An early expenses spring clean

At the risk of firing up the gods of spring cleaning into an unholy rage, I decided to have an expenses spring clean a bit early.

Crushing my expenses

Don’t make the god of spring cleaning angry…you get crushed…which is incidentally what I plan on doing to my expenses

Historically, I have found it easy to go after my variable expenses with vengeance, coffees in cafes, eating out, drinks in bars and random other shitty unneeded purchases.  I got good at battering down the latte factor. Sadly this approach completely ignores the fixed expense side of the equation and allows them to run freely on the vast expense tundra.

And that has largely been my approach, sort out my luxury spending habits and watch the outgoings fall.  It’s worked a treat, but the work of a beserker of frugality is never done.  I look at my outgoings now and see lots of pesky regular expenses that could do with a bit of a smack about the chops.  They are starting to get a little arrogant you see, prying further into the limitless expense tundra.  Without the odd suplex or dropkick here and there they have been testing the waters, increasing each year and generally getting a bit ludicrous.

The method for reviewing expenses was to boil the kettle, put tea bag in a mug and add boiling water.  Muse over the upcoming battle with expenses for two minutes, remove tea bag and add a dash of milk to the tea.  Carry tea upstairs and take a seat in the War Chair facing the Battle Ground of Excel.  Extract all regular expenses and starting with the most expensive first see if they can be smited downwards with the Hammer of Research.

A quick sorting of my regular expenses by size shows me that the mortgage payment is our single largest out going.  I work for a financial services company and get a good deal that can’t be beaten in the market, even after I get taxed on it as a benefit in kind, and it allows penalty free over payments.  No savings to be made here.  Savings – £nil.  A draw.

Council tax?  No choice here I’m afraid sucka, it’s linked to our address.  Savings – £nil. A draw.

The necessity of Gas & Electric are up next, which are currently coming in at £62 a month combined.  I am pretty embarrassed to say that I don’t know if this is a good deal or a bad one.  A quick Google suggests £784 for a small house/flat  or £1,153 for a medium size house is average in 2015.  We come in at £744 so slightly lower than the national average.  Come on Castle Zombie, we can do better than that.  You’re not that draughty.  Loading a few details into USwitch shows me I can reduce my cost to about £44 per month.  Savings – £220 per year.  (I could have saved a little more if I was willing to fix my price for 20 months).  Expense smited.

Next up is our joint life insurance and critical illness policies coming in at £54 a month.  These were set up years ago when we first moved into the house and have just been left to run.  Time to dig out the documents.  Arrrrggghhh…can’t find them in Mrs Z’s filing system.  So. Much. Paper.  Obviously, they are in one of the turrets of Castle Zombie.  The policy is a fixed term assurance and a fixed level of critical illness cover over 30 years, not even reducing with the mortgage.  Naughty IFA that sold us the policy way back when, should have been decreasing as it was to offset the mortgage. AI quick look at some quotes shows I can get equivalent level of cover for much cheaper, and cheaper again through work.  A quick chat with Mrs Z and we decide that with no dependents and a few years worth of savings should things go wrong, to cancel the policies.  Savings – £648 per year.  (I’m not saying you should cancel your life insurance or income protection policy, but for us it made sense to cancel it.  With a good savings rate we could easily live off one salary if it came to that, or for a good few years if we both lost our income at the same time.)  Expense smited.

The horror of Sky TV is up next at £50 a month, including broadband, phone line etc.  Fifty quid!  Mrs Z isn’t budging on this one…yet.  Savings – £nil.  (Time to work on this one, some savings to be made here).  Draw.

Rolling in at £29.99 a month we have my mobile phone contract.  It comes to an end in June and then I plan on going Sim Only until it falls apart.  I found an offer for £7.50 on GiffGaff with 1GB of data, which would do me.  Reviews I can see make GiffGaff look ok.  Savings – £135 from June (£270 annually onwards).  Expense smited.

It looks like I can’t change my water supplier.  Savings – £nil.  Draw.

Next on the agenda is my gym membership at £18.99.  Unlike the majority of the population I do actually use my gym membership, nearly everyday.  I’ve no room in my current house for a squat rack and bench so the gym will have to do for now.  It’s 2 minutes walk from work and a 10 minute cycle from my house.  No dice, sorry, it stays.  Savings – £nil.  Draw.

The TV licence is next under Mr Zombie’s beady investigative eye.  No change here, Mrs Z want to keep this.  Fair enough.  Savings – £nil.  Draw.

