I was talking to someone today about saving money, and building a cash reserve. A cash reserve is what I call a slush fund, which is an old habit. Its a back up fund, which sits between contingency, and savings. I have day to day money, contingency for when potentially expected but unwelcome things go wrong, then slush fund, then savings and finally investments.
The slush fund is sort of a side step, in thats its not designated for disaster, its almost like free money which can be used when in a jam, or when I want something, any use I want.
In this particular conversation I was explaining my rather simplistic take on the Aggregation of Marginal Gains, this is the theory that if you improve / reduce / increase / save just 1% on everything you do, the sum total will end up being impressively large.
The first change I made on this journey was to pay my household bills and fuel on a cashback card, originally it was the Santander 123 Cashback Card, now I use an American Express Card which offfers a flat 1.5% (the new AmEx offers 1.25%). Looking at just my basic (off the top of my head) bills.
Quick Break Down
Nominet Bill – £80 per year
Council Tax – £15
Petrol – £30
Car Tax – £2
Car Insurance – £20
MOT + Basics – £1
Car Service – £3
Car Maintenance – £3
Water Bill – £7
Weekly Shopping £30
Meals / Nights Out / Etc £30
Already £200 for basically doing nothing I wasn’t already going to do. If you use Cashback Sites and Loyalty Schemes you can probably add another £50 on there, Shell Card, Sainsburys Card, Waitrose Card, Etc. Then there are shop based cards such as the Sainsburys Credit Card, Asda Credit Card and others. Someone (who works for one such company) told me about a trick where you close the card after 18 months, and reapply after 2 months so you get the new user deals and bonuses.
Amazon is a big spending point for me, as a prime member, I make a point of choosing No Rush Delivery which gives me a £1 credit towards music and movies. I currently have about £40 of Credits which I use to buy any music or books I want to read. On top of this I use a cashback card for purchases which adds another £50-60 a year on to my total.
This spend covers new phones, bits and pieces for both personal and work, christmas and birthday presents, every day items, you name it I buy it from Amazon.
Looking at my credit card cash back totals for this year, and we’re 9-10 months in and I’m approx £430 up just on cards, if I account for cashback sites with car insurance, credit card applications, mobile phone contracts, broadband, gas and electric swaps, I must be at least £1,000 up in the slush fund.