The Millennial Money Rebellion begins here

black-and-white-people-bar-men-large

Right, prepare for some fighting talk.

In the UK, people born in the early 1980s – my age group – are being utterly fucked, financially, according to a new study by the Institute for Fiscal Studies.

Ok, so I’m paraphrasing, but we are the first wave of this ‘screwed generation’ everyone’s been talking about since the recession.

And it’s not just the recession’s fault. Essentially, stagnating wages, Britain’s out-of-control housing boom (meaning young people are stuck renting) and the elimination of generous defined-benefit pension schemes are to blame.

The average wealth of someone like me, in their mid-30s, is about £27,000, but those born a decade earlier had twice as much money at our age, according to the study.

It’s clear successive governments have failed to help us, because they’re too busy appeasing older people who tend to be more likely to vote.

No-one will help us, so we have to help ourselves. It’s time for the MILLENNIAL MONEY REBELLION.

Here’s my (slightly controversial) battle plan:

 

We need to stop worrying about what other people think

Social media drives a really unhealthy life-comparison habit. If you ‘can’t afford’ to pay into a pension, you CAN’T AFFORD that stay in an over-water chalet in the Maldives, no matter how Instagrammable it is.

Superpower gained: FRUGALITY

Everyone born after 1980 should move out of the south-east of England

It’s way too expensive and we can’t afford that shit. Move up north, where houses can be picked up for less than £100,000. Yes, wages are slightly lower outside London but living costs are WAY lower.

Superpower gained: FLEXIBILITY

Newcastle-Gateshead. Doesn't look so bad, does it?
Newcastle-Gateshead. Doesn’t look so bad, does it?

Ditch the credit cards and car loans

We need to stop living off credit, full stop. It is not helping us in the slightest. Buy the car you can afford with the money you have. Yes, it will probably be a piece of crap. Suck it up. Think of the rebellion.

Superpower gained: INDEPENDENCE

Bank some serious cash

Cut your living expenses to the bone and stash your money like mad. If you’re not a homeowner already, throw it in a Help To Buy ISA. If you are, a Lifetime ISA (which launches next year) will also be a good bet.

Superpower gained: WILLPOWER

Buy a small, cheap house as quickly as you can

There’s no debate in the UK about whether buying or renting is best for your bank balance. Renting costs are out of control, as the study clearly shows. Yes, I know, buying your first home is harder than ever. So forget about buying an adorable new-build house with a picket fence and pick up something you can afford with a small deposit. Then, try to pay off the mortgage as quickly as you can.

Superpower gained: HARNESSING THE PROPERTY BOOM

Take out a workplace pension, even if it’s not a very good one

If you work in the public sector, you might still have a decent pension. But for those in the private sector, don’t despair. Paying into any pension is MILES better than not doing so at all. Take full advantage of any employer match. Bonus points for boning up about the stock market so you can make an informed decision about how to invest your pension.

Superpower gained: FORESIGHT

Harness our strengths

We are some pretty grizzled people. The smackdown from the global recession hit our generation square-on, and only gave baby-boomers a glancing blow. But we have more of one key resource than they do: time. We will only benefit from this if we put our money away NOW and leave it to multiply without touching it. The days of spending all your paycheque are over. Save and invest, for the sake of the Millennial Money Rebellion.

Superpower gained: COMPOUNDING

Learn from the enemy

I’m being flippant: individual baby-boomers aren’t the enemy. They might be your parents. Learn from them. Get to know what they know about money. Heck, even live in their spare room if you have to. Tell them about the problems you face – they might have solutions you could try. Tell them to support policies that help younger generations. And for God’s sake, vote yourself.

Superpower gained: STRONG ALLIES

We SHALL overcome. Who’s with me?

Images: pexels.com


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Debt-busting challenge: the halfway mark

At the beginning of this year, when the mornings were still crisp and most of our celebrities were still alive, I made a solemn vow to you, dear reader.

The vow was that I would step up my game and pay off my debts faster so I would be rid of them within 18 months.

We’re halfway through that challenge so I thought now would be a good time to give you an update.

The good news is I’m (pretty much, if I squint at the graph) on target!

It’s been a tough few months, with some points where I simply despaired. Take yesterday, for instance, when my car was in the garage for not one but two faults while simultaneously at home, the kitchen sink decided to stop draining. (We successfully unblocked it ourselves – woop! – but in the process created a new leak – sigh)

Meanwhile, the dog is on expensive medication for the foreseeable future and the seemingly everlasting pay freeze at my work is going on another year.

