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Andy Chilton
Entries for archive: 2009-02
Found 5 entries.
Guest Post on Lazy Man and Money
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Firstly, welcome to all the Lazy Man and Money readers wandering over here to take a look round. Remember to subscribe to my RSS feed so you can keep coming back. And to all my readers, go and take a look at Lazy's blog (yes, he doesn't mind being called that) - it's a great read.
Short Term Sacrifices for Long Term Gain
My post over at Lazy's blog was originally called Short Term Sacrifices for Long Term Gain but in conjunction with Lazy we changed it to Sacrificing the Little Things for Early Retirement so his readers could get more of a taste of my background, why I started all this and where I'm headed.
I wrote the post in response to a comment I had on a previous blog post of mine, called Seeing the Old Me. Concetta put the idea in my head when she commented that by doing a four day work week, I was actually treating myself, all the time! I hadn't realised this at the time (though it makes perfect sense now).
I'd mentioned that I had been buying take-away coffees and treats for myself in reward for working too hard which brought back memories of the old me again. Working hard, playing hard but spending all of my money whilst doing it. Then I mentioned that I had to sacrifice things if I wanted to do a four day work week (oh, and retire early, mustn't forget that) - and by not spending my money on those 'extras' I could also afford to drop down a day at work. It turns out though that she was right and that having the extra day off is a huge treat, week in, week out.
If other people think that by not going to the movies that often or not having the flashiest car is a sacrifice, then that's fine with me. Neither of these things are that important to me and instead I'll make some fresh pasta, go out cycling or enjoy a bit of gardening instead. Better health and less outgoings.
Therefore a few small sacrifices gets me a much bigger reward - as always, judgement is in the eye of the beholder.
And funnily enough, these are also the same people who say "...and you can afford that?" when they hear you're working a 4 day week. Pretty funny, isn't it?
Thanks
So thanks again to Lazy Man for hosting my guest post and I hope you enjoy my article over there if you haven't read it yet.
Labels: saving, retiring, working
Inserted: 2009-02-28 08:40 (1 year, 5 months ago)
Personal Finance is Not a Destination, it's a Journey
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You've heard the phrase:
Life is not a Destination, it's a Journey
And like life, the road to financial independence doesn't lead you to a destination but instead just takes you on a road leading to a place you'd rather be but never actually getting you there.
Each junction on this road can also be considered a decision making time, a time when you can re-evaluate and a time to look back and figure out what you want to do to keep moving forwards. Forwards of course means heading towards your goals because if you didn't have goals you wouldn't know which way to was the right way to go.
Re-Evaluating Your Outgoings
In this post, I'd like to just concentrate on one particular aspect of these junctions and that is about re-evaluation. In fact even more specifically, re-evaluating your monthly outgoings like bills and suchlike.
Back in one of my first posts, I mentioned in my article on budgeting that I'd been doing various things over the years such that I was spending less on various things. Some of the bigger items I had cut down on were:
- rent (by moving to a smaller flat)
- travel (by moving closer to work)
- food (by not buying as many take-aways and making my own food)
- lots of other little bits and pieces
A few months after that, I also took some steps to make my monthly outgoings even less. I ended up selling my car and instead buying a bike for travel. That action in itself saved me over $250 a month, which is about $3,000 a year.
Can't be bad.
Spring Clean your Outgoings
Even though it's coming into Autumn in this hemisphere, for most of the internet world it is now coming into spring. As well as spring cleaning your house it is as good a time as any to also spring clean your monthly outgoings. This can be done in two ways.
You may want to turn and toss every single little thing but mostly you can just give things a quick dusting to make sure you've still got what you expect. In some cases, you just need to review what kind of plan you're on whether it's electricity, phone or subscription services.
I am currently going through a bit of a spring clean and I figure that by the end of it, I'll be saving well over $1,000 a year extra. Let me go through some of the things I've done in the past couple of months and a few more things on the table in the next couple.
- stopping my DVD mail subscription service
- switching electricty/gas providers to a cheaper option
- switching banks (to one with lower mortgage interest and less charges)
- changing credit card (to one with no fees and lower interest - not that I'd pay them any)
- stepping my internet usage plan to one with a lower price
- changing my home firewall machine from one drawing 100-150W to one which draws 5W
- switching my home/contents insurance to a cheaper supplier/option
- turning off my normal phone and getting a VoIP phone number instead
By doing all of these things, I suspect I can save upwards of $1,000 every year and quite possibly closer to $2,000.
For a start there's a $250/yr saving with switching energy suppliers and a $300/yr reduction by switching to a lower internet plan.
If I get rid of my phone, that's a $420/yr difference, minus about $120/yr for a VoIP phone, that's still a $300/yr saving.
