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Basics: What does Personal Finance Mean to Me?

Welcome to my new series of posts on the basics of Personal Finance. I know many other bloggers have done their own series, but it’s such a personal thing (no pun intended) that it’s good to go over it every now and again.

On that Wikipedia page, they certainly go some way to trying to define it in monetary terms. For example:

“Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit.”

For me though I find that Personal Finance is as much about a way of life than it is just about money. I’ll try and define it in terms of the way we live, rather than the fact that it’s about money.

Over on Twitter, I come across a good quote every now and again and this one can help us define Personal Finance too. From inexpensively:

“Frugality is all about changing the way you spend money, not changing the way you live!”

I do agree with this to the extent that you shouldn’t go without but I don’t think it says everything. In fact, I do think it is a way of life and whilst it shouldn’t force change on your life, it does affect it.

A Way of Life

As I said earlier, it’s about a way of life. I think some of these points also sum it up very well, for me at least:

• being content with what you have, and not wanting more
• enjoying life, no matter what the weather
• not being excessive in the cars we drive, the houses we live in and the things we consume
• trying to be self-sufficient as much as possible
• making good decisions in everything we do

... but most importantly …

• getting to the stage where you are comfortable, happy and healthy (whether this is work, home or money related)

I know this has been a rather short intro on Personal Finance, but I hope it has been an interesting and slightly different perspective on the matter. Let me know in your comments what Personal Finance means to you.

Labels: living, planning

Inserted: 2010-01-01 09:03 (7 months ago)

How is your Work/Life Balance?

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Recently I and a few of my work colleagues have been having an interesting time of it. Our project is pretty busy at the moment and it does make you think of the work/life balance.

As you all know, I have been trying to do a four day week recently but haven't been having any luck. I was four days for September and October but back to five days for November and December at the request of my employer. Again when I wanted to be back to four days in January, I was asked if I could do five.

Of course, I said '\i{yes}' because it's hard to refuse when your colleagues are also your friends.

The Problem

But since early January the project has been even busier and there is currently no let up in the amount of work we have to do. For the first 21 days of January, I was in work for at least a few hours (if not usually a full or even longer day) for 17 of them. If I were on a five day week I'd have normally done 13 days and on a four day week I really should have done just 10 days.

I also just cut short a holiday I had pre-planned from five days to just three.

And this is my problem. When someone asks me if I can do something, I invariably say yes. It's silly, I know and it's completely my fault but as I said earlier, I guess I find it hard to say no, especially to people I like.

Work/Life Balance

Unfortunately this does nothing for my work/life balance. My original four day work week dream is not only not happening but pretty much completely shattered. Again, as in November and December I have noticed that I have less time to do the things I enjoy. I have:

• hardly been on my bike in January at all (maybe three times)
• not really cooked a good meal at home
• not kept up with simplifying my life
• hardly spoken to my family in the UK
• missed a neice's birthday for which I will be eternally sorry

I even managed to somehow lose a DVD which I had sold on an internet auction site. I have no idea where it is and I shall be reimbursing the purchasers' price and postage. Not only have I lost out on a few extra dollars, I'm sure I won't get a good rating from the other trader.

So as you can see, my life has both gone out of whack and been pretty much non-existant. I have still seen a few friends here and there but not as many as I would usually. I usually go for coffee with a particular set of friends at least one weekend in each month and since the New Year, I have had to delay it every single weekend and now, there's not even a full weekend left to do it in (this Saturday will also be taken up working).

Extra Work and Who It Affects

We sometimes say to ourselves that "it'll be okay", "it'll calm down soon" or "we'll be able to relax afterwards" but none of these statements are ever true. Firstly, it's not okay when the extra work time starts affecting your family. Secondly it never calms down since commercial projects are incessantly going forward always with something to do. And finally, you don't get time to relax since once the project is done, all the things that need to be fixed up come back and haunt you for weeks if not months afterwards.

Out of those points though, the first is the most interesting in this conversation. Many times we buffer those around us from the realities of having to work overtime. We manage to shield our loved ones from the harsher realities such as nightmares (about work), arguments within work or even just plain old tiredness (whether physical or mental).

But sometimes our buffers become thin or cracks start to show. When working 14 consecutive days, it's hard to shield it anymore from those around us. We start complaining about the smallest things, we're grumpy and we're tired.

And as soon as you start to show it, your family sees it too.

Suddenly your homelife isn't as good as it was, your relationships don't sit as well and your family and friends start complaining that they never see you anymore. I know this because some friends of mine have been complaining for almost two weeks now. My response however is "There's nothing I can do".

Saying What we Don't Believe

Of course, there is something we can do about it and that is to push back on unrealistic work schedules. Having to work extra days, overtime and lunchtimes because of something that is out of your control is pretty demoralising. I have been on projects in the past which had crazy schedules but this particular one is fast becoming one of the hardest I've ever had to work on. Let me also qualify that by saying that on one of my previous projects I had to support a scientific space telescope for the European Space Agency for months beforehand, months after and 12 hours per day for well over a week around launch. So I know about high profile and expensive projects.

Today then, I decided that I shall give my all until project launch which will take us to around the end of January. After that however, I expect I'll not only be back on the four day work weeks but also back to normal hours too. It'll still be busy after launch I know but realities are kicking in now and I know that working these long hours is not good for either myself or those around me.

Instead of believing then that "there is nothing I can do", I shall be instead believing that my dream of a four day work week will soon become reality again - and this time, actually make it happen. Any future projects will just have to schedule me for four instead of five days per week.

Why?

Because I want the 'life' part of my 'work/life' balance back!

How do you put a control on the work part of your work/life balance?

Labels: planning, living, working

Inserted: 2009-01-26 01:11 (1 year, 6 months ago)

Why You Should Do New Year's Resolutions All Year Round (but don't call them that!)

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Are you one of those people who write down huge lists of things you're going to change about your life come 1st January? Maybe you just have a small list of things but the real question is, are you going to keep them?

Here, I'm going to tell you why you should do New Year's Resolutions all year round but instead of giving them a big official title like that, just tell yourself that you're going to change something about your life. Besides, most people don't last out January with their resolutions anyway, so what's the point?

Change a Little Something

Whenever I have changed aspects of my life on 1st January - admittedly something very rare in my life - I have usually failed at keeping up with it. But many times, I have just decided, right there and then, that I was going to change a little something. And this has been my most successful method when wanting to change direction in my life. Just start.

That's what you should do too.

Just do it spontaneously, don't think about it too hard, just do it. Yes, you might have been pondering it for a while but then suddenly you just know it is the right time to change.

Whether you are quitting doing something, doing more of something else or changing an aspect of yourself or your life, the best way to do it is to just say "To heck with it, I'm changing as of right now!"

No lead in time. No setting dates. No pre-planning and no further thinking about it.

Deciding that you will quit something on a particular day in the future just doesn't work. Then you realise that that day is going to be the last day you can ever have that particular thing means you hype it up too much. It becomes bigger than what the actual change is and maybe you even over-compensate prior to that date by having even more of the thing you're actually going to quit!

Surely this isn't the right way of doing it?

Wake Up One Morning and Just Decide

A number of major decisions in my life have happened when I've been in bed in the morning, trying to wake up and pull myself out of bed between snoozes and thinking to myself that I just don't want to get up today. When that happens, I usually know what it's about and on occasion I have decided right there and then what I was going to change.

One time, I couldn't get out of bed because I didn't want to go to work. Right then, I decided to quit my job and look for another one. After that it was easy to get up and I immediately stepped into the new wonderful world of looking for a new challenge rather than the old miserable grey world of the current job.

As a counter-example to this, I knew of a schoolteacher who said that she would quit smoking, not on the 1st January, but on the first day back at school. It seems to me that quitting smoking on what could be one of the most stressful days of the school year (teaching being quite a stressful job anyway) didn't seem to me to be the best plan. Instead, I told her to just wake up one day and to have just stopped. No date for when to quit, not ritual buying of the last packet and no 'last' cigarette. Instead, wake up and just say "As of now, I have quit smoking" and that's it!

Not just smoking but anything.

Changing My Whole Life

Back in September, I pretty much changed my entire life on the 4th of the month. It was a Thursday. I remember it well since I'd had the previous day off as my first Wednesday off of my first four day week. Prior to that Wednesday I had no idea that I would change my life so completely as I did the following day. I mean, things had been rolling around in my head prior to that day - a stewing period is always an advantage - but suddenly I woke up a new person.

