May

28

getting out of debt Amy’s way

Filed Under credit and debt | 8 Comments

You never know when you’re going to have an interesting conversation.

Last weekend I was staying with some friends by the seaside, and whilst we were out I ended up chatting to one of the group, Amy, about my house - which I bought last year. She stated that she was rubbish with money, to the extent that a few years ago, she’d been made bankrupt.

The details of the story are that she ran up £25k of credit card debt in her very early twenties, whilst earning a salary of something like £15k. After talking to a friend who’d been through bankruptcy she decided it was the best option for her, went to court and was made bankrupt. She was put on a payment plan of £100 per month for three years - this was the spare money that she had after basic expenses and could afford to repay to her creditors.

I admired her frankness, although I was then stuck with what to say. I told the truth, which is that I think there is nothing wrong with being made bankrupt - for businesses it’s a cost of providing credit which they should be allowing for. She said that although she’s now eligible for credit she no longer takes it up, and whilst she’s still perpetually skint (not a well-paid job, living in an expensive area), she’s debt-free.

I don’t know whether I conveyed my admiration well enough. I made (for me) the mistake of saying “it’s ok if you don’t do it every year”. I know that she’s right. Bankruptcy isn’t for everyone, but for some people it’s the best way to relieve their debts. It would have been for her as she couldn’t have even payed the interest on £25k, and she had little immediate prospect of a better paid job. Once bankruptcy has been discharged, you can carry on your successful life, hopefully a little wiser for the experience.

If I knew someone in real life who was facing massive debt I’d probably try to put them in touch with her. There’s nothing like hearing personal experience to try to reassure them that there is life after crippling debt, and that bankruptcy isn’t an insurmountable obstacle in the quest for a happy, fulfilled, and eventually rich life.

May

27

guest post - saving 10 percent is death

Filed Under guest posts | 18 Comments

Today we have a guest post. Rob Bennett is the author of “Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work.” It is available for sale at his web site, www.PassionSaving.com, which includes nearly 200 articles on saving and investing strategies developed in the Retire Early Community.

The conventional advice is that all workers should aim to save 10 percent of income. I reject this idea.

It is a bad idea to consult a rule of thumb when deciding how much to save. Effective saving plans are customized saving plans, not prefab saving plans. What you need to determine is, what percentage of income should someone pursuing your particular Life Goals and faced with your particular financial circumstances be pursuing?

Someone working a low-paying job because she believes that the skills she is acquiring will pay off big down the road may well not be able to afford to save 10 percent. Someone who has recently received a 50 percent raise can almost certainly afford to save far more than 10 percent.

There are many people today saving negative percentages of income (by going into debt). But a high percentage of effective savers save far more than 10 percent of income. It is not uncommon for effective savers to save 50 percent. In my best year, I saved 80 percent of post-tax income.

It is hard to save 10 percent of income if you are not pursuing a saving goal that provides strong motivation. That’s why most today are poor savers.

For those who are effective savers, saving 10 percent per year is usually a frustrating experience. When you only save 10 percent, you only save enough to be able to afford an old-age retirement. That’s none too inspiring a saving goal. Who gets excited about giving up things he could be doing with his life in his 20s, 30s, 40s, and 50s to provide for his needs in his 60s, 70s, 80s, and 90s? Most effective savers quickly graduate to more inspiring saving visions and higher saving percentages.

Save more and you will see results from your saving effort far more quickly. That will cause you to love saving more and more. Saving begets saving. It is when you begin saving more than 10 percent that your saving efforts kick into high gear.

Telling people to save 10 percent places a ceiling on their saving efforts as often as it places a floor on them. The save-10-percent advice encourages a way of thinking about saving in which people see it as something that must be forced, something that is boring, something that requires self-denial. Saving 10 percent is death.

May

21

worst tactics for trying to get a job

Filed Under education and career | 16 Comments

Now going to gossip about an alleged incident that took place where I work.

My team is trying to expand so they’re often interviewing people. Allegedly, there was one interview which went so-so, but after the interview, as the candidate was being escorted out, he basically went down on his knees and begged for the job. According to the guy who was interviewing, if they’d had any thoughts of hiring him before, he had officially blown it.

I don’t know whether I’m abnormally sensible, but I just can’t see myself ever thinking that would be a good tactic to get a job. No employer wants to see my desperation (if I’m desperate), which handily saves my pride somewhat. Behaving well at a job interview isn’t really that hard. Do what is asked. Be a sensible, normal person in habits (fake it if you have to). They might not hire you, but you’re giving yourself the best chance.

I could do with a laugh, does anyone else have any awful tactics that they wish to share?  Can you beat begging on your knees as ways not to get a job? Let me know in the comments.

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