Archive for achievements

Hard to believe …

I think today I just realised that we have more than $16,000 ready to buy a home, nearly $5000 in an emergency fund, and at least $6000 in other accounts for a range of purposes!

I know I posted these figures recently, but today I really just looked at them properly and really thought about how much it took to get here. It might not sem like a lot of money to some people, but to us it is like reaching Everest!

After so many years of struggling financially, this just seems hard to believe. Our difficulties started about 10 years ago when my husband sold his business and the new buyers defaulted on the purchase – after they had started renovations and left the building looking like a bomb site. Without that money or the business income, we had just my (office junior) income and a big bunch of final costs and legal bills to pay.  My husband’s plans for a new business had to be shelved because there was no start-up money, just bills. He had put all of his money into his business and like that, it was gone. Now he had to find a job, and to his credit he took what he could find. He went from a successful business owner to initially being a cleaner at a hotel. He didn’t let his pride get in the way of bringing in a wage (I’ll always be proud of him for that). He knew it was only for the short term, and it needed to be done.

Then we had a protracted court case, resulting (nine years later) in a paltry sum that didn’t even cover the cost of the legal bills. I think it worked out at about $1000 per year! Luckily, we had just kept on plugging on with our lives as best we could, and worked through paying our creditors. Many of them had been business associates and friends, and many were very good about waiting for their money. Again, I’m proud we paid them back and didn’t run away from it. 

Then I went back to university for 8 years and we survived on one income – initially it wasn’t a very good one either. But we knew that my studies would be worth it in the future.

Over the years, hubby’s income got better. But we watched the price of homes in our area more than double, all the while listening to friends tease me for worrying about money because `when you get out of uni, you won’t have to worry about money anyway’! (Yeah, right! While thing are better, we are far from not worrying about money.)

Eventually things did get better. We started being generally more responsible with the little money we did have and started getting rid of the `dumb’ debt we had, like credit cards and the like. Eventually we got rid of all the debt … after a few years of absolute bare bones living.

And now, as of this year, we are on two quite good incomes and our lives have started to change. Not because we have made our lives any more fancy, but because we are starting to move forward.

This is more than just having more money. Going through this has made us into fundamentally different people.  We are so much more cautious with our spending, and value security much more than just making sure the bills are paid (which is what we used to emphasise).

I don’t ever want to be in that situation again, and maybe that is one of the blessings in what we have been through. The fact of being in big debt without a quick way out made us `wake up’ in a way that some people who don’t ever face big financial worries never do. Instead of just paying the bills and spending the rest, we want to move towards a life where we are relaxed and moving forward financially each month. Let’s hope we stick with that, and reap even more of the associated rewards.

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Tickers are up

So I finally made a visual representation of my debts, savings goals and achievements, courtesy of Ticker Factory. Like it? Meanwhile I also updated the real state of my emergency fund (post-car repairs) and found it wasn’t as bad as I’d thought! I need to find  $470 to get back to where I was (closing in on $1020). Then I’ll change to my next e-fund goal of $5000. I’m feeling good again – I know it’s all in sight.

 Not sure if I am finally catching on about what it means to be frugal, but for the first time I am really thinking about whether or not I need some of the things I want to save for. I still want to do the travel stuff and things related to experiences (like celebrating my graduation) but I’ve been lusting after all this furniture lately, desperately trying to figure out how to afford it. Now I’m thinking: what exactly is wrong with what we’ve got? Sure it’s not my style and it is getting older, but it isn’t shabby and it isn’t awful. It’s probably a bit bland for my taste but there’s plenty of time to express myself in future, when I can afford it. I think I would rather think about doing stuff with my family than buying stuff. Hopefully this feeling won’t pass!

 

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A move to success: the power of motivation

I’ve been a fan of motivational literature since I was a teenager. I’ve always  liked reading books about empowerment and change, but I’d never bought motivational tapes or anything like that. Well, not until I turned 21 anyway.  That year I bought a CD program from one of the best-known motivational speakers in the world and I have to say, the change wasn’t like a lightning strike. It was more like a river, in which the tide slowly starts to turn. And it really wasn’t long before my life started to change markedly.

I’d already made the first big change myself, getting out of a bad relationship with my first `love’. But my life was not really going forward. I wasn’t enjoying the work I was doing and I had this nagging feeling I was at a crossroads in life. I was looking down the barrel of an `okay’ career, probably basing myself in the same town for good. It wasn’t a bad life by any means but it wasn’t the one for me.

So I ordered the CDs. Everybody mocked me for doing this program, but I was determined to give it a go anyway.

