Wednesday, June 30, 2010

ERE 21 day make-over continued

I have been doing the 21 day make-over at ERE and it has been quite interesting. Lots of it I already do and other things I am working towards. I was going to post on here various posts about the make-over challenge, but I have decided to sum the rest of it up here and now, but in the way I’ll be doing it.
Day 5 talks about finding a free hobby. I’m lucky that I love to blog. It’s my new found free hobby. Whilst it’s not technically free if you don’t already have a computer and internet, since I already had those things to me it is free. Other great free hobbies are things like gardening, playing sports (after the initial set-up costs), reading etc... Lucky for me I like these things and they don’t cost me anything.

Day 6 talks about clothing. I used to be part of the buying cheap crowd. I was more interested in quantity rather than quality. Now I look for good quality (I have specific brands I have found to be good quality) and I buy them at op shops or on mega sale. You see, I have found here op shops often cost as much as what I can get things for on sale, so I have stopped going to them as much for my things.

Part of clothing for me is to eventually have a classic wardrobe. This is one that is basic, has things I like that I can mix and match easily and everything goes with everything. It is a great base wardrobe in which I will have quality clothing. I have about ½ the items I would like and won’t be getting the rest of my classic wardrobe until the clothing “I don’t like but does the job dies”. You see, I can add “fashion” accessories if I want to update, such as scarves, jewellery etc... But I won’t feel the need to as with a classic wardrobe I will always be able to dress nicely. That and the fact I am getting stingier when it comes to these things.

Day 7 is go car free. I have car fee days; lots of them. I have looked into getting rid of my car but it’s not 100% practical at this point. I am however looking at changing the car I have to a more economical one. Cars are money pits really and if you can do without, do it!

Day 8 is get engaged. Basically use your time. Find things to do, don’t waste it. If you have a hobby you are less likely to go to the shops and hang out. I used to go to the shops just coz all the time. Now that I like blogging, I am less inclined to hang out there. Between reading, blogging and taking my girls to the park or doing family things, I don’t feel the need to fill my time with mindless wanderings in the mall.

Day 9 talks about budgeting. I have a budget and stick to it. Very rarely does it get blown out. A budget is pretty easy to do once you know what you are doing. I mean the main thing is to write out your expenses and income and make sure your expenses are less than your income. Sometimes it can take a little while to work the kinks out of your budget, but it’s worth it.

Day 10 is calculating your net worth. Is this something you have done? It’s basically adding up your assets and deducting debts. The number you are left with is your net worth. Personally I do not include things like cars, household furniture, jewellery etc... because realistically these are worth not as much as we think and usually next to nothing. So if you own a house that’s worth $400,000 and you owe $290,000 on it, you have $5,000 in one savings account and $2,000 in another plus $3,000 worth of shares your net worth would be $120,000. It’s not as hard as most people think and it’s a great way to see how you are going. Do it every 3 – 6 months as part of a financial health check.

There are other ways to do it and ERE’s is different and better if you are looking at retirement figures, but if you are wanting a general guide, my way is good.

Day 11 is setting up a barter/borrow system with neighbours. It can work out much cheaper than buying everything yourself and also means you save space by not owning everything. I do this on a small scale, not structured or anything with my family. For example one of my sisters has a staple gun (and it is AWESOME!!) I have a snap machine. We’d both like what the other has and just borrow as needed.

You can do it on a more organised level and make lists of say DVD’s, CD’s, small kitchen appliances (like food dehydrators, food processors) and give them to everyone in the group so you can use each other’s things. All you need to do is establish a group and set a few rules such as you break it replace it and return it as good or better than you got it.

Day 12 establish a savings account. It is amazing how many people don’t have one. I would have thought it would be the first step for anyone trying to save money. Open an account with a high interest rate and then put money in it each week that is off limits. It is being saved, so no spending from it. Train yourself to pay yourself first or get payroll to deduct an amount and out it in savings for you. Make the account hard to access too, so no atm card to tempt you, It’s too easy to spend it otherwise.

Day 13 discusses insurance. He discusses self insuring, but I am not so keen on that idea. Mainly because in my lifetime I have had my house burn down (ok, I lived there, it was my parents house) been robbed (different house), had many friends have flood damage/fire damage etc... to their house which is hundreds of thousands of dollars to replace and the insurance is cheaper than trying to find that money to replace.

I don’t have contents insurance because my stuff can be replace by freecycle/opshops for next to nothing, so I do not see the point in it for me.

As for car insurance, last month my husband caused thousands of dollars worth of damage to our car. It truly floored me the quote. Thankfully my insurance covered it all and it was not even 10% of the quote. So personally, it’s not something I will give up. I have also been involved in a hit and run plus various accidents in friends cars, so it’s too risky not to have it for me. That said if I had a little bomb that was not much to replace I would only have third party insurance instead of comprehensive. It all comes down to what things cost you and how much you are willing to part with if/when something goes wrong.

Day 14 is about investing for retirement. This is obviously a good idea. I don’t believe in superannuation. You put your money away for years where it’s not really working for you and retire on not much OR you could use that money to invest whilst young and reap the rewards much sooner. It is up to you what you invest in, but the most important thing is to learn as much as you can about your options, how to do it etc... Knowledge is power.

I’ve discussed my investment plans on here before which mainly revolve around property. But just because I am partial to that doesn’t mean it will suit you.


Stay tuned for my overview of the last 7 days.

4 comments :

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  3. Your right about op shops, alot of the time it is cheaper to buy something new thats on sale. If you get a few 'staple' wardrobe items it can last you a long time. Swapping clothes with friends is good too, because it's like having something new, and you can swap back again :)

    I also use excell to set up my budget for the whole year, I like to see where my money is and how little purchases will affect it in the long run. It's motivating to see how much money I will have by new year if I stick to my budget.

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