Your End of Year Financial Audit

Now is the perfect time to take stock of your finances before we head into Christmas and a brand new year with brand new goals.

Before you can set yourself some money objectives for 2020, you need a clear picture of where you are right now.

A really useful tool I use is the MoneyGirl (Laura Adams) “Personal Financial Statement.”

Basically, you create a simple table of all of your assets and liabilities and the number you come up with at the end of your ‘Net Worth’.

Net worth: For individuals, net worth or wealth refers to an individual’s net economic position, the value of the individual’s assets minus liabilities. Examples of assets that an individual would factor into their net worth include retirement accounts, other investments, home(s), and vehicles. Liabilities include both secured debt (such as a home mortgage) and unsecured debt (such as consumer debt or personal loans). Typically intangible assets such as educational degrees are not factored into net worth, even though such assets positively contribute to one’s overall financial position. (Wikipedia)

Full disclosure, when I first did this about two years ago my Net Worth was about -£10,000. I had no savings, barely anything in my pension and debt in the form of two loans, a credit card and an overdraft. It’s now in the plus and while it’s still not a lot of money, it’s a HUGE difference and I love watching it grow every month. Getting organised and setting goals is the first step.

No matter how bad your finances are, it’s only temporary. Any sacrifices you make are temporary. You will come out the other side and you will be happy that you took control.

Here is my interpretation of the statement- just a simple table to input your totals. Use a formula to add total assets and total liabilities and then another in the net worth column where you minus one from the other. 

Personal Finance StatementNovember 2019
Assets
Sinking Fund
Travel Fund
Stocks and Shares ISA
Lifetime ISA
Pension fund
Asset Subtotal
Liabilities
Overdraft
Credit Card
Mortgage
Liability Subtotal
Net Worth(Assets – Liabilities)


One money objective – 


Financial goals in 2020
1.
2. 
3.

Your net worth is a good benchmark for tracking your financial progress and goals towards retirement. Do not worry about this too much when you are starting your debt free journey and don’t compare yourself to anyone else! Your finances, like everything else, are personal to your situation. 

Once you have worked out your assets and liabilities, think about what you want to achieve with your finances in 2020. Maybe you want to pay down debt or save for a house or another big purchase? Maybe you want to maximise your money by investing?

To keep you on track, set yourself an intention or a money objective that will inform the rest of your plans. 

Then, to make sure you are actually going to be able to achieve this, set yourself some goals for the year. 

  • Pay off XXX in debt
  • Save XX for XX
  • Increase income by XX

Keep coming back to your “why” whenever you are tempted to overspend or dip into your savings. Is this purchase going to get you where you want to be or is it getting in the way of you reaching your long-term goals?

Once you know what you’re working with and where you want to be in 12 months time, then it’s time to make your budget for the holiday season and the year to come.

Now is also a great time to review some of your expenses to make sure you are still getting the best deal for you.

Some items to look into:

  • Insurance – car, travel, home, contents
  • Gas and electricity
  • Internet
  • Mobile phone

Another area to look at while planning is your savings account. Are you getting the best interest rate? You could be missing out on money by leaving your hard-earned savings in an account with a low interest rate.

Setting your 2020 goals before Christmas will (hopefully) have them in front of your mind and help you to curb any overspending. 

Coming soon – a guide to a low cost, low waste Christmas that should help you minimise spending and stay on track for your money goals.

Low waste (and low cost) skin-care swaps

In my quest to create less waste and spend less money, I’ve actually discovered several skin care swaps that have my skin feeling better than ever.

Ice roller -> lavendar infused ice cube

Ice rollers or jade rollers have been popping up on social media a lot of late with beauty bloggers swearing by them. The supposed benefits include

•reducing puffiness

•increasing bloodflow

•reducing appearance of pores

I have no idea if any of that is based on fact but I kinda loved the idea of rolling something cold all over my face! 🤣

A “sustainability influencer” suggested making your own by adding a drop of essential oil into ice cubes so I tried it and loved it. I use it every morning now. It helps me wake up and I feel like it reduces any puffiness. Also, smells amaaaazing. Cheap and easy to do but it feels like a luxury!

Oil-based cleanser -> Almond oil

Every night, I remove my makeup up (which is typically just tinted moisturiser and mascara these days) with Sweet Almond Oil and a hot face cloth. Just work the oil into your skin for a minute or two and then remove with a face cloth (mine are bamboo)you’ve run under the hot water tap. It’s dreamy!

