Biting the fuel hike bullet - time to ikat perut

The fuel price hike took me by surprise. I expected a 30 sen increase, not a whopping 78 sen! However, sitting down to take a look at my budget, I thank God that we are still able to swim, although I hope I’m not talking too soon.

How the fuel price increase affects our business
As far as our catering business is concerned, we are expecting prices from our suppliers to shoot up this week. An estimate of 40% increase is not out of the question. The question is how do we act responsibly and increase our price without chasing away our customers. We’ve come up with an approach that might work.

From day one of starting our home catering biz to 31 December 2007, we maintained our price at RM200 per pax per month. Expecting a fuel increase this year, we increased our price to RM220 for new customers who joined us from 01 January 2008 onwards. We maintained our old price for old customers (those who joined before 01 Jan 2007).

Now it looks like our new price of RM220 may not be sufficient to cover the huge increase in fuel price. So, we’ve decided to increase out price to RM240 per pax per month. This is for 3 dishes (one meat, one veggie and one side dish). However, this increase may be too drastic for some of our fixed income customers, so we’ve also decided to offer a budget package from July 01 onwards which will consist of one meat, one veggie and one soup at RM200 per pax per month. In effect, this means that if customers choose to pay the old price, they will have to settle for less. We’re still not soo sure if our new pricing will work out, because it might take about one month for suppliers to increase their prices.

How the fuel price increase affects our family budget
Obviously, there is going to be cost cutting. Thankfully, since my wife and I work full time at home, we have full control over household expenses. The fuel price increase should see our petrol bill go up RM150 per month and our electricity bill by about RM50. We haven’t taken into account other stuff that will obviously be affected by the fuel price increase. So what we’ve decided to do :

• Pay off our remaining credit card debt of about RM4K as soon as possible. Thankfully, if all goes according to the government’s plan, I should be one of the first to receive my fuel subsidy because my road tax is up for renewal on 02 July 2008. I also have a motorbike that has been sitting and collecting dust for about 3 years now that I will sell. This should bring in an additional RM1K - RM1.5K. We’ll then bite the bullet and increase our monthly credit card payment to around RM700 per month. If all goes according to plan, we will clear this our credit card debt in about 4 months.
• Repair, service or clean all our electrical equipment. Clogged fans and refrigerators that aren’t running at optimum performance will be power-guzzlers that eat into our family budget.
• Cut our weekend trips to KL/PJ malls to once per week instead of the current 2-3 times. This should save us around RM100 - RM150 per month in petrol, toll and parking fees.
• Spend more of our evenings doing family things instead of going to the mall. I like enjoying the free aircond at the mall, but this is going to cost more from now on, so better to strip half naked and enjoy a noisy game of badminton with my kids from now on. Or jump into the kiddie pool with them or maybe finally start jogging to lose weight. All in all, those nightly trips to the mall always end up with us spending more on snacks and impulse buying.
• More meals at home. Making sure the family fills up our stomachs at dinner time instead of half-full and then having an excuse to go for supper. Thank God we are in the food business so there is ALWAYS left over from catering that is more than enough to feed us.
• Cut all unnecessary expenses like newspapers (can read it online), weekly trips to the arcade for the kids and soft drinks when we eat out.

There are lots more ways we can cut costs. No we don’t need to go drastic, but we figured it’s a good way to get to grips with the crazy increases we will soon experience all around us. It’s time to “ikat perut” guys. I hope all goes well for you.

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