Monday, 28 July 2014

Five year review.

I have just discovered that I am rich. I have a few bob in a current account which is my emergency fund, this will come in useful should I need to pay out for something that breaks or wears out, or I want to go on holiday. I don't have to worry, because I am not dead skint, I have got some money. YAY :o)

I've been going back over my bank statements to see how I have been doing financially since I retired five years ago. In fact my statements go back further than that to 2001. It certainly makes interesting reading, especially around the time of November 2005 when I was getting fed up with driving, cutting my hours, and running a small business trying to make up the shortfall. I was riding by the seat of my pants then, down to my last £300 in the account, and no savings to fall back on. I still don't have any savings, because I don't need any. I can't see the point in having money lying around in accounts doing nothing except earning a piddling bit of interest. I can do without all that bother. The less I have the better as far as I'm concerned.

I'm not saying I want to live on fresh air with no money at all. If the government went bankrupt and my pension suddenly stopped, I would go back to work, But as long as they are paying me enough to cover my living expenses and a few treats, I am happy. I read a lot about poor pensioners who can't manage, but to be honest, I have a pretty good life on my pension. In fact, as my header says, it's a brilliant life.

I made the decision a few years ago to cut my working hours, which cut my pay. I decided I would learn to manage on less. When the going got tough, I simply stopped spending, that was it, full stop. Can't afford it, need money to pay mortgage, council tax, utilities, food, car, one cat, none left for other stuff.

I scrutinized my bank statements, got the calculator out, worked out a plan. The plan was not to buy anything I didn't need. In 2007 I did spend some money, I needed a new kitchen because the one I inherited when I moved here was disgusting. I had put up with it for years because every penny I had went into buying the house, there was none left for anything else. So for £514 I bought a new kitchen from Homebase. I ripped out the old kitchen, put the cupboards together for the new one, and paid a plumber to fit the sink, cut the worktops to size and screw the cupboards to the wall. I wanted some electrical work doing, new sockets, but the electrician said I needed a whole house rewire. So I didn't have the sockets, and I manage with the two double sockets already there.

Once I had got back on my feet again, after years of cutting back, cutting down, and being super frugal, things started to get easier. By then I had living within my means down to an art form. Nothing more has been spent on the house, it is still standing, and I have the same decor that the previous owners left me, except I put a lick of paint on the living room walls.

I saved enough to be able to change my car, adding some cash to the pay off I got from the insurance company when the last one was written off. I was able to save up a bit extra from my pension and get rid of the mortgage.

In 2009 my total annual pension was £7,925.84, now it is £9,590.23. Yes the cost of living has gone up, everything has gone up, but I am still managing. My quarterly utilities bills have hardly changed at all, their prices go up, I use less, I will beat them. I have no mortgage to pay now. I don't pay as much council tax as I did when I was working. I negotiated a better deal on my house insurance. I cut Bugsy's insurance. A little tweak here and a little tweak there, and I don't have to worry about money any more, as I have enough.

So, I'm feeling pretty flush at the moment, but that isn't a cue to do anything rash, like going out and buying something I don't need. I don't have to scrimp every penny, but I probably will, ha ha. It's in my nature to be cautious with my money. There's no way on earth I could go out and flash the cash.

There is another reason to keep on with the money saving, and it's far more important than me living within my means. The worlds population is growing at an alarming rate, and if things keep going as they are there is going to be a massive wakeup call. There will be no gas, no electricity, no water, it will all be gone, used up, nothing left. Me using the bath water to flush the toilet, and buying second hand clothes, is unlikely to save the planet, but it makes me feel better knowing I am doing a bit to help.

Anyway, as long as that pension keeps appearing in my bank account I will be OK. I'm sure of that.

My stomach is telling me it's time for dinner, so I'll say toodle pip.

40 comments:

  1. I love and admire your attitude! You are truly a fresh breath of air. You are a winner!
    Jan F

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  2. Yes, stretching every pound becomes second nature, after years of struggling on the bread-line we seem to be getting on top, it's nice not to have to worry that there's enough to pay the gas bill.

