Archive for September, 2008

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Budgeting for Beginners

September 30, 2008

It became apparent to me a few days ago that a person I was speaking to had little to no idea how to budget. And I was surprised. Very surprised. And this is because budgeting is actually the easiest thing in the world.

Here’s the theory. If you’re on a salary, or regular waged hours, then you have  a fixed income. And that’s a good thing in budgeting theory, because you always know exactly how much you have to spend. The scheme is that every payday you take this amount and subtract your fixed costs. These will usually include accommodation, utilities and food. Everything left after you subtract the fixed costs from your fixed income is what they call “walking around money”. Simple, aeh?

How I manage my own budget and easily work out my walking around money is to run the old two-bank account scheme. In this scheme you have one bank account into which your income gets put. Then you have a second account that your fixed costs come out of. The trick is to have an autopayment that goes out of your “income account” and into your “costs account” on the same day as your pay. This means that your costs get yanked out of your spending money before you even see it.

Or put another way, everything in your account on payday is spending money!! Or… savings. But that’s another issue. Let’s just get out bills paid on time first of all.

The only problem with this scheme is that not all costs are actually fixed. The mortgage or rent is usually the same every week, but things like power and food bills vary from month to month. What I do then is to guess roughly how much the utilities will be, and get the autopayment to cover that amount, plus a little more. I do the same with food. After all, the costs account is only there as a holding account. If there’s heaps of excess money I can always recover it.

The only worry with this system is that I might draw more money out for say, a christmas food bill, than I have in the account. But really the question there is checking on how much is in the account just before the accommodation costs are drawn out, and making sure the rent is covered. For power bills, just check how much you spend in a particular calendar month and set aside a little more than that amount for the same month this year.

If you’re just plain bad with over-spending on food bills, or the power bill fluctuated wildly, then run three accounts. One for spending, one for accomodation, one for non-fixed costs. That way if the food and bills account is in trouble, you’ve still got a roof over your head.

The good news is that if you’re reading this site then you’re probably interested in making sure that you don’t wildly overspend…

As I say, this system has worked for me for years. Having the rent and bills removed early means I know exactly how much walking around money (read: pub money) I had. As long as I didn’t blow the whole lot on wine and loose women I could always chip a little more money into the costs account if it was running a little low. And likewise, if the costs account was consistently in credit at the end of the month I’d draw a little out as a reward!

Ok! Questions!

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Family history and fatherly advice

September 29, 2008

Sorry for the posting pause. My daughter is visiting for the Oz school holidays, and Dad came to stay for a few days, and what with one thing and another a coherent post didn’t make it to the top of the to do list. (And that Che fulla is just not pulling his weight).

While Dad was here we talked about this whole frugality business. My grandparents were all working class and frugality was a necessity, not a lifestyle choice. My parents were likewise careful. Mum made our clothes when we were little, Dad had a huge fruit and vegetable garden, there were home-made preserves, home-brewed beer, and a hard-nosed approach to every major purchase. So I thought that he would just approve of my new-found commitment to frugality straight away, for the ancestral habits are frugal.

But no. “What are you saving for?” he asked. And then he pointed that he and my Mum saved most of their adult lives, and just as they were beginning to be able to relax and enjoy, she died. In retrospect, he thought they might have been happier if they had spent more and scrimped less.

That is something I have been mulling over ever since.

  • Frugality preserves my independence. In highly-paid jobs there is the concept of “fuck you money”, which is the amount you need to be able to walk whenever you feel like it. Highly-paid or not, saving is the only way most of us will ever acquire fuck you money.
  • Frugality is a moral choice to take no more than our share of the communal resource.
  • Frugality is the best insurance against adverse circumstances: practising it increases my capital while decreasing my wants.
  • Frugality frees me from keeping up appearances. I am not shabby. I’m frugal. (OK, I’m shabby AND frugal, but you know what I mean).

Those answers deal with the criticism “you can’t take it with you.” It’s true that my savings are useless to me when I’m dead (although they’ll be damned handy to my family), but it is the act of saving as much as the result that provides the rewards.

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When you’re starving, buy a bag of sugar

September 24, 2008

What is the cheapest staple in the supermarket? We took notes today. I looked for the cheapest brand, and the best price per unit. Food values obtained from labels, or the Food Standards Authority. Yes, I accounted for the banana peel (by weighing a handy test banana; didn’t have a taro to hand, sorry, and you can eat kumara and potato peel if you scrub them).

I’ve sorted this table by price. I reckon if you sorted it by nutritional value, it would pretty much be reversed.

