are so many ways you can budget – you are bound to find something that helps rather than hinders you.

15. Decide on your next steps.
How would you like to save? Read about a saving snowball to get an idea on how to prioritise your goals. Do you need any sort of emergency fund? Read about my approach to emergency funds and why I don’t save as much as is widely recommended.

16. Re-visit your budget.
Have a look after a month on how you are doing. Are you on budget? What needs tweaking? What is the best way to stay on track? Would you like to have your budget on Excel or online? Do you prefer full-blown budgeting applications off or on-line or perhaps you just need a simple tool?

Now, do you think you can give budgeting a go?
If so, take a quick test to find out which approach to budgeting suites your personality most!

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Where Does All the Money Go? - Here!

noreply@blogger.com (Anastasia) — Mon, 08 Feb 2010 06:46:00 +0000

visualeconomics.com delivered another great piece of complex numbers crunching in a nice diagram... a lot to think about! I just wonder ... why didn't they included debt repayments?

To view the image please click on it to expand

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Brace Yourself For The Week!

noreply@blogger.com (Anastasia) — Mon, 08 Feb 2010 06:27:00 +0000

Hello and welcome! New week is about to begin or has already begone for some of us
I thought I post this video on psychology of advertising - may be it will help us to withstand one or another temptation!

In this video Dr. Robert Cialdini discusses sales principles - It`s all about changing your social reality. (Excerpt from a psychology documentary about "Social Reality" with Philip Zimbardo)

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10 Most Popular Articles About Money

noreply@blogger.com (Anastasia) — Fri, 05 Feb 2010 06:17:00 +0000

So many things are about money in this life!
This Friday I want to share with your 10 articles - useful, funny or informative and all about money...
But first lest's have a look at this pretty little chart! What do you think about it? And - more importantly what result did you get?

Just click on it to enlarge for better quality

picture from madatoms

So, here is the list of 10 most popular articles about money on the web this week

5 Expenses You Can't Afford If You Have Credit Card Debt - for those of you who are broke
21 Things We're Learning to Live Without - What do you really need?
12 Ways To Curb Your Spending - A particularly effective means of draining your bank account is to do so in small doses
20 Ways to Waste Your Money - Whether a newbie or seasoned budgeter, nearly everyone has spending holes -- leaks in your budget that drain money with you hardly noticing.
10 Great Movie Rentals That Will Pay You Back - Here are some timeless classics from which we all can learn valuable personal-finance lessons
50 MYTHS ABOUT MONEY - Many misconceptions about personal finance could leave you out of pocket if you act on them.
Top 10 money drains - If you fall into these money traps, learn to avoid them and pocket the savings.
Who Else Wants To Save Money? 88 Tips, Tricks, Tutorials - some of these might seem obvious, but it doesn't hurt to be reminded once in a while.
10 Essential Money Skills for a Bad Economy - When it comes to money, the best defense is a good offense. The best way to avoid fallout from the national economy is to take control of your personal economy.
The Top 25 money tips of all times - Ignore your portfolio? Ditch your job? Check out these and 23 other unusual insights from our panel of leading financial experts

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5 Tricks to Convince a Tightwad to Buy

noreply@blogger.com (Anastasia) — Thu, 04 Feb 2010 06:08:00 +0000

So, you think you have it under control?
You can’t be lured into spending more than you want? Think again!

Here are some marketing tricks aimed to overcome the defence of a conscious buyer… By the way, making lists prior shopping won’t really help you either!

As I mentioned earlier when we spend money an area in our brain gets activated that is also responsible for processing physical pain signals. To reduce this feeling of pain clever retailers...

1. Make prices look like bargains.
120 quid for a year sounds too much? How about 10 a month or even better 33p a day for a membership?
2. Make buying easier.
Instead of charging us per carton or per plate savvy shoppers are offered “all you can eat” buffet and “unlimited download” offers
3. Make buying even easier.
You want a new broadband? How about we give you a land line and TV for just 20% more? Bundle offers seek to minimise the pain of paying for three different products by offering us a pack of three products that we need to pay for only once
4. Appeal to our needs.

Retail has found us out – we are more interested in the utilitarian features (aka what purpose can we use it for) rather than with hedonic once (pleasure). So if they want buyers to fork out for a product expect a list of practical benefits to be prominently displayed
5. Use the right language.

Research has shown that saying “a small 5 buck fee” increases the sales by 20% compared to “a 5 buck fee” statement. The reminder that 5 buck is just a really small fee convinces us to accept the fact and pay for it.

Even though we can’t escape the retailers’ marketing tricks it’s nice they’ve been thinking about us!

I wonder, if you ever felt compelled to buy stuff because it “made sense”? And – did it really “made sense” or was it a marketing trick?

