Posts Tagged ‘savings’


Generating your own power – Wind

January 13, 2010

So, Wellington is a windy place, right? And if we’re flat out interested in energy efficiency we can go a step further than merely buying low-watt bulbs, or turning off lights when you leave the room, or putting on socks instead of turning the heater up, by generating your own power.

This old idea absolutely fascinates me.

What I figure is this. My household used around 6400 kWh of electricity last year, and that amount was elevated on account of washing nappies and running a shallow bath for the wee man every day (it was also an extremely cold winter). This means that we run and average of about 18kWh through the meter every day. Fortunately we’ve been in an apartment all year, with decent insulation, hardly any windows, and no real drafts. All the same, if I could have found a way to knock down the power bill I would have. After all, the ~$1600 we spent is nothing to sniff at, right?

Not being anywhere near running water (although we could have cheated and run a small hydro scheme in the bathroom, with all that free potable water the city provides), our options are pretty limited. Ignoring the fact that we’re in the apartment (the move to the suburbs impends), we can either run a wind turbine, hang some solar panels out for all those sunny days – I’m not joking there, Wellington has more sunshine hours per year than Auckland – or perhaps set up a bicycle with a generator (you can get up to 300w per hour, not bad really).

So I started thinking seriously about wind, and to my surprise it actually seems financially viable. The first thing I did was consider the resource. Why opt for wind?

Well, Wellington is a windy place. Using the handy table generator over at NIWA I was able to download a table containing daily windspeed and wind direction at the Kelburn station for the years 2000 – 2008. The figures I obtained were very similar to those presented at Wind Finder, with average windspeed siting around 16 or 17 metres per second year round. With the NIWA figures I drew up the following graph.

Windspeeds Wellington, 2000-2008

What this fancy box and whisker graph tells us is how strong the majority of Wellington’s winds are. As you can see, the boxes (which mark 50% of all wind) consistently sit above 10m/s or 36km/hr. Now with most models of wind turbine requiring a minimum of 2.5m/s to activate you’re going to think you’ll have no trouble with an idle fan.

In fact, the more I investigated it the trouble with Wellington isn’t so much the absence of wind, but the abundance of it. Many turbines are rated to hurricane+ speeds 60m/s, and the windiest it gets here is a little about 40m/s (about 140km/hr). But that amount of very high wind actually places a fair amount of stress on a turbine, something we’ll return to.

So. How much power can all this lovely wind generate for us?

The short answer is that it depends on the model. As I said, our power consumption was around 6400kWh last year, well below the ‘typical’ consumption of 8000kWh. This means we’d need a turbine that could make a decent dent in that usage, and drop it low enough to make the savings offset the cost of whatever turbine we need.

It was then I started phoning power companies, and what I discovered was very interesting. There seems to have been a slight shift here in New Zealand and the companies have started allowing what are called ‘import-export’ meters. What this does is allow you to import power from your local supplier. But, if you have a generator, you are also allowed to export power back out to the grid! Awesome. In principle this means that if you have a turbine going, and nothing switched on in the house, you can actually watch the metre turning backwards. Then when the metre reader turns up, hey presto! They might actually owe you money!!

Naturally… it isn’t that simple.

The first people I emailed were Contact Energy, who eventually informed me that they’ll buy my power for 17c a kWh. And they’ll also sell me power for whatever the cost of my plan is. If this is 17c then great. If not, then I lose a little.

The next people I spoke to were Meridian, and they informed me that they don’t bring in cost. They have a 1 for 1 approach, where my kWh is taken off the meter directly. And that I found pretty interesting. Essentially, If I have a 26c per kWh plan (which is what we’ve been using), then I’m ‘saving’ 26c every time my turbine generates a kWh.

At this point the calculations started. What’s great about wind is that it can potentially generate power 24 hours a day. You can be lying in bed at 3am and know that all the fresh air out there is making you money. Even better, it averages that production out across the entire year. You can run the meter backwards during our windy summers, and forwards during the power-hungry winters. The trick of course is getting the right sized turbine for your place.

