Sometimes It's Hard to Stand By Your Plan: Why I Choose to Live in a Smaller Home Than I Can Afford.

We own our small home. During winter, it's warm and cosy but come summer, its seems stuffy and cramped.

For the moment, we choose to stay put although we could afford a significantly bigger and better place.

Are we making the right decision? You decide.

Who Is the Best Person To Look After Your Money? I AM BEST

I like neat little tricks for helping me remember things. So I wanted to come up with something I could use to help me make decisions on my journey to achieving independence from my salary.

I considered the following questions:

• Who has the best understanding of my attitudes, aspirations and situation?
• Who cares most about the state of my finances?
• Who has the most to gain or lose from the state of my finances?
• Who will my finances be working for?

And finally, I considered this:

'Who is the best person to manage my financial affairs?'

My answer:

I AM BEST

I love reading investment books......... but am disappointed today.

My bookshelves heave with stockmarket investment books and related subjects such as psychology. My collection is jokingly referred to as 'investoporn'.

When I first started reading, every chapter I read contained a revelation. Nowadays, I tend to get a handful of nuggets from each book I read. I'm happy with that because each book provides lots of revision, some different angles and a few brand new nuggets.

I'm always looking for something new to read and recently came across a book called Warren Buffett Invests Like A Girl by LouAnn Lofton . Ms Lofton, a member of the Motley Fool Team, is lucky enough to have her book heavily promoted by The Motley Fool.

I think The Motley Fool is an excellent website and is usually a great source of financial and investment information.

However, I do have some reservations about this book.

AA - Apathethics Anonymous?

About eleven years ago, I signed on with the AA. I don't think I've had to call them out in the last 5 years but every May, as regular as clockwork, I get a letter telling me how much my new, increased premium is going to be. It was going to be £207 for this year.

Two hundred quid plus sounded a bit steep and breeching the £200 barrier seemed to jump start me into action.

I had a quick look on the AA website and also RAC and Green Flag.

The letter told me (twice) what a valued customer I was so I thought I'd see if that were true.

Since I'm much better at being assertive and masterful over the phone than in person, I decided to ring them up and see what was what.

After a few security questions and polite greetings, I gathered I was talking to an operative who I will call Mark, which isn't his real name but he was a very nice chap.

Did endowment mortgages deserve to die in disgrace?

This morning, I was looking through some documents and came across some papers relating to my mortgage.

I have an endowment backed mortgage which is an interest-only loan backed by an endowment policy. Buying an endowment mortgage turned out to be a big mistake, but at the time, I knew no better.

I know for a fact my endowment will not cover the mortgage when the mortgage becomes due in a few years time. Luckily, I have known this for a while and, years ago, switched a good chunk of the mortgage from interest-only to repayment. It won't matter if there is a shortfall.

A mortgage is a long term loan secured against your house.

There are essentially two ways of repaying your loan:

Growing My Own's Investment Strategy

When people ask "What should I invest in?", it's akin to asking "How long is a piece of string?"

It depends on a multitude of things including age, disposable income, lifestyle, time scale, attitude to risk, knowledge, confidence. The list goes on.

With this in mind, I can only talk about myself. So lets consider me:

Do you back the horse, the jockey or the racecourse?

When investing in a new investment, one of the first questions that I ask myself is the above question:
Am I backing the horse, the jockey or the racecourse?

If I choose to back the racecourse, I think of it as picking a sector (geographical, like China, or sector, like mining). I do this particularly when investing in tracker funds and ETFs.

If I choose the jockey, I'm backing the competencies of a fund manager (of an investment trust, unit trust or OEIC).

If I choose the horse, then I'm basically picking individual shares myself.

Which is best?

Joshua Kennon - One of My Favourite Investment Authors

Joshua Kennon is one of a handful of investment authors that I really enjoy reading.

What I really like about his style is his ability to take quite complex principles and explain them very clearly and simply. When I read his stuff, I can almost hear him speaking although I have never actually spoken to him.

Another reason I like his writings is because he sometimes takes a commonly discussed issue and discusses it from a different angle.

Check out this article as an example of one of many:

http://www.joshuakennon.com/a-perfect-example-of-why-most-investors-have-terrible-returns-on-their-money/

Dot.Doom Fever - A historical story.

One long hot summer, when the internet was still in its infancy, an epidemic swept through Planet Wonga, where I once lived. This is the story of that time.

During the outbreak, previously rational people, myself included, caught a debilitating illness called Dot.Doom fever. Even though the fever was contagious, there were no physical symptoms and the fever could only be diagnosed by observing the symptoms of irrational behaviour and delusions that infected people displayed. Although not everyone caught the illness, every sector of society was affected: from doctors to cab drivers, hair dressers to solicitors, office workers to architects.

