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By Little Mummy, May 12, 2008 6:16 am

ACF stands for America’s Cheapest Family by the way, it’s a book I bought last year after it was given a positive review at The Simple Dollar. The book covers all aspect of saving money and spending wisely, one of the biggest takeaways though has been their budgeting system.

Like most people (I think?) I used to muddle along and as long as my bank balance was ‘in the black’ I thought I was doing just fine, until of course the car broke down and we hadn’t accounted for the unseen cost of repair, which is where it all starts to get complicated and stressful if you don’t have savings. The ACF budgeting system takes into account these seemingly ‘unseen’ costs and factors them into a budgeting system that is easy to use and provides piece of mind that when something unexpected happens the funds are there to take care of it. Sound good?

I manage my budgeting system in a (very) simple spreadsheet (no formula required! Unless you want to). Along the top I have all the categories in which we spend money, ie insurance, clothing, car, mortgage, food etc.. I take the projected annual cost of each category and divide by 52. The amount left is the amount I must put into that category or ‘account’ each week, we are paid weekly, you may choose to do this part monthly. The projection is easy to figure out if it’s a monthly direct debit I times by 12 then divide by 52. If it’s something more difficult like the car (which includes repair!) I allow for the most expensive car repair we’ve had (£650) and then divide by 52 and hey presto. For household maintenance I allow around 1% annually for the value of our home which is a generally accepted amount ie if my home’s market value is £100,000 then I allow £1000 per year, which sounds about right.

So as we are paid weekly (and this is much easier if you have internet banking), I breakdown the pay into these categories, leftover money is put into a seperate ‘frivolous spending’ account. All bills and spending which is accountable comes out of the first account, I manually minus the money out of the categories each morning. This sounds like a complicated process, but in reality it takes me around five minutes or less each morning.

I’ve been testing this budgeting system for nearly six months and I can honestly say I’ve never worried less about money. I’ve nearly always kept savings for unseen disasters, however, it’s all too easy to spend those savings, not when you’re using this budgeting system, it’s easier to realise that eventually these ‘unseen’ events will happen and that you’re actually just saving up for when they do. Instead of the event being a financial disaster it becomes just another bill, one that you’ve already budgeted for! Now that the routine is in place it’s so simple to manage that I can’t ever see me not doing it now.

How do you manage the household finances?

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By Little Mummy, September 23, 2007 1:02 pm

One major thing I’ve done in the last year to simplify my finances is to get a flexible mortgage. This type of mortgage allows you to overpay and take payment breaks. All excess funds go into a savings pot which is offset against the mortgage lowering the interest to be paid, and, in turn reducing the monthly payments. I like the fact that we can build a cushion in the savings which we can use to take a break if something happens and we could do with a month off, the savings can also be used for home improvements.

Last Monday we put an offer in on a house, on Thursday we upped that offer and am pleased to say that it was accepted! In this situation I am now finding further benefits to the flexible mortgage as you can just transfer the mortgage to a different address, no need to reapply, as long as the amount you need to borrow is within your upper limit it’s simply a case of changing the addresses.

What have you done recently that has simplified your finances?

Next Week’s Habit: Simplify my Life

Photo by flickr user cristina101

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By Little Mummy, September 10, 2007 3:13 am

I recently wrote my top ten money saving strategies that are ensuring we can live off one wage, whilst I stay at home with my daughter Erin. Also providing me with the option of returning to full time education in the near future.

Now it’s time for seven false economies that have tripped me up along the way.

1. Shop Brand Nappies

You may think (like I did) that nappies are a perfect way to save some cash, after all, the supermarket brand versions can be as much as 40% cheaper, which is a real saving….but don’t be fooled. I found that, when it comes to nappies you get what you pay for, the cheaper versions stayed very wet, meaning I had to change them more often, perhaps twice as often, making cheaper nappies a false economy. The only time I buy cheap nappies is to keep for standby. The reason? their so bad compared to the named brand that I can only stomach using them when I’ve truly been caught short!

2. DIYB

Otherwise known as Doing It Yourself. Badly. We’ve all heard of so and so’s husband who tried to rewire the house to save money and uhhh…didn’t get it quite right, resulting in a hefty electrician’s bill to correct it. Take heed, if you are in any doubt that you can’t successfully complete a job, don’t bother, instead try and find a friend of a friend who will do it for ‘mates rates’.

Ok I need to find the phone number for the light switch fixing guy (!)

