My question for you today “Why dump it?” might seem a bit odd so let me clarify.
When I was in the early stages of developing the Simply Budgets system I was feeling pretty pleased with myself because all of my regular expenses that fell due in a yearly cycle were under control and we were starting to enjoy the benefits that that brought.
Then early one morning I walked into the kitchen to find a puddle of water with a trail leading back to the fridge. My first thought was that one of the kids had not screwed the lid on a water bottle tightly enough and it was lying on its side, dripping away and feeding the puddle I almost stepped in.
However, closer inspection soon revealed the problem to be much worse. My fridge had died overnight and it was warm inside, thus allowing things to melt causing water to run out onto the floor.
The fridge mechanic confirmed that a new fridge was in order!
Unfortunately I did not have the money for a new fridge in my budget plan and I had to borrow money to solve that problem (which I wasn’t very happy about).
Don’t make the same mistake twice!
I decided I never wanted that to happen again so I started looking at how I could improve my system to also include replacing things that I now realised were going to need replacing at some time in the future on a much longer cycle than I had been looking at up until that point.
The biggest hurdle I could see was that all the budget planning I had done up till then was for things that I KNEW when they would fall due. E.g. Phone, Electricity, Car Registration, Insurance, Christmas etc.
How could I plan accurately for something that didn’t really have a due date?
After some experimenting I realised the best strategy was NOT to wait for these items to need replacing before I had the money to replace them!
Why would I want to take these things to the dump anyway? Wouldn’t it be smarter to sell them when they reached a pre-determined age and get some cash back?
So using my fridge as an example; I decided a new fridge SHOULD last 10 years. The cost of a $1000 new fridge over 10 years is roughly $2 a week. However, if you leave it till the fridge is 5years old before you start saving for the new one that doubles to $4 a week. When the fridge is 9yo it jumps up to $20 a week and if you wait for it to die it’s too late to start saving because it’s now scrap; it is then $1000 this week!
(This example makes it really obvious that the sooner you start saving to replace these items, the less it is going to cost you per week – so start now!)
So here’s the thing I realised. You will never be able to guess when your fridge, your washing machine, your clothes dryer, your TV set etc are going to die. But if you plan to have enough money stashed away in your budget plan to replace them at a reasonable age in the future you can most likely have a new one before you need to take the old one to the dump and you’ll get some cash-back selling your old one!
Would you agree that makes a lot more sense?
Chances are your new item will be more energy efficient than your old one and you’ll save on energy consumption as well. A double bonus!
So if you have a copy of my Simply Budgets software and have never used the Long Term Savings section it is time to have a look at that. It will save you time, stress, money and trips to the dump!
The sooner you start the less it will cost you so there is no time like the present! Why not look at it this week-end?
If you don’t have a copy go to http://www.simplybudgets.com.au/simplybudgets/ to find out more.
It IS possible to work out your Long Term Savings plan without my software but I can tell you it is a lot lot easier doing it WITH Simply Budgets and you will get the benfit of all the other features as well so it really is good value and an investment in the rest of your life!
Succeed With Money
There is so much that I have learnt over the last 20 years that I would love to share with you about how to take the stress out of managing household finances and about becoming wealthy (in more ways than one), so I have planned an event called Succeed With Money. It’s on the 29th of March and will be an action packed day of learning and hands-on application of that learning.
You need to bring a (Windows) laptop computer. I will give you principles to apply and then you can apply them right then and there. This includes the Simply Budgets software mentioned above.
I dislike seminars where you go along for the day and get all excited about a bunch of new information but a week later you’ve forgotten you even attended.
This is NOT like that! You will have already started applying the info when you leave at the end of the day, so please Click Here for more information. I don’t want you to miss out on this experience.
And, if you have friends who would say something like “I earn good money but have no idea why there is never any left over for ME!” please pass this info on to them as well. This is a life changing day. I guarantee it!
Click Here for the details.
That’s all for today. Have a goody!