The unknown consumer choice that we’re never sold and totally unaware of! (A tale of jumping off the consumer bandwagon and choosing the staygrade)


The unknown consumer choice that we’re  never sold and totally unaware of!

(A tale of jumping off the consumer bandwagon and choosing the staygrade)


We’ve all experienced that moment, even as a minimalist, when a gadget, or other domestic appliance, ceases to function as it did when first purchased and you have to begin the time-consuming, life sapping process of finding a replacement. Finding a replacement you would think, especially due to the world wide web, would be an easy task, but the consumer industry never makes things easy, especially if by doing so it can encourage you to spend a little more than you had at first thought.


In previous days the search for a replacement would have involved a swift look through your latest Argos book, or other alternative shopping catalogues, before jotting a 7-digit code on a back of an envelope and whipping off to your nearest branch. Occasionally, due to lack of stock, you might have been offered a substitute product, along with the opportunity to sign-up to yet another high interest store credit card, but this would have been as difficult as it got.


Nowadays there is choice overload, not only do you have a host of high-street stores and supermarkets where you can shop at but there is also a plethora of internet companies also vying for your interest. Then there’s the products themselves, all marketed with their own unique selling point (USP) which all need some of your own unique mental energy (UME) to decide if it’s actually something you’ll ever benefit from or use. For example, if you were shopping for a  digital camera then a popular high-street store currently offers an amazing 25 compact digital cameras, between £50 & £70, for you to choose from. Not only do you have to wade through this choice of almost-identical cameras it’s likely then that you’ll then spend more of your precious leisure time comparing the price of this item from alternative sellers before finally completing the transaction. If you want to watch an engaging video about the problems with choice click on the link at the bottom of this article.


In the age of austerity the term staycation was coined. A staycation being a frugal alternative to a vacation by enjoying a holiday in and around where you live. Equally frugal, and an alternative never suggested by either the salesperson in the shop (or the one in your subconscious), is the staygrade. The definition of staygrade being the like for like replacement of stuff that you are replacing.


Take for example my own recent quest of searching for a new DVD player to replace my ill-functioning 13 year old Phillips player. Having not looked at the industry for over a decade I was staggered by the choice on offer, not only did I have to consider the brand and price bracket within which to make my choice but there was the added question of whether I wanted; HDMi output, memory card reader, USB stick, Blu-ray, SMART TV functions, recording functions, surround sound etc.. and that’s all before I read reviews (to support my decision) and decide where to purchase it from (price/location/guarantee etc..). It’s exhausting just thinking about it. So here’s what I did…. I simply bought a DVD player (it even had the same brand name on it as my T.V), after all that’s what I ACTUALLY needed! I didn’t Google it, I didn’t compare the prices of it, I didn’t even look at the functions, I just went to a supermarket and purchased it along with the rest of my weekly food shop.


Not only can the staygrade save you a lot of time and effort but it also comes with some other positives. First, technology, and this applies to almost every daily appliance, progressively becomes cheaper over time. Take for example the current Playstation 3, just 6 years ago when first launched it sold for a staggering £425. Compare this to today when you can buy the same, if not slimmer and less power-consuming, game console for just £125….an almost 70% reduction on it’s initial price! The story of my DVD player mirrors the same pattern, originally costing £199 yet the replacement, albeit 13 years later, costing an incredible £26, over 85% cheaper.


Another benefit of the staygrade is that the snowball effect, the need to further replace a gadget due to the increased technological prowess of the item you have just replaced, comes to an abrupt end. I’m sure you’re all familiar with this, you come home with your new gadget, for instance a 16 megapixel, HD video recording, digital camera only to find that the laptop which you use to store and process all your digital media can no longer cope with these processor-intensive, memory-filling files. Suddenly you need to purchase a brand-new £399, 320gb, Intel i5, Windows 8, touch-screen laptop….all because you needed a new £69 digital camera!!!


I’m not anti-upgrade, new technology is amazing and the things it can do are at times incredible but the pace of change now is so fast that we are rendering millions of gadgets obsolete before they’ve actually reached the end of their useful life, all because they are not packed with the very latest up-to-date features which are on the gadgets being consistently thrown in front of our face via magazines, the web, TV commercials and even secretly placed in films & TV shows (via product placement). Updating your gadgets for these small, incremental improvements is mindless, both financially and environmentally. Put very simply, our earth’s resources cannot continue to provide for the upgrade hungry western (and increasingly eastern) consumer. In addition to this it is financial suicide to be spending huge proportions of our income, especially when laden with consumer debt, on stuff which while bringing to your life a short-term boost of pleasure, will contribute nothing to your long-term happiness or fulfilment.


