6 ways to cut your household bills

I’ve always had a love-hate relationship with the old adage “look after the pennies and the pounds will look after themselves”. For one, I prefer to advocate big savings over little ones. Major changes like down-sizing your home, relocating to a cheaper part of the country, or swapping your car for a pushbike, will make much more difference to your bank balance and your overall wellbeing than a string of minor life tweaks. The way I see it, choosing NOT to go on a £3,000 luxury holiday is like getting 3 years worth of FREE energy, or 10 years car insurance!

But – and it’s a big but – the sheer practice of habitually making successive small enhancements to your routine and to your budget, like changing your energy supplier or turning down your thermostat by one degree, is an amazing discipline to have. It helps you adopt an ‘always-on’ 100% frugal consciousness and keeps you at arm’s length from life’s constant stream of rampant consumerism.

I’ve shortlisted my 6 favourite bill-trimmers, none of which are as dramatic as moving home or selling the gas-guzzler! They’re all super-easy to implement and can collectively save you a nice little chunk of cash, every day.

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1. Buy tube heaters

The cheapest way I’ve found to heat a room. Leave one of these on as long as you like and it’ll keep a room warm for as little as 4p an hour. Much cheaper than electric convector heaters or halogens. One tube heater alone is not going to heat the whole house, or give you a roaring glow in the depths of winter, but they are perfect for those chilly spring and autumn months, or when you just need to keep one room nice and cosy. Hide them under the sofa if you don’t like the aesthetic appearance – I know some people find them visually offensive.

2. Get a wood-burner – and pick your fuel carefully

Ahhh, our new energy bill saviour. We’ve forked out £1200 to have a Firefox 8.1 woodburner installed but it’s paying back handsomely. We have a small-ish 2-bed cottage and it warms the whole house in no time. We have it going all day in the winter months when we’re both at home and light a small fire of an evening when outside temperatures are more in the region of 5-10C. I find coal is the cheaper fuel to run overall while wood is useful for getting the heat going quickly or for shorter periods. Having both options – ie, a multi-fuel stove – is important. Based on initial estimates I’d say our gas bill will be around 30% lower. And as we both work from home self-employed we can claim a portion of it back on our tax return forms.

3. Buy in bulk, make in bulk

Discovering Muscle Food was a watershed moment for me. We get 3 months’ worth of high-quality meat for around £60. Package it up and stick it in the freezer on the day of delivery and you’ll notice your weekly shop from then on is a damn sight cheaper. It also helps you plan meals better, which means less waste and gets you seeking out interesting new recipes. (“Hmm… What could I do with those chicken breasts tonight?”)

Similarly, you can buy big bags of rice, pasta, oil, flour, potatoes, frozen veg – the staples we all need – at exceptionally low prices. Sign up for supermarket alerts and voucher codes and you’ll soon see that you can also get great deals when bulk-buying luxury items like sauces, cheese, or even wine.

4. Create your own cleaning products

Big-brand cleaning products can cost a fortune. I shudder to think we live in an age where there’s a fashion for lemon-tinged bleach and rose-thorned purifiers. Insane. You don’t need any of this stuff. You can make all your own liquids, lotions and potions for pennies.

Vinegar and a few drops of essential oils in a spray bottle is all you need for your everyday household cleaner. Hydrogen peroxide can be a good, cheap alternative to carpet stain remover. For a powerful non-toxic oven cleaner you could try mixing up some borax, vinegar, baking soda and boiling water. (Note – before creating your own, please research the portions and mixture methods carefully.)

5. Re-sell your energy

If you generate your own energy through solar panels you can cut your bills by around 25-50% and sell any surplus energy back to the grid. The initial outlay is still quite high, which is why I’ve not yet done this one myself but the the costs are coming down all the time and the resale prices are going up so a 15-year break-even point, as it is now, should tumble to 5-10 years reasonably soon.

6. Live by day, sleep by night

Rise with the larks! Enjoy the world in daylight when its warmer, more colourful and altogether more beautiful. And when night comes, bunker in under a blanket and go to bed early during those long dark winter months. Get your house working to the same routine too. Turn off all your power-points when you turn in for the night.

