What is Said and What is Heard…

I started out this post with the intention to talk about the idiocy of the new UK “bedroom tax”, and the level of fear, misinformation and scaremongering that surrounds it.  I have fully-employed friends who own their own houses outright who are debating selling because of “the bedroom tax” that will bring their monthly living expenses above a comfortable level.  How have we managed to get to this point?

There’s a huge difference between what we are told and what we hear.

One of the most useful marital discussion tactics that Tim and I use  is to talk about “what we heard” the other one say when things get a little heated.  What we mean by that is the hidden subtext that our own fears and anger can put on an initially innocent comment.  He might say, “I’d like to go out for a drink tonight”, where what I hear is “I need time away from you, you’re driving me nuts”.  A world of difference between the two, but by saying it out loud, it allows me to say that maybe I’m feeling a bit insecure and need a little cherishing.  The difference is mostly in the perception of the listener and depends upon so many external forces – have we spent time together recently?  Have I got any reason to feel insecure?  Do I just need a big bar of Fruit’n'Nut and a cup of tea?

But when we apply this strategy to how the public are hearing the government information about “the bedroom tax”, I do start to wonder about the subliminal messaging that everyone is getting at the moment.  If you’ve read the information about this new fiscal policy, you’ll know that it applies mostly to those in social housing on low incomes (usually partly or fully unemployed) who get Housing Benefit.  Don’t get me wrong, I think that those people often need a lot of help and taking this help away is going to kick a LOT of people when they are down, and continue to kick them long after they are homeless, unemployable and suicidal.  I know that we need to stimulate the economy, but why can’t we do it by rewarding the workers, rather than punishing the unemployed?  George Osborne seems to have forgotten that the stick can have a carrot on the end of it…

 

But the thing that *really* interests me is that what fully employed, home-owning citizens are *hearing* is “we’re going to tax you because your house is too big”.  And people are angry about it, sure, but no-one is marching in the street like we did with the Poll Tax.  People are *expecting* to be punished and are doing nothing about it, other than trying to figure out how to minimise the impact on themselves.  People see nothing unusual in benefits being sanctioned, new and unfair taxes being levied, inflation increasing faster than the minimum wage and the breakup of the NHS.  We are *expecting* to hear about new tax breaks for non-dom multinationals and multi-millionaire bankers.  We no longer see anything unfair in the difference between the treatment of the rich, the workers and the poor (although the last two can often be bracketed together, these days).

My challenge to you today is not about your personal finances, but to make sure that you are informed about what is *really* happening in the big economic picture.  Don’t trust the red-top newspapers for your information, read broadly and watch more than one news-source.  It all has an influence on your financial situation.  By keeping abreast of your information, you will be in a better position to make the right decisions about your financial future.  Information is king!

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This Future is Different.

I have been through recessions before.

I grew up in the 70′s, frightened of the electricity going off and the panic in my parents’ voices when they spoke of a three day working week.  Then again in the 80′s, I’d watch Thatcher on the TV screen, trying  to crush the miners, and wondered why my 18 year old brother couldn’t find work.  The 90′s recession ended any hope of my husband becoming an architect (not that he lost much sleep over that, to be honest),  but it did ensure that when we bought our first flat, every single one we looked at was a repossession.

So why is this different?

This recession is a game changer because it doesn’t seem to be showing any signs of stopping.  Lehman Brothers fell in 2008, and things started to fall apart very quickly afterwards.  But whereas recessions in the previous few decades had lasted for one or two years before things started to pick up, this one is five years in and showing no signs of letting up.  In fact, if the economic pundits are to be believed, things are due to get far worse with the fall of the Cypriot banking system, a triple dip recession and continuing unemployment and underemployment.  The UK government seems to be flailing helplessly without much of a sense of either direction or empathy to those who they disenfranchise.

I am increasingly finding it difficult to think that things are going to get any better than they currently are.

So what can we do?  

I firmly believe that the that the most important thing we can do is getting out of debt.  Interest levels are low right now, but that is not always going to be the case.  If the UK is the next on the line after Greece and Cyprus, we can expect to see spiralling inflation rates.  For many of us, that will mean that cheap lines of credit will suddenly become considerably less affordable.  In a position where we are just hanging on, that means that a two or three percent increase in our credit cards will be the final straw that breaks the camel’s back.