Prior to the epidemic, people used to go about their usual business of building houses in a slow and controlled manner: first the foundations, then the walls, followed by the roof and, finally, the additional luxuries like roof gardens and hot tubs.

One of the most pernicious effects of the Dot.Doom fever was that, in the early days, it made people feel like Masters of the Universe and every house they touched seemed to turn to gold. As you can guess, people started building more and more houses. Some of the afflicted even borrowed Wongatons, the currency of Planet Wonga, to build or buy more houses.

The Widget Maker - A story.

Gerry made widgets. He loved making widgets and so did his team of widget makers. He loved widgets so much, he even called his business 'WidgetsRUs'. The only thing Gerry loved more than widgets, his wife and kids excluded, was cold hard cash.

Being a smart man, Gerry charged £X each per widget and then slapped a trailing charge of between 1% and 2% a year on each widget he sold, depending on the widget. (Gerry sold a whole range of different widgets - each type designed to do something slightly different).

The only thing that cast a cloud over Gerry's happy world was having to deal with the people who bought small amounts of his widgets. He didn't mind the people that placed massive orders so much, it was more the little buyers that used to ring him up for only 50 widgets at a time that annoyed him.

Indeed, he had once been known to yell down the phone at a startled little buyer, "What do you think this is? A 10p pick and mix store!"

If you pay your utility bill, pay yourself!

Every month most of us watch our wages slip out of our current accounts by direct debit and standing order. It's gone! Never to be seen again.

Would you ever NOT pay your utilities, mobile phone, insurance bills etc? No?

PAY YOURSELF too. Every month. Automate it.

A small start is better than not starting.

The Chessboard: A story

Once upon a time, in a far a way kingdom, lived a king who was very greedy and taxed his people until they were almost broke and starving. The king was not a totally bad bloke - just very greedy, foolish and far too removed from his people.

Early one morning, the king decided to go for a swim in the sea. Slipping out of the palace, the king headed to the beach leaving his guards and servants unaware of his whereabouts.

What is an ISA? Who knew wrappers could be so much fun?

An ISA (Individual Savings Account) is a tax shelter - like the polytunnel

over your crops or the wrapper around your sweet, the box around your chocolates etc.

So a cash ISA means that you don't pay tax on your interest, like you would have to in a normal savings account. It's still cash in your ISA, its just that the cash is sheltered from any taxes that may be due.

You can have one if you reside in the UK for tax purposes (for most of us that means having a National Insurance number) and are over 16.

Passive Income: The Holy Grail of Income

Imagine earning money while you DON'T work.

Assuming you are in paid employment, each day you go to work and engage in activities as directed by your employer. In effect you exchange your labour, knowledge and skills for a pay cheque. There is absolutely nothing wrong in doing this but it does mean that you have to be directly involved and physically present each day.

Yeah, you could do overtime (assuming you are in a job that pays overtime) or even take a second job but these still require you to be personally present and exchanging your labour for cash.

If you are in paid employment, you can't be elsewhere during your working hours. That means you can't be earning more money by working somewhere else or watching football or
chilling out or white water rafting or whatever else it is that
takes your fancy during work time.

So, is there another way?

Cut your coat one size smaller than your cloth....

In other words, try living just below your means.

I assume you are reading this blog because you have more than a passing interest in growing your own. (or you've stumbled on this page whilst waiting for your tea to brew).

Question is: are you prepared to delay gratification today for something much much bigger in the future?

Make the commitment and it all becomes much much easier because your mindset and priorities change. That, I guarantee you.

Never a lender nor a borrower be....... is this good advice?

I would say it is good advice when talking about borrowing from your friends and family. I would even go so far as to say it changes the balance of the relationship, often for the worse.

But then there is comercially agreed debt and that's a different ball game altogether.....

Why I think too much cash is not good for growing your own.

My mate has £10,000 in a safe. It's been there since 2004.

He told me about it a few days ago. I was pleased he'd managed to amass this amount but I was very surprised that he'd chosen to stick it in a safe.

Ways I can supplement my income.

Things I can do to supplement my income/ investment fund:

(1) Win the lottery - highly unlikely, moreso because I don't play it.
(2) An inheritance - moderately unlikely.
(3) Get another job - possible but not practical.
(4) Part time self employment - possible

So, it looks like self-employment of some sort is the way forward. But what to do?

What's the quickest way to make a small fortune?

Answer: start with a big one.

Boom! Boom! The old cliches are the best.

But for those of us that don't have a big fortune to start with, I intend this blog to be a source of information and ideas. That's the plan. But do plans ever go to exactly to plan? Not in my world and not in my classroom.