    But I still can't bring myself to waste anything, our menus are based round what I can pick up on last-minute yellow sticker reductions and we eat very well.

    Living in rented accommodation means we are relieved of all the property ownership expenses, as long as we can pay the rent and council tax that's us happy, not having a lot of spare cash doesn't bother either of us.

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  3. I love reading your posts ilona, we too live in a frugal household, I shop around for everything to get the best prices plus everything we earn goes towards paying the bills, the stuff we need not want plus we try to fit in the odd low cost treat, day out etc. My carefulness with money meant this year we could afford a new to us car that my husband needs for work when our old one died. This however left us skint so saving again now and axeing the luxuries x

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  4. Sounds like you do have a brilliant life! I'm glad that you are enjoying your retirement!
    You are an inspiration, living within your means and helping the planet as well. Thank you!

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  5. Contrary to what is commonly thought most pensioners are not the least well off. The unemployed single person has approx. £3,850 per year which pays everything except rent and mortgage. These days it may well cover some rent too with the bedroom tax despite people being willing to move and having nowhere to go to. It also covers some council tax which varies according to where you live. It is roughly £74 a week and must cover transport, electric, gas, phone (you are expected to be contactable by employers), internet which is the only way to apply for jobs, water rates etc. When you are sanctioned like the ex service man who was found dead with an empty stomach and no electricity for keeping his fridge working for cooling his insulin, you have even less.

    Pensioners who own their own homes have far less costs overall. Something the young can only dream about. Hours are long, pay is poor and loans are not given. It used to be enough to have 3 times your salary to get a mortgage, then it was 5 but now you need about 20 times and of course that isn't going to happen. I'm tired of hearing people telling the young they don't know what work is. Well for many, chance would be a fine thing. For the rest, they are put down, abused, and underpaid for no reward. We were very lucky in comparison so we did much better but you wouldn't think so to hear us moan. At least if we saved, things were possible. Mortgages are impossible and rents sky high.

    My parents who had a modest pension, said they had never been so well off despite working all their lives. I have friends who are retired teachers and go on holidays to rather nice places like Iceland and USA. My point is that although living in reduced circumstances, they are really not the ones we need to worry about in comparison with the poorer pensioners without decent pensions, the sick, and the disabled as well as the unemployed - who no doubt are found to be to blame for their own circumstances, well I beg to differ. Jobs are mostly given to the already employed and hardly any full time work now exists. The job vacancies that do exist are usually filled by those in other jobs. Some no doubt try less hard than others. Suffice to say that in my knowledge if you are over 50 it is very very hard. I know people who go without heating and even food for several days. They find work for a few days but that is all. No one tries harder and it is soul destroying if you watch someone who has worked continually since youth. The man I am particularly thinking of, is as thin as a wraith as sometimes he does not have money to eat. He has a life time of working and is now considered too old. Ageism is rife although supposedly outlawed. So my sympathy is with people like him and working families, who are left with no more than if they had no jobs after all their expenses are paid. They go under the radar yet there are so many.

    An honest days work for an honest days pay is a pretty basic concept but one that is not much in evidence anymore. The big companies are subsidised by the workless who work for nothing and the tax payer who pay tax credits for their workers who are not given a liveable wage. Some of the bigger companies also don't pay their taxes in full. But lets blame the poor for everything.

    As you say you don't need that much to get by and pay your bills yet many don't have that and it is NOT because of laziness or mismanagement or lack of skills. Do you know there are families too poor to have cooking facilities - no cooker? Not even a microwave. Yet people blame them for eating takeaways. I worked for a charity to supply them. There was a man with Alzheimer's who had no way of having his food reheated even when it was delivered to him. It's all very well not spending more than you have coming in but for many there is a shortfall. Poverty in most cases is not about making stupid choices or drinking and smoking, many do not. Everyone has different circumstances, yet are treated and despised the same.

