Financial Freedom Journey 2
Posted by admin on Apr 21, 2010 in Uncategorized | 17 comments
Week one of recording my expenses is finishing today. It hasn’t been that bad really although day 2 I lost my money diary. Thankfully I used the picture I posted here last week to get it back up and running. I’m now using a rubber band to attach the diary to my wallet. The hardest thing I’ve found is because I have write my expenses down, I want to change how I spend my money. This apparently is called the “Hawthorne Effect”, where you improve your behaviour in response to the fact that it’s being studied. I’m trying really hard NOT to change my spending at the moment; in a month I’ll have a look and see where it went.
I was having a cup of tea with my Grandfather during the week who brought up that his “daily accounts” hadn’t balanced, apparently he was a couple of dollars out. I don’t know how I didn’t know this, but apparently he has kept a record of every dollar he’s spent for years. He was always someone I looked up to, particularly fiscally. He kind of embodied this idea of frugal morality that I admire but really haven’t lived up to. I have no idea where my money goes but I’m about to find out.
I’m trying to think of financial goals at the moment, too. I want to think big.
After you write it daily then add it all up and use a hardcover book to record it monthly.
Debt is merely the result of being unable or more often unwilling, to control one aspect of one’s life. Many spend their money as if it is going out of fashion, then along comes a large account, be it electricity or telephone or whatever and “How am I going to pay this?” becomes the wail. For many years my wife and I have made a point of paying for electricity and telephone on a weekly basis. We go into a Post Office and make payments in excess of what we believe the weekly bill would be and invariably get an account saying we are in credit. We pay our mortgage fortnightly, each payment being slightly more than the monthly requirement. Currently we are some $20,000 ahead, an amount we can redraw if we are desperate. No, my wife does not and never has worked outside the home. We are now retired and our debt-free life has been obtained by not having credit cards and not purchasing something “because it is there”, or “looks nice”. We also try to save or pay lay-by in order to obtain any item we would like and in this way sometimes have to wait a few weeks for what we want. Better that than more debt and more interest going to some over-rich bunch.
I keep all of my accounts up-to-date on a computer, plenty of accounts programmes around and I know where every dollar goes.
If people took the trouble to work out how much interest they pay over a 12 month period with all their credit card debt, they would be amazed. That money is better in one’s pocket than in that of big business or banks. Is mental laziness part of this problem?
Are you able to offer some advice for my son. He has managed to rack up $48,000 worth of debt on his credit cards and has been having trouble paying the six cards back each month.
I have been through them and he has contacted the financial institutions about having the 21 to 19% annual interest rates reduced to approx. 14% which appears to be helping and some of these have lower transfer rates for 6-12 months.
I think he is getting a little disheartened because it is going to take a long time to reduce this debt. I can’t think of any other way out of this mess. Any suggestions?
He’s going to take 6.7 years and repay $74,420 in total at 14%. He’s really better off doing a debt agreement he’ll repay half that and he won’t be able to get into more trouble for 7 years buy which time he should have 20-30k in savings and can look at housing.