Money Wise Talks 19/05/2022

9% inflation! This is a 40 year high!

A recession is on the horizon that’s for sure. Is there anyone out there that disagrees with me?

Now is the perfect time to start looking at your budget, or setting one up if you haven’t got one. Stop spending more than you earn, build up an emergency fund and try and pay down as much consumer debt as you can (that being credit cards, loans, store cards etc). Tougher times are coming, I can feel it.

The worse thing to do right now is ignore the signs and bury your head in the sand. I would even go so far and say, don’t take any more debt on right now if it’s already a squeeze. We just have no idea how much the cost of living is going to increase throughout this year.

These are the increases that we have been hit with so far this year (some of these amounts may be specific to me)

  • Water 19% increase (Own calculations)
  • Gas & Electric 165% increase (Own calculations)
  • Council Tax 5.8% increase (Own calculations)
  • National Insurance 1.25% (From 12% to 13.5%) (Source Sky News 2022)
  • Petrol 32% increase (Compared to a year ago – Source RAC, 2022)
  • Food increase (variable)

Most of you will know I have just bought a house and although it is within my budget (just), I’m still anxious and worried that it will put pressure on my finances. One of the only saving graces I have is that I opted for a five year fixed mortgage so I know my payments will stay the same for the next five years. If you are on a variable rate you may want to look at some fixed deals or speak with a financial advisor to see if there are better products out there that will limit the possibility of an increase.

An increase in inflation could also mean the Bank of England increases the base interest rate again which means an increase in borrowing and credit cards.

So, if you have a credit card, unless you’re on an interest free deal this will mean you pay more interest and less off your overall balance meaning it will take longer to pay off. I wish I had the opportunity to clear mine in full but right now, the balances are too high to make a huge dent in them. All I can do is keep at it with the small overpayments I can afford to make and hope I can absorb any future increases.

I don’t usually focus my blog posts around what’s happening in the news, but last night I saw something on the TV about the inflation rate and it then played on my mind all night. I didn’t get to sleep till after 2am only to be woken up by my senile cat at 5am. Bloomin Knackered! This is one reason why I don’t like watching the news before bed as it just plays on my mind. It did make me curious though to what was going on. So today, I took the opportunity whilst on a long car journey to find out as much information as I could. I had four hours in the car today so I exhausted as many news channels as I could which talked about the increases in the cost of living, inflation and recession. Although I feel pretty knowledgeable now, it hasn’t elevated the sense of worry.

But I know I’m not alone.

It has created this need in me to know more though, in the hope that the more I know, the more time I have to plan my survival. I think that’s what it will be for a lot of us now. Just surviving and making sure we come through it. Seeing people on the news today talking about missing meals and not being able to put the heating on made me realise I am luckier than I thought. But that doesn’t mean I should be complacent. I know I can tighten my belt a little further so that’s what I’ll do. I can’t wait to get into the house now and see what my new bills will be so I can do a new budget. I feel like this will be the only thing I can do that will allow me to take back control especially when I have no control of what is happening in our external environment.

What I have Spent This Week

  • £2.60 Post Office – Parcel tape and wrap
  • £51.00 Next – New house things
  • £20.00 Cash
  • £22.47 Home & Bargains – Cat food and sweets
  • £5.09 Macdonalds
  • £38.22 Asda (Food shop)
  • £7.85 Costa Cafe
  • £2.80 Newsagents – Sweets
  • £2.50 Next – Sweets
  • £33.10 Dinner out
  • £3.13 Home Bargain – Snacks
  • £9.35 Co-op – Wine and sweets

Total £198.11

This last week has clearly been a week of snacks, eating out and just generally splashing out hasn’t it! And yet, only spending £198.11 is pretty good for me in comparison to the last few weeks anyway. I had a one off cost to get my daughters passport renewed and I couldn’t resist picking a couple of things up for the new pad – kind of inevitable as the excitement grows lol!

But the good news is, that all of these items can be cut back.

I get paid next week so am going to change up my budget for the entire month, well payday to payday. A week before payday, I’ll set my goals around what I want to spend in each area of the budget so I’ll know what I’ll be spending on X, Y, or Z. If it’s not in my budget, I won’t be spending. I think this will help eliminate a lot of my mindless spending on snacks and will help curb the overall spending each month.

Unfortunately, this month I have had to pay £210 for the annual car tax and £123.80 for a penalty notice so that’s all my planned monthly savings gone from May wages which would have gone to the house :(. Trying not to worry about the new costs for the house is hard when it needs so much, like a new lawn, blinds, light fittings, beds etc. And unfortunately, I’m not allowed to work for more than 47 hours a week in this job so I haven’t got the ability to make any more money either, apart from my 10 hours of overtime every weekend. I guess I still need to go back to that drawing board!

Let me know if you have a great ideas in the comments below.

Thanks for reading, Heidi x



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