But what the universe takes with one hand, it gives with the other.

A few months ago I got a surprise cheque through the post for a few hundred quid, from a bank I borrowed some money from a few years back. Turns out, it had made some admin error and as an apology, it was refunding most of the interest I had paid on the loan. After a few days fantasising about a massive blow-out trip somewhere, I eventually did the right thing and put it towards my debt mountain. You, dear reader, would rightly have given me hell if I hadn’t.

So here’s how the last few months (in red) have gone:

debtchart2

This week, I passed a major milestone, getting my debts to below £3,000 for the first time in what must be over a decade. It means my debts are now four-fifths destroyed.

I now have just one debt:  a credit card on a 0% interest deal.

And it feels great. I do feel like a weight is being lifted off my shoulders, and if something dire happens like I lose my job, the minimum repayments are less than £75 a month so there would be no impending disaster.

I start to scare myself if I think back to the time when my debts were at their height and my minimum payments were hundreds of pounds a month. This meant I was often robbing Peter to pay Paul, and in the background the interest on the debts quietly started to spiral.

But while psychologically I feel far happier and more in control, in reality things are not getting easier. I’m still having to make major sacrifices each and every month, without fail, because of my poor decisions many years ago.

It’s often said that minimalism is a helpful tool for those crippled by debt because they can a) sell their stuff to generate some cash and b) nip those damaging shopping trips in the bud.

In my experience, I’ll have to be honest: that hasn’t really been the case. I was never one for shopping for Gucci handbags and of the stuff I have got rid of, very little had any resale value.

The fact is, I had little to show for my debts. My spending was driven by more nebulous things – post-graduate courses, too many nights out, no appreciation of the importance of shopping around.

But there has been an overlap in one sense. Getting rid of my clutter (most of it utter crap) and getting rid of my debts has left my life lighter, physically and metaphorically. When once I couldn’t sleep for the panic attacks, now I quite frequently catch myself enjoying a strange sense of…contentment.

But I’m not done yet. I’m not done with my debts and I’m not done with my stuff.

I’ve been taking both purges slow-and-steady and I’m fine with that. My first priority was to be kind to myself. I didn’t want to embark on an outburst of enthusiastic self-flagellation as punishment for my former sins. That would have been no good for me, at a time when my emotional state was so fragile.

So yes, I’ve taken my time. But the end is in sight and I can’t wait.

I’d love to hear about anyone else paying down debts – how do you stay motivated?


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Ethical shopping (and other meanderings)

 

bananassmlCasting your vote in the supermarket

There’s a saying that every time you make a purchase, you’re casting a vote for the kind of world you want to live in.

It’s a nice thought, but kind of a terrifying one. That is a whole lot of responsibility to face up to, right there.

I’ve gone through phases of buying ethical products, but for the last few years that had fallen by the wayside as I concentrated on reducing my mountain of debt.

Sometimes, when you’re facing a financial catastrophe, you have to make some tough choices. That meant my well-meaning weekly box of organic veg had to go, replaced by cheap-as-you-can-get produce from Asda (US folks, read Walmart).

Now I’m nearly done clambering out of my debt spiral, I’ve been trying to get back into being a more thoughtful consumer.

Today at the supermarket we made an effort and bought things like FairTrade bananas, free-range and organic chicken, eco-friendly laundry detergent and carbon-neutral peanut butter.

And yes, the bill was a little more expensive.

But as I was going round the shop,  I was disappointed to see that some of the ethical alternatives they used to stock are no longer on the shelves. I guess people had stopped buying them. People like me.

What if the world turned minimalist?

Check out this great new collective post over at Mostly Mindful about whether everything would go to hell in a handcart if we all turned minimalist.

Some big names pitched in on this question, like Colin Wright of Exile Lifestyle and Anthony Ongaro of Break the Twitch, so I was honoured to be asked for my two-pence-worth.

An ominous letter

I got a note pushed through my door the other day, telling me to pick up a letter at the Post Office which I had to sign for. When I went to collect it, the envelope had the ominous word ‘police’ on the front of it.

Crap, I thought, my first speeding ticket. (The slightly judgey expression from the man behind the counter told me he had come to the same conclusion)

But when I opened it up, it was a note saying a police station had the bag, wallet and phone I lost 200 miles away back in April.

