Why is it Necessary to Budget? Download your FREE Spreadsheet.

Having a budget or living with a budget does not have to be as scary as it sounds. Neither does it mean taking the cheaper option, having to make do with lower quality things. It only means knowing how much money you have available to spend and this can only be a good thing.

A budget can be for a day if you are out for the day and have a certain amount of cash to spend. It can be for a week, or however long you want to make it.

The best thing about a long term budget is that you are not only in control of how much money you have now, but you are able to forecast how much money you will have in a year’s time, or five year’s time or longer, assuming that things stay the same.

The magic of this is that it allows you to see exactly what goes where. You can see where the little wormholes which suck up the cash for no reason and you can see work out your minimum monthly amount. That is what is the absolute minimum income you need to have to keep everything ticking along.

Then with the rest of the income, you are free to spend it however you like. You can pay off debts, you can save up to buy that special thing you have always wanted or go on that holiday of a lifetime.

Having a budget can actually free you to do more with your income.

And it is much better than living in the dark, not knowing how much money comes in, how much goes out.

I have put together an excel spreadsheet which can let someone manage their monthly budget over a year.
It is available as a FREE DOWNLOAD for anyone who wants to use it.

It can be downloaded from this page.

If you find it useful then please feel free to click one of the adverts on the right of this page.

There is a Microsoft Word document which explains how to use it.

To use it you will need to have Microsoft Excel.

 

Budget Food

These times are very hard for a lot of people. Someone who is living on benefits must survive on around £60 a week. So, in this series on budget food, I have decided to see how to live on less.

All my prices are based on shopping at Aldi, which is the cheapest supermarket in this area. Once in a while I will also do a comparison with other supermarket prices.

The objective is to make more things at home, rather than buying things which have been ready made, like pre cooked meals, and just to see whether it is possible to have a happy variety of foods and how much they cost us to eat.

I don’t plan to preach about healthy eating or what you should or should not be giving to children. There are a lot of other websites like that around. We all live in the real world and do the best we can. We all eat chocolate and cake and unhealthy snacks from time to time because we enjoy them. This is meant to be purely an exercise in the cost of the food.

 

How to Survive Spreadbetting

Spreadbetting is not the same as buying and selling shares, although the two are linked. In spreadbetting, the trader decides whether his chosen market will go up or down and places trades according to what he thinks. So, for example, if there is some good news on the horizon for a certain company, a trader could buy its shares, or instead, place spreadbets with a specialist firm.

The main advantages of spreadbetting are threefold:
1. There are no buying and selling fees.
2. There is no capital gains tax to pay on the profits.
3. It is possible to trade in a falling market as well as a rising one.

Other advantages are that it is possible to make instant trades online, although, whether this is an advantage or not will become clear.

I have been spreadbetting for nearly ten years now – with varying degrees of success. There is a lot of information out there about how to spreadbet, so this article is not about that. It is left for the reader to choose their own instruments, techniques and spreadbetting firms. They are all of a muchness and it is really up to the individual to decide what suits them. I trade the DOW Jones Index. But actually, many other indices, other shares and currency can be traded the same way. Also, I use technical analysis, while other traders use fundamentals.

Is it possible to survive spreadbetting?
The only way to survive is with discipline. Discipline of mind and discipline of action. Without it, the trader is doomed to chase his own index up and down, losing money like Autumn leaves along the way.

1. Have a realtime feed if you are going to be a day trader. You will need a good source of news and a good charting system. There are online sources and software available to buy. I am not really intending to advertise anything in this summary because they are all pretty much the same and the sources are easily found online.

2. Have a provider that you can trust completely. You need to trust them to make the trades when you want and to give you a good price. When I started, there were 4 points between the buy and sell prices. Nowadays, most providers give a single point. The way they get around this is to give a price which is removed from the actual price. So, for example, the Dow price might be 12289, the buy and sell price could be 12291-12292. So it is still a single point, but it is just a little removed.

3. Before trading at all, and also before trading each day, watch where the price is going and see whether it is following your system. Never start trading as soon as the market opens. Chartists will find days when their signals all indicate exactly what will happen like a beautiful symphony played out by the Philharmonia. Other days, the flags will be there, but the price will be moving all over the place. Likewise, people who trade on the news could find that this latest piece of news was already built into the price last week and what should have gone soaring up, just doesn’t. If it is not going along with your ideas, then leave it. Do not be tempted to guess. Sometimes it is driven by news – and there are enough chartists out there to drive the market according to their theories.