Finally, it’s music.  Mr Zombie has music with him at all times.  Walking to work.  Cycling about.  Cooking in the kitchen.  Why, even right now he is bobbing his head along to the funky grooves of Clutch.  Deezer was coming in at £9.99 a month, which was admittedly less that I was previously spending on buying music.  I managed to find a deal on spotify for £4.99 a month, a funky funky sweet deal!  Savings – £60 annually.  Expense smited.

You’ll notice that I didn’t lose any of the expense skirmishes above, I either won and reduced the expense or it remained the same.  So don’t be scared, it’s impossible to have a look at your expenses, lose a skirmish and actually end up paying more.  The eagle eyed amongst you will notice that there is no insurance (home or third party car in the above).  That’s because I review them annually for the cheapest deal.  They are ideally the only insurances that we would be using, as they are required by law and we couldn’t self insure against the losses at the moment anyway.

Phew, that’s some serious good work there, the Battle Ground of Excel is awash with battered expenses.  Let’s total the annual savings, shall we?  £220 + £648 + £270 + £60 for a total of £1,198!  That’s some serious saving.  It took me about 3 hours to pull this post together and make all the necessary calls.

Put another way, that’s £399 per hour, per year.  Damn Mr Z, you  just went and got paid like a consultant or a high class hooker.

Put yet another way, that’s savings of £16.5k compounded at 7% over 10 years or nearly £50k over 20 years.

To really drive the point home, that’s a reduction of £30k to my required Financial Independence fund (on account of the reduced spending assuming a 4% withdrawal rate).

*Breaks out into a happy dance*

Your task – set three hours aside this weekend and get paid a ridiculous hourly wage like I did.

Spend Less 😉 , Save More & Escape the Horde

Mr Z

 

19 thoughts on “An early expenses spring clean

  1. David

    Interesting post. Love your site.
    Mortgage rate – are you 100% sure you have the cheapest rate you can get? There are lots of deals under 2% now, but you don’t tell us your own rate.
    You also assume you will carry on with living arrangements that require the same level of mortgage, but that’s a rather extreme comment to make I guess!
    Gas and electric is in two parts – 1) how much you pay per unit and 2) how much you use. You did the first bit but did you get cashback? You haven’t looked into the second bit. If you read your meters on a monthly basis you will be able to calculate usage and then track over time. Then see how much it drops if you go away on holiday versus how much it goes up in cold weather. Or you can get a device to monitor usage of specific electrical devices. or turn the thermostat down, etc. The fixed monthly DD tells you nothing.
    Sky & TV licence. This would be a good candidate for the concept of “experiments” where you see if you can make a particular lifestyle change for a set period of time, e.g one month. Clearly, as you appear to know, it’s a total waste of money and is rotting your brains.
    I have the Giffgaff £7.50 deal and can vouch for it. I would like to volunteer to “Earn £5 by spreading the giffgaff love”(!)
    Water – you can also potentially save here if you look into your consumption.
    Tax – most people’s biggest cost but not mentioned. Pension contributions? Working through Limited Company?

    Reply
    1. Mr Zombie Post author

      Hi David – thanks for the comment.

      We get a mortgage at base rate, which gets taxed as a benefit in kind (a beneficial loan). Even after tax it works out at somewhere between 1% and 1.5% depending on what tax band you are in. Haha – yeah we aren’t moving anywhere soon. We’ve got a 2-bed terraced house and the mortgage payments are pretty small 🙂 We’ll move if we need more space (if we have kids) but for now there’s enough room here!

      We actually got an Efergy monitor at Christmas, pretty rock and roll Christmas present for each other 😉 Our usage isn’t all that bad on electricity and I do mean to do a post having a look at the output from the monitor soon! Gas is a bit harder to monitor I’ll agree, but I dislike waste. If I’m home by myself I’ll actually have the heating turned down real low and wear thermals haha. Otherwise, if we have people round we’ll get it really cranking at 18 degrees. But I actually have no idea how it moves from day to day, or month to month…

      Agreed on the TV – I watch an hour every other day or so, and only programs that I want to watch. Modern Life is Goodish, for example. Any tips to get Mrs Z to see the light? 😀

      Awesome, giffgaff seems the way to go! Sure thing, it won’t be until June time, but would be happy to help spread the love!

      Mmmmm tax, deserving of a post all on it’s own. I put as much as I feel comfortable into a pension (regulation risk is a real bastard here I think). I’m a permanent employee at the moment, but I haven’t disregarded the idea of working through a limited company in the future…

      MrZ

      Reply
    1. Mr Zombie Post author

      I do and I don’t. It’s not a voucher or anything, but for whatever reason actuarial students can get a Student NUS card, and so apply for the student deal on Spotify!

