“Beware of little expenses – a small leak can sink a great ship” – Benjamin Franklin
Friend, have you ever reached a point in your life where enough is enough?
That happened to me this week.
I was f*cking sick and tired of seeing our finances get decimated.
So I made some bold moves to get us back on track.
It required dropping my ego and making some sacrifices.
As I’ve shared with you recently, our inconsistent income has been a challenge. I don’t have full control over how much money flows in each month (but I’m actively working on it).
But what I do have control over are my expenses.
“You’ll never get ahead if you take out loans or live on credit. You will just slide backwards down the slippery slope. Reduce your expenses, analyse your situation & re-group.” – My Dad
Coinciding with Day 1 of the Fix your Finances Challenge on Monday, I used the dissatisfaction I was feeling with our financial position to sit down and get ruthless with our finances.
I wanted to find and fix the small leaks that had been sinking our great ship.
The first thing that had to go was the credit card.
We’d been using an AMEX Platinum charge card for the past two years. Before this, we’d never owned or used a credit card. But I was swayed by the travel benefits and perks and thought I had proven I had the financial discipline to manage a credit card.
Yes – the card did help us get some epic deals on flights with the points (we all travelled to and from America for under $1,000).
Yes – the card gave us free lounge access at the airports.
But the problem was the card also allowed my strong financial habits to slip.
I always bang on about Parkinson’s Law which says – the more of something you have, the more you will use. When you have a credit card, you have access to more money (which isn’t your money) which means you will spend more.
It’s all fun and games while you’re spending money that isn’t yours, but when the end of the month comes and you have the balance to pay off?
That’s not fun.
I’d made the justification in my mind that it was helping the us navigate inconsistent cashflow in our business and personal finances – but in reality, it was just a band-aid solution. It was creating more problems for us.
By ditching the AMEX Platinum card we saved $1,450 on the card’s annual fee.
We were also using the card to pay our rent to build up our points, but at the same time we were also incurring $744.64 in surcharge fees…
On reflection this was f*cking dumb.
A small leak can sink a great ship.
The next thing I did was eliminate the margin loan we had connected to our share portfolio.
It wasn’t massive (around $13,000), but it meant we were paying $1,111.56 in interest payments over a 12 month period.
To eliminate this I sold 200 shares in one of our stock positions (we made a $13,000 profit – not bad).
The next thing I did was take a close look at the subscriptions that were no longer adding value to our lives.
Netflix, Facebook Verification (blue tick), Twitter verification (blue tick), Audible, Hypefury and ClipScribe all got the flick.
Seeya!
This saved us another $1,407.85 per year.
A small leak can sink a great ship.
Finally, Kaci called up our insurance and managed to save us another $312 over 12 months.
All these little leaks added up to $5,026.05 in annual expenses!
“The universe won’t give you more money to manage until you can prove you can manage what you already have.”
These are the words I often share when I’m running workshops on money management.
This week, it was time for me to pour myself a cup of my own medicine and smash it down the hatch.
I hope you can learn a lesson from the mistakes I’ve made.
Don’t wait for a disaster to strike. Take a hard look at your financial situation. See where you’re f*cking up. Drop your ego. And make some sacrifices.
Your future self will thank you.
And never forget, a small leak can sink a great ship!
