Personal Finance: Breaking Up With My Insurance Provider

I’ve known for a while now that my car insurance fees were some kind of rort. My small, reliable, low cost car is worth somewhere between $10,000 and $12,000, and I was paying $143 a month for comprehensive car insurance. $143 a month is $1,716 a year. That means I’ve been paying almost 20% of the car’s value every year to insure it, despite my little household’s perfect driving histories, low annual kilometres and a locked garage. I’m the proverbial little old lady who only drives her car once a week to the supermarket, and instead I was being charged like I’m the stereotype of an 18 year old p-plater who’s quite keen on street racing and drink driving.

My dream car! I will own one someday.

Luckily for me, my crappy car insurance company gave me a push to change policies by increasing my fees yet again. To $157 a month, which is $1,884 a year. I repeat: $1884 a year to insure a car worth $12,000 at most. Take a moment to consider how ridiculous that is. I would have to total my car every six years to make that policy worthwhile!

I’d already created a “car replacement fund” able to well and truly cover the cost of replacing the car if I was to total it, as it seems to me that any frugal girl should be preparing for the future. So what was the obvious solution? To take out a third party fire and theft policy so that I wouldn’t be screwed if I hit a Ferrari, and cancel the comprehensive car insurance.

When I called the insurance provider I’d picked as a good bet for a new policy, the very helpful customer service rep explained an amazing phenomenon to me: if your car is worth over $10,000, you can’t get covered for anything less than comprehensive car insurance because it would give you the right to sue the insurance company for under-insuring you. I asked if this was standard across the insurance industry and he told me that for some insurers the limit is only $5,000. Basically, insurance agencies and our legal system assume that you are unable to make decisions for yourself and that you don’t understand what the policy you’re taking out actually means. Otherwise how can you have the ability to successfully sue for your choice to buy a policy that doesn’t cover your car’s value in its entirety?

I was not impressed that my plan to only have a third party policy wouldn’t work. I don’t want to go without insurance at all in case I hit that Ferrari.

However, this story has a happy ending. The customer service rep was able to sell me a policy for $1,074 a year, or just under $90 a month. That’s cheaper than any of the quotes I received from other insurance providers for comprehensive car insurance. It’s not as cheap and cheerful as that third party policy would have been, but it’s an annual saving of $810. It turned out to be very good timing as I had to pay close to $800 for dental work this week. 

My actual car! Which is clearly a Beetle copycat. I love you, Micra.

Just because a service provider was the cheapest option when you last looked, doesn’t mean that’s still the case. When I first had to purchase car insurance three years ago, the provider I picked was by far the cheapest for my circumstances. Now they appear to be very overpriced compared to market standards. My circumstances have changed in that time, and maybe the insurance market has too. This doesn’t just apply for insurance: when was the last time you shopped around for an internet provider, or ran a price comparison on different mobile phone contracts?

Look at whether you really need insurance. I’m still planning to drop down to a third party policy when my car’s value is lower. A different policy may be a better fit than your current one, and if you have a very large savings fund and the value of your vehicle is low, think about what you’re gaining from having insurance coverage. Some people wouldn’t be comfortable with the thought of paying for a new car out of pocket and would rather have insurance just for peace of mind, and that’s okay too.

If you’re friendly and you ask questions, you will receive a wealth of information. The customer service rep was willing to chat to me about all kinds of insurance issues. For example, do you know that if you live in a suburb with lots of car parks (e.g. close to the central business district or a shopping centre) your insurance premiums will be higher? That’s because people are causing accidents by reversing into each other’s cars in car parks and your premium is partly based on the statistics for your suburb.

Bought versus Homemade: Falafel Wrap

The café downstairs from my office sells super tasty falafel wraps. I love them! The falafel is spicy, the wrap is full of salad and tabouleh... I'm hungry just thinking about it.

But I'm really more of a "make it at home" kind of girl, so I decided to put together my own version and compare it to the café wrap.

Why yes, my chopping board IS bright green.

I used a shop bought wrap, baby spinach leaves, mayonnaise with minced garlic and herbs stirred through it, and the very awesome falafel recipe from Poor Girl Eats Well. I drop out the fresh coriander because it's too much effort, and add minced garlic because that's what I do with all savoury cooking.

Homemade falafel is not just tasty, it's nutritious (chickpeas are full of protein!) and it's also budget friendly. The recipe makes enough falafel for four lunches, and at $1 a can, that's four serves of falafel for $3 at the very most once you include the cost of the spices. I estimate the total cost of these falafel and spinach wraps at about $2 - $2.50 each. I want to make my own tortillas Sandra Reynolds style, which would a) reduce the cost quite a bit, b) make me feel like I'm the badass 1950s housewife I aspire to be.

Which is tastier? The honest answer is... both. They taste different, but they both taste great. So for me it comes down to not wanting to spend $7.50 on a café wrap when I can make one myself for $2.50 at the most, and the bragging rights of being able to casually say in the lunch room "yes, you really must make your own falafel if you want authentic flavour" in a snooty voice.

Winner: homemade!

Finance: Want To Stay Home With Your Babies? That'll be $300,000, Thanks!

Just the other day I asked my sister "are you sure you want to go back to work? It might be cheaper to stay home given the cost of childcare..."

Childcare is expensive, true. Most parents I know are paying $100 a day (no, I'm not joking) for junior to be looked after while they're at work.

But it looks like staying home has some serious financial downsides other than the loss of your salary.

MUMS taking time out from work to care for children until they start school face losing $160,000 in superannuation.

The savings hole has prompted calls for teenagers to be taught about the financial perils of being a stay-at-home mother.

The superannuation sacrifice blows out to almost $290,000 when women stay at home for a decade from the age of 30, calculations by financial research firm Canstar reveal.

One year out of the workforce costs $34,000, while three years out amounts to a $95,000 loss, it says.

I knew that being a stay at home mum for a year or two could impact on your super, but seeing the figures makes it real all of a sudden. $34,000 to take off a year?

Of course, my retirement plans don't really take my super into account. I feel like super is too hard to predict - you can't control the investments made past picking what kind of account you want, you can't control changing laws around super, you can't withdraw any money until you're 60. I want to be retired well before 60, and given that I'm committed to living within my means and deliberately building wealth, my super should just be gravy. (Let's keep those fingers crossed).

