"Secrets to Saving Money in Australia" Free Newsletter - March 2008
This issue includes:-
- Sad Sally, Happy Hanna: Who's Going Nude?
- April is No Landfill Month
- Sophie Gray: Waste Not, Want Not
- Bag a Simple Savings Bag!
- Special Guest: Anita Bell!
- Best of the Forum: Renew, Reuse and Recycle
- Penny's Blog: A Fool and His Money are Soon Parted
- Homeopathy Corner: Reducing Landfill
- From Last Month: Jam and Chutney Preserving
- This Month's Help Request: Wasteful Housemate Drives Me Crazy!
- Savings Story: Simple Steps to Get Organised Reaps Huge Rewards
How are you going? I hope you are doing really well. This month is going to be fun. It is No Landfill month - a great opportunity to improve ourselves and our lives. A couple of months ago I had the pleasure of meeting Vonnie (aka Fairy from the Savings Forum) at a Simple Savings meeting. Wow! What an inspiration she is. Vonnie grows most of her own food, washes her plastic bags in a bucket of hot soapy water, then hangs them on the line to dry and reuse. Her household only generates one very small bag of rubbish a fortnight. That is impressive. So this month, let's all see how much we can lift our game. If Vonnie can do it, so can we!
It is wonderful how almost everything that saves you money and helps you get out of debt also helps the planet and slows global warming. Together we can achieve marvellous things. Thank you for your help and thank you for your support. You are part of something amazing. Please read the following and give yourself a huge pat on the back. You deserve it!
"I'm sure you get emails like this all the time - but WOW! I'm so glad I joined. I've learnt so much already, and it's only been about 2 hours. My only problem is that I can't tear myself away from the computer to go to bed!" (Amy Currie)
"I just wanted to write in and thank you for this wonderful site. I have been increasingly careless with my money over the past few years, not looking at the prices of things in the supermarket, eating out whenever I didn't feel like cooking and clothes shopping as a hobby. Simple Savings has made me very conscious of my spending and wasteful day-to-day habits (using the fridge as a storing place for fruit and vegetables between the shop and the bin, buying coffees every day, buying magazines and newspapers just to throw them out a few hours later...). Simple Savings is a new way of life for me. I now only shop once a week (at the local markets and then the supermarket) and whatever I have forgotten or run out of, I try and do without until the next week. I bring lunch every day and my diet has improved amazingly - last week's menu was roasted capsicum and basil pizza, sweet potato risotto, salt and pepper prawns with Asian greens, Indian dahl with rice and hummus and tabouli wraps - less than $45 for a week's food. When I went to the ATM the other day, for the first time I knew exactly how much money I had in my account! I have just started working this year after being a uni student (and heavily financially subsidised by my parents). Now I know that I am not going to fritter away my first year's wage. I am saving up for a home deposit instead! Thank you to all the Simple Savings team for their emails and support." (Joanna Longley)
"My membership is up for renewal and I just wanted to let you know I have been thrilled with your site. I have implemented endless suggestions and feel SO in control of my money. My happiness and contentment have also escalated. Thank you and all the SS's for giving me the encouragement and motivation to set goals and see them slowly being achieved. I see myself being a SS forever. Best wishes and congratulations on a job well done!" (Jenny)
"We found the Savings Diary a real eye opener and are now going to continue the exercise at home by adding it to our Excel budget. The great thing for us was that we were budgeting for bills and have no debt but kept wondering where the extra went. By being a third party, SS has helped us be able to discuss and be accountable for all spending with no emotional hangups; being answerable to a computer makes it hard to argue. My husband used to scoff at spending money to save but now he's extolling your praises. We also love the Save-O-Meter; that has been a big winner with our daughter who loves to see something she has come up with on the meter - like a SS gold star!" (Melody)
GO Crazy girls in Hobart!
Who are the GO Crazy girls? They are a group of friendly super-motivated members who started their own club within the Forum more than a year ago to help each other get organised (the G.O. in GO Crazy means 'Get Organised') They travelled all the way to Tasmania for their first get-together in person recently and had a ball! It was very cold in Hobart but the nine of them had so much fun and got along so well, they're planning the next meeting already!
For a full report go to the thread
Pictured here are Carol, Rachel, Judith, Fairy (Vonnie) and Tracey having fun on Saturday night in Hobart!
With Aussiemaid, Vicki and KH at the market, proudly displaying their SS bags!
News flash: The next batch of SS bags is on the way! See below for details.
Have a great month!!
PS. If you enjoy this newsletter make sure you forward it on to your friends. We may end up with a nude revolution ;-)
1. Sad Sally, Happy Hanna: Who's Going Nude?
Hanna walked purposefully into the office and set a large box down on her desk. She turned to her colleagues with a mischievous grin and announced, "Good morning everyone! I need your help to make a few changes around here. You see - I'm going nude and you are all going to join me!" Jaws dropped all around the room, just as Hanna had hoped. "That's got their attention!" she giggled to herself.
Sally was the first to recover. "Hanna - I know you want to save money and reduce your water consumption but walking around naked to avoid using the washing machine is NOT the answer," she glared reproachfully. "And as for us joining you! Are you trying to get us all fired?" Hanna almost collapsed into hysterics at the sight of their worried faces and decided it was time to put them out of their misery.
"Don't worry Sal, I'm keeping my clothes on - and so are you! I'm talking about nude food - that is, food with no packaging, or at the very least no throwaway packaging. I want you all to join me in transforming our office lunches. We spend a fortune on food packaging and containers in the workplace and throw most of it away - but not any more! Let's all have a go at seeing how much we can reduce our waste this month. No takeaway coffee cups - bring a flask or mug to work. No cling wrap or disposable rubbish whatsoever - we all have to recycle or invest in reusable packaging this month. I've brought along a few things to give you a few ideas - feel free to come and take one so you can get started!"