3. Selling Stuff on Ebay

For a short time (while I was pregnant) I had the grand idea that I might build an ebay empire and become a ‘powerseller’ making lots of money in the process. I would buy cheap items to resell on ebay. If you’re considering it, don’t bother unless you have a great supplier and high priced products (electronics) at rockbottom prices, otherwise you’re going to find it very difficult to turn a profit.

First there is the listing fee, and then the percentage they take from the sale price, not to mention paypal fees, postage and packaging, plus all the time and effort, most of the time it really isn’t worth it, and that often goes for selling unwanted items like kiddy clothes and toys. I actually just give mine to charity or pass them on to someone I know now because it is such a false economy, both monetarily and time wise.

4. Cheap Deodrant

Unless you like snowing armpits don’t even go there!

5. Picnics

Controversially I don’t believe that taking a picnic on an outing is always the most economical. If you have leftovers or stuff to make sandwiches and squash to take then this can definitely be the cheapest option. But if your picnics (like mine) involve you heading to the supermarket to stock up on expensive pre-packaged foods to take, then you’d be better off grabbing a sausage roll or bag of chips when you’re there. Admittedly it’s not the healthiest, but once in a while it’s ok!

6. Buying Ultra Cheap Food

I’ll admit that some shop brand items are equal to or better than the more expensive brands, in fact I made a short list of them in my post about cutting costs. However, buying the cheapest and lowest quality of absolutely everything will likely end up with you having poor meal options, and eventually you will give into the temptation of tasty takeaways, thus blowing your budget way over what it would have been to buy tasty meal ingredients.

7. Extending the Life of Shoes

Kids shoes are expensive, our last pair were £26… You may be tempted to.. ahem… ‘extend the life’ of your shoes by trimming the ends and fashioning a pair of not-so fashionable sandals. It’s an economical idea, but don’t! Think of the shame and extra pocket money you will have to dole out in compensation (we are living in a society obsessed with suing for damages, beware!) also you can really harm the resale value if you decide (against my advice) to sell them on ebay

Anyonelse have a false economy to share….

Comments (17)

By Little Mummy, August 27, 2007 11:57 pm

For the past 20 months I’ve been a stay at home mum, and for the most part we’ve lived off one wage, this situation sets to continue as next year I’d like to go back to college.

Over the summer I’ve looked at our budget and expenditure in depth. I’ve figured out the main ways that we will be able to continue to afford ourselves the luxury of choosing to invest in the future, which will pay off both monetarily and in our longterm happiness.

1. Get What You’re Entitled Too

I’m not talking about sponging off the state here, just making sure you’re receiving all that you should be.

Most people, regardless of earnings, are entitled to something whether it be child benefit or tax credits. Make sure that you claim the tax credits and update them if there is a change. In my experience, even small changes can affect the level of your tax credits.

2. Make Money from a Hobby

Boost your household income by establishing a side income. Childminding is a good option if you’re already at home with your own child. Otherwise consider making money from your hobby. If you paint, sell paintings. If you make soap, set up an ebay store. If you blog, have you tried monetizing your site? It can be as simple as adding a little code. If your site is a page rank four or above try text link ads, I’ve found it to be the most stable income that requires no work other than pasting in the code.

3. Sell The Clutter

Do a sweep of your home and sell anything that you don’t need or don’t use. You can use the money to clear some debt or invest in home entertainment (see number 10).

4. Set a Budget for Everything

I find that having a ‘bills and essentials’ account and a ‘luxury account’ works well for me. I set a budget for food shopping, bills and petrol so that we have a rough guide of what we should be aiming for. I find that using the budgeting method works especially well with food shopping as it’s easy to keep on adding in extra treats, now I get the staples in and the money leftover (up to the agreed budget) is for ‘extras’ and treats.

5. Free Days Out

Spending money on lavish days out to theme parks is fun, but wholly unnecessary if you’re on a budget. This summer we’ve enjoyed going to the park, to the beach, for walks, the library, and to the museum – all free of charge. We’ve also sprinkled in a few low cost activities like soft play (£1.50/$3) and swimming (£7/$14, for three of us). We haven’t had any expensive days out this summer which is down to both Erin’s age and our budget, although we have taken advantage of some family perks! (see number 11!)

6. Savings

Try and build up an emergency fund for a ‘rainy day’. Even if it’s only a few pounds a week it’s nice to have a little extra available when you need it.

7. Save Money on Food

I’ve been using the classic tactics of meal planning, making a list and online ordering for sometime now, so when I looked at our food budget again I had to think of some other way to cut it down to size.

