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How do you cut everyday costs?

Discussion in 'Money Management' started by Crusher, 9th Jan, 2010.

  1. Crusher

    Crusher Well-Known Member

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    Lately me and my girlfriend have started thinking of ways, which don't really impact on our day-to-day way of life to not 'waste' money.. Wondering if anyone else does something similar or has some idea's?

    I got a whopping $640 electricity bill a few months back, and i think it's part to do with using the dryer every couple of days as its not very energy efficient (its brand new, but what dryer really is energy efficient) .. So, since the washing machine is rated 5 or 6 energy rating, it doesnt really matter what time of the day we use it, but the dryer is the one chugging away at the energy.

    I checked out Energy Australia's peak times and off peak times, and the cost was a major difference! peak time is around 36c per k/w, and off peark is only 8c! Which got me thinking..

    We use the dryer maybe 2-3 times a week, and the off peak is 10pm-8am..

    We do a load of washing around 8pm.. it is in peak times, but like i said the washing machine is pretty high on energy efficiency.. and then after 10pm, when its done, put the clothes in the dryer, and head to bed.

    In saying all of that, it will probably only makes $5-10 difference to my next bill, but i guess, over the year it might ad up.

    If anyone bothered reading all that, do you do something similar, or can you make some suggestions on ways to manage everyday costs?

    I've also started doing a monthly budget starting 2010. It's surprising how easy things ad up .. (ebay projected cost for the month.. $0 / actual cost $230 :eek:)
     
  2. Billv

    Billv Getting there

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    best not to use it, I suggest you sell it on ebay :)
    Sun is plentiful here and it's free.
    Save your money and the environment
     
  3. Jacque

    Jacque Team InvestEd

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    Hi Crusher

    Being a little older than you :) I think I can impart some tips here for budgeting. Many eons ago, when hubby and I were childless, we had a budget for everything and ruthlessly stuck to it- so if it meant there was only $20 left for groceries for that fortnight we had cheese on toast! It was a forced savings plan (that worked) and before we knew it we had sufficient money for a house deposit and various other "rewards"!

    Whilst we were both working we lived on one wage only and squirrelled away the other into a term deposit. Yes, we rented (subsidised rent via ADF did assist) bought second hand stuff (and still do) and simply shopped around for cheaper articles. By nature, I'm a bargain hunter and still find it difficult to pay full retail (so I know how you feel about Ebay!) given my frugality, which no doubt assists.

    From years of experience there's loads of ways you can save money. Perhaps the biggest one is the amount of money spent on everyday living items eg: food, clothes, entertainment, dining out, cars etc Secondly is utilities and insurances - you'd be surprised how much you can save by shopping around with insurers. It's boring, it takes time and it's not too much fun at times (especially when your budget doesn't allow for a big night out with friends or an interstate holiday) but if you can stick to a savings plan for a no. of mths or years you might just be surprised at the results!
    Agree that you don't need a dryer with just two of you- but they do come in handy when you have kids :D
     
  4. NSWGuy

    NSWGuy New Member

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    There are so many different ways to save money, but it has to be said that the single easiest way is to sit down with your bank statements, work out what expenses you have in the month and create a budget. The key though is to stick to it!

    With that in mind, I like to listen to Dave Ramsey's radio show - his style may be a little fiery, but he is brilliant if you need inspiration to save and the commitment to see it through to your target.
     
  5. Magpie

    Magpie Active Member

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    Hi Crusher,

    I agree with those who said that some kind of budget plan is the key. It might sound like it's not what you're asking but, believe me, it can make a huge difference. The important thing is not just to have some kind of plan, but also to keep good records to give you the data to base it on.

    I use a spreadsheet that I originally set up on Excel, but which I now run in Numbers on a Mac. It's really just a simple household account keeping setup that I programmed in for myself, but it also doubles as a budgeting system. It's a massive help with figuring out how and where to save.


    Basically, it does two things:

    1. Records all our income and outgoings. Running household accounts seems to have fallen out of fashion now, with many people apparently just maxing out the plastic until the funds dry up. However, we have a Mrs Beeton's cookbook at home that devotes 8 pages to running household accounts - and that was written in the 1800s, so nothing is new. The same principles, and benefits, still apply.

