Ask anyone who knows me, I have not been known as a saver. So how did I grow my money mindset? How did I finally start down the path of saving and building for my own financial future?
As a teenager, when I needed to save I was able to be very goal focussed. Saving around $2000 for a student exchange trip. But I didn’t have any other living expenses to pay for…
Now in my mid-30s, the mental adjustment required to get on a better financial footing hasn’t been as simple flick of the switch, It has come gradually over the years. Particularly when it comes to saving! I am not a saver or a budgeter – slowly but surely I am developing a money mindset which will hopefully set me up for the future.
Here is my experience and transition to growing a money mindset. Please feel free to share your own experiences in the comments below!
My early years…. Independence without the finances!
Leaving home at the age of 18, I decided to drop out of university and move to Melbourne.
From there, most of my fortnightly pay checks went towards rent and/or nights out.
There was no such thing as saving!
I was working simply to pay for rent, my social life and my credit card balance. Which ultimately would be where I ended up using for groceries and food, along with paying for my nights out!
Additionally, I got a fondness for new gadgets. And was upgrading my phone contract every 6-12mths. Paying a cancellation fee each time… :-O
It was a fun, frivolous and yet a little bit stressful.
I was treading water, on a debt carousel of my own making.
Not knowing how I was going to afford to pay off the credit card, or delay paying one of my utility bills for a few extra weeks, just to be able to then pay down the card a little more to then pay the outstanding bill.
My credit rating would have been through the floor!
This was the start of me realising something had to change. There had to be more than just struggling to pay for the things I wanted!
Yet, at the same time I had started down a slippery slope of applying for additional credit cards, taking a balance transfer. I was hoping to stop using the original card… I didn’t…. And things started to balloon out of control.
Even Peter Pan has to grow up
The stress of living fortnight to fortnight, was actually fuelling my desire to escape from my situation and perversely had me wanting go out more. Leave the real world behind for the night.
Around this time, I remember reading an article in Money magazine. I don’t really remember what triggered this. I had never read the magazine before, but I suspect it might have been a cover re: paying down your debt or something on the cover that grabbed my attention as I walked past it in the store.
So this was the start of the tipping point for me. Peter Pan had to confront reality and start to focus on his personal finances.
The simplest form to reduce my expenses was to cut back on two things.
My social expenses, ie going out most nights.
And stop upgrading my damn mobile phone before the contract was up! Simple, yeah?
Retrospectively, the behaviour I had shown specifically with the mobile phone, was about status & ‘look at me’ value…
I was essentially trying to mask my financial situation up, by buying my way into showing people I had money. Even though I was getting into debt to do so!
So at this point I started to become a little more frugal about the ‘want’ side of the equation.
Being an extravert I still wanted the social life, but found small ways to be a little more mindful of the cost of a night out. By reducing the number of nights out, and also saving a bit of money by having people round my place before heading out to hit the town (hello pre-drinks!), meant I could save a bit more $$$ by buying less drinks when I was out.
Two sides to every equation
So I had reduced the overall amount of debt piling on. Yet still didn’t have escape velocity from my debt. I had reduced the flow of debt, but I was still sinking…
One of the things I found myself starting to do, off the back of one of the articles in the Money magazine, was to create a ‘debt thermometer’.
It worked for me, because I am a very visual person. This helped me have a visual reminder, which I kept on the side of the fridge.
I was still not budgeting, but at least I was being mindful of my debt.
Next up, I took started another credit card with balance transfer offer. The key difference this time – I actually cut up both the old and new cards!
Determination set in, I did not want to add any new spending to this new account.
On top of that, my objective was to only allow my direct debits to come from the old card. Why? This allowed me to pay that old account in full each month and get on top of my utilities/etc, while also get a lower interest rate on the outstanding debt on the new card.
Around the same time, I also set a very simple automatic payment cycle to my credit cards. Allowing me to ‘set it, and forget it’ (so to speak). My repayments, were above the minimum and based on what I could afford.
So I went from sinking in debt to at least being able to hold my breath… I was still treading water, but at least there was a way forward.
But that is only one side of the cash flow equation. The other side of the equation, was the income side.
CEO at 25, but no, not really…
Like most people my age, I was still in my entry-level job as a Call Centre Operator.
I don’t know why, but in my early 20s I had grand designs of being CEO or something similar. But obviously didn’t have any idea of what was needed to get there!
Clearly this was my view of how to be able to afford things…. But I had no idea where to start!