But there are a lot of parents out there who will be relying on their super in retirement, and it scares me that they could make decisions about whether to continue working or stay at home based on a less than complete understanding of the financial issues.

So is it worth it to stay home with your kids? Of course it is, if that's what you think is best for your family. But you need to know what that means for your financial situation, so that you can make an informed choice.

Finance: Would More Expensive Petrol Change Your Driving Habits?

This news article caused me to stop and think this week:

It is a hard sell, but economists from the Australian National University say Australians would be better off with a higher tax on petrol.

They have compared petrol prices around the world and say if consumers had to pay more at the pump here we would use less fuel and buy more efficient cars.

I've often thought, while reading personal finance blogs or news articles from America, you think your petrol is expensive? We pay way more! But apparently, we're not paying enough for people to switch to fuel efficient cars and drive less.

Australia (and particularly Perth) is extremely car dependent. Thing is, the excessive drivers of the world already have significant disincentives to drive. Getting stuck in traffic for hours, paying for petrol, paying for parking - which is $20 a day and up in the Perth central business district - and yet they still drive. I believe that petrol could cost $5 a litre and some people would still drive.

And the people who don't drive excessively? I'm not sure we're in it for the savings. Personally, I don't enjoy driving as much as I enjoy walking or taking public transport. There are times when I am happy that I can drive and own a car - it was particularly hard to get home from parties at night before I drove. But I didn't get my license until I was almost 23, and I coped just fine. I worked and studied, I lived out of home (alone!) and I didn't need a car.

These days, I live within a few kilometres of the city so I catch free central area transit buses, pay a very small amount to catch buses and trains further out into the 'burbs, and I walk a lot. I even walk home from work on a regular basis.

My point? I bought the smallest, most fuel efficient car I could find. But I bought a tiny car because it's a reliable brand, it's easy to park smaller cars, and I didn't see the point of a bigger car. Not because it was cheaper to run. And my household uses so little petrol that I sometimes forget that cars even need petrol. That's not a joke, though I am blonde so you can blame it on that if you like. To me, walking and taking public transport is just a part of who I am. I do it because it's convenient, it's less stressful than driving, I get more exercise by walking, it's good for the environment... But never once have I based my transportation decisions on saving money.

And that's why I think the people paying $20 a day to park next to the train station in the city centre won't change their ways.

 

Product Road Test: Easiyo Yoghurt Maker

On a recent food shopping trip, Perfect Boyfriend stopped and pointed out a packet of 'yoghurt mix'. "How awesome would homemade yoghurt be?" Very awesome, as it turns out.

Of course, I wasn't going to just buy a yoghurt maker on a whim. I researched the maker I was most keen on (the Easiyo system), read online reviews, found recipes and compared prices.

In the end I paid about $18 for my Easiyo at the local Woolworths. It's available online for just under $15, but after working out shipping costs, ordering online wouldn't be worth it unless I was going to stock up on the yoghurt mix at the same time - and that would be a risky idea when I didn't have a chance to try the yoghurt beforehand.

I went for silver. Wouldn't you?

The easiyo system is basically a thermos. You shake up water and a yoghurt mix in the smaller container, fill up the big container with boiling water and let it do its thing for 8 - 12 hours. You don't even have to plug it in because all it needs is the boiling water. At the end of your 8 hour wait: there is yoghurt! Obviously at that point you want to refrigerate it, because who wants to eat lukewarm yoghurt?

I was attracted to the concept of homemade yoghurt not only because I love eating food I've made from scratch (or as close to as I can get), but also because it's a lower cost option than store bought yoghurt. The thermos makes one litre of yoghurt at a time, which would set you back $6-$10 at my local shop. In comparison, the yoghurt mix sachets are about $3.60 each if you buy in bulk online. My online research also suggested trying to make yoghurt from milk and a few tablespoons of a previous batch - that would be even cheaper!

The honey on this yoghurt was produced locally by my cousin's father-in-law's beehives. How cool is that?

Tonight I'll be mixing up a test batch of the strawberry flavour - fingers crossed it's just as great as the unsweetened greek style yoghurt, which has been my breakfast this week.

My verdict? I'm going to buy some online to give as presents (I love presents that help others save money), and I expect I'll use mine every week. It does, however, have the potential to become one of those single purpose kitchen tools that sits around getting dusty, so I really would only recommend it if you'll eat yoghurt regularly enough to make it worthwhile.

Note: this might be obvious, but this blog is not "monetised" and I am not a professional blogger. I bought this product at my local shops, and this review is my honest opinion.

Could You Live on the Dole? And How?

In case you missed it, this week our Federal Families Minister, Jenny Macklin, stated that she could live on the dole. This has caused a massive amount of controversy in the media, with a Greens senator declaring that he will live on the dole for a week to experience the hardship of the unemployed, and calling on Macklin to do the same.

In one sense, this is a ridiculous question because if any given person loses his or her job and is forced to rely on welfare, of course they scrimp and struggle and get by. What's the other option - give up and let yourself starve to death? So who would honestly answer "no" to "could you live on the dole?"

That doesn't mean it would be in any way easy to live on the dole. What I'm sure of is that those of us with well paid jobs have no idea how hard it is to make ends meet on the dole (or Newstart Allowance, as it is officially titled). I doubt that a week is enough to understand how brutal that kind of existence would be. A year might be more appropriate.

The political furore over this issue started me thinking: what would I do if I lost my job and I had to live on the dole?

My reality:
My job is extremely secure, I have an emergency fund, and I live in a dual income household which means that if either Perfect Boyfriend or I became unemployed, the employed partner could support the other.

But let's imagine...
If I'm going to imagine a scenario in which I'm on the dole, I would also, for fairness, exclude my current fortunate situation in which I have a partner who could support me. So let's pretend I'm single, and renting (which I would be if I was single at this age).

According to the Human Services (formerly Centrelink) website, if I was unemployed my dole payment would be $492.60 a fortnight.

When I was renting my own tiny flat, I was paying $520 a fortnight rent.

So, obviously the very first thing I would do is break that imaginary lease and move in with a family member. Sure, it wouldn't be all that great to sleep on the floor of my brother's study, but it beats homelessness.

Next up: I would change the insurance on my car from comprehensive to third party only. This might seem like a strange next step, but because of my age and the relatively short time I've had my license, my insurance is stupidly expensive. It would represent something close to 15% of my income if I was on the dole. I love my car, but I accept that it's a convenient luxury rather than an absolute necessity, so I would change my insurance immediately and if the length of time I went without finding work stretched on, I would consider selling it.

