Mr Frugal and I have had an interesting conversation about money, specifically where we’re at with money, this afternoon and we’ve come to some interesting conclusions about where we’re at and where we want to be.
We got together quite young, bought a house together on the spur of the moment when we got a great deal, got into debt, travelled as much as we could and paid as little as we needed to off all of our debts. Then we moved on to consolidating our debt and not cutting the cards up which we paid off with the loan which, as you can imagine, led to more debt. We moved house a few times, had two children and continued to spend above our means for several years meaning that our debts added up to a scary amount.
Then my Mum and brother died and we realised how short life was and that we wanted to spend more time as a family with the kids. This meant a drastic change in our spending habits but for a long time, the money we saved mostly offset the reduction in my wages when I went down to part time although there was some leftover to chip away at our debts each month.
We’re at the stage now where we’re earning more than we were and spending less than we ever have so more money is being set aside each month for savings and to pay off any debts we have outstanding so today we’ve decided that we’re officially out of the first stage of growing up financially – spending.
We’re already partly into what we think of as the next phase as we’re getting better at saving these days. We have a small emergency fund although we need to work on increasing that which is our priority for the first few months of the year and then any spare money we have each month will be used to pay off the last of the debts we have.
I know I should probably focus on the debt before the emergency fund but not having a big enough emergency fund is a big part of the reason we still have debts because when something went wrong, we’d just put it on the credit card in the past with good intention of paying it off that never happened.
I’d like to be debt free and overpaying the mortgage by significant amounts by the time I’m 40 (which is only a year and a bit away) so it’s a big focus this year for us because we really want to move on to what we see as the third stage of our financial life – investing!
We want to invest some money so we have that to supplement our pensions when we retire although at the moment we genuinely have no idea what or how we would go about this. We thought about simply increasing our contributions to the pension schemes we were in but I’m not convinced that would be the best thing for us when we’ve had a (very quick) look into it. We both participate in share save schemes at work but I’m thinking on a much bigger scale than that!
There are so many different types of investments to think about and that’s where I start to get confused. I have no idea if I want to invest in property or stocks and shares or even some of the High Velocity Trading that I’ve seen described on the Glenmore Investment website. We’d always thought that property was the way to go until recently and with the uncertain market at the moment, it’s a lot of money to risk. It’s all a total mystery to me right now but luckily I have some time to figure it out as we won’t be in the position to invest for at least another year or so.
Do you have plans in place for your retirement?
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