Sunday, 23 September 2018

Death to Debt in 20 Small Steps

Daughters. Folks.

Do you have debt?  Zero judgement from me, however it is time to treat death-to-your-debt  as a top priority.

Normally you will read of three or seven step debt reduction programs - but I think these 20 tiny steps are better.  These 20 small steps not only get rid of your debt, but they also build character, savings, respect, renew friendships, repair family money arguments and let you hold your head high.

Here are 20 tiny activities to be rid of debt for ever.

Activity 1 – Admit Your Debt
Admit all debts to someone verbally....yep, even the $20 we owe Mum. Everything. The truth. If we are one half of a relationship, then it has to be the other person we tell. (This could be very scary - just do it)

Activity 2 – Sort Your Minimum Payments
We must have the income to cover all minimum debt payments. If we are paying out more than we are earning then we are in an urgent crisis situation. Increasing our income immediately by getting a second stream of income is of the highest priority. Get this sorted first.

Activity 3 - Create A Surplus Quickly
This means sorting a realistic budget that leaves us something left over after paying all basic living requirements and all minimum debt payments. Don't worry about the size of the surplus at this stage - as long as there is one and it is realistic.

Activity 4 - Automate Your Money
This requires us to set up our banking to automatically assign money out fortnightly (or whatever our pay cycle is) to all billing vendors and to all debts. Only pay minimum payment requirements via automation. All other bills like groceries and petrol (gas) pay cash for, or, use a completely separate non-credit card account.

Activity 5 - Save $500 Emergency Dollars First
We do this using our surplus. We stick at it till there is $500 saved. Agree on what this can be spent on - be very strict here about what an emergency is. Do NOT jump this step (I know it is tempting) as it teaches us a multitude of things about ourselves.

Activity 6 - Ramp Up More Surplus
This is where we get creative by either finding other ways to earn a little more or spend a little less - or both. Even if we only squeeze out another few dollars/pounds for the weekly/fortnightly/monthly surplus, then that is OK.

Activity 7 - Document Your Debt
Document all our debts noting interest rate, debt amount and basic lender details. Using a pencil and the back of an envelope is perfectly fine to work this out. Nothing fancy required.

Activity 8 - Pay Off The Smallest Debt First
This will give us a sense of possibility and an early 'win'. Pay this debt off by paying the minimum payment plus our surplus from activity 6. (This will be the only time we take this particular approach)

Activity 9 - Save Another $500 Emergency Dollars
This will give us $1000 in our emergency fund. We achieve this step by rolling up the minimum payment of our already-paid-off debt plus our surplus.

Activity 10 - Pay All Debts to Friends Next
Paying all debts owed to friends next allows us to regain our self-respect and rebuild respect among our friend circle again. Let them know we will never hit them up for money ever again. We achieve this step by rolling up the minimum payment of our previously-paid-off debt plus our surplus.

Activity 11 - Save Another $500 Emergency Dollars
This will now give us $1500 in our emergency fund. We achieve this step by rolling up ALL the minimum payments of our previously-paid-off debts, plus our surplus.

Activity 12 - Pay All Debts to Family Next
Paying debts off to family is a psychologically powerful step - don't skip it. This will send a powerful message to our family members that we have got ourselves together and are acting as responsible adults. Equality will be restored once these debts are paid. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus

Activity 13 - Save Another $500 Emergency Dollars
This will now give us $2000 in our emergency fund. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 14 - Pay Highest Interest Rate Debt next
This is the fastest way to now tackle all remaining debt once we have experienced the early win of Activity 8 and regained our self-esteem with Activities 10 & 12. This is the business end of our debt busting war. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 15 - Save Another $500 Emergency Dollars

This will now give us $2500 in our emergency fund. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 16 - Pay Second-Highest Interest Rate Debt next
We are on a roll now. We have served our apprenticeship and this is serious stuff. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 17 - Pay All Debts In Descending Interest Rate Order next by one. Bang, bang, bang. Take no prisoners, show no mercy. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 18 - Save Another $500 Emergency Dollars
This will now give us $3000 in our emergency fund. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 19 - Save $5000 Confidence Dollars 
...or more if we like. Whatever amount makes us feel safe and free. $5000 should cover a couple of months of modest expenses if the need arises and saves us from having to be reactionary if we ever lose our job or experience a significant life changing event. It 'stays put' in a high interest bearing account - hopefully we'll never have to touch it. Having this amount 'there' is our own insurance policy and safety net. It is quite separate to our emergency fund. We achieve this step by rolling up ALL the previous minimum payments of our paid-off debts, plus our surplus.