The mobile phone market is the worst offender, subconsciously persuading consumers into the idea that they need to upgrade their perfectly-capable phones at the end of every 24 month contract. So hoodwinked are consumers, they don’t realise that the staygrade is a real alternative to this constant upgrading, but salespeople are the last people in the world who are going to start selling you the idea of a staygrade, keeping your current phone, along with a contract which is £200-£300 cheaper than they are currently paying.  For more about mobile phones read my previous article, ‘Is the iPhone such a smart phone?’.

The debt-free minimalist approach: Newer, cleverer, feature-packed gadgets and appliances can have their benefits but upgrading is not the only choice when it comes to the time when replacement is needed, or in some cases not needed but is simply on offer (as in the mobile phone industry). The staygrade is an essential tool in the debt-free minimalist toolbox and the sooner you apply it’s principles the sooner you will find freedom from the continuous, and ever shortening, cycle of upgrading/replacing stuff. All appliances come to their natural end of life, discarded with millions of other similar items at your local recycling centre, but for most stuff this comes too-soon, only rendered obsolete in the eyes of the user whose head has been turned by the latest, greatest, do-it-all, piece of kit. Upgrade where necessary, large CRT televisions, VHS recorders and 35mm cameras have all had their day and their next-generation HD LCD, DVD & digital counterparts are all excellent industry revolutions of popular household gadgets but do we really need, already, to upgrade to their slightly thinner SMART /3-D glassed/4k, Blu-ray, mass megapixel evolutions….or is it time to stayput, be happy with what you have…is it time to staygrade?

To watch The Paradox of Choice copy and paste the following link into your web browser:

The debt-free system: Part 5: Making plans for old-age… when you’re far from it! (A tale of the haves and the have nots)


‘The question isn’t at what age I want to retire, it’s at what income.’ 
— George Forman

The debt-free system: Part 5: Making plans for old-age… when you’re far from it!

(A tale of the haves and the have nots)

For those of you who are thinking ‘what happened to Part 4 of the debt-free system?’ don’t worry, you haven’t missed a thing! Just like the film industry, it’s o.k to have the sequel before the prequel…just think Superman/Star Wars etc.. As I wrote both Part 4 and Part 5, simultaneously, it struck me that I couldn’t possibly emphasise how important retirement planning is, especially in the middle of your life when much of your financial focus will be on mortgage debt (and quite possibly consumer debt), without writing about it, at considerable length, first. So that’s what I’ve done, and this article will do its best to explain why.

How much income you will need in retirement is obviously a subjective question, an answer which varies from person to person. I personally would like to imagine that in retirement I would be able to maintain the same standard of living, or even slightly higher, as I currently enjoy…but without the current long, exhausting hours slogging away at work! The good news is that the current government (U.K.) currently give a generous helping hand with this via an annual state pension income of £7,488, although who’s to say what the government will be able to provide in a further 30 years? If I’d were you I’d make sure you’ve got a Plan B because the murky world of finance and government has a tendency to implode on itself every so often and it’s usually us, the citizen, which has to pay for it in some way.

So how much will I need? Now the time to dust off that high school scientific calculator (don’t worry we won’t be using the scientific part!), or just grab yourself a pen and your finest arithmetic skills, and make sure you can access, or accurately guess, your annual incomes/outgoings. First you’ll need to add up your net annual household income, take away the annual of servicing your mortgage and also be able to guesstimate the cost for each dependent in your child (the cost of this will vary greatly from family to family…..think costs of education (fees) age (nappies), hobbies (sailing) etc..). Once you have this divide the sum by two (if you live as a couple) and take away the state pension amount (£7,488). My own figures looks like this; £31,000 (joint net income) – £8,500 (mortgage costs) – £1,500 (child associated costs) = £21,000 divided by two = £10,500 – £7,488 (state pension income) = £3,012.

As you can see from the figures above, retirement for a debt-free minimalist (dfm) is not a frightening prospect. Having learnt to live a simple life in which personal happiness and flourishing does not correlate with increasing amounts of expenditure, the dfm system creates a viable business plan, not just for your working life but way beyond it as well. For others though, the figures may not be so comforting! To create just £8,000 of income in retirement, you will need an astonishing £200,000 pension pot! For a 35 year old starting their retirement planning now, that would require you to begin making a monthly pension contribution of £350, for a couple that would be a seriously deep, £700, black hole in your monthly expenses column. However, if you can begin thinking of life when you’ll be old and grey whilst you’re still in the very prime of your life, at 25 years of age, that figure comes down to a more manageable, but still sizeable, £250 p.m.

Personally I’m not a fan of personal pensions. I’m all too aware of the financial middlemen taking away, more than their fair share, of your contributions/investment along each step of the way and also whilst we all hope to live long into retirement, the risk of this happening, in my opinion, is not outweighed by favourable returns on annuities (the product that you buy in retirement to give you an annual income through it). In the U.K. you do benefit from tax relief on your monthly contributions but as it currently stands later on down the line when you’re receiving your pension income you’ll be paying income tax on all but the first £2,000 of any additional (on top of the state) pension income. The dfm suggests the alternative pension, the alternative whose capital sum won’t die with you, will always produce a reasonable income…even when you’ve long gone and is most people’s greatest hope of ever creating generational wealth. If you haven’t worked it out already then I will share it with you now….it’s a second home.

