LIVING ON OWN TERMS

living on own terms

My past two blog posts scream boredom. Whats with mourning about one's boring life and lack of exciting shopping. I worry about me sometimes and so does my hubby. But today is a better and sunny day. I look at how I am living on my own terms and how a silly game defined my goals and drives me to what seems to be my financial destiny.
It all started with a fear. I know hey!!! Its amazing how fear defines ones goals. The fear of drowning may lead one to a swim school, we escape poverty by getting education, we exercise to flee ill health and so on. Most of these are just reflex actions. We never think of why we want to learn swimming, we just know that we wish to be able to swim. Fear is the most efficient push for us to achieve our goals.

I remember it vividly when, in my 20s, a friend forwarded me one of those irritating emails with questionnaires. An email I would never read to the end with my hectic schedule today, I completed with accuracy like I was sworn to telling the truth and nothing but. The two questions that are lingering in my memory include the one about how many times I did a driver’s test. Why do they even ask that question? Then came the question that set a crystal clear and ultimate personal finance goal for me: What is your greatest fear? I didn’t take time to think about it, I typed immediately without any hesitation. “Working for someone until the age of 60”.

Odd as it may sound, this was my fear then and still what defines my personal finance goals today. I have nothing against people’s choices to hold jobs until age 65 or later. It’s just not for me. I am fortunate in that, I have always loved my jobs and enjoyed every benefit that came with them. Two paid maternity leave periods, a pension contribution by an employer, medical scheme subsidy, a pay-cheque and again a pay-cheque. I am so grateful for having had job opportunities and will attribute chasing my goals to them. However, even when I was referred to as a permanent staff member, my understanding of a job has always been a temporary one. I subscribe to the new location independent school of though. I don’t take well to being told what to do, when and where. I would be happy to do my job in the middle of the animal park and do my eight hours from 11 am to 7 pm. Thats how this new generation of independent and self employed felas think. You will notice a few other similarities that are found in this fascinating group of thinkers. 

A new independent generation:

• Works from anywhere and in their own terms, taking advantage of the digital era. If not they are working towards that. 
• Has the power to decide whether they retire early or go to work for the love of the nature of the job they do. They live on a fraction of their income and stash the rest in a diversified portfolio, to ensure that they buy that power. 
• Works harder on building and growing a side/ passive income than a promotion because they know that that’s what will sustain them eventually. 
• Is in control of their lifestyles and not the other way round. They are not trying to fit in with any group, but are happy in their own skin. They will drive the car they can afford comfortably irrespective of what their peers think. They are in the class of their own.  

There is off course an alternative, which is following the crowds and the conventional way of thinking. The current generation crowd will not retire at 55, not at 65 or 70. They will not have the luxury to retire period. Pension funds are soon becoming a thing of the past. Which group are you subscribing to? The choice is entirely yours.

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SPENDING RESPONSIBLY IS FOR THE WEAK

a frugal housewife

YES, I know that because I am part of the weak. The strong/ brave spend carelessly and to them frugality, which I like to refer to as spending responsibly is for the weak. That's us.

The published statistics by StatsSA shows that South Africans started to spend less during and after the economic recession (2008/9/10...). the result is lowered household debt levels and improved savings. I am actually hoping this is true, and not sort of forced by the fact that people don't actually have jobs and money to splash on luxury goods. I havent been able to observe this amazing improvement in financial decision making from my close friends and family. People have been spending like there is no recession, nor a possibility of losing their jobs. they live like they are dying the next day...

My one horrible ex tenant, with a great job I must add, has left me with a huge debt in rental arrears. We have an agreement for her to pay me the outstanding rentals in installments. to my surprise, she did observe the agreement for the first four months. Being owed money when you owe no one is actually quite frustrating. The truth is that my tenant is in arrears for rental because of her previous financial choices. I never expected her to even honour the agreement. The four months has been a surprise. I was ready to write the debt off and for once use my non existent provision for bad debts account to do so. But when he started to pay every month, I sort of expected the payment every single month. I then started putting it on my monthly budget. And just as I was warming up to it, she stopped. See how frustrated I am right now?