I don’t know how or even if I will pick it up (it is still 200 miles away, and I’ve replaced all the stuff) but it’s nice to know there are decent folk out there who decided to hand it in – even if they did inexplicably sit on it for five months beforehand.


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Podcasts that will make you a boss at life

condensation1I’ve made a fair few changes to my life in the past few years.

But if there’s one change I’ve made to my daily routine that has boosted my happiness more than any other, it’s listening to podcasts while I’m driving to work.

Commuting is the worst kind of dead time, especially if you’re driving, as it’s really not the done thing to, say, read the paper at the same time.

But I made this pretty straightforward change to my routine a few months ago and I’m still absolutely loving it.

Podcasts are just better than the radio, because you have that much more control over what you listen to. I find that they a) take my mind off the fact I’m heading into the office (boo! hiss!), b) introduce me to loads of new and interesting discussions and c) act as a great motivator, getting me fired up to take action on the issue of the day, whether it be the refugee crisis or sorting your socks.

Here are some of my favourites but I’d love to get any other recommendations because I am going through these at a fair old rate!

TED Radio Hour
In a nutshell: It’s a universal fact that everyone loves TED talks. Even the snobby people who sneer at them secretly love them, but just don’t want to admit it. This takes a few talks on a similar topic as a stepping-off point for a big discussion.
If you listen to one episode, make it: Maslow’s Human Needs

Afford Anything
Formerly known as The Money Show, this makes personal finance loads of fun, from interviews with people who make a living selling second-hand finds on eBay to discussions on how to reach that Holy Grail of financial independence (aka super-early retirement). It’s fronted by Paula Pant of the Afford Anything blog and earlier episodes were co-hosted by J Money of Budgets Are Sexy. Personally, I preferred these earlier episodes because the two had a great double-act going on.
If you listen to one episode, make it: The Habits We Use to Grow Wealth

Death, Sex and Money
This is my other half’s favourite podcast. It’s a really gossipy, open chat between host Anna Sale and the guest of the day, from A-list actors to normal people with an extraordinary tale to tell. And the things you learn are just eye-opening. (‘He asked you to do what at gay conversion therapy??!’, ‘Jeff Daniels earned how much less than Jim Carrey for Dumb and Dumber??!’)
If you listen to one episode, make it: Falling In Love…With Heroin

The Mind Palace
Ah, it’s great to hear a proper regional British accent on a lifestyle podcast. Melissa Cain, from up Sunderland way, joins Jessica Lynn Williams, who seems to flit between idyllic coastal US locations, in a weekly transatlantic chat about minimalism, living sustainably and lots more. Sometimes esoteric, sometimes silly, always a good listen.
If you listen to one episode, make it: Waste

Serial
The podcast that made podcasting famous, the first series of Serial is quite simply excellence in journalism. I have yet to listen to the second round, which seems to divide opinions a little more.
If you listen to one episode make it: S1 E1 The Alibi. After that you will be hooked anyway.

Good Life Project
Ok, so this one may be a bit earnest for some, but I like it. Imagine the kind of personal development workshops you might find at an eco music festival between the falafel stall and the fair-trade scarves and you’re kinda halfway there.
If you listen to one episode, make it: Karan Bajaj On Yearlong Sabbaticals and Real Jobs

This American Life
Another giant in the podcasting world here. Each week there’s a topic and various segments which riff off it.
If you listen to one episode, make it: Are We There Yet? (Haunting accounts from refugee camps in Greece)

The Minimalists
This podcast may seem a little repetitive if you’re as familiar with The Minimalists’ blog, books, film, talks and interviews as I am, but there are still nuggets of wisdom in these discussions worth hanging on for.
If you listen to one episode, make it: Documentaries

10% Happier
Sceptical TV news reporter Dan Harris had a panic attack live on air and realised he needed to make some changes. He was surprised to find meditation helped him and wrote a book about it called 10% Happier. A nicely bullshit-free look at the world of ‘striving for enlightenment…whatever that means’.
If you listen to one episode, make it: RuPaul


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Wedding bells, balls-ups and budgets

 

IMG_0144It’s that time of year again: wedding season.

I’ve just been to the most wonderful wedding on a beautiful farm in the middle of the countryside. The day was full of carefree fun: playing with my niece, exploring barns, dancing, eating and drinking too much and catching up with people after FAR TOO LONG apart.

It made me think back to my own wedding, nearly two years ago. We’ll be celebrating our anniversary in a few days. See the picture above for a frighteningly accurate depiction of how we looked on the day (I’m on the left).