I would sell my furniture, white goods and anything that could bring in some money - if for no other reason than because when you're flat broke, you can't pay to store your furniture!

What wouldn't I give up? I'd like to believe I'd be able to keep my private health insurance and mobile phone. In the scenario I've outlined, because I could live with a family member, I'd be able to afford to eat something other than two minute noodles, and to contribute to household bills. I would need to tighten the budget for food and ongoing bills, but I think it would be possible to get by.

But, wait: this imaginary world doesn't seem so bad?
Yep. That's my conclusion too. And do you know why this scenario is liveable, and not a world of horrors? Because I'm so freaking privileged. I have strong relationships with family members who have stable homes and would welcome me with open arms. That is pure luck. It's pure luck that I don't have a whole family of drug dealers, that my relatives aren't violent thugs, that they're alive. Not everyone is in this situation. Some people have no family at all, or a family so terrible that living on the streets looks like a better alternative to them. 

If I didn't have family to rely on, I would have to rent or pay a mortgage. Even if you share a house with as many people as possible in a crappy suburb, could you find a room for less than $100 a week in Perth?

Additionally, I'm healthy. If you had any kind of health problem, I imagine that it would be extremely difficult to find money for medical care on the dole. 

I don't have children. I do not know how any parent pays for school fees, uniforms, books etc while on the dole. The allowance goes up slightly if you have children, but not enough to cover the costs of the little tykes.

Shouldn't people on the dole just get jobs?
Sure, if I was on the dole I'd have a good chance of finding employment quickly. That's because I'm lucky enough to have been born into a literate family, lucky enough to have attended good public schools, lucky that I'm smart enough to get okay grades even with a stressful family situation and patchy attendance, lucky that my Dad pushed me to go to uni, lucky that said Dad supported me financially while I was at uni, lucky that I have an Aunt who told me to apply for graduate jobs... The list goes on.

Try to imagine being born into a family where nobody has ever had a job, and in fact, nobody can read and write. Try to imagine growing up in a family where your parents never enrolled you in school, or they enrolled you but failed to feed you breakfast beforehand or even keep food in the house, failed to take you to school, never encouraged you to go. Imagine growing up without ever learning to read and write well enough to complete the most basic school work. Imagine having nobody in your life who could provide you with information about how to better yourself, nobody who could teach you basic life skills. Imagine having never used the internet, or read a book.

How easy would it be to find a job then?

I am so very, very grateful for everything I have.
        

Coffee Machine Ownership On The Rise - Does This Mean We're More Frugal Than We Used To Be?

Did you catch this article yesterday?

Aussies are getting more cup for their buck, saving up to $800 a year on cafe-quality coffees with the rise in popularity of affordable at-home machines.

I find the increase in ownership of coffee machines (especially pod based machines, like the Nespresso system) fascinating.

I'd love to believe it represents a growing awareness of how all those little luxury purchases affect the bottom line. I wish I could say it shows that Australians are finally learning to live within our means.

But honestly? I think that it's just one of the new, exciting toys that everyone wants to own right now. To me, a coffee machine in the kitchen represents lifestyle inflation. Five years ago it was ipods, this year it's Nespresso machines. If I don't see an article about increasing ownership of e-readers, and whether it represents a new frugal and / or minimalist zeitgeist, within the next two years I'll be very disappointed.

I'm not telling you that you shouldn't buy a coffee machine. Perfect Boyfriend bought one (for 60% of its retail price!!) a few months back and I love it.

But what I hope the folks running into Nespresso shops with their credit cards understand is: your coffee machine is only saving you money if you're actually saving more money. Has your savings figure gone up since you bought one? Has it changed your spending habits?

It could be true that Australians are becoming more frugal. However I tend to think that there will always be a section of the community who will live within their means, another section who will buy the new exciting toy no matter how much debt they have, and a whole other section who spends big bucks when times are good, and cuts back when that paycheck isn't looking so great anymore. I suspect that those people are currently cutting costs at about the same rate the big miners are cutting jobs in Perth.

I can see clearly now the rain has gone... Wait, nope, it's just my new glasses.

When I was about twenty, years of school and uni finally took their toll on my eyes. I started getting headaches and having trouble reading the slides in lectures... Yep, I needed glasses.

I think I spent about $400 on that first pair of glasses, and I didn't even really like them all that much.

I've learnt a lot since then. Some of what I've learnt is even about buying glasses without spending a whole week's pay. That's what I'm sharing here.

Your eye tests are free.
Medicare will pay for you to have an eye test every two years. Some optometrists will waive the cost of your eye test even if medicare doesn't cover it (i.e. if you've already had a test in the last two years), because they want you to buy your frames from them.

Your employer may partially cover your costs.
This is the case for almost all public servants and a great deal of employees in the private sector. If you work at a computer, usually all you need is a note from your optometrist stating that you require glasses for screen work, and your receipts. Chat to your HR team for more information.

Your health insurance will cover more of the costs at some stores than others.
I looked into it and my health fund offers special deals at Specsavers stores. Some quick maths made it clear that this was my cheapest option. When I visited the Specsavers shop, they were more than happy to check for me exactly what my fund would cover. I chose one pair of awesome frames and one of very stylish sunglasses - $339 in total - but all I paid was $89. I cannot recommend enough that you work out where your insurance dollar counts the most.

Yes, these are actually my new glasses. Are they not beautiful?

It's almost always cheaper to have your old frames updated.
This means that optometrists try to steer you away from it (hint: they're in this business for the excellent profit margin). It costs about $100 at most optometrists to update your current glasses. If you love your frames, there's no need to adjust to a new style when you can have them remade with your new prescription. Speaking of which...

Optometrists HAVE to provide a written prescription if you ask... But they won't offer.
Without your prescription, you can't buy glasses anywhere else. This is what they want. Get your prescription and you suddenly have more options for where you buy your frames.