After that, I wash with a facial cleansing bar to make sure my face is properly clean.

Then, cos I’m fancy AF, I spritz my face with some Rosewater.

Serum -> homemade oil blend

Instead of a super expensive serum, I made my own blend of Sweet Almond Oil and Argan Oil (50/50) with a couple of drops of frankincense. I read that frankincense has anti-aging properties and I have no idea whether or not that is total bullshit but it smells good and I cross my fingers!

Homemade scrub

Once a week, I exfoliate with a homemade honey and brown sugar scrub.

It’s so cheap and easy to make and if I accidentally get any in mouth, it tastes fab!

Homemade body butter

For years, I just used Palmers Cocoa butter and it was the only thing that I felt worked. I have pretty dry skin especially here in London where the water is really hard (I actually really miss the humidity of Taiwan!).

That was until I tested out this recipe that I came across on Instagram over the Christmas holidays.

You take equal parts;

• Shea butter

•Cocoa butter

•Coconut oil

Put them in a glass bowl and place over a saucepan of water. Boil the water and wait for your mixture to melt. Once it’s melted, let it cool for a few mins and then pop it in the freezer to solidify it a little. When it’s started to solidify around the edges, take it out and use a whisk to whip it up. When you have a nice fluffy consistency transfer it to a jar. I use a salsa jar because I eat chips and salsa at an alarming rate and always have a ton lying around my kitchen! You can also add a couple of drops of essentail oil if you want to make it scented.

Tranistioning from “normal” moisturiser to oil did cause some breakouts for a couple of weeks but I’ve now followed this regime since last summer and my skin is happier than it has been in years!

Let me know if you try any of these and how you get on with them.

Breaking Up With Fast Fashion

 

What’s in your wardrobe?

It’s time to break up with fast fashion and here are some of the top reasons why:

  • 10% of global carbon emissions come from the fashion industry, which is more than shipping and aviation combined!!
  • 77% of UK retailers believe there is a likelihood of modern slavery in their supply chain

First, take stock.

The thing is – you probably don’t need any new clothes. You likely have lots of beautiful items in your wardrobe you have forgotten about so, have a look in your wardrobe and fall back in love with what you already have. 

If you are feeling overwhelmed by the number of clothes you have, spring is the perfect time to cull your wardrobe!

Get everything out and pile it all in one place, Marie Kondo style, and sort it into categories:

  1. Keep – pretty self-explanatory! These are the clothes you love to wear often.
  2. Repair – many items in your wardrobe can be revived by fixing a zipper, letting a seam out or having the hem taken up. About once a year, I go through my wardrobe and see if there is anything that needs repairing.
  3. Sell – make some extra money by selling things with tags that you are never going to wear or some of your more high-end items that will get a good resale price on eBay, Schpock or Depop.
  4. Donate – for clothes that are in great condition, consider donating them to a charity shop where they can be resold. For things like winter coats and warm clothes, you might want to donate those to your local homeless centre. For torn or unwearable clothes, you may be able to donate them to animal shelters where they can be used as bedding for the animals. When in doubt, give the charity a call to see what they can accept.
  5. Recycle – for anything you can’t donate, find a local organisation that can properly recycle them like Terracycle.

Find a uniform……and then add your personal style

A lot of highly successful people have a ‘uniform’ that they wear every day. Mark Zuckerberg wears a grey t-shirt and jeans. Steve Jobs always wore black turtleneck and jeans. Arianna Huffington is a huge advocate for work uniforms and ‘repeating’ outfits.

If you find deciding what to wear in the morning causes you stress or you just can’t be bothered with the extra steps, a work uniform is a great option. (And if you’re lazy like me, you might also have a non-work uniform!). There is a lot to say for creating a capsule wardrobe of good quality basics that last a long time and fit well. For more on creating a capsule wardrobe, check out Project 333.

Simple, basic and capsule might sound kinda boring but they really don’t have to be. You can make any outfit more interesting with your choice of accessory(ies). Lipstick, jewellery, sunglasses, glasses, hair accessories, nail polish.

Slow fashion

Last year, I started seriously thinking about the impact our fashion habits have on our mental health, our finances and the planet. After watching The True Cost on Netflix, I couldn’t be willfully ignorant any more and I knew that I needed much more sustainable habits, both for my bank balance and for the environment. And as a proud (loud!) feminist, I also knew that the primarily female garment industry was exploiting women in low-income countries.

1 in 6 of the world’s workers are employed in the fashion industry and around 80% of those workers are female.