Our wedding day was, of course, the happiest day of my life. I married my best friend. I wouldn’t change a thing. (Except maybe that one thing about the….nah, forget it, Claire. Move on)

But the weeks, months and even years planning the thing, stressing about the budget and worrying about how our big day compared to other people’s? That wasn’t so good.

There’s always one person in a couple who does the bulk of the organising. That person was me. I was struggling with loads of debt at the time and my girlfriend and I had made a solemn pact that we would not borrow more money for the wedding. I’ m so glad we decided that.

But it meant we had to make really tough decisions. I remember at one point, as we were getting pressured to put this person or that person on the guest list, I broke down in tears in the middle of a phone conversation to a relative. I knew we just couldn’t afford to host any more people, no matter how much we might have wanted them there.

Here’s the thing: organising a wedding is not easy and despite what the glossy magazines might tell you, it is not always fun.

But in the end, we worked our socks off to get the best day we could on the budget we had.

This is my advice for anyone who is planning a wedding at the moment.

  • Work with what you have. Set a budget and include some contingency cash. Things will go wrong and having extra money on hand will alleviate stress. But if you have the budget for a shotgun wedding, you won’t be getting married in a castle. Accepting that is the first part of the battle. Work out the best wedding you can afford on the budget you have. Don’t get attached to a fantasy plan you will never be able to finance.
  • So you can’t afford an identikit wedding? So what??! Consider out-of-the-ordinary options; it can really inject some personality into your big day. We got married at a beautiful old building which is the home of a children’s charity. It was offering better rates than many of the hotels’ wedding packages and as a bonus we knew our cash was going to a good cause. You might want to consider getting married on an unusual day, or out of season, to save cash, or you might consider a pot-luck meal instead of a more formal dinner.
  • If you take people’s money, you also have to accept their input. Parents and other people might be kind enough to help you pay for your big day. But with that donation, they can also reasonably expect to have a say in how their money is spent. You may be pressured to invite great-aunt Nora, have a sit-down meal or hold your big day in a certain place. If you want complete freedom to make your own decisions, you have to pay your own way.
  • Don’t be afraid to haggle with suppliers. Flattery goes a long way. We found a DJ who we really liked, but the company was a little more expensive than the competitors. We fired off an email saying we were dying to book them but couldn’t quite afford their rates. Guess what? We got a discount.
  • Call in any favours you can get. We managed to get friends to perform music, a colleague’s daughter to use her staff discount to help us buy bridesmaids’ dresses and another friend to give us mates’ rates on photography. They may be happy to help, and consider it their wedding present to you. But don’t pressure any of your friends into working on your wedding. They might just want to kick back and enjoy your day with you. Give them the choice.
  • Enter competitions like CRAZY. I won three!! Hair styling on the day, wedding favours and the table plan, all hustled through entering all the contests I could find.
  • Feel free to get crafty, but beware: it may not always be a money saver and certainly isn’t stress-free! We made our own invitations using a kit and embellishing with our own decorations, which worked really nicely. But I also took the mad decision of baking our own three-tier cake with different flavours in each tier, which was really stressful and I’m sure didn’t save that much money, once I got all the stuff I needed.
  • Economise like mad on the areas you don’t care about, so you can spend more on the things you love. I got married in £35 high-street shoes so I could go on a honeymoon to Thailand. If your budget means you can’t do it all, make a list of your priorities.
  • Don’t be afraid to skip things. We didn’t have a wedding car. My wife rocked up in her band’s van and my dad dropped me off. That’s money saved and one fewer contractor to deal with.
  • The most powerful money-saving tip of all is to try your hardest not to see weddings as a showing-off contest. I know that sounds high-and-mighty and I really don’t want it to, because I had a real struggle with this. ‘It’s not a competition’ became the mantra I was often uttering through gritted teeth, not quite believing it. The truth is, you want people to have the most fantastic time at your wedding. Of course you do. But first and foremost, this is about the start of a marriage. Getting into loads of debt for one day is just a heap of stress you don’t need.
  • Lastly, enjoy your day. You may have worked your behind off bringing the damn thing under budget, but when there’s a hitch – say a friend announces at the last minute that they can’t make it – you can either fret over the wasted money on their non-refundable meal and the now-inaccurate table plan, or you can just shrug and let it go. Make a conscious effort to do the latter.

