Your Poverty Helps No One

“Your poverty helps no one” – I think I heard a property investor say this on TV and it really resonated with me.

Occasionally I read a bit of backlash against the middle class acquiring wealth. Terms like greedy and selfish are thrown around from time to time. If leaned towards conspiracy theories I’d say its a part of the upper-class scheme to keep the middle-class blaming the poor and the poor blaming the middle-class while they get away with doing whatever they want. When I let it slip at work one day that I own some shares someone jokingly (but maybe not so jokingly) called me elitist! If you are a property investor and own more than one house then you are “stealing” someone’s dream of home ownership.

poverty

As the title says “Your poverty helps no one”. Staying on struggle street is not some noble cause. I’m hardly “sticking it to the man” by refusing to play his game. If anything they want us to stay out of the game! The man wants us to stay in debt and to never try get ahead.

In my mind, trying to do better in life isn’t a bad thing and I reckon by being financially independent and retiring early I can actually help many people around me.

If I can afford to retire and still maintain my spending habits then not only does my job become available for someone else but the economy still has my input as I continue to buy things and consume. There’s plenty of hungry eager young people ready to work, the sooner I leave my job the better in their eyes! Who needs some old bastard clinging to their supervisor job till 3 years past retirement and a host of millennials secretly hoping those lunchtime cheeseburgers and onion rings will finally work their magic. Free up the jobs earlier for the next generation!

cheeseburger
mmmmmmmmm cheeseburgers

If I don’t have to work I can help out my family with childcare allowing the young families to get back to economic productivity faster and provide quality one on one interaction for a young person instead of constantly going to a crowded day care. I may also begin the financial independence indoctrination on the sly.

I invest heavily in my own country meaning company profits stay in the country and are not going to off shore investors. My investing helps keep money from flowing off shore, that’s got to be good thing.

If I don’t have to drag myself to a job all week I’ll have time to volunteer for organisations that do great work in the community enriching everyone’s lives.

I don’t need welfare or other safety net services, I have funded my own safety net. This leaves more resources on the table for those that need it.

Sure I’ve convinced myself that FI is a good thing, but envy can make people think some strange things. So for now it’s a stealthy path to FI but I won’t be feeling guilty about it that’s for sure.

January Work Selfie Highlights

As you can see I pack my own lunch to save money….mmmm leftover roast chickens.

Packed my own lunch for all of January! Think of the savings!

January 2016 Expenses and Investments

This has been my first month using ‘You Need a Budget’ or YNAB software.

Before I just used the system of paying myself first, so essentially I saved what I thought was a reasonable amount and then I spent what was left over. I never really had a handle on my actual expenses. Hopefully YNAB will give me a better understanding of my spending habits and hopefully I can start to increase my savings. YNAB claims most users save an extra $200 a month when they use the software

To explain my budget a little – I pay most the bills and my partner gives me money each month for their share of the bills e.g groceries, mortgage and insurance.

So here is the nice little graph that YNAB generates. Keep in mind everything is in New Zealand dollars. (The link will give you some idea of the purchasing power of a NZ$ for those who are curious).

Jan 16 YNAB

Ooooooo pretty colours. I love graphs!

As you can see most of our spending is on the mortgage. Holiday spending was paying for a trip I am taking in March, I booked the accommodation now. I didn’t take it out of my vacation savings instead I just absorbed it into this months spending. Below is a more detailed break down.

Screenshot 2016-02-01 15.03.09

Saving and investing: $1,153 saved or invested for the month. Not bad! I’m also saving some spending money for an upcoming vacation.

Groceries: This is really high! However it’s for 2 people and we just started a “healthy” eating plan so while I was getting my head around all the different meals I think I spent way more than I needed to. I also pre-loaded a grocery credit card for spending in December (I get a 6% return on the money loaded onto this specific card during Jan and Feb).