In January 2019, I finally made the choice not to buy any more fast fashion. So what are the alternatives?

  1. Repair what you have – there is a growing “mending” movement online and you can find amazing tutorials and inspiration.
  2. Swap with and borrow from your friends 
  3. Buy second hand – there are so many secondhand clothing resources in the UK.
  • Charity Shops – you’ll find these on any high street and some bigger organisations, like Amnesty International and Oxfam onlines stores as well.
  • Vintage – there are a lot of incredible and affordable vintage stores like, Rokit .
  • Peer-to peer – buy and sell pre-loved items on apps like Depop, eBay and Schpock
  • Secondhand designer – Vestiarie Collective is my newest obsession – full of beautiful pre-loved designer clothes.

4. Sustainable brands

When buying new clothes, have a list of questions you ask yourself:

  • Is this an ethical brand?
    • I use an app, Good On You, which rates brands on their Labour, Environmental and Animal policies.
  • Is this item going to last a long time?
  • What fabric is this item made from and can it be recycled?
  • If you feel the impulse to buy something, wait 30 days to see if you still want it. Instagram makes EVERYTHING look good and half the time, you will totally forget.

Be aware of “greenwashing”

Companies are aware of the emerging demand for more environmentally friendly and ethically sourced goods. Many will throw in terms like ‘sustainable’, ‘ethical’ and ‘vegan’ into their marketing without any transparency. These terms have no legal definition and absolutely no accountability. I’ve found Good on You to be a great resource for sorting through the bullshit.

Read: Project 333 EcoAge , Mending Matters

Download: Good On You app, Depop app

Follow: @fash_rev @venetiafalconer @ajabarber 

Watch: The Patriot Act with Hasan Minhaj – The Ugly Truth of Fast Fashion, The True Cost

So, you’re out of debt. What next?

I’ve been debt free now for 5 glorious months!

Surprisingly, I feel like that was probably the easy part. It took me about 18 months from when I decided get my shit together until I actually made the last credit card payment.

I forgot to to mention it in the last post but I used Dave Ramsey’s “Debt Snowball” https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan. It’s a really great method! Reaching each milestone was such amazing motivation.

Staying out of debt hasn’t been hard because not only do I have more money to play with than before, I also still remember the stress that came with it and I could never let myself go there again.

Saving, on the overhand, is proving a lot more challenging than I’d anticipated!

I’ve always been good at saving for travelling and stuff I want but I have a much harder time saving for things that are less tangible like emergencies or ‘rainy day’ savings or big things like a car, house or retirement.
My current savings goals are:

  1. Trip to Vancouver in July
  2. Full emergency fund of three months expenses
  3. A car
  4. Start saving for a house

Goal 1 is going really well for two reasons.

  • I fucking love travelling!
  • It has pretty clear ‘deadline’. If I don’t have the money by July, the trip can’t happen. And it’s definitely happening!

Goal 2 and 3, not so much. I’ve dipped into those pots a few times for non-essentials and am having a much harder time staying motivated. They feel a bit too big and too far away and also less exciting that a holiday or new clothes…..

Goal 4 honestly seems completely out of reach right now. And virtually impossible to make any real commitment towards. I am doing some research at the moment and trying to figure out my best option so this will definitely be a future post.

I’m a spender! I am an absolute sucker for new stuff. And while I’ve become a lot more conscious of the products I buy and where they come from, I still love spending. Instead of random fast fashion, I’m now splurging on house plants and rugs! Hello mid 30s!
I know my weak spots

  • Clothes
  • Food
  • House stuff

So, how do we stay focussed?

1.Use a ‘Zero-Based budget to ensure you’re saving as much as you can

2. Make is easy for yourself.
To get me into better habits, I’ve decided to automate my savings. They will now come straight out of my account a day or two after I get paid and go into an account I can’t easily access. Out of sight, out of mind!

3. Look at your balance
I can’t remember which podcast it was on it was but something the host said really resonated with me. Get used to and excited to see a big number in your bank account. I look at my bank account every morning and it does feel really good to see big numbers! I lived paycheck to paycheck my entire life and now I always have money in my account before payday.

4. Create some “rules” around your spending.
A good rule of thumb before purchases is to ask yourself a few questions. I love these from Money Saving Expert:

Skint? Ask:

  • Do I need it?
  • Can I afford it?

Not skint? Ask:

  • Will I use it?
  • Is it worth it?