I stopped buying takeaway coffee, I cut down expenses, I changed a whole myriad of aspects of my life - why, because I knew when I got paid in 12 days time it would be for a lot less than I got paid the previous month. I just had to do something about it to make sure I wouldn't end up going back to 5 days a week.

Use Any Kind of Stimulus to Make You Decide

It's not just about waking up in the morning though. You can make these decisions at any time you like but I find that the best time to make decisions is when that final straw broke the camel's back. Here are three quick examples of some aspects of my life I have changed in the last few years:

• About three years ago, I'd had a terrible week in work and went to McD's for food that evening. Instead of the usual chicken burger, I bought a large beef burger (I forget the name of it). It was disgusting, dripping fat, mixed with mayonnaise, it just didn't taste good. It put me off for life and I've never been back to McD's since.
• One day, I added up how much money I spent each year on takeaway coffees. It added up to almost $1,000 which was in my opinion, far too high a percentage of my salary - my net salary too! In fact, it wasn't this that made me stop but add it to the fact that I'd just received my 4th coffee that week which was caffeinated instead of decaf and that finally broke me. Paying extra on top of the already exorbitant prices for decaf which I never received anyway finally stopped me from going. Now I get the odd hot chocolate but usually as a treat and with friends.
• The decision to sell my car was the culmination of having to pay out $70 one Wednesday on petrol, $170 the next day and the final straw of $630 on the Friday. I was not happy. I decided it was time to get rid. Less than three months later, I was car-less.

Today's Resolution

Why didn't you get out of bed this morning? What was it about today that didn't allow you to enjoy it? Did you get annoyed by something which you realise you just don't need anyway?

When I asked myself about whether I really needed the coffee, I knew I didn't but it has also evolved from that now. It is no longer just about saving money by not having that coffee, but also about having more time in the day to enjoy myself. When I walk past the shop nowadays, I actually shake my head at the huge queue of people wasting 20 mins every day (or even more) waiting to be served the drink they ordered oh so long ago. I actually get more time in the day now to enjoy myself that little bit more.

These are the kind of questions you can ask yourself. Sometimes you decide that it's okay for the moment, that you still want something or you don't want to change something else. But eventually, one day you'll decide that you do want change. And when that day comes you'll know it immediately and your life will be changed forever.

The best part about all this is, you can do this every single day of your life. Why wait until a very inopportune date to change something of your life? Just do it and do it today. If you want to change something, you may even call it 'Today's Resolution' but either way, just change. You'll be happier tomorrow if you do.

Labels: planning, saving, living

Inserted: 2008-12-18 23:20 (1 year, 7 months ago)

The Little Things that Change Your Life Really Quickly

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Every now and again, you see something and you say to yourself "That's a good idea". Sometimes it's the big things, like a different bank with a lower mortgage rate interest, a fuel efficient car, a type of insulation or even a kind of lawnmower. You just know if you were to switch to any of these it would somehow improve your life since they are such an integral part of it.

But other times, you see something really small and you think "Wow, if only I'd switched to this before." Well, this is my story of something really small, something I bought yesterday and already I know it has changed my life and changed it for the better.

Prior to My Purchase

A few weeks ago I was chatting to some friends of friends. People I had met a few times before and already knew I liked them both. They were telling me of their habit of switching every single electrical appliance off at the plug when not in use. The only thing that stays on in the house when they go out is the fridge (actually, they said everything but I presume the fridge stays on).

This includes the likes of the TV, DVD player, stereo, speakers, microwave and all those other things with the shiny clocks, the bright displays or the standby LED lights. We know these are a constant drain on power (and therefore money) so why not switch them off? I knew, but I didn't really practice it.

I'm Not That Good

There are some things I do but switching things off by the plug isn't one of my strong points, which is weird, because I always used to do it. I guess I just got out of the habit. I have always switched off the microwave but my main problem (and mainly because I'm a geek) is that my router and my computer stay switched on. I will have to change this at a future time but now I decided to concentrate on something else.

As we were talking, I curiously asked one little question which eventually brought about my purchase yesterday. I asked "What about your alarm clock?"

"Mine isn't plugged into the mains, it's on batteries, just a small travel alarm."

"Ah", I said, "That's pretty cool."

Not sure I had that 'Wow!' moment yet but it got me thinking, enough to actually go out and get myself a cheap (real cheap) battery operated alarm clock yesterday. My old one, a plugged-in one, with a bright and energy zapping red LED display was having trouble tuning in to certain radio stations anyway and the non-radio alarm was a horrible dull noise which sounded more like a jet engine trying to start but not actually going anywhere. So in reality, it was about time I got a new one anyway.

Added to the fact that I had a new reason for getting one too.

My New Alarm Clock

When I bought it in the shop, I realised that the alarm clock also had a temperature gauge on it. Cool, that's pretty neat. Still no wow factor but nice nonetheless. Then I got it home.

I duly opened up the very small packaging and pulled out a square of about 2.5"x2.5"x1". My old alarm clock was at least 6"x2"x4" so already I had made a lot more space on my side table. Seeing as I'm in the middle of decluttering my house, I started thinking out that this new alarm clock was a winner.

But that's not all. The old alarm had it's power cable running forwards of the bedside cabinet since there are no plugs behind it(it's an old house). With that taken away and the long aerial gone too, the area to the side of my bed is no longer a strewn and busy place but more a tranquil, quiet and warm place.

I started liking the alarm clock even more.

My Two Weather Stations

I bought an electronic weather station a few years ago and have been hauling it around to each place I moved. Alas, the only thing I ever looked at it for was the inside temperature since all the other readings just didn't bother me. Also, my Mum (for all her love and kindness) actually bought me a similarly duplicate weather station for Christmas last year and I've never had the heart to sell it or give it away. (We all know what I think about Christmas presents anyway.)

But enough is enough.

I decided that with my new temperature sensor in my new tiny alarm clock, I could actually get rid of both of these unnecessary weather stations. Wahoo! Another quick win for me, my house and my new simple life and another win for the small, cheap and somewhat-versatile alarm clock.

The Drawbacks

Not everything in life goes as swimmingly well as had been going thus far and I soon figured out the one minor and the one major drawbacks of the new alarm clock.

Firstly, there are only two buttons to the whole clock. This means that having to set the time, or more likely the alarm, is a complete pain. It doesn't even allow you to keep the button depressed to increment the numbers faster. Ah well, this is minor and I can live with it since I rarely change it anyway and usually just switch it off at the weekends.

The other drawback however is when I realised that this clock doesn't even have a snooze button. You know, the one you press in the morning just so you can get another nine minutes sleep. Then because that wasn't enough, you press it again for another non-satisfactory nine more minutes. This, as far as I was concerned, a terrible mark against the almost perfect new purchase.

Taking What You Want From Life

Over the course of the day though, I figured that both of these minor disadvantages could be made to work for me rather than against me. On the point of the inefficient button pressing, I have decided to set the alarm for 7:30 in the morning and to leave it at 7:30 in the morning, for every single day of the week including weekends. I am not going to bother trying to change it at the weekends or any other time unless I have special reason to.

This will make sure I get up at the same time every single day and maybe one day my body willget used to it and not actually need the alarm anymore.

But the best thing I think I figured out with this alarm clock is that, without having a snooze button, once the alarm clock went off, I would have to force myself out of bed, no matter what! As soon as I figured this out, I knew that this was now a 'Wow!' purchase, not through any fault of it's own but due to the way I shall be adapting to my new beeping friend.

The Full Story

I didn't realise originally how much or how quickly such a small purchase could provide but I'd like to recap these new advantages just in case you missed them:

• I don't have to listen to crap and over-advertised radio in the morning
• it doesn't burn through grid power all the time I'm not using it
• it takes rechargeable batteries
• it has uncluttered my bedside table
• it had removed hazardous cables stretching to the plug away from my bed
• I have removed two other unnecessary gadgets from my life
• it will set me a regular (and reasonably early) time to get up at the weekend
• it will force me out of bed at a particular time instead of snoozing around all day

... and of course, the reason why I wanted to get it in the first place, is so that it lowers my electricity bill ever so slightly. However, the thought of not having another appliance switched on all the time led me to turning off most of those other appliances too. This is where each individual gains adds up.

Take From this Story What You Will

You might think that this whole alarm clock story is silly, small and insignificant. That's fine, take from this story what you will but I'm willing to bet that there is something small you have bought, or changed in your life, from which you got enormous satisfaction. It may even have had further repercussions further down the track and you never know how much the addition of all those small but incremental changes finally make to your life.