Spending Money and Restaurants: So summer time vibes and “holiday” mode may have lead to a few extra treats. I do like to go out for meals occasionally with my partner but by being a bit more creative I think I can cut these categories down. The spending money went on some hairdressing scissors (worth it!) and a fancy bottle of wine (not worth it, sad face, lesson learned) plus a book and a lotto ticket (Argh curse you lotto, the tax on those bad at math, but its our combined workplace lotto ticket, I don’t want those bastards winning without me!)

Clothing: For $90.50 I got 2 pairs of shoes, 4 tops and a pair of shorts and jeans. Clearance sales for the win!

Household goods: A multifunction stick blender (heavily discounted $100 off!), bathroom organiser and air tight container for dry goods.

I don’t generally carry a credit card balance but YNAB seems to take your starting credit card balance as a debt that needs to be repaid.

Goals for next month: Increase savings, reduce grocery spending. Also I’m thinking of starting a sinking fund for house repairs and maintenance. How does everyone budget for this? Currently I would take the funds out of our general savings.

Also I may have to start paying a little extra into our property investment fund next month as I want to pay down the mortgages on those little faster and build up a buffer for any renovations and repairs.

What are your budget goals for the next month?

My 6 Income Streams for 2015

pablo

Interest $61

Dividends $568

Renting out the spare room $1,680

Rental property $1,598

Peer 2 Peer Lending $12

Part time casual job $2,470

 

Total: $6,389

 

Most of us are utterly reliant on our jobs for our financial stability. What’s that saying I see all over the internet? Oh…that most people are two pay checks away from being homeless? Screw that. What a horrible position to be in. It gives your employers the ability to hold you to ransom and limits your choices in life down to uh……..about one. “Turn up for work everyday.”

working

After an embarrassing number of years of doing just that, I learned that there was another way.

The answer is multiple income streams, cash trickles, wealth torrents whatever you want to call them. But you’ve got to get some income coming in from sources other than your main job if you want to have more options and security in life.

Sounds easy but there’s a few barriers, firstly money begets more money. In some kind of incestuous fashion money spawns even more money. Receiving interest, dividends and the ability to purchase income generating assets all require some kind of starting capital.  So my first step was to get some savings and the kicker..get rid of dumb debt. Consumer debt makes you even more of a wage slave with high interest rates and payments that can’t be missed. So with dumb debt gone (apart from mortgage) and kiwisaver signed up for I started looking around for more ways to generate income.

Confession time, I lied, there is an income stream that doesn’t require starting capital (unless you count human capital).  If you have any kind of regular free time its about to disappear as you dive into the seedy exhausted world of working two jobs.  Direct the extra income into paying off debt or accumulating savings to launch the incomes streams. Of course alternatives are asking your wage master for a raise or extra hours/overtime both of which are usually preferable to a 2nd job. (However a 2nd will be there if you lose your main job.)

Once you start saving you begin to see the miracle of interest, or in todays economy the miracle of sweet FA interest. If interest rates go up in the future you’ll come out on top but for now…forget about it.

So I needed to look for other ways for my capital to generate income. First thing that caught my eye was the sharemarket. Sweet dividends batman! I used my hard earned savings to open a brokerage account and dicked about with single company stocks before stumbling across the concept of ETFs. I bought up smart shares (an NZX traded ETF) but these dividends were automatically reinvested but if I need cashflow at any time I can change them to pay out to my back account. So for now a have a few single stocks that pay out dividends twice a year.

Next opportunity for a further income stream came about after we discovered international English language students would pay generously for just room and board (oh and plus a wee bit of help getting used to the city, how the buses work how to pay for things etc).  We signed on for short term visits and have enjoyed the company of 2 lovely lads one from Taiwan and one from Brazil. It’s been very rewarding and even after spending a bit extra on food and utilities we seem to come out on top. A spare room can be a nice little earner if you’re willing to open up your home.

Turns out a lot of people need loans and if you’re willing to take the (calculated) risk you can become a lender. Peer to peer lending is huge and taking off across the globe you too can become a greedy banker charging loan sharkesque interest rates to those down on their luck, or if you’re choosey about who you lend to then maybe it will be at a more reasonable interest rate. It promises returns much greater than keeping you money in the bank. Defaults can be common in the lower grade loans so pick your loans wisely.

