People try to change too much at once and it becomes overwhelming, and they end up falling off the program. So gradually changing bad habits makes much more of a difference than trying to change them all at once.
-Ian K Smith
One of the lessons I’ve learned over and over again in life, is that if you try and change too much all at once, you significantly increase the chances of failure.
Think of all the people you know who’ve gone on a diet. Of that group, how many are still on that diet? Granted most, if not all, will lose some weight, but very few keep that weight off inevitably slipping back into pre-diet eating habits. Same with exercise, commercial gyms exist because most of us join, over train for a few weeks, give up because we’ve overshot the runway, and never go back again (we’ll continue to pay the bill though)!
Well this is the approach I wanted to avoid when kicking off my FI project. I had a rough idea of where I wanted to get to, and now I need to make a series of changes, drop some old habits, and form some new ones to enable me reach my goal with minimal changes to my current lifestyle, at least not in the short term. In the long term I know I’ll need to (think eating out, casual online shopping), and in the long run, I’ll be better for it.
First step was to take an honest look at my spending. So I downloaded a spending tracker to my phone and committed to noting down each of my outgoings. Although I hadn’t yet made any changes to my spending, the process of noting down every expense started to weed out the unnecessary purchases. A month of tracking gave me a good starting point, and a clear list of areas that I could make immediate improvements to.
Once identified, I drilled into some of the areas where I could make savings with very little consequence to my lifestyle. It seems really obvious, but why spend more for a product or service that you can get for less!? Well it turns out that’s exactly what I was doing.
I purchased a brand new phone, switched to a more favourable plan, and saved almost a fiver per month.
Handset: I had an old iphone 5c that was becoming slower and more unresponsive by the day, so first thing I did was post a message on Facebook asking my friends if they had any recommendations for an unlocked handset. The suggestion that intrigued me most was the One Plus Two ‘Flagship Killer’. Solid reputation and reviews at a very reasonable price, and recommended by a few friends. There’s plenty documented on the web about how fantastic it is so I won’t regurgitate, give it a google yourself. This was the one for me though. I purchased one and projected getting 30 months of use. https://oneplus.net/uk/2
○ Phone Cost: £250
○ Monthly Cost: £8.33pm
Sim only plan: First port of call is a price comparison site. Found what I was looking for on moneysupermarket. I was looking for a plan with decent data allowance, not too concerned with the minutes and texts, but that offered decent rates or add ons for calling International numbers so I can call home. I found one through Mobile Phones Direct. It was a plan with EE for £19.99 pm. Unlimited calls, unlimited texts and 16GB of data. What sealed the deal was £8 cash back per month through Mobile Phones Direct, and EE offering a £9.99 pm add-on for 500 mins international calls.
○ Monthly Cost: £21.98
Note that I still have the old iphone 5c which I plan to sell. It’s unlocked so I should manage to get £90-100 based on what similar phones are selling for on ebay. I’ll exclude this from the numbers below as I haven’t sold it yet.
Total Monthly Cost: £30.31.
Previous Total Monthly Cost: £35.30.
Monthly saving of: £4.99
Two years ago I bought a 2002 Toyota Avensis. Living up to its reputation, I’ve had very little trouble with it (except for replacing the battery and a few lights after the initial purchase). In addition to the cost of the car, tax and fuel, it was costing me £95 pm for insurance. Luckily enough my insurance was nearly up, and the renewal quote from my current provider was even higher than the price I paid in year 1.
Not much I can do about the price of fuel and tax, but I can now shop around for the best priced car insurance.
Thanks to my old pals the price comparison sites, I secured a deal with Admiral for £676, almost halving my bill. I paid this up front whereas previously I was paying monthly incurring an interest charge. I went on to purchase breakdown cover from rescuemycar.com for an additional £31.99, and got £6.72 cashback by purchasing through topcashback.co.uk. I had a similar level of cover from my previous insurer.
Previous monthly cost: £95
New monthly cost: £58.44
Monthly saving of £36.56
Well I can’t classify this as a need, but I spend time every day listening to music. Making brekky, on the cycle to work, in the gym, and at the desk. So a decent music streaming service is preferred. The premium version cost me £9.99 pm.
I put the feelers out to friends and family, and it didn’t take me long to round up 5 others who wanted to reduce their premium bill from £10 to £2.50. So I switched my Premium account to a Family account and saved £7.50 pm.
Previous monthly cost: £9.99
New monthly cost: £2.50.
Monthly saving of £7.49
I was happy paying a local gym £52 pm on a rolling contract, until another in the area ran an offer. £25 signup fee and £25pm if you join for a year. It even has a pool, steam room, sauna and jacuzzi which my previous gym didn’t 🙂
Previous monthly price: £52
New monthly price: £25
Joining fee: £25
Monthly saving (over year 1): £25
TV & Broadband
Got rid of Sky TV, hung onto broadband.
Previous monthly cost: £66.40
New monthly cost: £37.40
Saved £29 pm.
Long story short, we moved to a new place recently. This place has a garden and storage for the bikes, old place didn’t. So now I cycle to work every day. It was a conscious decision, our main reason for moving was so that we could use our bikes again. Was previously spending around £75 pm on tubes. I’ll still get the tube maybe twice pm now.
Previous monthly cost: £75
New monthly cost: £7.40
Monthly saving: £67.60
To summarise the monthly savings:
• Mobile phone: £4.99
• Car: £36.56
• Spotify: £7.49
• Gym: £25
• TV & Broadband: £29
• Transport: £67.60
• Total: £170.64
Which this handy tool tells me adds up to £49,625.31 if invested in an asset that returns 6% over the next 15 years (the number of years between now and my target FI date). Not bad for a few simple changes!