Welcome to this week’s Simple Inspiration Interview. This week I have a chance to welcome Emma from Money Can Buy Me Happiness.
Emma is from New Zealand and married to an Irishman. The sheer distance between the two countries is her motivation for plotting early retirement so she can chase the summer around the world with her family. She plans on spending the best months of the year with families in both the Northern and Southern Hemispheres.
As she travels managing your personal finances can be a bit of a challenge as well as generating income. Let’s hear how she has simplified her finances:
I don’t think it was any one event, more a combination of a lot of factors. As a child my parents were always around. They didn’t work 9-5 (my mother is a nurse and chose to work night shift while us kids were young and my Dad worked from home as a mechanic) so I was never brought up to think that was normal. I was also lucky to be exposed to a lot of entrepreneurial adults as a kid. My fathers friends and family were always wheeling and dealing property, starting their own small businesses or buying vintage cars and motorbikes to fix up and sell on. I think having early exposure to more non-traditional ways of making a living helps me to think differently when it comes to the possibilities of earning my living and early retirement.
What is the biggest challenge you have to overcome to reach early retirement?
Over the past decade it has been getting free of bad debt. I am now free of all consumer debt excluding my student loan which is interest free. Repayments for that are taken directly from my paycheck so I just allow that to happen and don’t pay more than I have to. My funds can perform better elsewhere.
Now, after having a taste of long-term travel, the challenge will be returning to the traditional workforce.
How will you overcome this challenge or roadblock?
I’ve always done bits and bobs for small business owners so I’ve decided to ramp that up into a full virtual assistant business. I’m starting slowly with the clients I already have. I’m currently designing my website and getting my branding finalized. I’ve also enrolled in some specialized training courses to help build my body of knowledge. Until my business starts providing a regular income I’ll take a part time job and my husband will go back to full time work.
How long did it take you to save enough so you could begin traveling?
We made the decision to travel long term in the taxi to Nadi Airport after an amazing vacation in Fiji. That was June 2010. Our flight for Santiago, Chile departed late May 2011. It took just under one year to save the funds required to travel initially.
How did you feel once you reached your goal?
Free! But also incredibly proud of myself. I used to believe I couldn’t save! It was beyond me that people had bulging savings accounts. I used to run up balances on credit cards or get personal loans for everything I needed. I lived paycheck to paycheck and never really planned what I was doing with my money. Once we decided we were going to travel I sat down and worked out how much money we would need and how long it would take us to save it. Running the figures I realized our necessary expenses were less than one of our paychecks. I showed my husband how much we would save if we put all of my earnings directly into savings. I thought he would laugh at me and say ‘No Way’ – but he said yes and the rest is history.
What systems did you use to save monthly?
Automate it or very disciplined about putting the funds in the appropriate buckets.
When we were saving for travel we lived off one income and saved the other. It was completely automatic – I gave my payroll department our joint savings account details and my fortnightly salary was deposited into that account. For irregular extras like overtime (my husband is a tradesman so he can earn extra if he works weekends, evenings, etc) or anything extra we could skim off the monthly budget I would transfer to the savings account through online banking.
How much of your personal finances have you automated?
Since our son was born we have lived on a self-enforced fixed budget. It’s completely unrelated to earnings.
Almost every expense we have runs through the credit card account so we receive frequent flyer points to boost our travel funds. I pay the credit card manually each month to ensure there is always enough in the account to cover the payment but also to ensure I don’t pay a cent of credit card interest.
Our storage bill is paid by direct debit each month and I have an automated deposit into my son’s savings account on the first business day of the month.
All of our rental properties are handled by professional property managers which means we have to do very little – other than check emails and answer any pressing requests for maintenance over $300. Under $300, the property managers are authorized to approve without consulting us. The rental income from our investment properties is deposited into our accounts each month, insurance and mortgage payments are debited from those same accounts. It’s painless. I can manage everything via internet banking.
What advice or tips would you give to others who are looking to live a similar lifestyle?
Before you even begin to look at your finances, sit down and work out your life goals. Define what it is you hope to achieve. Write it down and make it visible. Look at those goals everyday.
Whether you want to travel, buy a house, retire early or be a stay-at-home parent – you must have a goal. Then you can work out how to make your money work around your dream.
I write a blog called Money Can Buy Me Happiness because I truly believe money, if handled right, can make your dreams come true.
What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?
I read a lot of PF blogs regularly and believe they are a great source of free information. My favorites are listed here: Blogs I love
Do you have an emergency fund established, if so how did you determine the amount needed to fund it?
We have a $10,000 in an on-call account. It’s not strictly an emergency account but I guess it could be if needed. That would be around five months living costs for us.
It may sound controversial but I don’t really believe in emergency funds. I think people should always have savings but I know in my case if my husband was out of work I would go back to work. Or we could both work part time. I’d have no problem taking a job below my usual pay scale in an emergency.
We both carry life insurance which also covers temporary and permanent disablement, meaning were a real disaster to occur we would have funds to carry us through the worst of it.
What app or tool helped you the most when it came to simplifying?
I used to be all about the pen and paper and I still am when it comes to planning but I love Excel for projecting and calculating. I’ve also recently started using YNAB (You Need A Budget) which has helped me to reign in the travel budget.
What percentage of your income are you saving?
Currently none, as we are traveling. But when we go back home in August we will be aiming to achieve a 50% savings rate by December.
Thanks Emma for sharing your journey. She just announced some awesome news so be sure to check out her blog Money Can Buy Me Happiness to hear about it. If you also would like to track her journey be sure to follow her on Twitter or Facebook.
To read previous interviews in the series click below
If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you. Enjoy the rest of your week. Til next time, take one step at a time to simplify.