I hate the above term! For me, it is on a par with phrases such as "it ticks all the right boxes" and "it's a blank canvas", the types of things people say on TV and radio, in everyday conversation and in the workplace. I had a boss who used to use the rocket science phrase to the point of infuriation! (Apologies, Robert, you probably weren't even aware of this nasty habit, but we were working for the MoD at the time and, for all we know, it may well have been related to rocket science, but not when you were talking to me about data analysis.) But I digress.
This post is about some homebased experimentation, research and analysis into what's the most cost-effective and efficient way of living on a tight budget, especially while trying to heat a rural property in cold, wet, windy Scotland.
IT'S A SET OF NON-SCIENTIFIC ENERGY EXPERIMENTS
Today is Monday, first day of the working week for most. Yesterday, we had the first snow of the year and last night/early hours of this morning, we had a torrential hail storm driven by high winds. Winter has arrived!
Here in Frugaldom, we are continually faced with the conundrum of how best to heat the house (and water) within a very strict, very challenging budget. This budget is based on several years of research and analysis, based on various households and their differing financial situations. It has never been about rocket science, it has always been about simple arithmetic and home economics. The interesting part is that my calculation results were always curiously similar, regardless of the level of income to any participating household. Indeed, it would appear that the higher the income, the more chance there was of a higher ratio of debt. Fortunately, many people have started to 'wise up' to this and are now taking cotrol of their own finances.
£4,000 FOR A FULL YEAR - IS IT POSSIBLE?
Basically, it has to be possible, as there are no other options for some people. If you are interested in how I arrived at the figure, the following is from 2001 and was republished, every bit as relevant, in 2008:
Couple with 2 of a family, husband is a professional who works full time on a salary of £30,000 and wife is a full time mother/homemaker (not sure what the politically correct term for this category is any more!) Total income approx £452 per week including Child Benefit.
Mortgage & Buildings insurance - £740 per month = £170 per week
Council Tax/Water - £125 per month = £24 per week
2 cars, both on HP - £300 per month = £70 week
2 x road tax, insurance, servicing, petrol/diesel etc = £270 per month = £62 week
Credit cards - £100 per month = £23 week
Bank loan - £100 per month = £23 week
Total expenditure before actual living expenses - £372 per week
Remaining Balance - £80/week for everything else
Couple with 2 of a family, husband works full time, wife part time, joint salary of £18,000 plus Child Benefit, total income approx £300 per week
Mortgage & Buildings insurance - £303 per month = £70 week
Council Tax/Water - £100 per month = £23 week
Home Improvement loan - £266 per month = £61 week
Credit/HP - £100 per month = £23 week
Other debts - £100 per month = £23 week
Car - road tax, insurance, servicing, fuel etc - £100 per month = £23 week
Total expenditure before actual living expenses - £223
Remaining Balance - £77.00 for everything else
(There is a slight difference in today's figures in that the above would now qualify for Working Tax and Child Tax Credits, fuel prices and car costs have escalated and mortgage rates have fallen dramatically. Nothing much else has changed over the past 10 years, despite everything. Is it any wonder the country is going to the dogs?)
Having analysed many household budgets, it didn't really seem to matter what the annual income was, there always seemed to be a significant difference in the way that income was spent. As an example, a single professional person earning £52,000 a year may well have only £4,000 to actually live off after paying the upkeep of a rather spectacular house, complete with tennis court, swimming pool, fast car, regular entertaining, foreign holidays and paying for a gardener and housekeeper.
In 2011, a single young person working fulltime on national minimum wage with rent to pay, keeping in mind they are excluded from Working Tax Credit on accounts of age, may well have far less than £4,000 on which to live. (I'd suggest housesharing or getting a lodger!)
TRY TO GET YOURSELF DEBT FREE
No matter what your income bracket, we could all be in the same boat. Fortunately, we have the freedom to choose how we stay afloat. No matter what you do or how you do it, you are always going to have to pay the cost of living. If you can reduce the cost of living and clear off ALL debts, then think of the fun you can have from thereon in.
Budget to within an inch of your life and see just how much it costs you to live. You can see by the above how I arrived at the £4,000 and hopefully this will make things a little clearer for our newest followers, rather than having to search through at least 5 years' worth of information.
NOTHING MUCH HAS CHANGED OVER THE PAST 10 YEARS
Nothing much has changed over those years. Whether we like it or not, £4,000 is the sum total of disposable income that many households have available each year, whether they realise it or not, and this £4,000 needs to cover all the basic costs of running a household, including energy costs. This is where it gets very interesting!
HOW MUCH DOES ENERGY COST?
This is the beginning of a series of posts analysing the true costs of running a household in the 21st Century. Fuel or energy costs are what divide many of our individial budgets, whether it's a simple case of heating, lighting and power or incorporating the cost of commuting. It all revolves around fuel and energy - every penny we spend may be affected by these prices and I hope to relay the results of several simple, home based, non-scientific experiments in an attempt to help solve their cost-associated problems.
WATCH THIS SPACE.
NYK Media ~ Frugaldom