So, how big to go? Turbines, like anything, come in different sizes and quality. Wellington being Wellington I figured we’d need something pretty heavy duty, otherwise maintenance would become an issue. And if we have to maintain we lose our offset costs to a repairman. Worse still, we might have to replace it.

One turbine I saw was a 1.25kWh job. Designed for the Shetlands, and looked like it was built by Soviets.

So let’s say we get around about 80% efficiency per day (perhaps it isn’t windy enough all day, or it only runs slowly). This will turn out around 25kWh, and a whopping 9075kWh annually!!

This is though, from looking at our wind graph above Wellington has wind in excess of 5m/s over 95% of the time, so we can pretty much guarantee ourselves the 80%. The sensible thing then was to work out the appropriate sized turbine. What I did was compare 4 different sizes: the big 3.5kWh boys you’d use if you lived out on a lifestyle block (but still had connection to the grid), the 1.25kWh job, and a more modest 1kWh and 800Wh models.

Potential kWh generation from wind turbines - Wellington

As you can see, the amount of power generated can be pretty big. The totals for each model are:

  • 3.5kWh – 25410kW
  • 1.25kWh – 9075kW
  • 1kWh – 7060kW
  • 800Wh – 5808kW

Which leaves me wondering – assuming my calculations are correct (and I stand to be corrected), then a modest 800kWh turbine could be just the thing. The price should come in under $10k, and the savings at the current price of electricity (taking into account the almost 6% annual rise in power we’ve been experiencing), I should be able to recoup around $1400 of my power bill per year.

That’s a pretty snappy repayment. Perhaps 6 or 7 years, and far better than solar power.

And at that, I have to admit why I wouldn’t do it.

For starters, getting council approval for anything even the tiniest bit unusual in Wellington is, by all accounts, a freaking nightmare. Most turbines need to sit on a 10 or 15m high pole, and that’s something every NIMBY in the world will complain about. But assuming you actually get the thing up in the air, and enjoying all that sweet, sweet free energy?

Noise. Turbines are really seriously noisy. Really noisy. They recommend that you don’t have them within a 100m of your dwelling to be on the safe side. Now, when you closest neighbour is likely to be about 3m away from your property line, you’re sunk. Enough complaining and the council could actually try to take your $10k turbine away, permanently.

Then there’s the noise for you. That 3am enjoyment could actually be, “WTF! This turbine is putting out 50 decibels, almost 24hours a day!” FYI, that’s the volume of a noisy office conversation, outside your bedroom, in the middle of the night.

Worse, in high speeds they can put out something like 85decibels – a fire alarm, or siren.

So maybe on the farm. Otherwise? Idea kaput.


Energy Efficiency – Why bother?

January 8, 2010

In the big news in the Tibby household stakes is our impending move to suburbia. We’re very excited, and mostly because of the requirement to make a lot of plans.

Now some would call this nesting. And they would likely be right. But! In our defence a large part of the planning concerns ways to, firstly, save money compared to living in a city apartment (our first choice…), and secondly to add value to our property (like all good New Zealand home owners).

Other than servicing the mortgage and feeding/clothing ourselves, the big cost to any household is energy – including petrol for the automobile, another post altogether. It’s important then to make sure that your place is as energy-efficient as possible. It’s a mantra the green movement has been speaking for years, and I’m well-sold on it. Not only does it assure us that we’re not being wasteful, it also ensures that we save a little money. After all, $10 a week saved on the power bill, if transferred to the right account, amounts to about $30k off the cost of a mortgage.

So in looking at this issue I started considering alternative power sources as a means to drop costs. The outcome is another post entirely, but in doing so I uncovered one big long-term reason for looking at energy efficiency – the ongoing rising cost of purchasing electricity.

