Money Matters

I used to think that making money and having money to spend was extremely important. I grew up without much money and in a town where there weren't many opportunities. Money always seemed to be an issue when I was a child. I was determined to make money so I wouldn't have those problems. I didn't want the washing machine breaking to be a major drama, or to be unable to afford family vacations. 

As a teenager I started making money. First with a paper round, then a job in a bakery, then as a waitress and then in a bar. I worked long hours during high school and saved up a lot of money (well it was a lot to me!) so that I would have some money towards university (college). I got a full grant to go to university (because my parents' salaries were low enough) and I worked all the way through university. 

Unlike most of my fellow students I got through university without debt. I worked all through my PhD and then got a series of good jobs and ultimately a very good job. At some point I shot past that point of having enough money not to worry about basic expenses and afford the occassional holiday. I kept going ... I was working hard and saving a lot of money (I didn't have much time to spend it!)

When I was studying for my PhD I wanted to get a better understanding of money. I asked for a finance book for my birthday and my partner bought me a couple of books by the Motley Fool financial publisher (those books are a little out of date now).

One of the key concepts that stayed with me was Living Below Your Means (LBYM). The concept of living within ones means is well known. But this was about not increasing your standard of living in proportion to increases in salary. It was a great lesson to learn before I started to earn a professional salary. As a teenager I had lived well below my means and I had lived within my means as a student (which meant being pretty frugal.)

Our lifestyle did improve as we earned more money, but not in line with salary increases. This meant there was always spare money. We didn't feel that we were missing out at all. We did spend money on things that were important to us, like gadgets, and a nice kitchen. We just didn't feel that we had to have the best of everything. 

A few other popular finance books also cover the topic of living below your means. Apparently many millionaires don't live extravagant lifestyles (and that is why they are millionaires.)

We liked the idea of being financially secure and building up savings for the future more than we liked the idea of spending lots of money. 

Having a mortgage has always unsettled me. I hate seeing a large negative amount. Even if a mortgage is the best forn of debt, it's still debt. When we took out our mortgage, we assumed we would be paying it for 25 years, or probably longer as we moved house. We moved house twice due to job moves. Each time we made money on the sales and moved to a nicer house. 

I think we have a lovely family house now. It's much nicer than the houses I grew up in and it's in a very nice area. However, many of my colleagues have much fancier homes - and matching mortgages. Our nervousness about having a big mortgage kept is living below our means.

Through the Motley Fool we had also come across the idea of paying off your mortgage early, either by investing to build up an amount equivalent to your mortgage or making overpayments. 

We began to make overpayments on our mortgage and also investing. This was the money that most people on our salaries would have spent on fancy cars and luxury vacations. We had a basic car and simple vacations. 

Then I came across Jacob at Early Retirement Extreme. Jacob retired in his early 30s. He did this by living very frugally and saving most of his salary for several years in a professional job. He then invested that money and is living off the interest. Because his lifestyle is so cheap he doesn't need vast savings to support it. He argues that time is far more important than money. 

This got me thinking. I don't want to live as frugally as Jacob. But I did start to question what I was doing with my time. Did I really want to spend it in a professional job that, while enjoyable, was so draining that there wasn't much time or energy for anything else? What was I earning all this money for anyway?

At first I started looking at the retirement crossover point. When would the income generated from our savings equal our expenditure? Hmm that was going to take a while, and I wanted some more flexibility in how I spent my time sooner than that (I had two small children at this point.) 

Then I came across Tim Ferris and the Four Hour Work week. Again, his lifestyle didn't exactly match my ideal, but I took tons of useful ideas from it. I read a number of books on different lifestyles and approaches to retirement and put together my own approach. 

So I looked into setting up a business that would generate a passive income stream (well maybe not entirely passive!) instead of building up such a large savings pot. 

I'd probably earn less money, but I'd get control of my life sooner. I'm a techie so I looked to see if I could make money online. There are lots of options, but the one I was drawn to was writing and internet marketing. I have tons of interests and love learning, and I learn best by explaining to others. And also I love researching and comparing the best things to buy - I've spent years making sure I'm spending money on the right things for me and my family. We're not frugal, we just carefully consider every purchase. 

And that's why I know write on sites like Wizzley where I can do what I enjoy, have the flexibility of working from home and build up a set of assets that generate income. Why not join me?

So, yes money matters. There's a certain amount you need to meet basic needs. But there's a trade-off to be made. Is all the effort you spend making money really worth it? Could you take your lifestyle down a notch and save money for the future or reduce your need to earn so much money?

It's very easy to spend a good professional salary each year and then have to work until pension age with very little to show for it. Could you spend a little less now in order to buy some freedom later. 

I was fairly lucky that both my partner and I had a sensible attitude to money. And we came across some great advice when we were young enough to act on it. 

This means we'll be mortgage-free by forty and will have the freedom to try something different to the corporate 9-5.