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The Fierce Girl's Guide to Finance

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Is the patriarchy making us poor?

Did you know that 2 in 5 Australian women don’t feel in control of their financial situation?

That’s according to an MLC survey of women, which also found that of the 43 per cent who do not feel in control, 61 per cent said low savings is the main factor.

While concerning, it’s not really surprising. But I’m not here to give you a lecture and say ‘girlfriends, think positively!’.

[NB: Feminist rant alert!]

You see, it’s not as simple as changing our attitude or outlook. We are not just struggling with our money; we are struggling with the patriarchy.

We are conditioned from a young age to think of money as something that buys us stuff. The kind of stuff that helps us win in the world of constructed femininity – first dolls, then clothes, then make-up, then diets, then surgery and then all of that shit that we convince ourselves we need. (Or society tells us we need).

I am guilty of this  – I got suckered into the Priceline 50% off sale last week too.

But before I beat myself up about it, I think about the forces at work. I’m nearly 40, single and work in a male-dominated industry. My appearance is part of my currency, for good or bad. I need that make-up, I need to cover that grey hair, or so my internalised misogyny tells me.

(OK, so, my boss hasn’t told me I need 10 shades of glitter eyeshadow – that is some creative licence from me).

The weight of it all

I am not suggesting we stop shaving or go bare-faced (unless we want to, of course). But when we look at how the beauty-industrial-complex sucks our money and attention away from us, we should have pause for thought.

Have you ever added up how much you spend on this stuff every year? I haven’t. On purpose – far too scary.

But even a vague mental checklist of hairdresser, make-up, fake tan and hair products is alarming. Add in all the clothes and accessories I buy, and it gets scarier.

And that’s me being a tight-arse, not buying anything full-price, having a low-maintenance hairdo, and refusing to get my nails done (oh how I miss thee, Shellac).

If I think of the women in my life, we all have those kinds of expenses. And it seems to be getting harder, with Instagram beauty demanding all sorts of high-maintenance appearances, including botox, fillers and surgery.

Now I’m not saying these things alone account for any money troubles we have. But there are two things to note:

  1. Men don’t have these costs.
  2. We are highly distracted by them.

Being chained to the costs and worries of our personal appearance, our body fat levels or our emerging wrinkles – this chips away at our sense of confidence, not to mention our bank balances.

What’s the solution? 

Being ‘woke’, as the young folk say these days.

In other words, being conscious of the impact the patriarchy has on us and our confidence.

Being alive to the impact of our socialisation as young girls, where money was rarely on the agenda but being pretty was.

We don’t have to burn our bras (that would be both toxic and wasteful). But we can rebel in our own ways.

  • We can take on the knowledge that has traditionally been the domain of men – finances, investment, capital.
  • We can create boundaries for our spending, so that we do the sensible stuff – like saving and paying off debt – before we rock up to David Jones.
  • We can make a plan, set goals, educate ourselves and take on financial planning with the same enthusiasm as we take on a Kayla Itsines bikini body challenge.

Knowledge, attention, action. Pretty much the key ingredients to any great social change. And remember:

Some realtalk about buying property – and how to get it done

I’ve changed my mind about something. Something important.

I’ve said on this blog before that if you don’t buy your own home to live in, it’s not the end of the world. As long as you choose some other way to build your wealth, you don’t have to freak out about not getting on the property ladder.

And financially speaking, that holds true.

But I think I missed something important: human emotion.

Having just settled into the new apartment I bought, I realised I’d been denying something to myself. I like having my own ‘patch of dirt’. It fulfils a deep human desire to be settled and to feel some control over my destiny.

This feeling was compounded by the dramas of trying to get my bond back. The exit cleaners didn’t do a good enough job, so I found myself Gumptioning walls in my lunch hour.

A detail was missed in my ingoing condition report, so I was accused of leaving holes in a wall. And then there was the threat to make me pay for an electrician to change a light bulb that was out.

I fought tooth and nail, and in the end they only withheld $8.80 for said light bulb. But it reminded me of the way the cards are stacked against renters in this country, along with short leases and pet bans.

So, this is my advice for the yet-to-be-homeowners. Do everything you can to get your foot onto the first rung of the property ladder.

It might take a while, and it might mean making sacrifices, but it’s one of the most important things you can do with your money.

“But wait”, I hear you say. “I’ll never afford a property in this crazy market”.

And if you’re in the very lowest income band, that may be the case. But for someone earning  decent (or even ok) money, especially early in your career, it’s totally possible.  And here are three ways you can go about it.

Rentvesting – There are two hard parts of buying a property to live in. Scraping up the deposit and then repaying the loan (known in the industry as ‘servicing’).

If you go down the route of buying where you can afford and renting where you want to live, you remove that second challenge by having rental income.