Snooping around the net I discovered this handy page on the Ministry of Economic Development (MED) site. What you have there is a quarterly survey of power costs for a household using 8000 kilowatt hour’s (kWh) of power a year, around about the average for a New Zealand home. And there was some pretty interesting stuff provided in this excel spreadsheet.

The spreadsheet provides costs of electricity purchasing across the entire country since August 1999, and that’s a reasonably good time series. With a little very simple manipulation this turned up some very interesting information about power prices across the country, and how much they have changed over the decade. The first graph, below, gives us raw costs in cents per kWh averaged nationally (and yes, they include the 10% prompt payment discount).

Power Prices, National average

What’s more than clear from this graph is that prices have been increasing steadily since 2001. What this made me wonder is, how much will they increase in future? The thing about alternative energy is that once the initial outlay has been made you’re (hopefully) no longer subject to increasing in pricing – again the subject of another post.

If you consider the minimum tariff line the average household will be paying about $1800 per annum for electricity alone, a fair amount. This is especially the case if you earn close to the average weekly income of $830 (which is around $43k per annum, before tax, meaning the income in the hand is actually only $34k). In effect, the average house earning the average weekly income spends around 5% of it’s total budget on electricity. Higher earners usually have bigger houses, so they’ll also likely spend around that percentage (or more).

Now consider what prices are actually doing. As you can see in the above graph, prices trend up, as is normal. What I did then was find out the how much these prices have increased, and how much they are likely to increase in future. And I was mildly surprised.

The graph below shows both the percentage in quarterly increase in prices relative to an August 1999 benchmark. As you can see, the quarterly price difference (i.e. the amount prices change every three months) kind of bubbles along, but the cumulative cost places current prices 80% higher than in 1999 (the blue line, measured on the left axis). And that’s a fair bit. The green line (measured on right axis), shows that kWh are today costing around 23c each (whereas they cost around 12c in 1999).

Price Increases, Wellington Region only

The next thing to do was to attempt to project prices out to 2019, to see what we could be paying here in Wellington by then. To do so, I averaged the total quarterly price increases since 1999, and applied them to cost of kWh’s. When applied to the graph above I got the graph below. Of course, this assumes a constant rate of price increases close to my average – but considering the time series of data I had to work with thus far, it’s likely not far from the truth.

Future Retail Cost of Electricity, Wellington only.

As you can see, assuming a constant increase of 1.47% per quarter (the current average quarterly increase), electricity prices should rise to around 44c per kWh. This is almost 90% higher than now, and if we go back to our Joe Average family consuming 8000 kWh per annum, their bill will increase to around $3.5k!

Why I found this all interesting is that if you’re making energy efficiency savings in your house now, the ongoing saving in real terms actually increases every year. This means that as the price of energy increases – which it must – then you’re actually saving more over time, because that kWh you don’t use today hopefully won’t be used in 10 years when it will cost you almost double.

Furthermore if you’re installing some kind of energy generating device or system (the real reason I set out on this analysis), then the offset of your initial cost is actually higher as the years pass, because you’re generating the same amount of kWh you were when you installed, but saving more on money not spent. If you get my meaning.

Now the only question is how to generate that electricity… The subject of another post.


Making your own cottage cheese

October 12, 2009

Following hard on the heels of Stephen’s now-famous yoghurt-making antics, I thought I’d try out making cottage cheese, and see if the savings were enough to get me into the paper as well. I didn’t think that one would work twice, and thought I’d make do with the kind of crazy google hits were going to get off the frequent use of the word cottage.

If there is anything that makes me think of the 1970s it is cottage cheese. That and bean sprouts. But because around here we mostly stick to seasonal vegetables, getting greens for sandwiches is tricky, so sprouts it is. Likewise, with cheese being at times unreasonably expensive, cottage cheese is a good fat-and-protein addition to liven up lunches.