4. Never, ever trade up to your limit. Each instrument has a built-in market requirement. So, for the Dow, for each £1 trade, they require me to have £120 in my account. Now, if I only have £120 in my account, I would never trade at a £1 a point. Because that would leave me 100% exposed to that market and in a very vulnerable position. If it all goes in completely the wrong direction, then I will lose my hat fast! So, after 10 years of trading, I will, at a maximum, place a 50% trade. That way I still have funds in my account to cover my back if things should go wrong.

5. Know your trade. Before you place your trade, know when you will enter, know when you will exit. Know what you will do if it goes the wrong way. If you don’t know all these things, then go home and start again. You will not trade to the top of the peaks and the bottom of the troughs. Sometimes, the provider’s price just does not get that far and sometimes it all happens so quickly that you blink and its gone. Read up about stoplosses and make sure you have them.

6. Something silly that everyone says, but which is true is never run your losses and never bank too early. It is true that someone without a plan (or a clue!) will let a small loss run out of control in the hope that it will reverse. In the same way some people bank, as soon as a small profit is made, only to see it shoot up another 50 points. How you’re supposed to know exactly what it will do, i’m not sure, but it is good advice. If you are making a loss, try to look at it with fresh eyes. From the point you are now, (not where you started) will it go up or down? If it is going the wrong way, no amount of hoping will bring it back in line. Close the trade, take a second, and move on.

7. Regrets, we’ve had a few, but never when we are spreadbetting. The time to remember and mull over your failures is not in the middle of a trading day. If you are feeling emotional and fragile, then switch your computer off and go and do something else. Otherwise you will be trading out of desperation. Which is not a good thing to be doing anything out of. No revenge trading, no running scared and no desperate last acts of heroic foolishness. Not the right time nor the right place.

Hopefully some of these points should help someone survive, there are a few more, but it is getting quite long…

 

How to Survive Debt

All debt is relative.

A debt of ten pounds for someone who earns nothing is a bad debt. Just as a debt of twenty thousand is for someone on a thousand a month. So, the size of the debt is not the issue here. After all, a million pound mortgage on a house worth two million could be absolutely fine for some.

Debt is built up in two ways. There is the initial spend which causes a person to go into debt in the first place. Then there is the compound accumulation of interest and fees which are associated with this debt which help it to build up and up and up.

I am not sure how many of us are equipped to understand the complex calculations done by the banks when they work out just how much money we owe them. In very simple terms, in case someone does not know, debt can be compounded as follows.

If you owe someone £100 at 5% interest a month, then at the end of the first month, you owe them £105.
At the end of the second month, if you haven’t paid anything back, you owe them  £110.25, which is 5% of £105 added on, and so on. So, at the end of ten months, if you have not repaid anything, you owe them a grand total of £162.89p.

This is a wonderful device for all the banks to get us to pay back much more than we borrow. But it is that important percentage that is so important. If we paid back 6% interest instead of 5%, then we would owe £179.08p, over £16 more!

These are the basics to be aware of when initially borrowing the money. Compounding that debt is not going to do you any favours. The shorter the term and the lower the rate, the better. So it is a wise decision to never pick up the phone and call one of the new companies which offer short term debt at 1000% interest.

They are there, the adverts are cropping up. All they need is a million punters overpaying a few hundred pounds a month.

And it goes without saying to never, ever go to a loan shark. Or else, just chopping off an arm or a leg and handing it over to them first would be much better.

So, being in debt is actually fine, good debt is the way that smooths the wheels of industry – or something. But then the letters start coming through the door. Debt attracts more debt it seems.

Your lender will slowly inch up your credit limit if you are a good customer. They will offer a good short term rate to get you started, and then when you have built up enough of a loan with them, they will hit you with the full interest rate.

Other lenders will jump on the band wagon. More letters will arrive offering you more credit cards, store cards, loans for a car, holiday, doing up your house.

There are two facts to note here:

Buying things using a card is way easier than using actual money.  Firstly, it never seems to feel like real money. You just hand over the card and enter the pin number and it is all very clinical and painless. There is no counting out the small change and handing over the notes. It no longer matters whether you have the right change with you at all, you can pay for any amount of purchase – just use your card!

The second thing to note is that a lot of little amounts can build up to an extremely large total. Imagine five purchases of just under twenty pounds. It will not feel like you have just spent a hundred pounds, but that is what it means. Over a week of small purchases, it can add up to many hundreds of pounds.

So How do you Survive Debt?

The aim of someone who is in debt must be to get out of debt as quickly as possible. As painful as it will be, first of all, find out, or work out exactly how much debt you are in. Although you have kept a running total of your spending in your head, the actual figure may be very surprising. It could be thousands of pounds out when interest fees (compounded), late payment fees, overdraft facility fees, paper bill charges (yes, they do charge to send you paper statements) and manager’s lunch  (car, second house in Spain) fees are added onto the top.