Hanna's box of goodies contained all kinds of things from empty plastic ice cream containers and Tupperware boxes to coffee cups and paper bags. Everyone took a turn and was soon swapping ideas as to what they could all be used for. "Thanks everyone! It's great to see you all so enthusiastic," smiled Hanna. "I just have one more question. Who's going to tell the boss we're all going nude?"
2. April is No Landfill Month
Many people would describe modern packaging as a massive leap forward for mankind - but I'm not so sure. While all our technological advancements have made cooking easier (I love my oven and blender), when it comes to the quality of the food I think we have gone backwards. The introduction of disposable packaging means that instead of eating fresh food from the yard, our food is now several days, weeks or even months old by the time it gets to us. My favourite example is vacuum packed meat. It might look lovely and fresh in its fancy plastic bag but thanks to that bag the meat can be three months old and full of amines - yet sold to us as 'fresh'!
Once upon a time all our food was rudie nude. That is, food with very little clothing. No disposable plastic, no pretty labels, no sneaky tricks, just fantastic 'fresh' food. The wonderful thing about nude food is that it is fresher, tastier, cheaper and more nutritious than its heavily packaged counterparts.
So this month let's see if we can avoid disposable plastic and fancy packages. The less of these we buy and use, the less of them will end up in landfill. Doing this isn't just great for the planet. It is better for your health and will save you money.
Nude food is wonderful because it is cheaper. It costs money to package food; they need processing plants, transportation, petrol and all these costs add up and are passed on to us, 'the consumer'. So this month set yourself a goal to stop paying premium prices for earth vandalising, expensive packages by making the effort to learn how to grow some of your own food. This month prepare yourself a patch of soil, buy some sturdy food plants and give growing your own food a go. After all, food you grow yourself is virtually free.
Nude food is fresher. The whole point of packaging is to extend the shelf life of a product. That's jargon for making sure the food rots slowly. Well to be frank I don't want to eat rotting food, even if it is only partly decomposed. I love my food fresh! Biscuits taste the best snatched from the baking tray after they have come out of the oven, not from a throwaway plastic tray taken from a throwaway plastic wrapper. So this month set yourself a goal to bake everything yourself. Don't buy anything you can easily bake at home.
Nude food is tastier. The most delicious meal I have ever eaten was completely nude. It was nine years ago in Thailand. We were travelling down a river in tropical heat without a fridge. So instead of bringing chicken fillets, our guides brought the whole 'live' chook. At tea time it was discreetly dispatched, plucked and barbecued on an open fire. No seasonings, no herbs, just fresh cooked meat. It was divine! Even nine years later I still salivate just thinking about it. That chicken made me realise how much we have lost. The older the food is the less natural flavour it has and the more things we need to do to it so it tastes nice. All the seasonings and flavours we add are just trying to cover the fact that the food we are eating is old. I really want to eat fresh food - but I can't bring myself to kill a chicken! So instead I'm going to go to the local wharf once a week this month and buy the morning's catch, right next to the trawler. If you live inland, get some freshly slaughtered livestock. Let's see if we can all eat one really fresh meal a week this month.
Nude food is healthier. Nude food is so delicious and fresh. It doesn't need preservatives or chicken salt to give it flavour. It tastes divine just the way it is. When it comes to fruit juice, it's the phytonutrients in plants that contain most of the flavour and a lot of the health benefits. Once a plant is juiced it oxidises very quickly and the phyto-nutritients are lost. So even though buying orange juice at the supermarket is convenient, getting out the juicer is much better for you. So this month avoid store bought juice, instead treat your taste buds and squeeze yourself something nude. Then taste the difference!
The only down side to nude food is it takes longer to prepare. When you are learning how to cook nude it takes a bit of thought and mental energy but the benefits are huge. My family is definitely going nude this month!
3. Sophie Gray: Waste Not, Want Not
Every working day in Mumbai, India, approximately 170,000 tiffin boxes are delivered by Tiffin Wallahs to office workers all over the city. The boxes are collected from individual homes, to be delivered to the owner at their place of work in time for lunch.
The tiffin box is a stack of round metal tins that clip together, and contains a selection of home-made foods; bread or rice in one, daal or meat and gravy in another, vegetables in another. 170,000 of them a day, fresh from the recipient's own kitchen!
I adore Indian food. I love that the company that delivers the tiffins in Mumbai employs 5000 illiterate workers to deliver the boxes. And I think it's brilliant the service is so efficient that in 140 years they've only had a hundred odd complaints. So impressive is this operation, the Tiffin Wallahs have featured in 'Forbes' magazine. They don't even use a computer. Even more marvellous are some of the other things they don't use:
No styrofoam, plastic cling wrap, plastic bottles, cellophane and foil wrappers, plastic cutlery or disposable plates. No paper napkins, paper boxes, plastic bottles, Tetra Pak or any other of the inorganic or non-renewable paraphernalia that is so much a part of Western lunch culture. Those of us in the habit of taking food from home will already be enjoying the money saving benefits. But have you considered the planet saving benefits of how you package the food you take from home?
Kids' lunch boxes:
Decant: If you buy chips and pre-packaged snacks, change to buying a big bag and decant into reusable containers. Not only is it cheaper, there will also be fewer plastic bags in circulation.
Yoghurts: Kids love little portions, but those dinky little yoghurt pots add up to a big mountain of plastic every year. Buy cute re-useable containers and fill with yoghurt instead.
Sandwiches: Plastic sandwich wrap may look more appealing, but paper wrap will decompose swiftly (along with its uneaten contents).
