What does financial freedom mean to you?
To me, financial freedom simply means having enough money to be able to choose whether to continue to work or not. It doesn’t mean being rich and having everything the heart desires. It’s about having enough passive income to maintain a comfortable, and often frugal, lifestyle. This implies two things:
1) Being debt free
2) Having an additional source of income. I.e. not your salary
Knowing that you would have enough to survive if you lost your job certainly takes a lot of stress away. It also allows for more choice when it comes to where you work, when you work and why you work. The goal is to cover the baseline of your needs. You can then decide how much more you want.
What was the ‘aha’ moment that inspired you to tackle the financial freedom challenge?
My "aha" moment came when I moved to Cape Town several years ago and hit rock bottom in terms of finances. I had a good job, but debt on two credit cards, a bank overdraft and car loan were sinking me. I figured I had to do something drastic and that's when I started searching for personal finance books and blogs. I learnt about the concept of #FIRE (Financial Independence, Retire Early), paid off my debt, sorted out my finances and have kept learning! The latest book I’ve read is called ‘Your Money or Your Life’ by Vicki Robin; definitely worth picking up.
Are you financially free yet?
Not yet! I have a home loan, and my additional income stream is merely a trickle. The important thing, however, is that I have a plan in place and know what I’m aiming for.
What is the additional income stream you’re working on?
My main additional income stream comes from a Trust that I set up a few years ago and which owns and rents out 4 residential properties. All income currently remains in the Trust and forms a large part of my financial independence plan (The costly property investment courses turned out to be worth it!).
I also do some after-hours freelancing and have signed myself up to the 24 hour support call roster at work which pays me a little extra too. All this additional income goes straight into my personal home loan which I’m currently focusing on paying off.
What do you mean when you tell people to ‘take charge of your money’.
This doesn't just mean saving money by bringing lunch to work; it's a far wider reaching concept. Taking charge of your money means that you actively learn about investments vehicles, tax implications, how interest works and how fund managers make money through fees. It's not good enough to simply waive this responsibility off on to your financial advisor and trust that they have your best interests at heart.
That said, it’s not necessary to become a financial expert yourself. Taking charge of your money is about being inquisitive and asking questions. Don't just believe what you're told. Do a little research for yourself because at the end of the day no one is as invested in your financial future as you are.
What do you struggle with most when it comes to managing your finances?
My biggest challenge is dealing with unplanned expenses. More often than not these are things which my partner deems "essential", but which I see as "nice to have". We have an emergency, but our definition of what an emergency is differs greatly.
Money management can become a difficult subject in any relationship, but it’s important to keep talking about it and managing one anothers’ expectations.
If you could only give one piece of advice to someone looking to improve their financial situation what would it be?
Get rid of all consumer debt! That's credit cards, store cards and personal loans. Debt almost always comes at a high cost and it's not worth investing R1000 at say 14% interest when your credit card debt is charged at 22% (or more).
Debt also means that you use your current month’s salary to pay for previous month’s purchases and often leaves you with very little left for the current month which in turn leads you to spending more on your credit card. It's a downward spiral that can quickly get out of hand! Getting rid of debt and only spending money that you actually have will not only improve your finances but will set you up for future success!
Why do you blog?
Blogging is a great way to express one's thoughts and views on life and forces you to formulate and express your thoughts clearly and logically. As much as I hope this is helpful to readers, self-awareness and clarity of mind is immensely useful to me too. My initial reason for blogging was purely selfish as I wanted to learn what it entailed and how the world of social media worked.
The blog has grown past the stage of being an experiment and has become a fully-fledged personal finance blog. I'm really enjoying sharing my personal growth, development and learning process and the best part is that I know I'm making a difference. It's wonderful to hear stories from readers who have managed to take small steps towards managing their money better. It's the personal messages I receive that motivate me to continue.