Activity 20 - Manage Your Surplus Wealth
Now that we have ALL the previous minimum payments of our paid-off debts at our disposal plus our surplus rolling in relentlessly every pay-cycle….it is now time to actively build our wealth in whatever way we choose! In many ways we have only just begun when we reach this vital step.
This activity is the true starting line. We were way behind the starting line previously when we had debt.

Take control today  - respect our future selves.


Friday, 21 September 2018

$10 per Day - You'll Retire A Millionaire

Daughters. Folks.

Just some real basic math today for us all to ponder. Actually, no. No pondering please - just do it.

I see colleagues every day buying a coffee as they come up to work, sometimes a coffee and a egg and bacon roll. I see others buying a can of soda and a sandwich for lunch and a bag of crisps for afternoon tea.  All of this would easily cost more than $20 per day.

So let's be conservative and choose $10.  $10 a day, just to be fair, uh huh.

OK, so just take a lowly tenner and invest it every day for our entire working life and guess what? We'll retire with over $1,000,000.00. Totally true story.

Here is the math -  $10 a day from the ages of 22 to 67 invested very conservatively with a total investment return of only 7% per annum will result in  $1,145,117.35.  No fancy maths involved.

$10 a day for goodness sake.

Do it. Start today. Now.

Respect your future self!


Monday, 10 September 2018

Saving IS NOT Investing

Daughters. Folks.

I hear people confusing saving with investing all the time.

Saving is NOT investing. Saving is simply putting money aside to eventually SPEND it on something. Kerching!

Investing on the other hand is purchasing wise assets with the intention of it realising growth and yield that compounds forever thus providing you with a steadily growing income stream over time.

But, but, but .... I hear the protestations already:

  • "I get bank interest on my savings!" - OK, however, that interest is less than inflation so your savings are actually going backwards.  Not an investment. Simply savings.
  • "We saved hard and bought a house, that's an asset surely?! "  - No. Most family homes are a liability as they cost you lots to own and do not provide you with an income. (I hear a wail of dissent?!) Factor in everything you have ever spent on your home and also factor in all the interest you spent on your mortgage and most likely you will not be anywhere near breaking even. On the lucky chance you do make a small profit when selling, you simply have to spend all that money again to buy somewhere else to live. So, the family home - NOT a true investment asset.
  •  " My Nissan Skyline is an asset matey ....isn't it?!".   - No. Just no.
  •  " I inherited my mother's mahogany dining room suit. It certainly is an asset" - Lovely, but no it isn't. How much income did it provide you with this month? Oh, nothing? Well there you go. Not an asset.
  • "I have money invested in the bank on 2.5% fixed interest and it pays interest monthly" - Good. Great. Excellent. However, after tax and inflation your money is going backwards. Sorry, not an investment. Simply savings.
Nevertheless, investing is nearly impossible for most of us without saving up first. To invest you must save with the intention of spending it on an asset.  Good assets cost money. Good assets grow over time. Good assets produce an increasing income over time. Good assets can be held forever and passed on generationally.  Good assets will provide income for generations to come.

Being an excellent saver is the first necessary step to wise investing. Some of the smartest savers I know automate their savings to come straight out of their pay - they never lay a finger on it. They pay themselves first.

As necessary and virtuous as saving is, it is simply money slowly going backwards sitting in the bank awaiting to be spent. 

To all you savers out there, FANTASTIC!  You are light years ahead of most people.  However, savings are simply the first step towards wise investing. Know the difference.

SAVING is putting money aside to buy something.
INVESTING is putting money aside forever to provide your future self a perpetual income.