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    1. Well said. We've worked all our working lives and are now pensioners on the state pension, because of a very small private works pension we're only just above the limit to be able to claim anything. We would be financially better off without the private works pension.
      Life struggling to eat well and keep warm in winter isn't "brilliant" for us. We live extremely frugally, it's yellow stickers or go hungry. My husband has just had an eye test, he needs new glasses, where does the money come from? If we hadn't had the small private pension he'd have been able to claim benefits toward them. Those who can claim can wear the latest modern styles whilst we have to look at the most basic cheapest ones and even then worry how we're going to pay. This is only one example.
      Ilona I don't understand what you mean by saying when the utilities prices go up you use less, you will beat them. How can they be beaten? As the prices keep going up you'll keep using less but the prices are going to continue going up and there's only so far you can go until you're not using any at all. To be able to beat them will mean you're living without utilities at all?
      Using my daughters computer to write this, one of our own is a luxury we can't afford. When the television broke down we didn't get another, we make use of the library and read instead and it's a good place to go in the winter to keep warm too. 2 or 3 hours in there keeping warm saves us a little on the heating bill.
      For those pensioners who are as fortunate as Ilona, to be able to own a car, a computer, go on holiday, I'm glad for you but spare a thought for those of use who aren't so fortunate.

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    2. So very well put!! I agree with all you said here.

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    3. Entirely agree! I find it hard to imagine how u do manage . A car to run takes a fair bit a week. I wonder do you gave another source of income from your pet sitting and dog walking, gardening etc to ear the load?

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    4. Hello Anne. What I mean is that the utilities companies won't get any more money out of me. Yes, I will use less and less, I am prepared to cut my use of gas and electricity to the bone, if I have to, and I won't be moaning about it because it will be my choice. I expect my bills to go up slightly over the winter period and I budget for that, but I will still keep them as low as I can.

      I don't ask for money for dog walking, I do it to help my friends out. If they want to give me something I say a bottle of wine would be nice. I like to feel useful. I don't do pet sitting, I visit the house and take them for a walk. It might seem like I am always walking dogs, but it is only occasionally, odd times when the owners are out for the day. My friend has bought two 'buy to let' houses, I offered to help her with the gardens because she is my friend and because I like to do something useful with my time. She gave me a few items of food for the first one, and she treated me to a day out at Driffield for the second one, because that's what friends do.

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    5. By the way, My car gets very little use, it is economical to run. The reason that I can afford a car, a computer, a holiday, is because every penny I spend is carefully considered before I open my purse. I don't get any nasty surprises from the utility companies, the water company, my car insurance, I know how much everything is going to cost me, so I budget accordingly. I know which month the money is needed so I make sure I keep saving so I have enough to cover it. There is no mystery to it.

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  6. Hi,Ilona.A very interesting read.You are very unique.There are not many people who live well and happily on a pension.You have made a conscious choice to live your way,you are not wasteful and give back to your community and planet,and have your own home, can afford to feed yourself and furry family well, have money left over,and so importantly are healthy,positive, happy,creative, financially stable and solvent,and enjoy life.I know you have said it's how you've always been, but to many of us your sharing experiences on the frugal front is inspiring us to persevere and try harder to do the best we can for our circumstances.There are many people who don't have a clue where to start and your blog helps many. Thank you,again, regards, Destemona.

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    1. You are right Destemona, many people don't have a clue. I read about them on the Debt Free Wannabe board on the MSE forum. They know they have to cut their spending if they want to pay off their debts, but they come up with excuses, 'I don't want to give this up, or that up. They want to keep the same lifestyle, their Sky TV, and their gym memberships.

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  7. I really enjoy reading your blog! My parents had a very good life on very little money in their older years, and were happy with what they had. Jumble, car boot sales and charity shops provided most of their needs, they shopped at Lidl and enjoyed yellow sticker bargains from the local Tesco, grew their own vegetables until ill health got in the way, and practiced all manner of frugal practices learned from growing up poor in WW2. I have to admit that I'm not as frugal as I could be but always think twice about purchases, and try to be a "glass half full" type of person.

