So, what IS a predictable expense?

In my last blog I spoke about taking control of what is controllable and I referred to a couple I’ve been working with who had an unexpected expense. I commented that this particular expense was not ‘unpredictable’, it had just occurred ‘unexpectedly’.

So today let’s consider what is predictable.

As far as I’m concerned, anything that is predictable should be controllable and taking control of what is controllable is our goal!

  • Your weekly expenses such as food and fuel are predictable.
  • Your bills are predictable (even though they may vary).
  • Your daughter getting married one day is fairly predictable but not so controllable!
  • Retirement is predictable so long as you live long enough.
  • The need to repair and/or replace things like your refrigerator, car tyres and battery, television set, computer, washing machine, house and a myriad of other items that support your life is predictable unless one of these items are damaged by accident. (And as I said last week, you should have insurance to cover unpredictable events such as accidents).

‘Sydney Wide Salvage’ has made a business out of collecting broken down appliances. Here is a photo from their yard just to give you an idea of what I am talking about. They all eventually die!

Scrap White Goods

A 10 yr old refrigerator does not die by accident, nor does the washing machine, clothes dryer, microwave oven, television set or vacuum cleaner. The brakes on a 10 yr old car do not need repair by accident (but they may cause an accident if not repaired).

Everything has a service life and eventually will start to incur maintenance costs (even your body), and eventually the time comes when these items need replacing (new bodies are a way off yet unfortunately).

Have a look around yourself and take the time to consider which of your possessions you rely on and would not want to be without. Think about how long you would expect these things to last from new and consider how old they are now. How much will they cost to replace? How long do you think it will be before they need some maintenance? How long before they need to be replaced?

If you need help then ask. E.g. ask your mechanic what is going to need doing over the longer term with your car. If you tell him/her why you are asking they should be able to give you some really valuable information.

By ignoring the need to maintain and replace these items you are just asking for financial hardship and stress. Don’t put your head in the sand; take control of what is controllable! These are predictable expenses and therefore they are controllable. You may not be able to predict exactly when one of these items will need attention but you do know it is going to happen so you can prepare in advance (which is why I referred to them earlier as unexpected but not unpredictable).

It goes without saying that if you ignore what I am talking about here you will be able to buy more stuff with the money you don’t allocate to repairs and replacement of the items you already have, but common sense says you will then be setting yourself up for even more hardship when you have even more stuff that needs repairs and replacement in the future!

I have never met anyone who regretted putting money aside for future events but I have met plenty of people who regret NOT doing this.

And as a side note; when you start thinking about what I am saying here and you look at the image of all those discarded white goods, you really start to see the folly of purchasing cheap rather than quality! If you purchase an item that cost 30% more than the el-cheapo brand and it lasts twice as long, you will be heaps better off and so will our planet! You will most likely have much less break down and service costs as well.

If you are thinking to yourself, “it’s alright for him to SAY that, but I need a new ‘xyz’ right now and I can only afford a cheap one”, so long as you can put your hand on your heart and say “I don’t spend money on cigarettes, alcohol or drugs and I don’t buy any non-essential items for what are basically emotional reasons” then you probably should buy ‘cheap’ this time around and start allocating funds for ‘quality’ next time.

The road to financial freedom is a simple one but not necessarily an easy one!

If you want someone to help you put a spending plan in place that allows you to start taking control of all the expenses I’m referring to above have a look at the Spending Planners page on my web-site at http://www.simplybudgets.com.au/spending-planners/

Everyone should have been shown at school how to create and follow a spending plan. However, that did not happen, so now my goal is to fill that gap and help change people’s lives for good! The exciting thing is that it is a really simple process and with someone to help you get started and to be accountable to along the way, it really makes it easy for you to take back financial control.

That’s all for today.

David Wright