This is also a story about how negative or disadvantageous things can be turned to your advantage. I mean, having more time in my day is something I am already looking forward to...

...all because of one small, energy efficient, compact, temperature reading, non-snoozing, hard to use, little beeping alarm clock which is now sitting happily on my bedside table next to my lamp, my notebook, a pen and nothing else.

Ah, happy days.

Let me know of any other things which at first seemed small to you but later took on a whole different meaning.

Labels: budgeting, living, consuming

Inserted: 2008-12-14 22:26 (1 year, 7 months ago)

Simple Steps Taken to go Car Free

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Over time, I have taken numerous steps to become car free. Each of these steps are small, sometimes infrequent but all of them have added up in the quest of attaining car-free status.

And now they have all now been worthwhile since yesterday, I sold my car and am now officially carless! And you know what, it feels great.

Consideration

The first thing you need to consider is whether your life would be better or worse if you went car free. This one thing is the most important part of this decision since there would be no point getting rid of the car only to have your life become miserable and annoying. Everything you do should be to make your life happier, easier and more fulfilling.

For me, this decision was easy. I've never really been a fan of cars anyway and whilst I took a liking to my car (her name was Latoya because she was a Toyota) I just became sick and tired of the expense she was costing me, especially taking into account her old age and the number of repairs I had to do recently. Poor Latoya.

But after having a few chats with various friends a while ago, I decided that getting rid of the car was something that was definitely on my todo list but I just wasn't sure when. After having that short, sharp snap of car-related expenses back in September it became the final nail in the coffin with me and car ownership.

Having also moved in to town earlier this year this also made the decision to go car-free a lot easier. Transport to both work and almost all of the other places I frequent was now not required and in fact, probably slower.

If it helps, write down a pros and cons list of having, versus not having, your car. This is a good exercise since there might be some things you'd forgotten about. For example, the convenience of being able to drive to your holiday destination might be one but maybe you're more of a flier anyway. How about the reduced ongoing cost of not having a car versus the increased stress of having to ride public transport? (Unless public transport in your area is amazing.)

Add Up your Expenses - and Include the Car Price and Depreciation too

Another way to help you make a decision, is to add up how much the car is costing you vs the cost of having to pay for other travel arrangements. I can almost assume that because you are reading this blog that this particular item on the pros and cons list has a fair bit of weight in the final decision. It certainly was for me once I fully worked out all my costs.

As mentioned in my post about Two Ways Biking Substantially Improves Your Life, I mentioned a few ongoing costs of car-ownership and I'm sure there are probably others I have left out too. (For example, I think the car will have to have new tyres soon so I'm glad I didn't have to pay for that.)

Another item I forgot include in the original cost list was the actual amount of money I'd originally paid for the car. Now that I also have the sold price I can figure out that the car, over the four years I had it, cost me about another $50 per month just for the privilege of owning it. Of course, the longer I kept it, the less this would be but that's also a risk set against any upcoming repairs that might happen and one I was not willing to take. (Rust on the back windscreen and the slightly sticky gearstick are two repairs that will definitely have to be done soon.)

It Doesn't Stop There

As if you need any more convincing, there are also other factors to take into account. In the past six months, I have probably used the car 2-3 times per month and in fact, my friends borrowed her for the majority of this time. Even out of those two or three times I used it each month, two of those were probably unnecessary if a little convenient. When not in use, she would sit on the road gathering rust or having her wing mirror broken off which was no fun at all. All of these things add up to an unhappy car...

...and an unhappy me!

I knew I was having to spend over $250 per month on something I very rarely used and that amount was never going to get cheaper either (apart from the petrol price reduction recently but that's only a fragment of the ongoing costs). No matter how much or how little I used the car, I was out of pocket by a fairly reasonable percentage of my take-home pay, pay that I'd worked hard for and therefore money which wasn't returning the favour and working hard for me.

If you did choose to go car-free, that extra money would be much better off in a savings account, paying off your mortgage or even put into shares or property. Over the year, that saved money could come to something over $3,000 (or a lot more) not including any additional interest payments and that's a quite significant amount. Even just thinking that not having a car will knock years off your mortgage is really quite exciting.

Depending on the Most Reliable Form of Transport - Your Legs

Having always been a walker and now a keen cyclist too, I am relying on my legs more and more. In fact, I've always said that those legs are the most reliable form of transport ever. They've never slowed me up in a traffic jam, never broken down, never deviated from the scheduled timetable - since I set it - and almost always do exact what I want, when I want. They also never say annoying things over a tannoy system to hoards of beleaguered commuters when the points fail or the bus breaks down.

Both walking and cycling were the forms of transport I decided to concentrate on the most to help me out in the post-car era. I could say I was lucky in that most of my destinations are within walking or cycling distance but that would be wrong, In reality they are close because I specifically moved to this exact area for exactly that reason. All part of the plan, a plan which has been brewing for a year or more, with action taken over the space of six months and a final transaction yesterday to conclusively be rid of that four-wheeled contraption.

A Plan for Post-Car Blues

As shown above, I took a few steps to make sure I put myself into a situation where I could get rid of my car but there are other things to think about too. Maybe you'll find things slightly more inconvenient because you'll have to take the bus or train instead of driving but actually you don't have to make it harder on yourself by not owning any petrol-fueled transport.

Firstly, you could do what I did and buy yourself a bike. I managed to get one in the spring sales (in this hemisphere at least) and as I've said before, it's already brought a lot of joy to my life, both for exercise and for social engagements with other bikers. Essentially I have prioritised that a bike is more important to me than a car and therefore, I'm happier because of it.

Not to mention that I have already lost some weight and can feel that my stamina is steadily increasing.

Of course, you also have the option of public transport, which admittedly requires extra planning, but it's hardly a burden. If I can plan to retire at 40 then I can certainly plan to take a bus somewhere on a Sunday morning.

It's also not a bad thought if you remember you can still take cars every now and again. A taxi for a quick trip here and there doesn't work out to be too expensive (factoring in your lack of tax, parking, maintenance, insurance, breakdown cover and all the other things) or even hiring a car on the odd weekend for that jaunt away isn't going to break the bank either. In fact, you'll still probably be saving around half to three-quarters of what you were consistently spending every month and in some months near to 100% of that stays in your bank account!

All in all, no matter what transport you take during the course of the month, you'll be much better off than you were before.

Added Advantages

After selling the car yesterday, I also figured out a couple more advantages which, even if they are only small ones, still add up to extra happiness. Firstly, I was able to get some money back from my insurance company to the tune of $240 as reimbursement of my pre-paid yearly policy. It was a lovely parting note to my insurers and one that my Emergency Fund will be very happy about.

Secondly, when signing the official papers, I had to take my car key off my keyring and hand it over. And you know what, in that simple act, I went from having two keys on my keyring down to just one key and it was an amazing feeling. Simplifying my life in a most unexpected way made me smile and actually brought a little bit of joy to my face. Realising that you've just gone down from having a set of two keys to a measly one was much more fulfilling that I'd ever thought it would be.

Almost halving the weight of the keyring already makes me happier and certainly puts me one more step on the road to a life of simplicity and financial independence.

What would you do? Can you go car-free? What stops you, your family, your location, your job or something else?

Labels: planning, insuring, saving, living, travelling, selling

Inserted: 2008-12-04 22:41 (1 year, 7 months ago)

December Challenge - Free Yourself of Material Possessions

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Earlier, I posted about 5 Ways to De-Clutter and Simplify Your Life but in December, we're going to take this to the next level.

Being surrounded by material possessions weighs heavily on our minds. Sometimes I wonder how big the next place I move to should be just to fit all these things in. I wonder why I keep those DVDs on my shelf that I haven't watched in ages. My wardrobe, whilst not big could do with a trim. And all those other empty appliance boxes, folders of papers and books I haven't touched in a while just sit there staring at me.

And all the time, I think about doing something about these things.

Starting Out ...

Over time, people generally acquire lots of stuff. Each time they move, they shift it with them and since the new place is bigger, it's easier to acquire even more stuff and have it diffuse into the house like all the other belongings.

A spring clean every now and again removes parts of it, either to the charity shop or the rubbish dump but mostly, it just gets dusted and put back. Those things that haven't been used in a year or so but still being kept for the sake of it.

I've managed to do this with a few things since I downsized to my newer smaller flat but I still have lots of stuff, everywhere, all over the place. It'd be nice if this wasn't the case and I could actually get rid of a lot of it.