A second home for many is an asset only suitable for the well-off or the rich, but this is not strictly true and by following the dfm approach to retirement planning it could be one of the best financial decisions you’ll ever make. In Stage 4 of the Debt-free system I recommend a 25 year mortgage timespan, not that 20 years is financially out of reach, but for the reason that the system is designed to ensure you have the available income to create solid plans for retirement. And whether you invest in a personal pension or take the alternative in buying a house you’ll need every penny to make it work.

Just as in the article, ‘It’s all about marshmellows’ and any other articles I have written on this site, buying a second home will take time, patience, willpower and long-term vision but the future payback this time is monumental and, for future generations of your family, life changing. It certainly won’t happen overnight but what truly successful approaches to creating real wealth actually do?

Your first step in this journey is to save a lump sum which will be used to put a deposit down on a home. Currently a buy-to-let mortgage requires a 25% lump sum, a sizeable sum but it can be done. On a home costing the national average, £167,000, this would mean a deposit of an eye-watering £41,750. At this point you might want to run to the nearest personal pension provider and sign on the dotted line but stay with me. As it’s possible that rising prices will require this amount to be a little larger I have calculated, prudently I have to say, figures on saving a deposit of £50,000 (20% higher). For the 25 year old setting aside £250 p.m that would take 13 years of contributions, for the 35 year beginning planning for retirement late that would take a 9.5 year wait. Not meaning to wish away time but this would leave the 25 year old still only 38 years young and the 35 year old late-comers, still revelling in their mid-forties.

Deposit saved, and avoiding all temptations to blow it on a ‘once in a lifetime’ trip abroad or your mid-life crisis sportscar, you will now have the money to buy a suitable house for rental. As it stands your money will purchase a house capable of producing an income of £800 p.m, against a monthly repayment mortgage cost of only £650, for 20 years. The surplus £150 income, for all other intentions of purpose should be ignored and kept aside to deal with future costs associated with owning this property. You may have recognised that you will still have your monthly pension contribution amount to invest elsewhere, we’ll come back to that later.

Fast forward a further 20 years, and with no further funding, not only will you be the outright owner of a second home, with your buy-to-let mortgage completely paid off, you’ll also have created an income stream of £9,600 per annum. This income, whilst open to the variances of the rental market, will be paid to you not only throughout the rest of your life, but potentially, being held in trust, throughout every generation of your family there after. Not only that, in the form of your second home there’s a very attractive capital-rich asset that could be re-mortgaged or even sold should the family ever desperately need an immediate large sum of money. If, as a couple, you both follow this route then this future generational wealth is simply doubled, tap it into your calculator the money amounts are simply staggering!

Leaving assets to your children/grandchildren when you have left this earth is all well and good but speaking from experience it is highly likely that they may require, and appreciate, your financial aid long before you’re on your work to becoming part of the churchyard’s compost. This is the point at which you redirect the money previously designated pension contributions, to a pot called family support. I know first-hand how important financial support is from relatives, without it the big moments up to now in my life would have either been delayed or missed out on completely. It was with support from my wife’s dying grandparents that we were not only able to buy our first home, in which my family still live, but also pay for our wedding, which whilst planned with a budget, still cost far more than we could have ever of afforded alone.

The figures stack up quite impressively too, your £250 per month , not needed now for retirement planning, over the remaining 7 years of your working life (after paying off your second home mortgage and assuming the dfm retirement age of 65), earning a realistic 4% interest, would amount to just over £24,000. Unfortunately for the late retirement planners there isn’t the time between paying off your second home and retirement to begin creating this nest-egg although I’m not one moment thinking that there won’t be other money, either in the form of yourself receiving some inheritance or potentially higher-than-expect income, from which to create a pass-me-down fund.

The debt-free minimalist approach: So there it is, a complete financial plan, all the way from the prime of your life to the days you’ll be pushing up the daisies, all in five simple stages. The two objectives of this final article is to make you, the reader, ponder A: Have I truly considered the cost of retiring? and B: Are there are other options to the traditional pension? I think you’ll agree that yes retirement can be expensive but only if you leave it to the last minute, the earlier you begin to plan for it then the cheaper it will become. Along the way you’ll encounter the types who’ll claim they simply can’t afford to put away, but behind the excuses I guarantee they will be the all too familiar tales of consumer debt, overspending and excess! Don’t be part of the over 50% of the U.K/U.S population who have either none or too little in their retirement plans, because I guarantee that the day you retire and put your feet up, there will be a lot of people admiring what you have achieved, all whilst they serve up cold dog food for dinner, wishing they hadn’t blown all which they had earned on iPhones, designer clothes, cable t.v, holidays in the sun and a shit load of other stuff which they really didn’t need! Live simply, live happily, live long.


