money just makes it easier for people not to share.

PLEASE NOTE: These documents are heavily hyperlinked. Rather than repeating myself many times, which I still do, if I have written about it already, I will have a hyperlink to it. Following the hyperlink, will take you to that part of the document(s)

There is also a table of contents,that hyperlinks directly, to the subject concerned.

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After reading all below its most important to read A Alphabetical list of ways not to spend money

I have been thinking of writing this for some time. Im currently retired as a self funded retiree and became so when I was 55 on an above average income. My wife and I owned our first house outright (did not owe anything on it) when I was 24. So how did we do all this?

I have seen lots of books around about how to become a millionaire or how to make lots of money. I also hear many people taking about how to make money. As a person and couple that have had below average incomes all our working life I can now say that to become as we are, is not about making or earning money, but far more about spending money, or being careful about what we spend and what we spend it on.

When I talk to people about money I always say, “Its not what you earn but what you spend” .See also What is Money

I believe that if you want to enjoy what money can bring you, you have to concentrate on what you spend your money on rather than on how to earn money. My small amount of research on the information available is that far more is reported about earning or investing money than is on spending money wisely.

The answer then to the the question of this document, that the reason some some people don't have money is because they spend everything they earn where as those that have money, don't.

It takes time and effort and COST to edit a document. That's why this one's not edited. This whole document is about NOT spending money

You'll find many grammatical errors spelling mistakes and general typos in this document.

However you will still be able to read it and understand what it's all about. You may find it difficult to read compared to fully edited document, but you will be able to read it, and more importantly learn.

redundant capital letters

part way through writing this material I discovered I was spending a lot of time putting capital letters at the beginning of each sentence. that's because I use voice recognition, on my phone, and it does not put a capital letter at the beginning of each sentence, automatically, unless I end the previous sentence with a full stop. but then I thought, either the full stop or the the capital letter are redundant. I save time and therfor money by not starting sentences with capital letters.

Some of the spelling mistakes I,make are deliberate. English spelling is wrong and this is one of my ways of correcting it. See Spelng

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On reading the introduction some may say this is all about saving money. That's true but saving is simply the difference between what you earn and and what you spend. In most cases, most people, do not have the ability to easily modify what they earn, but everybody has the ability to modify how much they spend, when they spend it and what they spend their money on. Saving is the consequence of spending behaviour. Much has been written about the virtues of saving, but very little about how to save. I suggest that given a fixed income that saving is modifying spending behaviour. The how of saving is therefore to modify spending behavior.

You may have herd the expression “digging yourself into a deeper hole”. The solution is to stop digging. In the case of money the solution is to stop spending.

Easier said than done. That is what these documents are about. See the links below about a Alphabetical List of ways not to spend money.

Saving has to have a purpose. I see two major reasons for saving. For retirement and to increase income. More on these when I get time to write about it.

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I have written this primarily for young people as they will have the ability to get the most benefit out of it. Other age groups may also get some benefit, but the longer you wait to implement some of the suggestions the less ability you will have to obtain benefits.

Quite some time ago I used to teach Computer Studies at TAFE and devoted about only half an hour of one class where I told the story of how my Wife and I came to own our first house by the time I was 24. A number of years later I met one of the students of that class and he told me that he and his Wife, both in their early twenties, owned their own house because he had listened to what I said and used the same method I did to get their house. He had particularly remembered me talking about Trade Credit and had utilised it. I was quire amazed that someone so young had used the benefit of my relatively short talk.

In another position I had at a TAFE, in an administrative role, a young person told me that they had been out at the weekend and spent most of his money yet would not be getting paid until the next Thursday. I commented to him that I noticed that young people are not very good at managing money. He was a bit put out by what I has said because he used to work in a bank as a teller and because of that, he felt he should be regarded as someone that could manage money. I realise now that he did not see the distinction between handling money, counting and recording it, and managing money. This became more apparent to me latter when he took out a loan to purchase a new car and a mobile phone and then lost his job a few weeks later.

Another relatively young person I know had a desire for a particular model second hand car and borrowed about $20,000 to purchase it. The car was quite a bit less than than $20,000 but he was going to spend some of the extra money to “do it up” so that it would be worth more. The car ended up breaking down, then got stolen and damaged, twice, spent many years in a car repairers yard and finally floated away in a flood. He had to go through a lot of angst with the insurance company and ended up without the car but a substantial debt. When I asked him why he had borrowed more that the car was worth he said because he had got a good interest rate on the loan. However when I calculated that he would end up paying about $10,000 in interest over the term of the loan, he was astounded. He had no idea he would be paying that much interest, 50% of what he had borrowed.