Before I go, I want to give a quick shout out to people struggling to pay to be a guest at weddings. I hear you! It can be a pricey business – the gifts, the outfit, the hotels and especially the hen or stag parties. A warning to people younger than myself: you will hit an age where you inexplicably have five weddings to go to within a few months and you’ll soon be broke, broke, broke, flat broke.

If you’re planning a wedding, the last thing you’re probably thinking about is the wallets of your guests, as you tuck into another meal of cheap noodles to save a few more quid for the big day. But you can help them by keeping any pre-wedding parties affordable, pointing wedding guests towards hotels that would suit all budgets,  letting them know that giving you a gift is optional and hooking them up with other guests (not in that way! Well, maybe…) so they can share rides. They’ll thank you for it!

My finances: Great advice I live by, great advice I don’t

poundsWe all make money mistakes. That’s just life. Some we can learn to avoid in future, some we can’t avoid without a crystal ball. I’ve documented my biggest money mistakes on this blog before, but to cut a long story short, I ended up in a right debt pickle.

I’m now powering my way out of this mess and in the process, I’ve been doing a whole crap-ton of research on personal finance.

Certain bits of simple-to-follow advice just keep cropping up all over the place, so I thought I would share them here for anyone who thinks their finances could do with some fine-tuning.

Some of these ‘money rules’ I now live by (hooray!), some I hope to follow one day and some I frankly don’t find that useful. But hopefully there will be one or two tips here that might work for you.

 

FIRST UP, THE GREAT FINANCIAL RULES I LIVE BY

 

Live below your means

The rule: We’re starting off with a simple one – spend less than you earn – but it is pretty much the bed-rock of a sound financial footing. If you can get this one down, you’re way ahead of many people.

Why I stick by it: After years of not just living paycheque to paycheque, but spending more than I earned each month, I ended up with thousands of pounds in credit card debt. It’s a mistake I’m literally still paying for now. Living below my means now allows me to pay back those debts and when I’m done it means I will be able to start saving for the first time.

 

plugsmallAutomate your bills

The rule: Never get a red reminder letter through the post again. Sign up to direct debit payments for all your bills, and set them to come out of your account a few days after payday. Worrying about bills becomes a thing of the past.

Why I stick by it: Life is too short to spend on admin, so getting these automated was a no-brainer for me. Quite a few firms offer discounts for direct debit payments, so I can save money as well, and increasingly it’s now given as the only option when you sign up with a new utilities company.

 

Shift credit card debts onto 0% deals

The rule: Credit card interest rates can be eye-watering, and if you have debts you can end up seeing the costs spiral. So, shift them using zero per cent balance transfer offers and you can effectively get a free loan (although small transfer fees usually apply) for up to a year or two. It means you’re now properly paying back your debts rather than just paying whopping amounts of interest.

Why I stick by it: I used to pay around £800 a year in interest alone on my consumer debts. No wonder I wasn’t paying them off very quickly. This is one of the most important moves I made when I started to get serious about becoming debt-free.

 

Challenge all your outgoings

The rule: Go through all your regular bills and payments and see if you can get better deals elsewhere. Use comparison sites to make this easier. Cut anything you don’t need any longer and don’t be afraid of calling up your current providers to haggle better deals. People who haven’t done this before will save a lot of money.

Why I stick by it: It’s a really simple way of saving cash without feeling deprived. Honestly, who cares where your electricity is coming from? I wouldn’t dream of not shopping around now, it’s become an ingrained habit and I’m pretty sure it’s one that will stick with me forever. Haggling lower prices over the phone is also really satisfying.

 

Save into a pension and take full advantage of any employer match

The rule: If you work for the man, chances are the man will have a company pension scheme. If you’re lucky, the man will match any contributions you make towards your retirement. Take the man’s money, for goodness’ sake.

Why I stick by it: My employer offers a match of up to 6 per cent, meaning that if I pay in 1 per cent of my earnings, I get another 1 per cent thrown in free, but if I pay in 6 per cent of my earnings, I’ll get another 6 per cent thrown in free. Guess how much I pay in? Up yours, the man.

 

Pay yourself first

The rule: If you want to either save money or pay off debts, decide how much you want to set aside and then take that immediately from your paycheque when you get paid. Don’t save what’s left after spending, spend what’s left after saving.

Why I stick by it: Like the ‘automate your bills’ rule, this is just a great way to keep things simple. If I pay my debts early, I’m not worrying about whether I’ve got enough money to pay them at the end of the month. Also, it is a statement of intent: my debts are my priority, and they will be gone from my life!

