Simple Pound

People, it gets more and more depressing to write these end of the month reviews. Net worth down 5% this month. That’s huge. I think I have abandoned the whole “delayed gratification effort” for, well, instant consumption. On the other hand, I have taken up an old hobby again that I haven’t had time for since I first went to University - horse riding. As you can imagine, it’s eating up my cash faster than I can earn it. But you know what? I’m not going to apologise. I’m having fun, I’m enjoying myself and I was so happy while cantering through the countryside - I decided it was worthwhile.

Nevertheless I have been spending a bit carelessly recently (birthday week, what can a girl do?) and much of that cash went to unnecessary expenses like drinks, nights out, cabs home - you get the picture. Oh and there’s shoes. Gorgeous shoes. I blame Karen Millen

This is probably the point where I should say “It’s all going to change”. Well, I’ve tried that before and I’m not convinced it’s worked yet. I’m on it, wish me luck.

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One thing is for sure - reviewing last month’s financial odyssey is not going to be fun. On the other hand, I suppose I should be thankful for keeping such a close eye on my money since otherwise I would have never noticed the appalling truth. Or learnt from it. My point is:

I am now worse off than three months ago.

Despite three months’ salary and pension contributions my net worth is below the March level. I’m absolutely shocked and even a little unhappy since I enjoy seeing the progress bar increase (as opposed to decrease by nearly 2% this month)!

At least I have a pretty good idea what led to this fiasco: an orange coat, a digital piano and a trip to the Caribbean. In hindsight, would I commit these “sins” again? Maybe, yes and yes. The coat, I fully admit, was an impulse buy and a very expensive one at that. Yes I needed a coat, but no it didn’t have to be that one. On the other hand, I still love it as much as I did the minute I walked out of the shop with it and have so far not seen a single person (other than me) wearing it. In a city like London that’s pretty impressive

My piano purchase was an even larger expense than the coat and by no means an impulse buy. In fact, since leaving home I had told my parents I would take my piano with me as soon as I had finished University and had a permanent place to live. Unfortunately it turned out to be prohibitively expensive to ship an item like a piano from Germany to the UK. Hence I decided to get a digital piano in the meantime so that I could start playing (and practising!) again after having not touched a single key during my undergrad studies. The model I ended up getting was only half as much as the Yamaha Clavinova I had set my heart on previously and I got it for £100 less during an end-of-season sale. Regrets? None.

And finally, my holidays. One week on Grenada, a tiny little Caribbean island just north of Trinidad and Tobago. Flights and hotel together came to just over £400 and despite regular dinners out, numerous activities on the island and a day at a local spa, the holiday was definitely on the cheap side. Considering it was the Caribbean anyway Again, I don’t regret this trip at all. On the contrary, I would have happily stayed and travelled much further and for much longer than I was able to. The numerous once-in-a-lifetime memories made it worth every penny.

Regardless of whether I consider this money well spent, it’s time to stop. I am basically exactly where I was three months ago, so for the next quarter I will need to curb my spending in order to get my growth and progress back on track. Given that the house market is still in a pretty bad place, I probably won’t need my deposit money for at least another six months. But by then I definitely will need to have accumulated enough to make this (temporary!) backdrop in net worth unnoticeable.

If you have kept a close eye on my progress page you will notice that I redistributed some of my money between the various goals. I depleted my emergency fund in favour of allocating more money to the house deposit and I also shifted more money into the account intended to cover the outstanding bill I have with my parents. The latter is now fully funded, while my deposit has grown to 70% of my initial goal of £20,000.

Given that we’re halfway through the year, it’s once again time to have a look at how well my budget is working out. The good news is that my interest income reached 73% of my goal for 2008 by the end of June, indicating that my savings are working hard for me while I sleep This is even better news when you consider that this goal was revised upwards twice already this year: from £200 to £300 to its current value of £600. I decided to change it once more to £750, which is definitely fairly ambitious given that I received the interest from a fixed one-year term monthly saver account when it matured in June (hence half of that interest was technically already earned last year).

