2.3 The Excuses - Lack of money (part 2)
The best thing money can buy is financial freedom
Rob Berger
In post 4.2 What do I want out of life? I wrote down some of my biggest dreams, and some of them are quite expensive. In post 2.2 The Excuses - Lack of money (part 1) I got and overview of what my financial starting point are regarding to achieving these dreams and I must say that it is going to be quite a challenge, to say the least. There is some room for improvement, which in this case is a good thing, because then I have something to work with. And even though I seem far away financially from ever achieving any of my dreams, at least I am starting to take the steps to go where I want to go. Therefore, this blog post is a continuation of the 2.2 The Excuses – Lack of money (part 1) text and that it is why it starts with step number 3.
Step number 3 - Find your motivation/focus area.
My biggest wish from the “What do I want out of life” – list financially is at the moment a new home for me and my children. I have approximately 10 months to find something, because the terraced house that we are currently staying in is going to be renovated. We are therefore going to be rehoused to another place, which means two moves within 6 months and that is just too much moving around for me. But since I am not allowed to borrow any money in the bank to buy a new home, while I am a single mother with debt and an overbudget spending habit, (no wonder) I need to look at rentals. Hopefully I can find something that has all of the things on my wish-list when it comes to a new home. These are;
More indoor and outdoor space. We live on 84 m2, and when you are at home 24/7, 1 adult and 3 children, it just really quickly gets messy and dirty. This sometimes stresses me out, especially when one has to work in it as well. And I would like to have a garden, with room for the children to play, the animals to be and to grow our own food.
For me to grow my own food in the garden means no next-door neighbors spraying round up and away from the road.
To have the same rent as the place we are living in now. This is the good thing about our current place, the rent is cheap, which means that there is room for both savings and spendings.
A place where we are allowed to have animals. In most rentals in DK, animals are not allowed, because the rentals have been renovated from top to bottom, and therefore animals are not allowed in the houses.
A place where we can breathe, live and relax and not have to worry if our everyday living is ruining the value of the rental. Simply just a place that we can call home.
I have been looking for this place for years and it still hasn’t turned up, so I am crossing everything possible, that within the next 10 months, something will show up. Because it is no longer just a want, but starting to become a need, due to the renovations that are going to take place in our current home. So, the first hurtle is that I haven’t found the place yet.
Secondly the cost of this move is approximately going to be around 50.000 d.kr. and this means that I have to find 5000 d.kr. of savings per month in order to get that kind of money in time. This is in line with another wish from my dream list. Which is to create a new financial basis for my life, so that the whole feeling “lack of money” will despair. So, challenge excepted I guess :-0.
Step number 4 – Find your strategy
Going through my economy books and several Instagram pages on private finance, I couldn’t really find a good solution for me. Because I wanted to keep the process and the time spend on it to an absolute minimum and to keep it as simple as possible. I therefore came up with the idea to divided my income into 3, so that 1/3 will go to savings, 1/3 will go to fixed costs, such as rent, electricity, heating for the house, car, mobile, internet, insurance, tv-license, payments on debt etc. And 1/3 will go to variable spendings such as food, diverse, household, animals, children gas and fees from the bank etc.
Nothing less and nothing more. But holy moly, that is going to be a huge challenge, taking my financial history into consideration.
Step number 5 - Make your budget
At the moment I am not able to make any budget, while in August I have no idea of what my income is going to be. Therefore I am only able to make a budget for the next two months. First of all there is a decrease in my income compared to the number used in 2.2 The Excuses – Lack of money (part 1). The decrease is 19 %, so therefore the amount of money available to me each months have fallen, quite a bit. The percentages are therefore going to be a higher than the ones from 2.2 The Excuses – Lack of money (part 1), while the amounts are the same. My fixed costs are budgeted to 43%, which is a some over the 33,33%. A future task for me in the near future is to see, if I can minimize some of my fixed cost even more or to create more income. But the numbers for the fixed costs are;
My main focus at the moment is going to be the variable expenses, while these are the ones that I find most difficult to manage and at the same time they are the ones that I can take immediately control over. But at the moment I have to be realistic an admit that I am not able to get them down to 33,33%. I have budgeted my variable expenses to 57%. This means that there is no money for savings, which is a problem, but it is also a great motivation to try an save some money on the different posts. I have distrubeted the money as the following:
Food incl. Fast food
Diverse
Household
Animals
Children
Savings for the children
Gas
Fees from the bank
Other
30 %
9 %
2 %
2 %
10 %
0 %
3 %
0,5 %
0,5 %
Step number 6 – Find the changes
Here I am going to work out from my model from the 1.3 Simplicity text.
