What’s an “unpopular” spending or money decision that actually works well for you?

[HonestTealPoster]

For me, it’s not budgeting. I’ve tried it before and found it quite stressful, I ended up overthinking every purchase. These days I don’t follow a strict budget. I just spend fairly naturally and because I’m quite frugal anyway, I still tend to save more than I spend.

Is there anything you do that might go against the usual advice but works for you?

I now use just debit card rather than credit card…have saved a fortune because I am budgeting on money I have rather than credit card…so refreshing !

Actually there will be times in your life where you cannot save/ may need to be in debt. This is normal. Do not miss out on every small joy - especially with young children - because of prescriptive ideas in saving X% of your income.

There will be other times when you can save.

We saved to buy a house/ make upgrades to it. We saved for a small buffer to cover maternity leave costs. But I am not going to never buy an ice cream for the kids when at the playground because at the moment most of our money goes on childcare/ increasing cost of living etc.

I do recommend cutting back on takeaways and only having them as a genuine treat mind. That absolutely saves a fortune (and your waist line).

we do not eat out at restaurants much at all anymore. I cannot eat big amounts, so a meal the size of my palm maybe. I am also a chef by trade and can make a great meal at home for my husband and just make it a little bigger so I can have some (not a competitive undereater...I LOVE food, but had major bowel surgery 4 years ago and as such cannot eat alot without gas and pain as I cannot digest quick enough) Also live by the beaches.. so take a beach bag with some waters , maybe a couple beers for my husband, maybe a small wine for me, and our own chairs rather than paying tourist prices at the beach bars

Your reasoning makes no sense. Of course you shouldn’t pay down the mortgage in that case.

If you have a spare £1000, if you pay down the mortgage you save yourself £6.80 in interest. If you invest it you make £140. Sure you forgo the £6.80, but you’re still £133.20 up!

The important thing is not to then squander that money. You should indeed use it to pay down the mortgage eventually. But as long as your rate of return is higher than your mortgage rate, you’re better off investing.

Pet insurance- credit cards and high interest saving pots instead

When buying beauty stuff, there is a shop near me that often does 25% off days. In fact, so often that I wait for those days and stock up then.

Same with household essentials and black friday/week deals.

I build a list of things I need, can be bought in advance and bulk, eg dental floss and moisturiser. Then get them at these times.

Once you start looking, you realise that there are some items that you need never pay full price for. (Weleda skin food - I always manage to find it with a reduction.)

No this is wrong. In fact in your specific example you would certainly be better growing the high return investments.

It's fine to want to pay down your mortgage but the advantages are mainly psychological rather than fiscal.

Exactly this, this is my mantra. We had children young, I want to soak up this time with them, it’s not the time to prioritise saving and mortgage.

@Flatinbed I wouldn’t be cycling in the winter months to save 50p per day and getting out earlier, that’s dedication to being frugal.

Same! My husband has so many colleagues that have died shortly after retirement and he's in a job where most people retire earlier than usual. It's really affected his view on life.

One of the best pieces of advice I've ever been given was by a work colleague, he's an adventurous traveller and he's been all over the world. He said travel and long flights get much harder as you get older so make the most of it while you're young.

I'd rather live my life now than have massive retirement savings, especially as I don't have any children to leave it to.

Exactly.

There is a behavioural element to it - in that you can access investments more easily than money you've put down on your mortgage so if you would be inclined to spend it rather than invest, the mortgage repayment might be the better option for you.

But it's just financially illiterate not to understand that it's factually true that a higher % return on investments is a better option than a lower % on mortgage.

we haven’t moved for 20 years and have never upped our mortgage even though I earn six figures now (agent always) and we could afford a much bigger house. The house is big enough and we have enough space and I like where we

This choice means we have amazing holidays and a great standard of living with trips away, good food budget and we can do things if we want to not down to whether we can afford it..

I do the thing with time too, I work out if it’s cheaper to get someone to do a job than it would cost me in time to do it. If it does, I’ll pay someone to do it. I have a business where I charge my time on an hourly rate so if it’s going to cost £400 to have a room painted, for example, it’s not worth my while to do it myself because it’ll take me more time than it would a professional, the finish won’t be as good and I’ll loose money I could be earning.

