Spend less than you earn

by Marcel 15 February 2012

It's actually quite simple, Spending less than your income will save you money and a lot of stress. But, of course it's easier said than done...

My way of keeping track of income/spend is the following:

- Create a simple spreadsheet listing all of your monthly bills in one column. (rent/mortgage, gas, insurance etc.) these are costs that will not fluctuate all that much.

- Then create a second column showing your income.

Something like this:

Date Costs Income Description
2 30   Internet
5 35   Phone
10 600   Rent
11 50   Gas/Elec.
27   1500 Salary
28 100
30 25   Bus pass
Totals 840 1500  

This is a very simple example, but you should get the idea. Once you have this finished you know exactly what you have left for the month, in this case 660 euro.

With the left over amount you still need to buy groceries, clothes etc, work out how much you need per week, say 100 euro and add a little more just in case. In my example we'll reserve 450 euro (per month) for groceries/clothes and other things.

monthly Cost Description
  440 Groceries
  100  Clothing
 50 Other
Total 590

That leaves you with 70 euro to put in your savings account. It doesn't sound like much, but after a year you'll have 840 euro in your savings account which is 840 more than you would normally have. Most people find that once the savings account starts to grow they find more ways to save their money and it grows much faster. Also, don't forget the extras like bonuses, birthday gift money, tax returns etc

Not only do you know exactly what is coming in/going out but you also know where you could save a few euros, that magazine/newspaper subscription you don't really have the time to read, cancel it and save 10 euros for savings, or an extra treat every now and again.


Budgetting | Savings

Buy now, Pay later - is it worth it?

by Marcel 11 February 2012

With the financial crisis as it is, many retailers are luring customers with 'Buy now - Pay later', 'Zero percent financing' and other deals to let you take the product home now, and pay for it later, is it really a saving or is it a way to extract even more cash from your pocket?

Remember, no matter what they call it, somehow the purchase is being financed, and the financer also wants to make money on the deal, how do they do this?

- A majority of people don't have the money when the term has expired, which means that you will suddenly be stuck with a loan. The interest rate can run up to well over 16%

- 'Administration costs' are often charged, sometimes up to 50 euro per transaction.

When buying a laptop last year I was tempted to take up the buy now pay later deal that Dell offered me, but after a simple calculation I decided against it. The purchase price was approximately 700 euros and I had the money, but what if I put the money into my savings account for a year? I would actually be making some money off the interest!

Unfortunately the Administration costs were 30 euros, that's approx. 4.3% of the purchase price. The best interest rate I could find at the time was 3.5%, which meant I would actually be losing money. You should always check all the costs involved before purchasing.

For a larger purchase (say over 1000 euros), the calculation sheds a more positive light on the calculation, but there is still the other factor to consider...

Paying it back sounds simple enough when you buy the goods, especially if you have the cash, but it seems that a majority of purchasers do not actually pay the amount back on time! Whether this is due to to unexpected financial problems, or other reasons, it means your interest free loan is no longer interest free and you are sure to pay over the top fees for your purchase.

My advice is, only buy something when you have the cash, it will give you much more peace of mind than being stuck with a loan. 


Savings | Shopping

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