So I took the first step. And applied for a manager secondment role for another team in the call centre where I was working. I was successful for the role and so started a new approach to my career.
Overall it was a real baptism of fire. I was dealing with HR issues and even a small restructuring of the type of work the team did. Fortunately no lay-offs, but it went down like a lead balloon!
But with this role I was able to use the extra money in my pay cheque to pay a little bit more off my debt each pay. I loved seeing the small, but steady progress I was making in paying off my debt.
I was still able to have the social life I wanted at the time (albeit with some limits). And I was reducing my debt.
Yes, I could have cut back more on the social side, but for me that was a priority. I was (and still am to an extent) focussed on YOLO! I focussed on social life and new experiences.
Some might say typical Gen-Y… Which might be true, but it made me happy. Especially as all the bigger things in adult life seemed so far away (marriage, buying a house, etc).
Overall, I had no visibility of financial freedom.
I was just happy enough with my independence and social life. Essentially, this was a mindset that starting to solidify for me. 😀 And as I know now, it is what most people in the FIRE community refer to as FatFIRE.
But with that single manager role, started my climb up the corporate ladder.
Earning more $$$
From there, I started to learn more and more.
Some think of the corporate ladder as purely a vertical ascent. I tended to zig-zag. I would sometimes take a sideways step, moving into another role that wasn’t ‘higher’ up, but meant I would have to learn new skills.
These days, it can be referred to this as talent stacking.
Ultimately I was diversifying my skillset. To be honest, that wasn’t a strict focus for me. I was just restless.
Fortunately being in a large organisation, I was allowed and even encourage to take these new roles when they came available and to keep extending myself.
Additionally, I would hunt for new balance transfer cards, and swap the outstanding balance over. I always tried to do this before the balance transfer promotion expired, so I avoided high interest fees. Always cutting up the card, and closing the account once payment was completed.
I worked at that company for seven years. But over that time had a new role every 12-18mths. Taking secondment after secondment. Always happy to be working in a new role, learning something new.
By connecting the skills I had started to learn in a role, and apply them to the next role. I was turning myself into an higher earning machine. Farewell minimum wage, and hello lower-middle income! 😀
Each pay rise, would go towards paying down my debt.
And eventually, I was able to start salary sacrificing a little bit extra each month to go towards my super.
Additionally the company supported salary sacrificing for season ticket loan too. Which allowed me to save a little bit more, by buying a yearly season ticket compared to monthly.
I still wasn’t directly saving money. No emergency fund here! But I was getting slowly out of debt and able to breathe a little easier.
Just dabbling in the markets
As my money mindset started to shift, I knew I wanted to grow my money.
I was getting into a position where my debts were mostly manageable. And as such saving money started to seem like a viable option.
Saving around $2000, I embarked on a bit of a test run onto the share market. I bought Oroton and Telstra. I am not entirely sure why those two… Telstra was dividends, while Oroton (which I had no idea about) was something I had read about on an investment review site.
It didn’t bode well. Firstly it wasn’t really an educated purchase. And I was so nervous of losing my initial investment.
I remember the stock price dropping, and seeing red in my share value. Then panicking and selling out of my stocks shortly after.
This was around early 2007, with the ASX on its way to its peak (pre GFC).
I think this boils down to simply being unable to tolerate the risk that was involved and as such I wasn’t prepared to keep the $2000 locked away. And by doing this I obviously locked in my loss by selling, turning a theoretical loss into an actual one. Even though it was only a small loss, it had me rethinking things… Wondering how people handle this!
And then the GFC happened.
My little loss looked like nothing compared to what was happening around the world. I consoled myself that I was better steering clear of the stock market…
The doom and gloom in the media, filled me with fear. I was 24 and unsure of where to turn. Ultimately I decided to just keep paying off my debt faster.
Rounding out my 20s, I made the decision to try my hand at living in London.
I was eligible for a Working-Holiday Visa, and grabbed the opportunity with both hands.
At this stage I was now working in IT. And best of all I had almost paid off all of my debt! On top of this, part of the visa application process was the ability to demonstrate you had accessible funds.
That was painful, as the GBP to AUD rate was a little volatile. And meant it was a moving target.
But finally got over the threshold, hoping they would accept the funds I had saved as enough.
I was fortunate enough to be arriving in London just before the Olympics. And took advantage of this, by the fact I could now buy the resale tickets online as I had a UK address!
For the first six weeks, I was travelling, going out and having a blast. While behind the scenes working with a few IT recruiters to try and get a role.