Peas in a pod: The DNA of a financially independent frugal warrior

On my journey towards financial independence (FI) I’ve soaked a lot of great content – books, blogs, podcasts and the like. They’ve helped me along the path. The best of them have become dear friends, or sharp tools to my armoury, or new ingredients for my melting pot of ambition. And the more I have read and absorbed, the more commonality I have noticed in the authors and creators of this content.

I’ve concluded that FI-seekers are a rare breed that share some striking similarities in the way they value life and approach a challenge. Here, I’m going to deconstruct that DNA, the make-up of your typical FI-seeker, as best I can. I’d love to hear your thoughts! Do you agree with these common traits, or not? And do they reflect your own life values?

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Time not money

I believe the classic FI persona upholds one core principle over all others – life is NOT about money. It is about time.

Perversely, while eagerly sniffing out ways to cut our spending and accrue wealth, FI-seekers are actually not that interested in money at all. Far from it. The focus on our finances is a necessity we must go through in order to achieve our true desire, which is to have more time, and more importantly, more quality time – the time to do what we want, to devote to things other than work and chores and simply ‘getting by’ in life.

Investment style

The vast majority of FI-ers / early retirees / call-it-what-you-will, discover one single truth about sensible investing and that is to adopt a passive, diverse approach to portfolio management.

Passive, diverse investing is where you establish a strategic long-term mix of investments – eg, 60% global stocks, 40% corporate bonds and gilts – invest your money across indexes, such as the FTSE100, and then stick to this portfolio mix as the financial markets ebb and flow, knowing it is likely to give you decent, reliable long-term returns. You’re simply tracking the markets. The flip side to this is active investing, where you research individual industries and companies and trade stocks frequently in an attempt to beat the market.

Active investing is dying on its arse. Over the last 10 years, 83% of actively managed investment funds in the US have failed to beat their target benchmarks. Nearly half of them have folded within that 10-year period. With the advent of technology and low-cost index-tracking investment tools, things are getting even worse for the active investors.

Active investors are greedy. Passive investors are smart. FI-ers tend to learn this quite quickly and keep a large proportion of their investments in a passive style.

Liberty

We want control, we want choice, we want freedom. As I said, it’s high-quality time that gives you that freedom and money is simply an enabler. But we stand for more than just that. We believe in equality for all, creative expression, clean air and long walks, learning, loving and free-living. We think a lot. You could say we’re a little bit hippy!

But that’s not to say we’re wild or flagrantly spontaneous. As a companion to this desire for ‘liberty’, FI-seekers also have a strong river of analysis and science coursing through their veins. We’re measured, considered open-book libertarians, not afraid to ask questions or push the boundaries, but often do so after much research and within our quiet realms of self-knowing.

Morality

I have found that many FI-seekers have very specific moral standards. They may not jump up and down and scream about it, demanding others live by these same measures – quite the contrary, in fact; FI-seekers are generally more concerned with how they and their immediate circle behave – but they believe vehemently in respect. It is morally important to FI-seekers that they show respect to others and trust others to display the same level of respect in return.

On a macro level, we hope and dream that the world can one day embrace greater levels of moral decency and do away with the greed, hate and anger that’s chewing it up.

Family

While those lofty global aspirations are held dear in our heart, they are not as dear to us as our immediate family and network of close friends. Because we appreciate the importance of high-quality time, we want to spend that time with those closest to us, the ones we love the most. We cherish and protect our family at all costs. We create an environment of warmth, sharing and support.

Bravery

FI-seekers don’t tow the line. We don’t simply take what we’re given in life, say thanks and move on. We want more. And to look for more, to swim against the tide, you need bravery. We never say never, we experiment and try new things, we ask searching questions, we call time on bluff talk, we don’t take ‘no’ for an answer, and we will take (considered) risks as we strive for a new, better way of being.

Individuality

The most important trait of all.