... and Finishing Off

This December, I challenge you to start filtering through all those secret cupboards you have left closed for eternity, those drawers that seem completely jammed and those cardboard boxes in the attic or garage that haven't seen the daylight since the turn of the Millennium. Just a little bit here and there will make a huge difference. How much? 15-30 minutes a day. That's not much but, as with Personal Finance, many small changes add up to a large difference over the long term.

Not only that, but once you've filtered your possessions you'll find it hard going back and acquiring more stuff. This not only helps your peace of mind but also your wallet.

The Act of Filtering

A friend told me the other day that she has three piles: Keep, Charity and Throw Out. This sounds like a good plan since then you know exactly what you're doing with every single item you find.

You might like to add a Sell pile too but this is your choice. Maybe you have a Give to Nephew pile or a Recycle pile and of course, you may have others but the best way to do it is to keep it simple. Also, as and when you look at each item from that cupboard, drawer or box, make a decision there and then as to what you're going to do with it. The worst thing you can do is decide to decide later.

Say 'No' to a Don't Know Pile

Whatever you do, do not have a pile called Don't Know since that will just assimilate back into that stuff you didn't actually know you owned. After all, the point of this exercise if to get rid of things, not just shift them to another location in the house.

As I said, pick up each item and put it into one of the definitive piles. That way, when you look at it in the future, you know exactly what you're going to do with it (assuming you haven't already done something with it already).

Do a Little Every Day

By doing just a little bit every single day, you'll be amazed at how quickly you can get through your stuff. I shall be taking this challenge and posting one or two updates throughout the month so we can compare notes on how we're doing.

You might wonder if December is a good time for doing this since it is a very busy time of year but I suspect that this will work out well for even the busiest house host. Instead of leaving all of your tidying up until a week before Christmas and New Year then just start now and see where you are in two weeks. I suspect if you did a bit every day until mid-December you'd be more ship-shape than if you left it until later.

So what are you waiting for? Get sorting through that stuff and let's have a clear, clean, stress-free and simple Christmas and New Year.

And remember to let me know how you're getting on in the comments, state that you're partaking in the challenge and blog about it so we can spread the word.

Labels: recycling, planning, living, giving, selling

Inserted: 2008-11-30 10:06 (1 year, 8 months ago)

Choice Between a 4 Day Work Week or More Money

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As I have stated before, I am aiming to achieve my goal of retiring at 40 whilst at the same time working a four day work week. Yes, I know it's insane but it's good to have goals.

Besides, if I miss it at 40, then I'll probably hit 45. But that figure isn't the most interesting one. To me the most important figure above is that I'll be doing it whilst working a four day week.

Initial Thoughts

My four day work week started in September and almost as soon as I started doing it, I was blown away by how good I felt. I decided to take Wednesdays off to split the week up and just the thought of only ever working two days on the run, before having at least one day off, was probably the best decision I ever made.

I had various detractors including people saying "but then you get two Mondays" to which I counter "yes, but you also get two Fridays!" And besides, all the people I knew who took Fridays off wanted to have a long weekend so they could go away every now and again - unfortunately, they never did.

However, no-one said that a four day work week was bad and in fact, a good percentage of people started thinking whether they could do the same.

As it turns out, Wednesday, for me at least, turned out to be a magical day. Almost like going to Disneyland every week - it was a dream come true.

A Change of Lifestyle

Early on I realised that my life had changed quite dramatically. I finally had more time to do things. being able to cook more often, eat better and exercise more has been refreshing and of course, the ability to do other things I enjoy, like walking, cycling and taking photographs meant I was distinctly happier than before.

It came at a cost though and that was a financial one. My pay was instantly 20% pro-rata lower than it should have been. In reality it really didn't bother me as much as I thought it might since I had already altered my lifestyle enough such that I'd stopped spending enough money on frivolous things that it actually cover this difference. On reflection then I was no worse off than before (luckily I'd also had a pay-rise a few months earlier which also helped).

It Lasted Two Months

You might be able to guess that my four day work week is no longer - temporarily - but for the moment it is but a dim and seemingly distant memory. At the start of November, work asked me if I could go back to five days a week until the end of the year. It is only two months and I knew the question was coming anyway so I happily said yes since I like to think I'm quite agreeable in these situations...

...not that I knew what I was letting myself in for.

The first week seemed to go quite fast, the second a bit slower and now, in my fourth week back at five days, life seems to slowly grind onwards ever inching towards that singular Friday when I finally get time to myself. It's not so bad but I have already realised that my life is the worse off, in a number of different ways, for it.

I have less time, my diet isn't as healthy as it was, my exercise routine has waned and I feel a little more stressed about a number of things. I certainly have less time to do bits and pieces as you'll have noticed by the dip in the number of posts in November.

Time Deficient

Now, I'm sure that there may be some readers who'll be saying "We've all got to do a five day working week so just live with it" but here's my case as to why I need a four day work week (and not just for mental reasons).

As a single guy, I inherently get less time than couples do (and here, I mean couples with no kids - couples with kids certainly get less time to themselves than I do). Let me justify that by saying for my situation, I'm the one who has to tidy the house, I have to do the shopping, I have to cook for myself, I have to do the washing up and the washing, I have to pay the bills and talk to the bank/utility/phone companies. Oh, and I also have to earn a living. With couples, they can at least share a number of these chores.

A number of my friends go out cycling while their partners shop and cook. While they clean up afterwards, their partners can get on with other things. If both of them tidy up, it takes half the time and in some cases less.

So you see, by having that little bit more to do what sometimes feels like an infinite number of chores really helps. This way I can at least spend proportionately more time doing the more feelgood activities like recreation or hobbies.

The Extra Pay

When I started back at five days, I knew I would probably enjoy getting my increased pay-packet but in reality, what I got extra - whilst significant - doesn't really compensate for all of the negative things I have already been feeling whilst back up to five days. I'm usually a happy person, and that's still the same, I'm just not as happy as I was in September and October.

I knew that over these two months I would switch my thoughts between sticking at five days (to help my finances and retirement plans) or four days (to enjoy life a little more) and wait until the New Year to decide which I wanted to stick with, but I think I have already made up my mind.

I shall go back to a four day work week come January and not care about the extra money. It's a call between my head and my heart and unusually for me, whilst my head has invariably won in the past, this time my heart has won out by a large margin.

As one of my friends said to me a few years ago "You can always earn more money but you can't earn more time". And that is why I shall go back to just four days in the New Year.

I'm curious as to what you would do, so if you were in my situation, what would you choose? Please explain.

Labels: earning, living, exercising, working

Inserted: 2008-11-25 21:27 (1 year, 8 months ago)

Prioritising so You Can Have Your Chosen Way of Life

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Life is all about compromise. In almost everyday situation we come across, we have to trade one item off for another. For example, when I buy cream cheese, I usually go for the lower priced version rather than the much more well known Philadelphia. Why? Because I think the taste is identical and I get to save money at the same time too.

However, if I'm buying that delicious yeast spread for my toast, I always, always, always get the real Marmite. All of the others I've tried, especially in this part of the world, aren't quite the same.

I'm trading off the price of the goods for the taste. Usually I'll go for the cheaper option but in this case, there is no comparison, it has to be the original. I consider this to be a trade-off I am willing to take.

It's a Trade Off

Every single day, we're forced to trade something off against something else. Yes, you can go out for lunch with your co-workers every day but then you wouldn't be saving as much as if you'd brown-bagged your sandwiches before you left in the morning. Of course, you don't want to cut it out completely either since there wouldn't be any fun in that at all. It's a compromise.

It's the same with anything. You can take that expensive holiday abroad and enjoy it for 10-14 days, or you can choose to invest that money and spend 3-6 months there in 20 years time. By that stage in your life, you're probably more financially sound and more importantly you also have more time too (you're not still working in 20 years are you?).

Of course, you never know if you'll still be able to do that in 20 years time but that's not a big worry since you've already decided in your own mind what is important to you now. What is important to me now is my future lifestyle in 7 years time when I can semi-retire. If by then I want to go travelling, eat out every day or buy those large squidgy Marmite jars, then I'll do that - I'll do whatever is important to me then.

Choose Your Way of Life

Your future therefore is determined by the choices you make now. By deciding that your future is the most important thing for you, you should do everything you possibly can to make that turn out for the best.

If you have children, you might decide that they're the most important things to you, so again you should do everything you possibly can to make that turn out for the best too. You may decide the environment is your thing, in which case, give it a high priority in your life.