We need to be fighting our way out now, running from the oncoming storm instead of watching as it approaches and engulfs us.  We have seen the demise of places like Detroit and should judge it to be a wake up call.  I have been kicked in my own carefully planned debt reduction several several times over the last two years, and I have decided that now is the time to say, “No, no more.”.

The solutions that I have to pursue will undoubtedly be different from some people, but we are pulling in the same direction. I am determined that every day will be a day where I make a difference to our financial position, whether that is by pennies or pounds…

In Debt Net challenge for the day: Make the same promise to yourself that I have made to myself – every day you will tackle things head on, and try to make a financial difference every single day!

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The joy of the “Patchwork Portfolio”.

There are many people who have good secure, well paid jobs.  Sadly there are probably fewer of them than there might have been a decade or so ago, so many of us are having to change our minds about the way that we earn our daily crust.

My husband and I went self-employed about 12 years ago now, with him doing building work and both of us doing a little music.  As our life rollercoastered up and down, we came to realise that relying on the one steady job was difficult.  As I’ve spoken about before, we are at the mercy of clients who pay on time, the holiday timetable (no-one has the money to pay for building work in January after spending everything in December, and everyone is away in August on holiday) and the general economic climate.  We have been in the situation where one missed payment has messed up a careful budget plan for months on end.

So what do you do about it?

The answer is: DIVERSIFY.

Multiple income streams really rock, but can take a little while to get your head around.  We find that it works best if you find something that you are good at, and then try to expand that into other fields.  For example:

I am a performing musician.  This lead to being asked to teach class music at my local primary school.  My contacts from this lead to good references which allowed me to get a part-time job organising music events for my local university.  This lead to contacts who wanted a works’ choir organising.  Which lead to another works’ choir job …  That is five small, part-time jobs.  As arts-based jobs, they are precarious, and I am aware that I could lose any one of them at any time.  However, it is a fairly remote possibility that I will lose all of them at the same time.  This means that I would hopefully be able to stay afloat long enough to work out another job to make up for lost income.

My DH is a builder by day and a crime-fighting superhero by…. well, actually he’s a musician by night, but the Batman thing worked well for a moment there, I think…  Some of my contacts have rubbed off onto him and he’s got a nice little sideline of teaching peripatetic music in my primary school.  He also does workshops for children and adults, and has been playing in the best ceilidh band I’ve heard (I may be biased, but they are fabulous) for years now.  Every time the opportunity to diversify comes up, he takes it.

The bad points of this are that paperwork and taxes are *really* complicated.  I don’t recommend that you attempt any kind of self-employment, particularly the Patchwork Portfolio unless you are prepared to get down and dirty with paperwork.  However, keeping track of your own taxes and income is a very important step in debt reduction, so any time spent working towards that would be time well spent.

In-Debt Net Tip of the Day: Sit down and have a really good think about what methods you use to keep track of your income and expenditure.  Are they efficient?  Could you improve on them?

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So, where do things stand?

I hardly posted during 2012, despite all of my best intentions.  This does not mean that it was a quiet year – quite the opposite actually.

I am working “part-time”.  I put the part-time in inverted commas there because whilst I am not working a full 9-5 job, I am certainly doing enough hours of preparation and background work to come in at a 35 hour week.  The killer thing is that I don’t get paid for all the preparation.  However, I am not alone in that – the recession seems to mean that the people who are lucky enough to retain their employment are often required to put in more hours to make up the workload of colleagues who have been made redundant.  Harsh and unfair, maybe, but it isn’t a situation that is unique.

The good part of this method of working is that it is at several smaller jobs.  Whilst this is a pain when it comes to filling out income/expenditure forms, it does insulate wonderfully from a rather dodgy job market.  I may lose one job, but I will still have the others to cushion the blow…  It also means that I can order my work around my other commitments – growing my own food, raising livestock and childcare.  There are very few 9-5 jobs that would allow me to do that without having to pay punitive childcare fees.

So, on the whole, I’m OK with the job situation.  I wish I was paid more money, but hey – who doesn’t?

Darling husband is still working veryvery hard.  He does a 9-5 job (although it’s much more like a 7.30 – 6.30 job) and then goes out gigging or teaching in his spare time.  There are very few times when he is not working in one capacity or another.

Our aim is to be debt-free so that we can both go full-time with music.  We are currently both bringing in enough to live on, if we weren’t having to service our monthly debt.  But there is a very long way to go before we can get there.

