“It’s not your Salary that makes you rich, it’s your spending habits.”
– Charles A. Jaffe
One of my favourite things is the “aggregation of marginal gains” which is a concept used by Sir David Brailsford in British Cycling. This says (if I paraphrase) that if you improve something a little bit then these little bits all add up to a much larger overall gain. The effect of using this on our finances is that we have a financial advantage over others who pay 100% for something instead of the 98% we do. I haven’t done the maths but I think by using the aggregation of marginal gains, we have either saved or made well over £3,000 a year or £250 per month. I don’t know about you but I would prefer that £250 in my back pocket rather than someone’s corporate coffers. This post is about we use tools that are available to everybody, to save us money for things that we have to buy.
We start each month with me and Little Miss Fire sitting down to review what we spent last month and what we are expecting the following month. We move money around from our budget to pay for the following months expenditure. For example, we move £560 to savings to pay for petrol, food and other expenses that goes onto the credit card. All our bills are paid by automated direct debit from the joint account. This allows us to both track the bills being paid each month. Any other regular expenditure is paid by standing order. I.E. we share a Netflix account with my brother so transfer him £4 every month.
The bank accounts we use is a NatWest Reward Current Account in conjunction with a NatWest Reward Credit Card. The reward current account gives us a 2% back for every penny we spend on selected house hold bills. These include broadband, Council tax, mobile phone and utilities. The catch here is that you have to pay them by direct debit (which we do) and there is a £2 monthly fee. Last year we received over £80 in rewards for the £24 yearly fee so a profit of £56. The reward amount can either be traded up for a voucher at selected retailers (i.e. you can get a £40 voucher for £20 in rewards) or you can have the money back as cold hard cash. This is fantastic as we get money back for what we would have to spent anyway.
The NatWest Reward Credit card is used for our everyday spending. This gives is 0.5% cash back on whatever we spend, 1% in rewards in any supermarket spend (0.5% at supermarket petrol stations) and between 1%-15% at selected outlets (the percentages stack up so if I buy petrol from Sainsbury’s we get 0.5% cashback and 0.5% in rewards). The cashback is automatically deducted from our credit card bill every month. The catch here is that there is a £2 monthly fee. This is waved if you have a rewards current account so doesn’t cost us a penny. I can’t tell you how much we got back in cash back last year but I would think it was over £150. Everything we spend that can’t be a direct debit is put on here. Not only that but I run a company so any expenditure from there is also put through the credit card (e.g. we needed buildings insurance at £340 a year, that went on the credit card and was claimed back through expenses netting me £1.70 that I wouldn’t have otherwise had).
I also stay on top of our gas and electric tariffs, broadband, mobile phone, mortgage, car insurance etc to make sure we are getting the best deal (comparison website such as gocompare is your friend here!) Whenever we change supplier I use cashback sites like Topcashback.com to see if I can get any money for doing what I was going to do anyway. For example my mobile phone is with EE (contract up in April) for which I pay £33 per month (don’t judge is was before I learnt about FIRE!) EE were offering a deal where they add an extra 5GB of data to your phone if you use them for broadband as well. I use quite a lot of data so this appealed to me. So when our Virgin Media contract was up I cancelled Virgin Media (who were offering me a special reduced rate of £36 per month for 50MB/s) to go with EE Broadband (£31 per month, 76MB/s) and get this extra data. I also checked topcashback and saw that for the deal I wanted with EE I could get £135 cashback. Not only that but when my contract is up in April I’m going to a SIM only plan that will cost about £10 per month. So to recap I got £135 cash back, saved £5 per month on my broadband bill, got an extra 5GB of data on my phone and will save around £23 per month when I go to a SIM only deal in a couple of months. That’s a saving of £471 for the 12 months the broadband deal is for. Even without the cashback I would have saved £336 for something I would have done anyway. That’s not including the 2% I get back from the bank for paying my mobile by direct debit.
There are other things we use (like a nectar card) but as this post has gone on and on and on I think we should end here.
Hopefully you can see how we do things. It’s unfortunate that we have a finite amount of money, being able to stretch the money we have to spend anyway will hopefully accelerate our FIRE journey quite a bit. If you guys have any other tips please feel free to share!