We are all unique creatures – what works for you probably doesn’t work for me and vice-versa. In my own instance, I’ve spent a life taking every opportunity to avoid being told what to do, even though the advice was often good for some inexplicable reason I’ve always taken the wrong route with money.
I found myself at 50 years old in a situation of having no savings, no pension and £35,000 ($50,000) in credit card debt (but don’t feel sorry for me – i had a great time). However, turning 50 really sobered me up – literally.
I’ve got a wife who is nearly 20 years my junior and 3 kids. The oldest who has just left University with £50,000 ($70k) of student debt, and two small children aged 3 and 5.
So realising that something was going to have to change – I took the decision to cut my debts, and save for my future.
Surprisingly I found this fairly easy to do.
1. I got out all my bank statements and wrote down my income and my monthly bills……. To find that my monthly outgoings were £900 and my monthly credit card bills were nearly £1,100 a month !! My income which for most of us is the source of all our troubles ranged from £5k a month to nothing for months on end (ahhh the delights of self employment !!).
2. I drew up a monthly balance sheet (i hate the word budget – as you can tell from my ruinous financial position) and even though i didn’t ever stick to it… I always had it in the back of my mind that in needed to reign in my spending.
3. My wife and I saved £3,000 for emergencies
4. We changed all our credit cards over to interest free deals
5. Instead of paying off the minimum amount each month via direct debit – we now pay off a fixed affordable amount each month meaning that are debts are paid off over a set period of time (another 2 years to go)
4. We started saving for our future…. an emergency fund and investment savings are a priority – I am exploring ways of paying off my credit cards within 2 years.
5. I got myself a new job on full time contract after being self employed for nearly 30 years (the probable root cause of my financial woes)
6. I’ve started to save £400/month into my own investment account – More of this later – but I’ve invested in a couple of Investment Trusts on a low cost monthly plan – PCT.L and BRSC.L if you want to google the symbols.
7. My employer contributes £300 a month into a pension on my behalf (when I was self employed I was a bad employer to myself – paid irregularly and no chance of a pension – though no problem shelling out for friday night beers)
Overall – I feel much better about myself, I sleep better at nights and have less financial guilt