 

Track your net worth

The rule: Take a regular snapshot of your overall financial wellbeing by totting up your total assets and subtracting your total debts. This is your net worth. Monitor once a month/quarter/year to see how it is changing over time.

Why I stick by it: Firstly, it’s really easy. Secondly, I’m an utter gimp and I like plotting graphs to chart my progress on things. As I’m also a big fan of oversharing, my current net worth is £14,720.

 

AND NOW, FOR THE GREAT FINANCIAL RULES I DON’T FOLLOW

 

Have an emergency fund

The rule: Put aside around three to six months’ expenses in an easy-access savings fund. Then, if the boiler breaks or you write off the car, it’s a minor niggle rather than an all-out fecking catastrophe.

Why I don’t stick by it: I know I need one of these. But I’ve been prioritising paying down debts for the past few years. It’ll be my priority after that, promise??!!

 

Save at least 10 per cent of your income

The rule: Put aside a big chunk of your wage. You know it’s the responsible thing to do. You’ll reduce your reliance on debts, accrue interest and generally be a boss at life.

Why I don’t stick by it: As with ‘have an emergency fund’, I just haven’t got here yet. No, one’s perfect, right? Right?

 

Invest in the stock market

The rule: If you leave your money in the stock market, for long enough, it sprouts new money. How awesome is that? Returns tend to be better than with savings accounts, but that’s because you’re taking greater risk. After all, no returns are guaranteed and you may even end up losing money. One top tip is to diversify your investments (ie invest a bit in bonds as well as stocks, and/or invest in lots of different companies by choosing some kind of fund rather than shares in specific firms). Another is to see the stock market as a long-term thing, and a third is not to panic and withdraw your investments if the market takes a tumble.

Why I don’t stick by it: So I was investing a bit of money in the stock market once a month for a year, until recently, when I decided to pull it out to pay off some debts. I made a fraction of profit (I think it was £10?) but nothing to write home about. In hindsight, I went down the investing route too early. This should really come after I have an emergency savings fund in place.

 

Have a budget

The rule: Give every £1 (or $1 or whatever) a job to do at the beginning of the month. This one will pay the phone bill, this one will be on food, etc. You can set up lots of separate bank accounts to divide up your money in advance so you know you’re not overspending in one area.

Why I don’t stick by it: Honestly, life is too short to obsess like this. By automating my bills and ‘paying myself first’ I know that once that’s done, I can spend the rest on food or petrol or class A drugs* or whatever.

 

Run a side-hustle

The rule: You have a main wage packet, but what if you could supplement that by making extra money on the side? AirBnB hosting, filling in surveys, freelancing, blogging, mystery shopping, Uber driving and starting a small business are all common side-hustles. It means you have a back-up income if your regular job hits the skids, and side-hustles can even become a main job, given time.

Why I don’t stick by it: Honestly? I have neither the time nor the energy. I have tried various survey websites and found them an utter waste of time, given the hours you have to put in. Ditto mystery shopping.

As for blogging, well, yes, I do already do that, but I make no money from it (in fact, it costs me a little money). I dislike blogs covered in adverts and I particularly hate those that carry advertorials, so I’ve never wanted to take that route for my blog, especially given that I’m blogging about saving money and wanting less stuff.

I’m sure there are better ways to make extra money, but I’ve never been that motivated to pursue one.

 

brickssmallOverpay your mortgage

The rule: You can save thousands in interest by paying off your mortgage early. Then after that, you have a house, for like, free.

Why I don’t stick by it: I really want to do this. I really want to. And I will. Just not right now, ok? Stop hassling me, perfect internet finance peeps, with your shit together.

 

So there you have it. Have I missed any big tips that you live by, or ones that you find just don’t work? Tell us in the comments section!

 

*I don’t really buy class A drugs.

I’ve done a very silly thing

purse

There’s one thing I never plan for: making a really, really idiotic mistake.

How’s this for stupid: taking a break from a long car journey to stop in at a crowded cafe for lunch, then walking out without your bag, phone and purse, getting in your car and not even noticing you left your stuff behind until you’ve got home, nearly 200 miles away?

I really have excelled myself this time.

I’ve had to give everything up for lost. Being a broke (aspiring) minimalist means I don’t have a spare bag or purse, so this week I’ve been replacing my lost items with a kind of mad, resentful grimace on my face, which I’m sure has alarmed one or two shop assistants.