A few years ago, when I first became intrigued by the concept of early retirement, I found a very emotional attachment to some writers in the field. They inspired me. The book Your Money Or Your Life blew me away. I was hooked and excited about potentially making a significant life change, stepping off the traditional conveyor belt of work and taxes. At the start of that journey I was desperately looking for allies – a champion, a success story, a teacher. I was looking for more and more clues as to how I could unlock my own little life conundrum. I would latch on to any glimmer or comfort that I was doing the right thing. And I ended up feeling a real sense of fandom towards certain academics and bloggers.

But over time, this has waned. I’ve come to realise that, while I think we share many similar characteristics, the biggest and most important commonality among FI-seekers is, strangely enough, the fact we are all different. It’s our individuality and our spirit and determination for being unique that truly defines us. We have the verve to take the plunge and stick to our guns.

At the end of the day, we don’t need to follow others, or have heroes. We’re writing our own story, each and every one of us. Every day.

A 5-point strategy for helping people manage their money better

We have a huge problem. As a nation, we have an extremely low level of education when it comes to money, below the global average according to some reports, and it’s screwing up our health, life and wellbeing. Did you know that only 38% of UK adults know what inflation is? And that one in four students do not consider a loan or bank overdraft as debt? It’s time to take drastic action. I present to you my five-point plan.

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1. Don’t focus on anyone aged over 65

Sorry, controversial I know, but by the time you’re 65 you’ve pretty much made all your money mistakes. You can’t exactly switch career or accelerate your retirement plan. The best you can hope for is to be smarter with what you’ve got, improve your budgeting skills and maybe down-size to free up some money from your home, but you’ll know all this already. Whatever we come up with by way of an education plan will help all age groups, but to prioritise, let’s zone in on the core of the problem and save future generations from committing the same catalogue of errors…

2. Go back to school

It’s never too early to start teaching our bright young things the importance of managing money and living well for less. In fact, the sooner the better. Toddlers should be counting pennies not chickens, early teens must have a good grasp of income, bills, mortgages and tax returns, and by the time they’re 16 everyone should have a decent understanding of macro-economics – inflation, GDP, interest rates, foreign exchange and investments.

3. Create pioneers

It’s hard to spread the word alone, or for a government department to enforce change like a frowning school teacher. We need to work from the inside out. So, first of all, let’s create pioneers and champions who will advocate and educate on the ground in their immediate environment.

All local communities – schools, churches, sports clubs, charities, companies, political committees, hobby groups – they all have some kind of financial representation, someone who does the accounts or sets up the taxable status and manages the inflows and outgoings.

These people are gold dust and should double up as living-breathing finance gurus to whom we can all put our everyday money questions and conundrums. They’ll be rewarded handsomely by the government for their efforts and others in these groups will aspire to become a financial guru themselves and earn an extra income.

4. Keep it simple, keep it real

There’s so much crazy jargon around when it comes to money, it’s no wonder our knowledge is so low. The whole thing is a bore, a turn-off at best; a cumbersome, patronising beast at worst. So let’s not talk about ‘financial literacy’ as the industry so loves to do, let’s talk about ‘money knowledge’.

From there we need to create nudges and money rules for people that are a true reflection of their lives. There’s no point telling someone to save now for their pension in 30 years time when they have a 3-year-old to feed and energy bills to pay and it’s still 2 weeks until payday when they can hopefully pay off a slither of their mounting debt. Give them tips and tricks to help make the weekly shop go that little bit further. A brilliant recipe for sausage casserole that serves 10 portions at 30p each, for instance, is far more likely to get them engaged and kick-start some conscious thinking to help plan their spending in a smart, meaningful way.

5. Go on tour

Now is not the time for a government-led TV and poster campaign. It’s no good projecting these messages from an ivory tour and hoping they’ll land. That is so 1960s and simply not relevant to the modern day. We need the right messages to be out there, on the streets, all day every day.

All employers should be encouraged and incentivised to have lunchtime drop-in sessions in the workplace and post useful money tips in emails or on screen-savers and exciting desktop visuals. Shop receipts are the perfect time and place to remind people how much they just spent (or saved) as a proportion of their income and life budget. All this data can be seamlessly absorbed into an app that displays a constant reminder of how well you’re doing on a scale of 1 to 100, by the day, the week, the year and even over your entire life.

