Future Dreams

While jogging with my wife a few days ago, we had a conversation that we haven’t had in years. We discussed our dreams.

It’s an important conversation for couples to have. What are your hopes? What are your dreams? Where do you want to be in 10 years? In 20? In 50? Planning for the future gives you a map for the present.

My wife and I hadn’t had this conversation in years. A few days ago, we did. Our life-goals are simple and achievable.

I want to leave the corporate world and support my family with writing and the training classes I do. I want a chunk of land outside of any major metropolitan area, but close enough for the entertainment and shopping. I want enough land to expand my classes on my own property, relying on no one.

My wife wants enough land to have some horses. It was unspoken, but I think she wants my goals to take off so they can support her goals, too.

We want a comfortable retirement and we want to help the kids with college.

We’re a bit behind the game for college funding. That’s ok, though. There is nothing wrong with a kid working his way through college and learning those life lessons.

We are also behind on the retirement. But, if I can support us doing the things I love, I don’t need $X million. Retirement isn’t a cessation of activity, it is taking the time to do the things you love on your own schedule. If writing a book while sitting on my private range is enough to fund our life, that’s the perfect retirement.

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How to Save

Saving is hard.  For years, we would either not save at all, or we’d save a bit, then rush to spend it.   That didn’t get us very far.  Years of pretending to save like this left us with nothing in reserve.   Finally, we’ve figured out the strategy to save money.

Save your money

First and foremost, make more than you spend. This holds true at any level of income.  If you don’t make much money, then you need to not spend much, either.   Sometimes, this isn’t possible under current circumstances.  In those cases, you need to either increase your income or decrease your expenses.  Cut the luxuries and pick up a side hustle.  The wider the gap between your bottom line and your top line, the easier it is to save.

Next, make a budget and stick to it.   There is no better way to track both your income and your expenses.  I’ve discussed budgets before, so I won’t address that in detail today.  Short version:  Make a budget.  Use any software you like.  Use paper if you want.  Make it and use it.

Pay yourself first.  The first expense listed on your budget should be you.   Save first. If you can’t afford to save, you can’t afford some of the other items in your budget.   Cut the cable or take the bus, but save your money.   Without an emergency fund, your budget is just a empty dream when something unexpected comes up.   And something unexpected always comes up.

Automate that payment to yourself.    Don’t leave yourself any excuse not to make that payment.   Set up an automated transfer to another bank and forget about it.    Schedule the transfer to happen on payday, every payday.

Now comes the hard part:  Forget about the money. Don’t check your balance.   Don’t think about it in any way.   Just ignore it.   For the first month or two, this will be difficult.  After that, you’ll forget it exists for a few months and come back amazed at how much you’ve saved.

If you don’t forget about it, and you decide to dip into the account, you are undoing everything you’ve worked so hard to save.   Do yourself a favor and leave the money alone.

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5 Reasons to Quit Saving and Start Living

paycheck
Image by owaief89 via Flickr

Life is all about trade-offs.  You trade your time for a paycheck.  Your trade your paycheck for food, rent, and security.  Don’t get so obsessed with saving and security that you forget to live your life.   There are many good reasons to put your savings on hold in order to really live.  Here are five of them:

1.  You have an adequate emergency fund. You will never hear me advise against an emergency fund.  If you don’t have one, stop reading this and get one.  Go.   Without an emergency fund, your budget is a financial crisis waiting to happen.  With an emergency fund, you can weather life’s speed-bumps without watching them become total train-wrecks.

2.  Your retirement is on autopilot. You are not allowed to stop saving and investing for retirement.  Ever.  Assuming you have a traditionally scheduled career that involves you working until you hit 65 and deferring a huge chunk of living until then, your income will cease when you retire.  Do you know how long you will live?  Do you want to spend your retirement broke and bored?  Are you relying on the responsible financial management of the federal government to make sure you will still get your Social Security?  Invest in your retirement and get this investment on autopilot so you can stop worrying about it.

3.  Your income is set. I don’t believe in the fairy tale of a company being loyal to its employees.  The aren’t.  However, if you have a stable-ish job, an in-demand career, and some side-income coming from alternate sources, your emergency fund can be enough to carry you through the low times.  That’s what it’s there for.

4.  You have dreams. If you’ve always wanted to travel the world, follow a band on your, volunteer extensively, or anything else, it’s time to do it.  Don’t postpone your passion.