When I was young and learning to write computer programs at a College of Advanced Education, as they where called then, one of the programing tasks was to write a program that would calculate the amount of interest that would be paid on a average house loan of $20,000 over 30 years. The interest was well over $20,000. This made me realise that if I was going to purchase a house the way most people do, I would be using a substitutional amount of my income just to pay interest.

I provide these stories to show to young people that by modifying spending habits whilst young will have an on going and lasting effect the rest of your life.

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I started going out with my now Wife when I was 19. One day she rang me to say that a relative of hers had asked her if his brother could borrow some money to purchase some car parts that where very cheap. I suggested she just say no to him, but she said she could not do that. As with many such situations the relative did not pay back the money but another relative did on his behalf. My later to become Wife asked me what she should do if the relative where to ask here for money again, as she was still not able to say no to him. I asked her why she had the saving. She answered that she had always saved and it had become a habit. I asked her what she was saving for to which she said nothing in particular.

I suggested that saving should have a purpose and she should spend her saving on something that would increase in value, such as land. That way if the relative where to come asking for money again she could honestly say she no longer had it. I don't recall if he ever did ask for money again but he did become a non relative.

The amount my wife had, was no where near enough to purchase a block of land in the areas where we both lived. Nor was it enough to purchase land anywhere. Consequently she purchased land in a satellite town, and took out a personal 2 year loan to cover the short fall. This had the additional benefit in that the relative could be told that in addition to not having any money to lend him, she also had a commitment to repay a load.

A bit after that we made the decision to get married and I helped to pay off the loan such that it was fully repaid in less that 12 months with the last payment being made the week before we where married.

We spent the first 3 years of our married life living in a small low cost rented one bedroom flat. This was in contrast to some of our friends and relatives who where either renting entire houses or had purchased new houses and took out consequential relatively large mortgages. I had suggested to my older cousin that we would save for three years and then start to build a house. She said that I would not be able to do that because, at the time, the mid seventies, any saving we made would be eaten up by rampant inflation. I distinctly remember the liberal party running a TV add where a young male person said that although they were saving a certain amount per week that because of inflation that house prices were increasing faster than the amount being saved. I wonder how many young couples decided to take out large mortgages because of this.

Other than taking out a mortgage we lived a lifestyle much the same as our friends and relatives. But we saved over $15,000 in the 3 years. This was helped along quite a bit by the high interest rates at the time because we would put our saving in multiple fixed deposits. I remember we had over a dozen of them at one stage. We also realised that not only where we earning interest but where earning interest on the interest. That is when a fixed deposit would mature we would re invest it and the interest in a new fixed deposit. We also discovered that because we where able to combine some of these fixed deposits so having a higher amount to invest that we where able to get a higher interest rate.

Although we had the $15,000 the cost of building the average 3 bedroom house at the time was over $20,000. We could have gotten a builder to build a house for us and taken out a relatively small mortgage, but I figured that their must be a reasonable amount of profit for the builder which we could save by being owner builders, a term that was not being used at that time.

From the time we starting building until we move in was three months. Not bad considering most professional builders at the time were taking 6 months.

Our $15,000 saving did not last very long, but rather than go to the bank and borrow money we utilized trade credit. Trade credit is what businesses give one another when they buy and sell goods and services. When a business purchases something, from another business, they typically get thirty days trading terms. That means they have to pay for what they have purchased 30 days (a month) after the end of the month the purchase took place in.

The best thing about trade credit is that it cost nothing. The interest rate is ZERO. Meaning you pay NO INTEREST

So how did we, a non business, get these trading terms. By utilizing the trades people we were using to do the construction. The carpenter we contracted was able to get us 90 days trading terms (credit) with the local hardware store. Luckily my Father was working for a plumbing supply business at the time and was also able to get us 90 days credit. By making the purchases at the beginning of ever month we where able to effectively get another month credit. Of course we had to make sure we would be able to pay the respective amounts when they fell due. This required a bit of planning. But it was all known information. We new when the amounts had to be paid and also new when we where getting paid so never purchased more than what we would be earning in that free credit time. It is easy to do these type of calculations.

However that was still not enough to be able to get our house to the point where we could move in. So then we used free personal credit. That is Credit cards. Banks will give people free credit for a period of time. Similar to trade credit. You make purchases during the month and them pay for those a some time in the next month. When we where utilizing it the banks did not request payment until the end of the following month. Now they request payment in the middle of the next month. Again we made sure we did our purchases at the beginning of the month to maximize the free credit period.

I have since discovered that trades people utilize free trade credit and personal credit card free credit on top of ther trade credit by using ther credit card to pay ther trade credit, so increasing the credit free time they have.

The important thing to stick to with these free credit periods is not to go beyond the time where you get the credit for free. Because if you do you are then paying interest and that interest will be MORE than you would paying on a housing load. Planning is extremely important so that you do not pay any interest.

