Actions of a Future Millionairess?

By the way, today I didn't buy a Big Issue for the first time in a very long while, purely not to spend any money. However, I felt so bad about it that I think I will splash out tomorrow and get one. Sure, I'm still aiming for that million but I don't want it through the expense of losing my humanity and empathy.

Decisions, decisions

Planning to have a super tight month this month in order to pay for 2 important birthdays and still save money. It is actually not that difficult at the moment, I think you get use to consumption for the sake of consumption.

When you really think about it it is not difficult to not buy that coffee or chocolate bar. This month I'll not buy any take out coffee (a tall, skinny latte is nearly £2!), no magazines at all and I have already started walking home from work whenever I can. It does take me 1 hour 20 minutes to walk so I doubt this is something I'll do everyday but a few times a week will soon add up.

I will mainly try to eat from our well stocked fridge and larder with the exception of fresh fruit and vegetables and milk of course! It's lucky I'm detoxing at the moment as that saves me money on alcohol, snacks and being without that coffee is not so bad as part of a detox as it is as part of a savings plan. Have surfed the internet for cheap and tasty recipes and tomorrow I think I'll have a bean and tomato soup, very easy to make, healthy and above all extremely cheap especially as I have all the ingredients at home.

Property Market Slow-down?

The papers report today that UK mortgage approvals have fallen to the lowest level in 2 years. Is this finally an indication that the housing market is slowing down/turning around? It seems to me that this would be a good thing for now as the rate at which it has expanded is worryingly bubble like. Not that I have a mortgage but I can see the effects a violently crashing property market may have on my poor savings.

Much better to slow it down gradually if you ask me - and also maybe it might give people more of a fighting chance to get onto the property ladder.

Physical Challenge Update

So, a quick update on my very off topic physical challenge. At the moment I run 5km in about 31.22 minutes which seems okay to me. However, I did try to do 10km the other day, no matter how long it’d take me but I had to stop at 7.6km as I honestly thought I was going to throw up on somebody. I didn’t feel right all night after that so possibly I overdid it…

Anyway, it took me about 50 minutes to do 7.6km so I need to speed up if I’m going to make the 10km in an hour. I think I’ll do 5km a few times trying to increase the speed while also trying to run for longer at a lower speed. Maybe I should mix in a few intervals as well to get the speed up. Will report back next week.

Cutting Costs

Hmmm…I’ve been trying to set some part goals on my way to the million lately and no matter how I count I seem to have to rely either on a lottery win or simply to cut my savings by A LOT in order to reach my target within a reasonable future. My idea is obviously to make my million as quickly as possible but I have come to realise that it will take me about 10 years of hard work to get there, and that is still cutting it a bit fine.

I have had a look at what expenses I can cut in order to save a little extra each month, possibly investing this money in higher risk investments, i.e. shares. Sadly, or maybe it’s not so sad there doesn’t seem to be a lot I can cut in terms of fixed payments. I am already on the cheapest plan when it comes to all utility bills, my broadband only costs me £10 a month for example. This means that my share of absolutely necessary outgoings such as rent, utility bills and travel end up at about £540 a month. Above that I have other expenses that I cannot see myself cutting no matter what, the main one being my gym membership at £49. This is still one of the cheapest options that I’ve been able to find in London so I can’t complain too much even if it adds up to nearly £600 a year.

My monthly wage take home wage is about £1365 which means that every month I have about £780 to put into savings, debt repayment and maybe to buy myself some food and other necessities. Theoretically I should be able to save at least £500 a month every month so why do I never seem to be able to save that much? Maybe what I need to do instead of cutting costs is getting a higher paid job?

Am I thinking wrong?

I am definitely a beginner when it comes to investing and so far I haven’t quite dared to move from investment funds to shares. I don’t feel that I know enough to beat the index in these days when the share market seems to be going up and down like a roller coaster. However, after the recent Ericsson profit warning I’ve been thinking about whether it would be a good opportunity to move in and buy some shares in the company now when the share price has fallen.

I feel pretty confident in the company but don’t know if I’m thinking wrong - is this a good strategy? If you believe in a company and it’s share price falls can it not be a good investment to snap up some shares?

Maybe there are reasons as to why you shouldn’t do this, I need to read up a lot about shares! I’ll still definitely consider the idea this week.

Physical Challenge

I’ve decided to set up some other goals in my life apart from monetary ones. So to start off with something that is at least slightly realistic but challenging nonetheless I’ve decided to up my training regime in order to be able to run 10km in less than an hour, comfortably preferably but anyway will do me…

To the fitter people amongst you this may not seem much of a challenge but I have never been into running and very sincerely doubt that I have ever managed to run further than 5km at snail’s pace so for me it most certainly is. I think it’s important to keep challenging yourself in all areas of life and this seemed suitable to me for now as I feel I’m spending too much time sitting down at the moment.

I can’t tell you how long it will be before I manage to do this but it will happen!

Dedication or Insanity?