The debt-free system: Part 4: Even the good has its day (A tale of effectively eliminating good debt…forever!)


The debt-free system: Part 4: Even the good has its day

(A tale of effectively eliminating good debt…forever!)

‘People are living longer than ever before, a phenomenon undoubtedly made necessary by the 35-year mortgage’, Doug Larson.

So the good news is that if you’ve joined me in your journey against debt on part 4 of the debt-free system then the gruelling work is done, your financial feather should now be gliding in the breeze, as light as the air itself, seemingly unaffected by the laws of gravity (debt) whose main concern is to drag us all down to earth.

The bad news however is that the hard work is not over, now is not the time to begin feasting again on the tasty cake of consumerism. You’ll know from previous experience where that temptation leads you to. There are no presents to celebrate, no new car, no lavish holiday abroad and no 50” LED TV, they’ll all have to wait because what we’ve done up to now is to focus on building the most solid financial foundations you could ever wish for. Now is the time to start finishing the job off and to secure your financial future…for life.

Up to now the financial focus of the debt-free system has been on reducing non-essential expenditure through changing spending habits and mindsets. The consequence of this was to lighten the load, to create a positive monthly cash-flow to enable and to increase the speed at which you can eliminate consumer debt. This would leave us with two final financial goals to achieve; to reduce ‘good’ debt in a time span which allows enough money for you (and your family) to live flourishing lives and to also plan for later in life.

A recent trick of the mortgage industry is the 35 year mortgage. In years gone by 25 years was the norm but in an effort to make mortgages more ‘affordable’ banks considered it a good idea to thin out those debt repayments over an additional ten years. Not only does this artificially affect the general rules for supply and demand in the housing market, stoking up house prices even further, it’s also a very profitable idea for the mortgage providers as well. Check it out for yourself on the mortgage calculator link below and you’ll discover that on an average £200,000 mortgage those extra 10 years will also cost you a staggering £55,000 more in additional interest charges, a 50% profit increase for banks!!! That £55,000 has to come from somewhere though and unfortunately, as is always the case, it’s directly from the Bank of You. Maybe it’s time that bank products started coming with cigarette style warnings. ‘This product will seriously damage your financial health!’, as these debt vehicles, with prolonged periods of debt repayments, and the interest which is accrued along the way, is a financial disease which is unwittingly affecting millions of homeowners.

With this you may think the debt-free minimalist approach might be to go hell for leather and wipe out your mortgage completely within 10-15 years but here, once again, the slow approach is recommended again, the aim being simply to clear your mortgage in a 25-year mortgage span, with a view of leaving a good 5-10 years of your working financial life completely free of all forms of debt, which, oddly, is quite likely to be the first time that you are in the whole of your adult life…a scary proposition don’t you think? To ensure you can afford the additional payments, which are the difference between a 25 and 35 year mortgage term, the cost should be met by the surplus income made by having reduced unnecessary monthly expenses and from eliminating the costs associated with having to service consumer debts, it should not be made affordable by having to forgo even simple human pleasures or working even longer hours at the cost of precious family/leisure time.

Beware the honey pot trap. Often spurred on by rampant house inflation, it is all too easy to be lured in to reborrowing against the value of your home to pay for big stuff such as a home improvement or a new car. However it is vital that you ignore the lure of this particular honey as inside this hive is one almighty sting. A financial tool with which to boost a flagging economy, recent governments like nothing better than making consumers feel ‘rich’ by inflating the value of their homes, by devaluing currency and inflating prices, as they know, all too well, that one of the consequences of increased house prices is increased consumer borrowing, and subsequent consumer spending, against the capital ‘stored’ in their homes.

The problem with using your house value as one big, mammoth overdraft with which to purchase lifestyle improvements is that, just like the smaller overdraft with your bank, it’s not your money and one day, if not soon, you’ll be paying it back to your bank with staggering amounts of compound interest (for more on this check out my previous article ‘A tale of opportunity cost…’. A close friend of mine is a victim of this exact behaviour, having been one of the lucky ones to have bought a property at the beginning of the millenium, opposed to anyone buying in the second half of the noughties, from good timing he has benefited financially (from rising house values) to the tune of tens of thousands of pounds, a benefit which if not frivolously wasted would have meant he was at least halfway through paying off his mortgage and set-up for a very rosy financial future. Unfortunately this is not the case for him and his family, for the capital in his home has been used to fund a lifestyle which costs in far excess of their natural income.

