Financial Planning for Minimalists

Everyone thinks that minimalists are people with no money and have failed in life. Now admittedly some people discover minimalism through circumstance, as I did but it does not remove the profound change it has on your psyche. Regardless of how you become one of the chosen, everyone needs a good financial plan. Financial security reduces stress and gives us the freedom to pursue our dreams over living a life chained to a desk.

A good plan early on in life makes life easier in later life, with the right amount of discipline I believe anyone can be financially secure by the age of 40.

There are a number of ratios that I believe if followed, any person on any income can achieve financial freedom regardless of earning capabilities.

The only things you should go into debt for is a house and if required a vehicle.

• House max 6 times YNE, 25% deposit before purchasing (repay in 15years)
• Car max 1/2 times YNE earnings, 50% deposit before purchasing (repay max 3 years)

 YNE: Yearly Nett Earnings.

Housing is one of our basic necessities of life, the ratio for the nett wage to property value is 6. Buying a house no more than 6 times your net yearly wage will allow you to pay it off by the age of 40. Additionally, if you are 18 and you save the mortgage payment for 5 years. By staying home with your parents, then buy your house using the saved money as a deposit you will shave 5 years and have your house paid by 35, and save a huge amount in interest.

Think about where you live if house prices are too high then look elsewhere, there are many places where the house prices are favourable and work is available, don't let emotions cloud your good decision making.

Car, A vehicle is never a necessity even if you work a distance from home or live too far from a shop or your children's schools. Planning comes into this when buying your house, you need to decide the best location to reduce your need for transport. If you spend most of your time commuting to work then you are losing quality time with your family. A vehicle is a true expense and although it is more convenient to own then use taxis and public transport it is very rarely cheaper. Finance is the main expense when owning a car, save to pay cash for your vehicles. Keep it and look after it until it becomes uneconomical to keep on the road. Remember even if it cost a £1000 a year in maintenance is still less than financing a new car.

Example
My family runs two cars, my wife works 13miles away around 20min by car, our oldest child attends a local school 2.6miles away but and our youngest is still at home.

                                              Our yearly car costs taken from our budget

Unfortunately, we are not able to run our household with just the one car as my wife works long hours. I do the school runs and shopping duties before work. If we had planned better we could have bought a house closer to my wife's work and had a similar commute to our children's school we would have saved potentially £419.3 PCM, but we would not have a granny to look after our youngest and we would spend 12k PA on childcare. So currently we live with the additional costs of transport as it saves us because of child care.

Household and Living expenditure, This is an area where it is easy to spend television subscriptions, mobile phone contracts, magazine subscriptions and excessive electronics to name the top expenses. We take stock of what's important every month by creating charts to see where we are spending the most money and then decide if we want to change it or leave as a justified expense.
Below is one of my monthly spending charts general living expenses. I use this table to assess where my money goes, it allows me to focus on areas of improvement.

Every month we review where our money has gone and we adjust our spending habits to suit our targets. This was December so our alcohol, luxuries and fuel are higher than normal.

By controlling what you spend your money on you can save for the future, investing is not an area I want to tackle at this stage as I don't have sufficient spare cash, due to bad decisions I am currently 2 years behind my target of being free from debt at 40. Currently projected to be debt free and own all my assets at the end of March 2024. I will be 42!

The road to financial freedom is a difficult path filled with temptation and external pressure to conform to the norm, but we are going to achieve it one month at a time. Over the last 6 months, we have streamlined our finances and created a full proof system that constantly gets audited and adjusted as we progress with our own personal stages of the transition from our old way to the more sustainable way of life 

Other financially motivated blog posts in my history are 

• Living on less the road to minimalism
• Things parents should teach their children
• How I control my spending
• Money stop wasting it

Thanks for taking the time to read my blog

The cloths we wear

Ever thought about the clothes you wear, where they come from, who made them and what was the complete environmental impact of them?

12 months ago I made a conscious decision to reduce the number of clothes in my wardrobe. This process started out my need to reduce the material item that had become my driving force. I started out planning to replace my cloths with cloths made in Britain. I decided that and I would only buy clothes that have been manufactured in a manner that does not damage the environment or take advantage of the worlds poorest people.
This blog post was inspired by a documentary called "the true cost" this is worth a watch if you care about those people in third world countries who destroy their lives and environments to produce the clothes on our backs! A true eye-opener!
So right now I'm wearing a pair of Nike air trainers, Levi jeans, a next tee shirt and a peak performance jacket. I aim to find out where this clothing item was made and how to have this item impacted the world.

I started with doing a simple WIKI search on each company and from that search, I was very surprised what I found

Levi's

After reading the search I was not shocked to see the company had been involved in a scandal relating to the use of China sweatshop labour to produce their products. They don't use the Tan group anymore from what I can see but their manufacturing operations are still primarily outside of the US.
Judging from my limited experience this company appears to operate as all the major fashion houses do with little regard to the environment and the people they indirectly employ thus keeping themselves free from facing the true cost of fashion.
The company traded $4.5billion dollars in 2016 that is a lot of jeans.

Nike

While Google searching it did not take long to find out how workers in factories in Cambodia and Indonesia were passing out due to terrible working conditions. These poor people are working 50hours a week in terrible conditions for £190 pcm

Next 

has a list avalible stating who they use and they have a statement on their website that the ensure the companies treat their workforce better. It is easy to say you are doing more but all the cloths are still manufactured in the countries that don't have the correct workers rights in place.

Peak Performance, this company has no negative publicity I can see they also gave a comprehensive code of conduct and values towards sustainability, climate change and the environment. 

After a few minutes of research, I learnt that my actions have allowed these poor people to be taken advantage of. They need work a fair wage and don't have the luxury of refusing to work until conditions improve. We in the UK like to moan when our working conditions are not at the highest standards but we seem to care nothing for the poor people that make the cloths we buy, even when we are paying top price for designer / branded cloths are the worst even less of the money is actually going to the workers the farmers, fabric manufacturers and garment manufacturers but plenty is going to the corporate fat cats and investment elite.

I would gladly pay top price for cloths made in Britain, made of good quality material and made to last. I wish people would open their eyes to the way the world is operating, don't take my word for it do your own investigation and draw your own conclusions.

Wear cloths that last,  that made to last from sustainable fabrics and local people.

Think before you buy needlessly and think where your excess end up, we all have a responsibility to improve our current environmental situation.