5. If you really want it, earn extra money
Another tactic I use to stay on track with savings when I see something I really want to buy is to find a way to make some extra money to pay for it. Some of the ways to do this are similar to how to make extra money to throw at debts.

  • Have a clear out and see if you have anything worth selling
  • Use OhMyDosh to earn some extra cash
  • Get cashback – I’ve just signed up to Quidco to earn cashback on some of my purchases
  • See if you qualify for a “bank bribe” to switch your current account

Whether or not you can be bothered with the extra effort to find the money for something will tell you whether or not you really want it! It also helps to change your mindset when you have to work harder to get that shiny thing you saw and when you get it it feels so much more satisfying.

Lastly, if you do impulse buy you can return it! Don’t take the tags off right away. See if it really does “spark joy” and if not, take it back.

Changing your spending behaviours takes time and you will slip up. Don’t be too hard on yourself. Our relationship with money is deeply personal. It’s cultural. It’s gendered. It’s traditon.

We like to think we are rational beings, but we are more irrational than we realise. Advertisers know this. Marketing relies in behavioural science. They sell you a lifestyle, not a product. They tap into your emotions and insecurities and they are very, very good at it.

Keep an eye on those numbers, watch the debt decrease and the savings increase and your stress start to melt away.

Read: The Minimalists, Dave Ramsey
Listen: Money Girl’s Quick and Dirty Tips, So Money with Farnoosh Torabi
Follow: @FiscalFemme @TheMinmalists

How I Got Out of Debt

When I moved to London, I had some savings but not very much and I quickly burned through what I had.

Up to that point, I hadn’t learned very good habits with money but I had also never needed much for what I wanted to do. I travelled a lot and the cost of living was always affordable wherever I landed.

Getting into almost £10k debt was a combination of learned behaviours and a big change in living situation. I’d just spent four years in Taiwan, city with a low cost of living and great wages (for foreigners), and arrived in London which has pretty terrible pay comparatively and a sky high cost of living.

I had a number of core beliefs about money and about how I ‘should’ be living. To me l, money was never abundant and the lack of it a constant source of stress. My belief was that there would never be enough of it and making ends meet would always be a challenge.

When I arrived in London, I was about to turn 30 and wanted to to appear to be living a lifestyle of a 30 year old and not of a broke student. In Taiwan, I’d lived comfortably and still been able to afford to go on holidays and go out every weekend. In London, my first job was as a temp and I wasn’t even making enough for rent!

I had to buy winter clothes when I arrived because I didn’t have any and quickly developed a shopping habit I couldn’t afford. In hindsight, I think I believed looking the part of a 30 year old who has it all together would help me get it together!

On top of that, I didn’t have many friends and was struggling with loneliness missing my friends in Taiwan so I had to get out and about. I felt like I had very few choices; I could stay in and save money alone and depressed or I could go out and try to make friends and end up in debt and also be depressed. I opted for the latter because being depressed and lonely is worse than being depressed and broke but with some friends and fun included!

It was all an absolute shit storm for my mental health and I had worse anxiety and depression than Id ever experienced. I felt trapped in my job, trapped in my living situation and full of resentment towards anyone and everyone who appeared to be thriving in London.

Before I knew it I’d managed to get myself over £9k in debt and also needed a dental implant that was going to cost me over £2k. 😮

I had a maxed out credit card, a maxed out overdraft and two loans I’d taken out in attempts to consolidate the debt. I didn’t know what the fuck I was doing!

So how was I going to get myself out of it?

I first had to admit that my relationship with money wasn’t healthy and that it needed to change. Second, I needed to get really focussed and disciplined about cutting back and living well within my means.

I had to admit that one of my main problems was that I bought too many clothes and I couldn’t blame everything on London prices or charity work being relatively lower pay.

I had to earn more money and spend less.

So I made it my business to learn as much about money as I could. As soon as I started reading, I realised how little I knew and how empowering getting my finances under control could be. I read blogs and articles, followed IG accounts and listened to podcasts. I probably became really annoying because once I’m interested in something, I get a bit obsessed!

My anxiety reduced almost immediately when I realised that I did have the power to get myself out of the situation I’d put myself in. There were lots of resources and groups out there to help me and there were 100s of things I could do to save money and make extra cash.

How I did it……

First things first- Get a full picture of your finances

Write everything down!

Calculate your total debt

It can be scary but if you are going to pay it off, you need to know what you are working with.