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  8. Hi I love your blog, and especially the photos of your various travels. Only thing I'm picking up on is your comment about not getting your house rewired; we did get everything checked and a new fuse box a few years ago, then last year we had a huge power surge due to a short-circuit outside the house; some circuits inside did cut off successfully but we still had damage to various household appliances (and no electricity for over 12 hours while it was sorted). Point is, it would have been a lot worse - and more dangerous - if we hadn't had the new stuff installed. So any spare cash might be well spent getting a bit of an update on the wiring! All the best, not going against your ethos, just a bit concerned because what happened to us was a bit of a shock, in all senses.

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    1. Thank you for pointing that out to me. I take your point.

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  9. Hi Ilona, at the risk of sounding like a sycophant, you have been the biggest inspiration to me in changing my life these last few years. I read and reread you blog often as I find something new all the time. Any time I think I want to waste money I come back to you and find a strength to fight off the need.

    You are someone I admire, so much so you have even inspired me to get off my lazy ass and walk...I don't go as far as you yet, but my aim is to up my kilometers...I have no reaso. Not to.

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  10. Ilona, I`m very glad for you. Your life choices have served you well so far. My life choices have not been so lucky, and somehow I doubt that in years to come I should be able to say that I can survive on less. The way that things are going for me and DB at this moment certainly do not make us confident in the future. But, hey ho, such is life and we just have to make the best of a bad situation for now. Who knows what our future holds.

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  11. Hi Ilona I think you are fantastic and want you to live to be 100 but please die poor. That is what I tell my own parents. They don't understand, but you do. Thanks for your blog. Debbie.

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    1. Yes, I want to die poor. I want to spend it all before I go. I think everyone should do the same.

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  12. If there's still a state pension when we get to retirement age, that alone will provide a larger income than the one me and hubby live on now - the one he earns for working a full time job in the NHS. We won't be paying a mortgage then and will feel as if we have won the lottery.

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  13. Once we stop buying what we want, and only buy what we really need, it is then we see how far money can be stretched. Well done!

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    1. Exactly GK. I suspect that lightbulb moment will never happen for some people.

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  14. We've been sorting pensions for months, why are they so complicated? and why do they take so long to sort out? grrrr

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    1. Hi Julee, Mine weren't complicated. They sent me a letter about the state pension a few months before I retired, and long before that I did a search on a company I used to work for years ago, and found they could start paying my small private pension straight away. My friend has multiple pensions, she has lumped them altogether onto one pot.

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  15. Yes interesting comments, also I find when I don't spend any money just basic food bills etc bits of spare money pop up everywhere. For me savings is a must out of my little pay though many get much less I save some every time . This week I need to go to the dentist and without that money there I would not be able to go , it is like an emergency fund in a way and yes once a month it gets a nice small bonus of interest nothing to complain about :) I've had way to money days on this earth with a empty bank account and not enough food in the fridge and cupboards. All the best to everyone

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  16. I look around and we have everything we need, might have a few wants, sometimes I replace things for a better quality one, but I don't desire that much. some people at work complain they don't have money but when they talk they talk of mobile contracts hers was £60 a month, her partner and kids have got one too. she was shocked none of us do, ive just had my fathers phone, hes traded in for a new one. its cost me £5, I use it for the internet, Skype apps etc at home and continued to use my nokia for texts and calls, because I like it better, its costs me nothing per month and I put about 10 on every two months or so. bit different from about 200 a month just for mobile phones :(

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    1. My mobile is a very basic pay as you go. £5 a month is all I spend on texts, some months less than that.

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  17. If you are a couple on a state pension and own your own home, I dont understand how people say that they cannot manage? Two full state pensions is nearly 20k a year, am I missing something? As one commenter above mentioned, the unemployed are far worse off.