No matter what you decide, by channeling a lot of your energy into that area of your life, you'll be handsomely rewarded further down the line.

Prioritising for Retirement

As you all know, I have recently decided that my retirement is something which is very important to me and I am channeling a lot of effort into making it happen. Almost everything I do these days is somewhat influenced by my recent decision to both pay off my mortgage and retire from the daily grind by the time I reach my forties.

When I get up in the morning, I have my breakfast at home and wait until I'm in work for my coffee. I head home for lunch and I don't snack in the mornings or afternoons. My tea is usually planned - except when it's not - but I have reserves in the freezer for those times. I exercise plenty and am now biking. My car is about to be put on sale (just two more things to do) and my house is the smallest place I have lived in for almost 10 years.

The interesting point to note is this. Even though I have recently changed almost every aspect of my life - sometimes radically so - nothing seems overbearing. In fact, almost every decision I make now is influenced by my ultimate dream and in a lot of cases makes these decisions easier (it's almost obvious which of the choices I should take).

A Happy Life

And this brings me back to my chosen way of life. Even though my ultimate decision is to retire at 40, it has actually made the rest of my life, as it is now, a much happier and meaningful one. I prioritise time over TV, I choose exercise over going to the pub and I choose the great outdoors on a bike instead of a supermarket car-park in a car.

It just so happens that not only do these decisions make me happier, healthier and fitter, they're also making me wealthier and therefore one step closer to my ultimate goal.

What are you prioritising to get you closer to your goal?

Labels: planning, living, retiring

Inserted: 2008-11-13 22:08 (1 year, 8 months ago)

Two Ways Biking Substantially Improves Your Life

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I mentioned before that I would be getting rid of my car and instead buying a bike. It turns out that I couldn't wait before selling my car and I got the bike anyway. (Don't worry, I shan't be keeping the car, she'll still be sold when I planned, I just so happened to buy the bike a bit earlier.)

So far, the bike has been a revelation to me. I have been out on numerous occasions, done some things I have never done before and even taken part in some crazy shenanigans. After only a month of having the bike, I am completely devoted to it, the lifestyle it creates for me and the way it makes me feel.

But let me tell you about the two ways I think it has already brought me a lot of joy and happiness and how getting a bike can do the same for you.

Saving Money

I wondered whether this was too obvious but then I figured out the something which was not quite as obvious. It is all about how much money you'll actually save rather than the fact that you'll be saving something.

You'd be surprised at the amount of money you do actually save by not having a car (or should I say how much you spend by having one). The outlay required to just own a car seems to keep getting larger and though petrol prices are not as high as they once were, it is still a huge outlay even for someone like me who hardly ever drives anywhere.

Taking a look at my approximate outgoings for the car on a monthly basis:

• $20.00 - insurance
• $6.00 - breakdown cover
• $17.50 - road licensing
• $12.50 - Warrant of Fitness
• $80.00 - repairs (from the last two bills)
• $7.50 - residential parking charges
• $70.00 - petrol (one tank)

I'm sure some of these figures (apart from the repair bills) are quite low in comparison to other peoples' cars but you can see that it's over $200 per month just to keep her ticking over. I haven't included things like covered parking charges either. Even if I were to give my car away, I would still be better off after only 4.5 months! I am hoping however that selling the car will actually cover the cost of the bike even though it is crazy to think how low it has deprecated to (though I did buy it 4th or 5th hand).

By not having the car, that's an almost automatic saving of over $200 a month. Of course, this savings figure would depend on whether I need to hail a cab or hire a car during the month but I suspect those jaunts will be few and far between. Averaged out over the year, I expect to save well over $1500 if not closer to $2000. It could also be much higher if you take into account that I would probably fill up way on average more than one tank a month.

Go ahead and make a list of your own monthly expeses. It doesn't even have to be that detailed. Write down all the charges you pay for over the space of a month or a year. Divide it all out to a month and take a note of what you'd be saving. Sometimes even doing it in small steps helps.

Another aspect you should also look at is the lifestyle saving not having a car gives you. You wouldn't have to remember such things as paying road licensing, insuring yourself, obtaining breakdown cover, getting the car checked and having any repairs done. Even paying for or washing the damn thing seems like too much hassle to me so I'd rather not do it.

All in all, removing the car simplifies your life further and for me, that's one of my current goals.

Getting Fitter

There's no doubt that I have already noticed my fitness and health is improving. Whilst I used to run around on an indoor soccer pitch and get worn out, I can already run around for pretty much the entire game without getting as tired. The longer bike rides have given me more stamina which is also improving my other exercise activities.

We all know that exercising is good for us but in many cases, we don't listen to the advice our internal mind is telling us. By not having a car, it almost forces us to play by different rules. Walking, running or biking to your destinations becomes a part of your life rather than a part of your exercise regime and is therefore easier to keep up. For example, last week I rode to my friends' house to play Ultimate Frisbee and rode back again afterwards. It didn't take much longer than it would have in the car yet that was an extra 30 mins of exercise (around other exercise) that I wouldn't have otherwise had.

By making exercise a part of your life, forcing you to do it by not having a car, improves your fitness, health and wellbeing without even thinking about it.

Of course, public transport is also an option but if you're trying to spend less and save more like me, then the bike wins for those closer destinations.

Other Advantages

Owning a bike has other advantages too. It uses up less raw materials, it's greener to run, the more people have bikes means that the drivers are more aware of them and plenty of other reasons too.

Anything to add to either of these ways biking improves your life? Any other reasons you can think of how that you'd like to share, please comment below?

Labels: saving, living, exercising, selling

Inserted: 2008-11-10 23:33 (1 year, 8 months ago)

Why I Must Become Financially Independent

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I have just read a short but fantastic article over on Breaking Free. It's called Why I Must and it tells us why Brian must become financially independent.

As you know, my blog is also about becoming financially independent and his idea of keeping a list of reasons of why this must be so is really appealing to me. In fact, I think it's such a good idea, I'm going to start the list right now, copy this list to a file on my computer and add to it every time I think of a new one.

Reasons "Why I Must" Become Financially Independent

I must become financially independent so that I can:

• devote more time to developing free software
• do some volunteer work
• devote more time to organisations I am already involved in
• work for myself instead of for someone else
• enjoy my time off doing whatever it is I like
• spend more time on my hobbies
• excercise more
• get out and see more of the countryside
• spend more time with my friends
• spend more time with my family

That list is in no particular order and I guess it is only the start of what might become a fairly long list. Maybe you should try it too so that you can also see what you'll be able to do when you become financially independent. The endless possibilities may convince you to start on your journey to a prosperous and productive future.

Any others you think I should add to my list, or any that you would have on yours?

Labels: planning, living

Inserted: 2008-11-07 22:24 (1 year, 8 months ago)

'Living it Down Small' instead of 'Living it Up Large'

Have you ever seen the lights in Las Vegas? How about the skyscrapers of Hong Kong or New York? Ever been through the suburbs of Los Angeles or seen the sprawling mass of London?

To me, these cities typify places in which you can Live it up Large. Large living, large entertainment, large houses (ok, except for Hong Kong). Over the last few years however, I have been downsizing my living spaces each time I have moved and have really enjoyed moving into smaller and smaller places. Before that I had constantly moved into bigger and bigger places. Each time I moved, I ended up getting more stuff to fill it, in a lot of cases sometimes stuff that I didn't even want.

Going Smaller

Five years ago I moved into a small two bedroom house and only had two bags and a box. Over time, I bought stuff. Then I moved into a larger two bedroom house and filled that too. I then graduated to three bedrooms (and two bathrooms) and whilst I didn't fill that space, it had plenty of stuff spread throughout. Then I started going smaller. I squeezed all my stuff into a two bedroom unit and finally, I am now in a one bedroom flat.

Over that time, none of these moves have been related to my current financial plan though I guess my last move was a pre-cursor to it. I realised that I could live in town for less money than living in the burbs for more. That also generates a saving on transport too.

When I first moved in, it was physically impossible to move since I had so much stuff in such a small place. However, over the past few months I have been amazed at how well I have been getting rid of stuff. The floor is now something I see every day but I know I can clear all this stuff by a lot more.

It's been very liberating to be free of the shackles of extra stuff and I can already see some benefits of living in less space. Also, all that extra floor space you fill with junk, actually costs rather a large amount of money.

Interesting how spending money on extra stuff you don't need actually ends up costing you even more money!