    2. Includes a budget section that sets aside ongoing sums of money each week for personal use, and also for things that aren't quite so easy to predict. For instance, there's some each for the 3 family members, another for car maintenance, and one that's just for 'medium term saving'. The personal money can just build up - or get blown - in whatever way we choose, with no questions asked or criticism allowed.

    The 'medium saving' takes care of all those things that cost between $100 and $500 that you hadn't specifically thought to budget for - like replacing that tumble dryer, getting a bread-maker, fixing the computer or whatever. Car Maintenance also has its own little corner because (unlike the rego and insurance) it's more unpredictable. The services on 3 cars, and things like new tyres, can fluctuate a lot in frequency and cost, so it works better to just save some in advance.


    In practice I update the figures at least once a week. It shows three weeks on the screen - last week, this week and next week. Everything to the left shows the previous weeks of this year. Everything to the right shows what happened at the same time last year - because in fact the whole thing is basically last year's spreadsheet being updated as I go. So I always know when the bills are due and roughly how much they will be (based on last year + a bit).


    The benefits are huge:


    a). As a record of past performance, how we spent, how we saved, where it all went. Handy for looking up when you bought something ("Is that DVD player still under warranty?" "Can we justify upgrading the computer yet?" etc). Invaluable for seeing where your money REALLY went as opposed to what you thought you did with it (they're never the same...)

    b). It's a tool for running "What If?..." scenarios.

    c). A great way to take the angst out of decisions, and the guilt out of spending. My wife likes to spend her budgeted money in a pretty relentless and regular way. It mostly goes on clothes, jewelry, supplies for her hobby of making bead jewelry, chatty lunches, or whatever. It rarely builds up to much before it goes off to help stimulate the retail sector... :D but she's great at sticking to whatever the budget says she's got left. I'm completely different, and tend to dress in the same old rags, haven't seen the inside of a coffee shop in decade, and let it build up. Then I blow it all in one go on something like another guitar. :cool:


    I don't know quite why that works so well at helping you spend less - but it does. Maybe it because it gives you such a simple way to say "yes" or "no" to each spending decision, and also a very accurate way of totaling up how much each area is gobbling up.

    The only direct tip I can give you is that 12 guitars is enough, and that after that you need to switch to collecting keyboards, clarinets and a sax.... :rolleyes:

    All the best with it,

    Chris
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    As already mentioned - the first step is to have a really good understanding of exactly what you spend all your money on. There's plenty of software around that can help with this and with subsequent budgeting exercises (I use Quicken Personal Plus).

    You can't identify unnecessary wastage if you don't know where the money went in the first place.
     
  7. AsxBroker

    AsxBroker Well-Known Member

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    Hi Crusher,

    That's a serious energy bill. Buy a cheap indoor clothes rack from Woolies or Coles for $20 and start hanging your clothes, depending on the weather it usually takes just over a day for clothes to dry in a sunlit room. Sure the difference on the Energy Smart might save a little bit but you'll be better off without it and so will the environment. It's great that your dryer is 5 stars it's a bit like a store sale, you'll save xx% off when you buy now...but do you need to buy when the sun gives you light and heat for free?

    I can guarantee you that your electricity bill is not purely because of your dryer, in our previous place which we rented it changed to Energy Smart and I started doing the washing and dryer(ing) after 10pm and we save about 10% of our bill. Try turning things off...everything!!! Except for your fridge, dont turn that off...Flat screen tv's use about 100w per hour, desktop computers are a killer, especially if you have a 500w or bigger power supply, standard laptops (not those 17" or 20" desktop replacements) are usually more green using 65w to 100w ph and charging. Those little netbooks use around 35w per hour. Turn air conditioning off if it's not needed as these a HUGE power suckers anywhere between 3 to 8 kw per hour (yes, that's 36c to 96c per hour on a standard 12c kw/ph tariff). Unless you have a few kids, buy a dishwasher scrubber from Woolies or Coles and don't bother using your dishwasher, these can either take in cold water and have a heating element at the bottom or take hot water straight in and heat it up as a booster.

    Approximately 30% of energy bills are for heating/cooling. You've probably already read EnergyAustralia - Energy saving at home which has similar ideas.

    Hope this helps,

    Dan

    PS Don't forget to turn the lights out in rooms your not using or other appliances.
     