If you live in Sydney or Melbourne, being a first home buyer is really bloody hard. There aren’t really any bargain suburbs left, even on the outskirts.

But if you look elsewhere, median house prices look far more manageable. Perhaps it’s just out of town, like the Central Coast or the Bellarine Peninsula. Or it might be regional, such as Wagga Wagga or Ballarat. Or a smaller capital city such as Hobart or Adelaide.

I am not giving you hot tips on all of these as investment property destinations. I’m simply naming places where you can pick up a house for the price of a small garage in Sydney.

How do you work out where to buy? Well you can do a ton of research yourself, looking at the supply and demand drivers. Talk to people in the area. Visit it for yourself.

Or you can work with professionals whose job it is to research these things, and provide recommendations.

I am most definitely NOT talking about the guys who try and spruik you an off-the-plan development in the outskirts of a holiday town.

No, I’m talking about real professionals whom you pay for their services. Like any such adviser, choose carefully, look at their results with other clients and use your bullshit detector. But for the clueless or nervous, this can be a useful way to avoid buying a dog of an investment in a far-flung place.

Family Guarantees – This approach works where you have the ability to service a loan (i.e. a decent income) but trouble saving a sizeable deposit. Your parents can use the equity in their own home to act in place of a deposit. Say you have 5% saved for a $500,000 property, but need 20%. They promise to cover the missing 15% if anything goes wrong and you default on the mortgage.

This is different to just getting a lump sum gift from the parentals (let’s admit, that’s the dream solution). It means they don’t have to actually come up with the cash (unless things go wrong – see below).

Of course there are risks involved. The biggest is that you default and the lender demands some or all of that money your parents promised. Some lenders also require the guarantor (i.e. your folks) to cover the mortgage repayments if you fall behind yourself.

And lenders will generally require the parents to get independent legal advice before going ahead, so that’s an additional cost.

You’ll still need to prove your ability to save and be a responsible adult – lenders want to see proof of ‘genuine savings’. But family guarantees can get you into your own place sooner and avoid the cost of Lenders Mortgage Insurance (which banks hit you with if you have less than a 20% deposit).

Play the long game – Maybe it’s going to take you five or ten years to cobble enough together for a home. But in the Monopoly game of life, that’s not actually very long. If you live to 85 that’s less than 10% of your life!

It drives me nuts when I hear people say things like ‘well I’ll never afford to own property so I’ll just spend my money and enjoy myself’.

No! Just because you can’t afford it now, doesn’t mean you can’t ever afford it.

First of all, there’s the power of compound interest: 10 years of slow and steady socking away will actually see you get some free money in there too.

Secondly, just because you earn this much now doesn’t mean you will forever. You can climb the ladder, increase your education, change career, start a side hustle, marry money … ok scrap that last one. But seriously, there is always an opportunity to do more, be more and earn more than you do now. So don’t rule out a big goal.

The hardest part in a long game is staying motivated. If your timeline is five years, saying no to another overseas trip or buying clothes from Kmart instead of Lorna Jane can get old real quick.

So, don’t be afraid to do things like set SMART goals, make a vision board (as cheesy as it sounds) and track your progress regularly. Hey, maybe even ‘treat yoself’ to a reasonably priced reward when you hit milestones.

I have a plan to pay off my mortgage in 12-15 years (depending on what interest rates do), so some of this stuff will be going on in my little world.

I have specific and aggressive retirement goals, and this is what will keep me from making poor decisions about money.

I’ll never give up martinis, but will I drop twenty bucks on them in a fancy bar? Hell to the no! (I will totally make them at home.)

Oh hey, homemade martini!

That’s because I have done the numbers on repayments, and I know that paying an extra $250 a month can cut five years off my mortgage. And then I think about not having to get up and schlep to an office five days a week, because I’m doing my own semi-retired thing, and it motivates me!

So, my message to you is: don’t despair! With a clear goal and some good behaviours, you too will one day have the pleasure of telling your property manager to get fucked. (Note: this only happened in my head, not out loud).

 

 

 

The lazy girl’s guide to making money

One of the burdens of modern life is choice.

Choosing how to spend your time (Facebook, or read a damn book?). How to spend your working years (I’ve spoken to three friends this week about their career dilemmas). How to spend your emotional energy (obsess over 3% body fat gain, or not?).

And nowhere is this more prevalent than deciding how to spend money. So many things seem pressing or important.

We buy stuff because we are used to the instant gratification of retail therapy.

The pressure to look hot, young, thin and hair-free  sees us scooting into salons to address our perceived shortcomings.

And the social groups we move in demand a certain level of spending, on everything from dinners out to expensive hen’s days.

No judgement about any of these things. We are all at the mercy of these forces. (God knows I think far too much about botox on a bad day.)

A very tempting – and understandable – response to this is to minimise the choices we make. In other words, choosing not to choose.

This is not an ideal plan. 