The Simple Life

Over the past few years which have included my downsizing moves, I have hankered for the simple life. Mostly I did nothing about it but this year my breakthrough came. Not only did I move into a one bedroom and start to de-clutter, I have of course, started this blog and becoming more financially aware with a view to becoming financially independent.

There are so many benefits to heading in this direction, most notably having to pay less rent/mortgage for my accommodation but also because there is less space to put extra (and unnecessary) things. Things I wouldn't be able to buy since there wouldn't actually be any place to put them. If it was something that was desperately needed, it would have to be space-exchanged for something no longer needed.

So think about where you live and whether you actually need all that space. After all, most of that area is space you probably don't even use on a day to day basis, yet you're paying for it in rent/mortgage and you're buying things to fill it up!

I shall be continuing my plan on annexing a lot of my stuff and hopefully when the time comes to move again, I shall be able to find a place of a reasonable size, for a reasonable price and it still be like a castle to me.

What are your thoughts on the size of your house? Do you need more or less? Would you be able to survive in a smaller place?

Labels: planning, living, consuming

Inserted: 2008-11-03 23:08 (1 year, 8 months ago)

Sorting Out your Finances in Stages

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When was the last time you jumped from your house to work, and then at the end of the day, jumped right back in one massive leap back to your front door.

What? You've never done that before?

Maybe if you work from home you have managed to do that but for the rest of us, work is usually further away than just a large leap. Usually, to get to work we do something like the following: walk, wait, step up, sit down, step down, walk and finally rest when we get in the lift. We do it in stages, one after the other, each building on what went before.

The Journey to Financial Independence is also like that. We do it in stages and each one builds on the one before.

"I'm Not Ready to Switch Over Right Now"

Over the past couple of months, I have had many conversations with many of my friends about finances. I'm not sure why they come and talk to me (ok, I can guess a little) but mostly it works out for both sides in which we each learn something more. Some conversations have been small and to the point, others larger and covering many bases.

I have, however, figured out a slight pattern to what a lot of people are telling me. They say things like "Maybe I don't do it now but I'll do it later" or "I'm not quite there yet but soon, I promise" or "I'm not ready to switch over right now, I have a few things I want to sort out first".

So it seems that people want to change things but don't really want to commit to it yet. It is definitely a recurring theme.

My advice to any and all of you thinking about doing something about your finances, whether it's opening a freedom fund, starting your savings or even planning your retirement:

... JUST START NOW!

Sorry I screamed but take my advice, if you don't start today, you probably won't start tomorrow either and as we all know, tomorrow never comes. You'll wake up one day and say "I wish I started saving 10 years ago".

It turns out that I wish I'd started sorting out my financial future about 5 years ago but I'm just happy that I'm now on the right road. To those younger than I am, just go and re-read your high-school maths books about compound interest and you'll be glad you started when you did (and I wouldn't mind some credit when you're old and rich). If you still don't believe me and you didn't click that previous link, go and do it now since it has already said everything I could have said (and more).

Do It In Stages

The other thing you have to remember is that this particular area of your life, your financial matters, are pretty complex. There are strategies to make it simpler but in all honesty no matter how you look at it, it's fairly complex. Because of which, it also means there are a number of different ways you can do things. There are also a number of different things you can do and a number of different things you can consider.

All this adds up to an extremely rich set of paths you can take from here (now) to there (retirement or any other goal of yours).

With all those paths open to you, you can choose which direction you want to go, hopefully choosing one which takes you forward and therefore you can choose exactly what you want to do.

As you would get to work in the morning, you don't just take a big leap at the start of your journey and arrive there, you do it in stages. At first you might start off your emergency fund, you might decide to spend less or you might decide to earn more. You can of course choose everything at the same time but it's much easier to break it down into little steps and just start wherever you feel comfortable.

And that is the key, that you have to start somewhere! Starting earlier rather than later is better so why not choose to start today? Something, anything, whatever you like. Start today and maybe tomorrow, do something more. You surely won't regret it.

Call for you to pledge below to start RIGHT NOW. It doesn't have to be much but just start. Leave a comment and we'll all cheer you on your merry way to financial independence.

Labels: planning, earning, saving, living

Inserted: 2008-10-30 21:37 (1 year, 9 months ago)

The Search for Happiness

When you're walking down the street, have you ever played that game where each foot has to take it in turns to step over a 'line'? Whether that line is a flagstone, a drain, a curb or even where the pavement has been dug up and re-laid in a different coloured tarmac.

Occasionally one foot gets stronger since it manages adjacent wins but the other soon catches up - either you alter your stride so it steps over the next two lines, or you change the rules in your head so that the next line the losing foot crosses is worth twice the points.

If you've never played that game then I wholeheartedly recommend you try it. It's kinda silly I know. I still do it to be honest and as an adult it usually happens due to the habit of doing it as a child rather than because I think it actually means anything. The best thing about it however is that it reminds me of being a kid. A big kid, yes, but a kid all the same.

Harking Back

Looking back on me as a child, I remember many things but one thought seems to stick out more than any other. It is that of fun, enjoyment and happiness. We would spend the whole of the weekends on our bikes, pedaling around country lanes. We'd while away summer evenings on the local school field playing football until it was so dark, we couldn't see what was happening. Climbing trees at the height of the conker season was always fun and getting into trouble with some security guards here and there was always a possibility. Arriving home late for tea was a regular occurrence and was enough to be expected.

But that was a long time ago. Since then, I have grown up, become all responsible and ... yes, you guessed it ... finally became an adult.

Sometimes I wonder where those heady days went. When time didn't mean much, pocket money was never enough (so what's changed?) and responsibility wasn't a word in our vocabularies.

Amazingly however, my recent start on the journey towards financial independence has helped me renew and revisit a number of those happy thoughts and experiences from childhood. I am currently happier and more fulfilled in life than I have been for a good while and I know this to be true because a number of people I have spoken to recently have told me that I sound happier, look fitter and healthier and I am smiling more. (I think people who already know me would probably say is actually hard to do already.)

Recent Changes Leading to a Better Lifestyle

One recent change I made was that I finally bought myself a bicycle. The last bike I had was when I was 12 so that's a good 20 years ago and therefore 20 years in the meantime without having one at all. (Interesting fact: I still consider that old bike to be the world's first mountain bike but that's a story for another time.) Back then, we'd cycle all the country lanes and the old railway by my house but this newer one of mine has two other uses. Firstly as a means to get from A to B (and will eventually help me get rid of my car). The other use is to get a thrill by doing some off-road mountain biking. Up until a couple weeks ago, I'd never tried it before and I can tell you, it was an exhilarating experience. I suspect I'll be doing it twice a week from now on.

Over the past few years I have also started to go swimming again. Playing indoor football is always fun and I even pulled my old roller blades out the other week. My body feels fitter, my diet is healthier and my mind is happier for all of it.

My diet is an interesting subject since it has vastly improved in the past two months yet during the same time, the cost of my food has substantially gone down. Add in the fact that I am going to the market on Sundays, buying fresh produce and not buying take-aways and you can see how one thing goes up (nutrition) and another goes down (cost). Isn't it amazing when you think about it?

And the final thing I'd like to touch on is the one that this blog is all about - taking my financial situation into my own hands, molding it into what I want it to be and determining my own future based on cold hard facts about my income, my expenditure, my savings and my retirement. Just the mere fact of having more control over my future leads me to worry less about money and gain infinitely more peace of mind.

Oh, and did I mention that a 4-day working week was just the best thing ever! Yes, I thought I said that before so I don't need to mention it again now. Well okay, a 4-day working week is just the best thing ever!

You Should Try it Too

Now it's over to you. I have painted a couple of pictures above. One of my former self, either in or out of school, enjoying pastimes which didn't cost the earth, not a care in the world and basically being able to do whatever I liked (within the confines of the law of course). The next picture I painted was of my current self, a picture which has moved on over time, which had lost some of those previous experiences but also now isn't too different from the one I had before. Yes, I have to work, pay taxes, pay mortgage/rent, bills and a myriad of other things but in reality, I have managed to confine those things to a part of my mind which doesn't interfere with the rest of it.

Instead, I have been filling the other parts of my brain up with good things, enjoyable experiences, miscellaneous thoughts and sometimes random games just for the sake of it. Take control of your finances, work less, worry less, live more, play more, spend less, eat better, experiment with recipes, watch less TV, learn a new skill, take up a hobby, save willingly, exercise longer, exercise more often, read things, chill out for a while but most of all, be happy.