Drinks: Refillable water bottles are the best option. Tetra Paks will be a long time in landfill; even when shredded, some tests have shown that after more than a month the cartons haven't degraded even slightly, due to the polythene layers inside and out.*
Fruit: Fresh fruit comes in its own biodegradable wrappers (called skins). Fruit snack foods produced by commercial manufacturers are hygienically packed in non bio-degradable wrappers. Choose the apple, not the plastic bag of apple snacks.
Pack home prepared snacks such as popcorn or baking, raisins or crackers in renewable paper or reusable containers.
Why not challenge the school to a 'no landfill' month? Offer a class prize such as a water fight, party, or extra playground time to the class with the emptiest bin. Kids are brilliant at teaching their parents, and it might also stop them nagging for the latest snack trends.
Think tiffin: What have you got at home that you can have hot for lunch? If 'made at home' is not an option, consider how and where you buy your lunch. Yup, that sushi is a healthy choice, but the plastic box is an environmental nightmare - choose your sushi from the cabinet and have it placed in your own reusable box.
Eating irons: Keep a knife, fork and spoon in your office drawer and say no to plastic spoons and forks.
Hot food: Invest in a wide mouth Thermos and use it to make instant noodles in the office, take soup or leftovers from home even hot chocolate in winter. You'll feel spoiled, eat healthier and add nothing at all to the landfill.
Coffee: Support the coffee shop that uses sustainable paper coffee cups or skip takeout and have your morning coffee in good old fashioned crockery. Buy some cheap mugs for the office canteen and blacklist the Styrofoam; it makes the coffee and tea taste funny anyway.
Sometimes you have to spend to save, a little outlay now can save you later on. A selection of plastic containers with snugly fitting lids is essential. You can go for pricey but long-lasting Tupperware type products or cheaper Gladware, either way you'll use less plastic wrap. A Thermos, if properly looked after will last a lifetime of lunches and picnics, just don't drop it! When choosing a lunch box, choose a big one so you can fit your containers in it; the insulated kind help keep the food cool in hot weather.
Below are some recipes you can make for dinner, then eat for lunch!
Magic Chicken Pies
These pies are called Magic because the single piece of chicken goes so far it's amazing. Pies of all descriptions make great 'lunch box' food.
Preheat oven to 200°
1 single chicken breast (either roasted or equivalent quantity of 'leftovers' or poached in water with some peppercorns, parsley stalks and half an onion. Save the 'stock' for soup or gravy).
1 leek, sliced
A handful of mushrooms (about 5), sliced
2 tbsp flour
300g cooked potato, cut into small cubes
1 tsp thyme
2 sheets of frozen pastry or equivalent quantity of flaky pastry or short crust
Salt and pepper
1 beaten egg
Sauté the leeks and mushrooms in the butter till soft, stir in the flour and gradually add the milk until a thick sauce is formed. Add the potato, thyme and the chicken breast shredded. Season with salt and pepper and allow to cool. Grease a medium muffin pan with cooking spray. Line muffin pans with pastry. I find an empty 800g tomato tin or 400g tuna tin cuts just the right size circles for the muffin pans. Press the pastry in gently (re rolling the pastry until all the pans are lined). Spoon in the chicken filling. Using the pastry trimmings cut strips of pastry - four for each pie, and lattice the pastry strips on the top of each pie. You will need to dab a little cold water onto the ends of the pastry strips and press them down firmly so they don't pop up as the pastry cooks.
Brush lightly with beaten egg and bake for 20 minutes or until golden.
Satay Pork Balls
Mince is one of the least expensive cuts of meat, and as it is quick and easy to work with it is great for those with little time or culinary experience. This simple flavour combination is savoury and very more-ish, the recipe can easily be increased and the balls are great in pita bread with salad for lunch.
400g lean pork mince
2 slices of bread, made into crumbs
1 clove garlic, crushed
2 spring onions, sliced
1 tsp grated ginger
2 tbsp soy sauce
3 tbsp peanut butter
¼ cup sweet chilli sauce
Fresh salad leaves
Mix all the ingredients together in a bowl or food processor, use wet hands to form into balls and bake in a non stick pan for 20 minutes, shake the pan during cooking so the balls turn over. When they are cooked they will be golden brown and crunchy outside and inside should not be pink.
Serve with a salad, bread and a little sweet chilli sauce or chutney for dipping.
*Research on Tetra packs from Appalachian State University.
The compost pile was very aerobically active, held at a constant 130-140 degrees F, and was about 20' wide, 8' tall, and 10' deep. Even shredded to different size strips at widths from 1/8" 1/4" these cartons, after more than a month haven't degraded even slightly.
In municipal compost waste management systems, where the cartons probably won't be shredded and where time constraints exist, the carton, due to its polyethylene layers both inside and out, may outlast the other materials.
4. Bag a Simple Savings Bag!
The Simple Savings bags are brilliant but they have three real problems; They sell out in a blink of an eye, we can only order a limited amount and it takes ages for the next batch to arrive. The good news is the next lot are on their way and we expect them to arrive in Mid-May. If you would like one from this batch please order your bags now, immediately, straight away!
I hope this time we have enough bags for everyone, because I love my Simple Savings bags. They have been fantastic. I carry them everywhere, they keep me focused and they help me to save, Save, SAVE! But I never predicted how practical they would be. Now I take mine to the pool, on picnics, to school. They are a great size, fantastic for storing kids' clothes in, great for sorting toys, they stack neatly in the boot of the car, are handy for snacks on planes as they slide nicely under the seat (only half full), I even use one as a baby bag (for carrying nappies and things, not the baby). The only problem has been my green bags (*guilty grin*) don't match the other items in my wardrobe. I tried buying lime green thongs, but they just didn't cut it. It is important for us Simple Savers to look fantastic at all times, so now you have three versatile (match everything), distinctive and stylish colours to choose from. So here they are... drum roll please... the next batch of environmentally friendly, re-usable Simple Savings Bags; Pink with sky blue writing, black with purple writing and purple with bright green writing. Aren't they gorgeous!!