1. Presence:
Be present in the NOW, so that you can become conscious about what you feel and sense. If you get more in tuned with your feelings and senses, you will be able to figure out what your needs are and what is right for you.
My needs at the moment are money to put into savings for a new home, within 10 months I need 50.000 d.kr., which is a monthly amount of 5000 d.kr.
2. Identification
Identify what choice/change/habit/ pattern/ thing/relation is important for you to work on. Chose only one thing at a time, so that you know where to put your focus and make peace with the fact that at the moment this is your area of focus[1].
My change is going to be making a completely different budget and keeping it, in order to get the money for a new home. At the moment I am not able to earn more money, and therefore my focus area will be on saving money from my spendings.
In this case, there are several things I need to work on and I will write them all down here, but only work with them one at a time starting with the changes under number 1, so that it will only be one change at a time. I will share my attempt on making these changes on my Instagram.
1. Decrease expenses for food/fast food/household from 30 % to 26 %, by:
- Planning my meals
- Finding savings
- Stop food waste
- Cut down on meat and dairy products
2. Reducing the diverse post from 12 % to 9 %
- Stop buying things
- Is it a want or a need
- Borrow from friends and family
3. Reducing the gas post from 3 % to 2 %
- Walking instead of driving
4. Go through my fixed costs and see what I can do to find savings.
And maybe more changes will appear, the further I go in the process.
As I am looking at what to do, I just realized that the things that can benefit my money wealth, is also the things that can benefit Mother Nature’s overall health. Because a lower consumption equals lower CO2 emission. Things are really connected. See text 3.2 Carbon dioxide to read more.
3. Time
In order to create change in your life, you need to find time for it. Making conscious choices in everyday life, takes time because we need to switch off the autopilot an incooperate the choices into new habits, so that they can become our new patterns that can control the autopilot.
I am only going to continue this model on the first focus area, because I need to take the changes one at a time, which is to “decrease expenses for food/fast food/household from 30 % to 26 %. And I am starting with Planning my meals.
I would have like to have 10 hours per week to begin with because I am not use to planning my meals and I am not really good in the kitchen either, so I need to study some cook books.
But I can only find 6 hour per week, so for now that will have to do. I found the 6 hours by calculating that if I start planning my meals, from week to week, I can settle with going to the grocery store twice a week. This means that I will not have to spend time on writing shopping lists and go to the grocery store everyday/every second day.
4. Elimination
When you know what your area of focus is and have found time to work with it, you need to eliminate everything that is unnecessary complicated, so that you only use your energy on the essential regarding to your chosen focus area.
I need to work out a food plan, that plans for 6 meals per day, 7 days a week, including beverage and only to shop for the amount of money available to me on a weekly basis.
5. Repetition
You might need to repeat the steps several times with the same focus area, before you have eliminated everything that is unnecessary for you, in order to get where you want. Or maybe you chose to go through the steps with a new focus area, that you want to simplify.
Maybe I need to go through the process with “Planning my meals” several times before getting to where I want financially or maybe I will continue with the rest of the changes from
1. Decrease expenses for food/fast food/household from 30 % to 26 % by:
- Finding savings,
- Stop food waste,
- Cut down on meat and dairy products,
- Getting my household products down to an absolute minimum,
And then go back working with “Planning my meals” again. This really depends on what makes sense in the process.
But after checking these of the list, I will continue by going to number 2. Reducing the diverse post from 19 % to 1 %. I will continue until I am all the way through my list.
Step number 7 - Excecute
So now I know where to start, what to do and now it just to act on it. Follow my Instagram on the daily/ weekly updates on this change and the rest of this money saving project.
Wish me luck 😊
[1] I use focus area throughout the steps as representative for choice/change/habit/thing/relation or anything else you want to simplify with this theory, so that it is the same word through out the steps.