Food Weight (kg)
Price ($) Price/kg kJ per 100g kJ per $1
Kumara 1 3.98 3.98 335 842
Banana 1 2.48 2.48 229 923
Taro 1 3.98 3.98 469 1,178
Brushed potatoes 10 9.98 1.00 263 2,635
Rolled oats 0.75 1.98 2.64 1590 6,023
Pasta 0.5 0.99 1.98 1530 7,727
White rice 1 1.85 1.85 1470 7,946
Standard flour 5 6.48 1.30 1450 11,188
White sugar 3 3.00 1.00 1600 16,000

And we wonder why poor people are fat.

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School holiday bleg

September 22, 2008

So the hols are upon us. Bored young minds must be kept entertained. Preferably, of course, for free (or at least very little).

On the agenda thus far:

  • Weta Cave
  • Baking
  • South coast walking
  • Te Papa (again!)
  • Reading
  • Exploiting child labour in the garden
  • Ditto in domestic chores
  • Art/craft project

What have you got up your sleeve?

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What do they take us for?

September 21, 2008

Fools.

That is what they take us for.

… A sachet of cat food is 59c. A box of 6 sachets is $4.03! Not just a little over $3 which you might expect but 49c more than six individual sachets! But wait, it gets worse. A box of 12 sachets is not a little under twice the price of the box of six but actually $8.10! Which is not only worse than buying two boxes of six but even worse still than buying a load of singles. This makes no sense to me. Can anyone please explain to me the logic here?

This has been another installment of Simple Answers To Simple Questions.

(also, foolishness is an inexhaustible commodity).

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Visit the Knack Market!

September 17, 2008

This came in from Giovanni, and I thought I’d promote it up to a post. I’m working on Saturday so I’ll miss it, but any reports are welcome:

…a couple of people talked about bartering, and I mentioned a Newtown exchange market in the process of being set up.

I can now confirm that the organisers will take part in the Knack Market this Saturday, 9.30 to 1.30 at Berhampore School, 105 Britomart Street, Berhampore, Wellers.

They’re going to have posters where people can write down what they’d be willing to exchange (things, time, knowledge) and share ideas – it’s a pretty cool setup. I realise I’m also shamelessly pimping the craft market itself, but it’s a school fundraiser and it supports local crafters so I don’t feel so bad.

Shamelessly pimp away man. The more local people not buying stuff from off-shore people being paid $2.50 an hour, the better.

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Supermarket survey: P & S still cheapest in Wellington

September 17, 2008

Via the NZ Herald, we learn that Consumer magazine has done another survey of supermarkets. Pak’N’Save are the cheapest in Wellington still, though interestingly, not in Auckland.

The Consumer survey checked the prices of 15 staple items, including milk, bread, cheese, rice and wheat biscuits.

It left out popular brands like Weet-Bix and Wattie’s Baked Beans, going for the cheapest brand on offer in each item. That meant buying Budget brand at New World and Pak’nSave, and Home Brand at Foodtown, Woolworths, Countdown, SuperValue and Fresh Choice.

When there was no house brand item available, the next cheapest item was picked.

In Auckland, Woolworths ($37.33), Countdown ($38.24) and Foodtown ($38.57) were the cheapest places to buy, followed by Pak’nSave ($40.11), New World ($40.36) and The Warehouse Extra ($41.51).

Pak’nSave was the cheapest in Wellington and Christchurch, where the same basket of goods cost $36.80 and $37.75 respectively.

Of the 15 supermarkets tested in the three centres, the most expensive was New World in Wellington’s Wakefield St, where the basic basket cost $46.58.

Interesting that Wellington is cheaper than Auckland. That was not my impression when I moved here 2 years ago.

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Followup: sugar, and making things from scratch.

September 14, 2008

I see we had a very informative comment from Mellopuffy, who has solved two mysteries. In comments on this earlier post, Able Commenter Weka linked to the Food Cost Survey published by the Department of Human Nutrition at the University of Otago. That prompted a long but inconclusive discussion. What did that 400g of sugar per week mean? And second, why are some of us consistently spending far less than the survey suggests is normal?

Mellopuffy writes:

I just went and had more of a squizz at the info pack – the sugar is the amount included in all products that would be consumed over the week (including processed foods, any biscuits, baking, ice cream etc.). They have used the food groups discussed in the Food & Nutrition Guidelines (e.g. breads & cereals, fruits & vege, protein sources, dairy products) to determine a balanced diet for the average person per week, then done a breakdown of the foods themselves to determine how much of the basic purchasable constituents would be required to make these up (I think the milo is included as a commonly consumed caffeine free hot beverage). So the 400g for an adult man would be spread amongst all foods containing added sugar (as well as discretionary intake such as in cuppas). It might seem like a large amount, but processed foods do contain a lot more sugar than many people realise and many NZers think nothing of including cheap ready made items in their grocery baskets (as is evidenced by the food item suggestions included in the report). If you’re baking cakes muffins, biscuits or muesli bars at home, many recipes include around a cup of sugar or equivalents (approx 250g) per recipe.