I also don’t spend time being “frugal” unless it’s going to save a reasonable amount of money. Life is too short to be cutting up toothpaste tubes to save 10p worth of toothpaste.

This makes no sense,

I will make the figures easier for you.

If you 100k mortgage on a low rate and 100k in investments with a higher rate why would you pay off your mortgage from a completely financial perspective?

I use Ubers as needed rather than run a second car

It always bothers me when people say they need an expensive lease because they need a reliable car.

Now, this will be true of some people, especially in poor transport areas. But I heard it plenty from friend skiving locally who were being anxious about being stranded.

All the while I had a 10yo car that yes, occasionally let me down, but never for more than a day worth of Ubers that came in at a fraction of the cost of a lease.

(If you want to lease for other reasons knock yourself out, but if you're worried about the cost of taxis - why?!? You'll likely be far better off with the old car and the odd taxi.)

I think I understand where you're going wrong.

You're comparing the wrong things - you're comparing the entire interest on the mortgage to the return on 10k when you should be comparing just the interest rate on the 10k.

If you have £10k, and your mortgage interest rate is 0.68% and your investment return is 14%:

I put those figures into the MSE calculator here and what it tells me is you are better off investing

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

I agree there is risk appetite and behavioural stuff to think about too but I think some people are just not understanding the maths.

I’ve always been a spender. I’ve always had the attitude that life is for living and I’m going to enjoy mine. Covid changed my mind on that. I was amazed how much we were able to save. It really changed my attitude to money

We've always not maxed our mortgage, we’ve always lived in a smaller house rather than the big one we could live in. We’ve stopped takeaways and restaurants. We might have a takeaway twice a year for an occasion and tbh both of us confirm that we didn’t like it for the money. I think we’ve both got used to not having them. Restaurants are really rare too now. Maybe once a year because we’re doing our Christmas shopping. We used to eat out regularly, and casually but not anymore. The longer you go without, the less you miss it, in our experience. We also used to go out for all our adult kids birthdays and take all the family. When it was your birthday, it was your choice of restaurant but I do stuff at home now.Its much cheaper for us, all the grandkids enjoy it more, having the run of the garden and house.But I don’t think any of this is out of the ordinary, I think lots of people have given up takeaway, restaurants, coffees and food out.

when I was working, I made a conscious effort not to spend any money mon to Friday. I’m now retired so I find that harder. It’s hard to go out and not spend any money at all, and equally I don’t want all day, every day, in my house. That’s quite isolating. I now make a conscious decision not to spend Tuesday, wed and Thursday. I also don’t go round the shops. I love clothes and fashion but I stay away from the high street. I have enough coats, shoes, bags, jeans, jewellery, whatever to last me a life time and then some. It’s hard, I can’t lie….i do buy occasionally from Vinted though when I have that shopping urge.

again I don’t think it’s rocket science, we’ve run our car fine without getting the urge to get a new one. We went from two cars to one recently We’re careful with what we buy on our food shopping. I’d love a new sofa….id love to change our double bed to a bigger one….but really in reality all these things are fine. I’m not chasing all these things because I don’t want to spend the money.

some will say life is too short. Maybe it is. But I do know that at my grand old age now…all these things are making a difference to us. We can see the savings we’re making each month. My husband and I love to travel. We much rather our money went on that.

@Clogblog Yes, I see what you mean. And I wasn't taking into account compounding the interest.

But it's a bit of a moot point, since very few people will have the advantage of an economic climate that facilities a crazily low mortgage rate of 0.68%, at the same time as a high investment rate of 14%! Generally, the banks make sure they get the better end of any deal with the public.

I buy everything on credit cards or use things like PayPal credit
Pay in full before 0% interest period ends and keep my unspent salary in savings

😂

Hopefully you aren’t an Economics or Maths teacher.

I do multiple food shops a week as I can't be arsed doing one big one and having to think of every single meal for a week in advance.

And... we buy alcohol in our food shop 😱

Lol no, that would be my worst nightmare! I've asked for my post to be deleted.