And the next time you're walking down the street, keep a count (an inexact one is okay) of the number of lines your left foot crosses compared to your right foot. Smile to yourself when you have to change your stride when one foot is becoming too strong and look up to see if anyone is looking at you in a funny way. Hark back to your youth, gain back some of your time and go out and enjoy yourself for the sake of it and for no other reason.

You'll be amazed at how free you feel and hopefully you'll be one step closer in the search for happiness.

I'd love to hear your experiences, your ways of de-stressing, chilling out, exercising, enjoying yourself and generally becoming a big kid all over again.

Labels: living

Inserted: 2008-10-26 22:29 (1 year, 9 months ago)

Who do you Consider Rich?

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When you were a child, who did you think was rich? Was it those movie or pop stars who had earned millions and had their own private planes? Was it those people who'd inherited their wealth, owned a mansion and had their own swimming pools? Or was it those people who could afford to go abroad for their holidays every year?

For me, it was all of the above. I used to look at a lot of people and figure that they were rich. And for some reason, I wanted to be rich too. At that stage of my life, it all equated to material wealth, personal possessions and the ability to spend money on whatever I pleased.

Nowadays though, my view of people who are rich is not exclusively based on money. I view people as rich if they are financially independent, keeping as busy as they like (maybe even working for themselves of course) and are happy in their lives. I also rate very highly those people who can spend time doing the things they love, whether it's volunteer work, a hobby or two, being with their families or even making a little money doing something of their own choosing.

The funny thing is most of the people I now consider rich, defined by the categories above, are either semi-retired or fully retired.

Who are these People?

It is mainly understood, but mistaken, that the people who retire early are wealthy. However, there are a number of factors which goes against this viewpoint. For a start, to be retired doesn't mean you have to have a whole heap of money in your account. Nor does it mean you have earned millions and millions over a long and prosperous career.

All it means is that you can live on the amount of money you passively earn.

Or put it another way, you have reached that crossover point whereby your expenses are lower than your passive income. This means that, without lifting a finger and being careful with your expenditure, you no longer have to work.

Of course if you are only semi-retired and you still work a little, that income also adds up to offset your expenses so you can probably reach this point earlier than complete retirement. Yes, you might have quit working for someone else but at least you get to work on your own terms.

Getting There Faster

When you look at what I said earlier - live on the amount of money you passively earn - you can see that it is an easy equation.

Passive Income > Expenses

Whilst it is fairly simple to understand it is a lot harder to put into practice. Writing this blog, for example, helps me to put more things into place so that it becomes easier and easier and hopefully, I can reach that crossover point sooner rather than later.

As you can see, you can attain this point by increasing your passive income. But you can also attain this point earlier if you reduce your expenses. You'll start to realise that this is also exactly what you should be doing now and not just in retirement. You life should be organised so that your lifestyle in retirement is similar to your lifestyle now. There's no point scrimping and saving now to then splurge in retirement.

Similarly, there's no point spending like crazy now hoping that you'll be more frugal in your retirement.

By actively setting out your stand, how much you earn, how much you spend, you'll also be setting up what you need to get past that crossover point and into retirement. In fact, you might even be able to plan it years in advance, like me!

Everyday People

You mightn't have realised, that many people who are already retired, look exactly the same as you. They never had a hit record, they didn't inherit large amounts of money nor did they win the lottery. Instead, they seem to go for the bargains, don't buy designer clothes and clip coupons when they can.

They don't buy new cars, they don't need a huge house nor do they try and keep up with the Jones. In fact, they look just like regular people next door. You might even think that they don't have a whole lot of money at all, after all, their car isn't as big nor shiny as all the others in the local driveways.

But the truth of the matter is that they are richer than many of the people living in the same street. Probably richer in monetary value yes, but even more importantly, they are also richer in time too.

The reason?

Because they are retired.

They have been through the cost-cutting exercises, paid off their debts, own their houses outright, saved up an emergency fund, invested in the stock market or property and increased their income. Because they've done all of this previously, they now have the time to do whatever it is they please.

It is these people I now consider rich. They have the time to enjoy a great many things in life. After all, time is the one thing we can't earn more of.

Let me know who you consider to be rich?

Labels: planning, living, retiring

Inserted: 2008-10-24 22:18 (1 year, 9 months ago)

"Pay Yourself First" and other Ideals we have Recently Lost

Over the years, we have forgotten a number of things that our parents did, more things our grandparents did and even more so what our great-grandparents did. One of my favourite phrases of recent times is "It's the way of the future" but in a lot of circumstances, we really can learn from the past on how to best to get along in life.

Here I'll name a few ideals we seem to have lost over the years and hopefully we can start to bring back into life to make it better, easier, more fruitful and also make us financially better off.

"Pay Yourself First"

When was the last time you heard that phrase? A while ago maybe. Certainly for me, it's not something that has crossed my mind since I first heard it when I was in school. My parents didn't use it a lot though I fully expect my grandparents did.

In Personal Finance circles, it's a very well known phrase and one which seems to be the staple of better financial management from which all other tips and techniques arise from. Obviously paying off high-interest debt is the first thing that should be done but that gets you into the swing of paying yourself first. Then it's just a case of switching from paying off someone else to paying yourself.

I'm sure there are many different ways to do this but siphoning off 10% of your salary is the first place to start. Currently, that's exactly what I'm doing but I plan to increase it to 15% and finally 20% at a later date. If you add that to my KiwiSaver contributions (plus my employers on top), in a few years time I hope to be shifting the equivalent of 28% of my salary aside. This is in addition to making extra payments on my mortgage.

Growing your own Veggies, Get a Vegetable Plot

A few years ago, I had a vegetable plot. I lived next door to an old couple of 80ish years old. Once my garden was in harvest I had far too many carrots, beetroot and onions for me to make use of. I wanted to can some things - especially the beetroot - but at the time I didn't have the equipment. Instead, I gave some to my next door neighbours.

Without asking, something magical happened. They came around the next day with a 'harvest' of their very own. Silverbeet, lettuce, potatoes and parsnips! I was shocked but at the same time, very happy and very thankful.

It got me thinking that, in their day and age, that swapping would have been commonplace. They were originally British so I suspect in the years after WWII, having a part of a communal vegetable plot (something still very British) would have been commonplace.

Currently I don't have land I can (or want) to grow veggies on but my yearning to get back to the good old days is growing ever larger. Being able to pick a fresh carrot for breakfast, some tomatoes for lunch and maybe an apple at tea creates a very satisfying moment. I can't wait to get a veggie friendly place again so I can again reap the rewards - both nutritionally and monetary - by growing my own veggies.

Building to Last and Fixing the Things that Break

In our throwaway society, two things have changed. The first is that consumables are now built to be thrown away and replaced. "No user serviceable parts inside". Not only that but we have also lost our ability to fix other things too, things which are user serviceable.

Take my car for instance. It's not very complex but at the same time, I have no idea, none whatsoever, how to fix it if something goes wrong. Yes, I can learn about it - and I should - but hopefully I'll be getting rid of the thing soon anyway (heh, that's one way to remove a problem). Then again, knowing how to darn a sock or patch a pair of jeans is something we can and should all do.

Obviously you can't keep repairing things forever but you can sustain them for a while. Also consider giving them to charity to be given or sold on since there may still be some use in them yet.

Creating our Own Entertainment

Long before the days of games consoles, kids used to keep themselves entertained. The amount of time I used to spend in the street kicking a footy against the kerb was huge in relation to kids nowadays. TV, computers, games consoles, music players, portable entertainment all seem to keep kids occupied but whether their imaginations are getting a run-out is speculative.

When was the last time you saw kids on the street playing for hours with a spinning top or hitting marbles against each other? Me neither. Whilst I don't expect that form of entertainment will go down these days I do think they still have a place especially to encourage imagination which is something which will certainly help in later life.

Having recently bought a pedal bike, I'm already yearning back to my younger days when we would ride around for hours, getting in to all sorts of situations but thoroughly enjoying it too. Not only that, but it also gives me more exercise and is yet another activity that doesn't have an ongoing cost once the initial payment is made.

Going back further, when we were hunter-gatherers, our bodies expected a certain amount of exercise and they still do. Whilst we are still evolving, we're not nearly evolving as much as the technology we introduce into our lives and they just can't keep up. Give our bodies what they deserve and get out there running, biking, roller-blading, swimming or playing games. It's also great for the mind.