The bags are due to arrive in mid-May, and we are taking pre-orders now.
Important: The last two times we produced Simple Savings Bags they sold out in six days. So please be quick. We are a small company and we can only order a very limited number of bags. Please be quick!
If this is the first time you have heard about the bags. Here is their history...
How it began...
18 months ago, members asked for some Simple Savings shopping bags as a way they could identify other members. It took a little while to arrange because I wanted them to be extra special; not just a bag but something to help you lower your bills and improve your life. The result was a reusable, environmentally friendly Simple Savings shopping bag to help you 'Stop, Think and Save'.
The main purpose of these shopping bags is - well, obviously to carry your shopping but they are not just bags. They are also member spotters, Memory Triggers, confidence boosters, stylish accessories and they help us to help other shoppers save money!
1: They help you to spot other Simple Savers.
There are over 80,000 of us around now and here we all are, walking past each other in the supermarket without saying hi when we actually have something in common! We don't know what fellow Simple Savings members look like but by carrying our bags as we shop, we will now be able to flaunt our savvy status with pride! Also, with Savings Groups now actively at work all over the country, it's a great icebreaker for new members and the perfect way for groups to identify one another.
2: They act as a memory trigger.
Think of your bag as a funky memory trigger - something that is cool enough to want to carry around but actually reminds you to be on your guard and keep your money in your pocket. Stop, Think, Save is really a summary of your Eight Steps. If you can stop yourself and think about what you are about to buy, you are ahead of the game.
3: They give you confidence to ask for discounts.
Something I am hoping for long term is that when you have this bag with you, it will give you more confidence to ask for a discount. One of the problems we have found for a long time is that most people want to ask for a discount but are a little nervous. Don't be - think of it this way instead. Stores are set up with dual pricing; the showroom price that most people pay without question - and the cheaper price for people who have the savvy to ask. We want to help give you that confidence - as you carry your bag you will know that we are all out there doing it as well!
4: They look good.
Let's face it, looking good is important. A lot of thought went into the design because this bag needs to be something that you are going to want to be seen with every time you shop. Sure, there are plenty of other environmentally friendly bags you can buy but how appealing are they? How often do those daggy looking bags get left in the boot of your car? We wanted Simple Savings bags to be different - a bag you can't ignore. A bag that screams 'CARRY ME!' So we have gone with a stylish purple, black and pink bags that look good.
Unfortunately, it is a little hard to replicate the colours on a computer screen. We have made the images above as close as we can get.
5: They are sturdy!!
One of the problems we found with other environmental shopping bags is the fabric can be flimsy or seconds quality, the stitching is poor and the plastic base is very thin. We have ordered the toughest, sturdiest bags possible so they will last a long time.
6: They help other shoppers.
One of the biggest challenges members write in with is what to do when they see other people struggling. How can you tell them about Simple Savings without being rude or hurting someone else's feelings? These bags are the perfect solution. First and foremost they are unobtrusive. When you carry the bag around, all you are saying is that you are a savvy shopper and helpfully carrying the URL around too, so other people will see where they can go to find out more information. We have made the logo and URL nice and bold, so people can see it from ten metres away. You have carried the bag, you have done your best to help them out of debt and keep their house - the rest is up to them!
The Simple Savings bags are;
3 bags for $11
9 bags for $27
Discount for Vault members
We have lowered the price for current Vault members. Login to get these prices;
3 bags for $10 (Saving $1.00)
9 bags for $25 (Saving $2.00)
Click to pre-order (bags are due to arrive in mid-May).
5. Special Guest: Anita Bell!
Wow, Anita Bell is one popular lady! Ever since we introduced her as our special guest debt-buster in last month's newsletter, we have been inundated with your questions for her. Unfortunately Anita is unable to answer all of them at once but she will pick three topical ones each month to answer. The wonderful news is she has also answered many of Simple Savers questions in her books. You can view her range of books and get yourself an autographed copy directly from Anita's website
Here are this month's three questions and answers:
Fixed v's variable home loans
Savings Peta from NSW asks "I would like to know when you should consider fixing your home loan and when you should get a variable home loan. What are the indications that I should look for?"
Hi Peta! It's really much easier and more logical that most people think.
Step 1: Work out the difference for the best loans to suit you. For example, if your loan is $300,000 and one of the rates is 8% and the other 8.5% (*see notes below) then the extra cost per year is $1500. (That's $57.69 per fortnight or $4.10 per every day of the calendar!). Let's see that again in slow motion...
$300,000 times 0.5 (the difference between the two interest rates per year) divided by 100 (which converts from percent back to decimal/dollars) = $1500 per year.
Divide 1500 by 12 to get the monthly comparison, or divide by 26 to compare fortnightly costs or divide by 365 to compare how much extra per day it will cost (if you can bear the thought!)
Step 2: Ask yourself 'Am I willing to bet $1500 on interest rate changes in the next year. Or bet twice $1500 over the next two years? Or three times $1500 over the next three years?' And your answer to this will help decide how long you should fix your loan, if at all.
i) I didn't specify which loan was fixed and which was variable because it doesn't matter. This simple calculation will work in either case.
ii) Banks don't like to lose money, so when they're betting that interest rates will rise in the next three to five years, they usually set their fixed rates at a little higher than their variable rates to help compensate. But when they start betting that rates will come down, they often drop their fixed rates below their variable rates. This will help you to make better guesses at what is likely to happen, except when the banks are being very competitive in trying to attract new customers away from other lenders.
iii) You use basic maths theory like this to compare rates, but in practice, you're paying off your mortgage a wee bit each month so even though lenders will say that the difference between these rates is an extra $1500 a year, it really should turn out to be a bit less than that. But still, budget for the worst case and you'll be better off, even though it often doesn't feel like it.
iv) Don't forget to compare more than just interest rates. i.e. limitations that go with fixing your loans, such as 'hidden' fixing fees, limitations on how much extra repayments you can make and additional break costs if interest rates turn significantly in the opposite direction. Also consider other sides to dealing with that lender, such as availability of netbanking, ATM fees and whether or not their branch is open five days a week or six - or whether they have a branch in your area at all.