So how to make it? Easy. Put a litre of milk into a pot and apply heat, when it’s tipping 80-odd degrees, put one 1/4 cup of white vinegar into the mix and stir gently. The milk will curdle, and you strain the hot mixture through a muslin. And…. voila. Cottage cheese, or paneer, depending on your background.

I keep the whey and continually try to find uses for it, but let the curds cool in the fridge, mash it with a fork, and moisten it with some of that home-made yoghurt (you can’t use the whey, doesn’t work well). This makes it, to coin a phrase, just like the bought one.

And the savings. Well, I bought a litre of milk for this costing $2.09, and made 250g of cheese. 250g at the supermarket cost $2.35 the last time I checked. We’ll call that one “not a substantial saving”.

However, there are some key differences. My cottage cheese is incredibly simple to make, and is not time consuming. It is also without unnecessary packaging, and hasn’t been transported half-way across the country or world to my fridge (ignoring the packaging/transport of the milk, which I buy in bulk). Also, I know exactly what’s in it, something the me who has worked in food manufacturing knows is very, very important.

All in all you’d need decent access to a ready supply of cheap or free milk to make this one work well. But, there is satisfaction in making your own food, and in knowing that it has a low carbon-cost. Plus, you get to try celery sticks stuffed with raisins, and topped with cottage cheese! 1978 par excellence.


Greening the Nation’s bottoms

August 3, 2009

One thing most parents seem to share is dread at the cost of nappies. These things are seriously expensive, and if you chose the wrong option, then you’re talking several thousand dollars over the duration. One friend commented specifically that their grocery bill plummetted after their 2nd child graduated.

To address this dreadful expense my partner and I talked over our options before the wee tacker was born, and settled on re-useable nappies. And he being 8 months old tomorrow I thought I’d give a progress report.

In short: Not so bad.

We thought that things might become… different… when he moved to solid food, but we’ve been lucky and the reusables options has worked out well. The principle of the nappy is that it has a waterproof cover, an absorbent cloth, and a disposable liner. The liner is supposed to act as a “catch-all” that allows you to easily dispose of any offending solids. And that’s pretty much exactly what it does. You just gather up the liner and flush it. Since there are no solids heading in the wash cycle the need for a rigorous soaking/washing sterilisation process is less, and a decent warm wash followed by sunlight by kill any bacteria.

And that’s the next issue. Hot washes. We’re still tracking the power bill compared to last year, but it’s being complicated by bad billing in 2008 (a topic for another day), and this winter being so much more cold. But initial figures suggest it’s not too bad, and it includes the additional washing needed to keep on top of grubby baby clothes (feeding is messy!). Total power bill for 2008 was $1021, and this year to date is $633 (6 months). Mind you, we are only using warm washes, but it seems to do the trick, and every few months we spend a week doing spanking hot washes, just in case.

Meanwhile, costs for cleaning are not substantial. Our entire detergent bill last year was $58 (seriously…), and cost to date (January to July), is $50. That includes concentrate, baking soda (bleach), and white vinegar (disinfectant), the latter two bought from Moore Wilsons, the former from the Warehouse in 5kg bags.

Pretty good right?

But! I hear you say. But the initial cost of he nappies!! It’s a killer!!

Well, total cost of nappies including disposables (used at night or when/if we travel), is [drum roll maestro]… $602.

Compared to the cost of buying disposable nappies that is a fairly big saving. We figure the boy will run through a minimum of 6 nappies a day (not skimping and making him wear them for longer), but at least 8. A 20-nappy pack costs a minimum of $10 on special, but more usually $12. Wolfram Alpha tells me that we have 243 days between 4 December and 4 August. This gives us a potential consumption of 1944 nappies, costing us a minimum of $972. Of course this is in reality likely to be higher.

And, we can change the boy as many times in a day as we want. The most water we ever need use is the minimum setting on the washing machine, so 8 nappies or 15 nappies makes no difference. Plus, the disposable liners are actually good for a couple of washes if they have only been peed on! Another saving!