Don't be afraid to buy glasses online.
All you need is your prescription and your "pupillary distance" (this gets measured as part of your eye test, but you may need to ask for it specifically). I've bought several pairs online and it's always worked out well. I've used Optical4Less and despite the slightly dodgy website and not-so-great English, the glasses were great. It's an excellent site if you don't have health insurance and you need to buy glasses as cheaply as possible. The frames I bought never broke or scratched, though I admit they didn't have that designer look. I've also used SelectSpecs for designer frames. That's where I bought the Burberry frames I'm wearing right now - I tried them on in an optometrist where they would cost $450. I bought them for $149 online. Is it any wonder Australians are turning to internet shopping to save cash? Both sites provided exactly what was promised, with excellent customer service.

I spent more than I had to...
Because my job is reasonably conservative, I'm getting my current black Burberry frames updated so I can wear them to work most days and save the brilliant, colourful frames above for casual wear. I feel lucky to be able to afford this luxury - as one of my favourite heroines, Aurora Teagarden, says, having several pairs of frames is one of the best parts of being rich. For me, it's one of my favourite splurges. Even so, my new frames, new sunglasses and new lenses for my current frames will cost me... $188 ALL UP. That's still half of what I paid for that very first pair years ago. And if I'd chosen frugality over style, I could have paid nothing at all out of pocket.

The Frugal Sisterhood and some financial reading

Yesterday I exchanged unwanted goods with my sister. It seems to me such a great example of frugal living: I had window boxes I needed to get rid of, she wanted window boxes to plant flowers outside a bedroom. She had yarn she was never going to use from a short-lived foray into knitting, I use yarn up fairly quickly because I crochet baby rugs for my friends and family. My new pile of yarn is going to make some excellent presents :-)

This is the kind of everyday exchange that characterises my relationship with my big sister, and I'm grateful. We're both still learning how to live within our means and it's easier when there's somebody in your life who understands exactly what you're doing and why.

The only downside is that spending time with my big sister is making me miss my middle sister, who recently moved across the country to Melbourne.

Anyway. On a less personal note, it's been an interesting long weekend for financial news and opinion:
I am absolutely horrified to see that withholding financial support is now classed as domestic abuse. Don't get me wrong: I think there are definitely situations in which withholding money could be abuse. But as a blanket definition? No, no, no. Choosing to have someone in your life should not automatically mean that they are legally entitled to your money and can shout "abuse!" if you don't bankroll them. It's up to each couple to figure out how to handle money in their relationship.

The generations column at News.Com evaluated renting and buying. There are no surprises in this article, but it's a good summary of both options and it's worth reading if you're in two minds about it.

Childcare costs are up an average of 11 per cent. Jeez. Thinking of having children and working? Make sure you include these costs in your calculations - I really doubt that minimum wage earners could come out ahead if they're paying for childcare, housing, school etc.

I love this article about the definition of productivity and whether working longer and harder always means you're more productive. It's rare to see an opinion piece that implies Australians could be working too much, even though my anecdotal experience is that most of us do feel we're working too hard, for too many hours, and not enjoying life enough.

Off the Frugal Rails

I've been off the rails lately: the frugal rails.

I guess I've been pretty stressed, and it's showing up in my spending habits.

How? A lot of lunches bought during the work day instead of bringing lunch from home, giant flat whites bought at the coffee shop almost every day, purchases that I haven't thought through properly (I bought black jeans instead of blue! At least they're still fit for purpose as it were), a t-shirt I didn't even really want for a concert that I'd already spent far too much on a ticket for, and countless convenience meals after work with Perfect Boyfriend.

Thing is, my life is only going to be more stressful for at least the next few months. I started in a new role today, though not a new job as such, and it looks like I'll be far busier than I was in the old role. Given that I was already a tad busier than I can handle, this means I'll be working long hours and I'll be short on "life organisation" time. That's what I call the time you spend cleaning your house, making your own lunches and organising free or cheap dates with your special one. These things take time! Added to my actual work workload will be my uni workload, and my obligations to loved ones, including hosting two baby showers in the next little while.

So what am I going to do to get back on the horse?

• Remind myself of my budget, which allows plenty of room for discretionary or fun spending. I don't need to spend more than that on fun or convenience.
• Keep tracking every dollar I spend. I've been doing this for a few years now, and sure everyone tells me that I'm a dag for doing it, but it keeps me on the straight and narrow most of the time.
• Make up big batches of food on the weekends (when I have time) to help get me through the working week. I recently made a lasagne so large it divided easily into 14 portions, and they'll reheat beautifully from the freezer on cold nights when I'm exhausted after work. I have vegetable quiche in the oven right now, which will provide me with at least eight work lunches.
• Make sure that if I'm going to spend money on a meal I haven't cooked myself, I make it count. Delicious iku sushi with Emily before our lecture on Tuesday nights? Awesome. Coffee with my lovely friend on Wednesday afternoon? Done. But a slighty disgusting, unsatisfying lunch from the cafe downstairs from my office, eaten at my desk while I reply to emails? So not worth it.
• Kick the coffee habit (again). I don't need it and I don't think it actually adds value to my life. It just wastes money and adds to the waistline.
• Make sure that I spend lots of time with Perfect Boyfriend that involves spending little or no money. Cooking for each other and watching DVDs is a great date in my book - possibly because we both love to cook - but just as special are all the little ways we can spend time together. I walked him home from work tonight! And it was great. Other plans? Picnics, long walks around the river and afternoon teas with our families.
• Avoid the shops. Full stop.

Does anyone have good tips for me on how to break the spending cycle?

Wearing a Jumper Instead of Turning on the Heater: Condescending or Common Sense?

I was reading the news online at work today (yep, I'm naughty) and I was horrified to come across this article.

People should wear jumpers, use blankets, play board games and walk more to save on energy bills this winter, a Federal Government website says.  

But the suggestions are "very condescending" and overlook the cost of living struggles of many Victorian families, organisations that help the vulnerable say.

The article goes on to quote a charity as stating that most families on low incomes are already doing everything they can to lower their energy bills, which I would agree with. Once you start chatting to people who honestly don't have a single dollar to spare, you find out how frugal some folks really are.

What I have a problem with is the concept that advising others to wear a jumper and turn off the TV is condescending. To me, it seems like this is common sense. I may choose to continue to watch TV or use the computer despite the energy usage, but I know that if I was serious about receiving the lowest electricity bill possible I would turn the idiot box off. Heck, if I was so poor that I didn't think I could pay the power bill when it arrived, I'd probably go to bed at 7pm to avoid using the lights or indeed any electricity at all.

Maybe I'm alone in thinking this is common sense? Or maybe I spend too much time in the frugal mindset.

