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Archive for November, 2014

Emergency debt

If you want to embrace Radical Retirement Planning and save 50% or more of your after tax income you cannot afford to have any payments on debt other than your mortgage. This includes student loans, credit cards and car loans – they all need to go.

Remember, debt has a double whammy. You are paying interest rather than savings money and making earning interest.

Traditional financial planning suggests creating a budget and “working-on” getting rid of the debt over a manageable and comfortable timeframe.

Radical financial planning approaches debt slightly differently. We don’t have years to clear this, we only have months. If you are serious in being financially free in 10-15 years you need to clear this debt as an emergency. Like you had to save what you owe in debt to pay for a life-saving operation.

So, stop all non-essential spending and change your lifestyle. This basically means spending nothing apart from food and transport to and from work.

Here are some specific suggestions on what you can cut out and use to clear your debt:

  • Meals out
  • Take-aways
  • Going out for drinks
  • Cinema
  • DVDs
  • Costa coffee
  • Buying lunch at work
  • Sky
  • Gym membership
  • New clothes


You can also change your lifestyle:

  • Change your car (or go car free)
  • Walk whenever possible
  • Become a vegetarian for a while
  • Take an extra job
  • Take a lodger
  • Rent your garage or loft space for storage
  • Rent out your drive/parking space
  • Sell jewellery and toys like an expensive bike and jet-ski


There will be time for some of these things to return later as part of a plan. But, for now you need to be 100% focussed on clearing credit cards and non-mortgage debt.

It should only be a matter of months and all credit cards and non-mortgage loans will be gone forever.

Radical retirement planning

As part of my research into lifestyle money management I am being challenged on my own preconceptions what is possible. I hope the articles I write challenge you.

Here is a simple formula to think about – radically change your lifestyle and save 50% (or more) of your current after tax income, invest it wisely and enjoy a more secure and free life in the future. If you had done this from the age of 20 you would probably be able to retire at 37.

Depending on your current income and asset base you could be just 10 to 15 years away from financial complete freedom. How does that sound?

As always, there are choices

  • Work longer than you need to
  • Make more money

As a business owner have the option of developing your business and making more money. But, you will need to make a lot more and save a lot more because:

  • You tax rate will go up
  • Your base expenditure will be 100% higher (or more)


The thing about focussing on saving is that you learn to live on much less. This means you need less capital to live on. If you focus on making more there is a good chance you will fall into the trap of spending more.

What’s interesting and potentially makes the saving focus a better option is that it is really about living a better quality life.

Here are some suggestions on how you can live on 50% less. I will explore each one in future articles.

  • Get rid of emergency debt
  • Live close to work
  • Don’t borrow money for cars
  • Ride a bike
  • Cancel Sky and the TV licence
  • Stop wasting money of groceries
  • Only use basic mobile phones
  • Use your body more

A gift to yourself

I continue my research into effectiveness personal money management and as with business development it all starts with personal development. If you want to change your situation you need to change your thinking.

Consider the idea of there being three of you – the past, present and future you.

The reality is that the past you has put you where you are today; his or her decisions with money has determined your current situation.

If they worked hard and saved you can thank them because you will have some level of financial security and could be well on the way to financial freedom. If they have been a little irresponsible and frivolous then you could be anxious about the future.

But the “present you” can change that for the “future you”.

You can literally give yourself a better future by changing your thinking and behaviour. The key is working ON your life not just IN it and you can do this by having a plan. As with a business plan your life plan will have a vision, assumptions and fundamental methodology.

The actions will include changing your behaviour and saving. This can be challenging because it takes time and money away from the “present you”. It can feel like you are denying yourself of happiness. But, you can learn to enjoy a different lifestyle and be happier now. Part of this is thinking of saving and personal development as a gift to the “future you”.

A £1 saved now will be return yourself more than a £1 later. An hour invested today developing yourself and improving your effectiveness will save you more than an hour later. In 5, 10 or 20 years you could look back at yourself today and the action they took and thank them.

What you do now is a gift to yourself and your family. Start to develop a personal plan and question your lifestyle choices and make sure your being smart with money.

Smart spending

There is a lot of advice available on making, saving and investing money but little on how to spend money. So, I was interested to find a book based on scientific research.

The book “Happy Money: The Science of Smarter Spending” explains why we should shift our focus from earning more to spending differently.

There are five key principles to spend smarter to be happier. The great thing is that you could end up being happier with less and this could fundamentally effect your business strategy.

Remember, your business is there to serve your life so if you change your life you should review your strategy. Perhaps you could afford to part-company with high hassle clients/customers? Perhaps you don’t need the volume of business and can stop giving discounts to win new business.

Here are the five principles…all are common sense but not always common practice.

Buy experiences
Material things (from big houses, boats and flash cars actually give less happiness than experiential purchases (like holidays, concerts and meals out).

Make it a treat
Limiting consumption of the things we enjoy may help increase our appreciation and enjoyment from them.

If you have your favourite bottle of wine once a week, limit it to once a month or even once a quarter.

Buy time
Allow yourself to pay other to deal with the dreaded tasks you hate.

This can apply to domestic tasks like cleaning and ironing and to bookkeeping. Remember, you will be spending less on “thing” and need to the time to enjoy “experiences”.

Pay now, consume later
Delaying your consumption enables you to enjoy the anticipation.

This may mean not booking things last minute. Instead, book a table for dinner weeks in advance and a holiday 6-12 months early.

Invest in others
New research shows that spending money on others gives you more happiness than spending money on yourself.  This can be people you know or charity which fits with our giving with B1G1.

The really cleaver thing is you can combine the principles and they have a cumulative effect. So, the more principles you use to any spend the more happiness you will enjoy.