We’re thinking that we won’t have to make the outlay for the next size up nappy for several months (his growth has evened out at around 11.5kg), so the next $180-odd so a little way of, meaning that from here till then the only cost is cleaning and purchasing additional liners ($10 for 100, cost to date included in the $602).

The final word? Well worth it.


A field trip to The Reduced to Clear Store in Rongotai

August 2, 2009

Yesterday I visited the Reduced to Clear Store in Rongotai.

This shop sells short-dated grocery items at a discount to normal retail. It’s been the subject of some controversy as health professionals see it as a source of even cheaper high-calorie/low-nutrient food. (I don’t really want to get into that debate, but on their website the picture they have chosen for “kids lunches” is hilarious — a lovely healthy sandwich and a piece of fruit, misleadingly illustrating a  list of starch and sugar-rich processed foods.) Anyway, I was hoping that they might have pantry staples that don’t spoil and so on.

I have to say I was a bit disappointed. I really like the concept, and I was hoping I’d see a somewhat supermarket-like range of dry goods. But the shop is quite small, and the range seemed limited, mostly to confectionary and packaged snack food of a low-grade sort. I did see some cheap sugar (can sugar spoil? I don’t think so) but it was not markedly cheaper than the cheapest sugar at Pak’N’Save up the road. The only useful basic thing I saw there was liquid laundry detergent.

It’s possible of course that they are ramping up and that in months to come there will be a bigger range with the kinds of things I’m interested it. Reduced to Clear have a good website which describes a bigger range than what I saw. I presume it’s what’s available in their Auckland branch. The website would be even better if it had prices on it. Woolworths have all their prices on their website, New World have their special prices listed — I’d hope that a feisty upstart whose proposition is that they are cheaper would have their prices available for me to check before I leave home too.

Right now, I wouldn’t go there unless I needed to cater a 5 year old’s birthday party in a hurry. But I’ll pop in again in a month or two and see what the shelves look like then.


Squeezing out every last cent

July 11, 2009

One of the downsides of handy modern packaging is that it’s sometimes hard to get out that last little bit of something.

And this is an example. This hand sanitiser, in short supply currently because of people worried about swine flu, is no useless. This is because the level of the gel contained in there has dropped below the level of the tube that sucks it up into the dispenser. As a result, we’re out money because we can’t squeeze out those last few drops.

Now, some people would throw this away now because it is, after all, only a little amount of gel. Other more sensible people will unscrew the cap, and wait a minute or so for the gel to drop all the way to the cap end, and then use the remainder. But, that’s at least a dozen or more uses of that gel in there, and unscrewing the cap and waiting for it to trickle down involves an interminable wait when you have an infant on the changing table giving you hell about, well, anything.

So what to do?

Well, we’ve put the boffins here at Frugal Me onto this one, and we think we may well have an answer.

  1. tip the now-useless dispenser bottle of gel upside down until all the gel runs to the cap end.
  2. unscrew the top carefully, so as not to get gel all over yourself, and tip the remaining gel into the new bottle of gel you bought to replace the old one.
  3. relax in the knowledge that you probably saved 50c, while also not telling those manufacturers get the better of you.



How to Pimp Ur Ride

June 14, 2009

Kids. One things kids are not is cheap. The mountain of crap you need to keep them in all the stuff you need to keep them in is immense.

And one thing the suppliers like to ensure is that you spend a heap more than you need to.

Queue: the introduction of the Mountain Buggy, Urban Elite.

This is a pretty good pram. There’s one on TradeMe as I write this selling for $310 (with two bids). It has a lightweight frame, a mobile from wheel, sunshade, rain cover, nice wide berth and high riding position for the baby who is both urbane, and elite.

Brand new they retail for around $800. Which I would not pay. And not only because the website makes me a little sick in my mouth… But because it is daylight robbery.

