My spending on essentials (i.e. Rent, Food & Bills) is £110 under budget however this includes the £11.72 per month savings I have already made switching broadband provider. So after taking this into account I am actually £75 under budget.

My discretionary spending (i.e. everything except for essentials) was £636 under budget, which includes £247 earned from betting refunds that have already been included in my total earnings. I’m very pleased to have come in £94 under budget on my Christmas spending as I put a lot of effort into planning what I was going to get and then searching both the high street and online stores to find the best price.

So in total over the year I am £1009 under budget. However, I’m not going to be adding this to my MillionaireAdventure total as I have been putting off getting a new clutch for my car, which along with ever increasing costs of living will significantly dent this saving.

My spending on essentials (i.e. Rent, Food & Bills) is £104 under budget however this includes the £11.72 and £15 per month savings I have already made from switching my mobile phone and broadband provider. So after taking these into account I am actually £24 under budget which is very good considering the rising rate of inflation on my food and electricity costs.

My discretionary spending (i.e. everything except for essentials) was £373 over budget, which would have been even worse if I hadn’t earned £103 from betting refunds which have already been included in my total earnings. All of my overspend can be attributed to my unplanned holiday to Barcelona to watch the England football team.

The next big challenge is to minimise the cost of Christmas as the costs of buying presents, attending Christmas parties and the big day itself can all add up. If I am prudent over the next couple of months then I could well end the year under budget which would be a massive achievement considering the substantial rises we have seen in living costs this year.

My spending on essentials (i.e. Rent, Food & Bills) is £113 under budget despite my rent increasing by £30 per month from June. The majority of this saving was as a result of me using up the contents of my freezer before going on holiday so not needing to buy as much food for those weeks. Another £7.31 of this saving was the result of my experiment to become vegetarian for the week.

My discretionary spending (i.e. everything except for essentials) was £816 under budget during the quarter. The majority of this was due to savings on my car insurance, the car not yet needing a service and using less petrol than I had budgeted (probably because I was on holiday!) which in total saved me £553. There was also £90.22 from betting refunds but I have already included those as part of my Euro 2008 challenge so they don’t count.

So in total I am over £800 under budget so far excluding the stuff I have already posted about on MillionaireAdventure. But I won’t be able to repeat many of these savings for the rest of the year, and inflation increases on food, petrol and bills is only going to get worse in the coming months. What I have done so far has set me up well for the rest of the year, but I need to remain focused on my spending if I am going to have any money left over at the end of the year to add to my total.

When I first started planning this trip 6 months ago £1 bought $2.5AUD but as you have probably seen recently the pound has weakened substantially. This now means that I’ll get closer to $2.1AUD for each pound spent so everything out there is now 19% more expensive to me than it would have been. To put that in to context I estimate that my holiday will now be £350 more expensive just because of the weak pound and there is absolutely nothing I can do about it.

Overall my spending so far on essentials (i.e. Rent, Bills & Food) is £8 over-budget as inflation is countering all my money saving attempts that I have posted about on here. However if I had not taken these actions in the last 3 months then I would have been £68.19 worse off so I am still counting those towards my total.

My discretionary spending (i.e. everything except for the essentials) is £158 over budget largely due to problems with my car costing me £574 during the quarter. This is actually quite pleasing as without the problems with my car I would have been under-spent so I am hopeful that I can make this up during the rest of the year.

One of the problems I highlighted when reviewing my 2007 spending was the £798 that I had categorised as misc throughout the year and had no clue what it was come the end of the year. So far I am pleased to report that I have absolutely nothing in misc so I now know exactly where I have spent all my money!

In summary I think I have made some good progress and am confident that if I continue like this I will be under-budget come the end of the year.

Energy Bills

Firstly I checked whether I was with the cheapest electricity provider  on the energyhelpline.com website (where you can also compare gas providers if you have one). I had to enter details of which provider I was with, which of their tariffs I was signed up for and how much my current annual bills were before it instantly searched the market to find me the cheapest deal. It turned out that I was with the cheapest provider but not on their cheapest tariff, so all it took was a quick 5 minute call to switch my tariff. The savings from switching tariff are probably not going to be enough to completely offset the rising power prices this year, so I have also reduced the amount of time my heating is on and turned the thermostat down a little bit to cut my bills further. Hopefully this will be enough to keep my electricity bills at the same level as last year.

Telephone & Broadband

BT recently announced that from the 1st April they are changing their call tariffs, with ‘change’ being the word they opted for instead of ‘increase’ in their press releases. There is going to be a massive 1900% increase in the price of evening calls if you are on the cheapest tariff, so I am going to have to make sure I use my free minutes on my mobile rather than pay those higher call charges. They are also putting up the price of my line rental by 75p a month, but as I wrote here by opting to switch to paperless billing I will actually be reducing my total phone bill by £5.50 per year.