  8. Tropo

    Tropo Well-Known Member

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    11 Most Common Budgeting Mistakes

    Making a budget is a great idea for the majority of us. But many people draw up budgets that have fairly obvious oversights that render their work useless. To create a realistic budget, avoid these common pitfalls.

    Not Planning for Yearly Expenses

    You plan for typical ongoing bills expenses: groceries, utilities and gasoline. But oops, you forget about yearly expenses, like car insurance and property taxes. For planning purposes, simply divide yearly lump sums by 12 and allocate that amount for annual expenses every month.

    Yes, it's easy to forget about bills that don't show up at your door every month, but you're probably better off paying the total bill at once, since most companies levy an extra charge for monthly payments. Remember to also plan for other non-monthly expenses, like school supplies, pet care and gifts. (The tips in Holiday Spending Or Spending Holiday? will have you singing "Joy to the World" well into the New Year.)

    Not Expecting the Unexpected

    Many people don't set aside money for medical expenses, car repairs and home maintenance. But are these so-called irregular costs really unexpected? Almost all cars and homes eventually need repairs. The amount of repairs depends on age, quality of construction and maintenance.

    Sure, unexpected breakdowns happen. But you can predict some costs, at least roughly. When shingles on your 25-year-old roof with a 25-year-warranty are curling up, it's time to start setting aside money. Save money by shopping around and getting quotes, instead of hiring the first contractor who returns a call. (Be prepared before you buy - learn the basics in Used Car Shopping: How To Avoid A Lemon.)

    Not Tracking Past Expenses

    A good way to get a handle on irregular expenses is look at past expenses. How often you went to the doctor or mechanic last year can indicate how much you'll go next year. Plus, some costs are seasonal. Gas and oil bills are higher in the winter, and electric bills are frequently higher in the summer when air conditioners run.

    Disregarding Savings

    Many people contribute to savings only what they happen to have left after they've bought everything they want. A better way is to reverse that thinking. Decide what you will contribute to savings and stick to that amount, then buy what you really need.

    Not Having an Emergency Fund

    Paying attention to savings will help build an emergency fund. Financial planners recommend building up two or three months' worth of emergency savings, in case of job loss or severe illness.

    Not Including Small but Ongoing Items

    Small items, like eating out for lunch, add up quickly. A $3 cappuccino every workday comes to $75 a month - would buying a coffee machine be a better option? Look at these types of items, if your budget isn't paying off the way you'd hoped.

    Putting Too Much Work In

    Some people write down every amount they spend everyday and track every penny. You should be able to maintain a budget with a reasonable amount of record-keeping.

    Not Being Flexible

    You don't have to be too restrictive - trade amounts in different categories. For instance, spend less on eating out in one month and buy some new shoes the next.

    Not Writing it Down

    Numbers in your head can be amorphous and inaccurate. Writing down the budget can add discipline and authority. Try a spreadsheet or online software.

    Not Changing It

    Some people drop their budget instead of changing it. You should be able to change it as new income and expenses arise, or you find that your previous planning wasn't accurate.

    Not Being Realistic

    Some people set down unrealistically low spending limits, and then become discouraged when they run out of money and can't meet their goals. The point of a budget is not to stop you from spending money at all or from treating yourself once in a while. Instead, it is meant establish your priorities and you give you sense of control, and free you from guilt about spending.
    Budgeting is meant to empower, not cripple. Work within your means to create a budget that best fits your lifestyle. After all, it's your money, and you should have control over it.
    11 Most Common Budgeting Mistakes - Investopedia.com
     
  9. JudgeDreadz

    JudgeDreadz Well-Known Member

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    a well spotted article tropo!!
     
  10. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Can anybody recommend good software for budgets ?




    Thanks, Johny.
     
  11. JudgeDreadz

    JudgeDreadz Well-Known Member

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    johnny! I just use excel but there is probably a more sophisticated way of doing it.
     
  12. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I use Quicken Personal Plus.

    Start by tracking ALL expenses using categories - do this for a few months, then use the budget builder to create a budget based on what you're actually spending. You can then identify which types of things are costing you the most money and where you're likely to be able to cut back.
     
