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Barefoot budget


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#1 knottygirl

Posted 13 February 2018 - 09:40 PM

We have started reading barefoot investor, and I’m really struggling to get our budget down to 60%. Honestly if I count in money for clothes uniforms excursions for kids ect as well we would be close to 80%. I don’t work currently and dh earns a decent wage.  I’m just not sure where we can cut? Have already phoned insurance to get that adjusted and planning to dump the extras cover. I’m going to pay the cleaner out of my ‘splurge’ account cause it’s a luxury for me.   My daughter does preschool which is quite a lot, and also my kids do a lot of sport and activities which I don’t want to pull them out of.

I’ve phoned electricity provider and changed to a cheaper one. I’ve changed Home and contents to cheaper one. Changed internet to cheaper one. Couldn’t get car insure any cheaper. Reduced my food spending by $100 a fortnight.

It is possible for a family of 5 living on 1 slightly above average income to get to the 60%? Any one got any tips for what else I can cut?

#2 Lees75

Posted 13 February 2018 - 09:48 PM

Don't forget that the 60% is a guide only - if you can't, you can't! I always try, but some months are harder than others, and sometimes I pinch money from the smile category. I know others do 65% DE and then 7.5% smile, 7.5% splurge, 20% FE.

#3 knottygirl

Posted 13 February 2018 - 09:53 PM

Yeh just wondering what we are doing wrong though! If so many others are able to get theirs to 60%.   We have very little credit card debt, so I was thinking if I did adjust the percentage would go 3 lots of 10%. Our mortgage is also fairly small too. So I think the fire engine is less critical for us.

I’ve looked and looked at ways to save. Unless I start yanking the kids out of their activities then I just don’t see how we would get there.

#4 Tinkle Splashes

Posted 14 February 2018 - 01:24 AM

Join the shared experiences of barefoot investor on Facebook. There are plenty of people whose DE are at about 80% and can’t be improved in the short term, particularly single income families with young kids.

All you can do is minimise DE (which it seems you have) then allocate the remainder (in your case maybe 10% fire extinguisher, 5% splurge and 5% smile).

#5 nup

Posted 14 February 2018 - 03:50 AM

It's a guide. Isn't Pape's suggestion 60%? I've used MMM for years which has a different percentage mix but still the same approach.

I've recently ditched some tech spending I was doing in favour of a boost to my long term savings. Not huge but a big lifestyle change for me. It's all the little things we take for granted in DE that need close revision. I will include luxuries in my DE because they're necessary to me but others would deem them non essential and even frivolous. The guide is to bring awareness to your values and what matters to you most. Many people make emotional financial decisions and it's about acknowledging our choices. I don't think leaving our children an enormous inheritance at my own personal cost is a life well lived but I do want to contribute to their own financial security.

Edited by nup, 14 February 2018 - 03:51 AM.


#6 knottygirl

Posted 14 February 2018 - 07:48 AM

Ok thanks. Have requested to join the group. Glad to hear others can’t get to the 60% either. We don’t live overly flash really. Most of the expenses are things like rates, insurance, preschool fees, kids activities. We have a camper so have extra expense of insurance and rego for that. I don’t think we would have many expenses that the average homeowner wouldn’t also have.

Maybe single income is just really hard to achieve those %.

Dh has a salary sac car too, anyone know what papes thoughts on those are? He also put extra into super as his employer matches what he puts in so it’s too good to not put extra in. And that makes up for me not working and contributing to my super for the time being.

#7 paddington_

Posted 14 February 2018 - 08:43 AM

DH and I are thinking of looking into this barefoot way of saving.

Does anyone here follow this plan with freelance work?
I am salaried full time,  however DH is a freelancer. Income varies per month.
It's that doable with this system?

Thanks!

#8 alwayshappy

Posted 14 February 2018 - 08:52 AM

The whoel Barefoot Investor concept is definitely worth looking into regardless of how you earn your income.

It is a framework only, but what it does is draw attention to your incomings and outgoings and creates mindfulness about how you spend/save.

It can be tweaked to suit every indiivdual situation.

It puts financial awareness at the front and centre of your daily life.

#9 ~LemonMyrtle~

Posted 14 February 2018 - 08:54 AM

We are at about 75% expenses. Child care and mortgage are huge right now. And DH’s car lease. Hopefully we will pay out the lease this year so that will get us back to under 70%

It’s just a guide. The main point being that you have a plan and a loose budget and that you are saving every month.

Barefoot also says as well as reducing expenses to increase your income. So focus on that too. Promotions, overtime, part time work for you, whatever works. Earning more is as important as spending less.

#10 OzgirlKK

Posted 14 February 2018 - 06:04 PM

View Postknottygirl, on 14 February 2018 - 07:48 AM, said:

Ok thanks. Have requested to join the group. Glad to hear others can’t get to the 60% either. We don’t live overly flash really. Most of the expenses are things like rates, insurance, preschool fees, kids activities. We have a camper so have extra expense of insurance and rego for that. I don’t think we would have many expenses that the average homeowner wouldn’t also have.