I’ve also had to go through the hassle of calling the phone company and banks to get my sim blocked and cards stopped.

And do you know what, I have found out the hard way that I really need to simplify my finances. I lost count of all the credit cards I had to cancel, and I’m pretty sure there were three different current accounts I had to sort out as well. It was a massive hassle.

I have had to pay cash for everything all week, until my new bank cards arrived. I felt decidedly nervous going out and about with just a few quid in notes and no phone to boot. I kept worrying about what I would do if my car broke down. It was all pretty unsettling.

Looking on the bright side, my stuff wasn’t worth much – it’s cost maybe £100 to replace it all. The fact I write a blog called ‘Want Less’ may have given you a clue that my handbag was unlikely to be a Prada one and my phone was definitely no iPhone 6s. A stroke of luck meant neither my keys nor my glasses were in my bag too. They would have been a real pain to replace.

But in future I must remember to budget for stupidity. I never know when it will strike me.

What the Budget means for side-hustlers, financial independence geeks and debt-busters

CashSo today was Budget day (non-UK readers, you have my permission to skip this post!), and I sat through the speech so you don’t have to.

I have plenty of opinions about the government’s priorities, but this blog isn’t about that, so I’m going to take an unbiased look at what the changes could mean for those who, like me, are approaching personal finance in a decidedly unusual way. I’ll give each one a thumbs-up, a thumbs-down and a thumbs-waving-about-in-the-middle as I see fit.

For those desperate to quit debt, build savings, escape the rat-race and distance themselves from consumerism, there were some really interesting announcements.

Firstly, there’s going to be a new £1,000 tax allowance for side-hustles. Becoming an Airbnb host, an eBay seller or a loft storage space renter are all opportunities touted by those trying to become debt-free or financially independent. But they have also been pretty awkward in terms of tax. You’d have to register as partially self-employed, fill in an annual tax return, etc.

Now, we’re told we don’t have to worry about the first grand, fill in any forms or anything. To be honest, the spectre of paperwork has always put me off pursuing a side-hustle, so this opens up a few opportunities for me. All in all, this one gets a thumbs-up.

In other news, the government has announced it is raising the annual ISA allowance per person from just over £15,000 to £20,000. This means the interest you get on savings or investments up to this level will be tax-free (mostly – it’s complicated). Now, you may be thinking, who the hell saves £20k each year??? And you’d be right to think this. But what seemingly only benefits the rich can also benefit those who are mad-frugal with huge savings rates.

Having said that, I’m guessing even the very frugal will struggle to put aside £20k each year. Hell, most people barely take home that sort of money. So, I call bullshit on this new ISA raise. It gets my thumbs-down.

Ever look at your pay packet and curse at the amount of money you never even see before it’s whisked away by the tax-man? This next one may be for you.

The amount people can earn before they start getting taxed is going up a bit. It’s £10,600 now and we knew it would be going up to £11,000 next month. Now, in April ’17, it will go up to £11,500. My little brain has worked out that it means we’d pay £100 less tax a year. Well, it’s something, I guess. But the point where you go from paying 20% tax to 40% tax is taking a far bigger leap, of £2,000, saving higher earners £400 a year.

Personally, I think this is the wrong way round. We need the biggest tax breaks to hit all earners, not just the high earners. But every little helps, I guess, and this will make a small but tangible difference to people’s finances without making them jump through any silly hoops, so this one gets a thumbs-waving-about-in-the-middle.

Capital gains tax is being cut. This is the tax you pay if you make money on shares, for instance. It’s a thumbs-up for those investing money in the hope of retiring early.

Then, we were told about a new thing called a Lifetime ISA. It’s a kind of spin on the Help to Buy ISA that gives people a boost when saving for a house deposit. Under this scheme, you can save up to £4,000 a year and for every £4 you put in, the state will add £1.

Sounds great for savers. But there’s more than a few catches. You have to be under 40 to start one, when they launch next year. You only get to keep the bonus if you put the money towards a house deposit or leave it sat there until you’re 60. If you take it out early, you lose the bonus and there’s a 5% charge. Etc, etc.

I’ll be honest, my little heart leapt when I first heard about this one. I thought it was ideal for those pursuing financial independence, like I hope to one day, once I’ve beaten my debt mountain. But the more I think about it, the less useful I think it’ll be. For a start, limiting access until you’re 60 sounds pretty dismal. This is definitely about saving for proper retirement, not early retirement.