How do you choose shares for yourself?
Frogdancer from VIC asks "I would like to see the rules that Anita sets for herself when selecting which shares to buy. I would also be interested to hear a few words about the title of her first book, and if she feels that such a feat is still readily achievable today. I LOVE the charts in the back of the book with all of the different interest rates - invaluable when planning for the future."
Hi Frogdancer! Love your nickname! If you have at least a small amount of previous experience with the stockmarket, then I can answer this very quickly and simply by saying that the main things I personally look at (in order to achieve a balance of high annual returns with reasonably high capital growth, all relatively conservatively) are: the current share price compared to its 52 week highs and lows. I don't fret so much about buying at the lowest point but do like to buy low-ish with potential for at least 30% gain. Then I compare current price to the NTA/NAB. (Net tangible assets and/or net asset backing) as an indication of how much they're trading in comparison to their 'core wealth'.e.g. buying a share for $10 when its NTA is only $4.00 is a bit like paying a million dollars for a house that's only worth $400,000.
I also look for dividend yields higher than 3% for resource stocks and 6% for industrials. I like my dividends to be fully franked to make tax time more enjoyable and the PE ratio (price to earnings ratio) has to compare with the PE ratio for competing companies. (e.g. I'd compare a Coles PE with a Woolworths PE but not Coles with a car manufacturer because they don't compete for the same customers.) Another one of my personal favourites is the EPS (Earnings per share), and of course I always favour the positive ones (companies making profits).
If you have no experience in the market at all, or if you'd like any deeper explanations, the ten steps that I use are explained fully in the last chapter of "Your Money, Starting Out & Starting Over" (Australian edition only. New Zealanders need to make sure they get an Australian edition, which will still help them understand the market from their side of the pond too).
Please also note that I prefer to call them steps, rather than rules, because they're things that every cautious investor should consider when choosing shares. And there's nothing secret, mysterious or overly-complicated about any of them. You could figure them all out for yourself if you read almost any five finance books by other authors from your local library.
Rules are something that you can make yourself to help suit your own portfolio after you've set your personal goals for it. For example, my own personal rules include: Never buy shares in a company I wouldn't deal with as a customer (so for me that means no cigarette companies, and more than a handful of investment fund managers and one or two banks). I never invest in speculative/high risk stocks, like computer software companies and companies that search for gold. I never buy shares in companies who pay unfranked dividends. And I never buy shares in a company with a negative EPS. (A positive figure means it's making profits, while a negative figure means the company has been reporting losses.) Of course many investors can and do make money by breaking any and sometimes all of these 'rules', but they usually do it at the much riskier end of the investing spectrum.
As for the title of my first book (which was "Your Mortgage and How to Pay It Off in Five Years"), yes, it's still achievable, less so in some areas and surprisingly more so in others - remembering that the advertised price of a property is only one part of the equation. Negotiation, deposit, loan, length of settlement period and what you do during it all have major impacts on the overall cost that should usually be worth savings between $20,000 and $120,000 before you even start to make extra repayments.
In fact the dollar value of savings to be made from employing tips and strategies from this book has dramatically increased during the last boom. When I first launched the book, homebuyers could typically only save $10,000 to $60,000. So given the recent opportunity of launching my 5th year anniversary edition of the book, I raised the subject with my publisher about the possibility of changing the title. I asked if we could rename the book to something like "Your Mortgage and How To Save up to $250,000 Per Property" But since this little red book has become an Aussie icon in the finance industry and a bible to most first homebuyers, it was considered best that we should honour its title and its readers by keeping them intact.
Is it still possible to own your home in 3.5 years?
Kate from QLD asks "I would like to know whether Anita still thinks it's possible to buy and own your home in 3.5 years - with the general increase in housing costs, is it still possible to find places that would fit the selection criteria to enable the 3.5 year timeframe (as mentioned in her first book)? For those not in the know- the basics were:
1. Select a property which is affordable in the first place.
2. Pay as much off as you can, as quickly as you can.
3. The remainder of the book was concentrated on ways to save/earn extra money for additional payments.
I don't have the book here with me now to quote it, but I believe there was a 'formula' to tell you the maximum you should borrow. I know that at the time of writing, the properties referred to were costing in the order of 60-100k (which is totally unheard of now- unless I'm wrong, which is my question!)."
Hi Kate. Firstly, the title of the book suggests five years, even though I achieved ownership of my own home in just three years, two weeks and four days. I remember it exactly because I went without Tim Tams the whole time, sigh... After all, interest rates were 14% to 17% and we were only earning low to middle incomes! Since then we've paid off higher priced properties on lower incomes in a similar timeframe, each time with an increasing number of kids under our wings. Of course all homebuyers have experienced a mixed bag of blessings and bad luck during this time. Prices and wages have gone up (mostly in line with inflation if you average over the last 20 years instead of just the last five). Meanwhile interest rates have come down and loans have become more flexible. So whether or not you personally wash up on the happy side of the shore depends on how you manage each and every stage of the purchase to sale process. And yes, your list does mention most of the basics. I've mentioned a few more in answer to Frogdancer above.
