STOP THINK DO - Part Three

Develop a Plan and Organise a System For Paying Your Bills

If you have bills arriving in the mail that you didn't know were coming or you suddenly can't afford to pay for something else because you have to pay this bill, you are allowing your bills to control YOU, instead of you controlling them.

To prevent this, you must have a plan and you must work your plan into a system.
Firstly, list your big expenses throughout the year. These may include electricity, water, school fees, registrations, insurances etc. If you are unsure when these bills fall, then mark them on a summary sheet which is divided into 12 boxes, one for each month, as they come in through the year. Knowing what is on your horizon will enable you to plan for the larger expenses rather than dreading them when the bill arrives in the mail.

To control the bills I have a system whereby I tally up every bill that I expect to come in throughout the year.

 I look back through old calendars and bank statements to get an accurate list. I then add the total of all the bills for the year. After I get up off the floor and recover from the shock I divide this amount by 52 or 26 if you work on a fortnightly budget and then know that this is the amount that I have to put aside.

My version of "put aside" is to transfer it into an account that is only for bills. I don't touch this money, except for bills. Depending on how much control you need over your finances, you may choose to have a plastic bag for each bill, whereby you put $20 a week into the electricity bill bag etc. Some people choose to do a bpay electronic transfer to each company so by the time the bill comes in, the amount is in credit or close to zero.

The choice is yours.

The only rule is that it has to be "a system" that is, something that is not too complicated and works for you. If you are the type of person that simply can't have cash on hand because you are impulsive then don't choose the method where you hang onto the cash. You would be better of paying each company a small amount each fortnight.

When a bill comes in I write the due date on the calendar and the amount. I then have an "unpaid bills" clip that stand on my desk. One of my jobs on Mondays is to look at my budget and pay any bills. I pay the ones that are due in the upcoming week. I also write a list of bills that I have paid so I can see at a glance how much variance in, for example, mobile bills over the past few months.

As you know from my previous posts we work on a cash only basis for our day to day expenses and for our savings. See my previous post for how I actually do this.
http://avisionsplendid.blogspot.com/2007/07/working-with-cash-budget.html

To take away financial stress you have to be in control. Otherwise your money management is like a giant wave that keeps knocking you down every time you try to stand up. Removing financial stress will allow you to concentrate on more important things, like building quality family relationships and having a more peaceful, simplified family life.

Let me know how you are going via email or comments. If you have any helpful hints on how you reduce financial stress in your family, please let us all know.

STOP THINK DO - Part Two

STEP TWO: KNOW WHERE YOU ARE FINANCIALLY AT ALL TIMES.

We have embarked on a journey to take control and create a better and simpler life for ourselves and our families. Before we get into the nitty gritty we are doing some preliminary steps which are financial. Money is not the most important thing in our lives, but it plays a big role in our stress levels and can even cause relationship breakdown. We will therefore attempt to remove that stress by managing what we have and this will enable us to focus on things that truly matter.

So, in your notebook make a 'starting point' page.
1. Head it with today's date.
2. List ALL the money you have – every bank account, every wallet, every purse, every money box. Don’t list what you owe here, there will be a separate table for that.
3. Now list all the money you owe. This includes mortgages, credit cards, personal loans, loans to friends or family, lay-bys etc
4. Now, make a summary :

TOTAL WE HAVE: ___________________________

TOTAL WE OWE:_____________________________

Now that you have faced your financial truth you can start taking some steps to improve your situation. It is also helpful to mark a date on your calendar for 3 months down the track to do this again and look at how you have improved. If you want to keep a tighter reign on things you might re-do this sheet monthly. If you are really taking this seriously, you may even graph your progress so that what you have is in one colour and you can see that line going up, and what you owe is in another colour and you can see that line going down.

Don't be too frightened by the results. It is important to know where you are so that you can map out where you are heading. Burying your head in the sand will only make your situation worse. Take control !

Don't forget to give me some feedback. Email me with your results or let me know how it feels to face the truth!

