How To Change Your Life – Questions You Should Seriously Ask Yourself In Your 20’s!

analysis blackboard board bubble

On my journey to self improvement, I have asked myself a LOT of questions. Many of which I didn’t like the answers to. But in answering them, I found out that my life can be, and has been, drastically improved.

The most important questions I asked myself are below, along with my answers at the time (earlier this year). I have also added side notes to some answers in red, with feelings I had towards my answers and some great lessons to learn.

Try and answer these questions yourself, honestly, and write your answers down. You’ll be surprised how easily things can be improved..

Q – Is there anyone in your life you no longer speak to who has tried to reach out to you?

A – I don’t speak to my parents or my younger brother. After a family fall out around ten years ago, the family separated. I no longer have any ill feelings towards them, I just have no desire to speak to them. In all honesty, we have nothing in common other than blood. Although I do not hate them, I realise that we are very different people, both morally and philosophically.

I often think about getting back in touch with my family, my brother more so, however I always conclude that I am happier without them. I don’t have fond memories of my teenage years when I lived with them, in fact I have pretty terrible memories of that time. The last time I tried to make things right things didn’t go so well. The obvious differences in personalities moved us further apart. My brother is who I would like to speak to, but he harvests feelings toward me which my parents have instilled in him, and this shows in some of the things he says to me, it’s almost like he holds a grudge because I left. I don’t know…maybe i’ll reach out to him when he is a bit older..


Q – How much money have you saved in the last 5 years?

A – More than I have saved right now. At the moment I have £400 in my savings account. I have had up to £1,800 at certain points over the last 5 years, but I have spent all of that money on holidays, despite trying to save a deposit to buy a house.

Considering I have worked full time on a good salary for 8 years, £400 is incredibly disappointing.


Q – What percentage of your income do you spend on car payments, petrol and insurance each month?

A – Car Payment + Insurance + Petrol = 22.26% of my monthly income


Q – What percentage of your income do you spend on housing/living costs each month?

A – Rent + Council Tax + Bills + Food = 50.81% of my monthly income


Q – What percentage of your income do you spend on eating or drinking in bars and restaurants each month?

A – Restaurants + Costa Coffees + Nights out with friends = 21% of my monthly income


Q – What percentage of your income do you give away to help others each month?

A – 0% – Okay this is starting to make me feel bad…


Q – What percentage of your income do you save for investments/retirement?

A – 0% – Now I feel worse..


Q – What percentage of your income do you spend on repaying debts?

A – Debt repayments amount to 6.03% of my total monthly income

This was the most surprising answer for me. Until recently, I thought paying back debt was what I spent most of my money on. In actual fact I am spending 3.5 times more on both socialising and transport!! THIS CAN’T CONTINUE!!! If I flip those percentages round I can have my debts paid off in a third of the time, and pay a hell of a lot less interest!!


Q – What is the total amount of debt you owe? And at the current repayment rate, how long is it going to take until this is paid off? Be completely honest and account for every single penny!

A – Student Loan + Car Finance + Student Overdraft + Personal Loans =  £26,780. My personal debt such as loans and car repayments will be fully paid in 3 years time (according to my agreed repayment plans), however my student loan payments will take 30 years to repay at the current rate!!

WOW – 30 years is astonishing. I have done a further calculation on this student loan debt, and by the time this is paid off, I will have paid £6000 extra in interest.

Biggest wake up call – Most people think this is fine because this gets deducted out of your pay slip before you get taxed!! ‘Oh I don’t even notice this payment’ is the common opinion on student loans…

This is unacceptable and a massive con, to say the least!! I have worked out that if I pay an extra £150 per month off my student loan debt, then I will have this debt paid off in 5 years and pay less than £1000 in total interest.


Q – What is the total value of the assets you currently own?

A – ETF Fund + Stock Portfolio = £160

This is why saving a deposit to buy a property is so important to me. Assets are the only way to increase your net worth significantly and ensure more security in retirement (unless I win the lottery of course).


Q – Do you have a spreadsheet which allows you to track every penny you earn and spend each month?

A – Yes – I started doing this a few months back and was once again shocked about how much I spend without considering my debt obligations and long terms goals. My spreadsheet contains exactly how much money I earn and subtracts every penny that goes out from that amount.