(And yes, I do mention a simple equation in that book, but it's more of a rough rule of thumb rather than an exact formula. It's only to help you work out how much a normal person can usually afford to pay off in five years, given average wages at current interest rates. And there's a slight variation for people who are good at budgeting, because obviously they can afford more from the same income. But you also have to remember that this 'affordability thumb-rule' is only for the loan portion of the purchase price. (i.e. most people can afford to pay off two times their total annual income in five years, or two and a half times their annual income if they're good budgeters.) But then on top of this, you have to estimate or 'guesstimate' the size of your deposit plus however much you can negotiate off the price off the property before you know which price bracket to go shopping for property (whether that's vacant land, a studio unit, house or commercial property.) Then you have to avoid choosing a strict loan, try to get a long settlement period, figure out how and where to live while you're building/renovating and so on.)
Note: Anita Bell is a bestselling Australian author who writes from personal experience. She is not associated with any particular bank, real estate agent, stockbroker or other investment advisor and she uses the profits from her books to help others, so she mentions specific books in her replies above for reference purposes only, to help point readers in the direction of more thorough responses where necessary, and she encourages budget-battlers to borrow her books from friends or local libraries wherever possible. (When borrowing from libraries, remember to ask your librarian to check that you're borrowing the most current editions.)
6. Best of the Forum: Renew, Reuse and Recycle
We've said it many a time but saving money and saving the planet really do go hand in hand. Not only are our Savings Forum members a money-conscious bunch; they're constantly striving to be kinder to the environment too. Check out some of these Forum threads for eco-friendly inspiration!
Even though many of us are making a conscious effort to use environmentally friendly shopping bags these days, we still manage to end up with a few pesky plastic bags. The good news is, there are dozens of ways to put them to good use, rather than adding them to landfill. This thread will give you heaps of ideas, from stuffing beanbags to even making a blanket!
Paula's husband has FINALLY given up his old shirt collection from the 80's and Paula is keen to recycle them - but how? With the help of other members, she aims to come up with 100 different ways and as usual, there is never a shortage of creative ideas!
When Amanda wanted to dispose of her king-size mattress, she found a much better solution than simply dumping it. She came across a company which will either recycle unwanted mattresses or donate them to charity. Find out more in this thread!
Unwanted or worn-out bedding takes up a lot of space in a landfill - but what else can you do with it? Turn them into something new and very useable, with some ideas from this thread!
Who says you need to use rubbish sacks to throw your rubbish away in? Lesley-Ann shares her clever method of disposing rubbish while recycling other items and saving on plastic sacks all at the same time!
7. Penny's Blog: A Fool and His Money are Soon Parted
Mar 19, 2008
Noel and I are getting very cynical in our old age - it must be the Simple Savings mentality that's causing it, but that's a good thing, I have to stress! Being cynical is certainly saving us a fortune anyway. We have really come to detest people and organisations which try and use their wily ways to get people to part with their money - even watching TV makes us sick lately. Take last night - a commercial came on the telly for Michael Hill Jeweller, advertising a diamond necklace, ring and earring set. 'You WANT it...' the voiceover breathed enticingly. 'You NEED it... you HAVE to HAVE it'... and all at the 'bargain' price of ONLY $1295 each! 'Ooh, what a bargain! Shall we buy two?' Noel and I sneered at the TV. I mean, here we are in a recession for goodness sake. The media is full of it; there are families everywhere struggling to put food on the table and companies like this are still throwing themselves and their products at people. Well forgive us Michael Hill if diamonds aren't exactly top of most people's shopping lists at the moment. Hot on the heels of that nauseating ad came a promo clip for 'What Not To Wear' where Trinny and Susannah were transforming geeky teenage girls into stunning, confident young women. I have nothing at all whatsoever against boosting a young girl's self-esteem - good on them - but what I didn't like was the other message they were portraying - that you've got to spend a lot of money to look good. Sure, it was lovely to see these young girls being pampered but the whole 'transformation' process would have cost a flipping fortune. I couldn't help but wonder what sort of shopping habits Trinny and Susannah were teaching at such an impressionable age.
I'm also waging a personal boycott against what I call 'Stuff Shops'. These are shops which sell nothing but stuff. Beautiful and usually completely useless stuff which nobody needs but looks so lovely it makes people want it. I used to be the Queen of Stuff Shops and I know how dangerous they are, which is why I loathe them so much. I would have wasted literally thousands of dollars in Stuff Shops in my Sad Sally days. I never need to buy another knick-knack for my house and wouldn't want to; it's too cluttered thanks to all the crap I bought as it is. Our tiny town has only one main street and it used to have no less than three Stuff Shops in it; now it has two and I do my utmost to keep the heck out of them. In fact I take an absolute pride in NOT going into one of them; they probably think I'm really horrible for always walking past and waving hello but never actually going in! What on earth's the point though? It's not as if I need anything.
Another thing I have decided I definitely don't need to buy again too is a water bottle. My recent experience of people watching in the city while everyone rushed past with takeaway coffees and bottled water put me off for starters, but after reading an article at the weekend entitled 'Waging war on the mighty water bottle' I'm determined never to buy another of the blasted things again. I also recently cancelled our water cooler hire, which probably sounds very extravagant to even have one in the first place but our drinking water was horrible and full of all sorts of nasties. The water from the cooler was lovely and we drank much more of it which was better for our health but it was costing us over $70 a month in bottled water and machine hire from the company! Can't think for the life of me why we put up with it so long now but they did us a favour in the end, when they neglected to deliver us any water for two months, during the school holidays. The hottest time of the year and when we all needed it most! I had great pleasure in writing to inform them that thanks to their crap service, we realised we didn't need their posh water any more - especially not at a cost of $840 a year. They begged us to reconsider but no way! Instead, Noel went to Bunnings and bought a permanent water filter for $200. Just wish we had done that in the first place!