We had made arrangement with the bank to be able to take out a housing load but never had to do so. It is always to have a backup plan in case something goes wrong.

Whenever we could, we did as much work on the house ourselves. That included drawing up the initial plan, making applications for permits and the like, digging trenches, painting, tiling, supervising, purchasing materials and engaging contractors and trades people. However we also paid some builders a modest sum to occasionally give an opinion of the work that trades people have done.

As I said earlier, we move in to our house 3 months after we starting building, but the house was far from finished. It was not painted, had no floor covering or curtains and some rooms had not been finished. But it was cheaper to live in a house that we owed nothing on, than to be paying rent.

Over the years we slowly finished the house whilst living in it. This was a saving again as we did not have to travel back and forth to the construction site.

It was also not a particularly fancy house and did not have anything fantastic in the way of finishings. But we owned it outright and I was only 24 years old.

Some may say that it could have been done in the past but it can not be done now. I agree in respect that land prices are currently increasing quite rapidly. But presently inflation, compared to what it was when we where building (17%) is extremely low. We built our house quickly because building cost were increasing very fast. But now they are not. So ther is less need to build fast. You can save a bit of money and them build a bit and continue to do that. Build as you earn money.

If you want to live comfortably in retirement it is important that you have a plan to do so. Everyone will have a different opinion of what comfortable retirement is but those that have always spent all they earn, so have no savings, will have a big shock when they have to live on a government pension. Compare that to those that have not spent all they earn. They are used to not spending, so will not get the same shock, if they where to live on a government pension. They would be able to supplement that pension with they saving they have accumulated.

In our case, My Wife and I am are self funded retirees, meaning that we get no government pension. We currently spend more now than what we did before we retired and have a enough assets to enable our future income to increase faster than inflation.

This is all because of our spending habits we established throughout or lives.

In Australia we have compulsory employer contribution to superannuation. It was originally establish by government in a bid to reduce the burden on governments to have to pay future pensions because it was known that, in the future, ther would not be enough people working and paying taxes to support those not working and receiving a pension. Because of this ther are superannuation laws that determine when you can get back what you have contributed to superannuation. I have yet to see such superannuation that will give as much disposable income as people are used to before retirement or an income that increases with inflation.

Unfortunately, it would appear that this is not known. I hear on talk back radio programs and at superannuation seminars people saying they have so much money in super and want to retire in a few years and ask for advise on what to do. The time to be thinking of retirement is when you first start working, NOT just before you are about to retire. It would appear that because the compulsory super contributions is government regulated that many people feel they do not need to worry about it. It is to far off in the future. Someone elses problem. It is not particularly difficult to spend some time making discussions about your future. Some of those decisions are how you spend money.

I have a relative that told me they had trouble getting a bank to accept a number of reserve bank, tax refund cheques that where up to four years old. I asked why she had not banked the cheques for that long and she said that if she had, they would have spent the money,but by not banking it they would not.

A friend told me that they where having trouble getting an organisation that had built a swimming pool for him to finish it. I suggested he not pay them until it was completed. The friend said that he had paid to pool organisation the full amount of the pool before construction even started. I asked why. He said because he had borrowed the money from the bank and that if he had not payed the money when he did, he would have spent it and not had the money to pay for the pool.

In both these situations the attitude was that if they had money they would spend it. That somthing else had to be be done to stop them spending it. Both where, I consider, extremely badly conceived ways to overcome a behavior problem.

Attitudes lead to behavior.

It has been proven time and again that although attitudes are hard to change that behavior is very easely changed, and a continued and ongoing change in behavior can lead to a change in attitude.

Do as you have always done and you will get what you have always got. But if you make a change in what you do, you could be better off. If you are a person that does spend all they earn that is a behavior that you can change. Try it. You have nothing to lose and everything to gain.

My wife and I do not use supper to fund our retirement. If we can do so anyone can. The primary way we are able save for retirement and live very comfortably in retirement is because of our spending habbits.

My Father in law retired not long after we got married. At that time his superannuation payout was enough to buy 3 or possibly 4 houses I suggested he should buy houses and live off rental income, but that was not his way of doing things, so put the money in the bank and slow spent a lot of it. He later discovered that the interest on the money he had in the bank was not allowing him to get a full pension, as a consequence he transferred the money to a cheque account which received no interest, so enabling him to get a full pension.

The next 40 years of his life he lived on the pension and when he finally passed away we discovered that he had almost twice as much money in the bank as when he retired. This goes to show that a person on a pension can save a substantial amount of money. As I said before it's not what you earn, it's what you don't spend thats important.

parsimony

noun noun: parsimony extreme unwillingness to spend money or use resources. “a great tradition of public design has been shattered by government parsimony” synonyms: meanness, miserliness,

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