It’s this spreadsheet which has allowed me to save the £400 that I currently have in my savings account. When considering if I can afford something, I put the cost into my spreadsheet and then adjust my current spending to allow me to do it, this way I am learning to sacrifice things I don’t really need and my spending decreases each month.

If you don’t have a spreadsheet like this, please comment below with your email address and I will send you a free copy of mine – I promise this will work wonders for your finances!!


Q – Do you have a list of goals you want to achieve, written down? Financial and otherwise?

A – Yes. Mostly financial goals. I have given myself 18 months to get out of debt and save enough money for a deposit to buy a property. These two priorities are at the top of my list and I have made a plan of how much I need to save each month to achieve these goals. Added to my financial spreadsheet of course.

I have had to cut spending in many areas of my life. The first to be cut was the amount of money I spend socialising each month. I now have the same amount of nights out each month, I just don’t drink alcohol on half of those nights. I’ve also chose to cook more meals from home rather than go out to restaurants.

The best decision I’ve made is to move out of my current apartment and move in with a friend. This decision has saved me an enormous amount of money. My new living expenses now amount to 26.76% of my monthly income as apposed to 50.81%. I plan to save and pay down debts with the spare cash.


Q – Are you the highest paid employee at your company? If not, why not?

A – No. Other than the director of the company, there is one other person who earns more money than me, and we work on the same projects. The reason he earns more money is because he has more knowledge in more skilled areas of our operations.

I could be the highest earner within my company. I just need to learn more. I can shadow the guy who earns more than me whenever I want. I can ask him for information about any job he carries out. The knowledge is there and available to me, I just need to reach out for it.


Q – How many books have you read in the last 6 months? And are they the right books?

A – I have read one book in the last 6 months. The book was ’12 Rules For Life’ by Jordan Peterson. This was a great book which centred largely around taking responsibility for your own life and I found the book to be extremely beneficial. The concepts discussed in the book are similar to ‘How To Win Friends And Influence People’ by Dale Carnegie, and after reading the book I made plenty of positive changes.

One book every 6 months is not enough reading. I read that the average millionaire reads over 30 books a year in the UK. I have always had a passion for learning and you must read a lot to be able to learn. I have never really been interested in fiction, as I don’t tend to learn much from that genre. Personal development and educational books are where I find the most value and they genuinely allow me improve my life each time.

I have also recently signed up to Audible, which allows me to listen to audio books on the move, in the gym and in the car on the way to work. The knowledge you can gain listening to audio books whilst also being productive in other areas is priceless. If you haven’t already, give Audible a try!


Q – How many pounds overweight are you?

A – Zero. This is the most successful part of my life. I workout 3-4 days per week and eat healthily. When I miss workouts or don’t train for a while, I feel lousy and unproductive. Working out puts me in the right frame of mind and genuinely provides me with more energy for the rest of my day.

If you don’t currently work out and feel like you lack energy, try and do 20/50/100 press-ups, or go for a run, a couple of times a week, and see the difference that makes to your physical and mental well being.


In Summary

Answering these questions put a lot of things in perspective for me.

A couple of things I asked myself, concerning family relationships and health, were asked to highlight the areas in my life I felt were the most important to address. Maybe answering these types of questions will help with any issues you have with your family or health and inspire you to improve. At the very least, this exercise will give you an honest reflection of where you are, compared to where you think you ought to be at this stage of your life.

The main thing for me was realising that I am more in control of my finances than I thought. Most people believe that our financial struggles are down to not being able to earn enough money, which often leads us to blaming this on our boss not giving us a pay rise, or not being allowed to work enough hours etc., however the power you have in limiting your spending holds much more significance.

person holding coins

I asked myself one final question to confirm this hypothesis..

Who would you rather be? The guy earning £100K a year and spending £100K or the guy making £30K a year and spending £15K?

We all know the answer to this question, and thinking about this answer has inspired me to improve my life in many ways.

Organising and tracking my spending each month has helped me begin to save the money I need to get out of the hole I found myself in and it wasn’t until I began this exercise that I realised how deep that hole actually was.

Thankfully I am now on track to dig myself out, and I am actually excited about it!

Maybe you are already financially secure for life, but if you’ve made it this far and you’re reading this then maybe not. If not, then give the questions above a go. I hope doing so can help anyone facing the same issues to make some positive, lasting changes!