My point is that, the BRAVE will just decide not to pay their debts, and keep making the new ones for as long as they can. At the end of it all, we keep comforting people when they are drowning in debt, losing their apartments, having kids banned from schools, etc, when they actually are the ones who made bad choices. I am not talking about people who lost their jobs or for some unfortunate reasons lost their income. I mean people who, month after month continue to live way above their means. You must know one of those. They are little miss perfect, well groomed, living in suburbs you can only dream of, in a perfectly styled home, with a perfect landscape and a machine that matches perfectly in the garage. Actually make that 2 machines in that garage. I do know a girl like that. Really now, if we have similar salaries with no inherited fortune and I live in a smaller house and drive a modest car, how on earth does she do it? How does she have all that on the same income or less. You can only stretch the rand to a certain limit.

I can think of only one explanation, consumer DEBT. The brave are not going to stay at home and not go dine out with their friends. Whilst at the dining trip, they will have to show everyone they are not cheap, they actually eat the right kind of sushi together with well matured wine. They will even offer to take everyone's bill whilst they use an almost maxed credit card. Most likely, they will be wearing a new designer pair of stilettos and a new hairstyle whilst swiping the card. Then they will force the smile whilst they feel like crying because they don't know how they will pay for the R2500 they just spent on credit card on people they pretend to like. How foolish can one be really.

On the other hand, the weak are sipping on their fresh rooibos ice tea at home playing catch up with the loved ones. They are probably reading a book they got from the library. (I buy books and never go to the library by the way. I wish I did though.) My point is that, its mostly one's own doing that they end up suffocating in debt. If you don't have savings that will last you for at least 6 months in the event that you lose your job, you are living in a glorified poverty. An emergency fund is no luxury, but a necessity. Whilst 10% of your income saved is great, 20% would be amazing. Start paying yourself first and in no time you will be addicted to it. Its not as difficult as it sounds. I have months where I save the whole 65% of my income. Those are rare months but 40% of my income should go towards my investments and savings. That is the reason I drive the car that I drive and don't buy a new outfit everytime I'm invited to a wedding. If its someone else's wedding, I don't need a new colour blocking suit for heavens' sake.

Spending responsibly is actually for those who do it for themselves. Nothing is as painful as keeping up with the Joneses at the expense of your long term happiness. I am yet to see someone happy whilst they drown in debt. I am not lying when I say I sleep like a baby. And I make it a point that I sleep on satin sheets. Its a great feeling being debt free. I know I still owe on my house, but that's about it. I don't know how I would live with myself carrying the amount of consumer debt people I know and love do.
Whats you reaction when you see a guy pulling off in his 15 year old Conquest in a traffic light? Do you frown with pity or think he might just be owning a huge part of the company you work for? In other words, he might be your employer. I always respect people who do the things that bring real happiness. And by that I mean FREE stuff like quality time with family. Think about it!!!

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Wealthy Life is Quite Boring

Wealthy life is quite boring NOT

Exactly as the title states, a road to a wealthy life is quite BORING. There is nothing glam and happening on the way to wealth. Your day is filled with spending less and less of what you make. Not to mention the stares and labels of what a loser you are, how you don't have class. Off course you mind but you are secure in your own skin and understand that building wealth is about discipline. Budgeting is boring, tracking expenditure is BORING. Who cares though, right will always be a bore. A friend once told me that I don't like nice things. Not in a bad way, just stating what she thought was a fact on a particular item I thought was just way too expensive. Too expensive meaning that I cant justify the expenditure at all.

And another friend, advising me to just sell all my rental units and buy a R2Million (should be worth R3M today) house in a very upmarket area and LIVE LARGE. I was a bit shocked, but yes I did go with her to view the house which she was planning to buy, and I fell inlove with it. I loved it for her and thought I cant possibly "afford" a house like that. By afford meaning, that house was not inline with my goals at the time. It still is not by the way. But it was very fine.  Bedrooms wrapped around in a huge balcony. A separate laundry room... and that was a big deal to me then. I now have my laundry corner in my garage and I'm happy with that "laundry room".

Funny thing is that, that same week my husband said to me "how about...we move to a smaller house and just LIVE LARGE". I couldn't stop laughing. My friend just used the same phrase in protest for a huge house and my guy uses it for a small house. My hubby loves boring and wealthy even more, I can tell you that. Makes me love him. But I wouldn't move to a smaller house than I live in. 200 square metres for a family of four is not extravagant in my opinion. Any size of a house is not extravagant when one can afford it, regardless of National Credit Regulation. Yeah, you guessed right, I will define that. Affording means paying for your house and the rest of your expenditure whilst you can still save/ invest and have a secure future at the same time. That's the boring part of wealth. You can't just spend without thinking about the future and defining what you actually mean. And to me, that is NORMAL.

