It’s been just over a year since I discovered the FIRE movement and fell down the rabbit-hole of endless blogs and podcasts all talking about financial independence. I watched the documentary ‘Playing with FIRE’ last night and found it so inspirational. It was thanks to an email from Monethalia, letting me know that it is free here (with the password FIRE) until 11th December. The documentary follows Scott Rieckens and his wife and daughter as they make enormous changes in order to pursue financial independence. On the way they talk to the great and the good of the FIRE world.
If like me you’re not quite brave enough to give up your job, sell your home and move half way across the country to live with your parents for four months, as the Rieckens family did, then a good place to start instead is with an annual review of your finances and a plan for what you want to do over the next 12 months.
Reduce the mortgage by £12,000
My main aim for 2020 is to reduce our mortgage by a further £12,000. This year I have made payments totalling nearly £14,000 against our mortgage and by the end of the year we will owe about £72,000.
As we overpay by more than £500 per month the building society recalculates our monthly payment each time and decreases it. The plan is that each month Mr Simple increases the overpayment which he makes manually, therefore the total amount we pay each month remains the same. The thinking behind allowing the standard monthly payment to decrease each time is that at some point in the future, if we decide to stop overpaying and just let it run its course, the amount coming out of our account will be fairly small. At the moment the standard payment is decreasing by about £4.00 every month.
Well, that’s enough about the mortgage, let’s have a look at the other bills I expect to be paying in 2020:
|Gas and electricity||£89.78||£1077.36|
|Phone and broadband||£18.99||£277.88|
|Council Tax||£258.00||£2580.00 (ten months)|
Reduce the water bill to £31.00 per month
Our water bill went up after we had a new lawn laid and spent the very hot summer of 2018 watering it using a sprinkler. Prior to that the bill was £31.00 per month. We have a large garden, two greenhouses and a vegetable patch, so our water consumption is going to be higher than someone who lives in a flat, but I am hoping that when it’s reviewed at the end of the financial year it will go back down to the previous rate. Mr Simple has installed two water butts and we have adopted the habit of not flushing the toilet every time we spend a penny. Sorry if this sounds a bit disgusting, but it’s only me and Mr Simple and it really doesn’t bother us. According to the Money Advice Service about 30% of water used at home is due to flushing the toilet.
Gas and electricity have recently gone down thanks to Octopus and we are moving our phone line and broadband to Plusnet, so I am happy with those totals. All of the other items are fixed so there’s absolutely nothing I can do about them.
Increase my holiday spending
This year has been a fairly frugal 12 months in terms of holidays. Mr Simple hasn’t been abroad at all, but I did go to Italy with my mum in celebration of my 50th birthday. Having only gone away in the UK with Mr Simple, which meant missing our usual two weeks in France, I realise that holidays are one thing that I am happy to spend money on. My mum wants to go to Croatia next year and whilst I could stick to my frugal guns and decline, she’ll be 75 in April and so I want to take the opportunity to enjoy time with her whilst I can. It’s not that I think she going to pop her clogs any time soon, but you never know what might be around the corner. I have therefore increased my holiday budget and am going to put my annual car user’s allowance from my employer towards my holidays.
Next there’s my own bills – for some reason the house insurance comes out of this instead of the joint account, but it makes no difference as I would be paying the total amount whatever.
Keep the car going
As my car is getting older it is likely to cost me more and so I have calculated increased spending in that area. It’s only a matter of time before I have to buy a new one, but fingers crossed that won’t be in 2020.
|Holidays||£166.00||£2000.00 (plus £800 from travel allowance)|
I am due to have my eyesight checked in January 2020 and may have to buy a new pair of glasses. I therefore save every month towards this eventuality. If I don’t need a new pair then the money can go into savings.
Continue paying into my ISA, but at a reduced rate
With the increasing cost of my car and the holiday expenses I can only guarantee paying £363 per month into my ISA. What doesn’t factor in my spending is the payments that I get towards the miles I drive for work. This is on top of the annual travel allowance. Although I budget spending £120 on petrol, sometimes that is covered by my travel expenses. How much I receive varies each month, but whatever I get will go into my ISA. Some months it is over £100 so would take my savings up to nearly £500. We’ll just have to see how it goes.
After deducting the above payments I have will have £450.00 to spend as follows
Reduce the food budget
I have worked hard in 2019 to reduce our food spending, but I hope to make further progress next year. £140 also covers cleaning items and some toiletries so I don’t think it’s that bad, but I feel that I could do better. So how does this compare to your budget? Finding it hard to make savings? Why not subscribe and get my ‘Frugal Tips’ sheet as a thank you.