Maybe single income is just really hard to achieve those %.

Dh has a salary sac car too, anyone know what papes thoughts on those are? He also put extra into super as his employer matches what he puts in so it’s too good to not put extra in. And that makes up for me not working and contributing to my super for the time being.

He is against the lease car.

Go onto his website sign up to his newsletter and you get his 'look into his wallets' and 'how to get a new car for free'

Your not going to like it but get rid of the car.

He also encourages earning money to get your percentages closer to the 60%. He literally suggested to a single mother to find a Saturday job. And I suspect he would say the same to you. Sorry!

It would be interesting to see what your percentages would be without the car.

You get a cheap car (yep a $500 bomb) and work your way up to a new car using his principals.

Also even if you mortgage is small, if you don't have the best deal your paying too much. Have you called the big and looked at refinancing?

#11 SplashingRainbows

Posted 14 February 2018 - 06:25 PM

Don’t get rid of the lease car just yet.

Whilst Pape’s basic principles are sound, they do not often allow for more complex situations. I found him quite ‘anti’ finance professionals and rather simplistic.

Take the above post for example - who would buy a $500 bomb just because someone is anti lease. It’s not personalized advice. The repairs to a bomb are quite possibly more than the reliable lease car, the ability to earn an income may rely on having a good car, the tax benefits may significantly offset the cost - it’s vey general - you ha r to really assess it for your own circumstance.

#12 ~LemonMyrtle~

Posted 14 February 2018 - 06:36 PM

We hate our lease. It’s costing us a fortune. I don’t know how they convinced DH it would be cheaper this way, because it’s not. We are paying a huge amount each month and at the end of 4 years we won’t even own the car, we will have to pay a huge residual. And the payout fee to end it early is ridiculous. We wanted to pay it out after a year and the payout figure was pretty much the cost of the car brand new. They also did our estimates wrong because every year they tell DH he is thousands ahead on the petrol/bills part of the lease. And we can’t get that money back as cash until the end or something stupid. Plus it obviously impacted our borrowing potential. The whole thing has been a farce and annoys me so much.

We are paying it off this year hopefully, despite the penalties. Either pay it out or hand the car back and get something cheaper second hand, not sure. But it will free us so much more money, even taking into account insurance and ergo and petrol.

If you don’t want a $500 bomb, then a personal loan is better, you own the car at the end of it, it forces you to actually pay it off in a timely manner, and it’s easier to refinance or pay it out if required.

#13 SplashingRainbows

Posted 14 February 2018 - 06:41 PM

LM as a professional my advice is your lease company is highly unlikely to be telling the truth about not giving you back the petrol/bills amount you’re ahead. Ive seen it come back for a variety of individuals. I’d push harder.

They will penalize you for paying out early.

Your best financial advice for you *current* position is not the best advice for someone with no lease. I do think you should seek some personal advice about it.

#14 OzgirlKK

Posted 14 February 2018 - 06:44 PM

View PostSplashingRainbows, on 14 February 2018 - 06:25 PM, said:

Don’t get rid of the lease car just yet.

Whilst Pape’s basic principles are sound, they do not often allow for more complex situations. I found him quite ‘anti’ finance professionals and rather simplistic.

Take the above post for example - who would buy a $500 bomb just because someone is anti lease. It’s not personalized advice. The repairs to a bomb are quite possibly more than the reliable lease car, the ability to earn an income may rely on having a good car, the tax benefits may significantly offset the cost - it’s vey general - you ha r to really assess it for your own circumstance.

I had a $1500 car for 2 years without any repairs. I didn't say the op had to buy a $500 bomb, but if they have no money to spend more then thats what they have to do. My post doesn't make sense without reading Papes 'get a car for free'.but i didn't want the op reading my post to get rid of the lease and argue "but we need a car" the $500 bomb is the solution to that. Leases are a rip off. simple fact. There is a smarter way.pape is against borrowing money for a depreciating asset. OP wants to get her budget to 60% - getting rid of the car is a way to do that. I personally would rather have a cheap sh*tty car than pull my kids out of sport... maybe the OP is the same?

#15 Lees75

Posted 14 February 2018 - 07:00 PM

I would be tempted to put the car lease in the fire extinguisher category. That’s where my car loan is (i am lucky enough to have a zero interest loan from my parents).

#16 SplashingRainbows

Posted 14 February 2018 - 07:18 PM

Maybe the op is the same.

But “get rid of the car” is very different to “consider your car options such as ...”

I’ve read Papes book. A lot of others too.

#17 knottygirl

Posted 14 February 2018 - 07:23 PM

Thanks I’ll look up the article. The lease is actually up later this year anyway, so there is no point changing anything right now. It is dhs car anyway, mine is newer, and we bought it with cash. He was talking about releasing it for another 2 years but maybe we will just pay it out. Unsure what the payout figure is at the moment.  

