Monday, 6 December 2010

The Great Frugaldom Challenge of 2011


The challenge - pay the rent/mortgage, pay the council tax, live off £4,000 for the year

The annual budget is something that has been analysed, reconfigured, reanalysed and rejigged so often that it has become second nature to readjust all the columns of the spreadsheet with each spend. It now accounts for every penny that comes in or goes out of the Frugaldom account. This isn't like the good life, this IS the good life, only we can't rear animals in our back yard for meat and we can't keep a pet goat or a pet cow for milking. We need to work to earn the cash needed to pay for the things we can't produce for ourselves. Frugaldom is going to attempt, once again, to beat the budget. We can keep poultry, grow fruit & veg and work from home at making it all a success.

£4,000 was the figure I arrived at several years ago, when helping others with their debt consolidation. The figure, or thereabouts, cropped up often in various financial situations. whether the households concerned were earning £10,000 per year or earning £30,000 a year, their overheads and household expenditure seemed to follow accordingly and, in most cases, the £4,000 was what was left over after paying all the bills, hire purchase, rent/mortgage, council tax, work related expenses and debt repayments. Now, the differences are beginning to show, with those of us in rented houses paying more than some of those in their own, mortgaged homes. Yet the general concensus is that things are getting worse. They aren't, it's just that people's perceptions of what they must have as opposed to what they actually need have changed drastically over the past thirty or so years. In the late 80's, a reasonable income for an ordinary worker was around £3,000 to £5,000. Taking the lower limit, a £3,000 per annum income would secure you a maximum £10,500 mortgage. In today's dire and dangerous economic climate, each £3,000 could have secured you £15,000 so it isn't difficult to see how that would affect the housing market. But I digress.

From the late 90's, £4,000 was the average amount left over for your average household to survive. From this, all the household bills, food, clothing, utilities and extras had to be paid. But we've moved on twenty years since then and, for many of us, the income hasn't kept abreast of the pricing increases and it's now impossible to buy a house for 3.5 times the minimum wage. (If anyone knows of any reasonably habitable, ready to move into properties in the £37,000 range, please let us know.) So, with several years of practice beneath my belt, I'm about to embark on the 2011 challenge - to live off £4,000 for a full year. This will be the fifth year in a row that the challenge has been set at this figure and we haven't failed yet.

Since the original challenge began, prices have fluctuated to such an extent that it IS still possible. Many things are now readily available at a fraction of their original cost, whilst others are much more expensive. In 1980, you could buy 20 cigarettes for around 75p, petrol was around 75p for a gallon. Cigarettes and petrol have roughly stayed neck and neck in the pricing stakes, both costing over £5 now. But think of computers. I remember we paid around £1,500 for a basic PC with a 9600bps modem and thinking, in 1995, that it was amazing being able to access the Internet. I could now buy an all singing, all dancing laptop for under £300. In the late 90's, Internet access was billed by the minute on a local rate number. You paid your £25 per month then had to pay your telephone company for all time spent online. Running an online business could mean bills of hundreds of pounds per month. Now I pay under £20 for 24 hour access at speeds that were unimaginable back then. Times change, progress marches on, we CAN adapt by manipulating our budgets to fit what now seems like a miniscule amount.

How can we live on £4,000 for a full year? Well, for a start, I am not counting on having any fancy holidays or spending on extravagancies like hair styling, manicures, regular trips to the pub, a wardrobe of new clothes or umpteen pairs of new shoes, nor am I intending joining a gym, paying to be told not to eat so I can lose weight or parting with any of my cash for the purposes of any other fun exercise or hobbies. These are all non-essentials. We have acres of forestry and national parks that can be enjoyed free of charge and we have who knows how many channels on TV plus a whole worlld of websites if you prefer staying indoors. Homebrew is fun to make and tastes just fine to me - better still when it's made with foraged or homegrown fruit then turned into frugal champagne.

How much could you save, how much extra could you pay off your mortgage, how many debts could you clear if you were able to run your household on £4,000 per year? This is not for the faint hearted, so be warned. It can get tough, it can get boring, it can get frustrating and it can get mind-bogglingly complicated to the point of distraction. But it's also rather addictive and can create what I call 'Numerical OCD'.

If you're brave enough to take on this challenge, join us in the Frugaldom Forums and get ready for 2011.

If you thought it was hard work going out to do your shift for an employer, try working your money until it's screaming at you. The household budget IS your job and it's no easy feat when it gets to frugal living. It could be the ride of your life or it could be you'll give up and resort to the consumerist lifestyle of fulfilling your own wants at the expense of all others. Either way, you've nothing to lose in trying. It is, afterall, better to have tried and failed than never to have tried in the first place. (And you've always got the savings to play with at the end of it all.)

Good luck to all who choose to take up this challenge and many thanks to all who have taken part during previous years.

Coming soon... the easiest way to assess your own household budget.


  1. taking up this challenge this past year saved me a small fortune, i was no wherenear £4000 but came in a lot less than I would have other wise, managed to pay off over 3000 in debt, buy a new car for cash and deal with emergencies that cropped up, something i would not have been able to do if i had nto c=taken up this challenge. I will be doing it again this year and am tryignto tweak things here and there, need to finish off payign my debt and start seriously over paying my mortgage

  2. Thanks for being a part of it all, Sharon. It does take a bit of getting used to but then the penny drops. It suddenly dawns on you how much you've overpaid for most things in the past - handing over you hard-earned dosh without as much as a blink, let alone a question. Things are certainly never the same again. Good luck paying off the debts and then tackling the mortgage. It's well worth it.

  3. I am still on track for trying to keep up [down?] with you, but am soooooo far behind that it's the clouds in the distance that entice me onwards :-)

    It's very true about it turning into a hobby/OCD event! My OH just paid me what we think of as a great compliment - he said one of the things I do best is nailing companies to the wall before a penny of our money gets past the zip on my wallet!!! Thanks, Nyk, for all the encouragement and the good example

  4. Glad you're completely addicted, Moira, what a compliment to get from OH, wow! I am impressed! Long may it continue... the compliments, cost cutting and the nailing of companies to the wall until you're sure you've got the best deal. :)


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