Week 2, Question 2
75/25 against buying a car! OK OK I feel told off. The message is very clear, we will just have to put up with our little car for a while longer. So who do I bill for the chiropractor???
Phew. Now that controversial item is off the agenda, do we take a chainsaw to our spending or go see a mortgage broker and fix our mortgage?
Now I’m sure many of you will be thinking “Steph you idiot you need to do both!” but we just need a steer on what to do first.
Oh, should let you all know that the three of us are off to Matt’s parents over Easter, and will have (shock horror) NO INTERNET ACCESS!
So have a good one everyone, don’t eat too much chocolate and see you all Tuesday.
Steph
posted by sortme @ 10:05 AM
7 comments
7 Comments:
Hi Steph :)
i have no idea about mortgages, so wont comment on that one, all i will say is that if you think a Mortgage Broker is going to help you, then see what they can offer you, its free and you dont have to go with what they will say, but it will give you some more ideas on what you could or could not be doing regarding your home.
Spending is something i know about! and its AMAZING how much extra a week you spend on NOTHING! get a little notebook (they only cost .30c at a stationary place) and take it EVERYWHERE with you, write down EVERY purchase whether it be a $3 coffee or a $150 food shop, at the end of the week, go through your notebook and work out the amount you spent on things you really did not need, its amazing how it adds up and can all contribute towards your household. do the same with the reciept from your food shopping, that extra bottle of coke, that bag of chips, mate thats $5 you could of deducted off your shopping bill. have a treat still, whether it be a special coffee or a mag a week, you cant just do without everything, you still need to live and enjoy too. but look at areas that you can save, install energy efficient light bulbs, wrap your hot water cylinder, all helps with the power bill. look at your internet bill, is there a cheaper plan that you can use? i could go on forever but you get the idea, look at every single reciept, every single bill, and look at what you can do better next time. im still learning too :) but these are ideas that i have picked up and have really opened my eyes to my own spending
have a lovely easter holiday!
I agree with everything Carla says. Years ago we did a budget and part of that process was logging everything we spent our money on, and we did this for over 3 months (got very boring but was well worthwhile). Found out our biggest unnecessary expenditure was takeaways!
We have also set up a separate bank account for our bills. Worked out how much our set bills were per year (eg rates, insurance, car rego, power, phone, Sky) as well as our fortnightly grocery shopping and divided it by 26 to get fortnightly average. My husband gets paid fortnightly, so every pay a set amount is paid by AP into the bills account. It is not touched for any other expenditure. Doing the spending log helps to work out your grocery spend etc for the year too.
I should have mentioned we are a single income family with a similar income to yours. I am a stay at home mum with two school children.
Our budgeting is well under control, so we can also 'pay ourselves' each fortnight by putting a set amount into a savings account by AP each pay day (as with the bills account). You could do this to build up your emergency fund again once you've reduced your expenditure.
The most immediate thing you can do, right this instant, is tighten up your spending. Buy only essentials, always asking yourself "is this a want or a need?" Then see a mortgage broker to see if you have the best mortgage deal you can get.
Does that laptop of yours have Microsoft Money on it, my computer came with it. Every transaction I do is electronic even for small things like buying a pie at a service station. The transaction cost me nothing because it is done through my credit card that has a low limit so I can't overspend on it. I use my credit card for every purchase except in places where stores won't excpet it and then I use eftpos. At the end of the month every transaction is downloaded from internet banking to Microsoft Money and then marked into a category. I then know exactly what I am spending my money on and where I can make improvements.
Go and speak to a mortgage broker
Their advice and help is free (in most instances).
MOST brokers have relationships with most of the mortgage providers - they *should* know who offers what, and who has the best product for you. YOU HAVE NO OBLIGATION TO FOLLOW THROUGH IF YOU ARE NOT 100% CERTAIN YOU ARE NOT DOING THE RIGHT THING.
However...
Speak to your bank
Most financial institutions/banks don't like to lose their business, see if you can wrangle a better rate from your bank, or see if they can match or beat the competitor/s.
(the mortgage broker may have a relationship with that bank and may be able to help there also).
Consider the cost of moving your mortgage
Quite often it does cost a bit of money to move your mortgage: break fees, discharge fees, as well as legal/conveyancing fees. This could be anywhere from a few hundred dollars, to a few thousand...
You have to consider the long term benefit and savings if you do switch financial institutions - but you could probably put these fees back onto your *new* mortgage.
So my suggestion to you, is to speak to a mortgage broker and your bank.
Honestly- you live beyond your means- get hold of everything that you dont use and dont need and sell the darn stuff on Trade Me like all the rest of us do. Great fun and great way to clear those pesky bills.
If the Mortgage Broker is FREE to speak to, (ask first when you ring up if they offer free advise) then speak to one to get the advise that is needed.
If they are going to cost you then don't spend any more money finding out...
Then option 2 is where I would vote for but only if the Mortgage Broker costs money.
BTW hasn't it cost you heaps of money to go away this weekend.. you know the cost of petrol ($1.61 per litre)... surely you could have spent a nice quiet family weekend at home... you know quality time with your child and husband... going to walk around Western Springs and having a picnic together... or go to the beach... which costs you not a lot at all.
Firstly, I think you would benefit from preparing a detailed monthly budget.
An advanced template can be found here:
http://www.macro-x.co.nz/free_downloads.htm
Or a basic one:
http://office.microsoft.com/en-us/templates/default.aspx
This will help you to track your expenses and also identify which items you are really struggling with.
At the moment, from your annual budget, you are spending more than you earn so...
Income
--------
Are you able to increase your earnings?
Options:
1. Get a part-time job (working from home?)
2. Your husband does overtime regularly
3. Your husband gets a second job
4. You sell some possessions
5. Get a boarder
Expenses
-----------
How can you decrease your spending?
I would look at what your major expenses are - mortgage and food. Usually the bigger expenses are easiest to reduce.
Mortgage: IIRC someone mentioned earlier that refinancing your mortgage would save you heaps. Talk to your loan provider and / or a mortgage broker about your options.
Food: Also mentioned earlier, shop once a week, buy in bulk, choose the no-frills options, shop online, reduce extras (fancy cheese, expensive cuts of meat, alcohol etc), use coupons / discounts / loyalty cards or shop at Pak n Save..
Other options:
1. Reduce extras (SKY TV, entertainment expenses - watch a DVD instead of going to the movies)
2. Make sure bill money is deducted or set aside soon after your husband is paid. This way you will not spend money you don't have (it may mean setting up a separate bank account)
3. Choose cheaper options - rent a DVD vs movies, walk to the shops vs petrol, no frills food vs fancy etc
4. Insurance - is it all with the same provider (for a discount?)
5. Cheaper forms of heating - blankets and sleeping bags in the lounge
Some of these are relatively drastic but usually can be modified depending on circumstances.
At this stage I really think it would be beneficial to produce a more detailed monthly budget to help identify specific areas for improvement.
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