As with most rules there is an exception to the rule. Using value in your home to expand your current home, as an alternative to moving home, makes perfect debt-free minimalism sense. Moving home is a costly business, and if the move is only for a relatively small improvement in living space, then borrowing to expand your current home is usually the most cost-effective way of doing it. Switching homes will cost the average homeowner around £5,000 in estate agent fees, Stamp duty, conveyancing, removal and other associated costs. So before you move house why not consider the alternative and save yourself in the process a lot of time, money and stress!

There is a well-known saying that the rich get richer whilst the poor get poorer and this saying definitely applies to those who have equity in their home. Having 90% LTV (percentage of loan compared to the value of your house) on a £200,000 house will mean your debt is charged interest equivalent to £6,000 per £150,000 of debt, each year (£500 interest p.m), reducing your LTV to 75% LTV brings a dramatic reduction to just £4,300 per interest. As you can see from these figures, that’s £1,700 less interest on your debt if you maintain a high LTV, think of the lifestyle improvements that can fund, and as opposed to increasing borrowing against your debt, this method is also long-term sustainable….you’ve just got to get that high LTV point first! For a bit of increased motivation with this check out my article ‘It’s all about marshmellows…. a tale about deferred gratification’.

Whilst for some a 25 year mortgage span may appear on the tame side and a 20 year mortgage a much more headlining grabbing figure, I feel that to do this, on an average salary, an imbalance in your financial life is often created and the area in which this usually occurs is in financial plans for later in life….retirement. Have no disillusions if you’re not one of the lucky few who still have a final salary scheme pension plan then retirement is one hell of a costly idea and you’d better start thinking about it sooner rather than later because it’s not going to get any cheaper!

On the positive side, having embraced a life of debt-free minimalism, it highly likely you’ll be in the win-win position of having created a lifestyle which is both financially stable and long term sustainable. Add to that living without the strains of consumer debt, it is possible that you will have the money surplus each month from which to start making plans for a life in retirement, which with the fortunes of both good health and good luck, could easily last as long as your working life .  

The debt-free minimalist approach: There’s no doubt that your home is your biggest financial asset in your life so the way you pay for it will have a significant effect on your financial future. Your mortgage should be structured so that you can afford to pay it off in at least 25 years whilst also allowing you, and your family, the necessary disposable income for you and your family to live flourishing lives and also surplus income with which to build a solid, retirement strategy. Just as in many other steps along this debt-free journey there will be temptations all-around, all of which will be attempting to deviate you from the route of simplicity and happiness, so keep your guard up and remain focused because if you get this right then you’ll be completely debt-free and set-up financially for life!

P.S. Don’t forget to organise the ‘I’ve paid off my mortgage party’ and remember to send me an invite.

The debt-free system: Part 3: The good, the bad and the ugly truth! (A tale of killing off debt…for good!)



The debt-free system: Part 3: The good, the bad and the ugly truth!

(A tale about killing off debt…for good!)


So you’ve decided that you want to live a debt-free life, a life without the additional stress of you (and possibly your partner too) of having to work all the hours that God sent us just to cover the bills, some of which are more unnecessary than others, and to pay for the stuff that, whilst still filling up precious space in your home, no longer deliver the satisfying glow with which it arrived.


Not only have you decided that it’s time to pay off your debt, you’ve also begun to balance the books, instead of adding to the debt pile like an over eager member of the US Congress, you’ve started winning the war against debt. You may have even noticed some changes already, the bank statements, which once brought you nothing but dread when they arrived through the letterbox at the end of every month, now actually bring a smile to your face because you can see from the decreasing figures that a little bit further on in this journey you’re going to be completely free of the pressures of debt.


You may of heard about debt being split into one of two camps; Good debt and bad debt. Good debt being either debt (a mortgage) connected to the purchase of your house or an investment in yourself, usually in the form of a college/university loan. It earns its ‘Good’ tag by generally accruing a comparably low rate of interest and being used to ‘purchase’ goods that are considered by the majority as a valuable asset/wise investment. Bad debt on the other hand is the complete opposite, accruing high to extortionate rates of interest and used predominantly to purchase assets with little future value such as a car, a holiday abroad or a home improvement. Whilst I generally agree with the two distinctions, it would be a fool who would take on an unnecessarily high mortgage (or expensive education), for a house which is far too big for their needs, based on the understanding that it’s o.k because it’s only ‘good debt’. Even ‘good’ debt accumulates interest and requires repaying, and the price to pay is usually in the form of additional hours of work, stress and the loss of precious leisure time.


It is more than just a funny coincidence that those who have debts have a habit of underestimating the true scale of their debts. So now is the perfect moment to take a huge sharp intake of breath and total it all up….warts and all. Whether your preference is a fully-featured spreadsheet or a scribble on the back of an envelope, once you know where you stand then there’s only place to go….onwards and upwards.