I suspect I'll also save about $360/yr on home/contents insurance and realistically my bank fees/credit card fees will be lower by about $100/yr or more.
Just totting that up, that's a yearly saving of $1,300 without even lifting a finger (ok, I have to phone a few people but not much more than that).
See What You Can Do
If you've been living frugally for a while you might have already done all of these things and more, especially if you've been settled into one house for a while. In which case, maybe you don't need to review your situation.
However, it doesn't hurt to go through each of these things every so often just to see if something can be done. Let's say a new competitor is now supplying energy to your vicinity, it would be a shame to miss that opportunity.
Even just shaving off a little at the top of each and every bill you get can save you a significant amount of money per year. Add 10, 20 or even 30 years worth of compound interest on top and those small insignificant amounts start to add up to some serious money in the future.
So far my increase in savings have been well worth the effort I have had to put in and there are still more of those things on the list for me to go through and switch around or reduce. Overall, I'm pretty pleased already.
What other bills can you think of which can be easily reduced by either cutting back on a plan or switching supplier?
Labels: banking, insuring, saving
Inserted: 2009-02-25 01:15 (1 year, 5 months ago)
Frugal or Cheap
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There seems to be some debate in the PF world at the moment about what the terms 'Frugal' and 'Cheap' mean. I think there are some interesting points but in all honesty I really think that it is in the eye of the beholder.
Personally I think I prefer the term Frugal rather than Cheap due to the same reason DebtDiva mentions ... that cheap has negative connotations, but mostly it doesn't matter to me.
I have known a number of people over the years who have said things to me like "I'm too cheap to buy [this] or [that]". They obviously don't care about any negative feelings towards being 'cheap'.
To Me, It Doesn't Matter
In reality, it all amounts to the same thing anyway, that these people who call themselves frugal or cheap look after their money a bit more than those who don't. Possibly by not spending as frivolously, saving well and looking at the long term needs rather than the short term wants.
The One Thing I Remember
There is however one phrase that I try to remember when I am purchasing something. Generally I don't go for the cheapest stuff but at the same time I don't go for the most expensive either. I've always been a middle-of-the-road guy when it comes to such things (of course, it is very dependent on what it is you're buying).
As it turns out, this particular phrase has stood me in good stead over the years and I somehow manage to make my purchases last years longer than what some other people would. By not buying the cheapest thing, my possessions usually last as long or longer than I need or want them to. Adhere to this phrase and you'll probably be able to do the same too:
Only the rich can afford to buy cheap!
It's one of those phrases I heard once and never forgot. The friend who told that was well on the way to retirement at an early age (probably mid-forties and he could stop work - not that he will) and I've thought about it all the time since.
How do you see the words 'frugal' and 'cheap'? How about 'thrifty'? Does it really matter?
Labels: planning, budgeting, shopping
Inserted: 2009-02-22 15:56 (1 year, 5 months ago)
Turning a Rental House into Completely Passive Income
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A rental house is a great way of earning some passive income and, if luck should have it, a great way to increase your net wealth too.
I have mentioned before what passive income is and why you need it, but I thought I'd just let you know my latest development in this area - specifically my rental house.
It's not a big development mind you, but I'll tell you anyway.
Having no Time
Recently, as most of you already know, I have been working far too much. It's not something I'm going to make a habit of mind you but it did make me think about some things. More specifically my tenants required some attention to a couple of issues in and around the house.
For one of them, it was as easy as getting an electrician in and eventually just receiving a bill in the post and paying it. Pretty easy stuff.
However, one of the other items that still needs doing is something which I (or someone else) needs to look at first.
I then realised that I just didn't have time to actually go up to the house. It's about 50km away and not having much time through the week or even the recent weekends has meant that it was pretty difficult to get over there.
Then it hit me, that even if I wasn't busy, would I really want to go up there anyway on my days off. Not really no, so I decided to make the rental property almost completely passive. It hadn't taken up too much time in the past but it was always a worry on my mind.
Getting a Property Manager
Deciding to get a property manager was at first a difficult step. I'd thought of it long ago but didn't really want to pay anyone to do it. As I said, I hadn't had to do too much before but my view of some things have been changing recently.
You guys know that time is more important to me than money so I decided to maximise my available time. By hiring a property manager I now get even more of my time to myself and I get less worries too.
That can't be bad.
The Costs
Of course, a property manager doesn't come for free. He takes a snap at every single week's rent and of course when things needs to be done, he charges. He's providing a service to me and it's one I'll ultimately benefit from so that's okay with me. I also think it's pretty good value for money too.
These costs however are also counteracted by a couple of things.
