July 2009 Newsletter Edition 1

Welcome to the first Mr Home Budget newsletter titled: "Additional saving secrets revealed... how to keep even more money in your pocket".

It is a true honour to write the first one of what we hope to become a long-running money saving newsletter.

I would just like to take a minute to reintroduce myself and the keep it simple home budget.

My name is Adam Goulding (aka Mr Home Budget) and my story is quite simple. Four years ago my bank balance was so low paying rent was a big problem. March 15th 2005 was the day rock-bottom was hit emotionally and financially for me. The term completely broke and debt-ridden sums it up nicely. This was the result of a "she will be right" attitude.

Spending my money like a drunken sailor, never saving for a rainy day. Credit cards were used as if they were my own cash. Struggling to survive and living pay cheque to pay cheque. Desperate is not a strong enough word to sum up my money issues. How could a somewhat intelligent person like me be so wrong about money and my spending ways?

Yes, basically "messing up" is the phrase coming to mind!

Then like a flash of lightning, a thought so extremely simple, yet a powerful realisation hit me. Whatever happened in my life with money up to March 15th 2005 wasn't working! Most decisions about my money to then were wrong. This one true realisation changed my life but who could show me a way out of financial danger? Not changing was not an option, as things would only get worse as time went by.

Then my girlfriend Renee (now my wife) let me in on her system for growing money. Renee was much better at handling money than me, and I knew she could help. She told me secret number one of keeping more money in my bank account. This was the KISS principle, KISS simply stands for "Keep It Simple Stupid".

Renee started to show me how quick and easy killing my debt could be. Stop my spending ways and get back on the right path with my money. Due to working with Renee, I am very proudly announcing our goal of "becoming financially independent".

In fact, between Jan 1st 2007 and Dec 31st 2008 savings of $84,975.71 have been achieved by us. Just by using Renee's "Keep It Simple Stupid" ideas, our overall wealth has accumulated.

After using Renee's Kiss principles I started to write a book on saving money, budgeting and reducing debt. This book is titled "How to cut your debt to zero in 5 simple stages, the keep it simple stupid budget".

This newsletter is full of the stuff that I couldn't fit into the book; also additional ideas and ways to save money. Plus as the newsletter is monthly I can comment on current events.

I look forward to bringing you this newsletter over the coming years. Also if you want to follow me on Twitter you can by going to @mrhomebudget.

While this newsletter is about my thoughts and opinions, I would love to hear what you have to say.

Email me at anytime about the newsletter at mrhomebudget@gmail.com

Thanks
Adam Goulding
Aka Mr Home Budget
www.mrhomebudget.com.au

X Lotto (Sorry, the odds are against you)

As I sit at my desk wondering what to write about, a radio advert is playing in the background. This week the radio shouts out, $90 MILLION to be won in X Lotto; Australia's biggest ever prize pool.

The reason why it is now 90 million is because the previous $59.2 million jackpot did not go off. This is despite Australians entering 79 million times and spending 87 million dollars on it.

OK here it comes, I think I can just imagine the next few days. First you will get the story on the news of the reporter interviewing people in the street asking what they would do if they won. Then the current affairs shows will do their bit to pump up the public. Then the newspapers will join in. Not to mention the jokes around the work place of people saying "Hey, I won't see you here next week I'm going to win the lotto".

Now there is going to pressure on you. First you will start hearing things from your workmates. There is going to be a syndicate that you will have to join at work. Then there will be pressure on you when you go to the newsagent. There will be a syndicate there as well. Then even in your own extended or immediate family, people will be asking the question, "Have you got a lotto ticket?"

Now, I have no problem with some healthy gambling. What annoys me is when it becomes fever pitch and every man and his dog has already told you what they will spend the money on.

In my book, I discuss the odds of winning the lottery. As I go onto the official lotteries commission website, I see they have the odds at 1 in 45,379,620 to win the $90 MILLION this week. Now let's pretend you entered the lottery once every single week of your life from a baby to age 100. You use the same numbers each week. Congratulations, you just increased your odds from one to 45,379,620 to 5,200.

I guess what I am trying to get at is YOU CAN'T WIN. The whole system is designed so you can't win.

