24 Sep 2012

Struggle

I've been struggling over writing a post all about how I feel about happiness. I'm finding it difficult to put the words together that define exactly what it means to me. As you can probably guess I don't buy into the regular short term buy your way out of sadness idea.

So here's something completely different while I mull over that. 

A few blogs I follow have been banging on about the Blog-up event, it sounds like a laugh a minute I have to say. Maybe a little bit corporate? Or am I being a little cynical - hey if they were able to drag the ermine away from the Stella bashing, all is good in my eyes!!

In other places, MMM has highlighted the upsides of p2p lending, I've looked into it and would like to have a go at some point - I would also like to have "play" money to test out these ideas. I hope he doesn't start thinking he's winning monopoly as that would be a dire shame, his head does seem in the right place though. Hopefully we'll see the good affects of a moral and wise investor giving back. Maybe something we can all learn from.

Otherwise it has been a quiet week, a gem from the other side of the sea has popped up in the shape of http://whatstostopyou.blogspot.co.uk/ after having a short read through, his ideas seem very close to my heart, along with an acute financial brain (spot the economist / accountant!!), I also love the wonderful moment of the day.

Which brings me back round to my work in progress post, I love taking a moment each day to find a bright point. Even when the auditors are breathing down your neck and you know you won't get home til 8 :(

Picture: www.picturesdepot.com



20 Sep 2012

Needs / wants


Once you've compiled a few months of expense reports, it's time to rip them to pieces. I find the best way to do this is to have two sections; one of your needs and one of your wants.


Needs

The needs section contains the bare essentials to living, shelter, warmth and food/water. This gives you a feel for how far you can cut costs whilst still maintaining some sort of a modern lifestyle. You have to remember that in many countries people have to go without these needs, not because they can’t afford it but because they do not have access to them.

Wants

This is for pretty much everything else, I still break this section down into its various types of spend. Car, home, lunch etc etc.

You’re probably thinking why the hell I would want to spend all my time doing this. Well you can then see all the superfluous things that you’re spending your hard earned cash on. Basically every £ you spend on something other than the essentials is a £ you've earned for no reason.

If you can reduce this spending to the lowest requirement you therefore don’t need to earn as much. You can therefore not work as much or at all!

Or continue working and start spending more on productive things like helping out charities or building a spaceship!

Imagine a spaceship! Your own freaking spaceship!

There's also the concept of fuck you money which I love. It's basically where you build up enough savings so that if your work ever crosses that line, whether unreasonably asking you to work yet another weekend, or asking you do something that is against your morals, you can just say fuck you and walk out the door. There's comfort in having a safety net like that, giving you the confidence to speak your mind when required.

Ever stress over needing that pay rise or whether redundancy is going to come knocking? This fear can be removed through the creation of these safety nets and the way to create them is to have control over your spending.

Freedom can be gained through increased control, it sounds weird but it’s true.

I’m not there yet, but I’m on the path. I’ve set a date of 14/02/2031 as when I can stop working. It sounds a long way off but considering I’ve only just started on this path it seems fairly reasonable to me. Especially as I have some big expenses coming up in the next year or so.


Photo by: boingboing

16 Sep 2012

Where does all the money go?


I find the best way to track your spending is to take on a simple 4 step process

First you must simplify - got 7 credit cards and 5 current accounts? You've got to stop  using them all, consolidate all your direct debits so they come from one current account. Got balances on all your credit cards? Put all bar the one with the best cashback rate (or other bonuses) in your sock draw. This then reduces the different places you can spend money from. Which leads to the next step.

Get them all signed up for online billing. If you haven't already you should be able to sign up to see your statements on a live basis. This means everytime you spend the statement will be updated in a couple of days.

Then log it all, spreadsheets help, there are various ones available here is good but I prefer my own one. It has a column for each day! Then subtotals for each month.

It may seem a bit anal to log every days expenses, but I've found it's the only way to really keep on top of everything. Once you start logging it day in day out, it becomes less of a chore, you'll hopefully find that you become more mindful over your spending as well. If you spend less, you don't have to put so much in the spreadsheet! Also I always feel a bit guilty when I log indulgences.

This process let's you compare month to month expenses along with everyday expenses, you pick up the daily coffees along with the yearly car expenses. This really lets you see the big picture and that's the whole point. You start seeing in black and white what you've done wrong (usually those daily coffees!). Or opportunities to save as I like to call them.

From this you can start making changes, you may find it difficult - but if you want to achieve those goals you've set out you have to make sacrifices. You'll soon notice the differnce, cut out those £3 a day coffee addiction, that's an extra £720 a year in your pocket - if that's the size of your overdraft or credit card balance it seems silly to keep supping away.

It's not just the small things though, don't forget to compare your car/home/life/pet insurances - current account interest %'s etc etc etc EVERY YEAR or more frequently!  It will really make a positive difference on how that spreadsheet looks. the bigger the positive number at the end the bigger the smile on your face will become.

11 Sep 2012

Tracking your goals.

Once you've got some goals in mind you need to start thinking about how to get them done.

I prefer using a roadmap technique. I simply right down the steps that I need to complete to get me from A-B. Just like you would write down a list of town names if you were going on a road trip.

For short term goals this can be pretty easy, there might only be one thing that needs doing. But if you have a longer term goal or a very complex goal it can become very difficult. This is where I find the roadmap really comes into its own. You can start comparing where you are to the "map" and can see what needs to be done next.

You can also see if you have started on a new aspect which wasn't in the original spec of the goal. Again this can be very useful as you may get caught p in doing something that is not adding value to the goal. These things can often be difficult to spot if you don't review what your doing.

This process can be used in so many situations. For me I use it nearly everyday. Especially in my budgeting. I  currently have set monthly, quarterly, yearly, 5 & 10 year saving goals set up, I monitor my spend to see how I'm doing towards these targets and if I have reached past goals.

If I haven't achieved the target I can tell where I've gone wrong quickly and try to remedy it before my next target. Often I set stretch goals which I tend to throw in every now and then to mix things up, these vary  in nature, but usually are along the lines of use 50% less X than last month, whether that be petrol, lunch, clothes etc.

I've come to find this very rewarding. I'll share with you next time how I track my spending to make things easier.