Crunch biting? Debts mounting? Start saving, the easy way

Start saving the easy way

This is the story of how I got rid of my debts and started saving all in one year. Admittedly my debts weren't huge, but they were 2000 pounds and for someone that had never worked full time (back in 2004) that number seemed quite a lot.

I set myself the goal of paying off the debt within a year, and guess what, I did it within 3 months!

I spent everyday applying for jobs, sometimes ten jobs everyday. I had 3-5 interviews everyday and became accustomed to the sorts of questions many interviewers ask and the answers many like to hear. If you are in a similar position now I'd advise the same thing, bang out the applications for a week or two to get lots of interview experience, even if you don't get the jobs you will get lots of valuable interviewing experience.(Word of caution- don't continue to apply for jobs you don't like in your late twenties and after just because you want interview experience, once you've had 10 interviews, in my book, that should be plenty of experience.)

So, next, I was offered two or three summer jobs. They were full time and looked fun. Surprisingly they were jobs I was interested in- teaching Film making and Breakdancing to international kids in London for 9 weeks, although it didn't start for 4 weeks I said yes to that job. It was free board and lodging and I got over 1k a month net.

In the weeks that followed I got a job in a local shop and saved money. By the time I'd gone to London I'd paid off some of my debt already. When I london I made the habit of paying myself first and I made sure to create a savings account that I put all the money into first. Then I used the accumulated cash to pay off the debt. By the time I'd done that job I was debt free, something it my peers 2/3 years to manage, and some still haven't done it nearly 5 years on.

I'm not meaning to big myself up here, I want to just explain a few of the tools I used and still use, to overcome debt and have a healthy financial cushion.

After leaving the London job I temped until I got permanent work in 2006. All through that time I made sure to save in a tax efficient way, by transferring all cash into a cash ISA. An ISA is a savings account free of tax for people living in the UK. There's a limit to it, at the time it was 3k a year. By the time I got my permy job I had saved around 1.5k already. I upped the ante once I was earning more to saving between 400-500 pounds a month (90% of net income after expenses) by reducing my outgoings. I made sure to get the cheapest rent in my city by negotiating with the landlord to get 2 extra people in on the contract but keeping the rent the same. So we got rent half price for 18 months. I also cooked my own food and didn't buy pretentious food or clothes- I've never cared for impressing others with a phony image.
After another 6 months I'd filled up the ISA and started my interest in investing in shares.
I was considered poor by the national average wage, but through saving and living frugally I saved 5k in 18 months, something some people find hard on twice the salary I was earning.

I hope I've never made out I'm super rich by doing this blog. I'm doing it the slow way. I'm not a multimillionaire. I'm an average guy that has an interest in this stuff and wants to share his knowledge. Currently my shares are down, but I'm in it for the long run. I'm still buying, and so are the companies I'm investing in (via share buyback and acquistions). If there still in, I'm in.

So getting a good financial foundation starts with saving. Don't listen to anyone that wants you to buy property and stocks without having something up front- they'll make money and you'll lose out. The great thing about saving money is it develops a number of good warm qualities. Firstly you develop patience. Second, you know that if the worse was to happen- financially speaking- (losing your job, for example) you'll be fine. I can live for 2 years on my savings. I wouldn't. I want to build not take away, save not spend.

Start saving today and start feeling like nothing in the world can disrupt your calm state of being.