Now you’ve balanced the books, realised the true extent of your debts it’s time to prioritise which debts to start wiping out first. At this point you may feel like getting a few easy kills, paying off multiple low-level debts just to clear out half of the list of debts on your spreadsheet, but taking shortcuts has never been the debtfreeminimalist approach and now is definitely not the time to start taking them. Irrelevant of their individual balance, once you know what you can afford each month (the excess of your incomes in relation to your outgoings), you need to take a look at the rates of interest charged on each of your debts (add this to the back of your envelope as well) and focus on paying the highest of these off first, irrelevant of the time it might take to do so.


Debt by priority is by far the most effective way to clear debts although you may come across the counter argument that this is not as psychologically motivational as the balance approach which focuses on wiping out debts with the lowest balances.  My advice is at the end of the month to ignore the list of creditors, it really doesn’t matter who you owe money to, and to simply take a look at your total balance of debt each month because there is no greater motivator than seeing those figures tumble by more and more each month.


Prioritising debt is as crucial stage of debt reduction as any other, getting it right here could save you thousands of pounds in additional interest charges and months of debt repayments. Take the example of a £10,000 debt, 70% of which is made up of credit card/store card debts (25% typical APR) and 30% home improvement/car loan, which you can afford to service with £300 each month. If, just for the sake of a morale-boosting quick wipeout, you decide to focus on paying off the smaller, but less expensive (with regards to the interest it attracts), loan then yes you would pay off one of the two debts in less than 12 months in contrast to a 30 month wait taking the debt-free minimalist approach (highest APR first) but the total interest charges using the balance first approach are a staggering £2,531 MORE, meaning your £300 p.m payments need to continue for an additional 8 ½ months to pay off the exact same two debts. Convinced yet? You should be!


The debt-free minimalist approach: By; not taking on excessive amounts of ‘good debt’ (and needless to say no additional bad debt), facing up to the exact amount of debt which you’re in and then paying down debt by prioritising highest interest rate charges, you’ll have the most precise, effective plan with which to become pay off credit. Simply put, there is no quicker or better way of becoming debt-free, so that you can start to live the life of freedom which we all deserve!

If you’ve got multiple debts then click on the snowball calculator link below. Experiment for yourself the difference costs of prioritising your loans by either balance or interest, enter all the details of each debt and it will even give you a plan of action for wiping out debt in the most cost-effective way.

The debt-free system: Part 2: It’s not rocket science (A tale about balancing the books)

The debt-free system: Part 2: It’s not rocket science

(A tale about balancing the books)


“And don’t tell me debt is not a big deal. Debt will cut off your legs and laugh at you as you grovel in the dirt begging for mercy. If you don’t need it, don’t get it. If you can’t afford it, don’t get it. If you’re already in debt, get out quickly. If you think you’ll never get out, you’re right, you won’t.”

Osayi Osar-Emokpae, Impossible Is Stupid

So what’s the plan? Some people like to take a crash debt approach, but just like the approach of it’s sister plan, the crash diet, this method may start off well, dropping a couple of dress sizes in the first few weeks (or thousands of £s in the case of debt) but more often than not it’s not long before they’re back on the same old consumerism bandwagon that they’d been on just weeks before. Downsizing your house or car, selling off important assets, taking on a second job to create additional income in order to clear a debt is an almost pointless exercise if you’re yet to have tackled the root of your financial problems, overspending and over-consumption.

Just as it is that an overweight person has grown to be obese by simply having consumed more calories than they’ve burnt off, although not quite so obvious, most people’s financial position are of a similar simple equation. Debt is often created by people from having continually, for many years, spent more than they had earnt, only for them to wake up one morning, in the cold light of the day, and realise the terrible state of affairs they are actually in.

Balancing the books is one of the key accomplishments in a journey to becoming debt-free and its value is not only in the financial sense of the word but also in the motivational sense of achieving this milestone. It’s the moment of realisation when you know you are capable of doing this and that from now on, probably for the first time in years, the only way is debt reduction (as opposed to debt creation).

To make a hot air balloon rise you have two options, you can either add more gas or lose some weight, it is a similar situation if you’re trying to improve your financial position, there are two potential options; one is to increase income (the money which comes into your bank), the other being to reduce fixed costs (the costs that you have to pay for at the end of each month)….or better still try doing both!

Whilst reducing some of your outgoings comes hand-in-hand with becoming a minimalist, wiping the slate clean by cancelling expensive, income-sapping gym memberships, magazine subscriptions etc, there are also the unavoidable costs (mortgages, electricity, home insurance etc..) which you can, over time, reduce to a bare minimum.If you want to delve a little further into reducing your outgoings then check out my articles ‘Look after the pennies and the pounds will look after you!’ and ‘Whatever happened to the idea of a 15 hour week?’.

For most wage-slaves (like me), increasing your income, especially in the age of 4 year public sector pay freezes, 40+ hour working weeks and continuing austerity, is an uphill challenge, but definitely not impossible. Increasing income can conjure up images of taking on second jobs, working late nights in a supermarket filling shelves, but for me this option’s opportunity costs, leaving little time for the important things in life/additional stress, far outweigh the benefits which the additional income would bring (especially after the state get their share of it!).