I have actually been thinking about some more specific goals since last time I mentioned it. I need some more time to think through what is actually realistic but in the mean time I've been reading a really excellent personal finance blog about a 26-year-old man in Stockholm whose aim is to become a millionaire before he's 30. Sadly for some, the blog is in Swedish so only very few of us can share his thoughts and crazy ideas but what made me fall completely for his blog is his obsession with saving money. Of course, he has investments and it's interesting to follow his ideas around this but what's even more interesting is every other month when he has a "stingy month". This means that he goes from saving a minimum of say SKR 6,500 a month to saving a minimum of SKR 10,000 or so a month (equivalent of about £500-£900). He does this by completely controlling any expenditure that is not absolutely necessary.

This guy, who calls himself "miljonaren" - the millionaire -has a maximum spend on food of about £1-2 per meal and doesn't buy anything, ANYTHING else but food. One month he writes his blog from a hotel room whilst on a business trip. Instead of going for dinner with his colleagues he lies to them to say he has friends in that particular city and then sneaks up to his room to eat beans, that he has brought from home, straight out of a can! Now, is that dedication or pure insanity?

I don't think that I could be as extreme as him in saving, nor do I particularly want to but his passion for what he does is really inspiring, and he is well on his way of reaching his goal so he must be doing something right!
http://miljonar.blogspot.com/2007_03_01_archive.html

Economic Goals

Following on from my thoughts the other day, I have considered setting up clearer goals and some more short term ones too. I think it would be easier to work towards paying off my debts in 3 years or saving £10,000 in a year for example rather than simply to make enough money to become financially independent. This will obviously still be the ultimate goal but I shall consider some realistic intermediate goals to ensure I am on the right track.

Weekend Away

I will be away for a few days, trying hard not to spend too much money so that I don't have to be ashamed when I report back...

Dilemma!

This last week I have been thinking about what to do with my student loan. I would love to be completely debt free within the near(ish) future but at the same time I wonder whether it’s a good idea to pay off the cheapest loan I could possibly have. Should I make extra payments above the 5% of the total loan that I pay over the year and pay it off quicker, or should I instead take the extra payments money and invest them? Theoretically, and probably even realistically I could make a greater return investing this money than I can “make” through paying off my loan quicker.

In reality I think the solution to this dilemma is in weighing up how comfortable you are with taking a risk. Taking money that could be used to pay off a loan and investing it instead means that you are investing borrowed money which must always be considered risky. However, in this particular case I think the risk is so small that it may very well be worth taking even if I am rather risk averse generally.

It is also important to consider whether I will have to take out another, more expensive loan later. In this case it would be better to keep the money (obviously ensuring that they are giving me a decent return during the time it’s not used) and use it rather than taking out another loan.

I shall think about this some more and make some calculations over the weekend to see how different situations might pan out, will let you know my decision next week.

My First Monthly Report

As I promised yesterday here is a review of my current economic situation. The idea is that I will do an update each month where I show how my situation have changed and how much closer I am to my first million.
As I do not own a property or any other similar assets this shouldn’t be a complicated exercise but you may find that you have to think about it a bit more if you have such investments.
So here goes:

Miss Millionairess's Money Situation September 2007

ASSETS:

FUND INVESTMENTS £25,926

ISA £820
HIGH INTEREST SAVINGS A/C £405

TOTAL £27,151

~~~~~~~~~~~~~~~~~~~~~

LIABILITIES

STUDENT LOAN £23,926

OVER DRAFT £250

TOTAL £24,176

I realise that this may not be the clearest way to show my assets and liabilities and I will work on it for next time but in an attempt to get this blog started I will leave it like this for now.
So as you can see I still have a fair bit to go to my first million but my investments seem to be doing okay at the moment, more about that next time. At the start of this blog then my actual assets are greater than my liabilities by £2975.00. I am hoping to increase this drastically over the next few months mainly through investments but also trying to slowly pay off my debts.

Introducing Miss Millionairess

I guess the best way to start this blog would be with a review of my goal and my financial situation. At the moment I don’t have a time specific goal in place. I know that I want to become financially independent while I’m still young enough to truly enjoy it. I’m not trying to reach this goal for anybody else, nor do I plan to spend my money on designer clothes, fast cars and luxury items. The idea is rather that I will have the freedom to do what I wish to do, such as retiring (very) early, travel the world without worrying about money flow and generally be able to lead a normal life without having to work 9-5.

I am a young female living and working in London - one of the most expensive cities in the world. My partner and I are currently renting a flat as we are planning to move abroad within the next few years but luckily have a very good deal as we are renting the flat from family.
I have not always been concerned with saving and investing. Like many young people I have been to university landing me with a massive student loan in spite of working during this time. I have travelled often and far and have bought a huge pile of clothes which I have never used.

It’s only been in the past year I have thought more and more about what I actually want out of life. It may sound sad to want to collect money in a pile while you’re still young be the idea is that I want a decent life both now AND in the future hence I have thought more and more about how to achieve this. To me, I would like much more time to travel, see my family and friends, write and read than I do now and the best way to get more time I think is through complete economic freedom which will allow me not to work unless I wish to do so.

This was much longer than planned so I will leave the analysis of my economic situation for tomorrow.