I'm still finding interesting reading wherever I go too. I really enjoyed an article in That's Life! this week about a Kiwi family who have undertaken a 'No Trash' challenge. They have vowed not to contribute more than ONE BAG of rubbish to landfill for an entire year and have been doing an absolutely brilliant job of recycling. I thought I was a pretty good recycler but these guys are really going the extra mile. I learned all sorts of things can be recycled that I never even knew of! The article really got me motivated and I'm determined to think even harder now before putting anything in the rubbish bin. One new thing I do admit to struggling with at the moment is the launch of a new book. It's most definitely a 'want' of mine but I'm not sure it's a need! It's called 'Change the World for Fifteen Bucks' by an organisation called We Are What We Do. At this stage the book is only available in NZ and costs, funnily enough, $15. It contains heaps of environmentally friendly tips, many of which save money and all result in making the planet a nicer place to live. The thing is, I learn so much about saving money AND saving the planet from Simple Savings, half the time I buy these other things and find there's nothing new in them!
I'm describing my March so far as not exactly No Spend, but certainly super-frugal. I'm really happy with the decisions I've made and the things I've bought and don't feel any of them have been unnecessary. I'm also getting a lot tougher with the kids about buying food and drink when out. We always have a treat after the boys' swimming lessons because they work hard and swim around 25 lengths so I reckon they deserve it but that's all from now on. They're learning that their Mum cannot be swayed! Mind you, there's so little they can eat in the junk food department now between the two of them with all their allergies, there's hardly any point in even looking. Ice creams have been swapped for healthy fruit ice blocks and most other sweet things are off the allowed list now. So it was a bit unfortunate when I won a box of 24 Mars Rocks bars on the radio yesterday! I guess Noel's going to be eating a lot of chocolate!
March 2008 (for Vault members)
3rd - Try, try and try again
8. Homeopathy Corner: Reducing Landfill
Many people know Homeopathic remedies are safe and very cheap to make, but few realise they are also much better for our environment than mainstream medicine. Mainstream medicines do a lot of environmental damage. There are the obvious problems such as plastic bottles and glossy boxes adding to landfill. Then there is the far more insidious problem of what happens to the antibiotics, active ingredients and various chemicals they are made from once they leave the body and return to the environment. The world is now experiencing contaminated water supplies, antibiotic-resistant super bugs, and side pollution from the manufacture of these medicines and the problem is a growing one.
Homeopathic medicines have none of these problems. They are safe (made from sugar, water and alcohol), cheap (simple manufacturing methods) and environmentally friendly. Most medicine is even dispensed in re-usable glass dropper bottles. If you already have homeopathic medicine at home this is how you can re-use your existing glass dropper bottles.
How to Reuse your Bottles
Before you try to reuse empty homeopathic bottles, be aware that there is a right and a wrong way to clean them. Just rinsing or washing will not necessarily get rid of the old remedy - energetic traces will remain in the bottle. The best way to eradicate this is to boil them. Let's look at how easy this is to do:
Step 1. Slap on some rubber gloves to avoid getting an accidental dose of the remedy through your skin as you clean your bottles.
Step 2. Separate each bottle and cap and rinse. If your bottle has a glass dropper, it can be separated from its rubber top and cap as well.
Step 3. Place all your separate pieces into a saucepan of water, making sure the bottles are upright and filled with water. Bring to the boil for twenty minutes to destroy any energetic traces of the previous remedy that may still be clinging to the pieces. (Note: the rubber tops will tolerate boiling just as well as the glass pieces so make sure you throw them in too.)
Step 4. Drain the pieces and allow them to dry. This process will be quicker if you gently warm them in an oven but do be careful not to overheat them!
Step 5. Reassemble your bottles and dropper tops and, Voila! They are ready for reuse.
9. From Last Month: Jam and Chutney Preserving
Last month Melissa Daniels asked:
"I would love some advice and tips on preserving and jam/chutney making. This has always appealed to me and I currently have a surplus of wonderful fruit and garden vegies but I have had a couple of failures in the past, (mould getting in or things not 'setting') and I'm too scared to give it a proper go now! Do I have to go out and buy all the proper 'gear' or are there cheaper ways I can get set up? The preserving jars and accessories all seem quite pricey in the shops and I'm wondering how cost effective a method of storing my excess produce this really is? Thanks!"
Thank you everyone for your tips and instructions for Melissa. It sounds very cost effective and easy to turn your fresh produce into yummy jams and chutneys. Well done!
Use jars from other products for fruit preserves
For storing fruit preserves I re-use jars from products we use at home such as tomato sauce, mayonnaise and so on. Then to ensure they are sterilised I use my old baby bottle steriliser. You can buy sterilisers second hand on eBay for about $20, sometimes less. If you really want nice jars for gifts, shop around next time you are buying anchovies or similar products that often come in nice jars with metal fastenings.
Natural pectin for setting jams
When making apricot jam (or other stone fruits), add the seeds to the saucepan as you simmer according to recipe. The seeds contain 'pectin' which is a setting agent - much cheaper than buying it from the shop.
Kill mould and bacteria with secure lids
One of the main causes of mould growing in your home preserves is that the jars have not been sterilised properly. Simply pre-heat the oven to around 160 degrees Celsius and thoroughly wash the jars, lids, rubber seals, or whatever you are using in hot soapy water. Make sure they are spotless and rinse in clean hot water. Then place the jars in the oven for 20 - 30 minutes to kill all bacteria. When filling the jars ensure you fill them all the way to the top and fit the lids securely. Store the jars out of sunlight in a cupboard or pantry until opened then store in the fridge.
Yummy microwave jam
Here is an easy recipe my mum uses to make jam in the microwave.