I have had (still do have) a bit of fun and stupidity with my money too actually.

• For starters, I can probably do with fewer shoes and bags,
• I can also do with less jewellery, but I choose not to.
• I shouldn't have paid for the gym membership if I was never gona use it. But I did, twice.
• I didn't need a monthly spa treatment, but I reckoned if I don't spend on excessive out dining, drugs and alcohol, why the heck not,
•  I dont need to go cosmetic shopping when I see the word SALE written in RED.
• Exclusive books, exclusive books, exclusive books. I am learning to buy used books and hopefully use the library too.

However I am so very grateful that I am not:

• Gutting down the kitchen that I bought with my house, because whilst its boring, its relatively new. That makes me feel responsible;
•  Out there shopping for the leopard print boots that I wish I had so badly;
• Spending all my hard earned cash every month;
• Paying for a car installment for another few years;
• Having coffee anymore since a few days ago;
• Married to a spendaholic and my kids understand the value of money;
• A miser and I help family whenever I can ALL the time.

BUT I'd rather have a pretty boring life than:

• Live in debt because I love my sleep too much;
• Rely on government in my old age;
• Trade my boring life for a short lived glam of permanent poverty.

Whilst most believe that wealthy life is quite boring, LIVING LARGE is a matter of opinion. I choose BORING. How about you?

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Monthly Spending and Budget Report-July 2012

To sum up my monthly spending and budget report for July 2012 in one sentence I'd write... "To say its been a high expenditure month is an under-statement of the year". But I achieved more this month than most months. I think when you have huge once-off expenditure items, you become more careful with your spending in other areas.

Remember that this is the month where I got a pleasant surprise of a reduction in levies for one unit, then security fees climbed up in two units, and my mid year goal review showed just how slow my progress is, but I'm not complaining. I spent a lot of money last month. But it was all responsible spending. Plus the interest rates dropped... which is never great news for savers.

My July 2012 monthly spending and budget report:

INCOME	% OF TOTAL	NOTES
Real Estate	63%	That's higher than I wish, meaning that my other income is too low.
Hubby Allowance	32%	This is not so necessary but I like it.
Once off	0
Online	0
Extra	4%	Interest on my Emergency Fund. Dividends were ZERO again.

On the expenditure front: it was my first overspending month for the year.

ITEM	%OF INCOME	NOTES
Real Estate	25.1%	1 mortgage & taxes/rates. I am not counting the barrier doors because they were not taken directly from my income.
RA & Unit Trusts	7%	Fixed
Online	0%	I did spend $50 on my online business but I made provision for it from my previous online income.
Internet/ Phones	1.6%
Consumer	1.6%	Groceries, personal care and all that jazz .Not realistic, I think most shopping was done by hubby.
Withdrawals&Fees	0.3%	Great
Giving	44.2%	Part of this is an interest free loan to a friend.
Invested	20.2%	Like I mention below, I paid some to  my homeloan even before I started spending. I also topped up my Just Invest which serves as my emergency fund account.

OVERSPENDING

-R2784

I ended in the RED. In reality I overspent by -R20,784 if we take the security costs of that one unit into consideration. But the money was from savings, not my monthly income.

My parents were in a tight corner and I helped them out with R9000, there goes my online income from last month. I then topped up my emergency fund by R6000, paid R3000 extra in my homeloan account, paid all municipal accounts until October and paid this quarter school fees for my one and only bursary recipient. I had to take funds elsewhere to pay for the barrier doors (R18000) for the ground floor of my biggest unit. This gave me a negative balance sheet statement with a - R2800 balance. Thats how little I overspent. My online income usually helps with occasional needs of my parents.

Interest rate cut means my interest on the emergency fund drops whilst my home-loan installment is in its lowest. I still cant believe how low it is. Since its not profiting me much to save at the moment, I will put all my extra income into my homeloan to fast track bond payment. Its my last home-loan standing. I cant wait to be home loan free.

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