Firstly, he will be reviewing the property, the house, the garden, the rent and various other things for me. He'll also advise me on how much properties like mine are going for in that particular location. I suspect the first thing he'll do is put up the rent. In fact, if he puts it up by 10% and I'm paying him about 7.5% then I'll still come out better off.
Secondly, his costs are therefore my expenses, which are claimable back at the end of the year against any income the property has generated.
The non-Monetary Paybacks
Finally, I get paid back in having extra time, more freedom and more peace of mind.
Which you all know is pretty high on my list of simplifying life and enjoying more of my own time.
Labels:
Inserted: 2009-02-16 19:38 (1 year, 5 months ago)
Seeing the Old Me
Over the past few weeks, I have been working extra hard. Too hard in fact. Long hours, many days and that means I have a problem.
Well, I say one problem, it's more a group of problems. In fact, I seem to be getting quite a few problems that my little group of them is becoming quite a collection.
You see, because I've been in work too much I haven't been living my life the best way I should.
Reasons for Having Problems
My goal when I started this blog off in September was to work a four day week. That lasted two months until I had to work a five day week. In January I was working at least a six day if not a seven day week, and they were pretty long too.
This causes no end of problems.
The reasons for the problems however are all due to one thing. Time.
Time.
That one little word.
Say it again... time.
It's something that I have had very little of recently. That small, four letter, very smooth, round and mellow word is the cause of many of my more recent problems (which I shall get on to shortly). Of course, it hasn't been because I have had so much of it but rather because I have had so little of it.
Effects of Lack of Time
Going shopping has been a pain. The fact that my local supermarket which is on my walk home from work is open until 11pm has been a great lifesaver since my 10 or 12 hours days have given me little in the way of opportunities to actually go and get food - which has mainly consisted this month of buying milk, bread and stuff to put on sandwiches. And of course, since I just had to go whenever I needed, I always forgot to take my re-useable bags with me.
My home life has also been a bit chaotic. I've been washing and hanging my clothes out at lunchtimes since they seemed to be the only parts of the day I could actually relax. A quick walk home, put in some washing, make some food, hang the washing out, walk back to work. It still makes it busy and I never really got chance to sit on my back deck and watch the world go by.
Granted, work has been buying (mostly) food each evening to keep us alive but of course, the food bought then mostly consists of take-aways which I got pretty tired of eating quite soon. Pizza is okay every now and again, but three times in a week is not good. Added to that is the fact that they aren't really that healthy for you and I'd much rather be eating something of my own creation.
Every so often I considered that I would be able to make something at home too (and recently have been forcing myself home for tea too) but many times I would buy something with the intention of cooking it but never getting around to it. So I even had to throw away food which is something I try not to do at all these days. So there is one way I've wasted money.
The Things I Have Reverted To (and Hence Wasted Money)
Occasionally I'd be leaving work at a half decent hour but of course felt too tired to cook. Hence I would end up eating out at prices which are about twice you can make two wholesome meals for at home.
I also even reverted to buying chocolate, coke or even coffee during those really stressful days (when I really thought that I should treat myself). Firstly, we know how much these little things add up over time but also upon reflection they just aren't worth it. Even though I was working hard because I was asked to, I almost slipped back into the vicious cycle:
- I treated myself because I was working too hard
- I was working hard because I needed the money
- I needed the money because I was treating myself
Compare this to when I was working a four day week and you can see that it is an upwards spiral:
- I could work a four day week because I wasn't treating myself
- I didn't have to treat myself because I didn't feel all stressed out
- I didn't feel stressed out because I was working a four day week
As you can see, I'd rather be in the second upward cycle than the first downward one.
It was Close
Certainly there were times this month when I spent too much, either on food or otherwise. Also since I wasn't going out on my bike as much (a free activity), some of the other activities I was getting up to were things that cost money and were reasonably expensive. They also happened to be the most convenient. It turns out that not only did I have very few hours of spare time but January was also the most expensive month I've had in months.
Go figure.
It doesn't make sense does it? But it's all perfectly explicable. To relieve the tension, the strain and the stress, I turned to the quick, easy and expensive options. My old, dark days were filtering back through the dark clouds.
At one stage in the month, I was even thinking to myself "Creepers, maybe I have to go back to a five day week just to keep up with my spending!"
Which shocked me. Once I had that thought, I decided to confront the powers that be and told them that I would have to go back to a sensible and somewhat normal work week once February kicks in. I'm sure I'll be doing a 5 day work week again this month though I suspect things will be back to normal come March.
I just hope that the extra pay from January, the extra from February and any overtime/time off in lieu I get is all worth it in the end. We'll soon see (I hope).
Have you ever had problems falling away from the straight and narrow with your finances and had to force yourself to get back on the right tracks?
Labels: earning, eating, working, spending
Inserted: 2009-02-09 22:30 (1 year, 5 months ago)