We’ve been let down by people that we trusted in 2012, leading to a great deal of sadness and despair, and setting us back a very, very long way on our financial plan.  It has been a harsh lesson, but one that we have both taken on board now, and we won’t be making the same mistake twice.

The path ahead is clear for the first time in a long while, and we are determined.

Full speed ahead, captain…

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It’s been quiet, but I’m still here…

Right.  Taking the bull by the horns again and trying to get back on the blogging horse again.

In my absence, I have noticed that Feedburner has fallen over, and is not allowing me to move my feeds.  Hrm.  If you are interested in staying with this blog as I revamp it, could you put a note in the comments here with some kind of mangled email address?  (Just so the spambots don’t come looking…)

I have a newborn desire to get down and dirty with the banks!

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New Year Stuff is *Hard*.

It’s the curse of the self-employed builder – the beginning of the year.

We find that everyone wants to get building work done before Christmas, and then they spend like there’s no tomorrow and resolve to cut back on spending in the new year.  I absolutely understand how that cycle works, but sadly, understanding it doesn’t mean that work comes in any more regularly.  We are blessed in having a few friends who have saved for work and are happy for us to do it in the winter, but until spring hits properly, I’m not expecting any big local jobs, so we’re having to be extremely sensible and frugal.

But this time of year is *always* like it.  Same in August.  For many people, August is summer holiday time – spend, spend, spend!  For some reason I haven’t quite figured out, August seems to be a really lean month for us.  Of course, as we work our way out of debt, we wouldn’t spend out on lavish holidays and outings anyway, but sometimes it is hard to watch other people do it.

Knowing about these lean times and seeing a pattern does help in terms of my internal dialogue when dealing with it.  It feels more positive to say “this always happens at this time of year” instead of “DOOMED!  WE’RE ALL DOOMED!!!!”.  And positive actions are the key to getting out of debt, I feel.

So, how are we saving money?  How do we spread things out?

A *lot* of making stuff from scratch.  This has the bonus of almost always making the thing in question nicer, tastier and better for you than convenience foods.  Case in question – what is pasta made of?  When I asked my husband last night, he said “wheat, egg and water”.  I showed him the bag of pasta we’d bought the night before.  100% Durum wheat.  No egg.  No wonder it tastes bland and unfulfilling!  Of course, egg prices are going up hugely at the moment, and I’ve never been quite so glad to have chickens – we’re not worried about using eggs in this house…  So, if you make pasta at home (with the egg), it tastes *so* much better and has the extra protein that kids need.

Cakes and breads are another prime example.  I know that breadmaking feels like a faff – all that waiting and kneading and waiting again…  But the amount of actual labour time it takes is quite short – there’s nothing to stop you doing other stuff whilst it rises and bakes.  To quote Talis Kimberley quoting Elizabeth David, “Bread takes time, but not YOUR time…”

Buying raw ingredients allows you to make bigger amounts, healthier recipes and save money into the bargain.  If you are low on time, have a making evening/day and do it in batches, freezing what you can’t use.  Having your own, homemade convenience meals in the freezer is a real boon.

Swapping with like-minded friends is helpful too.  Don’t duplicate book and DVD purchases with friends – swap them around :-)  Also if you have any skills, see if you can swap those with friends.  (I like sewing and am good with mending and trouser-altering etc. – I swap those skills with a friend who looks after my daughter when I work…).

Finally (and this only works if you are a hoarder, unfortunately) a bit of retail therapy when things get really bad – we have lots of stuff due to some big life changes.  Most of it is boxed and stored.  Every now and then when I’m feeling most in need of a bit of a lift, I go and rummage in a box and I will generally find something I’d forgotten which will make me smile – the last thing was a print by the wonderfully talented Sue Mason, which I’d stored away, ready for a new wall to hang it on.  I have the new wall now.  I shall hang it later today and feel as if I have something new, without spending any money at all!

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Simplistic Lists Don’t Work.

A friend just linked to an article on Yahoo about ’10 Easy Ways to Get Out of Debt”.  I clicked through with a professional interest, and was reminded of why these one-off kinds of article irritate the heck out of me.  The article was full of ‘new and helpful’ advice, including ‘keeping an eye on what you spend’ and ‘prioritise debts’.