However, each time you see an advert on TV or on radio, it makes it sound so easy. The adverts sell the fantasy of you winning.

Let's talk about another form of gambling and the ways they try to sell you their services. Instant scratchies are a product where the odds are not in your favour. In fact to try and win a $200,000 prize, the average odds on a $5.00 scratchie are 400,000 to one.

Using real figures let's do the sums.

400,000 tickets at $5.00 a ticket equals $2,000,000 revenue for the scratchie organisation.

However the total prize pool on the tickets is only $1,200,000.

That means they make a profit of $800,000 but they are only paying out 60% of every dollar they bring in.

Once again the odds are definitely not in your favour.

Now there is pressure to play this type of gambling as well. There was a television advertising campaign a number of years ago in South Australia that I found particularly distasteful. It had a reporter with a microphone from the instant scratchies organisation interviewing people in the street about their wins. One particular lady said that she had won $1000 one time from a $2.00 scratchie. This lady went on to say that it was her last two dollars; it was left from her shopping. She was meant to be using it for the bus, but she decided to try her luck instead. She ended up winning $1000.

Now does this sound evil to anyone? Here is a lady at the shopping centre who is down to her last $2.00. This is the only money she has to get home on the bus. She decides that this money was better invested in a long shot instead of getting herself home safely. Most people would say this is crazy.

Yet the advert glorified this lady as if she had done something extremely smart. Had this lady been one of the countless losers, she would not have been on television.

Here is an example of one of the adverts on You Tube that is similar to the one above:

The same South Australian instant scratchie organisation came up with an equally clever, but evil marketing ploy. They placed big full length mirrors in shopping centres. These were ordinary everyday mirrors, however along the bottom of the mirrors in big writing was something to the effect of "Will you be the next lucky one? Buy an instant scratchie".

Insert cartoon of "Man standing in front of mirror jumping into the air"

They were actually placing your image into their advert. Wow, this is clever stuff!

Save your money. If you want to gamble, you can. However, understand the odds. They are not in your favour; they are in the favour of the people setting it up. Remember most of these gambling things like X Lotto and scratchies are owned by the government. So what you are really doing is paying more TAX. The only difference is when you pay this tax there is an ultra slim chance that you will get it back or maybe more.

Here are some other adverts you need to watch out for.

How easy this all sounds

Here is one of the stories that I am talking about on one of the current affairs show.

Building the hype!

Additional saving tips

This is a really good one that somebody told me about the other day. Their yearly car insurance contract was coming to an end and they were looking to renew. They wanted to stay with the same company that they have always been with.

After calling the company and asking for a discount, they were happy when the insurance company offered them an $8 a month discount to re-sign for a year. This was given to them because they were such a loyal customer. This is not too shabby to get a $96 dollar discount just for asking.

Then this person in question had a brainwave. He went to the car insurance website and filled out an online quote form, as if he was a new customer. He included the same details about the drivers and the car. Well, you will never believe what happened. The offer for this new customer was $14 less a month than they had previously been charged! This is a total saving of $168.

This company was caught red-handed. They were giving lower prices to new customers rather than looking after their older, stable customers.

He called back and demanded the lower price with his evidence in hand. He was quickly given it.

Surely this has to be the height of rudeness. You have been a loyal customer with a company for a long time but they give discounts to brand new customers. And guess what, it happens in all industries; insurance, telecommunications, banking and utilities.
If you want to stay with the company that you have always been with that is fine. Just make sure you check that they value old customers as much as a brand new customer.

Saving in this case $168

Fiona Smart (Inspirational Story)

Inspirational Stories

Each month we plan to include a story from someone who has done a really excellent job using the "Keep It Simple Stupid home budget book". This is designed to keep you going in the correct, positive direction and to give you other people's experiences on what they have done. It is also to show you that you are not alone in this journey.
However as this book only went on sale last month, it is a bit hard to talk to people who have been using it for a long period of time. I have interviewed a girl who came across my book in a different way to most. She only read the book about 5 weeks ago but her transformation from someone drowning in debt to someone climbing back to the light is fantastic.

