Tag: financial independence

Step 29: Start a coins jar

~ Inge Natalie Hol ~ Leave a comment
Step 29 of the 100 steps mission to financial independence: Start a coins jar
Step 29: Start a coins jar

Maybe you had a coins jar at some point in the past, possibly when you were a child, and like me you might have looked at it in anticipation every time you put in a coin, hoping that single penny would somehow magically fill up the jar to the top… or at least get you to your savings goal in order to buy that new Nintendo game… I at least had one as a child and definitely enjoyed the process of saving up and seeing my little nest egg grow. But despite reading about coins jars on many money and finance blogs, I never started this in my adult life, as I wasn’t convinced or indeed saw the point of it, as I didn’t think those coins would ever get me anywhere near my savings targets with the amount of change I’d put in.

That was until recently when I read about this concept again in MJ DeMarco’s book “The millionaire Fastlane”. DeMarco agrees that a coins jar, or a change bucket as he calls it, won’t actually make you rich and definitely won’t make you a millionaire. But he does express two advantages that having a coins jar can give: Continue reading “Step 29: Start a coins jar” →

Step 28: Keep 50% of any extra money

~ Inge Natalie Hol ~ 2 Comments
Step 28 of the 100 steps mission to financial independence: Keep 50% of any extra money
Step 28: Keep 50% of any extra money

As promised, the next few steps will focus on how to speed up your savings process and reach your savings target faster with some simple ideas. Although the tips and habits will help you to build your living fund faster, they are not meant to be just one-off ideas. If applied over time, they will help you to keep progressing towards new financial targets you have set yourself, even if they have since become other or bigger goals.

The first one of the tips – Keep 50% of any extra money – is an easy one to understand, yet as often is the case when it comes to money, difficult to implement, as it requires you to resist the temptation of instant gratification and instead needs you to focus on the long-term advantages of self-control. Continue reading “Step 28: Keep 50% of any extra money” →

Step 27: Build a 3 months living fund

~ Inge Natalie Hol ~ 1 Comment
Step 27 of the 100 steps mission to financial independence: Build a 3 Months Living Fund
Step 27: Build a 3 Months Living Fund

Once you have built your emergency fund of $1000 (or the equivalent in yourn own currency) for unexpected or emergency expenses, you are going to continue with the new savings goal in line with our mission to reaching financial independence. In this step we look at the ins and outs of a 3 months living fund and you are going to start working towards putting together this fund.

The rationale behind a 3 months living fund is that it would cover your basic living expenses if for whatever reason you no longer receive an income. This might be because you lose your job, are unable to work or voluntarily decide to take time out of work, for example to care for an elderly parent or sick relative or because you want to take time to focus on something else. It a safety net that ties you over for at least three months that will at least cover your basic living expenses for some months, leaving you time to find a new job, an alternative income or just allowing you to take those three months off before returning back to work. Continue reading “Step 27: Build a 3 months living fund” →

Step 26: Open a new savings account

~ Inge Natalie Hol ~ 1 Comment
Step 26 of the 100 steps mission to financial independence: Open a New Savings Account
Step 26: Open a New Savings Account

Now that you know all about the power of interest over time, are building (or have built) your emergency fund and have started paying down your debt, we are moving on to a new area of your finances: your savings. In the next few steps we will look at your savings in greater detail, but the first step for today is to open a (new) savings account.

Looking at the title and this introduction you might think can skip this step as you maybe already have a savings account, which you are of course free to do. But opening a new account starts with investigating what’s on the market and I recommend you at least read through this step and potentially still consider opening a new account, as it never kills to have more than one savings account, especially if they don’t involve any costs, and because it can be helpful to have different accounts allocated to different savings goals. Apart from that, it is also a good habit to compare saving accounts from time to time, to make sure you are still getting the best deal. And if you find out you aren’t getting the best conditions possible, it is a good moment to consider changing your savings money to a new account. Continue reading “Step 26: Open a new savings account” →

Step 25: Start a Monthly Finance Review

~ Inge Natalie Hol ~ Leave a comment
Step 25 of the #100stepsmission to financial independence: Start a Monthly Finance Review
Step 25: Start a Monthly Finance Review

In step 18 we looked at starting a weekly finance review and what to focus on during that weekly half an hour, to ensure you stay on track for that month’s spending, bills and goals.

Today we are going to take this one step further, by starting a monthly finance review, in addition to your weekly review. Whereas the weekly review is incredibly useful to ensure you achieve your monthly goals, the monthly review helps you to achieve your longer term goals that you set out to achieve, such as becoming debt free, getting to a certain net worth or saving a specific amount of money. It is the moment to plan and look ahead a little further and to readjust your goals and spending patterns.