      Reply
  2. weenie

    Nice savings there, Mr Z. Are you on a water meter? If not, perhaps worth considering getting one fitted for free – reduced my bill by 50% when I switched, especially as no one at home in the day to use water and when you are home, you’re conscious you’re on the meter so don’t leave taps running unnecessarily.

    Reply
  3. David

    Another massive cost that’s not immediately visible from monthly direct debits is depreciation on car purchases. But it can be a massive hidden cost second only to housing costs in many family budgets. It’s definitely worth taking a look at your true cost of motoring (assuming you have a car).

    Reply
    1. Mr Zombie Post author

      I do have a car, but it’s 16 years old haha. I doubt it’s got much depreciating left to do! To be honest, I fill it up about two to three times a year, so it is a cost I could probably do with out. But I like being able to go for a surf on a whim, so I can’t bring myself to get rid of it yet…

      MrZ

      Reply
  4. Mrs ETT

    I’ve only just started budgeting again after a decade, and I have been depressed to see how many of our costs are “fixed” expenses. I haven’t even begun to tackle the discretionary expenses yet, but this post gives me hope that once I have, there will still be some room to move on what seems to make up most of our expenditure!

    Reply
    1. Mr Zombie Post author

      Mrs ETT – there will be without a doubt! Unless you are completely on top of your expenses in which case… it’s a win already!

      Reply
  5. BargainValue

    If we are talking about reducing the electricity bills, have you thought about solar/PV panels? I think, that this is a future and even today it can be viable. Of course, it require a huge, inital investment, but it sometimes a better option, than to invest your money somewhere else.

    What’s more I wonder, if in UK are companies which pay customers for NOT using the electricity during a few hours a day. I’m talking about negawatts, which are quite popular in some areas in US. What, do you think about this? Is there any chance, that negwatts can become an option for saving-seeking customers like You?

    Reply
    1. Mr Zombie Post author

      Morning BV. Yep we have considered solar panels, but they are becoming less attractive as the government reduced funding over here. And yeah, I think if you produce power from your own solar panels you can sell the excess back to the grid at a predetermined rate. I know TFS installed some a while ago and highly recommends them 🙂 ( http://thefirestarter.co.uk/solar-panels-faq/ )

      Thing is, they are an expensive investment if you are considering moving in the next few years. I hope as the cost of producing the panels comes down over time more and more people get them installed. I, for one, think they look awesome 😀

      Reply
  6. Charlie

    Life insurance and critical illness policies are on my list of things that I need to review but I confess to have buried my head in the sand. I have both and mine too were set up via IFA. I’ve changed jobs since then and I think new employer offers critical illness cover as part of employment contract, so might not need that at all any more. Don’t even know what type of life insurance I have :/

    Where did you start your research for finding replacement policies? Do you have links to general information that you found helpful from reviewing your own policies?.

    Reply
    1. Mr Zombie Post author

      Hi Charlie,

      If you pull out the documents there should be a summary sheet with it, that will give you the level and type of cover. E.g. £100k 30 year decreasing term. Which would be a term assurance which last 30 years and the cover decreases over the 30 years (most commonly used to cover a reducing loan balance, like a mortgage). And similar for the CI cover. Any idea what it says on the contract?

      I cancelled my policies and didn’t replace them, as felt comfortable enough to self insure (i.e. we are comfortable that if one of us lost our job or died, the other could pay the mortgage and what ever else by ourselves. We don’t have any dependants so don’t feel like we need any cover from this point of view. Just my way of looking at it, not advising you to do the same!).

      I don’t have a link to any specific information that I looked at as I have trained as an actuary, sorry. I do have an article in the works about self insurance…!

      Mr Z

      Reply
  7. Berry

    One thing I learned recently: renewal discount! I just learned that if I give my internetprovider (KPN in the Netherlands) a call once a year and ask for a renewal discount, I get a 6 month discount of 10 EUR (which is about 1/3 of the price). That’s an easy 60 EUR for a call to an 0800-number.

    Reply
    1. Mr Zombie Post author

      I like your way of thinking. 2 years, for something I barely watch. Sky will be gone by the summer, through persistence if nothing else.

      It is something that needs to be approached carefully, as we both feel differently about it (I’m obviously right though 😉 ) and I wouldn’t want to bully someone into something they didn’t want to do. Let’s see how the two years of freedom approach works…

      Reply
  8. CM

    Now TV might be an alternative to Sky? We had Virgin TV, but now only get phone + Internet, and use Freeview + streaming services such as Now TV and Netflix.

    Reply

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