You know the 80/20 rule, right? AKA The Pareto Principle. It says you get 80% of your outcomes from 20% of your efforts. (Nice easy summary of it here). Like, 20% of your wardrobe gets worn 80% of the time; 20% of the people in your company do 80% of the work. And so on.

The same applies to your money. Not in an exact ‘whack out your calculator’ way, but in a general sense of doing a few things right can have an outsize impact.

So, here I offer unto you: the lazy girl’s guide to doing the right thing with your money.

Tip 1. Start retirement saving early – The magic of compound interest means the earlier you start, the greater the gains and the less the pain. I know, super is boring and you have to pay of home loans and HECS debts and stuff.

But here are some amazing numbers. Laura is 30 years old and already has $30K in super. She’s earning $75K annually, and putting the standard 9.5% of that into her super. If she works for 30 years, she will end up putting just $213K of her own money into that nest egg.

But she will end up with over $1.1 million!

That’s because most of the money comes from compound returns – the light pink bars in the graph below. This is a simplified version of retirement saving: in reality, her salary will go up and down, and her rate of return will too. But it gives you the picture.

Now, if Laura puts in just a little extra – say 12% of her salary – she will end up with $1,321,429 – an extra $212,000! That’s a lot you can spend on a round the world retirement trip, just by putting away a couple of hundred extra every month.

MoneySmart.gov.au Compound Interest Calculator

 

 

 

 

 

 

 

 

On the downside, if Laura takes four years off work to have some kidlets, then she only has 26 years to work that magical compound interest. So, her total nest egg goes down to $791,566. Yep, instead of $1.1 million.

Again, that’s simplified, because the amount would actually depend which years were taken off, and where in the savings cycle she was up to. But it illustrates the reason there is such a huge retirement savings gap between men and women (like, close to 50% I’m sad to say).

So, the action points here:

  • Add a little extra to your super as early as possible – ask your payroll peeps about salary sacrificing.
  • If you are off work or going part-time, your spouse/partner can make contributions into your super and may get some tax benefits too. (Nice summary here)
  • Another option, if you’re on a low or part-time income, is to make an after-tax contribution of up to $1,000 to super and the government will contribute 50% to match it – up to $500. More on that here.
  • For goodness’ sake, please roll all your super into one account! Paying multiple fees and insurance policies is like standing in the shower tearing up hundred dollar bills. Most funds do it all for you these days, so pick your fave fund and get in contact. The difference at retirement could be tens of thousands of dollars!

Tip 2. Pay down debt faster – This applies to all debts, from credit cards to car loans. But I want to talk about the biggest, hairiest debt: your mortgage.

A quick play on an Extra Repayment Calculator shows that on a $400,000 home loan, paying an additional $250 per month would mean:

  • You save almost $52,000
  • You pay off the loan 5 years and 7 months earlier[i]

 

Think you can’t afford that extra money? I challenge you to find it.

  • It’s  you and your partner not buying a coffee every day (yep, for realz – $8 x 30 days = $240).
  • It’s cutting your grocery bill by shopping in bulk or somewhere like Aldi (did you read this post?).
  • It’s getting your hair done differently so you go every three months instead of every six weeks (I did this and it changed my life).
  • It’s putting on your big girl pants and not buying shit you don’t need, three times out of four (the fourth time, well, hey, we are all human).

Whether it’s a hundred bucks or a thousand, looking for ways to chuck extra money into your mortgage puts you so far ahead. You can either get out of debt faster, or leverage the equity you build up to invest in another property.

Find a better deal – On the loan mentioned above, you’d save $33,683.69 over the life of the loan, by moving from an interest rate of 4.04% p.a. to a loan at 3.63% p.a. (yes, these loans exist).

Plus, you’d be paying almost $100 less as the minimum repayment each month. That’s money you could either have in your pocket, or ideally, pay off as an additional amount.

Yes, refinancing means a lot of paperwork, but get a good broker and they do the hard work for you. Whatever you do, don’t pay the ‘lazy tax’ by staying in an expensive home loan.

Use your offset or redraw – These work in slightly differently ways but have the same effect: they reduce the amount that your interest is being calculated on.

If you think about it, 4% of $100,000 is much less than 4% of $150,000. So, you want to be paying interest on a smaller principal amount.

Redraw – this lets you access any additional funds you’ve paid above the minimum repayment. Say you’ve paid an extra $5000, you can get it out in an emergency (a real one, or ‘I need a holiday before I kill someone’).

Offset – the balance “offsets” the interest charged on your mortgage.  Say you have $10,000 in an offset and $300,000 on your loan, you only pay interest on the equivalent of $290,000.

It’s similar to the redraw but a bit more dangerous because it’s easier to access. Often a redraw takes a day to process, whereas you can have an offset mixed up with all your normal bills and banking.