Second Chef, bless her frugal heart, found this buggy in a second-hand place for a whopping… $50. The only trouble is, it needed a little love.

But a whole lotta love we got. Number one issue was that the canvas on the seat area had started to give way, and the metal frame of the sun cover had worn through. So, we got in touch with the very nice man at Hurry Up Shoe Repair in the bottom of the State Insurance Building. He was able to whip up some patches and have the whole deal fixed for $18, as depicted.

The next problem was that the tyres had pretty much worn down, and were likely to pop unexpectedly causing both crying and shouts of exasperation from respective family members.

So, a quick trip to Capital Cycles, and for $30 they sold us two new tyres and put them on for free.

Finally, new sun/rain covers to keep the wee guy happy, which were a whopping $90 all up…

And there we go. One pram restored to former glory for under $200.

Verdict? Excellent. The pram is larger so the not-so-small man is happier. It’s lighter so it’s easier on Second Chef. And it has an adjustable handle so those of us taller folk don’t have to stoop to push it, and it therefore preserves the back.

A win.


Reusable vs. Disposable nappies

December 10, 2008

I’m hardly on old hand at this parenting business, but I think I’ve realised the financial benefit of making sensible decisions about convenience versus cost.

The main thing, and the philosophy of Frugal Me, is to think through what you’re doing and spending.

So here’s the thing. I just bought infant disposable nappies on special from New World and they were $10 for 30. Not bad, right? $0.34 per change. But with a minimum of 8 changes a day that adds up pretty quickly.

That pack of disposals might last for three days if we were using it exclusively.

But what we have been using is these Real Nappies. They have a reusable padding that’s extremely good at catching all the liquids, and these liners that catch any solids. You chuck the liners down the toilet (they’re paper so break down quickly), and wash the padding.

In total, we were given a Top-Up Pack, and bought an Essentials Pack. In total this costs, $118, and should last until the wee tacker is around 9kg, which is a fair old way off (hopefully). Once he gets that big we’ll just replace the outer pocket, and keep using the old padding.

So how much do we expect to save? Current estimates are around $2000. The boy is only 6 days old, and that would have cost us ~$16 in disposal nappies. If he keeps using nappies at the same rate we should have paid off the investment in around 20 days. Considering that he’s going to be in nappies for at very very least a year, we’ll be saving money (even considering washing the nappies – hot water and detergent), we’re still up.


Value for money in legumes

November 30, 2008

Following up on Stephen’s post on the musical fruit, I thought I’d weight up my options on chickpeas, one of my favoured legumes.

Chickpeas are blimmin great, they’re moister than most legumes, they make dishes like hummus (one of everybody’s favourites), and spicy pumpkin and chickpea soup.

The question you have to ask yourself is, is it better to buy dried or tined beans? From an environmental point of view you’re going to go for dried. Other than the cost of heating the water to cook the legumes, the only other cost is transportation of said legume to the market in which you the consumer purchase it. Tinned things on the other hand are heavy, using more fossil fuels, and need additional products like tins to be manufactured.

So no real competition there.

But. And there’s always a but. Are they easier on the back pocket?

100g of dried chickpeas from the local New World costs $0.99, and that seems like a pretty good deal right? Even with the cost of cooking them added in, they’re still going to come in cheap (incidentally, if anyone knows the kw/h used by a typical household stovetop, I’d love to hear it. The interweb has been useless in this instance).

I took my 100g of chickpeas, soaked and cooked them, and ended up with ~230g of ready to eat peas.

In the tinned variety, you can buy 415g of cooked chickpeas from the Pams range for $1.55. That’s almost twice as many peas for only $0.56 more, right?! Wrong. Once you tip off the brine they use to preserve the peas after cooking them for you, you end up with ~245g of peas.

My shonky maths stands to be corrected, so lets run through this carefully.

  • Dried chickpeas are $0.99 for ~230g ready to eat, making them $4.30 per kg.
  • Tinned chickpeas are $1.55 for ~245g ready to eat, making them $6.33 per kg.

