There is a personal finance community lurking around out there quietly going about making good decisions with their money, because more often than not they had been making some pretty rubbish ones prior to this. I know this to be true because every week people write to me and inspire me with their stories. This week in my blog I’ve changed things up a bit and have invited a GUEST along to write this weeks blog post. This guest is my sister and having watched her life from the sidelines over many years, where she was spending money like she stole it, it has been a miracle watching her swing the other way and work out how to actually save some.
I had been banging on at her for years about living within her means and one day the penny finally dropped. Here is her story...
For all but the very beginning of my adult working life I have been Maximalizzy. I owned my first house at the age of 24, I cheaply renovated it and thought it was just right for my needs, the mortgage wasn’t huge and I was living within my means. In the course of that first three years of house ownership, I began to watch friends and colleagues spending their same amount of hard-earned cash on cool cars, cool holidays and bigger houses. And I began to become a little bit envious.
There were lots of brilliant sayings floating around that I began to use like, ‘You've gotta live for the moment - you never know when you’ll die,’ and, ‘What’s the point of having money if you don’t spend it?’ Suddenly the small, ex government three-bedroom house I had happily lived in up till then was “too small”.
Banks were handing out big mortgages to anyone who had a permanent pay-cheque and if they thought I could have one, well by crikey, I probably should get one! I rationalised that I really needed more than just a three bedroom house for my once a year visiting family, and my ever-growing pile of must have things like collectable porcelain plates with dogs on them.
So, my three bedroom yet perfectly adequate house became a four-bedroom town house with a bigger mortgage, and more rooms for those once a year visitors to stay in, and for my pleasurable piles of purchased crappiness to be displayed and gather dust in. The new mortgage was reasonably substantial but was ONLY over thirty years so it would pay itself off before I retired at 65. Two mansions later and a mortgage that would make a sane person cry my husband and I finally found ourselves living in our FOREVER dream home. This latest mansion had a pool, lots of acres and was in a beautiful location and all of my pleasurable piles of purchased crappiness fitted in well too.
I was the cat that got the cream, even though that cream still had a thirty-year use-by date and I didn't quite have that long of a working life left…
Then my husband and I had a cash windfall and like any sane person, we put it on the mortgage. BUT shortly after we did that a friend came to us with a really great investment opportunity. It was too good to pass up AND it was guaranteed to make us millions. But most significantly, we were considered worthy of been asked to invest in a really great investment opportunity. So we did what any insane person does and we re-extracted the money from our mortgage and leapt headfirst into the world of entrepreneurship and small business ownership.
Drip, drip, drip our windfall money went into the really great investment opportunity. Then the really great investment opportunity failed. Quite spectacularly. What? How jolly surprising!
We spent a bit of time licking our wounds over that. We were now in our early forties, and our financial future was bleak. We'd lost pots of cash, a friendship, and our pride. But like the tough beggar’s we Kiwis are, we got up, dusted ourselves off and thought, ‘Oh my God. That was rather f**king awful. What the hell do we do now?!’ The drastic situation called for a drastic measure, so we upped and left The Land of the Long White Cloud to seek out our fortune elsewhere.
My husband and I found jobs that paid us handsomely in Australia, we got rid of our forever dream home in New Zealand, and bought ourselves another home in Australia which ironically was just about identical to my first, perfectly adequate home. My pleasurable piles of crappiness and all other trinkets associated with it were gifted to second hand stores and surprisingly their gifting made me smile A LOT. Perhaps it was because they’d weighed me down and were now gone, or perhaps the thought I had that their next owner would be gifting them back when they too had a financial reawakening? Our new smaller house fitted our little family of three just right, and in fact as we only took up two bedrooms, we found we had a room spare that was no longer filled with crappiness. We didn’t have too many visitors due to now living in the desert region of Alice Springs (and if we did there was a perfectly good tent we would offer them), so we took in a boarder.
Very quickly our new hard-earned cash began to pour in, but this time I stopped racing out to spend it on rubbish I didn’t need. Now our money was redirected into index funds, super schemes, our now much smaller mortgage in Australia and also into our small NZ company which wasn’t a really great investment opportunity but was instead our very own, start from scratch, blood sweat and tears, profitable family owned business which my husband and I started just before our other really crappy venture had failed. Our little business is now six years old, is our baby and it is just one of the multiple streams of income that are creating our financially independent future.
So, after way too many years of being Maximalizzy, I finally found the key to my happiness wasn’t in the size of my house, or the amounts of crappiness I put in it. It was the thought that debt sucks and leeches the happiness from you. It’s the later in life learned realisation that I don’t need three bathrooms because someone (me) usually has to clean all those toilets. Everything I now have in our little three-bedroom, one-bathroom house is exactly what I want and exactly as it should be.
I know that if ever I fall off the wagon, that stupid purchase I just made is going to add one more day to how much longer I have to work for someone else before we are truly financially independent. And I don’t want to work one more day in a place that’s not New Zealand if I don’t have to.
I can tell you from my experiences in my need to keep up with the Joneses that a well-paid job is a start to financial security, but what you do with that money is the path to financial freedom. In minimising my life, I’ve found my happiness. I hope you’ll take away something from my story that will help you find yours too.
You can follow Liz on Instagram @minimalizzy