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The Myth About an Emergency Fund and Why You don’t Need One

noreply@blogger.com (Anastasia) — Wed, 03 Feb 2010 06:06:00 +0000

Read any blog, web site or book dealing with personal finances and you are bound to find one or many pages written about the necessity of having an EMERGENCY fund … The advice ranges from few hundret to start with to the equivalent of 6-12 months expenses.

Continue searching and reading comments on this topic and you will soon discover that most people don’t have such a fund and those who try to have one struggle with: defining its size, knowing when to use it, keeping paying into it in the longer run.

And is if it was not enough there are further considerations like: do I pay into an emergency fund or do I re-pay my debt first? Do I have to have it in cash or in one of mine accounts? What is more important my emergency fund or my retirement fund?

For most people to physically save 5, 10, 15 or 20 thousand dollars/pounds/euros on top of everything else that needs to be taken care of (like your pention, debt, education, etc.) is nearly impossible.

Hence this goal is demotivating and destructive. It’s easy to think – “what’s the point of budgeting, saving, planning my finances if I can’t even provide a safety net in the next three, five, ten years time” (fill in the time it will take YOU to save up that ridiculous amount of money)

I vehemently oppose the whole idea of vast amounts of money tucked away in cash or in low interest savings accounts!

I don’t suggest you don’t have any savings, no! I suggest that you break down your emergency fund monster into manageable chunks of money being saved for different purposes, available on different terms and that you substitute some of your possible saving goals with insurance products.

Pictures are better than words, so here is my hierarchy of emergency funds

Cash Flow

Half of an average of your overspend in the last six months – this is something you should aim to have in your account by the end of the month – each month. – Why? Nothing motivates you more to stick to your budget, keep saving, control your spending, etc. then your current account floating above “0”.

In our case it’s about £200.

This one should cover unplanned minor expenses like shoe repairs, speeding tickets, new toaster and alike (I refuse to get anal and plan (aka save in advance) for this minor crap)

Repairs

Look around your house. What do you have that’s likely to break down and is not covered by warranty? (In our case it’s: heating, appliances, water boiler). How old is this stuff? How much do you think it might cost to repair it?

In our case – I’ve estimated £800 (excluding car)

Other Emergencies

That’s the first part of your “truly emergency” fund. Money for larger, unpredictable expenses. This is an area where you would struggle to come up with an example quickly as this pot of money should cover unpredictable and unanticipated costs, nothing else.

I hope to save here £1500

Long-term Fund

That’s the one that should help you in case of illness and unemployment. To cover for unexpected death I personally opt out for a life insurance. I would estimate 4,000 to 6,000 here.

By the way - the amount you need to save here depends on how many people work in your household now and how many could start working/increase earning if need be. Don't "over-save" just because you don't want to challenge a potential status quo!

Other Stuff

I have an extra car repair saving goal as it is likely that something needing attention will happen each year (latest at the next inspection) and I also have “irregular bills” category in my budget – even if I am paying for something once in a year I can be saving money for it for at least 11 months prior, can’t I?

Where to Get Money From?

My approach to this is quite flexible.

Cash-flow: spending discipline on a monthly basis, I've budgeted for an “underspend“

Repairs and irregular bills: I have listed all irregular bills for the upcoming year and dates they are due - each bill contributes its amount to the overall amount of money saved each month into this category based on its size and due date. Repairs is a rough estimate.
My irregular bills will all be paid by April this year but I will continue to save the same amount of money going forward until I have £500.

Once I've reached this mark I will save for the next year irregular bills and than divert my monthly contribution to the "other emergency" goal.

My "other emergency" and "long-term" both receive equal amount of money (£100 each). That's not much but the idea is to contribute more when additional money becomes available.

The worst possible scenario of a sudden death is covered by a life insurance.

The only vulnerability we are not prepared for is the long-term sickness/disability... I'll worry about this one later. But right now I am considering different options and in particular I am thinking about taking out income protection and life insurance for me and my husband.

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Which Budget Personality Are You? 13 Questions to Help You Choose

noreply@blogger.com (Anastasia) — Tue, 02 Feb 2010 06:25:00 +0000

What would you prefer? A quick test to help you pick the right budgeting tool

Here is a quick test I’ve created to help you match your approach to budgeting and the tools available to you.

Answer each question assigning a value from 1 to 9 with 1 being least important (or least true) statement and 9 – most important one, than total the score and read the description at the bottom of this post:

	QUESTION	YOUR SCORE
1	I know exactly what I am spending my money on I just need to track it	____
2	I know exactly what information I want to get out of my budget	____
3	I am aware of different budgeting schools out there and I have a strong preference for a particular one	____
4	I know how to forecast my budget and cash-flow	____
5	The best way for me to understand numbers is to see them as a picture, a graph or a pie chart	____
6	I am pretty confident I will stick to keeping budget, I just need a tool	____
7	Paying money for a product/service usually motivates me to keep using it	____
8	I like the support sharing with other people provides me with; I enjoy being able to share my experience and challenges with others	____
9	I am very concerned that my financial information may get in someone else’s hands	____
10	I am likely to track my spending as I go along, rather than at a set moment in time (e.g. evening or weekend)	____
11	I find it is important that the things I use look nice, are well designed and easy to use	____
12	I need to start budgeting because I am in real financial troubles and each penny counts	____
13	Writing your spending in a book like my parents did, is a viable alternative	____
	OVERALL SCORE	____

Scores below 50

You are most likely to be happy using free online budgeting tools that offer you community support and easy to handle applications. These tools offer some basic but easy to understand graphical reports; allow you to create personal budgets based on pre-defined categories and add your own, if needed.

