become financially secure

I’m just replacing it with a more concrete goal.

I’m now at 10% of my first target on the savings fund (1.5 months of salary). It’s not a huge amount, but I thought I’d mark it all the same.

Today, I had to get some money from the bank earlier today (I’ve had 94p in my pocket for about a week now). The machine asked me if I wanted to check my balance before making a withdrawal, and for the first time ever, I was able to think to myself “Nope, I know exactly how much is in my account thanks very much.” I’m also aware of exactly how much I’ve spent on my Amazon credit card (which I make day-to-day purchases with before paying off in full each month).

You could argue that’s one form of financial security, and it’s one that I like.

...been somewhat bemused every time a story like this comes along. One of the first pieces of advice I heard after I graduated from university was “money can’t buy you happiness, but it sure helps”.

Also, given that most people’s number one cause of stress is money, it’s hardly surprising that when you have enough of it you get a whole new set of worries.

Admittedly, I had to laugh when I read that a greater percentage of lottery winners were married after they had won the jackpot – call me cynical if you will, but I just wasn’t at all surprised. ;-)

18 months ago, I’m not even really sure how I was coping financially. I was being paid sporadically. I was mismanaging my debt. My bank account was running at zero for all the wrong reasons. I was spending too much on books, newspapers, magazines and other assorted junk.

Fast forward to today, and things are looking quite a lot better. Since I joined my company on a full-time basis, we’ve grown from 5 people (I was employee #5) to 10, plus a handful of external contractors. We just agreed the biggest contract (by value) I’ve ever been involved in. We’re hopefully about to agree the biggest deal (by profile) I’ve ever been involved in, which will launch the company into a new market which I’m responsible for. I’m not saying I’m directly responsible for all of that, of course, but I’ve certainly played my role with 5 out of our last 6 deals being down to me. I seem to have pretty good entrepreneurial instincts for markets and products, so now I need to follow through on that belief. In short, things are looking pretty good on that front.

As a result of all this wheeling and dealing, I am now being paid regularly (a very pleasant feeling and one I’ve not had for about 3 years). Ironically, my spending has reduced as my income has risen, and I’ve been able to focus on clearing off my gigantic debt overhead, which now only has a matter of months remaining. I no longer spend money on newspapers or magazines at all, with the exception of my subscription to The Economist which is covered by some consultancy work I do on the side. I do sometimes buy magazines when I’m travelling on business, since I get the expenses back for that. I’ve only placed one order at Amazon (for me) this year compared with 32 in 2005 (and even the one this year was about 98% paid for by gift vouchers – Ruth’s book I couldn’t use vouchers for), although I have had a couple of incidents at real live bookstores earlier in the year. However, compared to 18 months ago, where I couldn’t pass a book store without buying at least three books, I feel I’ve come a long way. It seems apparent in hindsight that whereas some people are addicted to buying shoes, I was addicted to buying books, and equally obviously, it was a serious problem for me. I may not (yet) have completely overcome the addiction, but I think I can feel justifiably proud in reducing my habit by (I would guess) 500-1,000%.

Junk spending has also taken a serious hit. 12 months ago I was probably spending at least £20 ($40) per week in Starbucks alone. The last time I spent a penny on coffee was March 29. Buying my lunch and takeout probably accounted for around 25-30% of my monthly expenditure, and now accounts for around half of that. I can certainly do better with this by remembering to make my lunch more often to take with me. I only have takeout once every two weeks on average. I drink water more often than not, whereas 12 months ago I was spending money on “juice” (soda) to complement my caffeine. All this reduction in spending also has a health benefit in that I drink milk several times a week, whereas I never did before. For once, I haven’t rushed out to buy every single new games console that hits the shelf. I have bought a few games for my Nintendo DS, but a couple of these have been expensed by work. I had a monthly recurring fee for a member’s club which I haven’t used for a few months – I obviously don’t need that, so it’s gone now too. I have all the utensils, folders, notebooks and such that I could ever need, so I don’t need to buy any more of that, no matter how cool that fancy folder might be (I guess stationery is my other addiction – being organised appeals strongly to me, I just don’t do it terribly well!).

Overall, since April when I decided to really focus properly on financial matters, my basic monthly expenditure has dropped by 15% while focusing on my debt. I’ve had a couple of large bills to pay over that period related to my previous company, however, which I’ve excluded from that calculation.

I’ve now opened my first separate savings account, with a regular contribution of 10% of my salary. Although I still have some debt, I want to make a start on squirreling some money away. As I said in the debt backstory linked above:

Looking at how much money I’ll be spending on this each month really hurts, not because of what I could be spending it on, but because of how much money I could actually stash away.

I’m far, far ahead of my declared schedule of having 50% of my debt cleared by the end of 2006 (currently at 33%), so now I’m aiming to get it as low as I possibly can: under 20% by the end of the year should be easily achievable. As I get closer to clearing the whole lot, the hurt of not being able to save all that money is becoming more and more acute. Patience, dwlt, patience.

Oddly enough, personal finance books don’t appear in any of my book stacks. However, I have done some reading across the web, and I think I could probably write my own book now. That might help the savings balance!

With the debt far more manageable that it was before, I’ve been putting some thought into this. The short-term goal is to provide myself with a safety cushion of six months salary. However, that’s quite daunting right now, so I’ve broken it down in an obvious way:

1. 1.5 Months
2. 3 Months
3. 4.5 Months
4. 6 Months

I’ll give myself a little celebration at each milestone, and will be tracking progress monthly right here, so that you can follow along with the fun!

I’ve taken the first step to sorting out some of my debt, which is the real priority for achieving financial security - get rid of the stuff which costs money :)