5.   Deathbed regrets suck. Very few people lie on their deathbed lamenting the things they did.  Regrets tend to be focused on opportunities missed, skipped, or indefinitely postponed.  Do the things that are important to you before it’s too late to do them.  Don’t abandon your future in favor of current pleasures, but don’t forget to live, now.

Do you have any other reasons to stop saving?

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How to Maximize Your Income and Reduce Your Expenditures

If the past few years have taught us anything, it’s that we need to be taking out less debt and building up more savings. And certainly, it’s where the public seem to be heading – levels of mortgage overpayment and personal savings have rocketed in the past year amongst those who have the luxury of being able to put income aside.

For many of us though, finding money to save is a real struggle. After the bills and living costs are taken out of a monthly salary payment, there’s not always a lot left to play with. So what do you do?

The answer lies in getting tough with yourself, carrying out a review of your current spending patterns and working out a sensible budget. Essentially you need to both maximise income and reduce expenditure – both sides of the coin. There are plenty of ways to do this when you start thinking, so be creative and start thinking outside the box.

Here are a few top tips to get you started:

Ask for a pay rise – it seems like an obvious option, but so many of us never do it. Take a look at the market and see what similar companies are offering for your job role or profession. This will give you an idea of whether you’re currently being paid enough for your skills level and experience.

Ask your manager in a calm and prepared manager and come with facts and examples to back up your request. If the request is turned down, try again in a few months time, with more evidence. Also, ask HR for advice about your job salary banding and progression, so you show that you’re serious.

Get a new job – the obvious option when your pay rise request is denied. You may find that you can earn more elsewhere in the same profession, or flex your skills into a new career entirely. See a professional careers advisor for guidance.

Get a second income – more people than ever are opting for this route, by becoming self-employed on a part time basis. There are numerous industries that rely on an army of part-time staff, often self-employed. Examples are party-planners, sales people, freelance designers, coders, copywriters and researchers, market researchers, bar and restaurant staff and plenty more.

Take in a lodger – if you have a spare room, then the government allows you to take in a lodger without paying tax on rental income (up to £4250 pa.) This can be an effective way to make the use of your home to bring in income. Do your research first though on how to select the right lodger and make the relationship work.

Look for opportunities to earn – examples include signing up for overtime during busy periods at work or selling unwanted items on eBay. You could also sign up with the local council to count votes during election period, or help steward at large events. There are various agencies offering links to such opportunities if you search online.

On the other side of the coin lies spending reduction. This is a bitter pill for some to swallow, but there really is no point in earning more if you’re not going to make good use of it!

Food shopping – when it comes to food shopping, start using grocery coupons/vouchers and sign up for reward schemes. Downgrade your brands when you’re out shopping, so that you save money on you shop each time. Look at bulk buying offers, local grocers, markets and other opportunities to slash monthly grocery bills.

Travel – identify ways to save on travel, firstly by walking when a journey is a mile and under. If you’re doing this regularly you’ll save on petrol and you can cancel your gym subscription! With train tickets, book well in advance to take advantage of special deals and with holidays, look for cheap holiday offers and promotions via online search sites – these check the whole of the market to find the best prices and options for your requirements. Holiday extras such as car hire and airport parking can also usually be arranged via these online travel sites so be sure to compare prices to save yourself some money.

Clothes shopping – instead of shopping expensively on the high street, channel your passion for fashion into eBay. Many of your regular brands will be on there already and you can sell last season’s purchases to make way for the current season of items. Get savvy with bids and set yourself limits – you’ll find some great bargains if you’re clever about it!

Entertainment – when it comes to entertainment, sign up to group buying schemes for special offers and look more broadly in your area for things to do that don’t cost a lot of money. Things like local leisure centres, museums, parks, libraries, city parades and exhibitions are often free or subsidised by the council and you can enjoy time with the family without spending a lot of money on more commercial entertainments.

Hobbies – rather than taking up yet another expensive sport that you’ll buy all the equipment for and then never see through, find low cost hobbies to enjoy and cultivate. Walking or running, painting, music appreciation, gardening, racket sports, debating groups, local social clubs – all of these can be enjoyed without necessarily parting with too much cash. And it will broaden your horizons too – thinking more broadly about what counts, such as spending time with loved ones, rather than throwing money at free time like there’s no tomorrow!

 This post brought to you by MoneySupermarket.

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