In the interest of brevity, I will only list the remaining changes to the budget (since I don’t deem them noteworthy enough to dedicate an entire paragraph to each):

• Utilities: new category with £350 since it took our utility provider more than 7 months to get our bill sorted and we hadn’t paid anything until they finally managed to get organised
• Landline: slightly up from £90 to £100 based on usage
• Mobile: down from £220 to £180 based on usage
• Groceries: slightly up from £1,400 to £1,500 - inflation is kicking in
• Dining out: down from £1,000 to £900 to accommodate the increase in food prices
• Clothes: up from £1,000 to £1,200 with the best intentions to undercut it
• Gifts: up from £750 to £1,000 (I’m too generous for my own good)
• Hairdresser / Manicure: up from £500 to £600
• Drinks: pooled with the Category “Clubbing” hence total down from £250 to £200
• Cinema: up from £50 to £100
• Health Insurance supplement: up from £60 to £65 - I blame the bad £/€ exchange rate
• Gym: Down from £360 to £150 because I cancelled my membership
• Contact lenses: Up from £200 to £500 as an eye infection forced me to change my prescription to the more expensive daily disposable lenses
• Life Insurance: Up from £900 to £950 due to £/€ exchange rate
• Broadband: Down from £100 to £90 as we are on a fixed subscription
• Charity: Up from £120 to £150
• Planes: Down from £900 to £800 as my one major holiday is already accounted for
• Holiday Accommodation: Up from £300 to £500 due to major naivety on my part (initially)

That’s all from me for now. Progress page and “Best Of” section have been updated as usual.

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It’s June 1st and that - as usual - means it’s time for reflection. I haven’t posted much in the last half of the month as I’ve been struggling with some issues at work and needed a lot of time to reflect on non-financial issues. The good news is that I’ve got a new series in the works that will hopefully be useful to many of you, but more on that in a separate post…

Overall the May results aren’t too bad… an increase of 3.67% in net worth translated into a 1.5% step towards my next net worth goal. The stock market didn’t do too badly and hence both my pension and life insurance were up. Those developments, however, are masking the fact that I have dipped into my deposit savings to fund my piano purchase.

The good news is that it didn’t have too bad an effect on the “bottom line” but on the other hand it’s forcing me to live paycheck to paycheck at the minute. The reason is that I haven’t fully funded it using savings, but paid for it using my credit card (for those reward points!) - hence most of my salary that isn’t already allocated to fixed costs (rent, utilities etc) goes towards the credit card payment.

For the last two months it has always been enough (just!) to cover the total so I wasn’t forced to carry a balance (yet?). My aim now is to drastically reduce my spending to get back in a position where I have money left over from my previous paycheck to go towards the bill.

I guess the fact that I’ve just paid for my summer holiday won’t necessarily help with next month’s bill either… *blush* But hey, blame the British spring and the miserable weather it has brought with it ! Who doesn’t need a little bit of sunshine to compensate??

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I’m running rather late with my end of the month review for April and I’m pretty sure I know why - the stats for this month have been rather disappointing. I’m nowhere near the targeted 0.5% asset increase this time as yet another major purchase has led to an asset decline of 1.30% which in turn reduces my net worth figure by 0.83%.

However, the “major purchase” is now sitting in my study in the form of a digital piano - the Yamaha P140S and I’m still convinced that (a) it was worth it and (b) I got a good price for it as it was reduced by more than £100 from its RRP and hence cheaper than any other quote I could find (including Internet shops…). I will probably have to use some of my savings in order to pay off the credit card I used for the purchase, but I’m hoping to reduce that to a minimum and instead fund it out of my regular salary by simply cutting back on other excess.

A few other things contributed to my negative net worth result this month: most notably a trip “up North” to Harrogate for my friend’s wedding which set me back about £300 in total (2 return tickets plus hotel). It was obviously more than worth it and I wouldn’t have wanted to miss it regardless of the expenses attached.

The only good thing to report is that my miscellaneous income is still rising, mainly due to a steady increase in interest income. My expectation for this year has been raised from £250 in January to about £600. Barclays have finally managed to open my cash ISA for this tax year. Luckily it’s only taken them about a month (*sarcasm*). But when I enquired about the progress of my application I was told (without having to ask) that interest would be credited to my account from the day the application was made - despite the cheque only being cashed 4 weeks later! This effectively means that I will have earned double interest on the initial amount I deposited…

That’s all from me for this month. I’m hoping to have a much better net worth result for May, even though I’m not 100% confident I’ll be able to achieve this as I won’t have much opportunity to increase my savings as a result of having to put all my income towards April’s purchases… Keep your fingers crossed!