Even if you don’t have a mortgage, you can apply a lot of this thinking to your saving.

For instance, look for better deals on the interest you get paid – or even look at other types of investments depending on your timeframe and goal. (Check out this post for some tips).

Track your money and expenses so you can find extra savings. And always pay yourself first. Just like you pay your mortgage repayments before everything else, your savings should go into a different account before you even see it, hold it or think about spending it. Ideally in a different bank!

Start early. Pay off debt. Sounds simple huh? It is in theory, but can be hard in execution. If you’re not convinced you can do it, maybe part of the challenge is to tweak your attitude to money.

May I recommend one or two posts I’ve prepared earlier?

Mindful spending – what it is and why it matters:

https://fiercegirlfinance.com.au/2016/08/28/mindful-spending-what-it-is-and-why-it-matters/

What’s holding you back from being Fierce:

https://fiercegirlfinance.com.au/2017/05/01/whats-holding-you-back-from-being-fierce/

That’s it. Now go forth and be fierce.

4 tips to help avoid a spending blow-out

Do you ever feel like there’s an devil on your shoulder convincing you to spend money?

I’m not sure if it’s the same devil who says ‘yes, you need another shot at 1am’, or just a close relative of hers.

Either way, these evil little goblins like to ruin your bank account or your Sunday morning. But we don’t have to give in to them every time.

There are ways to tame the devil on your shoulder when it comes to spending.

1 – Remove temptation – There’s a difference between allocating extra funds to your mindful spending, and simply giving in to bad habits. (If you haven’t read this post, I recommend it).

Mindful spending is where you think about what’s important to you or brings you the greatest pleasure. For example, I spend an outsize amount on fitness because it makes me happy and is good for me. But I don’t buy designer clothes or eat at expensive restaurants. I give myself permission to spend on the priority.

This is not the same as the ‘treat yo’self’ mentality. Buying an expensive pair of shoes is only mindful if you’ve previously decided that it’s part of your Mindful Spending Manifesto. You’ve accepted that expensive shoes make a positive difference to your life, and you’ve cut back on something else to allow for it.

Something that seems to permeate our culture is a sense of helplessness in the face of spending. Yes, shops are good at marketing. Yes, we all have moments of weakness. But unless you have a legit mental addiction (in which case, you should be in treatment),  managing our spending should be something we work on with the same fervour as we work on our diets.

So, if you love expensive shoes, don’t go into that shop. If you overspend on boozy nights out, don’t take your card with you – make a cash budget and stick to it. If you can’t be trusted on the ASOS website, don’t click into their newsletter – which brings me to the next point…

2 – Reject reminders – I’ve heard two different people say recently that their worst habit is getting a newsletter from their favourite store, then splurging as a result. “It’s my weakness”.

Well this might sound obvious, but how about you unsubscribe? I’ll admit, these stores are clever. You can’t go to any e-commerce site these days without being offered ‘15% off for subscribing to our newsletter‘. What a bargain you say!

Sure, give them your email and get the coupon. But that’s it! No more. As soon as their welcome email hits your inbox, hit that ‘unsubscribe’ button faster than a Kylie Jenner lipstick sells out.

And if you’ve already got a bunch of these emails hitting you up, then spend 10 minutes – right now – getting them out of your life.

While you’re at it, you probably need to unfollow them on Instagram too. I know, I’m mean. But will your life really be worse because you haven’t been invited to ‘shop the new season look‘?

3 – Get off the spending merry-go-round – AKA: avoid recurring costs.

I love a Shellac manicure with all my heart. Those colours! That staying power! But I have no Shellac in my life anymore, because that shit is a revolving door of gel polish, UV light and acetone baths.

Even if you just want it for an event, you have to go back a few weeks later to get it taken off. And then while you’re there, you may as well get a new colour … and then boom! You’re back on the spending cycle. (And the impact of acetone baths on one’s health is also kinda questionable).

The same can be said for a lot of hair and beauty treatments, but also things like those ridiculous subscription boxes. Like, you really need a box of random beauty products every month? Puhlease. Tell those charlatans who’s in charge of your spending, thank you very much. (Hint: it’s you)

4 – Get smarter than the finance companies – One of the wonders of modern life is how it thinks up new ways to make you buy shit you don’t need. We’ve moved on from the old-skool credit card.

Now, we have Afterpay and zipMoney. Sure you don’t pay interest (although there can be late fees). But it takes a purchase that’s otherwise unaffordable or ill-advised, and puts it within your reach.

It breaks down the mental barrier of ‘my cashflow can’t deal with this‘.

So my advice here is simple: don’t use them. Don’t sign up to them. Don’t create an account (or cancel the one you have).

At the very least, give yourself 24 hours to consider a purchase using it. You’ll be surprised how often you change your mind.