Over the past few months I have been trying cheaper alternatives to our regular buys, we have managed to cut our expenditure by around 10% by sticking with some of the cheaper alternatives. Note: we only kept the ones that were as good as, or better than (yes, there were some cheaper alternatives that were better) the more expensive version. Products that we have transferred to include; tortilla chips, salsa, shower gel, toothpaste, flour tortillas, rice, and laundry tablets. Non transferables included coffee, bread, butter, and fruit, these products presented a false economy which I’ll go into in a post soon.

8. Cut the Bills

Quite a few of our bills have risen steeply recently. Our mortgage has increased by nearly 25% in the last year, our gas and electricity by around 40% and our telephone by about 30%. It became clear that we needed to focus on reducing these if we were to survive on one wage.

I’m not really a big believer in changing suppliers every five minutes, especially if I get good service. I find it a hassle especially for utilities. So we have turned our attentions to trying to reduce our usage instead. We have began using the heating less, we’ve brought a manual clothes dryer to cut down on our tumble dryer use and we are also trying to be more economical in the car. Oh yes, and only call mobile phones in an emergency and keep lengthy calls until after 6pm.

9. DIY

Cut costs by doing it yourself. We recently saved ourselves some money by laying a simple vinyl floor in the bathroom. The total cost was around £45, if we’d had someone in to do it we would probably have been looking at paying into three figures.

10. Buy Entertainment Products for the Home

We recently received a windfall, we decided to spend some of the money equipping ourselves with some home entertainment. We looked upon this as a bit of an investment, we know that there will be some financially tight times ahead (during my year at college) and having entertainment at home means we won’t need to worry about not having any money to go out. Amongst other things we bought a Nintendo Wii which has already provided us with many hours of entertainment.

Bonus – Utilise Family Perks

Every family has perks that you should take advantage of when times are lean. For example we can holiday in a nice part of Wales as much of my family live there. Close members on the other side of my family have acquired a caravan in a picturesque part of Scotland, we’ve already been once and plan many more ‘freebie’ weekends away. And that’s not to mention the plethora of decorators, joiners and handymen that most families have at least a couple of. It’s ok to take advantage of these perks provided they are offered and you try and do something in return.

Any other ideas on how we can spend less?

Photo by flickr user Rogue Soul

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By Little Mummy, July 4, 2007 12:19 pm

A while back I wrote an article about keeping costs low as a new mum, it’s time to update that article with ideas suitable for toddlers and the parents of.

Food

Milk

We moved from powder milk to full fat milk as soon as Erin was 12 months (recommended earliest age). Not only is the carton milk cheaper it’s also ready made – our mornings became that little bit smoother as a result.

Breakfast

I buy weetabix in bulk packets, for non weetabix days we have granary toast. These options are inexpensive and healthy.

Lunch

I usually provide a ‘picky plate’. My time working at a nursery taught me that this was one of the most effective ways to get children to eat a variety of well balanced food. I usually serve a bread product ie a sandwich, bread & jam or pitta. A meat product, usually mini sausages, ham or chicken bites. Fruit & vegetables, whatever I have, which is usually baby tomatoes, cucumber sticks, carrot sticks, strawberries and grapes.

Snacks

Fruit, biscuit, or occasionally a few crisps.

Dinner

A mini version of whatever we are having.

The point I’m making is that by keeping it simple and within what you already purchase it’s cheap and efficient to feed your toddler healthy food.

Toys

Most of the toys in our home have been christmas or birthday gifts. When I do buy something it’s usually a toy I know will last a long time and be used in different ways ie the kitchen we recently splurged on.

I know that over time the kitchen will be a cafe, a laundrette, a fast food outlet and probably much more than even I can think of. You can’t go wrong with kitchens, tool benches, cleaning sets and doll related stuff, they are perfect for the 1-5 year olds.

Clothes

Buy staples items like vests, pyjamas and socks cheaply from supermarkets or low cost shops. Accept hand-me-downs as ‘playing clothes’. This leaves nearly your whole clothing budget to spend on the main clothing items.

I buy seasonally, usually one season ahead, this way Erin doesn’t become desperate for things and I can take my time and find the nicest clothes and sometimes some good deals too. Although we never seem to have enough socks??

Entertainment

Mix paid entertainment with free stuff. Our freebie entertainment includes the library, museums, the park, feeding the ducks, and the petting farm. Our paid days out are usually swimming and soft play. Save the most expensive days out for special occasions ie the zoo.

Please jump in with your own ideas, just click on the comments button below if your new to this blog thing.