Having a positive outlook can spill over to pretty much every area of your life. I try to approach every situation with a default positive demeanour and that helps me to not put roadblocks in the way before I’ve even begun. Instead of approaching a situation and looking at potential problems as roadblocks, I think of them as challenges to be overcome. It doesn’t work in every scenario but more often than not, it helps.
Having the right attitude, then, when you’re trying to save money is just as important as the physical act of transferring money into your savings account each month. Prior to the initiation of our plan for financial independence, we’ve had one other significant savings event in our lives. And our attitudes towards each could not be more different.
Savings Challenge Numero Uno
After we got married in 2011, we had no savings left. We weren’t happy where we lived and so wanted to move sooner rather than later. Which meant we had a pretty momentous task ahead of us.
As I discussed in a previous post, the home we lived in was shared ownership. We owned 40% and at the end of 2011, beginning of 2012, we were in negative equity as we’d bought in 2007, just before the 2008 financial crisis. So, our flat was worthless to us, we had no equity built up that we could use for a new house.
We came up with a pretty ambitious plan to save £100,000. Our savings were to encompass a 10% deposit, fees associated with house buying, stamp duty tax fee and a small amount for any DIY and new furniture we’d need.
We were bringing home £5,700 a month after tax and in the calendar year of 2012 saved £30,640, averaging £2,500 a month in savings. We put a stop to the aggressive savings plan when we knew moving to America would become a reality and in September 2013, when we hopped the pond, we had £34,00 in our ISAs. Even though our life had altered course, we knew we’d be coming back to the UK and would be looking to buy a house and so were grateful we could return with a substantial amount already saved.
Looking back at those figures and feat, of saving over £30,000 in one calendar year, I’m incredibly proud of past us.
However, our feelings at the time were quite the opposite. We felt constrained, frustrated and unhappy. We genuinely are savers over spenders but I think it was the forced nature and time crunch of the task that affected our attitude so much. We felt trapped where we were living and knew the only way out was to save our way out. Money gives you options. But the amount we had to save felt like Everest.
By early 2013, we were done. We resented saving any money per month. Which was ridiculous as we were not living on rice and beans, with no central heating and candles for our lighting. But our attitude towards the saving was so negative that is was hard to see the positive. Thinking back to that time, we acted like spoiled brats.
The reality of it was that we were saving a lot of money each month. Yes, it was going to take a long time to get where we wanted to be because we were starting from zero. And the beauty of this plan was, we were going to get ourselves where we needed to be. We had a sense of pride knowing that our hard work was going pay off for us. We aren’t the type of people who want things handed to us. We want to earn our achievements and make our lives successful through our own hard work and commitment.
Going from zero to £34,000 savings in under 18 months is a huge achievement but because of our attitude, we felt shackled and defeated by what we were trying to achieve.
This Time Around
Fast forward to March 2016 when we decided to put our grand plan to achieve financial independence in motion. We had serious reservations starting out. Not because we we unsure if this is the right plan for us, it 100% is. But because the memories of how we felt in 2012 when we were saving for a house came back to haunt us.
We were genuinely worried we wouldn’t be able to shift our attitude enough to be able to cope with significantly reducing our outgoings to save most of our income. This is a very long term plan. It’s a forever life plan. This isn’t just save hard to reach the £100,000 mark in a few years. This is completely overhauling your outlook and your relationship with money and to live like you earn £20,000 when you might in fact earn £100,000.
But, happily, we’ve embraced the changes with gusto and really without any grumbling. Just shy of a year into the plan, we have permanently changed our spending habits and outlook on life and are still continuing to learn and grow into this new lifestyle. It’s just made so much sense to us.
Even though we’ve always have been savers, I’d say it was 60-40 spending to saving ratio. Now it’s more like 20-80. We’ve stripped away pretty much all discretionary spending for ourselves and focused to reduce fixed expenses where we can. Yes, we still go on trips and we still eat out from time to time but our main focus is to save the majority of our paychecks so we inch ever closer to being able to say bye to the 9-5 for good.
I’m pleasantly surprised by how different we’ve found starting out on this journey and has affirmed for me, if nothing else, that attitude really does matter. We’re attempting a much more ambitious plan than in 2012 but because we’re enthused and positive about it, we are enjoying the challenge so much. We don’t feel shackled or trapped like before. Instead, with each month and each new paycheck, we’re inching our way, ever closer, towards freedom.