Another trap is the credit card balance transfer. ‘Move your debt to us‘, the banks say. ‘Pay no interest!‘, they say. And you think ‘right, this is the time when I stop adding to the balance and pay off all my debts’. 

If that actually happened, these things wouldn’t exist. It’s a trick. You sign up and spend more.

If you really are paying a lot of credit card debt off, and being slugged with interest, you get ONE GO of moving to a no-interest card. Then you ditch it. Freeze it, stash it with your parents, hide it somewhere. Whatever you do, don’t give yourself room to add to that card – all you’re allowed to do is pay it off.

And that, my friend, is how to slay the devil on your shoulder.

Photo credit: https://www.flickr.com/photos/devignelements/

You have 300 paydays left. Seriously. So, what’s your plan?

Last week, I ruined everyone’s Friday by dropping this truthbomb.

Seriously, if you’re in your 30s and plan to retire in your 60s, you don’t actually have many paydays left.

It’s easy to work out (if you get paid monthly). Pick your imagined retirement age, minus your age now, and multiply by 12. Because I have aggressive early retirement plans (and am kinda old), it’s an even lower number.

Yep, just over 200 times to wake up and feel rich for three days. 200 times to scour my payslip working out how much leave I have accrued. 200 times to go down Pitt St Mall feeling like a baller.

That’s not really many times at all, in the scheme of things.

And if you’re planning to take time off to raise kids, then you can minus out at least 6 of those paydays,  and maybe a lot more.

So, now that we have all had a moment to face reality, let’s talk about what we do with this information.

Running the numbers

Our time in paid employment is a gift. Not just to our smashed-avocado-loving selves of today, but also to our future, chilled-AF party selves. We are all Baddie Winkle, somewhere in the future, drinking with Miley Cyrus.

Instafamous nanna, Baddie Winkle

How do we do we achieve this? We take charge, that’s how. We do a mutha-effing BUDGET! Woot!

Ok I said that in an excited way because I know you’re about to hit snooze. But go with me here.

How to do a Budget that doesn’t hurt your head or induce anxiety

A budget is all about giving you data that makes you better at decision-making. And information is power! So, I recommend a combination of:

  1. MoneySmart’s great online budget planner (click here), which sets out all the costs you have right now. You can choose weekly, monthly or annual for each item, and it averages it all out for you.Then you can run it as a monthly, quarterly or annual budget. It even gives you a pie graph – awesome!
  2. MoneySmart’s TrackMySpend app (in the App store or Google Play) – record everything you spend, and I promise you shit gets real very quickly. You can just do it for a month if you like – but it gives you powerful data.

Once you have this data – a combination of ‘forecast’ and ‘actual’ numbers – you can make informed decisions. In particular:

  • What does it cost to be me?
    These are your fixed costs. A useful way to think about this is to have different versions – the ideal you, the average you and the bad you. Kinda like Kylie Minogue in the awesome video for Did it Again.

    My ideal budget is when I don’t buy three pairs of boots at the Wittner sale (they were super cheap) and don’t have Priceline accidents (when you go in for Panadol and come out with three new lipsticks). My average budget is when I actually do those things.

    And my bad budget is when I buy stuff I don’t need due to premenstrual angst or emotional turmoil. To be honest that version of me has been tamed  these days, so I usually fall into the first two. And my latest budget has Priceline accidents built into it.

  • What’s a reasonable savings goal? 
    There is no magic number for this. At least 10% is good, but if you have done your real budget (the average you) and there’s genuinely not enough left over, then do 5% or whatever. If you can do more, then happy days! The key is to do something.
    Also, it may not even be real savings at this point – it could be paying down bad debt like a credit card. Or, at the other end of the scale, it may be going straight into an investment like a managed fund or ETF (more on that here). In any case, it’s the money you allocate to being a responsible adult who does sensible things with your future self in mind.

And once you’ve answered these questions, you can feel more in control and less like ‘it’s all too hard’. Simples!

Bad at saving money? Here’s why – and what to do about it

I got asked today ‘how do you have the discipline to diet?’.

Since I was eating a Bounty at that moment, I’m not sure why. (To be fair, it was a piece of someone else’s Bounty, so there are obviously no calories.)

My response was that it’s easier if you have a reason. In my case, it’s so I can compete in powerlifting in a lower weight class.

It’s the same with money. Another friend asked me, ‘What if you just can’t save?’. To which I answered the same thing: you need a reason.

AKA: a goal.

Goals, I know! So lame and hard and too much like adulting.

I’m not a massive goal-setter myself, but I have forced myself to create some clarity about where I’m going. So then I know how to get there.

Just before you get bored and switch off, let me offer you a gift. We’ll come back to it shortly.

Click here to download your printable A4 worksheet

Why do you need a worksheet?

So we can put the ‘plan’ into financial planning.