  13. Johny_come_lately

    Johny_come_lately Well-Known Member

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    Thanks Sim. How much does Quicken cost?





    Johny.
     
  14. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    For basic budgeting, Quicken Personal is $79 RRP
    Quicken Personal Plus is $199 RRP

    Here is a comparison: Reckon

    I actually have an annual subscription for Personal Plus which costs $79pa and they send me the latest version as soon as it is released.

    I do the same with Quickbooks Pro which I use for my business accounting.
     
  15. Qaz

    Qaz Active Member

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    If you have an iphone theres a (relatively) cheap app called Ixpenseit which I found useful for tracking spending. At around $6 its alot cheaper than the quicken stuff (though not as thorough or as powerful).

    I come a little bit from the Ramit Sethi school of budgetting. I see people run around all the time cutting coupons to save cents and not actually putting cash away at the end of each month. Alot of people are (i beleive) basically scrimping on the cents to feel good about wasting the dollars.

    In my not so humble opinion, I wouldn't worry about spending a few dollars on a coffee every now and again and would worry just about knowing where your cash is going and having a sum of money transfer from your paycheck each pay period into savings. With the rest, enjoy yourself, a budget is non-sustainable unless it has some leeway for you to buy yourself a few small cheap luxuries every now and again. In other words chase the savings in the big items like insurance, don't sweat the little stuff unless you really have to (though still document that you bought it).

    This is just my opinion though and it won't necessarily work for everyone. For me it's allowed me to put away around $12,000 a year in savings as a single person on a $50,000 a year income.
     
  16. KateMelb

    KateMelb Active Member

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    If you're really serious about saving money any way possible, then check out the Cheapskates website. Everything from cheap recipes to advice on how you can make just about everything yourself (including washing machine powder!). It really helped us out when interest rates were up at 10% a couple of years ago.
     
  17. macca_fbd

    macca_fbd New Member

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    Hi Crusher,

    A number of years ago I did up a budget and basically listed every expense, both regular and not so regular, including a great many things that Tropo mentioned. Where it came unstuck to a degree was that I only had 2 accounts, a Joint account with my partner with which every bit of income flowed in (and out again), and a High interest saver account. What invariably happened was I could not differentiate between bills, food, discretionary etc.

    What my partner & I have done since is switch our mortgage over to a portfolio account which allows us to have multiple offset accounts against our mortgage. I have since divided a number of these accounts up into various sub categories like - bills, food, savings, investments etc.

    All I do is work out how much all bills cost over a year (this includes unforseen things like medical, car & house maintenance, memberships etc) and divide by 52. Same is done with food etc. We also shop at Aldi every month (sometimes 5-6 wks) which saves us a packet, usually only cost us around $300 (We also go quarters in a beast every 6 months for around $300 so that covers our meat basically). All lapses like takeaway for example come out of this account so it stops you from being bad or you can't afford to go shopping.

    We also give ourselves play money(adult pocket money) which covers any discretionary items including, alcohol, smokes, going out on the town etc comes out of this play money, which is around $60 a week. If you can afford more than by all means, suit yourself.

    Sticking to this reigeme has worked a treat for us, when large bills come in I don't even care because it is allowed for in the bills account.

    We also put solar panels up so instead of paying an electricity bill, we get money back each quarter (also use the dryer approx 3 days a week). It uses about 2 KWh per run, It costs us about 20c a KWh so it uses less than $15 a quarter. We had the climate smart audit done and the biggest killers are computers (put it in a hibernate mode after x mins of non use), old appliances (had a 40 + year old tucker box chest freezer, that uses some juice), heat lights and entertainment systems (xbox as media centre) left on all day. Most of my standy power use was negligible.

    You also don't need a mortgage offset either, High interest accounts are usually free when linked to your normal bank account so you could get as many as your want. Works for us.

    Sorry for the rant.

    Cheers.
     
  18. fundies

    fundies Member

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    My wife and I budgeted hard for 10 years, and paid off our home at 38 years old. Since then, we have loosened the purse strings somewhat, and spend too much on overseas holidays, kids etc. We could still have a good life and continue to budget, but the wife has "let loose" so to speak. We still manage to save though, but we would be millionaires if we showed some restraint over the past 7 years since getting rid of the mortgage ( on average wage ).

    Remember, it takes two to budget.