Thanks for reading.

 

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How To Retire At 40 – Without Becoming A Millionaire!

man wearing black and white stripe shirt looking at white printer papers on the wall

One of the first things I wrote down a month ago when considering my future was that I didn’t want to work for another 30 years.

I am absolutely convinced that working 9am – 5pm, five days a week, is not what we are supposed to be doing with our time. In fact I think one day, people will look back on this behaviour and wonder why we were all so stupid to go along with it for so long.

This monotonous ritual is impeding the progress we make as a society and I believe with more independent, meaningful work, the human race would flourish more than ever before.

But how do we get there? How can we free up more time for ourselves when most of us have only ever been taught how to remember enough information to pass a few exams, in hope that those exam results look appealing enough to an employer, who will generously give us a job on minimum wage. We might even be rewarded with a 3% pay rise each year (fat chance).

Is it only the creative, courageous entrepreneurs among us who can make enough money to be able to quit work early and live happily? Or can the average Joe make this dream a reality?

I have spent the last month reading as much as I can on personal finance, retirement and investing for the future, in order to try and answer this question. I found some good idea’s during that time, but none better than Joe’s (his name is not just a coincidence).

Joe works part-time and designs beautifully crafted, bespoke garden furniture.

The company Joe works for is a customer of mine, and I met Joe whilst installing the internet in their building a few weeks back. Let me tell you his story and take from this what you can…

At 28 years old, Joe had simply had enough of working full time at a job which he felt provided absolutely no value to him or the world. After spending eight years complaining in quiet desperation at his desk, he decided that it was time to change.

He wanted to figure out a way to retire before he turned 40, but first he would have to figure out what it takes to be able to do so.

Firstly, Joe needed to know long he was going to be retired for until he dies. Let’s take the average life expectancy of 80 years of age, thus making his retirement period a splendid 40 years, or 480 months.

Secondly, he need to know how much money per month he would need to be able to live with all his basic needs met (food, bills, clothes, shelter, travel etc.). This is a tough one to calculate for each individual, as depending on where you live in the world, living costs can be astronomical.

Here was Joe’s situation…

Joe is 28 years old, single, living in a one bedroom flat and drives to work every day in his car. He takes home £1,700 per month from his salary.

Here are his average monthly expenses:-

  • Rent/Mortgage payment – £550
  • Bills (Utilities + Council Tax) – £250
  • Food – £150
  • Car Payment + Insurance + Petrol – £300
  • Enjoyment and Socialising – £400

Total monthly expenses – £1,650

Now of course, these figures are applicable to a certain type of person in terms of lifestyle and location, but you can use the same list to create your own monthly expenses in Microsoft Excel (which is strongly advisable for anyone serious about personal finance).

So Joe could live with all his basic wants and needs met on £1,650 per month. Even less if he didn’t like the taste of beer so much!!

man drinking beer and looking at his left side

Now let’s do the maths. Joe needed to do one of two things in order to retire at 40 years of age:

  1. Save up £792,000 in twelve years (£1,650 multiplied by 480 months). Unlikely on his annual salary of £28,000, wouldn’t you say?
  2. Find passive sources of income which amount to £1,650 per month

These are the only options Joe had without having to become a millionaire or win the lottery.

So let’s break down Option 1.

If Joe is twelve years away from 40, this means he has 144 months available to save £792,000. To achieve this, Joe would have to save £5,500 per month! Joe takes home £1,700 per month at the moment, so this is going to be a problem. He either has to learn how to make many more sales in his current job, or start a side business which brings in extra cash. Even then Joe wouldn’t be able to save his entire income, as he obviously has his living expenses to pay.

So what did poor Joe do?

He went with Option 2, retired from full time work at 38 and now works part-time doing what he loves!!

And here’s how he did it, step by step. You might want to write this down…..

  • Joe sold his car, swapped it for a pedal bike and cycled to work every day
  • He cut his ‘enjoyment and socialising’ budget in half – Here is a link to a great blog which will tell you how to do that – Drinking Less To Save More
  • He then began to save that spare £500 per month for two years
  • He took the £12,000 he’d saved and used it to get a mortgage on an apartment, worth less than £100,000, in an up and coming area
  • He moved into the property, paid his mortgage each month (still £550) and continued to save £500 per month
  • After another two years, now aged 32, he took that new £12,000 and done the same again, only this time, Joe found a tenant to rent his first property from him

After taking these steps, Joe then continued to work full time for another six years. He continued to make his mortgage payments in the first property, courtesy of the tenants.