One final point… Knowing ‘how well’ you’re doing with money should never be related to how much you’re earning. That would simply exclude the lower earners altogether and give the high earners an undeserved pat on the back for their ego but very little else. It’s a fallacy anyway. Most millionaires are actually plain awful with money. Low-income groups and the self-employed are far better with their finances and plan long term for an easier life, without seeking out short-term windfalls.

It’s all about increasing your money skills, not your income. That way, it’s a badge of honour that anyone and everyone can wear.

 

Finally, a plan! 5 years to (semi) retirement

This blog has changed quite a lot in recent months. It started out as a bit of a playground for me to express finance related thoughts and ideas away from my day job as an investment writer. It was in some ways a trial zone for themes I wanted to discuss but couldn’t in my professional capacity due to the constraints of the brand I represent, my corporate identity or the industry regulator, the FCA. Sometimes all three.

Adelie Penguins Diving into Water (Composite)

Moving in to the investment industry two years ago (I’d previously had no interest in it or knowledge of it) turned my head, as you’d expect, towards my own finances. It soon got me analyzing my incomings and outgoings properly for the first time ever. It made me think about planning for my retirement. It got me calculating my rent as a percentage of income. It forced me to consider pensions, and with that, death. There’s been a lot of time pondering death.

I spent hours forecasting the second half of my life and always in a very cold, scientific way: estimating life expectancy, projecting property price growth by region, salary increments versus a potential rise in inflation and interest rates, the likely returns on a high risk portfolio over bonds for the next 10 years, tax breaks on a pension versus the accessibility of an ISA, and so on. Quite boring stuff really.

Time is money

But over the last 3 months my thoughts have strayed more and more to the emotional and holistic side of how money plays a role in our lives. As I’ve explored themes a little detached from this very sterile, textbook approach, I’ve found there are far bigger and more interesting questions to answer: What do you want to do today? What makes you happy? Who are your closest friends? Why do you only see them twice a year? Do you prefer light or dark, cold or warm, sex or love, food or fashion, time or money?

I want to understand the things I treasure most and do what I can to be around them as much as possible.  Consequently, a clear concept for me has now emerged and that is to find a way to NOT work as soon as possible.

I work with some good people and I earn good money, but if that money were no object I’d rather wake up slowly every morning with my wife, drink tea in bed, play with the cats, potter, do some light work locally to help a neighbour, learn a new instrument or a new language, fix something, go for a run, cook a lovely meal, drink a beer in the sun and meet up with friends. Now that’s a day.

This might sound like a retirement lifestyle. And if so, well, so be it – that’s what I want. But it’s unachievable right now. I can’t afford to give up my job. For a start, I’ve got a £1,700 a month mortgage to pay. But I want to get there as soon as I can. I think it’ll take 5 years.

The plan is:

1) Save and save damn hard (30-45% of net salary).

That should be ok. We don’t care much for posh nosh or fancy holidays, though we have forked out on them frequently in the past. It’s symbolic of the consumerist trap. You work hard to earn money to live well but then feel the need to spend it all on ‘treats’ in your spare time – to justify working so hard in the first place. But we don’t really need any of that stuff.

2) Move to one of the cheapest parts of the UK and buy a small home for us and a holiday let apartment.

Perhaps somewhere on the coast where there are good opportunities for tourist trade.

3) Compliment the holiday let income with some ebay selling, freelance writing, dog walking – whatever it takes really to get by.

This doesn’t of course rule out work completely but it means I can do it more on my terms, as and when needed. I figure we’ll need £1,500 a month for the two of us (and the cats). The properties will be paid for outright.

4) At 60, sell the holiday let and use it to top up our pension pot.

That’s it. That’s the plan. It’s pretty basic and still forming but it feels really exciting to potentially give up formal work at age 47. It also feels really scary and in some ways crazy to do so (can I really turn my back on a well-paid job?). But I want more than just a well-paid job. I want time.

The most exciting thing of all is that I have seen a new way of doing things, a new way of living. A way that is different to the blinkered 40-year city career path I’ve assumed is the only option until now.