I know, a lot of people don’t trust financial planners. There are good and bad ones, just like any other profession. We’ve all had a hairdresser who takes ‘just a trim‘ and turns it into ‘radical hair makeover so you look like a lesbian biker‘. (Don’t get me wrong, I love lesbian bikers – I just don’t necessarily want their haircuts).

However, I’ve been having a conversation with a mate who’s a financial planner, and he messes with my head because he’s all about ‘plans’.

I would ask him ‘should I buy a property to live in or invest in’ and he was all like ‘well, what’s your plan?’.

I don’t know! I’m in my late 30s, divorced, childless. So far, all the ‘plans’ I made 10 years ago haven’t really turned out.

But that doesn’t mean I can get away without one. Without some goals, I don’t know where to put my money or how much to save.

And if you don’t know the destination, how will you know the how to get there?

Sometimes, choosing the destination is the hard bit

People often ask me about what to with their money. I can’t  tell them specifically (partly because I’m not licensed so it’s illegal). But I do ask them ‘what’s the goal’?.

Is it  saving enough for a property? Is it having enough to travel? Maybe it’s just being a bad-arse with a backpack and a round-the-world ticket (oh hey Betsy, how’s Iceland?).

Tactics are useless without a strategy. And a strategy is nothing without a goal.

If you’re  like me though, you find big life planning stuff daunting at best, terrifying at worst. But don’t worry, Fierce Girls, I got ya.

I came up with questions to help you create some clarity. And then I made a fucking worksheet! I know, I am crafty AF.

Doing the worksheet

Now, you can do this and not necessarily come up with a special number. You know, a savings goal or something. That’s a topic for another day.

But you will think critically about the factors that shape your decisions. So the questions in the worksheet are (and you can totally pick the timeframe that applies to you):

  • Where do you want to be __ years from now?
  • What things do you want to experience?
  • How will you spend your time? Who with?
  • What will you own?
  • What is a must-do or must-have?
  • What can you give up or cut back?
  • What is the ‘why’?

When I did this exercise, I came up with a general plan that I don’t want to be a full-time, salaried employee much past my mid-fifties. I want to write books and hold workshops and coach people and be generally useful. I also want to travel as much as possible.

So that means I have about 15 years to build wealth, take holidays, smash a mortgage and sock away superannuation. Scary huh?

It also means I can give up expensive cars, too many clothes, and general unnecessary ‘stuff’. When I am considering a purchase, my decision tree is something like ‘Could I better spend this money on my trip next year?’ or ‘Wouldn’t I be better to chuck this into my mortgage?’.

Of course I won’t be perfect. But I have a plan and sense of direction. And then everything else is easier from there. Try it yourself!

Next week: The Track Your Spend challenge: finding where your money goes and working out how to save more of it. Yep. I’m gonna make another worksheet. It will be amazing.

 

The secret to guilt-free spending

Sounds too good to be true huh? Like the promise of diet cheesecake or hangover-free wine.

But I spent a whole day with a guy last week, who I can only call the Money Whisperer, and he explained how it was possible. Plus, he was so full of good sense that I had to share some highlights with you.

Steve Crawford, from Experience Wealth, has built a whole business wrangling the errant wallets of ladies like us (or me, at least). Gen X and Y, mainly professionals, often in media and finance. We all earn good money but somehow it slips through our fingers faster than we’d like.

So, he is a Money Coach. That’s actually a thing (that people pay for, not just me scolding you for free). I’ve told him he has to do an interview at some point, but in the meantime, let me paraphrase one of his concepts.

Banking – sooo boring. Or is it? 

I know, setting up bank accounts sounds so dull. But it’s all about earmarking money in a way that makes things more organised, and less tempting.

This is essentially how I do my banking, and while I am not perfect, it certainly keeps me in line. Steve has helpfully refined it and given it better names. I, however, made that fancy little graphic.

The Banking Buckets

These are the key elements:

Main account – your pay goes in here and pays all those annoying fixed costs, like rent and bills. You pay the Boring Bills straight out of here, with direct debits.

Storage – this is money you know you’ll need later, but not right now – in other words, short-term savings. This is the most ‘sensible’ account – the one that grown-ups have because they know car rego is due in January and they don’t want to put in on a credit card. I’d also argue this is the hardest one to nail – but still, we have to try!

Hot tip – have this one with a different bank, so you don’t see it and remember it every time you log on to internet banking.

Savings – This is the long-term stuff – the home deposit, the potential share portfolio, or the emergency fund (real emergencies like your car breaking down, not needing to buy new moisturiser so you can get the Clinique gift-with-purchase). This should be in a high-interest account with no card access – meaning you can’t get drunk and dip into it at 3am in the casino.

Spending – This is the guilt-free account. Sadly, you can only put money in there after filling up the other three. Sucks, I know. BUT – whatever is in there is totally guilt-free. Spend it on hookers and coke, if you feel so inclined. Jokes! We don’t need to pay for sex. Or coke, for that matter.

