Comfort

I was reading a post on a friends site about the third stage of financial freedom. It struck quite a few chords.

I've got to the point where I'm comfortable, when an unexpected expense comes along it's now no big deal.

This feels like a million miles away from where I was a few years ago.

I think one of the biggest things that's helped me along the way has been getting a month ahead.

By that I mean, I planned out what expenses I have throughout the month and saved hard til I've got that amount in my bank. At this point I'm then all paid up for the follwoing month. As I'm then not required to contribute anything more for that months expenses, I can save for the next month.

This strategy then allowed me to start saving money. How I did this was by saving on the monthly expenses. This wasn't by reducing my usage of things necessarily (although this helped!) but by making savings in other ways. When you buy your home /car insurances for instance the helpful insurance companies often try to help you spread the cost by letting you pay by monthly direct debit. Some let you spread the cost for free, most charge you an APR (Annual Percentage Rate) for effectively loaning you the money over the year.

Once you have the cash to pay in a lump sum up front you save the extra expense of this APR. I always think of it as why go to all the lengths of searching out the best deal on your insurances (your using comparison sites right?), why would you then want to pay more just so you can spread the cost over the year, especially as the rates they charge are probably going to wipe out the savings you'll make.

With this strategy you can then plan further into the future. I'm currently working on getting a years worth of expenses saved up. A lot of people would call this an emergency fund. I think of it more of a cash float. This money is effectively already spent and needs constant replenishment.
It's hard to get to this stage, I've given up a lot of my old consumerist ways (not really a bad thing) and now I have comfort.

Comfort because if the roof comes in tomorrow it's not the end of the world and as a wise man said the sky will always fall tomorrow.


Image by Darnyi Zsóka