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    1. We don't have two full state pensions, my husband has a full one because he's worked all his working life but my pension is low because I had time off work to bring up a child then when I returned to work I was advised to pay "housewifes stamp" instead of the full national insurance stamp. I had no idea that this "housewifes stamp" wouldn't count towards my pension. The state pension that I do get is based on my paying a full stamp when the housewifes one was stopped, so I don't have enough years to count.

      There are additional living costs in older age, just one is that we both have arthritis and have to try to keep warmer in winter or we really suffer.

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    2. Maximum state pension is £113.10 per week. If both people were entitled to one that's £226.20 per week or £11762.24 a year.
      https://www.gov.uk/state-pension/what-youll-get

      That is nowhere near £20000 a year. Where did you get "nearly £20K a year" from?

      If anyone who is retired wants to check that they are receiving the correct benefits you can use the Age UK benefit checker here:
      http://www.ageuk.entitledto.co.uk/

      Toni

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    3. I dont think those figures are correct, ilona help us out here, how much is the full state pension?

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    4. Thank you for that Toni. As well as the basic state pension I get additional components. I haven't a clue how they work it out, but mine is bumped up to £162 a week. Some of it is superannuation. I also get a deduction because I contracted out of my state pension for a while, but then I get a small graduated retirement benefit.

      My friend who is almost the same age as me does not get anything like how much I get, as she took the option of a lower married woman's contributions when she was in her twenties and thirties. She made up her shortfall with private pensions. All very confusing.

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    5. Hi Anon, your comment came in just as I was writing the above comment. As I said, the basic state pension is £113.10, but then additions are made depending on your work record. They changed the system in 1997, so I get an additional pension before that date, then I opted out, and later came back into the system. Each persons entitlement is worked out according to how many contributions they made during their working life.

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  18. I know what my future holds. My total income per year is three thousand pounds. Out of this I have to afford everything.Heat and light is hard in the winter. I can do without the light but due to poor health, I need heat.

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  19. Congratulations Ilona - surely though, due to your frugal lifestyle, you do not spend much of the £9550 per year (you get more than I thought!!). Also, is that below the tax threshold?

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    1. Yes, it is below the tax threshold. I get a full state pension because I worked for 45 years.

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  20. I think it all depends on how you'd like to live in retirement, and what you'd want to be able to do. It sounds, Ilona, that you do precisely what you want, when you want, and live exactly as you like. It might not be for everyone, but it clearly works for you! My sister recently sold her shop and retired early (she'll be 60 in Dec.), because work was becoming increasingly hard on her body (she had a custom framing shop), she wanted to spend more time with her grandchildren, and she was ready to lead a much less stressful life. Since her retirement, they've been hit with a number of unexpected expenses that have put a serious dent in their savings. Their house has no mortgage, but is old, large and maintenance can be steep ($7500 this month for new A.C., necessary where she lives).

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  21. (continued) If the house becomes too much for them, they could always sell it and move into something smaller requiring less cost and maintenance. Here in the U.S. there are always senior communities for ages 55+ that are generally very affordable, if small. Not sure if that's available in the U.K. When my sister was retiring, we took our oldest son's old laptop, upgraded it with new software and sent it to her for Mother's Day. For some folks it's important to have the latest, greatest technology (like my in-laws), but for others something reliable and basic is fine. If a couple is retired, they can probably get by with one car. Again, it just depends on what's comfortable for them. We have folks in our town still working well into their seventies, so that's possible, too.

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  22. The way you live Ilona is the way that everyone should live but its not that good for the economy although you have to look after your own finances because no one will do it for you.
    We live in a similar way, every penny saved is a penny towards something else. I've had very little credit mainly because driving is overtime based and can't be guaranteed.
    I've always run old cars, so no depreciation for me and its all paid off for me now and i'm debt free.
    I just need to cut the gas and electric bills now. A car battery, a 12 volt solar panel and some LED lights would light the house for free so that would be a start.
    Dave.

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    1. I think we are singing off the same song sheet Dave. In the past I always took a chance with an old banger. Gone a bit upmarket now, have a 57 plate Meriva. I could afford to change it now but no point in wasting money. It is still a good one and will last a while yet.

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