It’s been over a year since I started up this blog, but more importantly more than a year since one bored lunch at work found me start a reading frenzy of Monevator and RIT, the spring board into an orgy of reading countless other blogs.
The start of tipping my scales towards being a saver.
|Mr Z’s Spend-O-Meter. Today.|
I’ve kept the reading up, although perhaps not at the same frenetic pace. I keep up to date with all my favourite blogs, not always commenting on but always reading and digesting each article. There’s at least one new article a day for me to read, and it might only take a couple of minutes to skim through, but it keeps thoughts of saving, investing, frugality and Financial Independence at the front of my tiny mind.
Having constant input helps me to focus and keep motivation topped up, which is important with a long term investing plan as left unchecked it’s likely to leak away into the ether.
The blogs I read are from people at a variety of different stages in their savings and investing timeline. Some, like myself, are nearer the beginning, others are well into the journey, habits established and almost running on autopilot and others are enjoying the capital fruits of their investing labour.
Not only does my insatiable blog reading keep the old motivation topped up, but it helps me to tweak my strategy and keep my costs as low as possible.
It’s not just blogs, but also books. There is something different about plowing your way through a book dedicated to an investing idea compared to reading blogs, which can be a bit schizophrenic. I’ve particularly enjoyed Smarter Investing by Tim Hale, The Black Swan by Nassim Taleb and A Random Walk Down Wall Street by Burton Malkiel which I just finished. Going from a random walk straight into some HP Lovecraft stories this week has been interesting.
Each Sunday Mr Zombie sits down with a steaming cup of Joe and updates Mr Zombie Limited. A spreadsheet that tracks spending and saving and pulls it together in the form of a balance sheet and profit and loss for Mr Zombie Limited, which is ultimately my NetWorth. Does it take much time? No. Is it a little bit creepy? Maybe. A little nerdy? Perhaps. Ironic to be completed whilst listening to Gangsters Paradise? Yep. Helpful? Definitely.
Updating my Net Worth every week keeps me actively engaged in my passive strategy. I’m not looking for a pat on the back, confirmation that my strategy is working awash a sea of green excel cells showing increasing unit prices week on week. It’s 20 minutes each week looking at my numbers and staying engaged with my finances.
This is a positive habit that I have formed over the last year, a month seemed to long I would either be starting to look at my ISA account to see what was happening or starting to lose interest, my thoughts drifting to a new motorbike I didn’t need.
Change in mindset
Over a year on and I have noticed a change in outlook, a shift in paradigm away from the consumers spending model towards the Financial Independence savers model.
I don’t have a strict budget to stick to, yet I am spending less than I ever have. It’s like there is some background application running that reviews all spending decisions and optimises them. All the reading around spending less, saving more, frugality and reducing costs has osmosed it’s way into my brain. The time spent assimilating information in front of my laptop or on my phone is working. You get the idea.
The maturing of a regular saving no longer means it’s time to look at booking a holiday, but time to move the proceeds into a longer term vehicle and set up a new regular saver. A payrise isn’t an excuse to buy some cool new gadgets, but the chance to save more each month and increase my savings rate even higher. Moving house won’t be about maxing out, getting the biggest house possible to impress the Joneses, and don’t get me started on buying a new car.
I find myself with cash left over at the end of each month and a clear credit card balance rather than dancing around the overdraft each month or putting a little bit onto a credit card. And it really isn’t through some constant effort, a strict set of rules and boundaries designed to control and reduce my spending. But just that shift away from spending without thinking.
It’s not tiring and to be honest I don’t feel like a cheap skate or as if I am missing out. Drinks are still had with friends, meals are attended and I have even still been on holiday abroad *swoons with horror*.
Pushing the scales away from spending and into saving hasn’t been a year of hard graft if I’m honest and I’m certainly looking for a pat on the back and a “Well done you frugal chappy“. It’s been a combination of a few small changes, a Team Sky approach and realigning what saving (or money) was for. There has certainly been things that I have declined with frugality in my minds eye, but it hasn’t been a year of triple using tea bags and then eating them for sustenance. I don’t refuse a catch up with mates, hang up the phone, go into my garden and start shouting at the lavender bush for some cheap entertainment. The neighbours have asked me to stop that.
I will admit that I am not a frugal bad ass, my savings rate could be higher. But I’m not leaking and spraying money like I used, on all the little bits, the coffees, the lunches, the new hardware for hobbies, new books (thank you libraries), the curries on a Friday evening (mmmmmmmm curry) etc. My spending dioralyte has been found, it seems.
|Bung your spending up|
I will also admit that I am in a privileged position, live in a country where things are pretty easy and in a job that pays more than the average UK full time salary.
That said, increasing your savings rate while all those around you are spending more and more isn’t an easy task and shouldn’t be approached half-heartedly. The pressure on us to consume is immense, like a high pressure washer slowly scraping away the mould and dirt off your lovely paving stones, the pressure from advertisers (and sometimes friends and family) batters down our resistance to consume. After a while though you find out where the holes in your armour of frugality are and you can patch these up. If you have a weakness for buying cycling gear…don’t wander around a cycling emporium aimlessly.
The thing that really gave me something to cling to, a bit of purchase (oh the irony) was the idea of Financial Independence and Early Retirement. FiRe if you are down with the kids. Saving for my retirement was all well and good, and indeed I was already putting 20% into my pension, but it wasn’t a reason by itself to trim back the spending and go into a savings frenzy. It just wasn’t that exciting.
The idea that I could do some pretty simple lifestyle engineering, save more and then use this to become financially independent (more accurately to have the power to give the middle finger to The Man at anytime I wanted) and potentially even retire early, perhaps even really early, now that was exciting.
Time to FI = F(Spending less, saving more)
It took plenty of readings of a very simple idea for it to finally click. Spending less means you can save more. Spending less also means you need to save less to eventually live off, you are spending less after all. Spending less really does supercharge your attempts to become Financially Independent. Build some spreadsheet models to really drive it home, that’s what I did.
It seems so obvious now, the concept is staring you in the face in the everyday, but it’s one that seems to have escaped society at the moment. And it’s easy to forget that just over a year ago this wasn’t so crystal clear to me.
At the end
It’s easy to forget that my change in perspective hasn’t come from being more fluent in the investing tongue, being the best investor in the world or concocting the perfect asset mix. For me it’s been a simple change. And that’s from viewing money for purchasing, to be consumed, to be spent, to be exhausted. My salary isn’t treated like an allowance anymore, a periodic resource to be depleted. Money is now viewed as a tool itself, something to be invested, compounded and grown.
This change has led to an increase in NetWorth of around 45% for Mrs Z and myself over the last year or so. And it’s nothing fancy, no real investing wizardry, no specially designed over the counter derivatives and no timing of the market. Just consistently spending less than I earn.
Remember kids, spend less, save more and (eventually) escape the Horde.