Let me tell you the story of Fiona Smart. My website www.mrhomebudget.com.au was designed by an old friend of mine. He worked extremely hard on the site and I was very grateful. Once the book was finished, I gave him a copy for free to say "thank you". Without my knowledge he passed it on to his girlfriend, Fiona to read.
Now I do not know Fiona very well. In fact, I have only seen her a few times in my life.

Out of the blue I got this email from Fiona and it reads word for word as she sent it to me:

hi adam
its fiona, obies partner
i have read ur book
OMFG its amazing
i am struggling with a few, well 3 credit card debts
i can c the light at the end of the tunnel
obie has tried to help but it just seemed like he was telling me off for doing it, not actually telling me how to do it
whoohoo
thanks
adam
fiona

As you can see, the book must have really spoken to her. I decided to interview Fiona for this month's inspirational story. This is due to the fact that she is where you are right now!

Fiona, in the email you talked about having 3 credit cards. Can you tell me why you needed three and what it was like juggling these cards?
Well Adam, after I left my husband I needed instant money. I got 4 credit cards to help me through; I then got my divorce payment but didn't pay them off. That was 3 years ago and I still have them. I have eventually paid one off, thanks to the stimulus packages from Mr Rudd.

You have now had the book for over a month. Are you keeping your receipts?
Yes I am. I have a Tupperware container next to the computer and every night when I am doing my timesheet for work, I find all my receipts and put them in there. I only started 10 days into June, so it really has not been a "full month" but very interesting to see where my money has gone...

Has it been easy to ask and collect all your receipts?
Yes it has in a way; they see me asking for a receipt, I'm in my work uniform, 99% of the time, so they assume it's for work!!

Are you seeing areas in your life where you can cut back after the three month period? What are these areas and did you think you were spending a lot on these things?
FOOD!!! I'm a lazy person and buy breakfast, lunch, teas, coffees, and snacks during the day. I am a planogrammer which entails going into stores (like Coles and Woolworths) and changing a section of their store. I know I spend the money; I need to get more organised and take lunch and flasks of coffee with me. When I find out how much I have spent in the last 3 weeks, I think that will shock me enough...

Besides the credit cards, are there any other forms of debt that you have had in the past or still have now?
Yes, I borrowed money from an old friend, he is no longer a friend but we have a $10 per week repayment agreement.

What is your opinion of debt after reading the book?
I don't want to be in it anymore...I can see how to get out of it and be debt free.

May I ask how much debt you are in right now?
Probably $8000 if I payed credit cards, people I owe money to, school fees, netball fees, OSHC fees, the little lists are endless.

How do you feel about this much debt?
Horrible...

If you could give advice to other people who haven't read the book, what would you say?
Keep receipts for 2 weeks... find out where your money is going... I told a friend about this book, she is a smoker; she calculated she spent $180 in 2 weeks on cigarettes... WOW

Do you feel more confident about going into the future? Have you turned over a new leaf?
Yes I have, for example my kids just got receipts for a school performance I had to pay for. They put the receipt in the Tupperware container. I can't wait till it all gets started in motion, after the 3 months. I am really excited, I want to skip that step and start NOW!!

Can you tell us any stories where money has been a real problem for you?
I needed new tyres, had NO money, and had to ask Obie (Fiona's partner) for money. I hate asking for money or help, I am a proud person. If I had $20 left to my name for the rest of the week and Obie or the kids needed it, I would give it to them, and deal with it myself.

What did you like most about the book?
It was very easy to read and it feels like it's going to help me get out of my debt.

What did you least like about the book?
I don't know, you need the worksheets bigger and easier to copy (very hard in a computer scanner)

Can you give us a saving tip that you use that was not in the book?
When I pay super contributions, I pay $1000 throughout the year and the government then adds $1500 as I don't earn $60,342

Thanks Fiona for that great insight.

OK, that brings us to the end of the first newsletter. I would like to leave you each month with a quote that inspires you to keep going. These quotes are not so much about money but more about life.

"The future depends on what we do in the present" Mahatma Gandi

"It's not what you earn; it's what you do with it that matters" Adam Goulding

Thanks
Adam Goulding (Also know as Mr Home Budget)
www.mrhomebudget.com.au
Twitter address @mrhomebudget