A Course For Calmer Waters
Twelve months ago my wife and I set out a journey to eradicate debt, plan for the future and steer the wayward ship of our financial destiny clear of the storm, and headed for calmer seas. Since then, we’ve sliced our outgoings in half and paid off over £19000 of debt. Most imporantly we have a plan for the future and a brighter outlook on life.
Lost At Sea
It is no wonder the journey from wayward consumer to savvy saver (or even accomplished investor) is often likened to that of a long voyage at sea. At some point the ship becomes lost, it’s crew facing tough decisions in order to safely navigate storms, big seas and broken sails. It’s a classic cliché, but for good reason — that’s exactly how any journey worth the effort plays out.
For some people, their ship is well and truly sinking, for others it’s far from the storm, safely in port. For my family, we were somewhere in the middle. We weren’t drowning, but the folly of our youth and our failing to properly think ahead left us spread thin, taking on water and slowly going under.
We’d managed to hole our ship on both sides. Two scars below the waterline. On the portside — Debt. To starboard — Lifestyle. To top it off, we’d set sail with nothing to plug the holes, no sponges — no plan.
For most people debt is insidious. It stacks up bit by bit, put to the back of the mind by 0% finance deals and balance transfer offers, until one day we realise the weight of what we’ve been ignoring. Sadly, many buckle under this weight, fail to get out from under it and enter a life long cycle of servicing debt and missing life.
The answer is pretty simple. Our grannies taught it to us, live within your means. Warren Buffet is known for his singular advice, don’t use debt. But in today’s culture of mass consumerism, cheap credit and social media influence, many choose not to accept the realities of what’s required to navigate financial seas safely. Consequently, many fail to take a hold of the helm and steer themselves to calmer waters.
Dog versus Tail
For us, we got sick of being the tail. It wasn’t just about being frustrated and unable to do the things in life we wanted to. It felt that every time some extra money would come in, it would go straight back out on a credit card payment, just at the time we “needed” something. We’d use the credit card we’d just paid off again and before we knew it we were right back where we started. We weren’t spending frivolously, eating out every night or jet setting, but we were paying the price for bad financial decisions made years ago and being eaten alive by interest.
As adults, as parents and as a married couple, not only did we feel foolish, we felt irresponsible.We were sick of being the tail, we wanted to be the dog, and that meant cutting back, some hard choices and a lot of hard work.
Grabbing The Wheel
Life is about choices — we had a choice to continue as we were, and hope that we’d somehow just figure it out, or we could choose to be different, choose to act differently and take responsibility.
This doesn’t happen at once obviously. A year in, we feel like we are just about on course. We have a long way to go till we reach our headmark, but the most important thing you can do is start.
My wife and I sat down and cut out everything in our life that we didn’t need. Gym memberships, satellite TV, magazine subscriptions, day trips and even visits to see family (most of ours are a plane of ferry trip away). We shopped around for all our bills, sometimes halving what we were paying. We swapped our phone contracts for SIM only deals and most importantly — we budgeted hard.
The first month, we over spent. The second month, we came in on budget. By month three we were well inside. After three months we had cut our food budget by almost 60%. We stopped buying meat and alcohol — tough choices some would say, but choices we were happy to make.
We made it our mission to throw out anything that was associated with debt, cut up cards, got a better deal on our mortgage (coincidental timing, but hey I’ll take it!) and sold anything we didn’t use. We sold furniture, clothes and kids toys. I even got £1 for a set of old Lego instructions.
We were making good progress, but we could do more. Since we’d been together we’d always had two cars. Living semi rurally we’d justified this as a must. It wasn’t. With £6000 outstanding on my wife’s car we decided to ditch it. We saved what was needed to clear the finance and sold it. We could still do better, so we sold my car, clearing another £1500 of debt and took our daughter along to pick out a new family car for £1750.
With the holes plugged and the water now firmly on the right side of the hull, it was time to figure out where we were headed. My wife and I talked at length about what we wanted out of life, for us and our daughter. We let go of classic consumerist dreams, expensive houses and started to think hard about our future. I used to see pensions as boring, now I run contribution numbers in the evening just for fun.
The infectious thing about taking charge is that it bleeds into other areas of your life. We started looking at how to improve our health, our diet and our family time. We found that whilst we aren’t going to be debt free for perhaps another year, or maybe two, just being “back on the rails” was enough to offload much of the baggage we’d been carrying around with us, which allowed us to focus on the important things in life.
The key thing in all of this is to be realistic about what you’re trying to achieve. Anybody looking to try and rebuild their financial standing in life isn’t going to do it overnight. It’ll take time. The trick is to embrace it, and learn to appreciate the small wins as much as the big.
Finding Your Fleet
They say you need a tribe in life. We certainly found this to be true with parenting, but even more so with trying to redesign your life from the ground up. It’s very hard to stay focused when all around you seem to be over extending credit lines, buying big houses and upgrading cars. For us, if we didn’t have the guidance of some good friends who are on the same path, the journey would be much harder. We’d still be on it, but the metaphorical months at sea would be much more difficult to bear. Reach out, ask for help — the internet is an amazing place.
It doesn’t matter where you find the details of the plan or method you follow. For us, our strategy came out of a casual conversation with a good friend at work. What’s important is taking time to decide for yourself how you want your life to pan out, the values you hold and the things you believe in. Then get after it.
We are only a year into a journey that no doubt will take many. By the end of 2018 we will be clear of our storm. The big seas will be behind us and our focus won’t be on plugging leaks, but tweaking sails and building speed.
The value of a new outlook on life isn’t in how much money can be saved, made or compounded in the future. It’s not about paying off debt faster than the guy next to you. The value is freedom. Freedom to think for yourself, decide for yourself and act for yourself. For many people, the value is being given their life back, a life that was gradually spirited away from them by consumerism, conformism and credit.
I’m just another guy writing on Medium because it’s what I like to do. I still like material things, I still aspire to do things that cost money. The difference is I now know the bounds of what I can afford, what it takes to achieve those things without resorting to quick money, and am happy that our dreams will come in time.
Wherever we decide to steer our ship, I’m just content looking forward to the journey along the way. Wherever you decide to steer yours, I wish you fair winds and calm seas.