There you have it.

Respect your future self


Sunday, 9 September 2018

Savings Ain't Savings

Daughters. Folks.  

Savings seem to be rarely actual savings these days.  How so?  Well,  just listen out for when you hear the word "save or "saving" or savings" being used and be honest enough to critically think about what is actually being said.

OK, here are some examples that I hear weekly from colleagues, friends and family ..... and my critical unspoken thoughts noted straight afterwards in brackets. 

  •   I saved 40% on this dress. (So you put that 40% savings in your savings bank account yeah? Not likely.)
  •   This wine was on special so I can drink extra this weekend - such a saving. (Um, so you still spent the same amount yeah? ...and you're gonna drink it all yeah? #notasaving)
  •   Apple twinkle-pop pies with the free widget were on special so I bought a whole box for the kid's lunches. That saves me having to think about lunches (Right, so there somehow is now money in your savings account from that reasoning? Scratches head, purses lips - how is any of that even a saving?)
  •   We saved $1000 on insurance by swapping insurance companies! (Good on you - is that $1000 now in your savings account or will it just be 'absorbed' somewhere, somehow-ish?)
  •   I saved $10 on shipping! (Yeah, but you still bought that whizbang online for $200!)
  •   I drove all the way to Nextown because butter was 99 cents. I do love a bargain (Uh huh, and it cost you $5 in fuel to get there and back. Wise. Not.)
  •   I spent $29 instead of $35 for  so-and-so's new  book  (You actually just spent $29, you didn't save a thing) 

You might think I am being unnecessarily cynical, however my point is - saving is not saving unless it gets put in the bank and saved.  You may have spent less or paid less or decided to buy something for less than normally advertised or bought an outrageous piece of nonsense cheaper than usual or  paid bargain price or got something high quality for rock-bottom prices - yes, yes and yes - but unless the difference is banked, then it is not a saving at all. You simply just spent less. What happened to the change from that spending-less exercise?  Where did it go? The same place hot water goes is my guess.

Let's stop saying that our spending is saving - cause it isn't.  Call it frugal spending or mindful spending or even considered spending by all means - but not saving. 

I laugh when young folk calling something that is really good "wicked".  I also laugh when perfectly grown up folk call spending "saving". Same same.

Savings need to be in their own bank account where you can see them and where they can earn interest, not sitting in a figment of our imaginations or lodged inside a set of flawed reasonings.  

I dare you, the next time you state that you saved $X on a purchase, to put that $X into your savings account and leave it there.  Now there's an ACTION ITEM right there.

Respect your future self.


Friday, 7 September 2018

The Power of 20 cents

Daughters. Folks.  All it takes is 20 cents.

Generations of wealth wiped out by genocide, war or foolishness can be turned around in a single generation (or less) all based on the power of 20 cents. True story.

The fortunes of a family can be turned around even on an average wage with no substantial career jumps across a lifetime - again, all based on the power of 20 cents. No exaggeration.

Take for example a young women of 20 entering the workforce after her family has been stripped of their wealth. Based on the power of 20 cents, she will have amassed a $2.5 million dollar fortune to pass onto her family at the end of her career. She will have lived a normal life in every other way whilst applying the 20 cent principle.

Take another example of a young women of 25 whose family have been living pay packet to pay packet for as far back as she can remember - she too can easily change her fortunes and those of her children using the power of 20 cents - all on an average wage. She too can have nearly a $3 million dollar legacy amassed across her working life whilst living a totally average life.

You can too. 

How does the power of 20 cents create this unbelievable change in fortune?  
Simply by investing 20 cents of every dollar that ever comes your way.  

Every time you get paid, take 20 cents in every dollar and invest it. Every time you sell something on eBay or at a garage sale, take 20 cents in every dollar and invest it. Every time you get birthday money or find a fiver on the ground, take 20 cents in every dollar and invest it. Simple math. Habitual. 

Your fortunes will change, 100% guaranteed, if you invest 20 cents in every dollar that ever comes your way.

No excuses, no victim stories, no complainty-pants, no ifs and buts - respect your future self and invest 20 cents of every dollar that ever comes to you.