Calculate all your income

Salary + any additional income you have coming in

Calculate all your expenditure

Every penny. You need to know how much you spend on every single category so you can see where you can easily cut back. There may be some really easy ones to get you started like daily coffees and other little things that add up fast.

Spend less – Cut back where you can

Separate your expenditure into two categories: Essential and Discretionary

1.Essentials

Essentials are things you CANNOT avoid. Not Starbucks coffee on the way to the office 😂

Rent

Phone bill

Utility bills

Transport/car expenses

Loan payments

Medical bill or prescriptions

Groceries

Can you save on any of these?

Could you move to a smaller place and save on rent?

Could you save by selling your car and downsizing to a cheaper model?

Are you getting the best deal on your utility bills? Or phone provider? (I saved £20 a month on my bill AND got a new phone by finding a better deal through moneysavingexpert.com and switching providers).

You can save a lot on your groceries by planning ahead what you are going to cook and what you need, making a list (and sticking to it!), swapping name brands for supermarket own brands, going to the shops with a full stomach

2.Discretionary

Discretionary spending is all non-essentials. If you are in a lot of debt and struggling to make ends meet, you might have to cut most of these back for a couple of months to get yourself to a more stable place. If that sounds scary, don’t worry I will be posting lots of tips on how to look after your mental health for zero cost to get you through!

Memberships/subscriptions (Spotify, Netflix, gym)

Eating out

Shopping

Donations (help yourself first and then you can help others!)

Make your budget.

Your income – your essential expenditure = what you have left to pay off your debt/save/have fun

If this is all new to you, you won’t go far wrong with Dave Ramsey! I also use his Zero Based Budget https://www.daveramsey.com/blog/how-to-make-a-zero-based-budget

Earn more

Once you are cutting back and throwing as much as you can at you debt, you can start to think about ways to earn more and get it paid off even quicker.

Could you get a new job with a better salary?

Are you due for a promotion?

Do you have a spare room you can rent out?

Do you have a car?

Can you teach online?

This is a list of the things I did to make more money and pay off my debts quicker

  • Sold some clothes and other items at home that I was no longer using. I used Schpock and Facebook market place as both platforms are free and for local use. Instead of posting things, I arranged to meet with people and exchange the items. I have also used both to buy some second hand things.
  • Matched betting – I read about matched betting in a couple of blogs and decided to give it a go. Matched betting is a way of taking advantage of the free credits that online gambling websites give you. It’s totally legal and a great way to make money. It takes a bit of getting used to and you will definitely need a tool to help you in the beginning. I use Profit Accumulator www.profitaccumulator.co.uk/, which had tutorial videos, software to help you choose best and calculate your profit. I made £1,800 in two months which was a MASSIVE help! I took a break for a couple of months but went back to it recently to earn some extra money for travelling in 2019.
  • Switched bank accounts to earn a ‘bribe’ of £200 (check out moneysavingexpert.con for up to date bank bribes.)
  • Moved my credit card balance to a 0% card to reduce the interest. At the time, I was also awarded £25 cashback for switching. (moneysavingexpert.com is a great resource for keeping up to date with the best offers)
  • OhMyDosh – is a website where you can take surveys, sign up for free trail to earn money- so far, I’ve made over £100 on there doing free trials.
  • YouGov – through surveys on YouGov I earned £50. It did take about 6 months though so this is not a fast cash option! I did the surveys mostly during my commute to kill time and was delighted to learn that you can keep going to earn another £50. I have also done some YouGov focus groups which oten pay up to £60 for a two hour session

I did have a few challenges on the way – I had to move house (for the 6th time in 3.5 years….) and on top of moving costs, my rent increased as well. I also burned my leg really badly in the summer and spent over £200 on taxis to hospital and doctors appointments as well as a considerable amount ordering in food and buying medication and bandages because I had just moved in, had no food in the house and wasn’t able to walk. The combination of these two things burned through the majority of my emergency savings, which was disheartening but it was an emergency and that is exactly what I needed it for! It was a shame that it was spent almost immediately after it was saved but I was so glad it was there and for the first time, I wasn’t using credit to cover an unexpected event. I’ve since replenished my £1,000 emergency fund and now I’m working on having 2-3 months of expenses.

Living within or below your means isn’t always fun when you don’t make a lot of money but it’s honestly reduced my stress so much that’s it worth it! I would love to travel more, have nicer clothes, go out to dinner more, buy a house, go to more concerts but I can’t afford that lifestyle right now and the only way I will is by finding ways to make more money. That’s the next step!