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By now we are half way through April and this is probably the least-timely monthly review I’ve ever written and published here. It feels strange to still be dwelling on March when it’s nearly time to think about the April review. The main reason this review has taken its time is that I wanted to re-publish my net worth progress bar on the front page which got a little messed up after I updated the site’s theme. I still haven’t sat down to look at the code again, so I’ve decided that the review should really not wait any longer… The progress bar will come up soon though - I promise

I was a little worried about the outcome of this month’s review as I had set myself a fairly ambitious goal last month by proclaiming that I wanted to increase my net worth to 40% of my overall net worth goal. This 1.5% increase over last month translates into a fairly substantial increase of assets (~ 4%) I would have had to achieve in order to meet my target.

The good news is - I did it I saved aggressively last month and also had a decent amount of extra income (blog, Easter presents) which means that I can proudly announce an asset increase of nearly 9%! Overall, I’ve achieved 42% of my net worth goal! To be honest, I was a little surprised how well last month shaped out, so I made sure to double-check all the numbers, but it appears to be true. I’m - understandably - very proud of myself.

Unfortunately, April’s numbers are very unlikely to be anywhere near as good. The reason? Well, mostly the shopping therapy I’ve engaged in since the last time I recorded my net worth figures. But that coat was just so gorgeous and earned me a lot of compliments already… somehow I think that makes the price tag more acceptable. While this is obviously delusional, I’ve always adored Karen Millen outfits and I’ll probably always will. I guess the lesson learnt from that splurge was: “Stay away from Selfridges”.

But don’t you agree it’s gorgeous? Yes, it’s not as important as buying a house and it’s certainly not helpful when trying to save for the deposit of such, but it’s just … sigh.

As usual, I have updated the Progress and Best Of pages - but then you knew that.

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I can’t believe it’s been another month. Admittedly a short one, but a full month nevertheless. In any case, the upcoming review was a good opportunity to sift through all my receipts from my trip to Malta a week ago and categorise them as usual in my oh so beloved spreadsheet.

The financial end result of that rather lengthy exercise was a decent 2.46% increase in my overall net worth which translates into a 1% step towards my next goal (as shown in the progress bar to the right). While this is certainly not bad at all, I have decided to grow my money a lot more aggressively than I used to. I’m currently saving 10% of my take-home pay at most, which is just not good enough if I’m seriously considering the purchase of a flat in London in a year’s time (and I am). Hence next month’s mission will be to bring my net worth from 38.5% to 40% of my current goal. In order to do that I will have to save at least double of what I used to. Wish me luck…

I have also taken the opportunity to review my first budget and check how well it actually reflects my needs (and wants!). This was part of an exercise to figure out where I could save more and spend less than originally thought. In the process, I have made the following adjustments:

• I have doubled my expected interest income as my original estimate was a far too conservative. Based on the initial figure, I would have managed to earn a year’s worth of interest within the first 4 months. This wouldn’t really encourage me to save more (since I could have comfortably met my target just by keeping my existing savings) and hence I have made it a little more difficult for myself. The reason I haven’t tripled it (as you would expect knowing that my initial figure would have been satisfied after 4 months) is that I expect the Bank of England to reduce interest rates further which in turn will eventually reduce the savings rates available in the market.
• I have increased my phone (i.e. landline) budget by £10 as I hadn’t really budgeted all the phone calls I would have to pay on top of our free evening & weekend package. Most of those additional phone calls are used up when I speak to my parents abroad, which is an unavoidable expense as I am fairly close with my family at home.
• My household budget was reduced by 20% after I realised that most of our major expenses for the flat should by now be dealt with and there was no need to mirror last year’s expenditure.
• The budget for council tax was increased slightly to allow for a potential rise in the rate that may or may not happen - better save than sorry.
• Based on the last two month’s pattern, I have increased our food budget by 20%. There are two things in life that I don’t really like to compromise on - one being how well I sleep at night, the other what food I eat. If our spending suggests that we need roughly £240 to £250 a month then so be it.
• I’ve reduced my clothing budget by 33% and even though this means I have overspent in the first two months of the year, I think it shouldn’t be too difficult to cut down there in favour of knowing my flat’s deposit is happily growing. Even after the cut, the budget of £1,000 is still fairly generous and should accommodate any major shopping spree
• My gifts budget was increased by about 25% as well given the amount I have spent in this category in the first two months of the year. What can I say, I’m just too generous

That’s it for this month’s reflections. As usual, I have updated the Progress and Best Of page for your information and entertainment…

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