zero based budgetting

26 Mar


I saw this today in a blog post about finance

Quoting from the post… ‘Most people do not suffer financially because they are stupid or unlucky or poorly informed. Most suffer financially because they are careless.

In the 70′s there was a process called zero-based budgeting. It required each line item to be justified as if it had never been seen before. The purpose was to root out the things that consumed money but no longer contributed equal or greater value.

Essentially, zero-based budgeting asked, “If I was not already doing this, would I start?” end quote.

I have been doing it without realising what it is called. Some will call it simplifying their life. it is a good thing to incorporate it in your financial planning  and do a cull of your financial commitments.

Looking back on your life, i am sure we can remember the time when we did an about turn and got rid of some debt that we had been carrying without thinking all these years.

For me, it was the car, i got rid of it. It took some time though. it was only when i moved to live in central london that i realised it was an unnecessary expense.

Another example is this…  getting a mortgage and then getting rid of it by paying it off. i am glad i got a mortgage in the first place, for that means i bought my flat at a time when it was going cheap; so this shows that getting into debt can be a good thing if it is for an investment.  and i am glad i got rid of it about 10yrs later. now i realise i should have got rid of the mortgage much sooner than i did… as i got the money to pay it off, but i was brainwashed to think that i have to pay it for 25yrs.

And i think someone told me not to pay it off as u can build up a credit history. Also, the tax structure is such that can get mortgage tax relief of your interest. not sure if that applies anymore, it was reduced to the first £30,000 of your mortgage , that sum might be abolished now and u dont get tax relief anymore, but u can see why it pays to keep the mortgage when you can get tax relief on it. as usual the consensus was you got to have some debts so that u build up a credit history.

sometimes the way the tax is structured, if u are working, it might pay you to use hire purchase as that is tax deductable. that is why i see so many adverts (when a new tax year begins) about getting a new car, by paying £200 a month. you can even get a mercedes by just paying £300 a month. that would be totally tax deductible. whilst if u buy a car, not much u can deduct. if u pay cash u cannot deduct any interest if u had borrowed the money instead. u can only deduct depreciation. But once u get a car, you will be spending more money as u will be using it more and petrol costs will rise. but essentially if u buy something that requires running costs … you are committed to spending.

it is like deciding to  send the kids to private school. you have committed yourself to spending like crazy for 15 years. if that does not frighten anyone , nothing will. are those parents so confident that they will be able to do it for 15yrs? knowing that it has to be maintained because taking a kid out of private school and into state run schools will cause a lot of psychological damage to the child’s education. 



14 Responses to “zero based budgetting”

  1. brushes and papers Thursday March 27, 2014 at 9:23 am #

    Nowadays it is wiser not to borrow money from bank. The borrowers always end up to be a loser. As for investing in good education for your children in private school, parents everywhere usually do not think if they can afford to pay in long term – my two cents.

    • alifesgayventure Thursday March 27, 2014 at 12:15 pm #

      hi, thanks for your thoughts. normally i would agree that borrowing is not good. but i have borrowed to buy this flat, and i am glad i did. because i got it when it was very cheap to buy. and now i can stay here( and it is right in the centre of london) rent free and mortgage free. if i had rented, i would be priced out of this area long ago because the rent would have risen so high.
      as for paying private schooling, i think it might be better to send the kids to a comprehensive, (maybe chose a good one) which is state funded and so is free for the pupils; , and if your child needs it later to pay for private tuition in the weak subjects , that way all the money is not spent just to pay the private fees plus extras, eg extra costs from curricular activities, school uniforms, outings, equipment, etc . i am talking of the uk situation. maybe in malaysia/singapore it is different?

      • brushes and papers Thursday March 27, 2014 at 12:30 pm #

        Our situation is kinda a reversal from yours. We too are glad that we paid off all the mortgage on our apartment years ago, otherwise with the loan interest skyrocketed up, we don’t think we’ll be able to afford it.