Instead of continuing to save £500 per month, Joe started to over pay the mortgage payments on the first property by an extra £250 per month. However he split these payments bi-weekly, lowering the amount of interest accrued between payments. With the spare £250 he had left over, he got a loan on a cheaper car than he had before, with a smaller engine, so the petrol bill stayed within his £250 budget.

After doing this for six years, Joe was able to take a job working 20 hours per week for £1,000 per month. And here is why…

Joe’s first apartment is now worth £115,000 (£15,000 more than he paid for it).

The £88,000 mortgage that was taken out is now fully paid off.

How?

Some of the extra £150 per month paid by the tenants as rent for 8 years, in addition to the extra £250 of over-payments paid by Joe each month, reduced the amount of interest on the loan and therefore shortened the repayment term by 4 years!! This also covered the few months worth of mortgage payments that Joe had to find when the property was empty, in between tenants moving in and out, as well as some damage sustained to the property over the years, which again Joe had to pay for.

Still occupied by a tenant, paying £700 per month in rent, the first apartment now turns a handsome profit, £550 of which Joe uses to pay the mortgage on his second property, leaving £150 in the bank as an emergency fund to cover damages or vacancies within the tenanted property.

Joe’s second apartment, which hasn’t gone up in value (yet), is being fully paid for by the profits from his first property. There is only £40,000 of the mortgage on this property left to be paid and that will be settled by the time Joe hits 45 years of age.

And now his current living expenses look like this:-

  • Rent/Mortgage payment – £0 (paid by the profits from his first property)
  • Bills (Utilities + Council Tax) – £250
  • Food – £200 (Joe now enjoys an extra steak each week)
  • Car Payment + Insurance + Petrol – £100 (Car loan was paid off after three years)
  • Enjoyment and Socialising – £300

Total monthly expenses – £850

Joe uses £50 of the extra £150 per month he makes from his part-time salary to buy himself a new item of clothing each month, as he now likes to look good whilst he drives his fully paid off car.

He uses the remaining £100 to, once again, over pay his mortgage on his second property that he lives in.

And finally on that point, when Joe owns his final property out right, he plans on finding a tenant to replace him, whilst he moves into a new house. The new house will of course be paid for by the rental income on his two properties, both now being rented out for £700 per month.

Joe is well on his way to becoming extremely wealthy.

Before ending this story, I’d just like to point out that Joe took plenty of risks during his journey to part-retirement. He also had some bad luck with damages and vacancies in his properties and he had to use profits and credit cards to pay for some of that in the short term. Joe also lives quite simply and now gets his enjoyment from his work, rather than the local pub.

What we can take from this is that you don’t have to become rich beyond your wildest dreams to become wealthy, or retire early. Having the discipline to cut back on some of the less important things in the short term (the expensive cars and trips to down the pub), can provide you with enough extra cash to build up your savings. It’s then what you do with those savings that decide your future.

Joe part retired at 38 years of age, 10 years after he decided he wanted to retire early.

Imagine where he’d be if he started this process at 20….

Thanks for reading!

rear view of man sitting on rock by sea

 

My First Blog Post – Why are we unhappy?

black and white man young lonely

I don’t know about you, but almost every day of my life I ask myself the question ‘why am I not living the life I want to live?’.

Every single time I would try to answer this question, I would do so by describing how I wanted my life to look and then complaining to myself about why I don’t own a house, or why I don’t make more money, or why I don’t travel more, or why my belly is bigger than it should be, or….the list goes on. Sounds familiar to you too, right?

Four weeks ago, I’d had enough, and I finally considered that instead of constantly questioning why I don’t have the things I want, I would try and find a method to getting all those things. To my surprise, I realised that I already knew how to do it, and more importantly, that most of the things I thought I wanted, I actually didn’t.

So, I am going to share everything I found out about myself in the last four weeks, and the steps I am taking to be able to live the life I want. Hopefully this can help inspire anyone going through the same thing to just look at the situation a little differently and realise that you already have the answers to most of the hardest questions in life!