Let’s face a little reality: You can’t just quit your job and go be a pirate without resources to fall back on. You need to pay the bills, and if you quit your job, there’s no paycheck. Trust me on this, I learned this lesson. Part of building your ship means making sure you can function once you sail. Money is the most important part of that equation. So, what to do?
You save. Every single cent that you can. However, in a world with kids, bills, not a lot in the way of a paycheck, and the temptation of shiny things to fight, it’s hard. Believe me, I know.
I’ve come up with some ideas.
1) First, I have my direct deposit set up so that a set amount goes directly to my savings account. It never hits my checking account. Additionally, I can’t access my savings from my debit card, so I actually have to go into the bank to make a withdrawal.
2) I don’t use my ATM card except for larger purchases. I draw an allowance once a week from the machine, and I use paper money to pay for the little things during the week. Any change I have goes in the change jar. There is one exception: Once a week I go up to the 7-11 and pay for something and ask for 10 dollars back, and they are nice enough to give it to me in a roll of quarters if I ask.
3) I transfer 25 dollars a week into my Sharebuilder account, and my plan is to once a quarter buy shares in a REIT. This REIT (AGNC) has a yearly dividend of a little over 12 percent, which I will reinvest into the shares for the foreseeable future. I just made my first purchase, using half the available funds in my account, and then will do it again on June 30.
4) As I mentioned in a previous post, I set aside 25 dollars a week into my Amazon Account, and that one is for Christmas Spending ONLY.
So, as you can see, I have a three-tiered savings system. Cash on hand in the jar, available savings at the bank, and an investment that can be sold as a last resort.
All my savings transactions happen on a Friday, and it’s the first thing I do on Friday Morning. I actually have it as a calendar item to remind me.
The rest is all up to my discipline. What am I making this investment for? My future. My wife and kids. My peace of mind.
Here’s a tip, though: Write down your monthly expenses, the bills, the shopping, all of your outlays for a month, then triple that, then multiply it by six. That’s how much you’re going to need in reserves. Cash goes quicker than you think when you’re trying to be a pirate.
Looks like a pretty big number, doesn’t it?
The earlier you start, the better.