Work out how much you owe.

Next, sit down and work out income versus expenditure. This is quite easy these days, with online banking and downloadable statements. You can easily what is going out, where and how and what it coming in.

As Charles Dickens said: “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

Cut down where you can.

Plan to overpay as much as you can within the terms of your borrowing. Some lenders protect the repayments they expect to receive by putting a limit on how much you can pay back.

See if you can earn more money. Can you let out a spare room? sell anything online? Offer tuition for a skill you have? Piano? Good head for numbers?

If you are in difficulties let your lenders know as quickly as possible. They are mean, they are callous, but they will try to protect their investment. If you can convince them to agree better terms, and still pay, then they might agree.

Aim to pay off your most expensive debt first. Take it slowly, one step at a time. Don’t hide, act now! 

 

How to Survive in the Pickling Business

You can scoff if you like, but a search through Google reveals over half a million hits for the pickling business. So there must be very many people who are doing very nicely out of pickles!

Now the thing is, that while we are in this global recession, there is one thing that everyone still has to do. That is right! We all still need to add relish to our food.

It might be cheaper food, that is for sure, but that doesn’t mean that it can’t be delicious.

This is where you come in. Do you know any good recipes for pickling your own vegetables? Great!

For those who don’t, here is a simple lemon pickle recipe to get started. After that, it is a question of finding some other great recipes and getting people to buy your pickle. Voila! You are in the pickling business.

Great Lemon Pickle
You will need some firm lemons, salt, bay leaves, star anise and black pepper.
Cut the lemons into quarters half of the way along, leaving the quarters connected.
Put a teaspoon of salt into each open lemon and close them back together.
Add each lemon to a sterile jar with a good lid.
Add the spices and some lemon juice.
Fill to the top with boiled and cooled water.
Keep on the shelf for 4-6 weeks, turning the jar every now and then to keep the salt moving.

People need to spice up their lives when they are feeling happy and sad and low. Someone in the pickling business who makes great pickles should always come up smelling of roses.

 

How to Survive Buying on eBay

If you are thinking of buying something online then eBay is a popular place where a lot of people start their search.

It is true that it is possible to buy a huge variety of things on eBay. This can range from designer shoes to a real crab necklace (really!).

So, how is it best to go about an eBay purchase?

Start off by just entering a term into the search box. It is good to be as specific as possible but without narrowing it down too much.

So, if you wanted to buy a 9ct gold dragonfly necklace, then that is exactly what you could enter. But if it was just a 9ct gold necklace, then a lot of other itmes would be shown.

I’m writing these obvious things down because of the ‘-‘ feature. In order to stop all the plated, tone and gold filled items from being shown, you can enter

9ct gold necklace -plated -filled -tone

et voila.

Once you have found the item, take a look at a small drop-down box at the top right hand side. This will say ‘Best match’. Some algorithm that eBay has in place favours certain sellers over others and these are the ones which are listed at the top. But these may not be the items that you want, so they can be re-sorted in terms of price or however else you want to sort them, then the next thing to do is to look at the seller’s feedback.

If they 100% positives and everyone is happy, then great. If there are a few negatives, then read the negs (you can click on the number to read just the negs). First, are they all from the same disgruntled buyer? Are they from people with low feedback themselves?

New buyers often have very high expectations and think that eBay is a giant company rather than a lot of stay at home mums, so they leave negatives about silly things. ‘Item was not as pink as I thought’ or
‘Size was right but item did not fit me’

If this is the case and the picture is positive overall, then there is no need to be too worried.

Sometimes sellers pull their act together. So there could be a lot of early negatives and then a lot of praise.

If there are a lot of recent negatives along the lines of ‘item never arrived, no communication’ then avoid at all costs. The seller has obviously gone AWOL.

Having found the item and made sure the seller is OK, then next, read the description. Then read it again. There is no point bidding for something you need by next Wednesday if the buyer takes two weeks to deliver it.

Finally, when all this is sorted out, do a quick Google search. It is not always the case, but sometimes, it is possible to buy a new item from an online store for less than a second hand one on eBay.

That’s it. Bid on the item to the amount that you are willing to pay and go away.
Do not stay online until the final second, because there may be someone who wants it more, who is willing to push the price up to silly amounts.

If you don’t win what you want today, there may be another one along in a minute, or tomorrow.

Paying through paypal is often a more secure way to pay because eBay have fairly hefty buyer protection policies in place. If your item never arrives, then you are almost certainly guaranteed a refund by opening a case with them.

And that is all.

Enjoy your item.