Anyway. It's started getting cold even here in sunny Perth, so I've started wearing warmer clothes in the evening. Some nights I even change into my flannelet jammies as soon as I get home from work - Perfect Boyfriend is a lucky man! If I start feeling too cold, I jump on the exercise bike for five or ten minutes until I'm toasty again. During Winter I like to cook in the oven anyway, and that tends to take the edge off the cold in my little home. Homemade lasagne or apple crumble goes down a treat on a chilly night!

Saving Money On Home Decorating

I decided some time ago (about when some of the old vertical blinds started to go mouldy) that buying some new window dressings for my home, the Bake Lair, was going to be a priority. But when I asked around with some of my friends who've used professional window dressing companies... Well. I had three windows that needed blinds, and there was no way I was paying $1000 or more for the three. It represented a "convenience charge" to me - those companies get away with charging so much because they measure the windows, they supply the blinds, they cut them, they install them. It's a lazy tax, and like everyone else I'll pay for the convenience in some situations... but not this one.

I decided there had to be a cheaper way.
First up, I tried to figure out an easy solution. Ready to hang blinds that you can install yourself are great - unless your windows aren't standard sizes. I spoke to a certain hardware chain about having blinds cut to size. Summary: expensive, poor quality products, and they were going to ship them all the way to the Eastern States to be cut. Nope. I tried a curtain shop: reasonably priced but poor quality product, and they weren't even in stock. But here's where the curtain shop earned a place in my heart forever: they gave me the card of a woman who professionally cuts blinds to size.

I did find timber venetians that were sturdy and had a beautiful finish, but not at a specialist curtain or renovations store. I found them at Spotlight. Better still, Spotlight has sales on regularly where the price of blinds are slashed, so instead of $159 per window they cost $99 per window. Cost so far? $297.
My Dad and I took a road trip out to the woman who cuts blinds (I really can't make that into a proper job title!) and she cut the two sets of blinds that needed to be cut to fit, reduced the length of one set, and did some tricky cutting magic to make the set for the kitchen fit properly around the tile splashback... For $65. Bargain! I gave her $70 and she threw in the right kind of drill bit and screws, and plenty of advice on installing them.
We borrowed a drill, and my Dad and Perfect Boyfriend spent a grand total of an hour and a half installing them.
Total cost: $367.

You can see how great they look in the kitchen!
So sometimes there's not an easy way to save on what you want to renovate in your home, or you don't have the specific DIY skills required - even my Dad, who can do just about anything, wasn't game to cut the blinds. You can still find a way to save.

One thing I learnt from this experience was that small operators sometimes charge a lot less for the services you need. If you shop around, buy on sale, enlist the expertise of people who can undertake some of the DIY for you, borrow the equipment, and only pay for the services you really can't source another way, you can save a bundle.

Saving on sickness

I have the flu.

But it's not as bad as it could be. Why? My frugal habits.

I have a first aid kit which is stocked with painkillers, bandaids, bandages, throat lozenges and strapping tape for when I break a toe once or twice a year. And guess what? They all cost me a LOT less than they would if I had to go to my nearest chemist to buy them now. Buying these necessities when they're not necessary saves you money. It also saves you from having to venture out into the world when all you want to do is stay snuggled under your blanket for the next three days.

I always have a well stocked pantry. While I must admit to begging Perfect Boyfriend to get me some rainbow paddlepops while he was out last night, already having plenty of easy to prepare, tasty and nutritious food in the house helps no end. When I make large batches of meals and store some individual portions in the freezer, I'm insuring myself against just this kind of situation. You're not going to be up to cooking when you're sick. It's far better to reheat some frozen mushroom risotto (mmm) than to have to starve, eat nothing but the dry crackers you've found hidden in the cupboard when you have a sore throat, or survive on takeaway while your body is desperate for some decent nutrition.

I take care of myself. I must admit, this is a fairly new thing for me. I used to work too much, take too much on in my personal life, and generally just run myself ragged. My health has suffered a lot as a result. Now? I get eight hours of sleep most nights, I eat three nutritious meals most days (nobody's perfect) and when I get sick, I go to the doctor. This way, the severity and duration of my flu is not nearly as bad as it would have been if I caught it after a weekend of hard partying, no sleep, a twelve hour day at work and a Mars Bar for lunch. Taking care of yourself is the best. I wish I'd figured this out sooner.

I've signed up to automatically receive my medicare refunds. Medicare now allows you to sign up with your bank details and they'll send you the refund on medical bills automatically. While I still have to pay the full amount on the day I see my doctor, within the next few days I have a 50% refund sitting in my account. Confession: back when you had no other option but to line up at a medicare storefront and hand over your receipts to get your refund, I didn't always bother. For a start, those medicare offices are only open during, you guessed it, office hours. If you haven't already signed up for automatic refunds check it out here.

Fun money - why you need to give it a special place in your budget

I know that some people can manage never ever to spend money on non-necessities. They do exist, and many of them write personal finance blogs about how you don't NEED anything other than basic food, shelter, and medical care, so you therefore shouldn't really be spending on anything outside those categories.

That's not me.

In my budget, there's always room for fun stuff. I'm lucky enough that the amount that gets paid into my account (my salary) is higher than the amount that's going to come straight back out (mortgage, bills, groceries, and a generous chunk of savings). When I write up my little budget every fortnight, there's a set amount allocated to "discretionary spending". You might call yours fun money, mad money or even your allowance. Whatever you call it, it's your you money.

While I spend plenty of this money on lots of fun things every fortnight like a coffee with friends, a packet of lemon sherbets, the occasional dinner out and even "stuff" like books and DVDS, generally I don't spend it all. I let some of it accumulate in my account. Then when I want to spend a larger chunk than I would normally allocate to fun in the budget, I've already saved up my discretionary funds for whatever it is I want. Like the Star Wars Xbox I bought this week - it's awesome! And I had the *cough* $550 *cough* all ready and waiting to pay for it, out of my very own fun money. That's what it's there for.

Why do I think fun money is so important?