However there are other ways, smarter ways to earn money. By moving current accounts this year (single accounts with Halifax, joint account with Santander) I created an instant income of £400 (switching bonus) whilst in the long term these accounts bring in an additional £300 p.a. through a combination of cash-back (Santander 1-2-3) and rewards (Halifax Reward Current Account). Using cashback websites (Quidco) for insurance cover, mobile phone contracts, swapping utilities and buying birthday presents has reaped a handsome £400 this year whilst using a credit card (Aqua Cashback/Tesco Credit Card) for purchases (just make sure you clear the balance), big and small, has netted, through a mixture of cashback, rewards and additional time for money in the bank to earn interest, a useful £200. Check out ‘marginal gains’ for a comprehensive list of ways to do this.

For those of you who have long considered credit card interest, overdraft charges and excessive bank charges (where’s the fairness in banks charging a £28 ‘fee’ just because they didn’t have the money to pay a direct debit) as just part of life….it doesn’t have to be this way. The cruel, Catch-22 element of debt, is it’s those who can least afford to pay these charges that are most likely to be paying them and it makes debt for them a much deeper, darker hole from which to escape. As a result, turning it round for you will be harder than most but it really doesn’t take much to start clawing your way out of that hole. Balancing the books will mean that you’ll soon head away from these outrageous charges and you’ll never have felt richer. So do yourself a favor, as you start balancing those costs, waving goodbye to the worst of the bank charges, you might just want to rise a middle finger the next time your pass you chosen high street bank. It certainly won’t help you get those fees back but it will definitely, without doubt, make you smile…a lot!  

The debt-free minimalist approach: So now you’ve lightened the load, bought in a little gas for the burners, it’s time to start saying goodbye to debt and begin to look forward to the land of freedom. It might be some way off yet, a blip on the horizon even, but the time will quicker than you think and once you get there you’ll probably want to say forever. Balancing the books is a pivotal moment in becoming debt-free and it doesn’t take much, a little bit of time, a little bit of discipline and a little bit effort, but long-term it will be the best paid little bit of effort you’ll ever make!

The debt-free system: Part 1: Making the impossible possible (A tale about having the right mindset)

The debt-free system: Part 1: Making the impossible possible

(A tale about having the right mindset)


When you’re swimming in an ocean of debt, it’s all too easy to think that becoming debt-free is an impossible, distant dream, far beyond your reach. In your mind, such is its unlikelihood, most people decide to choose the easier option, the option to just believe that debt is just part of life, an illness that you’ll just have to live with, better still why not dull the pain with a little retail therapy, a new coat/iPhone/TV, after all… what’s another two or three more hundred pounds of credit on top of what’s already there? Of course, this behaviour serves only to enforce what you’d already been thinking…getting out of debt is just about impossible!

The truth is, getting out of debt isn’t easy, there isn’t any instant, quick-fix solution, but it is possible…and it’s not half as painful as you think it’s going to be. Next month, after 8 long years, I will have made my last payments against consumer debt which, amongst many other things, had been accrued from retail binges and travelling adventures long now forgotten… apart from their cryptic code existence within the depressing negative balances displayed on my monthly loan and credit card statements.

It’s been a commitment, a sacrifice of summer holidays abroad, of learning to live without, of time taken to search out the best deals, of having to say no to things which you know you know for sure you’d enjoy, of scrimping in every single area of my life, but, now that I’m there, I’m going to make absolutely sure that I never, ever, take on another pound of consumer debt for as long as I live. And on reflection, what’s 8 years of a life which I hope, God willing, may last for another 60 at least, but now with the greater freedom which living without debt will bring us. Now for the mortgage!

The debt-free minimalist approach: Up to now, consciously, my articles have never offered a solution, a strategic system to attack debt with, because I believe the most difficult challenge in tackling debt is changing people’s attitude towards money and dealing with the behaviours of over consumption (and being conscious of the aggressive, consumerism-driven marketing tricks which surround our lives). It’s only when you’ve accepted that stuff doesn’t make you happy that you can begin to adopt the debt-free minimalist approach, the culmination of hundreds of small changes in lifestyle, which given the benefits of time, will give you a system that is not only long-term sustainable but also powerful enough to change the direction of your whole financial future. So now if you’ve got the mindset it’s time to start making the impossible possible and get debt-free!

Next week: The debt-free system: Part 2: Balancing the books

If you haven’t read any of my previous articles then just scroll down or visit the archives page (for selective articles only)

Haven’t you got something better to be doing with your life? (A tale about the endless pursuit of stuff)

ImageHaven’t you got something better to be doing with your life?