The Way Things Were

Looking even further back into history reminds us of even more things we no longer think about. On a recent TV program I saw it reminded us that the more basic an activity is, the more our bodies and our minds respond to it. Exercise and cooking our own meals - as opposed to watching TV and eating take-outs - not only make our bodies and minds feel better but are also helping save money at the same time.

It's no coincidence that the things that make us happier and feel better, are the things that actually cost us less.

Any other activities you can think of that our ancestors did, we don't but should still consider to make a part of our lives? Leave your comments below.

Labels: living

Inserted: 2008-10-12 11:58 (1 year, 9 months ago)

5 ways to De-Clutter and Simplify Your Life

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Stuff, junk, clutter, mess. Call it what you will but it's all the same. It is those things you've had lying around the house for ages and ages. Things you really should get rid of but haven't done anything about, sitting there idly like a cat in the sun. It's about the stuff you think to yourself "... but I might need it later".

Well, here's a bit of truth for you.

You won't need it later. You won't need it next week or next month, or even next year! In fact, you just won't need it at all! Ever. Full stop.

The Idea of Having

So what is it that stops you from getting rid of it all. It's the Idea of Having. All those things that you've carried around with you for years you somehow have an attachment to are just baggage. You think that because it was something that defined who you were at one stage of your life you feel the need to keep it to remind yourself of this long forgotten time. But the problem is, every other aspect of your life has moved on and you're no longer defined by the things you had. You're now defined by who you are and the use of these ancient items is nil. In which case, get rid!

I should know about this since I have been a master at slavishly shifting my stuff around - house after house has seen boxes come and go without so much as an unpacking. I think there might be some dinosaur bones at the bottom of one box, I've had it that long. Consequently I have completely forgotten what's even in there. How sad.

also, I still have things that I had at university! I left university 14 years ago for goodness sake. Occasionally I look at it and smile to myself, remembering some of those happy times but times that are now from a bygone era of young adulthood far removed from the person I am now.

My Achilles Heal

For ages (and ages and ages), through a number of moves, including one half way around the world, I have always just packed up my stuff and shifted it to the next place. I think my tendency to hoard things stems from my Mother since she's always got a houseful of stuff though I can hardly blame her for my failings now. Hoarding is certainly something that was inbuilt into me at an early age and a problem I'm only just tackling now - yes, I'm imagining I'm lying down talking to a softly spoken person sitting on the couch next to me.

But finally I can feel the recovery process is starting and my Achilles heal is getting better and not holding me back. One step was to just stop buying more things and the beginnings of a budget meant that I was already on the right track, spending less and refraining from adding to the problem. (Not that I'd spent much on 'stuff' recently anyhow but it all helps.)

And finally, over the past year or so, I have been tidying, de-cluttering and organising all of the things I shall be annexing from my life. Usually I have done this ad-hoc and so far it's been working. There are plenty of other ways to do it too, but here are five to help you on your way.

5 Ways to De-Clutter and Simplify Your Life

There are a number of different ways you can get rid of your stuff. Over the past year, I have done four of these and am about to start on the fifth.

1) Give It

Giving it to a friend is a great way to get rid of stuff but also give to someone who'll use it. I've had a number of conversations recently whereby a friend of mine said "I wish I had ..." and I told them they can have mine. Sometimes I see it as a long term loan though I suspect in some cases I'll never see it back. That's okay with me though, better someone is using it than not at all.

2) Donate It

There have been a number of occasions in the past year when I have filled up a plastic bag or two and put them out for collection by one of the charities. Over the years I have also donated my fair share of goods to the Salvation Army, sometimes to re-sell things I'd originally bought from them!

This gives you two great feelings. The first of helping others and the second of removing your bond to some of your material possessions. Win-win for all concerned.

3) Pass It

FreeCycle is something I haven't yet tried but am planning on sending a few emails to the Wellington FreeCycle group this week. I have a number of fiction books that I'm sure are quite popular and therefore, I wouldn't get much for them anywhere else, so giving them away seems like a good idea to me.

Also, wouldn't it make you feel good that some random stranger will get some happiness from that book you really enjoyed too.

4) Sell It

Selling your stuff via a garage sale, taking to a second hand shop or selling on-line is something which can actually give you a slight return for your sunk cost. Yes, I know it can be hard to get only a few dollars for something you paid so much more for but if it's something you never use yet can net you an increase in your balance then why not.

I took some books to the second-hand bookstore last week and the (small) amount of dollars I received, I put straight into my Emergency Fund. It's money I've never seen before so instead of spending it on something else I don't need, I pretended it didn't exist. Now I'm also helping my future self if something goes horribly badly wrong, something you probably can't do with an old book or DVD.

5) Dump It

Obviously, this should be your last port of call since it's better to keep things out of landfill. Re-use via any of the above means should be considered first, especially if the thing is still functioning for it's intended purpose.

If not, dump it and be free in the knowledge that you have a tidier and neater house.

Reasons to be Cheerful

As in my use of my Credit Card, de-cluttering actually makes my life simpler. I have less things to worry about. I always seem to have something going through my brain, whether it's my latest idea, a website or two which needs doing or some volunteer work I have on. To help concentrate on some of these things a bit better, the less I have to worry about money, possessions and other such things, the better it is for me.

Why don't you try it and let us know in the comments below how it's going.

I suspect that you'll then have more reasons to be cheerful and less reasons to be worried. After all, it's just stuff and you ain't going to need it anyway.

Labels: living, selling

Inserted: 2008-10-11 23:27 (1 year, 9 months ago)

The Long Slow Road to Financial Independence

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As I've stated before, "it seems more likely that you can become financially independent by literally spending less than you earn than you can by winning the lottery".

And that is exactly how I'd like to introduce myself.

About Me

As it says in my footer: Retire-at-40 is a personal finance journey of a regular guy, with a regular job doing regular things. I earn well though I've never been a saver. Then I started getting serious at the start of September 2008 and in just over a month I know my life has drastically changed.

I can see myself spending less. I can see myself saving more. I can see myself working less. And I can see myself enjoying my life more. In fact, all of these things are already happening. Why? Because they lead me to my goals and they make me worry less.

The Long Slow Road to Financial Independence

It didn't take me long to figure out that it was a long road from starting work to stopping it completely. My initial problem though was that I never did anything about it. Until now. My journey on the road to Financial Independence has well and truly started with a bang. The changes in my life are already great and I have a nice shiny new blog to boot.

You'll notice along the way that I use certain phrases over others. Take for example the phrase "The Road to Financial Independence". I like it, it makes sense to me so I use it. Now consider the phrase "The Road to Wealth" or "The Road to Riches". I don't use these because I don't like them. They promise too much and deliver almost nothing. "The Long Slow Road to Financial Independence" may seem a lot less razzmatazz (almost boring) than those other phrases but then, if you know me, you'll understand that I like to be realistic and I like to understate things. And I also like to be sensible too.

Which leads me on to another phrase "sensible spending and saving". I like it. It makes me happy.

Both of these phrase describe how I'm undertaking this journey. There are no quick solutions. There is no point hanging out for a lottery win. Just a plain and simple way of life, of decluttering, of making things last, of creating things and of being sensible.

Promise less, deliver more!

Even though I'm still new to this game, I've already realised that anyone can do what I'm doing. I know this because I used to spend up every month. I wasn't living paycheck to paycheck but I would usually spend what I earnt.

By promising myself that I can be a saver, I can be frugal and I can invest wisely, I have realised that my future looks a lot more rosy now than it did just a month ago.

I've always been sensible with my money and sometimes clever but now I'm learning even more tricks of the trade. For example, the way the Simple Dollar is creating a Savings Ladder (with fixed term investments) is pretty intelligent. It's almost one of the best posts I've read since reading a number of Personal Finance blogs.

I just wish I were that clever. Except, I don't have to be. You see, I'm just a regular guy. Instead, I just inform myself of the things other people are doing and in doing so I hope that I can make my money work for me rather than me having to work for my money. Makes sense doesn't it?

Signing Off

I realise this post has been a slightly roundabout way of an introduction but I wanted to give you illustrations rather than just plain facts. Illustrations how you can also do the same as I am. Even today, I was told by a friend that they "were not that type of person" to do what I shall be doing.

I just asked "Well, have you tried?"

The answer was "No".

All I can say to that is to take your first step on the long slow road to financial independence. I promise you, it will interesting, fulfilling, happy and hopefully rewarding.

Labels: saving, living, spending

Inserted: 2008-10-06 13:19 (1 year, 9 months ago)