This account is like when your mum let you have ice-cream for dessert, but only after eating all your vegetables at dinner.

Once you’ve done the sensible things, then you do the fun things.

How much goes in each account?

That’s quite a detailed discussion for another time. But briefly:

  • make sure you work out the Boring Bills stuff properly – and don’t forget to shop around if they seem unpleasantly high
  • give yourself a decent Storage buffer, as that’s where the big costs often come from
  • be realistic with Savings – even just a little bit is far better than nothing at all
  • make Spending somewhere between what you’d really like to play with. and what you realistically can afford.

And if this all sounds like a great idea but you don’t where to start, you should give Steve a call. He will make rude jokes about Sydney people (he has a habit of saying #sosydney in conversation), but other than that, he’s the real deal.

photo credit: suzyhazelwood DSC01149-02 via photopin (license)

Don’t panic! Well, actually, panic a little.

I’ve been at the coalface recently.

Not literally digging up coal and stuff, but hearing the stories of everyday Australians and their money challenges. I now work for a large financial planning and mortgage business, so I see lots of different ways people are winning or losing the big Monopoly game of life.

So here are some things I really want to tell you.

We are entering uncharted territory, in terms of our economy and society.

We are going to have far more people, living far longer, with unprecedented levels of debt.

This sounds like a big, impersonal statement, but has a lot of implications for each of us as individuals.

For example, if you’re Gen Y or X, like me, your parents could well be retired for 30-40 years. They will likely spend their retirement savings on their holidays at first, then their general living expenses and then aged care (which is bloody expensive). We, their kids, will be lucky to get much of an inheritance.

Key takeout: We will have to look after ourselves one day.

We are buying homes later and paying more for them.

Australians are going to have mortgages for a long time, and many people will limp into retirement (or some form of it) with a debt.

This hit home to me when I was talking to the head of our financial planning business.

I’m trying to work out whether I buy a place to live in, and he’s asking me all these hard questions like ‘what do you want to do in 10 years’ (I don’t know, other than it probably involves Botox).

And then he said, well, what if you retire in your 50s? (Unlikely, I’ll concede, but my dad managed it at 53). Will you want to still have a mortgage? And then it dawned on me that if I get a 25-year mortgage I’ll have it in my 60s!  What the actual fuck.

Now of course I can get a small mortgage and pay it off sooner. But if I do the minimum, that means I’ll literally be in debt for decades.

The age people my age can access super is 67 (aka ‘preservation age’), so I couldn’t even tap into my super to pay off that debt until then. (Which is what people are doing more and more, then having not much super left to live on).

Key takeout: We should probably rethink our retirement age and smash our mortgages as fast as possible.

Maybe you can’t afford the home you want, right now. But you can probably afford a home you don’t like, in a few years.

I know, that’s confusing. Why would you buy a house you don’t like?

I have said before on this blog that buying property isn’t the ultimate be-all and end-all to life. Certainly that’s the case when we’re younger. But nobody really wants to be old and homeless.

There’s a growing group of under-40s who despair of ever getting into the market. But that’s because lots of us want to live in expensive places like Sydney.

One option is to buy an investment in a more affordable place – often regional cities – and sit on it for a long time. Most people who have ‘dream homes’ didn’t start with them. They upgrade over time.

The key is to do something, as soon as possible. What scares the hell out of me is the idea of not owning anything in old age.

I heard a customer story the other day about a couple, in their 60s, owing hundreds of thousands on a home loan. Their combined income was less than $75K per annum, both casual. They may never pay off their property. Or the husband might die and leave his wife on her own earning $19K a year. Yep, these are real people and I have no idea of their backstory. But I really don’t want any of my Fierce Girls to be in this position one day.

Which brings me to my final key takeout: Please start soon. Actually, start now.

Start what? Saving, being serious, investing, adulting, not wasting money on crap. The sooner you build a foundation of wealth, whether it’s a little share portfolio or a savings account or a cheap investment property, the sooner you are giving yourself a bedrock for the future.

And the power of compound interest means the sooner you start, the less painful it will be. Don’t put off the idea of wealth building, even if it  means starting small.

And if you’re not sure where to start, then have a look through the extensive Fierce Girl archives. Because the blog is about to celebrate its first birthday! Yay! So you have a year’s worth of fierce tips to work with. Enjoy! (Now that I’ve scared the shit out of you haha).

Photo credit: https://www.flickr.com/photos/cedwardbrice/ 

Top 3 tight-arse meals for the week before payday

As a tight-arse from way back, I hate spending money on work lunches.

And as a weightlifter, meal prep and Tupperware containers are 80% of my life. So I can teach you a thing or two about high-protein, low-cost meals.

