Michelle McGagh
Michelle McGagh describes how she saved £22,000 in just one year
“You’re not buying anything? At all? For a whole year?” This is the phrase that I’ve heard a million times, usually followed by: “I could never do that!”
And it’s true, most people don’t want to give up spending and treating themselves for an entire year. Most people are sensible. But lots of people do want to cut back, have more pennies in their pocket and make better financial decisions.
They just don’t know where to start.
Imagine enjoying every item you owned. Imagine not feeling burdened by the items you’ve kept just because someone gave them to you and you would feel guilty for throwing them away. Deciding that you’re not going to beat yourself up because you no longer fit into clothes you wore 10 years ago, and getting rid of them instead, along with the guilt that goes with them.
I realised that the things I owned had started to own me and I had bought things to tell people a story about who I was, or at I wanted them to think I was. By getting rid of those items I was taking back control of who I really was.
As a millennial I’d grown up being sold to through magazines and TV and I was hooked. I was happy to be told what item to buy to make me look prettier or seem cleverer or more interesting. Except none of the items ever really did what they said or would, so I did what advertising is supposed to make us do: I continued to shop on the off-chance that I would find the elusive products that I thought would make my life better.
By getting rid of the items I owned, I was finally telling the advertisers that I was on to their game, that I didn’t need an object to make me happier.
I set out on the road to try to determine what would make me genuinely happy. The starting point was to get rid of the stuff that had been crowding my house and my mind.
Safe
Luckily, my husband Frank had been feeling the pressure of the stuff too, so we decided to get rid of as much of it as we could. Nothing was safe from being donated, given away or sold. Crates of vintage dresses ended up on eBay; the local charity shop became the recipient of multiple 1950s and 1960s crockery sets; family benefitted from rugs, chairs, lamps and pictures.
In total, after two years of paring back our belongings, I’d estimate that we got rid of 80% of our things and made ourselves a few pounds in the process (PayPal actually suspended my account because it thought I was a business, I’d flogged so much!)
As my interest in minimalism grew, Frank and I even set up our own blog, www.londonminimalists.co.uk, and I became part of a growing community of people who were fed up of being stuck in the vice-like grip of consumerism.
It’s also through this community that I heard about Buy Nothing Day. This day falls on the same day as Black Friday, an American phenomenon that has been transported to the UK in recent years. Black Friday is the day after Thanksgiving in the US and is a popular shopping day, with consumers flocking to shopping centres to purchase deeply discounted items.
I’m making Black Friday sound much more civilised than it is. The fact that there is a website dedicated to logging the deaths and injuries that happen as a result of Black Friday shoppers squabbling over TVs and food mixers tells you all you need to know.
In the UK in 2015, Black Friday sales broke the £1 billion mark for the first time, but not everyone was out shopping. There were also those who had pledged to avoid the shops and take part in a Buy Nothing Day.
Buying nothing for a day was a good start in rallying against rampant consumerism, but abstaining for a longer period would be even better for the wallet.
But how long would a spending ban have to last to make a real impact? A week would be good, and a month would be even better, but if I really wanted to break the habit of putting my hand in my pocket and spending mindlessly then a 365-day spending ban was surely the way to go.
I decided that I was going to be one of those people who bought nothing but, instead of avoiding the shops for a single day, I was going to do it for a whole year, starting on Black Friday of 2015, November 27.
The No Spend Year Challenge was born.
Every challenge has to have rules, and mine were pretty simply: I couldn’t spend money on anything other than my normal bills and food.
Before I go into what I couldn’t spend money on, let me tell you what I did spend money on.
Total outgoings
These are the only total outgoings for our household, which Frank and I split evenly:
- Mortgage.
- Money to charity and to help family.
- Council tax.
- Gas and electricity.
- Phone bills.
- Water services.
- House and contents insurance.
- Life insurance.
- Critical illness insurance.
- Washing machine insurance.
- TV licence.
- Internet.
- Bank account fee.
The only other thing left to buy was food and toiletries. Everything else was off-limits. Which meant there’d be no more rounds of drinks purchased in the pub (tap water only from now on), no new clothes, no presents for my nephews, no takeaway coffees, no meals out and no holidays. There was also no budget for transport, not even a bus fare, so I’d have to go everywhere on my trusty bike.
You name it, I couldn’t buy it. And I couldn’t let Frank or anyone else pay for me either. That meant no drinks bought for me at the pub, no family paying for dinners out or gig tickets; it was a year of no spending, not a year of scrounging off my friends and family. That would be one way to lose mates quickly.
It was going to be hard. In order to succeed I needed a target, something to work towards. And what better target than the enormous mortgage debt hanging over our heads?
The mortgage has always been a black cloud for me and I had made an effort in the past to chip away at it meant overpaying just £50 a month.
Thanks to my job as a freelance personal finance journalist, I have access to people who know a lot about money. A few years ago an adviser told me that it makes sense to pay off your mortgage quickly and when your mortgage is gone, throw all the spare money you no longer need to use to pay off your mortgage into a pension. This seemed really sensible to me but the problem is that while I was overpaying the mortgage a little bit, I was still spending money like it was going out of fashion.
Don’t get me wrong, I wasn’t running up bucketloads of credit card debts or prioritising shopping over paying bills, but the reality of the situation was that I was constantly handing over my card with no real idea of how much I was spending.
A coffee in the morning, a sandwich at lunchtime, drinks after work, maybe a little treat for myself because I worked so hard – it all adds up; I just had no idea how much it was adding up to.
If you’d have asked me if I was good with money I would have said “Of course!” and I’m sure my friends and family would have said the same.
Day-to-day spending was compounded by the fact that I love travelling and holidays were the way I treated myself (conveniently forgetting about all the other smaller treats I gave myself throughout the year).
With the idea of a no spend year firmly entrenched in my mind, I decided to look at my bank statements to see just where my money went. You can imagine my shock when I went through a year’s worth of statements and categorised everything that I’d spent, right down to the £12.50 I spent on an eye test. And I can tell you that I thought I needed another eye test when I totalled up the numbers – surely that couldn’t be right! I definitely needed time off from spending.
Terrifying exercise
It’s a terrifying exercise but I would recommend that everyone does it. You don’t need to look through a year of bank statements; looking at your spending over the past month would probably be enough to help you identify where your spending pitfalls are.
I divulge the embarrassing details of my spending throughout my book, and hopefully you’ll be encouraged to examine your spending habits too (I’m sure they can’t be as bad as mine).
The above is an abridged extract from Michelle McGagh, The No Spend Year: How I Spent Less and Lived More, published by Coronet Books.