1 1/2 cups of white sugar
500g of fruit, chopped
1 lemon (juiced) then keep the rind
Place fruit, lemon juice and the rind halves in a large microwave safe bowl. Cook, uncovered, on high power, stirring occasionally for six minutes. Add the sugar and cook on high power for approximately twenty minutes or until it reaches setting point. To check if it is set just cool a little jam on a chilled saucer. If the jam wrinkles when you touch it and stays separate it is ready to bottle. Don't forget to remove the lemon rind and spoon the hot jam into clean jars.
Use free sources for preserving recipes and tips
When I had an extra glut of vegetables from my garden I searched online and in my local library to find books and information on preserving. I borrowed a few books at a time and found the recipes I liked that didn't involve any special equipment. Currently we are eating a fabulous zucchini, tomato and apple chutney that the family love. All it cost was a few extra ingredients and some jars I bought in the supermarket which can be re-used. Just pop a layer of gelatine on top of the contents before you put the lid on. This will ensure no air gets in during storage. One of my favourite online sites is (www.bestrecipes.com.au). Try the oven dried cherry tomatoes in oil and pickled egg recipe!
Turn unset jam into fruit topping
If you are experimenting with making jam for the first time and it doesn't work, don't fret! We can get so hooked up on naming things sometimes it's good to think outside the square. Call it fruit topping for ice cream instead and ask your friends to save their empty jars for you. You can thank them by sharing some of your home-made produce.
Three Fruit Marmalade
This is a tried and true recipe for Three Fruit Marmalade. Marmalade is an easy jam to make because it is high in pectin which ensures that it is easier to set.
3 kg white sugar
2 1/2 litres (10 cups) cold water
Wash fruit. Cut unpeeled fruit in half lengthways, cut halves in thin slices (I do this with the food processor). Discard seeds. Place in bowl (not a metal one), add water and stand covered overnight.
Next day, put fruit and liquid into a large saucepan (at least 15 litre capacity), bring to boil, reduce heat and simmer covered for 30 minutes or until fruit rind is tender.
Add sugar, stir over low heat until dissolved. Bring to boil and boil uncovered for about 40 minutes or until jam jells. To test this, put a saucer in the freezer for about five minutes then place jam on saucer back into freezer for a few minutes. If it thickens to jam consistency it is cooked enough. Be careful not to burn at this final stage.
Pour into hot sterilised jars (put clean jars without lids into a warm oven for about 30 minutes to sterilise them).
This makes approximately 12 jars but if you do not have a large saucepan you can halve the ingredients.
Bottle fruit as well as preserves
As well as making sauces, chutneys and fruit preserves I can save $3.00 a week ($156 a year) by just bottling prepared fruit. Simply slice and prepare fruit, place in sterile jars well packed down, fill with a 2:1 water/sugar syrup, add sterile screw top lid and place in saucepan covered in water. Bring to boil and simmer for 20 mins to cook the fruit.
This works beautifully with tomatoes as well, saving $2.10 a week ($109.20 a year).
10. This Month's Help Request: Wasteful Housemate Drives Me Crazy!
This month Kate L asks:
"I am trying really hard to save money and pay off my enormous debt. However, my housemate is making it very hard for me! He never turns off ceiling fans, ALWAYS uses the air con turned on HIGH in his bedroom overnight even when it's not needed! He never hangs his clothes out to dry- only uses the dryer, and forgets to turn the TV off when he leaves the house. All of this electricity is surely adding up and unnecessary, yet because we pay half of the bills each in the household I have to pay for half of his unthoughtful habits. I have tried explaining to him that by doing all of these things it will cost more money in the long run yet he refuses to believe me. I can't work out how we would 'split' the electricity bill evenly to reflect each other's habits. When we do groceries he always puts in extra items which I am sure we don't need, so our pantry is stocking up with extra unneeded condiments. Again when I try explaining we don't need to buy the same things every week he doesn't listen. Do you have any tips to help me? My savings account is drowning in someone else's habits!"
If you have any tips which can help poor Kate we would love to hear them! Please send your suggestions here.
11. Savings Story: Simple Steps to Get Organised Reaps Huge Rewards
I have saved thousands of dollars since joining Simple Savings, just by getting organised. This has made my husband and I plan and budget much better, which has enabled us to pay off two credit cards, a long outstanding tax debt and for me to stay off work for one year with our first child. Here is how we organised our financial information so we can easily keep track of bills, receipts and our budget. We have 10 plastic folders labelled with a different area of our finances, for example, utility bills, credit cards, savings accounts and so on. Each folder is divided into more specific sub-sections using dividers. We have a document on the computer that contains all our pay dates. I have this filled in right through until May this year. Every time a bill comes in, I look when it is due to be paid and enter the name and amount beneath the date of the pay packet the bill must be paid out of. The paper copy of the bill is filed in the appropriate folder. Every pay day, I open up the document to see what needs to be paid, and pay it as soon as possible. This means no bill ever gets paid late (in fact most get paid early) so I no longer pay the hundreds I used to pay each year in overdue account fees. Also, being able to see what will be going in and out is a huge help when budgeting. We keep all bills for one year, then shred the ones that are printed double-sided and re-use the empty side of those printed one-sided.
We also have two shoe boxes labelled 'grocery receipts' and 'other receipts'. The receipts for everything we buy are saved in the relevant box and at the end of the month I place that month's receipts in an envelope and put it back in the box. That way if something breaks or goes off before its use-by date I always have the receipt, so I can always get my money back or a replacement. This year we have also organised birthdays. I have written up a list of all the family birthdays we need to buy presents for and keep a copy of it in my wallet. If I spot any bargains that would make good presents when I'm out shopping, I can get out the list and see who it would be suitable for. No more last minute shopping and going over the $20 to $30 per present budget we have set. As well as all this, we plan our menu a fortnight in advance, regularly use the $21 Challenge and I bake a lot, all adding more to our household savings. It just goes to show that being organised goes a long way.