        Years ago when my daughter started school, we have thought of sending her to private school which has better facilities and most of the teachers are native speakers. But once again we too are glad that we did not. As you know private school is much more expensive and I personally think that my daughter will not learn to be competitive there as private school is more relax and comfortable than public school. There are so many very good public schools in Spore. It just needs for the child to fight/study real hard to be accepted there. Again it is just from my personal experience.

      • alifesgayventure Thursday March 27, 2014 at 1:15 pm #

        i always say our generation got it lucky. we miss the deprivations of the japanese occupation, and we got to enjoy the economic post war boom..we got the best of the free education and jobs being readily available; the medical advances in health, and the boom in air travel. .and benefit from the property boom. our generation got it real good. hasn’t it? .

      • brushes and papers Thursday March 27, 2014 at 1:20 pm #

        Yes, indeed. We must treasure all we have.

      • brushes and papers Thursday March 27, 2014 at 1:55 pm #

        Hi, sorry to message you again. Just want to ask why can’t I see your notification on my WordPress app whenever you liked me? Is it your setting?

      • alifesgayventure Thursday March 27, 2014 at 2:02 pm #

        it happens with my blog as well. sometimes i cannot see any numbers in the like section even though i got an email saying someone have liked the post. i dont know the significance of the like button. i mean do we get a prize if the like hits 100, 1000, ?? haha. or what?
        if i dont log on, and go to my log like a total stranger, i can sometimes see advertisements; and sometimes the people who like it. so try that and see if that appears when u visit your blog like a stranger.

      • brushes and papers Thursday March 27, 2014 at 2:05 pm #

        The problem is, if you appear in my WordPress app then I can easily click your website because there is a link there.

      • alifesgayventure Thursday March 27, 2014 at 2:11 pm #

        i use the wordpress reader. there anything you post appears and so i can read it. as well as posts from everyone i follow. the other option is to let wordpress send an email to me of every post of the blogs i follow. that is not what i would like, as it would clog up my email with lots of notifications. the wordpress reader is the best way of reading blogs and you can even put in blogs from other websites.

      • brushes and papers Thursday March 27, 2014 at 2:16 pm #

        Would you check you setting? Have you filled out boxes which asked your web addy?

  2. alifesgayventure Thursday March 27, 2014 at 3:07 pm #

    i am sorry to be so unhelpful. i dont know how to check my settings. i am quite ignorant of a lot of things to do with my blog and wordpress. i just post and read other people’s blogs in the wordpress reader and that is it. haha. i get a wordpress blog in my wordpress reader writing about their latest thingy they have put up and i have no idea what they are talking about. haha. i ignore it as it does not interest me to know. i read of others saying how many viewers they got, and even where those viewers come from but i dont know how to get those stats , or rather i remember seeing it, but forgot how to find it. even now if u ask me to bring up the reader option to add to the blog, i would not know where to find it. just as well i got it when it first came up to my notice when i set up the blog.
    nor am i really that interested in the new features that wordpress keeps telling me about.. that is the reason why i dont bother to find out, i am not that interested in the viewer figures or who used what search words to find my blog. i m like the guy who just operates the machine but have no idea how it works.

    • brushes and papers Friday March 28, 2014 at 10:09 am #

      Well don’t worry about it. I am just too lazy to go to my blog and find out who liked me. Most people who liked me have link written on their logo, so I just click those and wordpress directs me to their websites. The least I can do is have manner and look at what they posted and return the favour, right. Sometimes to be ignorance is a cool thing too haha.. Cheers.

  3. Carl D'Agostino Wednesday April 9, 2014 at 1:55 pm #

    Should make several payments mtg and then pay off if you wish and able. Credit report will show payoff which is affirmative to your credit-not need to build with numerous payments to increase credit score esp on large purchase. Thanks visit my blog.

  4. Garfield Hug Tuesday September 23, 2014 at 2:05 am #

    I learnt about break even budgeting…..this is in the context of social volunteerism where I volunteer at….wish it was my own budgeting, spending all I have and getting fresh funds next year! LOL!

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