Hey fellow traveller!
It’s Journey-Man here again,
I was listening to someone this week, talking about living life the way we should and he mentioned ‘Passion’ – he said that we need to live our lives purposefully, with passion. I know exactly what he means and I decided that I need to be attacking my personal finances with passion and on purpose. So this is the week for action.
It is important that as you follow along with me, you understand that knowing isn’t doing. If I just know I have a problem but I don’t do anything about it I will always have that problem.
I have to do something! You need to do something!
Having done some research I have decided that I need to do a few BIG things to make sure that I attack the financial problems that I have created. These BIG things are 1) start saving by setting up an emergency fund, 2) become an expert on my own bank accounts and 3) start understanding and sorting out my debt.
I will be paid in a few days so I have set the following goals for this month:-
I set these three goals because I started working on my finances on two fronts this week. Firstly I want to understand my spending so that I can work out exactly what my debts are. Secondly I want to start setting up an emergency fund.
I am going to deal both of these in this article because I have learnt so much about both and I believe that there is real value in dealing with these two issues as quickly as possible.
We have a few really good articles on WellSpent about emergency funds and how to go about setting one up. After spending some time looking at the best way to proceed with rescuing my finances, I now understand that I really do need to set up an emergency fund. I am going to do just that. But how much will I need and where will I get the money to do that?
Firstly, because I want to set up an emergency fund (which means I have to actually save and set money aside) I need to know (really know) what I am doing with my money, what I am spending and, most importantly, how much I am wasting. I want to turn that potential waste, into savings.
And that brings us to the word that we all seem to hate – ‘Budget’.
If I am going to set up an emergency fund, the first thing that I need to do is to sort out a budget and that is going to take some doing because I have had my finances on ‘auto’ for a long time. I mentioned, for example, in a previous post that I don’t really know what debit orders were coming off my accounts; that is an indication of how much attention I have been giving my savings!
So this week, in anticipation of setting up a proper budget, I downloaded all of the statements, from my ‘savings’ and credit-card accounts. Once I downloaded the statements I spent a few hours analysing the transactions; what a revelation that was!
I have been paying for things I don’t use and I have been spending money on things that I don’t need.
As I looked through my accounts I realised that there is indeed scope for radical change. Here are some of the things I have done:-
Maybe you think that because you have started late, analysing your spending, setting up an emergency fund and planning a budget are wasted time and energy. Maybe you believe that because you are starting late you need to bypass these fundamentals but can I suggest (and again, this is not advice – you need to speak to a professional) that it may just be the best thing you can do, regardless of how late you have left things.
I sincerely believe that I am a late-starter because I never attended to the fundamentals of savings and investments – so I am going to do just that, persistently and consistently.
I have given myself thirty-six months to make radical changes and to save more than I have ever saved before. My goal is to use these next there years to build a solid foundation, rid myself of bad habits, learn new habits, soak up as much knowledge as I can (I want to do this so that I can share this knowledge with my kids).
So as I start the journey I have mapped out the beginnings of a plan which includes:-
I think that I have started on the right path, to be honest I have read so much and thought so much about my finances that I find it difficult to get it all across in a single article. I want to note that some of the other things that I am thinking about and working towards include working more closely with my wife on our finances, looking at increasing our income, starting a small business again, opening TFSA accounts for my children and setting up an RA. All of these will be covered as we journey together. I hope that you will keep following me.
Here are a few things to read about and think about this week:-
Do something, now!
Until next time