It’s the personal finance version of “if you want to lose weight just eat less and exercise more!”.  What angers me so much about both sets of utterly useless advice is that if someone needs help with something major like debt or weight issues, you can bet your bottom dollar that they’ve already tried it.  If it was as simple as “eat less”, don’t thin people think that overweight people might have actually *tried* that?  For the vast majority of people, it really isn’t that simple.  People have complicated relationships with food. I’m fortunate that my relationship with food is such that I tend to undereat as much as I overeat, and my body has hit a comfortable stasis with my eating habits.  I’m also realistic enough to realise that many people have *much* more complicated relationships with their eating habits.  I’ve not walked in those shoes, so I can’t comment, but I’ve seen enough dear friends with self-esteem and weight problems to know that it just isn’t that easy.

These simplistic personal finance plans hit me the same way.  They all assume that you are earning enough to keep up to date with minimum payments and by simply cutting out a few restaurant visits every month, you can start making headway on the debt.

Wake up and smell the coffee.  People are in trouble for many different reasons.  People lose jobs.  Benefits get cut.  Babies are born.  People get ripped off.  If *only* it were as simple as “spend less”, we’d all be laughing.  But most of us out here are working with a set of circumstances that see us working at rebuilding some kind of financial security as hard as we possibly can.  We’ve cut our personal spending as hard as it can be cut.  We don’t remember the last time we went to a restaurant.  We don’t remember the last time we bought clothes.  We don’t get gifts at Christmas and birthdays.  We sell as much as we can, and work several jobs.  Telling us to “give up the morning cappucino” is, quite frankly, about as much use as a chocolate teapot.

And that’s why, here in 2012, this website is determined to be proactive and to actually attempt to give some useful advice.  Advice for people who have cut everything as hard as it can be cut and need some help and someone to listen to…

So, if the new year has brought you a rash of credit card bills and call centre employees who job description seems to be “be as frightening as possible to get more money”, then this link is for you:

Consumer Action Group: these people offer very practical advice and a sympathetic ear when one’s credit card company is really, REALLY unpleasant.  There’s also tons of useful advice on useful ways to fight back.  If you’re considering a PayDay Loan, then I highly advise checking out the forum regarding Wonga.com and their like.  Scary…

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2011 Financial Roundup…

It’s been an odd sort of year, and dominated to a greater extent by money.  There has been good news and there has been bad news.

GOOD NEWS

  1. We’re over halfway through paying off a bank loan which will free up enough money to allow us to get a grip on some other financial things.  The end is most definitely in sight, and I’m feeling very positive about it.
  2. After some advice from our accountant, we find that we are in a position to wind up the business which doesn’t actually make any money, but costs us in terms of VAT and paperwork charges.  This will simplify tax, quarterly records and financial shenanigans to a great extent, and will be a relief to all involved.
  3. I got another job!  It’s a job doing something that I love (organising music events), and has the potential to lead to other things.
  4. We’ve got more done on the house. I now have an office, the kitchen is mostly done and my husband is on the roof nailing down tiles as I type.  This feels like real progress.  99% of the walls that are meant to be there are actually there :-)
  5. My husband continues to transition from building work to full-time music work without a drop in income.  This leads to a happier home life all around.
  6. My son has decided on a career path and college route, both of which feature him being independent.  This makes us all happy – not least of all my son!
  7. Starting ANOTHER job in January.  Hopefully this won’t result in income going down again (see no. 3 next list).
  8. Emptied storage unit, one less thing to pay for each month.
  9. Paid another year off mortgage.

BAD NEWS

  1. Due to new credit card rules being adopted by my horrid credit card company, I am no longer able to eat away at the capital.  (Action: Work harder)
  2. Aforementioned credit card (MBNA – stands for Most Banks Not Arsed, I think) fraudulently took money from my account and froze everything for weeks.  Still trying the same trick.  I shall be glad to be rid of them!  (Action: Work harder)
  3. Got a job, lost more in child tax credits than I am paid.  Net loss to monthly income. (Action: continue working, I have my pride!  Also, get another job – oh hang, on, I’m starting another one in January – yay me…)
  4. Everything has seemed to be a rather depressing grind this year – staggering from crisis to crisis, without sinking (hurrah!) but without making much headway (boo).  No money for much in the way of luxuries and frugal gets very boring…
  5. Eurozone in complete meltdown.  Very worried about what 2012 holds.  (Action: Must get out of debt quicker!)