During most months you can probably combine every fourth weekly review with your monthly review, although for your monthly analysis you will need to set aside more time, as you are analysing the entire past month and also looking further ahead. I recommend scheduling in roughly 2 hours every month to complete this step.
Continue reading “Step 25: Start a Monthly Finance Review” →

Step 23: Start paying off 1 debt

~ Inge Natalie Hol ~ 1 Comment
Step 23 of the 100 steps mission to financial independence: Start paying off 1 debt
Step 23: Start paying off 1 debt

From the previous step you are now up to speed about the positive effect of extra payments on outstanding debts. That leads us to the current step: start paying off a debt. You might think you are already paying off a debt, or several of your debts, but the point here is that you are going to pay off a debt faster by making higher monthly contributions than the minimum required.

When you pay off a debt faster than scheduled, a few amazing things happen:

  • You end up paying less interest, resulting in a lower amount of money paid back overall;
  • It takes less time to pay back the loan, meaning you can tick it off your list a lot sooner;
  • Psychologically it is a great relief to have paid off a debt: one less thing to worry about;
  • It increases your motivation by showing you that you can achieve your goals;
  • And here’s a great thing: once you’ve paid off a debt, that monthly amount you poured into this debt suddenly becomes available, which you can then use in its entirety to pay off another debt, meaning it keeps up that momentum!

Continue reading “Step 23: Start paying off 1 debt” →

Step 22: The impact of extra debt payments

~ Inge Natalie Hol ~ Leave a comment
Step 22 of the 100 steps mission to financial independence: The Impact of Extra Debt Payments
Step 22: The Impact of Extra Debt Payments

After some rather depressing news to do with debt and interest, it is again time for some uplifting information. In this step we are going to look at how powerful it can be to put extra money towards paying off a loan and how much it reduces not just the time spent on paying back the money, but also the total amount paid back.

This information will hopefully inspire you to find ways of making extra payments towards reducing your debts. As even if they are small extra payments, in the long run, thanks to that friend of ours called compound interest, it will have a huge effect.

Let’s go back to the same example as the one I used in step 21 to illustrate how credit cards work, in which we looked at an outstanding debt of $1000, at a 1,5% monthly interest rate and a payback rate of 3% with a minimum of $10. But this time you make an effort each month to pay the minimum amount (3% of the outstanding debt) and an EXTRA $25 on top of the minimum amount. Let’s see how this works out. Continue reading “Step 22: The impact of extra debt payments” →

Step 21: Stop accumulating debt

~ Inge Natalie Hol ~ 1 Comment
Step 21 of the 100 steps mission to financial independence: Stop accumulating debt
Step 21: Stop accumulating debt

It’s time to start looking at an area of your finances that makes many people nervous, scared and / or depressed, leaving them ignoring rather than analyzing and planning how to deal with that very same area: debts.

Yet in order to become financially independent and in total control of your finances, it is important to understand how debts work and how even seemingly small debts or amounts can make a tremendous difference to your long-term finances.

In step 4, you listed all of your debts, so you should have a good idea of how much debt you have and how much you are paying towards amortizing these loans. In this current step we are going to look at the effects of debt and how much extra you end up paying on any long-term debts. Continue reading “Step 21: Stop accumulating debt” →

Step 20: Learn about Compound interest

~ Inge Natalie Hol ~ 3 Comments
Step 20 of the 100 steps mission to financial independence: Learn about Compound Interest
Step 20: Learn about Compound Interest

You have probably heard about compound interest, and might even feel you understand the notion of compound interest quite well, but since it is the key concept in some of the next steps and because the impact of compound interest over time might be far bigger than you realize, this entire step is dedicated to looking at how compound interest works.

In finance compound interest is one of the most powerful factors at work that by using time as it catalyst, can do one of two things:

  • keeping you poor by losing money on outstanding debts
  • making you richer by making more money with the money you already have

Let’s look at how compound interest works and how it generates this power over time. Continue reading “Step 20: Learn about Compound interest” →

Step 18: Start a Weekly Finance Review

~ Inge Natalie Hol ~ 1 Comment
Step 18 of the 100 steps mission to financial independence: Start a weekly finance review
Step 18: Start a Weekly Finance Review

Step 18 is all about starting a new and incredibly powerful habit, one that will allow you to focus on your mission, realign your spending and savings patterns to your goals and get closer each time until little by little one day you tick off your first goal, then your second one, your third, until you realize you are able to hit your goals one after the other.

This new super habit is starting a weekly finance review, during which you will go through your goals and some of the main steps we have covered up til now, and when you work your way through the next 82 steps that are still to come, you will add some of those steps to your weekly review too. In that way you consistently hold yourself accountable for your success as you review whether you are on track (or not) for the rest of the month, and what adjustments need to be made in order to make sure you will achieve your goals for the month, and with that ultimately those much desired long-term goals.

Continue reading “Step 18: Start a Weekly Finance Review” →