This is where budgeting would have helped me. As I did NOT calculate how much money I was spending… And after six weeks, was getting very desperate to find a job to start topping my funds up!
Fortunately I landed a role, albeit one with a lot of commute involved. It was based in a town just north of London. But I was happy to be working. And it ended up being a reverse commute. I was going out of London when everyone else was coming in, so I always had a seat and
Moving on up
It was very costly though, and on a lower paid rate than I was earning in Australia I was struggling to make ends meet again, though I actively tried to avoid going back into debt.
After eight months, I started looking for a new role. This is when I found a role which involved a significantly reduced commute, a sizeable increase in wage and was right in the middle of Soho.
Around the same time, a friend was moving out of the flat they were in, and put me in contact with their landlord.
We did a private rental agreement, where I had a direct agreement with the landlord. This allowed both of us to avoid agency fees and effectively reduced the monthly rent. I was paying an extra £200 a month compared to the share house I was in, but I now had my own bedsit flat in a nice area.
Financially, most of my money was going on travel now. Probably like most Aussies who move to London… Part of the appeal of the role I applied for, was the need to travel to the remote offices in Asia, Europe and USA.
Same role…? More money
After 18mths, the promised work travel had dried up and I was doing three peoples work in one role.
I am one to try and improve things from the inside, where I can… But conversations with my manager didn’t result in changes, so enough was enough.
This company had also promised to sponsor my visa, but kept delaying the date. I was running out of time on my Working Holiday visa, fast!
So I started the recruitment process again and found another company who was willing to sponsor me, but also pay me what I felt I was worth.
I ended up spending four years there!
This role introduced a quarterly bonus and financially, I doubled down on paying my debt – while still enjoying short weekend breaks to EU or the occasional night out with colleagues. Soon I had no debt remaining. Everything was paid off!
But it felt like all the different skills I had learned professionally over the years, all culminated into this new role.
With no debt, I was then focussed on getting the pension match from my employer, by salary sacrificing into my pension. By the end of the four years I worked there, I was contributing around 20% pre-tax into my pension, and not even noticing.
I wasn’t living exactly frugally, as I have never been one for shopping (other than gadgets :-D). But on top of not spending much, I was still going out with work, but at this company a lot of the managers would open a tab – essentially free drinks!
Money was naturally starting to accumulate in my account. I was still spending of course. Rent was still one of my biggest expenses, followed by food (aka eating out) and travel…
Over of the grey skies…
I loved London, and will be going back to visit. But I started to get sick of the weather and the commute. It literally felt like the rat race… And my mental health was starting to suffer.
I had a ‘Head of’ role, and was busier than I have ever been before (I do love a challenge). But I was close to burning out. As such, I had been talking to my manager about moving back to Australia.
During one of my holidays, I took a week off and lay on a beach in the Canary Islands. It was glorious. And this is where I started to read Tony Robbin’s, Money – Master The Game. Reading about investment strategies which included investing in ETFs…
Back at work, projects at work were getting more and more stressful. With tighter and tighter deadlines, which started to get a little unrealistic.
The time to leave was here.
I told my boss I was leaving, and this ended up with an agreement with my boss to help deliver one last project. Help deliver the big project and the company would pay me a project bonus, if targets were met.
You can say I made sure the team delivered that one 😀 And then I got on the plane, with my project bonus in hand!
2019, investing for the future
After reading Tony Robbin’s book, I started the process of increasing my Financial IQ.
Reading blogs across the FIRE spectrum, and also diving in a reading more and more books about personal finance. I have started to invest, and invest to hold long term…
Mentally, I feel I am in a position I can now invest for the long term without worrying about short-term gaps in funds. That project bonus went straight into my investment portfolio. There isn’t a specific ‘investment strategy’ currently, but I will be ensuring it fits my desired outcomes, while being very low maintenance.
This year has also seen me change from direct employment to freelancing. And I am loving the flexibility. Picking up work contracts when needed and still actually working with some of the people I worked with in the UK (even though I am at the end of a video conference call).
Wrap up & please feel free to share your experiences
As you can see, my own money mindset is still growing – and has been a very long process.
I am on a path now which feels a little more secure. No longer being sucked into quick sand that was my credit card debt.
The more I read about FIRE the more it makes a lot of sense to me. And seeing others in the FIRE community also on similar route, is so motivational and keep me on track.
I have ultimately started this blog to try and document my progress over the coming years. While also helping me articulate my own thoughts about personal finance…
But enough from me, over to you – please add your own story to the comments below, I would love to hear from you!