First of all, let me just recap the numbers on work lunches. Say you buy lunch twice a week and it costs you $12 each time. You work 48 weeks a year, so that’s $1152 a year on burritos and sushi. If you cut that down to once a week, not only does buying lunch become a fun treat, it will save you nearly SIX HUNDRED BUCKS! You could spend that on shoes or investments or savings – whatever.

But I know, you don’t have time to prep lunches because you have kids/drinking sessions/work events/Netflix commitments.

So here are my foolproof ways not to end up in the food court, being fleeced for a bento box … especially if you have too much month at the end of your money.

The Ultimate Pantry-Freezer Lunch: Tuna Special

I thought everyone knew about this, but apparently not. And not everyone knows about the special secret ingredient either. It’s pretty simple:

  • A tin of tuna (I use the 180g ones, because gainz)
  • Mixed frozen vegetables (Aldi – $1.79)
  • Rice (you can use the microwave packets but I think they are wasteful and exy, so I cook a couple of cups of brown, black and red rice on the weekend – lasts a week in the fridge)
  • Secret ingredients: sesame oil and soy sauce

You chuck a handful of the veg in a container (to defrost during the morning) then add your rice, a tiny splash of sesame oil (seriously, go easy on this stuff, it’s really strong – no more than 1/2 teaspoon), and a small slurp of soy sauce.

At lunch, heat in the microwave for a couple of minutes, add the tuna, heat another minute or so. This will cost you about $2 AND make you feel super healthy and virtuous!

Looks way special, huh?

The Ultimate Make-ahead Freezer Lunch: Mince & Veg Extravaganza

I eat this for breakfast every day, but some people think that’s weird. (Those people haven’t been doing squats before work, obvs.) But it’s a great lunchtime option especially if you want a hot meal. It’s based on:

  • Beef mince (I use 1kg but you could use 500g if you’re a pussy)
  • 1 Onion

Chop the onion and cook it on medium heat. Turn heat up to full and brown the mince. Now add a bunch of spices. I don’t measure anything, but if I did I guess I’d use about 1/2 teaspoon of each:

  • Ground cumin
  • Ground coriander
  • Sweet paprika
  • Smoked paprika

And whatever else I feel like. Cook them up with the mince for about 1 minute. Then throw in (for 1kg mince):

  • 1 tin whole tomatoes
  • 1 tin crushed/diced tomatoes
  • Quarter or half a jar of passata

Again, you can play with these quantities. Just depends on how thick or saucy you like it. You can also skip the passata and just add more tomatoes. It’s all very fluid.

Then you add in all the vegetables (especially old, dying ones) in your fridge.You can throw them in a food processor or chop them by hand. I like some combo of:

  • eggplant (diced)
  • carrots
  • zucchini
  • broccoli (srsly – just chop it into small pieces)
  • kale or spinach (I often use frozen portions – $1 a pack!)
  • brussel sprouts (sliced or pulsed in the food processor)
  • mushroom
  • capsicum
  • choko (if you have an aunty or nanna who grows it)

Throw in a good pinch of salt and pepper then simmer for at least half an hour – til everything is soft (the eggplant seems to take the longest). Cool it down a bit (don’t leave it out too long if you don’t like salmonella), put it in little containers and pop in the freezer.

I use the dedicated Tupperware freezer range, but the cheap stuff or even snap lock bags do the trick. Then when you tell yourself you have no food for lunch, grab these little lifesavers and let them defrost all morning. Simples!

Also good for late-night, I’ve-been-at-the-pub dinners.

The Ultimate Lazy Girl’s Low-Carb Frittata

I’m almost embarrassed to tell you about this one, it’s so easy and cheap. It’s our old friend the Frozen Mixed Vegetables and a packet of frozen spinach.

  • Defrost the veg (in the microwave if you have one, on the bench for an hour if you have allocated the microwave nook to protein powder, like me)
  • Whisk up some eggs. It depends how big your oven dish is. I have a loaf tin that takes 8 eggs to fill. Just play with what you have. If it’s not non-stick, try lining it with baking paper to avoid egg mess.
  • Now I add some egg whites from a carton. You buy them from the fridge at the supermarket but they are always in hard-to-find places, and I end up asking.
  • Add a sprinkle of chilli flakes if you like them, into the eggs.
  • Lay the veggies out nicely in the dish and pour over the eggs.
  • Baking time depends on how deep the dish is and how many eggs. My loaf tin takes an hour. A flan or pie dish would be about half that.

 

cheap meals Before…netflix … And after

 

This version gives me enough for a 4 days of eating. Just depends how hungry you are. Have a side salad with it and it feels more satisfying (I’m talking some baby spinach and cherry tomatoes – nothing fancy or hard).

And that’s it my friends! No more excuses for not taking your lunch to work. Also, you will be healthy and feel virtuous – and who can put a price on feeling smug?

photo credit: gborin Hang on little tomato via photopin (license)

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