Here is a very standard and conservative example:  Take an office worker in Australia earning an average wage of $60K per annum across a total working life cycle from age 20 to age 60.  Investing 20 cents of every dollar they earn will result in a $2.6 million dollar fortune if invested conservatively (using a basic 7% compound return) during their earning life.

Ponder, but more importantly .... do it.

Respect your future self.


Sunday, 19 August 2018

Sunday Night Learning

Rid your life of debt.
It's an emergency!

Hi dear daughters

Here are some readings and videos for Sunday night.  Educating yourself is paramount to changing your fortunes, habits, self talk and preferences - the more accurate, consistent, positive input into the mind the better.

Woman make better investors than men - read about it HERE

Canna Campbell is a down to earth lady with excellent YouTube videos on investing and changing inner beliefs about money and investing - listen to her videos HERE and read about her HERE

If you are starting out from behind and have debt, then Dave Ramsey's approach may strike a chord with you HERE

Also check out the recommended blogs I have in the side bar ..... and not just the latest post of each, have a thorough look around each blog.  I'm going to be very picky about what I put in this side bar as it needs to be good quality and specific to the needs of us all here at Papa's Pennies.

These links are not meant to make you comfortable, in fact rather the opposite - these links can educate and shift the way you think and act. These links should awaken a part of your being that makes you feel alive, aware and ready to change and growth.

Change to your external fortunes only happens when you do.  

Don't shut the door to your mind when you feel the cold winds of change blowing in - they a probably blowing through the open door of opportunity.

ACTION ITEM 1:  Always read and listen with a note pad ready and pen in hand. Write down the key points that you felt your mind grasping whilst you listen or read.

ACTION ITEM 2:  Read your notes OUT LOUD back to yourself when you are done.

The simple act of listening, writing and reading out loud is a complete cycle of learning and reinforcement. Very, very powerful.

Have a lovely Sunday evening, and remember .....

.....respect your future self


P.S. How's the font Cheryl - easier to read?

Monday, 13 August 2018

Back-To-Front Bill Payments

Dear daughters

Do you pay your bills in the wrong order? Back-to-front?

If you are not sure, then grab a pencil and the back of an old envelope and then read on:-

Pencil ready?  Good.

1. Jot down when you last paid the electricity bill
2. Jot down when you last paid your water bill
3. Jot down when you last paid your phone/cell bill
4. Jot down when you last paid for groceries
5. Jot down when you last paid for gas/petrol
6. Jot down when you last paid yourself

Whoops. There it is.

Did you pay yourself last? Maybe even never?  Don't worry, you're not alone as most people do not pay themselves first (if ever). Everything else gets paid first and then there is nothing left for your future self. Very back-to-front.

There are a zillion excuses not to pay yourself first, I've heard them all and I've used them all too! Would you normally serve everyone else's dinner and leave your plate empty? Would you make sure everyone else's seat belt in on and leave yours undone? Hmmm ..... it's same thing as not paying yourself first.

It is time to begin paying yourself first. Start today. Paying your future self first is the ultimate act of self respect. Paying yourself first is an act of self care and an utterly practical way to demonstrate to yourself your self esteem. Paying yourself first boldly secures your future. Paying yourself first means you are wise, canny, resourceful and intelligent.

ACTION ITEM:  Write it down  - "I pay myself first".  Put it in a place you will see it every day.

Every time you receive money from any source, take some and set it aside in its own special account for the future - the long term future.

  • Every pay packet or pension, the very FIRST action is to take an amount (any amount to begin with) and place it aside in its own special account. 
  • Every single time money comes to you via selling something or as an exchange for a service rendered, or as a gift, take part of this money and place it aside in that same special account.

This too is a foundation principle that simply cannot be ignored. You'll quickly enjoy paying yourself first and paying your bills after that - back-to-front to how you have previously been paying them. :-)

Have a peaceful evening and remember .....

Every day, in every thought, word and action - respect your future self.


P.S.  Today's picture is of one of our ceramic biscuit jars and its shelf-friend the soup tureen. Great spots for squirreling some coins.