Thinking about work and money and everything but

It occurred to me that I have been in some jobs that required 30 or so hours of effort per week, tops. Others have been a more routine 40 with the occasional late night finish bumping it up to 45-50. And some have been pretty much 24/7, all because my brain could never quite escape the to-do lists, the reports that needed doing, the team member who needed motivating, the budgets that needed slashing, and so on. It doesn’t matter if you’re not physically there, in the office, if your mind is on the job, so are you.

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All of a sudden that £50,000 salary doesn’t seem so generous. Sure, on a 40 hour week it works out around £25 per hour. Factor in holidays and it rises to £27. And if you’re lucky enough to be on easy street and clocking in no more than 30 hours a week – and all praise to you for that! – then it works out a tidy £32 per hour.

But if you are all consumed by work, rarely managing to free your brain from it’s gnawing clutches and even dreaming about work then your taking in a paltry £12 per hour.

Cash drain

I also spend a lot of time thinking about money. When we think about money, it’s often in a negative way: the gas bill is going to be huge this month, I shouldn’t have spent so much going out last weekend, I’ve got three birthdays and a wedding coming up, should I look for another job where I can earn more money? All very anxiety-driven stuff.

So I’ve started an experiment where I attempt to reverse my psychological approach to all things wok and money. I try to look more to the future and the things I want to achieve in life and how I could save enough to get there. Now when my mind wanders and lands on the topic of money, I don’t swish it away towards another train of thought, I embrace it. But I push it down the track of life, towards a bright, optimistic financial future. It gets me thinking about some wonderful opportunities, like moving to the coast or the hills, running a little local business, relaxing in the sun, or doodling in a nice little restaurant over a long coffee. Our thoughts define us. They shape our identity. It’s important to control them, else they will control us.

So far so good. The experiment is working well. I see a vast array of opportunities ahead.

Consumerism begins at home

I can’t deny it. Since moving out of our box-tight 1-bed flat in Camberwell, south London and into a 4-bed house 13 miles south in Whyteleafe Surrey (for exactly the same price) we have felt the need to fill that extra space with crap. I never thought it would happen. But it has. 

Consumerism begins at home

Room upon room of vacancy I’d never known before has become progressively populated with a wild variety of soft furnishings, musical instruments, a pool table (god, I love my pool table!), cat toys and all manner of utilities I never felt the need to own before, but now I have space for them I feel compelled to buy, buy, buy.

Addicted

I’ve never spent so much time on ebay. It’s horrific how we are so easily swayed by the marketing machinations infiltrating our new life. I work in marketing for god’s sake, I have done for years, and I still can’t resist the betterware catalogues and virgin wines vouchers and 30%-off B&Q mega deals on bank holiday weekends.

But, despite our recent ravages on the bank account and sometimes silly luxurious buys in jubilant honour of our new existence, I’ve started to notice that these things actually give payback. Well, kinda. What I mean is, the more time I spend at home, around my cluttered ensemble of shiny new products, the less money I spend in every other facet of my life.

In the box-room in Camberwell there was the chance to furnish it with lovely items but it was so cramped we felt the need to escape constantly. So we would be out with friends, in the pub, in restaurants, at gigs, away for the weekend at every opportunity. That makes your life bloody expensive. Especially when you’re already paying the best part of £1500 a month on rent.

Now, I may have just forked out £99 on a fancy bashed-metal circular table-stand but I will happily sit next to it for years to come, resting my cup of tea on it while we kick back and eat a good cheap meal at home, watch TV, chat with friends and play with the cats.

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Welcome to the cheap seats

As we’re spending so much more time at home these days, life has actually becomes incredibly cheap. I used to crush £150 on a regular weekend. Easy. Sometimes a lot more. Now it’s £30, if that. We do very little, and we love it. We hang about the house, have a few beers in the local pub on a Saturday night or go to a neighbour’s house for a party. So the payback has come thick and fast. And keeps on giving.

In all honesty, we need to trim back on both. I don’t really need stuff like the bashed metal table to enjoy my time back at base. I could be living the home life AND saving more cash to shorten my journey to retirement. But hey, one step at a time.