Next up was to check whether I could reduce the cost of my broadband by searching for cheaper providers on thinkbroadband.com.  There were plenty of options that looked like they would save me a lot of money, upto £120 per year in some cases. But I am what they term a ‘heavy user’, which apparently has nothing to do with my weight but rather the amount I use my broadband connection. This meant that many of the cheaper deals would not be suitable for me as my usage would either be restricted or in some cases I would simply be charged far more for the additional usage over their restriction limits. As I am not willing to reduce my PS3 or TV downloads, and my work just wont get done without an internet connection my choice of cheaper providers is limited to just one provider. They were then ruled out on the basis of having terrible reviews. So for now I am sticking with my current broadband provider who has not yet announced any price increases.

Council Tax & TV Licence

My council tax will be going up by £51.67 per year (a 4.7% rise) from April and the price of a TV licence is also rising by £4 (a 3% increase). I have grouped these two together as unfortunately there is no option of shopping around to find the cheapest tax, so the only alternative is not to pay (which is against the law so not really an option). Following the advice from Martin Lewis on MoneySavingExpert.com I checked my council tax band against my neighbours and found that we are all the same band so no chance of getting that reduced. Beyond that there is nothing more I can do.

Food

I believe that food shopping is the front line in the battle against inflation this year. Last year I spent £2,273 on food and with the rate of annual food product inflation at 8.4% I can expect this to rise by £182 this year (Source: Office for National Statistics). The other costs that I have written about so far are largely outside of my control but each week I choose what food items to purchase so this is an area where I can fight inflation every week.

Resisting the urge to travel by tank in future to the supermarket my weapon of choice has been mysupermarket.co.uk. As I wrote in this post this comparison site allows me to save money on my regular online food shop by selecting the cheapest supermarket based on my basket of goods. It also ensures I don’t miss out on any special offers and that I never pay more than I have to.  

I have also managed to avoid having to pay a single delivery charge this year by always searching tescovouchercodes.blogspot.com and hotdealsuk.com to find a money off voucher at least equivalent to the delivery charge.

The final assault on the cost of food shopping is going to be the emptying of my freezer over the next couple of weeks. Having sorted through everything in the freezer there is approximately 4 weeks worth of food in there which is worth about £176 (based on my average food spend of £44 per week last year). As I wrote in this recent post reducing the level of food inventory that I hold will free up an estimated £100 of cash. Also it will allow me to switch the fridge/freezer off for 4 weeks whilst I am not at home saving me a further £9.80 on my electricity bill (based on 3 units per day, approx 35p per day at current rates).

The first thing to do was review how I had done in 2007. My original budget had predicted that my income would equal my expenses. I just missed this target by spending £40 more than I earned, not a huge amount but still an overspend nonetheless. It becomes more interesting when I drill in to the detail as my income was actually far higher than I had expected hiding some significant overspends on my electricity bills, clothes, gadgets (see an earlier post about my gadget addiction), gifts, days out and misc. I’ll explain a bit more about each of these categories in order of overspend.

The largest overspend was misc and I can already here you asking ‘what is that?’. One of the rules of budgeting according to Martin Lewis is to ensure items go into the correct column and I am normally quite good at this so I never had a misc budget. But over the year I dumped costs here that I didn’t know where else to put, so every cost here was an overspend, all £1038 of it. To make things worse I only know what £240 of this is, so I have spent £798 and I have no idea where! That’s scary and something I don’t plan to repeat in 2008.

Another big overspend was on clothes where I spent a massive £1603 in a year against a measly budget of £600. I knew I had spent a lot as I lost 2 stone throughout the year which basically meant I had to replace everything in my wardrobe for the second year in a row due to weight loss. Obviously it’s great that I am losing so much weight but the disappointing thing is how much of this money was wasted on buying clothes of the wrong size and not returning them (most of them went to charity shops, although some were listed on eBay).

I spent £918 more on days out (includes football tickets, gig tickets etc) and £475 more on gifts than I had budgeted. In hindsight both budgets were far too low and will be increased to more realistic levels in 2008.

Compared to the big overspends described so far being £86 overspent on electric bills doesn’t sound significant but this wasn’t an issue with the budget I had set, nor did I use a lot more electricity last year (despite my many new gadget purchases!). No, this is simply a case of the price of electricity rising. And worse still its expected that electricity companies will hike up their prices by another 10-15% this month, or in other words I can expect my electricity bill to go up close to another £86 in 2008 (and that’s before we factor in any other price rises).

It’s not just my electricity bills that are rising quickly, petrol is up as a result of higher oil prices and increased fuel duty, food prices are on the way up for the first time in years and all this before I even find out what my council tax bill will be for the next financial year. Fortunately I rent so don’t have a mortgage to pay otherwise things could be far worse! With so many costs rising it’s vital that I track my spending carefully over the next couple of months so that I can take corrective action if my costs continue to rise.

If you are creating a budget for the very first time then there is a useful guide and budget planner here: http://www.moneysavingexpert.com/banking/Budget-planning