Live on £4000 for a year - Part 3

Frugaldom

Here's a real poser that I'd love to hear everyones' views on...

2009 Challenge - Live on £4000

I'm mulling over several possibilities here and am still convinced that the cost of living can be kept within the £4000 limit next year, but what if you actually HAD the £4000 available up front right from the start? What if you knew that was the ONLY money you had and that it HAD to last you a full year? Would it make you spend any differently, knowing that at any given moment, the unspent balance was in a high interest account and that every penny you earned (after paying the costs of working to earn it in the first place) was going straight into a high interest, regular savings account?

How different would the end result be with the £4000 reducing each month whilst also gaining interest? This has intrigued me and I am seriously considering doing this next year at the expense of this year's savings.

I love number crunching but I'm not number-minded enough to work out what balance would be left at the end of the year, assuming an APR of 6% is still available and spending was limited to the original 4k.

Marru

Nyk - I'll give it a go later tonight. Got DD to bed and am indulging myself by watching TV (something else than Balamory or Shrek)

I would have to make an assumption that every day the outgoing is 4000/365 and that interest is paid for the daily amount monthly to make the calculation easier. Or should I assume that one twelth of the 4k are transferred from savings account to current account in the beginning of each month?

Doom_and_Gloom

I'd love to do the challenge next year. It's made me even more thoughtful about the money I spend. I love that about this . This years 3K for me seems to be ALOT bearing in mind I live at my parents again. I think that 2.5K next year will be enough if I stay here :eek: .
If I had 2.5k for next year to do what you are saying about I would do that. That would mean that whatever I earnt would be able to go straight into savings etc. Wow that would be really funky.

You may be onto something there to be honest nykmedia.

whitewing

Nyk,

I am absolutely convinced that if I had £4K at the start of the year, then I would definitely wok harder to survive within the challenge. I'm sure i'd do it.

Does anyone want to give me £4K so I can prove it, lol?

If I had the savings I would definitely have a go.

Marru

Ok, here is very rough calculation assuming that the amount for that month has been moved from savings account to current account in the beginning of each month. I used the amount of days in that month as a divider:

Opening balance £4,000.00
01/01/2009 -£ 339.73 £3,660.27 £3,660.27
01/02/2009 -£ 306.85 £3,353.42 18.30 £3,371.73
01/03/2009 -£ 339.73 £3,032.00 16.86 £3,048.86
01/04/2009 -£ 328.77 £2,720.09 15.24 £2,735.34
01/05/2009 -£ 339.73 £2,395.61 13.68 £2,409.29
01/06/2009 -£ 328.77 £2,080.52 12.05 £2,092.57
01/07/2009 -£ 339.73 £1,752.84 10.46 £1,763.30
01/08/2009 -£ 339.73 £1,423.58 8.82 £1,432.39
01/09/2009 -£ 328.77 £1,103.63 7.16 £1,110.79
01/10/2009 -£ 339.73 £ 771.06 5.55 £ 776.62
01/11/2009 -£ 328.77 £ 447.85 3.88 £ 451.73
01/12/2009 -£ 339.73 £ 112.01 2.26 £ 114.26
01/01/2010 £ 114.26 0.57 £ 114.84

This means that in the end of the year you have £114.84 worth of interest earned. But what this calculation doesn't take into account is that your earnings from that year (minus rent etc) would go to the savings account for the following year and would be accumulating interest. Let's say that you will be able to put aside £333.33 every month towards following year in the end of each month into savings account earning 6% and you would have that £4k plus £111.81 interest in the end of the year giving you total interest earned: £226.65. Please do remember this is very rough calculation and assumes that every month is the same i.e. no fluctuation in outgoings wich is pretty unrealistic scenario.

