Thursday, 12 April 2007

Cutting the fat on your budget

Is your budget bulging around the waist? It could be time to cut the fat, it sure is for me.

I am already living to a tight budget, I need to be to realize my goal of $10,000 in 6 months.

Lets break down my monthly budget briefly. Items in Blue are adjustable and can either be higher or lower based on my habits. Items in Grey are "fixed".

Rent: £485
Food: £80
Electricity: £40
Petrol: £40
TV,Internet,Phone: £18.99
Cell Phone: £20
Car Insurance: £183
Entertainment: £20

This comes out to £887 a month.

How can I cut the flab?

First lets look at the adjustables

  • Food: I have allocated £20 a week for food. However, my girlfriend and I have managed to buy a month's worth of food for £34.00. How in the world.... Look, you need to be vigilant, you need to look around for the best deals. Check out The Simple Dollar's article on choosing a new grocery store. Also consider writing out a detailed meal plan. We realized that we could have awesome left overs either for dinner or for lunch at work. Having an effective meal plan not only saves you money, but also allows you to assess the amount of nutrition you are getting. This month we've cut £46 off the food budget.

  • Electricity: Being frugal with electricity is not only good for your wallet, but also has important environmental impacts. By doing a few simple things you can save tons of money. I'll post an article on saving electricity later, for now lets examine it within my budget. I have allocated £10/week for electricity. By breaking old habits (like leaving the computer on all night) and being aware that electricity COSTS MONEY we have managed to make £10 last 2 weeks! Therefore, our electricity costs this month are going to be somewhere around £20. That means we have cut £20 off the electricity budget.

  • Petrol: Boy, isn't petrol expensive. You guys in America have it easy. I'm paying anywhere from £.88 to £.98 per litre! When I wrote out the budget I knew I would have to cut down on driving. So i set myself a strict budget of £10/week. Seeing as it costs about £20 to fill my tank, i knew I had to choose wisely when I drove. How can I cut the fat here? This one is a no brainer. It's Spring now, the weather is better, the sun is shining, and I only live 3 miles from work. Time to brush the dust off the bike. By not using the car during the week, every week, I am saving myself up to £20 a month! This is one advantage of living in a city, we can walk everywhere...and now we do! Savings on petrol: £20.

  • Entertainment: This is for when we have to see that new movie (300) or we need to treat ourselves to a drink at the pub. But generally, we download all our movies, and when we buy drinks we buy them from a Polish store called Budget Booze...classy. This is the only part of our budget where we have overspent. By £10... So no savings here.
Next lets tackle the "fixed" areas of our budget. These may be payments that are bound by contract such as a mobile phone, or cable. But as we'll soon find out, these aren't set in stone and can be reduced.

  • Rent: Our rent is £485 / month. That's cheap for Bristol, but not cheap enough for me. It just so happens that my rental contract is up on May 1. I also found another apartment for £350 a month. I asked my landlord if he wanted to match that price, and if he couldn't then we would be moving on. We're moving on. You have to be willing to make sacrifices to meet your goals, and seeing as we are leaving the country in 6 months, this seems an easy sacrifice to make. Savings: £135 / month

  • TV,Internet,Phone: £18.99 for all three! What a good deal you may be thinking. Your right, it is a good deal. This same package was offered for £30/month. This is how much I was paying up until last month. My cable TV provider had lost 2 very good channels when I called to complain, they apologized profusely and offered to drop the price to £18.99, and I had only been a customer for 4 months! If a service provider is disappointing you contact them and let them know. Ask outright for some sort of discount and you'll probably get it. Savings: £11/month

  • Cell Phone: Before my days of frugality and savings I bought a Blackberry. Damn it was cool. caught onto the inclusion of the past tense verb "was". My Blackberry was stolen while I was on holiday. I was paying £35/month for phone service, and blackberry data package. I called T-Mobile told them my situation and they turned off the blackberry data package saving me £15/month

  • Car Insurance: £183 a month for insurance! Highway robbery, they must know that they give away licenses in Florida and hike up the premium. In all seriousness, I am paying such a high premium because of my age and the fact I am driving on a international license. How can I reduce this. Is your car worth more than £5000? Mine isn't. Then why did I splurge for "full comp" instead of the bare bones "third party" ? Unless your car is worth it, full comp isn't cost effective. I called up my insurance company and reduced my monthly charges to £150. Savings: £33
So how much did weight did my budget lose? Excluding TV,Phone,Internet, and Cell Phone (these were reduced in March) and subtracting £10 for the overspend in Entertainment....

we have saved £244 !

Please digg this article if you found it informative.


Cents You Asked said...

I'm going to have to learn to convert currency reading your blog! Luckily it now appears to be 2:1 so the math should be easy.

KRdaCat said...

Jeeze I never realized you responded. Sorry.

From now one I will do the conversions for the readers. Or maybe add in a currency converter.

Thanks for reading