Stock Up

Today I went to ALDI ( about a 40 minute drive from home) and did my stock up with a friend of mine who is also looking at saving money through smart buying.

Sometimes it is good to pair up because you can go halves in larger quantities so that you get the bulk discount without the storage problems, or having the product go off before you use it all.

So far we have shared rice and peeled garlic cloves ( we got a big bag when we were at the Sydney markets together). Soon we plan on sharing potatoes and a large quantity of meat.

It's nice to have like minded friends. I had to laugh tonight because I got a text message from her which said " cat food a hit", meaning that her previously fussy cat had taken to the cheaper ALDI cat food. It's great having someone who enjoys extreme shopping as much as I do !

Extreme Shopping

You've heard of extreme sports, well I am into Extreme Shopping. Now don't misunderstand me, I don't spend hours clothes shopping and wandering the malls. In fact I hate that sort of shopping. I am into extreme shopping for things I have to buy - and let me tell you I LOVE it!

It started quite a few years ago when I was expecting number one son. I spent a lot of time obsessing over our budget working out how I could afford to not go back to work once the baby was born. I soon worked out that saving 20 cents here or there could really make a difference and I have been totally obsessed with the concept ever since.

Now I am sure many of you are thinking that you can't be bothered shopping around, or that the extra time involved is not worth it, but take a look at this little equation.

Lemonade: I usually buy two bottles for a week. It comes on sale and I can save $1.25. Multiply this by two and then by 52 weeks for the year and the saving is $130. Not much you reckon ? Do this across your grocery list and you 'make' enough savings to take your family to a resort for 10 days every Christmas. (well that's what I choose to do - you may choose something else like pay your credit card off or use it for birthdays etc )

So.... the question remains. Is it worth the time and hassle ? Only you can answer that question. The actual question is.... how much time are you willing to invest to have a holiday/ pay off credit card etc ? ... one hour..... three hours ......5 hours......

Here's how I do it.

Firstly I went to the supermarket I usually frequent. As I did my normal round I took a calculator and worked out the best buy by using the unit price method. I divide the price grams/ litres etc and multiply by a common unit to get the price into a usable quantity. Clear as Mud ? Let's do an example. In the supermarket you see two bags of sugar.

The first is 2kg for 2.49 and the second is 3kg for 3.79. Here are the steps

2.49 divide by 2 = 1.245 per kg

3.79 divide by 3 = 1.263 per kg

so the 2kg is the better buy. Don't be fooled though, the answer is not always the biggest quantity and this example doesn't really show a clear saving.

Here's another: Toothpaste 110g for 1.29 or 175g for 1.89

1.29 divide by 110 X 1000 = 11.72 per kg

1.89 divide by 175g x 1000 = 10.80 per kg

I convert the smaller numbers to kilos or litres to make it easier.

It tool me about an extra 40 minutes to do the shopping that day and I recorded the prices in my price book. The next week I shopped at the other supermarket and did the same. Then when I came home I compared it with a docket I had from a trip to ALDI.

I then made a master list of what to buy from which shop. All up I think it would have taken me about 3 hours to do the whole thing over a number of days. Now when it comes to shopping day I don't run around to every shop and waste my time. Because I used the stockpiling principle, that is I buy enough of something when it is on sale to not buy it again until it comes on sale again , that I simply buy what I need depending on which shop I go to.

The extreme shopping starts (oh I crack myself up - this is so sad ! ) when I see catalogues and can do a quick calculation as to whether or not the shampoo is a good buy and how much I will save.

Every time I laugh at myself and think I have REALLY become obsessive compulsive about my grocery shopping I just think of that holiday.

We have been going there for 9 years now. Who'd a thought it ! Most people can't be bothered. But I'm sure if you stood on the street corner and handed out $2000 they'd jump at the opportunity.

Well, people, your opportunity is already under your nose. You just have to ask yourself whether you are willing to invest the time. After all, in this world we either spend money or we spend time.

Are you an extreme shopper ? I'd love to hear your story !