The last income stream we use is rental property. Although more of it is unrealised income with gains in the value of the property adding more to our wealth than rental income. Currently we are making a profit but there are a few more expenses to pay this year (rates, body corp fees). This was the most expensive income stream, but technically they were bought with the banks money as we didn’t use a deposit. The only requirement for this kind of finance was a large amount of equity in our own home, it only took 10 years of painful mortgage payments to get to this point.

So those are my 6 income streams that I have on top of my regular day job.

money

Some are barely more than a trickle at the moment but my goal is to have enough income streams to cover my day to day expenses.

The ultimate goal for me is to be free of the requirement to work for a living. To not be dependant on a job to pay my day to day bills. To be free to do the work I find fulfilling and not necessary the most financially rewarding.

Surviving pay check to pay check means you are dependent on one source of income and while that seems to be the normal state for a lot of people its not actually a good thing. I consider myself safely employed, but things are always changing.  There could be a downturn in my industry and I could be made redundant or my specialised skill set could be rendered obsolete by new technology. For safety its nice to have other ways of making a dime to save my ass if I lose my job and while I’m still working I can put those extra dimes to work building wealth.

Why being financially independent is so important to me.

“It’s all about the pain”

 

I have a weird pain over my shoulder blade that gets exacerbated by movement of that shoulder. My work purchased a specialised piece of equipment that semi motorised my main work task. While I’m grateful it pretty much ties me to my workplace. I can’t work in my area of specialty in another workplace unless they are also prepared to invest in this equipment……..which seems unlikely.

 

Financial independence means I could walk away from this line of work that causes me pain on a daily basis. Take a year off work on sorting it out. Then try out other jobs that I find interesting or fulfilling.

 

Financial independence means being PAIN FREE! Woohoo.

 

“I can’t stand you people”

 

I work with a small team in a small open plan area. After ten years I’ve had enough. Hey no ones perfect and I’m not the ideal co-worker, but I read somewhere that you are the product of the 5 people you spend the most time with. So if you are always negative and complaining, bitter about your job and pessimistic maybe you need to look at the people around you? Are they happy and cheerful, do they look for silver linings and opportunities when presented with problems? 8 hours a day everyday with negative people can really grind you down. 8 hours a day with positive inspirational people can lift you up! The Empowered dollar explains it really well…..

SO WHAT DO YOU DO WHEN YOU’RE IN AN ENVIRONMENT THAT BRINGS YOU DOWN? YOU JUST DO YOU. AND THEN YOU FIND NEW AWESOME PEOPLE.

 

Financial independence would let me choose who I spend my time with instead of being forced into the company of people who are only a bad influence on my mood and optimism.

 

Also I’m kind of an introvert. Less face time would be great. Can I please have my own office.

pablo

“Risks are risk free”*

 

With an independent income risky ideas are much much less risky. Going back to school, trying a job abroad starting a business all become within the realm of possible instead limited by my need of a steady pay check. Things that filled me with fear before now have a safety net and anything seems possible.

 

“I once traded time for money, now time is love”

 

If my family needs me I can be there, after school care for nieces and nephews, cook my grandparents dinner a few nights a week. If anyone gets really sick I can drop everything and be there. I don’t need to throw in 8 hours of work before I turn up.

 

I can spend more time with my partner, currently I spend more hours per week with my co-workers! Its ridiculous.

 

“So much room for activities”

 

I have a few hobbies I’d like to explore further, I have a few things I’ve never tried that I dream of doing. At the moment I really feel like working and recovering from work takes up so much of my energy that there isn’t any room for activities. I want to paint, develop some gardening skills and work on my home brewing.

 

“So what’s in it for you?”

 

So what would being financially independent mean to you? How would a steady income regardless of your circumstances change your life? Find the reasons, write them down and remind yourself of them frequently. Becoming financially independent isn’t always an easy road and it takes time and knowing why you are taking the journey will make it less daunting.

 

 

*Almost