Thursday, 12 March 2015

Update on The Year Of No Superfluous Spending

A scary statistic heard by hubby on the radio yesterday has my mind ticking away again.
Apparently, in the year 2000, the personal debt level for every man, woman and child in Australia was $50,000. In 2015, this has doubled to $100,000. This is mainly due to spiralling house prices in most of Australia. For example, in my state of Victoria, I found a report stating that the median house price rose 162% between 2000 and 2010. And in the last five years, they have kept rising. The average wage, meanwhile, has increased by approx. 20%, if you're lucky, in the same time frame. 
Eventually the bubble has to burst - and I want my financial situation to be as secure as possible when it does.
Hence, my focus this year on saving. 
I am going back to the basic premise of this book.

So simple, it is amazing we all haven't worked it out for ourselves! Anything you buy, you are trading the hours of your life it took to earn the money. So logical! So saving money is like earning a higher income, with the benefit of not paying tax on it. A win, win situation! 

One of my goals has always been to save enough by my actions at home that one, I will not have to enter the workforce, and two, we can fund an early retirement for hubby.

I found this interesting article about calculating your net worth. 
This is it in a nutshell:

Financial Independence in 3 Easy Steps:
  1. Figure out how much money you are taking home and subtract the amount you are spending.
  2. Be sure to keep all that surplus money at work, by paying down high interest debt first and then investing the rest.
  3. Once the total value of all your investments reaches 25-30 times your annual spending, paid work is now entirely at your discretion. For life.
The article then goes on to give examples with figures. Well worth a read, especially for those who feel they don't understand finances. So many people get into financial difficulties because we have been led to believe that things like that should be left to the experts - the banks, financial planners and accountants - and that is simply not true. I know someone who lost all their retirement funds because they trusted a financial planner, as they felt that an 'expert' would know what they were doing. 

It's your money, Ralph!
(This saying is from a State Bank of Victoria TV commercial - and I still say it to this day! I looked it up, it was from 1988!)

But it is so true - it is your money and it is important to use it wisely.

I have found for myself that I have spending 'triggers' - generally if I feel unhappy, I will shop online. It is way too easy to spend money, and lots of it very quickly, with online shopping. At least with physical shopping, there are the limitations of having to walk to each shop, spend time looking for items, talking to the staff in the shop - these all tend to slow you down. On the internet, you can shop as fast as your little fingers can fly!

Another trigger is boredom. I have a friend whose children are all at school for the first time this year and she spends a lot of time at the shops, just so as not to be alone all day.

As the above picture states, I needed to find an alternative way to occupy my time when my trigger went off. I have found that the items I would tend to buy were yarn and fabric, books, patterns and other craft equipment and childrens' books and art/craft items. Items for the children were a particular trap as I could 'justify' the purchase as it wasn't for me. I have had to tell myself that they have enough and that more stuff is simply not necessary. 
So now instead of buying stuff, I blog. I am stashing all my yarn on Ravelry so I can bust that stash and maybe have a teeny excuse to buy some more in the future. I am participating in different linky parties, like the Love Your Library Challenge, which is encouraging us to revisit our current library of knitting patterns rather than purchase new, Yarn Along, where there are always heaps of great reading recommendations (which I then reserve at my local library!) and others. They are all giving me an alternative activity and keeping me happy as it is so amazing to receive positive comments. It always gives me a boost. If you could see me sitting in front of my computer, sometimes you would see a crazy lady doing a happy dance!

Don't know if that sounds a bit too needy?! But seriously, I do love blogging - it's free, it's fun, it makes me happy to show others my crafting and to connect in some small way with all these wonderfully talented bloggers around the world. 

So have a think about your own spending triggers. And then you can come up with a plan to combat them when they strike.

I would love to hear how others are going with saving, spending and other financial matters. 


  1. I am trying to be better about my spending. Just glad I have all those years of unfettered stash enchancing to now fall back on. LOL! Yeah, don't explain to me how much more money I would have if I hadn't been feeding the stash!

    1. Absolutely, me too! That is what is making it way easier not to buy any more yarn - I already have an entire yarn store in my garage to choose from! I don't even want to think about the money spent. I read a book once where they said to do an exercise where you add up the cost of all the items in your house to see how much money you 'wasted'. That would be a scary amount!

  2. For years I have only bought items that we truly NEED. Once I worked through my stash of yarn, I only buy yarn for specific projects. One at a time, and usually for a gift. I justify it by telling myself that 1) it would cost more than the yarn to go buy a gift of the same quality 2) it's a hand made gift that will be appreciated by the recipient 3) if I knit as a hobby (and I'm not that fast at it) I figure it is a lot less expensive than "a night out" would be - whether going out to the mall, or going to a show or something like that.
    And, as an aside - considering what you just said about eliminating superfluous spending, I am doubly honoured that you specifically chose to purchase the items that you ordered. Knowing that there was so much thought involved and you still deemed it "worthy" of your spending dollars makes me more happy than you can possibly realize.

    1. That is where I am aiming to be once I eliminate my stash. Hubby thinks I spend too much on yarn, but as you say, most of it is for gifts and I don't spend lots of money (hardly any!) on clothes, shoes, handbags or makeup. And you're right, it is also my leisure time activity.
      And you are welcome! I have been admiring your work for so long and trying to 'justify' spending some money on me. So lots of thought and to-ing and fro-ing, but absolutely worth it. I cannot wait to see them!
      I guess it is more eliminating that type of spending that is not thought through. I would often tend to see something, click and buy! Terrible, I know.

  3. I totally have to stay away from Amazon. Like yarn shops I can only enter if I have an absolute need for something specific!
    I find the net worth thing a little scary... Where did we get this idea that not working was the goal? Where would the world (science, food production, healthcare, schools, etc etc) be if we all were just working our way to maximum early wealth so we could lie on a beach somewhere in Ibiza?

    1. Internet shopping is scary! I guess when I say 'not working' we, of course, will be working, just to our own gain, not some faceless company who couldn't care less about us. We will be engaged in more meaningful work.