• I'm not willing to completely give up my social life / leaving the house, and while there are loads of ways to have fun without spending money, sometimes you have to spend a little money to have a lot of fun. And that's okay.
• I like buying presents. Today, for example, Perfect Boyfriend wasn't feeling well so I picked up some of his favourite English chocolate as a surprise. I like that part of my personality, and with a fun money fund, I can indulge it.
• I think I would, quite simply, go CRAZY if I never got to spend some money spontaneously / on things I just want. You need a little freedom and spontaneity in your life occasionally.
• I'm not perfect, and neither are you. If you're covering all your necessities and saving towards your future, why can't you buy some things you want along the way? To me, getting to spend a small proportion of my income on nice clothes, books and yarn (oh, the yarn) helps keep me on track with saving forty five per cent of my income.

Han Solo loves fun money so much, he's breaking out in a song and dance routine that both horrifies and delights me.

Gardening Without Breaking the Bank

If I could have a massive garden that took hours and hours of work and cost me an absolute packet, I would. But I've adjusted to my circumstances. A small balcony that gets almost no sunlight is all the space I have to work with, and the Sophie-wages wouldn't cover the kind of gardening spending habit I'd love to have (hello, acres of roses). Between full time work and post-graduate study, I probably don't have time to maintain a massive and exotic garden just now anyway.

My limited experience creating and maintaining my balcony garden has taught me a few things about what to do and what NOT to do if you don't want to waste time, energy and money but you want great results.

Learn the limitations of your space.
As stated above, my balcony gets very little sunlight. Your garden space might get hot sun all day, or no sun at all. It might have sandy soil or rich, dark dirt. You might live in a dry area or one with plenty of rainfall. Think about these factors: they matter.

Choose plants that match your space.
Boy, did I get this wrong. I killed miniature roses, petunias, pansies, gerberas, tomatoes, salad leaves, all kinds of herbs, portulacas, cordylines, flax, and about twenty other kinds of plants before I realised that my choices were all wrong for my space. I wasted about $300 on plants that were never going to survive in the environment I had available. Some day I'll have a wonderful vegetable patch, herb garden and more rose bushes than you could imagine, but it's not going to happen on my balcony. Now I grow ficus, calanchoes, rhea, philodendrons, and even a small umbrella tree, amongst other things.

Phone a friend.
Unless you're already a gardening expert, there's bound to be someone in your life who knows more about plants than you do. I finally caved in and asked my Dad for help after several rounds of "oh gosh all my plants are dead" and he was a huge help! If you don't have someone to ask, ask the internets. Googling "shade tolerant plants" is a fantastic way to find endless resources on your particular gardening issue.

Start small.
Don't go out and buy enough plants for your whole garden. You have no guarantee that you'll still be interested in gardening a month or a year from now, or that the plants you pick will be right for your space (even if you've done your research). It's a bit like borrowing your neighbour's dog for a week to teach your kids about the responsibility of pet ownership. If you can keep your first selection of plants alive for more than three months, it's time to buy a few more. Take it slow. Nature will still be there once you're sure you won't forget to water the roses.

Don't buy at the usual places.
Large plastic pots with good drainage cost about $20 each from Bunnings, or $3.50 each from the Reject Shop. Plants are far cheaper bought from wholesale nurseries, market gardens and community plant sales than from a retail nursery.

Get creative.
I bought the wrong kind of pots initially - no drainage! One of my aunts took one look at the pots and asked why I didn't just use a hammer and nail to knock drainage holes in the bottom of the pots. Duh. I use stools and mini-shelves I already owned to stand pots on at different heights for the look I was after on my balcony. Think outside the square and your garden will be even more unique.

Saving on Groceries

I've recently cut my weekly grocery bill from $250 to $150... Which is still relatively high for a two-person household! I've got some work to do to get it lower, but I thought I'd share the ways I've cut it down by 40% so far.

I cook. A lot.
It's much cheaper to cook a meal at home than to buy take-away. Everyone knows that. We always cooked most of the meals we eat, but I've upped the ante lately. It would be rare for us to have take-away more than once a fortnight at the very most now. I cook tasty, reasonably nutritious meals at home, and I think it's improving our health as well as the grocery bill.

I plan every meal for the week,  without exception.
This requires a little bit of work - but I enjoy it! I plan breakfast, lunch, dinner and snacks for two people for the whole week. This means that you won't be running out of food and running out to a fast food place / the supermarket as a result. Or, much more of an issue for me, buying twice as much food as you really need because you overestimate how much you'll eat.

I audit the pantry.
A tidy pantry is an absolute must unless you want to spend a fortune on ingredients you already have on hand, or fail to buy them because you haven't realised that the packet of icing sugar in the back of the cupboard is two years past its use-by date. Before I write the menu for the next week I check what we have and I often base meals around what we have available.
I only shop once a week.
Every time you go to the supermarket, you pick up a few things that aren't on your list. The less frequently you shop, the fewer "extras" you'll be buying.

I make more things from "scratch" at home.
Okay, tipping some bread mix into the bread maker isn't really cooking from scratch, is it? But I get the same super fresh, delicious loaf of multigrain bread as I'd buy at the bakery for $5 minimum... And it's only cost me $2 for the breadmix and yeast, plus minimal costs for water and electricity. I could buy bread cheaper than that, but it wouldn't be anywhere near the same quality. I make pizza dough in the bread maker too - it tastes better than shop-bought pizza bases and it's cheaper. At Christmas time I used the bread maker to make jam for my family. I haven't discovered all the functions yet but that machine has well and truly won a place in my heart.

We cook large batches.
I only have a relatively small fridge and freezer, but even so it's possible to cook meals in large batches and freeze them for later. Chilli con carne? That can be burritos one week, quesadillas the next and tacos the week after that. Perfect Boyfriend's bolognese sauce can keep me happy for weeks with small serves dragged out of the freezer and warmed for dinner on a cold night.

I only buy what I'll actually eat.
This has been a real issue for me in the past. I eat something once and love it, so I think I'll suddenly start eating it every day. Nope. It just goes to waste.

I need very few cleaning products now that I'm on board the Enjo train.
I'm sure I'll discuss this in greater detail in another post, but if you've been buying as many bottles of shower cleaner as I used to, you'll understand that not buying cleaning chemicals or paper towels is fantastic for the wallet. I wish I'd invested in long-life cleaning materials sooner.

None of these improvements has resulted in a lower standard of living in my little household- if anything, it's been the opposite. And I feel great about not wasting as much food as I once did.

Frugal Coffee Drinking

An exceptionally frugal colleague of mine asked me this week: is it cheaper to drink coffee made in a plunger, or coffee in those little instant sachets you just add hot water to?

