Living the good life, while saving heaps.

I’ve found they key to really feeling like you are living the good life is to get back in touch with nature. Nature isn’t trying to sell you anything, make you feel less than you are for not owning something and it has no secret marketing agenda. It’s a wonderful reset for a stressed and over busy mind.

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So lately we’ve swapped pricey brunches for bushwalks and lazy afternoons at the pub for a picnic and swim at the beach. Truth is we are blessed to live near a multitude of swimming beaches all within a short drive. Thanks to urban planning in the 60’s large tracts of bush remain house free and there are many well-maintained walking tracks to enjoy, the closest is about 150 metes from my front door. (540 hectares of parks & bush reserves!)

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Find the nature closest to you, it could be a park or a garden, a river walk, a lake a spot to sit and stare at the landscape, a friends backyard or even a few potted plants/herbs/vegetables that you can take care of.

Nature is mostly free and amazing. Sometimes it’s hard to drag myself away from the laptop, but cultivating a love for the outdoors has been a very enriching part of my life. I’m still not up to the level of overnight hikes or camping (I’d miss my cosy bed too much!) but I am quite happy to spend the whole day hiking to a lovely spot and back. To be honest I like the fact that day trips are cheaper too as I don’t need to buy/borrow any camping gear.

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Visiting new spots creates new memories and has stopped the weekends blurring into one big hazy blob of watching TV, browsing the internet and drinking too much wine on Saturday night. Instead I have memories of birdsong, wildlife, great conversation uninterrupted by cell phones and a feeling of wellbeing that just can’t be bought.

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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.

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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

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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.”

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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.

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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.

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“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