31/01/2009 £ 333.33 £ - £ 333.33
28/02/2009 £ 333.33 £ 666.66 £ 1.67 £ 668.33
31/03/2009 £ 333.33 £1,001.66 £ 3.34 £1,005.00
30/04/2009 £ 333.33 £1,338.33 £ 5.02 £1,343.35
31/05/2009 £ 333.33 £1,676.68 £ 6.72 £1,683.40
30/06/2009 £ 333.33 £2,016.73 £ 8.42 £2,025.15
31/07/2009 £ 333.33 £2,358.48 £ 10.13 £2,368.60
31/08/2009 £ 333.33 £2,701.93 £ 11.84 £2,713.78
30/09/2009 £ 333.33 £3,047.11 £ 13.57 £3,060.67
31/10/2009 £ 333.33 £3,394.00 £ 15.30 £3,409.31
30/11/2009 £ 333.33 £3,742.64 £ 17.05 £3,759.68
31/12/2009 £ 333.33 £4,093.01 £ 18.80 £4,111.81

Frugaldom

whitewing wrote: »

If I had the savings I would definitely have a go.

What a challenge that would be - to generate 4k savings between now and 1st January 2009! If only! :rotfl:
But I've thought of another way of doing it that will completely upset Marru's calculating applecart, sorry Marru - if I had £1000 ready for 1st January, that would give me until 1st April to set aside the next thousand and then 1st July, followed by 1st October, as we do this challenge in 4 parts. I think I could manage that because I haven't touched my ciggie savings or my Interest beater savings! Apart from that, there are still 108 days to go (from tomorrow) and there are folks on MSE doing the £10 per day challenge and succeeding... are you thinking what I'm thinking?

OOH! Just came back after reading Marru's calculations and they look GOOD!
Now wondering even more.... brain making clunking noises! It seems to think that if I only had £4000 to start with and spent £4000 over the year whilst banking the monthly equivalent, that I'd have the £4000 back in the bank plus £225 approx left by 31/12/09. Would that mean I had reduced my COL(cost of living) by 5.6% and, therefore, beaten inflation?

whitewing

nykmedia wrote: »

What a challenge that would be - to generate 4k savings between now and 1st January 2009! If only! :rotfl:
But I've thought of another way of doing it that will completely upset Marru's calculating applecart, sorry Marru - if I had £1000 ready for 1st January, that would give me until 1st April to set aside the next thousand and then 1st July, followed by 1st October, as we do this challenge in 4 parts. I think I could manage that because I haven't touched my ciggie savings or my Interest beater savings! Apart from that, there are still 108 days to go (from tomorrow) and there are folks on MSE doing the £10 per day challenge and succeeding... are you thinking what I'm thinking?

Hmmm...I might just about be able to give it a go with my 'emergency' £1k. But I think I would have to work out how to do it as my DD's and SO's come out of the acct that wages go in. It will be too much hassle to change my current account.

Going away to ponder this. I can't be sophisticated at this stage. Just need the lump sum to sit there and diminish. Can't even think about interest. I would save enough by not over-spending.

Skint_Lynne

Hiya,

Would you still be able to do the challenge if you don't have the cash upfront? I want to work out exactly what my household outgoings are between now and challenge time and do a training session into cutting down. I also want to gut my house from top to bottom and do the garden in time for it as well, so that i have a totally clean sheet (and so that it is nice for DH to come back to, home on 19th Dec).

My phonebill is horrendous, but will be back to normal hopefully after Dh has completed his posting and is back in the UK.

I am now quite tipsy, I bought a can of gin and tonic in T tonight, that is enough for me, cause any more than that and I am dangerous!!! I would be ill until Thursday if I had to have a good drinking session, I am a lightweight!!!

SL x

whitewing

Skint_Lynne wrote: »

Hiya,

Would you still be able to do the challenge if you don't have the cash upfront?

Oh yes. Most definitely. I didn't have cash up front this year. The cash up front element is because I think it would be easier to stick to the target.

whitewing

Phonecalls abroad - have you checked out the main site for how to reduce call costs?