The Six Reasons We Spend Money – part 4

 

Today I’ll continue the mini series I’m currently writing about; the six different types of expenses we encounter in our lives.

If you missed the first three you will find these at my blog at the following links

1. Weekly Expenses
2. Non-Weekly Repeating Predictable Expenses
3. Product Purchases

Today we look at number four.

4. Repairing Items That Support Your Life.

No matter how lucky you are, sooner or later you will have to pay for repairs to something you rely on. White Goods, Motor Vehicles, your Body etc.

 I can’t tell you how many people I have spoken to who believed the seemingly untimely need to repair something they rely on every day was an unfortunate unpredictable event.

 However, everything breaks down sooner or later so only a fool will neglect putting funds aside in anticipation of this.

 The important thing to remember is that there is often more than one way to solve a problem and the easiest solution is usually the most expensive one. Thinking outside the square may require more effort but often costs less money.

 Whichever solution you come up with, throwing money at a problem you have not planned for may appear to have solved it but in fact it has just transferred it to a different place!

 E.g. When your car breaks down you experience inconvenience and want that to go away. If you fix the problem by putting the repairs on your Credit Card the inconvenience definitely goes away and life gets back to normal but back in your comfort zone the problem might be out of mind, but it has not gone away; it’s now in need of repaying, possibly with added interest.

 If you solve a number of problems this way in a year and do that for four of five years in a row you can end up in a lot of financial pain.

 The clever person factors into the decision to purchase something the need to put money aside to cover repairs down the track. What usually happens is the opposite though.

 I’ll give you an example:- You decide it’s time to update the car. You consider a price bracket you can afford but when you start looking something happens and you find compelling reasons why you should go up to the newer model or the higher spec version with fancy wheels, metalic paint, etc etc etc. Instead of leaving a safety margin you end up in a precarious situation that could go horribly wrong if something breaks down ‘unexpectedly’.

 Of course I’m sure you have never done anything like that, but you probably know someone who has!

 Where to keep this money?

 You will never guess how much you should put aside for repairs for each item you rely on so it makes sense to have a single ‘bucket’ of money for general repairs. This money could be kept in your Bills Account as long as you have a Simply Budgets plan that identifies it from other Bills money. Otherwise it makes a lot of sense to keep it separate so you know how much you have available at any point in time.

 If you can keep it in a mortgage offset account that would make a lot of sense. Or, if you have a redraw facility on your mortgage you may be able to add this savings to your mortgage payments and draw it back when needed.

 How to manage this money?

 You should deposit money each payday and the amount you dedicate to this will be partly determined by what you can afford and other factors such as the age of your possessions. Once you build up a decent reserve you may be able to back off and funnel funds to other more exciting projects as well.

Succeed With Money Workshops

If you are feeling like all this sounds so simple but your finances are far from simple I would love to help you. There is nothing worse than the feeling of going around in circles and being constantly under financial pressure.

The ‘Succeed With Money’ workshop is a day where you can put ‘simple’ into action!

Let me ask you; what does the life of your dreams look like? Is that getting any closer? Have you down-sized it because you are losing hope? Why not give yourself the opportunity to leverage off the two decades of learning and experience that I will be drawing from at these workshops and make a change for the better?

Don’t put up with unnecessary hardship any longer!

With the end of the year fast approaching, Christmas and holidays are not so far away. If you want to really have a different experience this year with money being your companion instead of the restricting factor in your life my Succeed With Money workshops are a great way to make a change for the better.

Details and dates have been posted on my web-site at http://www.simplybudgets.com.au/financial-education/succeed-with-money-2/

This workshop is an awesome full-on day guaranteed to give you the tools and information to go home and make real change in your day to day finances (and I do guarantee you will get results).

Just one of the things we will be doing on the day is using the Simply Budgets software to plan for funding repairs and all the other expense types you are going to encounter in the future. Why not tackle them head on and come out as the winner?

You will get far more than you think is possible or expect when you attend one of these events. I deliver really powerful information in down to earth easy to understand language with a bit of humour thrown in for good measure.

 If you think success with money is for someone else, think again! You deserve it as much as anyone else does and I have helped thousands of people achieve it so why not you too?!

Warm Regards

David Wright
Simply Budgets
Ph 07 5472 0155