If nothing else, listening to the CDs forced me to look at what I really wanted out of life. The program asked me to list my goals, what I wanted and what my timeframe was. Initially  I wrote down a lot of stuff that I clearly didn’t really want – not in the short term anyway (eg big cars, luxury homes), but I thought that was the stuff you were `supposed’ to aim for.

In between all the stupid stuff I wrote, I actually started to make some sense. I really decided the biggest change I wanted to make was in my career. And whether or not I already believed I could do it, I realised I actually should go back to university and study something completely new.

I told a friend I was thinking about doing a degree in nursing. She asked me why I wanted to do nursing, when I `obviously had the brains for medicine’. I’d never thought about it. Well, I might have had the brains (debatable!) but I certainly never had the drive. I did well at school but I could have done a lot better if I’d actually devoted my energy towards school instead of part-time jobs and parties.

I thought about it and realised I liked the idea of nursing but I would really love to become a doctor. So I looked into what I had to do to make that happen. I won’t lie. It was daunting. I’d needed to make up some chemistry and mathematics subjects from high school (I had studied the creative arts strands like Journalism and Film and Television Studies). Even then, I was unlikely to be accepted in to any of the incredibly competitive undergraduate degrees straight away. I was probably going to have to do another degree first. And then there were the interviews and exams … and all the other testing stuff that I had always avoided when I was younger.

Yet I did it. I did night school for a year, then did 2 years of a medical science degree before being accepted to med school (a 6-year undergrad program). And now I’m in my final year, with my final exams behind me. It seems hard to believe that I am nearly done after so much time … that I am nearly a doctor.

It seems my life will be vastly different to how it would otherwise have turned out. As an example, even this year, as a final year student, it seems likely I will travel overseas (at no personal cost) to attend a medical conference. I can’t imagine that happening in my old life.

As an aside, I now love every day at `work’. I get to meet people and help them through the best and worst days of their lives. I know how privileged I am.

Looking back, I have to wonder what role all of the different motivational books, and the CD program, played in my career turn-around. I know this is a personal finance blog, and this post has been all about motivation. But I do also wonder also what role the motivational literature have played in my turnaround to financial responsibility. Would I have continued to live paycheck to paycheck forever? Would I ever have looked seriously into investing? Would I have bought a McMansion and spent my working life trying to afford the repayments? I’m not sure, because I fear many of us buy stuff because it’s what we think we should want, regardless of whether or not it is really right for us.

I know motivation books and programs are not for everyone. But in the context of my experience, in the future I wouldn’t think twice about making a relatively small outlay to take advantage of another person’s perspective on life. Whether or not it can be put down to a CD program – or that I bought the program because I was already at a crossroads and want to change my future, the result has been good. I have no regrets!

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Christmas without debt … sooo nice

Well, I just finished my shopping and we managed to spend $650 on Christmas, including food. And I don’t feel like we scrimped AT ALL. Some readers may remember that we had allocated $1000 for Christmas this year. Well, part of the reason it was even that much was because we usually spoil each other a bit at Christmas to make up for our efforts to scrimp and pay off debt through the year. This year we decided we’d had a pretty nice year as it was, and we’d prefer to get each other smaller gifts. Our approach has allowed us to pay for Christmas without creating debt (I used the credit card to pay for things but paid the amounts back online when I got home from each shopping trip).

This approach also meant that today I was able to transfer $250 back into our recently depleted emergency fund, which took a beating while I wasn’t working during exams. I must admit, it was nice to be able to focus on my exams and know we had a small reserve of cash to help get us through. Anyway, I am very pleased with Christmas 2007, which might actually be sweeter this year than ever!

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Net Worth skyrockets, husband on side

Well, Christmas approaches and of course, I am running around like crazy trying to get meaningful gifts that people actually want. The pressure is higher on my side of the family, where each person receives only one gift. The pressure is causing most of us to resort to gift cards at each person’s favourite store, but it feels really impersonal. Even my significant other wants me to get him a gift voucher! In some cases it makes sense because I know he wants to spend some cash on outdoorsy stuff, and he knows that I wouldn’t know exactly what to choose, but still …

I think part of the problem is that just about everybody in our society has enough money to buy anything they really want whenever they want it. Hence even if you do know enough about your niece or grandmother to know what they are into, you also need to be sure they don’t already have the item you can afford. It makes things a little more complicated. Add in the fact that we only spend $30 on Secret Santa, and our options do go down (though I believe this amount is more than enough!).