So it would appear that the action plan for 2012 is getting another job (already done it, will see how the workload holds up and then see if I can expand it into a similar thing elsewhere) and paying down as much debt as physically possible.  More Ebay, more decluttering, more actualising money from stuff that we don’t want anymore.

The best news really, is that I’m more determined than ever.  My financial situation is difficult, but not impossible, and if ever someone was going to work their way out, then it’s me.  Hold onto your hats – 2012 will be a year of prosperity!!!!

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Direct Debits Can Cost You Money…

I’m so frustrated.  We’ve been really careful over Christmas, buying second-hand, making good use of leftovers, spending time together at home instead of going out…

We had a client’s cheque returned today, having bounced three times in the two weeks since we presented it.  We won’t be seeing the client again for at least another week, and in the meantime, their work has been completed, but the money is obviously not there.  *sigh*

Also had a couple of late payers from other things – I’m sure they don’t *mean* to be late with their payments, but what with Christmas and everything, things fall through the gaps, including the money that we need to pay…

The mortgage.

*sigh*  It’s just so frustrating that other people’s hiccups impact so badly on us.  My one big comfort is that we cancelled the mortgage direct debit, because it was costing us so much.

That statement is, of course, completely at odds with what the banks and utility companies generally tell us.  They tell us that direct debits can save us all those pesky handling fees, and are so very convenient!!!  Hurrah!  What they don’t say is that if your direct debit goes out without the money being present, it costs you money.  And (depending on your bank) automatically cancels the direct debit so it won’t be paid next month. For those who have a regular income, this is usually just a one-off blip.  However, one of those “one-off blips” did cancel every direct debit we had a few years back, and took *ages* to get everything back into some kind of order.

For us, however, it’s not a one-off blip.  We are constantly at the mercy of people being prompt payers.  And let’s just say that not everyone is a prompt payer.  Many are truly, truly wonderful, and mean that we can make financial headway. But it doesn’t always work like that, and all you need is one corporate big-hitter client who decides that he’s going to take 60 days to pay your invoice instead of the 5 that you need and you have direct debits bouncing around like that camera advert with the bouncy balls in San Francisco…

Because we’re self-employed, this kind of thing can happen more often than I’m comfortable with.  So, on the advice of our helpful bank, we cancelled the direct debits, and requested reminder phone calls instead.  So whilst we’re waiting for our mortgage payment to hit our account, we are at least not racking up bank charges.

Phew.

I do wish the clients would pay though :-(

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Having the Christmas I want, not what they tell me to!

I’ve done my Christmas food shop.

Don’t feel too bad, I’m still spectacularly behind on most of the things that ought to be done, according to received wisdom.  According to the media I should have:

  • made mince pies and sausage rolls to offer to visitors over the festive period.  (Most visitors to this house are welcomed with whatever is to hand, including the eye-watering homemade cider which kills tastebuds, so mince pies and sausage rolls are unlikely to happen)
  • Sent Christmas cards to everyone I know (I hate the waste of paper, don’t have the time and prefer to give to charity instead.)
  • Bought gifts for all my friends and family (I’ve discussed the fact that I can’t afford this with all the people who matter, and frankly, most of them were relieved not to do it either.)
  • Made my Christmas pudding (we never eat it on Christmas Day anyway – always too full)
  • Made a Christmas Cake (received one as a family gift – fab!)
  • Bought Christmas crackers.  (May just make these, a la “The Good Life”)
  • Decorated the entire house in a co-ordinated fashion with brand new trimmings (used old family favourite trimmings – more memories anyway!)
  • Bought a real Christmas tree (we have our dear old artificial tree.  According to recent reports, you need to use a tree at least 10 times to equal out the carbon cost compared to a real tree.  Mine is 15 years old, it owes us nothing, but is still trooping on in a rather comforting fashion!)

Will my Christmas be a sad and desperate affair because I haven’t spent money on these things?  No, it will not.  It will be full of love, laughter, food and togetherness.  We will play games in the afternoon.  We will drink homemade wine and cider.  We will walk the dog.  We won’t worry about the credit card bills in January.

Sure, we’re in debt, but I’m darned if I’m going to get further into debt to have the kind of Christmas that the *media* tells me I should have.  I’m going to have a lovely family Christmas on a budget we can afford and continue paying down the debts.  It’ll be a *good* Christmas :-)

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Posted in Frugal, Lifestyle | 3 Comments