I have been trying to get some casual work. It’s def something I am keen to do but so far not much has come up. Dh is this year hoping for a promotion so he’s not really able to help out as much if I do pick up casual though, so long term it seems better to let him put in the best impression and hopefully get a nice big pay rise and then it will be easier for him then to help out if I get work.

#18 OzgirlKK

Posted 14 February 2018 - 08:16 PM

View Postknottygirl, on 14 February 2018 - 07:23 PM, said:

Thanks I’ll look up the article. The lease is actually up later this year anyway, so there is no point changing anything right now. It is dhs car anyway, mine is newer, and we bought it with cash. He was talking about releasing it for another 2 years but maybe we will just pay it out. Unsure what the payout figure is at the moment.  

I have been trying to get some casual work. It’s def something I am keen to do but so far not much has come up. Dh is this year hoping for a promotion so he’s not really able to help out as much if I do pick up casual though, so long term it seems better to let him put in the best impression and hopefully get a nice big pay rise and then it will be easier for him then to help out if I get work.

Honestly you are doing great!! Most people don't even have any idea what their budget is!

Read the article though!

Good luck!

#19 knottygirl

Posted 14 February 2018 - 09:42 PM

It’s going to take some big changes that’s for sure. I’ve booked a babysitter for this weekend so we can actually sit down and talk properly without kids interrupting us!  Barefoot date night 1.

We have looked at refinancing awhile ago but we couldn’t. We have an investment property as well, and according to the bank we are currently over borrowed. Our investment property pays for inself, but they calculate borrowing capacity as being at 7.2% interest and also as only being rented 80% of the time and also only at 80% of the rent we get, as they think it’s rented for too much. So until I’m working again refinancing is out.  The loans ect were set up from when I worked. We were going to sell when we moved, but prices were not great at the time and rents were through the roof so we decided to just keep it while it’s not costing us anything. Our plan is once the current tenants decide to leave we will sell. The equity in it will just about pay off our house so we aren’t too concerned about refinancing as we may not see the benefit of it. I have no idea how long the tenants will stay for though could be a few years.

#20 Cimbom

Posted 14 February 2018 - 09:46 PM

You should ask for the interest rate on the lease. I bet they won't tell you what it is

#21 knottygirl

Posted 15 February 2018 - 07:24 AM

View PostCimbom, on 14 February 2018 - 09:46 PM, said:

You should ask for the interest rate on the lease. I bet they won't tell you what it is

Possibly. But it’s kind of irrelevant now anyway, we have only got it for a few more months and then will be finished.

#22 born.a.girl

Posted 15 February 2018 - 07:58 AM

Is the investment property in both of your names?  (I'm guessing so.)

Capital gains tax might be a relevant consideration for you, in terms of which year to sell the property in, with your work considerations.

#23 knottygirl

Posted 15 February 2018 - 11:27 AM

View Postborn.a.girl, on 15 February 2018 - 07:58 AM, said:

Is the investment property in both of your names?  (I'm guessing so.)

Capital gains tax might be a relevant consideration for you, in terms of which year to sell the property in, with your work considerations.

No it’s not it’s actually only in my name.  

It shouldn’t be a problem because I don’t have any plans to go full time for a number of years.

The bulk of the capital gain happened when we were living there anyway. When I said house prices weren’t great, it was still more than we paid. It’s just that rents were so much better, and houses were slow to sell at the time. So we thought rather than stress about selling and having to drop the price to offload it, as we couldn’t afford for it to be vacant for long, we would rent it out until things picked up.  Another house in the street recently sold and they got a fantastic price for it. However it was on the market for 6 months. We couldn’t afford it to be empty costing us money for 6 months.

#24 ~9YearsLater

Posted 15 February 2018 - 04:14 PM

The book is a guide. Not a bible. It’s a bit simplistic to say you must follow all his advice to a tee to get ahead. I’ve already read the article that you suggested OzgirlKK and we still opted for a car loan recently as buying a cheap car and working our way up isn’t realistic but the debt is manageable and will be dominoed quickly.

Our daily expenses also exceed 60% mostly due to school fees but again, we still manage to do much of what he’s suggesting and get ahead. We’ll get further ahead as the years progress.

As a PP has said, it’s about applying as many of his principles as is realistic for your circumstance and being mindful about the way you approach money. We’re certainly far better off than we were 2 months ago even with a car loan and DE exceeding 70%.

#25 chicken_bits

Posted 15 February 2018 - 04:34 PM

Absolutely agree with the others that it's just a guide. Atm, I'm disabled with 2 young kids and DH is on a fairly decent salary. But, having 1 child in almost full time daycare because of my illness hits us hard. So, for the moment we're doing what we can and next year when DS starts sessional kinder I'll divert all that childcare money.




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