Tag Archives: budgetting

zero based budgetting

26 Mar

london

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. 

 

 

life is nice in london

12 Jan

London

12.1.13 saturday 

I have noticed that if u click the follow button on each person’s blog a box comes up asking u to give them your email address and it says u will be notified by email.

That scares me off, because I don’t really want my email to be clogged by these notifications.

But I noticed that if I click on the follow button at the top of the page in the task bar, than it comes up in my blog’s reader, and I can chose not to have email notification. And I can read all the blogs I follow in the reader.

That is much better.

Have you found this out too?

Also I wonder if I edit my posts will they send a email notification to followers every time I click the publish button? That would be real irritating to the followers surely? At least I would find it irritating to have my email box clogged up by many notifications of the same post just because small changes have been done.

The independent newspaper has a report of one of their reporters to live on £31 a week, which is what is left after rent, bills, etc have been paid for.

He concludes he could not live on that. But seeing what he spends it on, I believe it is because he is hopeless at budgeting.
I live on £50 a month for all my living expenses.
So if I can do so why cannot he? The answer is he does not know how to budget.
Just one example will illustrate the point.
He spent £8.60 on two trips on the tube, when he already has a bus weekly card. Why does he take the tube?

And then he buys processed foods like pizza, ham.

If he were to just buy one uncooked chicken ( £5), uncooked minced beef400mg (£1.17), 15eggs (£1.50), and veg, oats, sultanas,and rice, pasta, milk powder and bread will feed him very well for the week.

Here is what he bought instead.

Saturday
Milk, coffee, pasta, chopped tomatoes, an onion , a carrot, cooking bacon =£4.78

Sunday
Pizza £2.50
Bread and ham for sandwiches £3.60

Monday
Spend £5.77 for ingredients for a chilli that will last him 3days. (I wonder what he bought? A basic minced beef + fresh tomatoes (6 for 68p)+canned kidney beans, will not cost that much.) Maybe he bought cans of chilli con carne. That would be expensive.
He bought basic cornflakes included in that total.

Tuesday
Nothing on food

Wednesday
Nothing on food

Thursday
£2.20 on frozen pizza

Friday
Dinner £3.63

I think any decent cook will be able to show him how to eat well on less money. So it is not poverty that is his problem, it is ignorance. I bet no one in the comments in that article will point this out.

http://www.independent.co.uk/news/uk/home-news/life-on-benefits-the-starving-of-the-11-million-8448685.html 

I have seen it many times even amongst my friends who think they are frugal. 

My friends would buy canned sauces, when it is so much cheaper and quicker and easier to just use fresh ingredients and make your own.
U want a tomato sauce, use 3 fresh tomatoes, and water. Add herbs or whatever u have in the kitchen, pepper, etc. and u have a lovely tomato sauce just like that. If u want to thicken it, just added cornflour dissolved in a bit of water.

So with curry sauce, instead of just buying a can or bottle of curry sauce, use curry powder and add water, garlic, ginger, or whatever herbs u got and that is it, curry sauce. Add a bit of suger if u like to enhance the taste.

I have long ago stopped buying pasta sauce from the bottle, or passata, or bottled curry sauce. They are very expensive for what they are, merely water, with a touch of curry powder, or a bit of concentrated tomato paste. And they will be very salty and sugery as well.

Do u know that passata , which used to be 29p is now 55p? And that is the Tesco basic one, fancier brands cost even more.

It is only concentrated tomato paste and water. With a bit of vinegar.
The branded ones made from real tomatoes are very expensive. U might as well just buy fresh tomatoes and make them yourself.

Life is really very nice for me here in London.

I take the bus to the gym and use the showers as well as do the machines. And without much effort I can see me bulging out with muscles in all the right places.

And I washed with that radon orange and tea smelling gel , and it is a really nice smell. Funny how the smell can make u want to use it. Those marketing guys really know how to attract people to buy.

Even I was tempted to buy it just for the smell. Haha.

My friend who is coming to visit me called and told me that he managed to get national express bus fares for £5 one way, both directions. They charge £2 now for booking. That has gone up rather a lot from what it was before £1. But the general cost is reasonable at £12 return. Esp on such short notice.

It wont tempt me to go to Bournemouth but then seaside towns don’t expect much business in winter.

In winter, London is the best destination to visit.

And he is ok with no heating in the flat. he said he don’t have heating in his place either. So that is good to find a kindred spirit who don’t want heating.

We should form a club of likeminded guys like us.