The closer you get to the higher end of this category the more likely it is that a “paid for” package would be the right choice for you.

Scores between 51 – 63

The higher your score in this category the more likely you would welcome a semi-professional software package both online and offline.

You may feel that the fees a lot of these programs charge, is money well spent as you are likely to appreciate detailed reports and the ability to customise your tool to serve your well-defined requirements.

From 64 upwards

You might be happier using an excel spread sheet. Chances are you not only know what exactly you want your tool to calculate and report upon but also how to make it happen. You also may enjoy the freedom of to customising and creating your budget from scratch. You may also feel safe in the knowlede that no one can get hold of you information and misuse it.

For any technical support and inspiration just Google ”excel budget template”. Alternatively you can try to combine Excel and GoogleDocs to get the best out of both worlds: the flexibility of Excel and the convenience of an online tool.

Trolley Psychology in the Supermakret

noreply@blogger.com (Anastasia) — Mon, 01 Feb 2010 06:18:00 +0000

If you are a smart shopper you might think you are in control of what you buy. But there is the whole science behind how products are organised, priced, labeled and how sections are ordered. Nothing is left to the chance!
There is a wealth of tricks based on psychological theories that in the end help convert you from a visitor to a buyer.
Watch the video a fun look at some of the tricks used by marketers in the retail trade. They talk about the use of layout, product placement and color, something I've posted about in "Which color is your Shopping Trolley" recently.

Get smarter with your money, get updates straight to YOUR EMAIL or RSS Feed now!

The Week is Nearly Over!

noreply@blogger.com (Anastasia) — Fri, 29 Jan 2010 06:12:00 +0000

Let's have some fun! Let's finish this week how we have started it - with a bit of advertising

LIVING ON A BUDGET

5 Steps to Set Up Your Finances When Immigrating to Australia - Part 1

Why Buying in Bulk is Not as Good as You Think

Myth #1: Buying a larger package usually means that the cost per unit (ounce, pound, etc) is lower.

Myth #2: Bulk-buying clubs don’t allow non-members to shop with a friend who is a member.

Myth #3: Bulk-buying clubs can only be shopped in-store.

Myth #4: You can’t find good bulk buys outside of a warehouse club.

How to analyse your spending and why you need it

So, what did I do?

What have I achieved so far?

Interview: What's your worst financial blunder?

- what was your funniest/worst/biggest financial blunder?

- what did you learn out of it?

Step by step of your first budget - What Would I Do Differently?

No, You Don't Need a Large Emergency Fund - or Convince me That I am Wrong!

No wonder that I don’t like emergency funds!

Finances and Economy in Pictures

Economy and Unemployment

The Geography of Recession

The Visual Guide to The Financial Crisis

How Your Degree Effects Your Unemployment

Lifestyle and Savings

Consumer Fraud in The USA

Calories per Dollar

Men + Women = Love

Men vs. Women - a Financial Divide?

Something for the Valentine's

International Affairs

Who is Buying What?

Success or Failure - How Color Determines The Fate

Why Should You Use ZOPA?

How does it work?

What Can You Earn?

Review: Your Money or Your Life - And Why I Don't Like this Book

Higher Education and its Costs

Russian Women and Their Money

Dating Russians

344 Tips to Help You Save from All Over the Internet

What Budgeting can Learn from Dieting

What happened?

Away Motivation

Towards Motivation

4 Steps to Tackle Debt Successfully

3. Prioritise Your Goals

4. Automate Your Payment

America's Recovery

16 Steps to Your Most Successful Budget Ever

DO NOT START WITH EXPENSES – START WITH YOUR GOALS

REALITY – exploring the current situation, relevant history and future trends

OPTIONS – coming up with new ideas for reaching the goal

WHAT/WHO/WHEN – deciding on a concrete plan of action

Where Does All the Money Go? - Here!

Brace Yourself For The Week!

10 Most Popular Articles About Money

5 Tricks to Convince a Tightwad to Buy

The Myth About an Emergency Fund and Why You don’t Need One

Cash Flow

Repairs

Other Emergencies

Long-term Fund

Other Stuff

Where to Get Money From?

Which Budget Personality Are You? 13 Questions to Help You Choose

Scores below 50

Scores between 51 – 63

From 64 upwards

Read more about budgeting tools

Trolley Psychology in the Supermakret

The Week is Nearly Over!