I don’t think he realised what he had unleashed until I provided him with the following breakdown.
 
Our office provides boiling water, milk, sugar, and poor quality instant coffee powder. So theoretically we could drink coffee all day for free - except that the free coffee powder is disgusting. That’s option one: free, disgusting coffee.
 
Another option is to buy a jar of decent quality instant coffee powder and use it instead of the gross stuff. A 200g jar of Nescafe Gold costs $16.69 and contains 117 servings, so that’s 14.26 cents per cup of coffee.

Or you could buy ground coffee and a plunger. A single serve plunger will cost you anywhere from $10 up. Let’s assume you’re reasonably savvy and buy it at that price. A 200g package of ground coffee costs $6.93 and contains approximately 40 servings, so each cup of coffee costs you 17.33 cents plus your capital outlay of $10 for the plunger.

My frugal colleague uses ground coffee in a plunger some of the time, but he also uses instant sachets for cappuccinos on other days. They cost 63 cents each, so I was able to give him the quick answer that the plunger-made coffee was cheaper than the sachets.

There’s a more luxurious option: buy yourself a coffee machine and a thermos, and bring your hot coffee into work. Let’s say you’re lazy like me, so the only way you’re going to use a coffee machine is if it’s easy – this limits your choice to the machines that turn tiny alfoil sachets into coffee. I don’t understand this process, so I assume it’s some kind of magic involving tiny alchemist barista elves. I’ve been looking at buying a Nespresso Pixie as a present for someone, and it seems like the best price is about $300. A good quality thermos costs $20. The Nespresso capsules cost between 68 and 75 cents each. You’ll be using your own milk for this scenario, and 250ml of milk will cost you about 41 cents. So this option requires a capital outlay of $320 plus a cost per cup of at least $1.09. This is relatively expensive in terms of "homemade" coffee, but cheaper than buying a barista-made cup by a wide margin.

Of course you could always do what I did for years, and treat yourself to a café coffee each morning. The café at the foot of my office building provides a discount to local workers, so a regular sized flat white sets you back $3 instead of $4.50 (or more) at other cafes. The staff all learnt my name within a few weeks of the building opening, which I LOVE but I also think is probably a ploy to inspire brand loyalty. It works - if I'm buying a coffee during my work day, there's no way I'm going anywhere other than that Coffee Club outlet. I used to think it was just fine to spend $3 on a cup of coffee every day. Then it occurred to me to start looking at my expenses as annual costs rather than daily, weekly or monthly expenditure. Assuming you get four weeks of annual leave, you work about 240 days a year. That $3 cup of coffee just turned into a $720 annual fee.

Don’t get me wrong – I don’t think it’s always worth spending less money than you could on life’s little luxuries. Some days I really want that flat white, so I buy one, and I don’t feel guilty. But your everyday habits involving small amounts of cash add up in the long term. That’s why it’s a good exercise to look at your budget and expenditure across the year, not just that pay period. You might love coffee enough to spend $720 a year just for that morning cup on work days. I don’t. I love it enough to bring my own jar of instant coffee into work and drink that most days (that’s a $34.22 a year habit) and only buy barista coffees when I really, really want one. Because if that means I spend $500 less a year on coffee, that’s $500 a year I could spend on clothes, books, eating out at fancy restaurants, or paying down the mortgage. Or if you’re digging your way out of poverty, it’s $500 towards your emergency fund or paid off your credit card debt.

I would also think about the other factors here – are you really going to bother making a cup of coffee at home each day and carrying it in to your office in a thermos, or is that too hard for you? I don’t know that I’d bother to do it. Do you feel like the break from staring at the computer screen for fifteen minutes is worth the cost of the coffee you buy on that trip to the café? I know a lot of people cherish that coffee buying break, so it's worth it to them. If every cent you earned was committed to other areas, you’d be willing to drink that gross free coffee to avoid overdrafts on your bank account, but otherwise the point of mindful spending isn’t always to spend as little as possible. It’s that you know how much your coffee costs so you can choose whether or not it’s worth the money to you.

Keep in mind that my costings are based on only one cup a day, and having an office that provides everything you need for your coffee - except that its coffee powder will make your eyes water, and not in a good way.

Luckily my colleague was very patient with me while I gave him a full cost analysis of his coffee options.

Frugality Elsewhere

Between a broken toe and a cold, I've managed to forget all about which day it is and failed to write about frugality this week. I've failed to do much of anything except nap on the couch - but I do have a few baking projects for the Easter long weekend which I'll be sharing with you later on.

Luckily, other bloggers haven't been as lazy as I have, so here are some recommendations from this week:

• J D Roth at Get Rich Slowly discussed shopping for the sake of shopping
• Frugal and Thriving featured a guest post on how lent can apply to the secular (which I particularly enjoyed because I almost always practice lent - but I wouldn't call myself a religious person)
• Lindy at Minting Nickels set herself some (mostly financial) goals for the next quarter
• MSN Smart Spending featured a post by David Ning on five money truths that aren't obvious

Frugal Friday: The 50 30 20 Rule

Have you heard of the 50 30 20 rule for budgeting? It's a simple way to calculate (and categorise) your spending. If you're not familiar with setting yourself a budget and sticking to it, this is an easy way to start. I'm not sure where it originates from but it's been doing the rounds for a while now.

Start with your after-tax income. 50% of this should be allocated to needs, 30% to wants, and 20% to savings. Did I mention that this is super simple? Oh, wait, there's a catch...

Wants versus needs:
Not everyone understands the difference between needs and wants. Needs are things you really cannot survive without. Shelter? Check. Food? Check. Mobile Phone? Nope. That's a want. You can tell me as many times as you like that you neeeeed your iphone but seriously, it's not essential to your survival. So be honest with yourself - there are very few items that belong in the needs category. This is the part of budgeting that a lot of people find hard to cope with. If you're used to buying yourself whatever you want, it can be a shock to the system to look at your spending realistically and cut out some of those "must have" items that you don't need at all.  

The average salary in my beautiful city is $80,000:
Which according to the Australian Tax Office website, is approximately $62,250 after tax.
That works out as:
$31,125 budgeted for needs (housing, groceries, medical costs, electricity, bare minimum of clothing, etc)
$18,675 budgeted for wants (new clothes, expensive haircuts, mobile phone, dining out, books, baking tins, wool for craft projects - whichever luxuries you love!)
$12,450 saved in a separate account for future financial goals and emergencies.

