Financial Minimalism

Financial Minimalism

This morning, when paying my water bill I realised that minimalism can be applied to all aspects of our lives, not just our physical belongings. It occurred to me that I spend time on the 15th of every month logging into a website, entering my card details and paying a utility bill. This process takes me around 10 minutes each month, or two hours over an entire year. What a waste of time!

Beyond the physical act of sitting & paying the bill, I also have to be conscious of the date & remember on the 15th of each month to pay the bill. This is absurd & it is one of the last parts of my financial minimalism journey.

This morning I took an extra 10 minutes to sit on the website & set up a monthly direct debit. I have now freed myself from the tyranny of the monthly water bill. I still need to set up another direct debit for my council tax bill & I’ve decided to do that later this evening.

My Financial Minimalism Journey to date

Things used to be a lot worse than this before I started my Minimalism & simple living journey. When I started I had so many bills & so many due dates. I had a student loan to pay each month, a student overdraft to clear, 5 separate credit cards all carrying an outstanding balance & all of my utilities had to be paid manually on receipt of a bill.

Luckily I didn’t have a car payment to make as I’ve tended to buy cars for cash since 2008 when I handed back my lease car, but I did have car insurance and breakdown cover to pay. I also had excessive debt to try to clear & a massive rent bill which I would pay via a bank transfer each month. Paying by bank transfer meant I had to login each month & manually transfer cash to my land lord. Not cool.

The problem I had was a lack of fluid cash in the bank to commit to direct debits. With so many commitments and around 15 separate payment dates each month, I needed to pay them manually just in case I didn’t have enough money to cover the bill. That way I could manage the bill, wait for a reminder or red-letter & hopefully buy time to pay off the outstanding bills. This was largely due to overcommitment.

Managing so many payments when you owe a lot of money is hard work. It requires a lot of thinking time & financial planning. It also introduces a lot of stress.

In 2012 I finally committed to living a more minimal & simple life. I sold the flash cars, handed back the keys to my house, sold a ton of stuff & moved in with family to get the finances under control.

Using money from the sale of the car, I instantly cleared an overdraft and one of my credit cards. I then started redirecting those payments to other cards to snowball them and bring them down more quickly. Over 18 months I managed to clear off all but one credit card, pay off all student debts & even get into healthy credit in my current account. Minimalism helped as not buying stuff quickly leads to you saving money. Also, when a married couple share a single room in a family members house, you quickly learn what your most valuable possessions are. It was like a crash course in minimalism & we became badass mobile people in days.

We had a small storage unit for all of our remaining house possessions & just enough stuff in the bedroom to live our daily lives. The funny thing is, when we moved in 2015 to our current house, we had the task of unboxing everything that had been in storage for so long. If I’m honest, apart from the very odd item, we had forgotten owning most of the stuff.

It was an instant realisation that we had lived for 18 months without any of this crap & lived good lives. We had travelled extensively. We could pack up everything we had into our small car and travel anywhere in the UK. At the drop of a hat we could pack up and go and stay with friends, or stay with family in Scotland. We shared a single set of drawers for the entire period & had more than enough clothing.

Packing for foreign travel was a cinch. We could share one bag, or take two small backpacks. When you remove your stuff, you realise that most of it is just useless crap or distracting rubbish.

Anyway, back to finances. Following this period as we neared the end of our 18 month pay off period I was left with no debt besides two credit cards. The balance was low enough that i could transfer one balance onto another card & be left with a single card. I actually did a double balance transfer. I transferred the balance from card A to card B leaving card A empty. I waited less than a month to be offered a balance transfer offer on the empty card A. They offered me 6% interest for the life of the balance, which made it more manageable and more like a loan. I then transferred the total balance from Card B back to Card A so all of my debt was on one card & at 6% for the life of that balance.

I had managed something I thought was impossible 18 months earlier. I only had one single payment to make each month. From 15+ payments to remember to pay each month to a single payment. Granted I no longer had rent to pay & would soon add that back into the mix, but one item, The pressure lifted was insane. I felt like a new person. The ultimate goal is zero debt & zero finance, & I’m working towards that goal daily

I instantly setup a direct debit for this remaining credit card payment & I haven’t given it a second thought since.

I’ve carried this financial minimalism with me since. When we moved house I used cash for everything. No credit or finance, just savings. When I needed to insure the house, I paid the entire premium cash up front. Better to pay all at once & save on interest payments. This also means I know exactly what’s coming out of my bank each month. The same went for car insurance, which I now pay annually for a significant saving. The same also goes for car tax, which I pay for a year at a time.

I setup direct debits for my rent, Internet & mobile phone, my credit card is still paid automatically each month. In fact the only things I still have to pay manually are my Council Tax & Water bill. That will be sorted by the end of the day on the 15th August 2016, I promise.

Financial minimalism is something that not many people write about. But it does work. You can take it even further like I have and cut out any unnecessary payments. I cancelled all subscription payments, I no longer have pay TV channels, I cancelled my Xbox live as I never use it. Thinking about it, the only things I do pay are the essential utilities (my internet is essential, right?). I don’t pay for any luxuries, subscription services or anything with a monthly commitment.

I like knowing that not many bills come out of my account monthly, it’s less to think about & surprisingly it is exponentially easier to manage your finances. Having a load of separate things to pay each month is no different from having loads of stuff. It’s distracting, it consumes far too much of our energy and thoughts. It’s just bad.

if you treat your financial commitments with the same minimalistic principles you apply to your stuff you will see a huge pay off. I’d go as far to say that financial minimalism is even more important than minimalism with your possessions. Finances can haunt people, they keep people awake at night.

One handy side effect of adopting minimalism is that you will find you have loads of stuff you no longer need or want. sell that stuff & you can go some way to paying off your debts. I’d guess that the sale of my stuff cleared around 35% off my debts overnight. That’s a great starting point.

I find that I feel much more content since addressing my finances & applying minimalism to them. They are easier to manage and easier to forget about. Address your smallest debts first. I know that is contrary to everything people tell you, but owing 1 person is much better than owing 5 or 10 people. The sooner you can shed creditors the better.

My aim now is to clear that last card, plan a trip to New Zealand to visit one of my best friends & to move to Amsterdam within 12 months. I’m now in a place to do all of those thanks to some major changes to the way I view possessions & finances.

Have you tried financial minimalism? I’d love to hear your thoughts on this. I’m sure some people will be saying “easy for him to say, I owe loads of money & make very little”- trust me, I sacrificed a lot to pay off a huge amount of money & I earn a very modest wage from self-employed work, much less than I would in a ‘Real Job’. Anyone can do this & I implore you to give it a go. If you have tried it, please leave your tips & advice in the comments section.

If you are new here, be sure to checkout my Introduction to Minimalism posts

John Signature

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