I do think that where many of the commenter’s savings are being made is via the ‘making from scratch’ ethos. The Otago study will be coming from the standpoint that this behaviour is not the norm in contemporary NZ society. Indeed, they refer to the Basic category as one in which people prepare all food at home, yet the shopping suggestions for meeting the budget in this category still includes bought crackers & biscuits, ice cream, basic pasta sauce etc. I don’t see anything particularly ‘disturbing’ in this, just that the study aims to reflect patterns of food consumption as they currently exist across NZ society. Also, for Nutritionists & Dietitians to make effective recommendations and suggestions about food related spending, recognition and accommodation of these habits is more effective than issuing instructions that someone who’s never baked in their life (and doesn’t have the time to either) should start making all their own bread and bikkies in order to be able to eat affordably.

If any other commenters want to write gargantuan, fact-packed comments that save us the trouble of composing a post, please do.

[Editorial from Che: In fact, if you want to write a fact-packed post like this for our site, we welcome them, we’d like this to be a community blog.]

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Quick!! A cheese bargain

September 14, 2008

You’ll want to hurry down to Wellington Central New World ASAP to purchase 900g of cheese. They’re only $8.99 and on special.

You won’t find a bargain like thatr for awhile.

Likewise, Palmolive liquid soap is $4 off.

These are good things.

Even better, you can buy New Zealand oranges at the Waitangi Park Markets for as little as $1.60 per kilo, and tomatoes for $4. They have green apples for less than $2 a kilo.

It’s also a beautiful day outside, so get on down there before it closes (you have half hour…)

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How to Survive Rarotonga on $300 a day

September 12, 2008

My main motivation for trying to be frugal with money is so I can enjoy life a little more. If you’re a spendthrift then you’ll doubtless be doing the same, but with the added dimension of significant stress around VISA time…

The partner and I just got back from a week in Rarotonga, and, well, it wasn’t all that thrifty. But there is a very good reason for that. Second Chef (my partner) is heavily pregnant and we just needed things to be easy. Consequently we stayed at the Rarotonga Beach Resort. As I say, not so thrifty. We did do the math though, and with the travel agents offering resort packages the costs were kept down significantly. If you factor in all the freebies the resort includes (like the three breakfasts I ate every day, alleviating the need for lunch… yay for buffets), then it’s expensive but not too bad.

So how did we cover costs? No mortgage. This means that we save a fair amount of money ordinarily. It also means no stress trying to produce 70% of our incomes each fortnight to pay huge interest on an asset we could rent from someone else for half that.

What we learned though is that the next time we take one of these trips we’ll be armed with information to really save money on a holiday in the islands:

  1. get your driver’s licence and hire a scooter to get about the island. the buses are reliable, but when you can have a scooter for as little as $80 for 6 days you’ll find the costs are comparable. All in all petrol cost us $12, less than two return tickets on the bus ($14). We did this, and it was worth it, if not only for the convenience. Or, hire bicycles for about the same.
  2. stay in a bungalow and halve the cost for accomodation. A hotel can cost $250-300 per night, but a bungalow or bach can be found for as little as $125 per
  3. book your airfares months in advance, and half the cost
  4. try to land on the Thursday flight, and buy your food for the majority of the week at the markets on Saturday. We got a kg of lemons (for drinks), and 2kg of tomatoes for $3. $3!! These sort of bargains abound, but you need your own kitchen (hence the bungalow)
  5. don’t plan to do anything on the island except laze about, swim, read books, and eat pawpaw. Everything else is expensive (mind you, it’s actually cheaper to go diving there than it is here)
  6. buy your own snorkling gear from the Warehouse for very little
  7. don’t go in for the tours, they’re mostly just charming and witty bullshit (we did get to listen in on a couple at some locations). Buy/borrow a guidebook and you’ll get the same information
  8. cook for yourself. The range of ingredients is very similar to New Zealand, so you shouldn’t be too much out on a limb there. Any bought meals cost a minimum of $40. You’d have to be spending like a drunken sailor to spend more than that on ingredients even at the very small local stores.

And there you go. Some tips to enjoy an exotic South Pacific Island holiday, on significantly less than $300 per day, and all on your savings from not owning an albatross like a mortgage.