A note on debt:
Many frugal bloggers advocate the use of the 20% savings to pay down debt. I agree to a point, but if you've gotten yourself into a bad debt situation by giving in to your wants, I believe the best way out is to reallocate some of the 30% wants category towards paying down debt. If you've created the crappy situation, it's time to man up and get yourself out of it. I've been in that situation, and it felt great to finally get rid of that debt and start my new, responsible financial lifestyle.

My own budget:
I don't follow the 50 30 20 rule exactly. I'm happy to spend less than 30% on my wants, because whatever I shovel into my savings account will eventually get spent on wants or needs anyway. For example, I've been "saving" like crazy lately, but some of that money will get spent on my new dental braces and a holiday this year, and in the longer term, I'll be putting it towards all sorts of things Future Sophie will need or want - a larger car, a family home, an emergency fund to buffer myself against life's ups and downs. My budget is roughly 45% savings, 45% needs, 10% wants. That works for me. But I'm in a privileged position, in that my housing costs are well below average. Which brings me to my final point...

Here's the bad news:
Shelter, as mentioned above, is in the needs category. In Australia, we don't have widespread access to affordable housing. The median house price in Perth is hovering around the $460,000 mark, which is expensive considering that the average income in Perth is just under $80,000. What's my point? On an $80,000 income, take home pay after tax is $2,395 a fortnight. Given that financial advisers generally agree that spending more than 30% of your take-home income on housing means that you're officially in financial distress, let's say that a reasonable rent or mortgage payment on a take-home salary of $2,395 a fortnight is $718.50. Great. Except that the median rent in Perth is now heading above $820 a fortnight, and the mortgage payment on that $460,000 median house price? That's $1,568.00. (Check out the mortgage calculator on this site if you'd like to see mortgage payments based on loan amounts - this is a very addictive tool!). So while I'm a strong advocate for trying to keep your fixed costs as low as possible, you have to be realistic about your situation and what will work for you.

Extra credit:
The MSN Smart Spending website is worth a read - the articles are about American finance and economics, but much of the advice is relevant to Australians too. I've found some of my favourite finance blogs by seeing the bloggers featured on Smart Spending.

Frugal Fridays: Why I Choose A (Relatively) Frugal Lifestyle

I’m planning to discuss frugality with you on Fridays. I love alliteration! But more to the point, living within my means is very important to me. It's part of having everything - because you can't have everything when you can't pay your bills.

I know a lot of people hear me say that I believe in being frugal and think I’m saying that I’m a cheapskate. Being frugal is not the same thing as being cheap. Frugality means living without waste. Being frugal means spending wisely. Sometimes this does mean spending less than you previously have, but what it mostly means (to me) is spending in ways that are meaningful to you, and managing your money so it's just one part of your wonderful life instead of the issue that dominates it.

I choose a frugal attitude for a few reasons I find compelling:

I believe in leading a sustainable lifestyle.
Take a moment to think about how many packages of paper towels you buy in a year: they’re all in landfill right now. Doesn’t that worry you? For me, spending wisely and considering whole-of-life costs for my purchases is frequently aligned with making sustainable choices. When I look at whole-of-life costs for my purchases, it’s incredible how often the option that costs less over its lifetime is also by far more sustainable. When you waste less of your financial resources and waste less of the world’s finite physical resources, you deserve a gold star.

I don’t want to be a sucker.
We all know at least one person who is constantly complaining about being broke – or who manages their financial situation so poorly that you use them as an anecdote. That’s not going to be me. And if that’s you, it’s time to stop being a sucker. Do you WANT to be the sucker who’s trying to figure out how to pay your overdue bills because it’s ‘too hard’ to budget and manage your money wisely? I don’t. I'm not the girl who spends her entire pay on a single outfit (or a single night of partying!) and then has to live on packet noodles for a fortnight. Because that girl - and I apologise in advance if that's you - she's an idiot.

It’s liberating to ‘break up’ with consumerism.
When your self-worth is tied up in having the latest, best, shiniest whatever-it-is, you’re trapped. You’re only as cool as your new gadget or your designer outfit. You feel the pressure to keep up with the purchases of everyone around you. Unless you have unlimited money, you simply can’t keep up with the latest trends and fads – so why not set yourself free from that prison? When I broke up with consumerism, it was a light bulb moment for me. Loving what you already have gives you freedom. Feeling content with your life is a wonderful feeling.

I have big plans.
My life right now is awesome. I have a stable, well-paid job, I’m studying at a post-graduate level, and I live with my Perfect Boyfriend in his cool little apartment. That’s a great life! But you know what? I have so many plans for what I want to do with the next fifty years. I want to buy a house and turn it into my dream home. I want kids. I want to read every book on the surface of the planet, learn how to decorate cakes professionally, crochet toys, go on adventures, build a garden from scratch, own a big slobbery dog, and generally have a lot of fun. I love my life now, but I also love the life I know I'm going to have. So why would I steal from my own future self by getting into unnecessary debt or spending every cent I earn instead of saving? I’ll need that money later on. Which brings me to my next point…
Money brings opportunities.
If it’s three days until payday and you only have $5, your opportunities are limited. But if you budget and save, you have money at hand when opportunities arise. Say you buy your lunch at work every day, which in Perth means spending $50 a week. If you had that $50 in your bank account, when your friend called you to see if you wanted to go see a movie, you could have said yes. That’s a choice you didn’t have before. If you let that $50 build up into $300 over a period of six weeks, you could have bought that new suit you’d been coveting that suddenly got slashed to half price instead of watching someone buy the last one in your size, because uh oh, you don’t have the cash and your cards are maxed out. If you save that $50 for a whole year, you have an emergency fund of $2600 so that when your car breaks down, you aren’t choosing between walking six kilometres to work every day and asking your dodgy uncle for a mob loan to pay for your repairs. Money allows you to take advantage of opportunities. Being broke is a synonym for having no options.

Money isn’t everything.
When you start spending wisely and meaningfully, it forces you to make conscious choices about what matters most to you. It puts money in its place. You’ll focus on what you really want in life – not on what you want to buy. When spending money and then subsequently running out of money is your modus operandi, you're too busy stressing out about your financial situation to enjoy life. And there are a lot of things in this world to enjoy, many of which cost nothing at all.