Anyway, while I am excited about this next tidbit of news I have to share, much of the rest of this post is going to be about superannuation, so I’m ready for a few of you to fall asleep or move on to another blog about now! This week my husband received his pension plan information for the last financial year, and between his monthly employer contributions, a small rollover amount from a previous job and the investment’s growth, the total value climbed by nearly $20,000! His account is still not huge, but it is looking a lot more respectable than it did this time last year. I added the new value to the month of December in our Net Worth chart (I keep my own record on NetworthIQ) and the huge jump dwarfs every other hard-earned gain in 2007 – even the month where a $4000 lump sum helped us cut our credit card debt to almost nil.

The best part about this is that it has made my husband excited about the benefits of such plans and he now wants to contribute $100 a week from his salary towards maxing out his pension plan. Given that he is a little older than me, this is not a bad idea and is one I would fully support, even if it affects the financial goals for 2008 that I set out in my last post. There are a few reasons why I think this is a good idea. One is that I will definitely encourage any interest in money management that he develops. I love that he is very happy for me to plan our money each month and I know he thinks I do a great job, but sometimes I want him to get more involved. The fact that he actually wants to put money away is a great step forward for him. Secondarily, under salary sacrifice arrangements he can make at work, he can put some money into his pension plan before tax, so we wouldn’t actually lose the whole $100 in net salary  – it would probably be more like a $60 drop in what actually enters our accounts. I have warned him not to expect such a great result next year – the world economy is a bit shaky and I don’t really know which way the markets are going to go in 2008 – but I figure that it never hurts to put money away.

One advantage of the mandatory pension plan system in Australia is that it is a real opportunity for young people to see compound interest at work. My super is not huge because I have taken nearly seven years off full-time work to study. But I started working casually at 16, and my pension plan has been accruing since then. In the first few years, it wasn’t much to be impressed about. I think some years the fees actually outweighed the growth and I went backwards!  But last financial year the total of my pension plan was about $25,000. Not bad for a full-time student – it even outweighs my student debt (which is interest-free). Though the last few years probably aren’t typical because the growth has been impressive, I love opening my yearly update and finding that my plan has risen by several thousand dollars. It makes me think about what I could do with shares or a managed fund. Then I remember that I still have to focus on getting rid of my consumer debt first. Given how well the markets have gone in the past few years, the opportunity cost of servicing all that debt has been great, I’m sure. Yet, in some ways I think my focus on repaying debt has taught me something important pretty early in life. I never want to do this debt repayment thing again. I want to live within my means as much as possible, and focus on living well, not living hell!

Anyway, I now have to re-enter the fray at the stores. Wish me luck!

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Feeling positive

Speaking of milestones, as I was the other day, my site has passed 1000 visitors this week. Thanks guys! I remember my first few weeks of posting, when I doubted anybody would care what I had to say. Thanks for keeping me motivated!

I was watching the advertisements for Financial Peace University on the Dave Ramsey website (we don’t have it here in Australia). It looked pretty good. One thing that struck me about it though was all the testimonials ie `we paid off $18,000 in debt in less than a year’. I was listening to that and thinking … wow. I wonder what if feels like to do that.

Then I felt really stupid.

Since June this year, we have:

– paid off nearly $7000 owing on our credit card;

– eliminated more than $3000 owed to our family (not counting the amount we exchanged for labour);

– reduced the balance owing on our vehicle by almost $3000; and

– built a $1000 emergency fund.

So we’ve paid off at least $13,000 in debt in less than 6 months, and saved a little bit as well! And we’ve done this on one (relatively good) income, and one casual income.

While living rent-free is a huge advantage for us that I have to acknowledge, I also see this as an achievement in itself. It’s not easy supporting a family member to stay in their own home, and living with an older generation can be difficult at times (as I’m sure it is difficult living with us sometimes!). So while we are doing this primarily to support my father-in-law, reducing debt has been a big driver for us staying here, and we have `paid’ for those debt reductions in other ways ie loss of privacy etc.

However, thinking about this has made me feel so much better, and I realise now that my attitude is sometimes very `poor me’, when in fact I really need to recognise how lucky we have been to be able to stay on track so well.

 We have a few things that we would like to plan ahead for in the next year or so, including a joint birthday party for me and my hubby and a specific gift for another person having a milestone birthday within our family. While we don’t intend to spend a huge amount on either of these, they will come at the worst time of year for us, so they will require a bit of early planning.

I also have the opportunity to do an 8-week placement in a remote location next year (in fact, it’s a requirement of my course), and I would like to do it on one of the islands on the northernmost tip of Australia. This would be a fantastic experience for my family and I, but it will take some funds for all of us to go up there for that long. So we will start planning that soon too. When I get back from that trip, I will almost be a full-time wage earner! This is an astonishing proposition for someone who feels like a perpetual student!

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