What this tells me is that the manufacturer has added 68% more value to their product by cooking them for you, which is lovely for them but not so lovely for you – or the environment.

And this is why frugality is so important to me. By getting it together to cook my own chickpeas I’m not only saving myself money, I’m preventing communal resources being squandered on useless commercial activity. Worse, supermarkets are full of this type of crap. Instant pasta sauce? I’m looking at you, buddy…

UPDATE: There’s an “Turkic” store of some kind in Newtown that sells pulses. Their chickpeas are $5 a kilo. This would add up to $2.15 per kilo cooked. I’d say you’re hard-pressed to find a better bargain than that.

The place is on the corner of Constable/Riddiford St, heading towards New World. Which I was.


Rough and ready reckoning

October 31, 2008

I’ve started to realise that applying a little elementary calculation is very important to my frugality practise. Over time, I’ve got in the habit of using some simple rules to decide whether something is a good deal.

Annual Savings

When I look at a saving, if it’s near weekly I multiply by 50 to figure out what I would save over a year. If monthly, by 12. And so on. I always try and think about what something is worth over time. One long black every weekday? $3.50 x 5 is 18.50, call it $20 a week; so that’s about $1000 on coffee a year. Which (are you reading this Morgue?) I would like to find down the back of the sofa. Wouldn’t you?


Do you know the rule of 72? If a sum of money earns umpty % interest, just divide 72 by that number to find out how many years it will take to double. When I do this in my head I cheat and make it 70, which isn’t quite as accurate but is close enough.

So if you have a 100 bucks at 10%, it will take a bit over 7 years to turn into 200 bucks. I always find that quite encouraging. I think to myself, well, Stephen, if you could save $500 this year (see previous rule) and invest it at 7%, then it will double in 10 years, so that $500 will be worth $1000 before you’re 50.

Hours I would have to work

I have done the maths to figure out my hourly rate after tax and expenses. So I can look at something chunky and say “gosh! I would have to work for a week to pay for that!” and then ask myself whether it’s really worth a week’s work to me.

Notice I said “after tax and expenses.” I reckon that just using your raw hourly rate doesn’t reflect the reality that tax and essential spending reduce the amount available for you to dispose of (“discretionary spending”). I got this idea from the marvellous book Your Money Or Your Life. There are copies in the Wellington Public Library.

Multiply by 25

This is a bit complicated to explain in detail—the idea comes from here—but the guts is, if you make some conservative guess about returns on savings, then multiplying by your yearly spending on something by 25 tells you how much you’d have to save to pay for something out of savings interest without running your savings down.

For example, if you spend $240 on takeaway pizza a year, because it’s your monthly treat, and you could save $6000, you could pay for all your pizza needs out of the earnings on that $6000 and still not run it down.

Help me out

Do you have rough reckoning rules that help you make money decisions quickly? What are they?

Fingerwagging Postscript

When I was at school, and we asked why we had to learn maths, we were told it would be useful in later life. (This is true even for higher maths, actually, but not many people I went to school with became programmers). However, we didn’t get very concrete explanations. I would now say if I were a maths teacher: because if you don’t learn basic arithmetic, and fractions, and percentages, and algebra, people who have learned those things will cheat you blind.

I never really cared about the answer because I liked maths and was good at it. But I do think that if you hated maths, and were not good at it, it would be really worthwhile to get a little remedial tuition now. I can’t imagine how you can make good money decisions without it, and it must be very stressful worrying about whether you’re coming out ahead or not.

One thing I did turn my nose up at was spreadsheets. A few years ago I worked with people who would model every little decision in a spreadsheet, and I used to think that was pretty naff. But now I cannot stop making them, and damned handy they are. If you have a PC (and how else are you reading this?) you can get OpenOffice for free. Learning to drive its spreadsheet component is a valuable investment of your time.