The government says it wants to support savers and strivers, or whatever its latest awful buzzwords are for the financially responsible. But there must be simpler ways of rewarding saving.

So, I’m not sure whether this gets a thumbs-up or thumbs-down yet. The devil will be in the detail.

God, I hope that was more interesting to read than it was to write. Pass the wine…

Poop poop! Cruising towards debt freedom

carSometimes, when you’re taking so many little steps towards a big goal, you can forget to look back to see how far you’ve come. Small triumphs along the way can almost go unnoticed, as you fixate on the finish line.

So I had to force myself to pause this month and enjoy one particular moment:

I’ve paid off the bloody car! That bad boy is mine, all mine, I tell you.

(And no, the car pictured is not my car. I’m nowhere near that cool.)

The car loan was the biggest chunk of my total £15,000 debt mountain at its peak. Since then, I’ve paid off an overdraft and a credit card but adding this one to the ‘out of my life’ pile is pretty damn satisfying.

Next month, I will have to make no big car payment. It had been my second biggest outgoing, after my house, for the past four-and-a-half years. Before then, I was paying off a similar amount on another loan for a postgraduate course I took. So in total, a big chunk of my wage packet has been eaten up by a loan payment of one kind or another for the past decade or so.

But while I can celebrate this month, I can’t slow down just yet. I may now have more disposable income, but it’ll just be heading towards paying off my remaining credit card debts for a good while yet. Then, once I’m debt free, I still won’t be kicking back and pissing all my money up the wall.

Here’s why: If there’s one ‘life hack’ (and boy, do I hate that phrase) I’m determined to master, it’s the idea of paying my instalments in advance rather than in arrears. It’s that simple – save rather than borrow. A simple idea that would save me thousands in a lifetime.

The more I think about personal loans, the more I dislike the idea of them. They fool you into thinking you can afford things you can’t. You’re tied to payments for something you bought years ago. If you lose your job or your income, you’re stuffed. By their very nature, they cost more than saving up the equivalent amount beforehand. I’m done with them.

Savings, on the other hand, are power. You may be saving up for a car, but if the roof leaks or the boiler breaks, it’s no biggie – you use it to fix that instead. Try doing that with a car repayment.

Then you get interest on top, just to reward you for having your shit together. You also get to look at your bank balance and ruminate about how awesome you are.

With debts, I just had a burden. With savings, I will have swagger.

Net worth: not just for millionaires

palm treeWhat do you think of when you hear the term ‘net worth’? Do you think of millionaire bankers with yachts? Someone who’s a bit of a dick? Does your mind automatically shut down (‘Boooooring!’) because it sounds like a meaningless financial term?

Well, I’m here to show you why knowing your net worth is both really simple and really useful.

Anyone who tries to tell you this stuff is complicated is LYING. It is, quite simply, a snapshot of your overall financial situation, right now, in pounds and pence. All you do is add up all your assets (savings, money in your current account, your £500 guitar lying neglected in the corner) and take away all your debts (credit cards, money owed to friends, etc).

The number you end up with will either be a positive number (you own more than you owe) or a negative one (you owe more than you own).

The process itself is dead simple. The only hard bit may come when you have to face up to some hard truths.

In 2010, I worked out my net worth. The calculations were painless. What hurt was the number. I was £12,139 in the red. My debts were massive and I had no savings at all.

I’ve since been paying down my debts and my mortgage, and I’ve even started putting a teeny bit of money aside.

Each year, I work out my net worth again, and each year it improves.

This year, I totted up my assets, subtracted my debts, and the number popped out: £12,139.

I was struck by the coincidence. The same number as six years ago. Except this time, there was a plus sign in front of it rather than a minus sign.

Don’t be disheartened if your net worth is a negative. It’s a starting point. Progress for the first few years may start slow, but it soon builds up and builds up as your expensive debts shrink and your savings start to earn their own money.

That’s why, hopefully, if you plot it on a graph over time, your net worth shouldn’t just go up in a diagonal line, but an exponential curve (remember those from school? Nah? Ok, here’s one)

exponential

It’s also a really good way of working out if there’s a problem with your finances and you’ve been putting your head in the sand. Your net worth should not be getting worse every year, unless there’s a very good reason, like you’re retired.

You might hear people arguing about what you should include in your net worth – such as whether you should include the value of your house, pension pots, the resale value of all your crap.

I honestly couldn’t care less how you do it. Just be consistent, and be honest with yourself.