(A tale about the endless pursuit of stuff)

Have you ever stopped to consider how much of our lives are wasted in our endless pursuit of stuff? This consumer cycle is much bigger than you’d ever think! These consumer purchases, be it a new kitchen, must-have gadget or luxurious holiday, commit us to working longer and longer hours which leave us exhausted, drained of energy with which you could have done something with purpose.

Be it your weekday evenings or traditional weekends, most people choose to recover from work by, you guessed it,’treating’ themselves to more stuff!  Having seen it advertised on the tv show you were watching/magazine you had been reading/website you had been browsing/friend you had been visiting, you then spend some more time finding out if this is definitely the stuff you want to buy.

Convinced that we definitely need this stuff we then commit more of our leisure time to purchasing and collecting the stuff you wanted. For some items this may be the swift, addictive ‘1-click’ on a website but for others this could be an all-day investment of their leisure time walking around endless shops in bland shopping malls and uniformed high streets. If you’ve travelled to shop by car then you may even find yourself having to work a little longer that month just to pay for the small slab of concrete you parked on whilst you were out shopping for your stuff!

Beware though, whether it’s on online or in the mall, it’s all too easy to become distracted whilst shopping for stuff. Retail shopping can be like one big confectionary stand that’s sitting temptingly next to the till. It’s the moment you ask yourself ‘What did I come in for?’  (or go online for?), the original purpose having been forgotten as you become distracted by the consumption of even more stuff which you just happened to pick up on your way to purchasing what you had come in for!

Stuff has a nasty habit of not keeping us happy for long and it’s not long before the ‘feel good’ factor of this new stuff wanes, so we begin to spend out time seeking out the next item that you really just have to get.

Now, if you’re really unfortunate ,you may even have to work a little longer to pay for the interest that has accrued on an overdraft/credit card as you didn’t actually have the money to purchase your stuff at the time. If you’re just unfortunate then it’s highly likely that you’ll be working a little bit longer down the line to pay the mortgage which you could have been paid off years earlier had you just owned a little less….you guessed it……STUFF!

LESS STUFF = MORE TIME (and a happier, simpler life).

The debt-free minimalist approach: It’s a fact of life that most people will spend the majority of their week working but do we really need to spend such a significant proportion of our leisure time in the endless pursuit of stuff? Consuming is not living, happiness is not found in the pursuit and accumulation of more and more stuff, it is found in living an active, purposeful, social, creative life. Go out for a walk in the woods/by a lake, draw or write something, spend time with your family, tend to the garden, make something, fix something, learn something new (an instrument/a language), join a community club, become a volunteer, plan an adventure, write a letter to someone you love, follow a passion, get fit, bake a cake….the options for how we spend our leisure time are almost endless. So when you next find yourself about to begin the next consumer cycle, pause for a moment and ask yourself ‘Isn’t there something better that I could be doing with my life?’ because you’ll normally find that actually…there is!

What ever happened to the idea of a 15-hour week? (A tale of priorities and the value of time)


What ever happened to the idea of a 15-hour week?

(A tale of priorities and the value of time)

“The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity.” John Maynard Keynes..

The one thing most people have in common is that we would all like more time, leisure time that is. Whether it is the all too familiar experience of spending your Sundays wishing you could just have one additional day off (don’t you just love Bank holidays for this reason) or the data that shows absenteeism almost doubles on Mondays & Fridays, it’s obvious that most people want more time to do the things that they want instead of spending it (time) doing what their employers want.

Lack of time has many casualties, be it the pain of getting home late having missed seeing your child that day, your children’s important milestones and events missed by commitments in the office, the perpetual rush from one task to the next without time to pause, reflect and enjoy the natural world which surrounds us, or the lack of time to invest in doing something for which you are truly passionate about. In Bronnie Ware’s ‘The top five regrets of the dying’, the biggest regrets of those on their deathbed were not that they wished they had earned more money, lived in a bigger house, accrued more personal wealth or bought more stuff, it was the two things that our ‘work all hours’, wage slave lives. consumer culture take away from us the most; they regretted never having the freedom (financial) to live a life true to oneself and the lack of time with which they were able to spend with their children in their youth/partner.

The truth though is that it is this way because we have chosen it to be like that, it’s probably always been like that, the only trouble is that maybe we’ve never stopped to actually consciously consider whether that way of living life is the best way or not? Or do we do it purely because it is the only option that we have been raised with? Our herd mentality to follow the flock and to go with the majority.

“Live like no one else does now so that you can live like no one else does when you retire.”, Anonymous

In 1930, the economist John Maynard Keynes famously told the world, in his essay entitled ‘The Economic Possibilities for our Grandchildren’, that in just 100 years it might be plausible that no man (or woman) would have to work for no more than 15 hours a week. He predicted a scenario of ‘our grandchildren’ working a five day, three hour shift pattern, a total of 15 hours, from which enough of a salary could have been earned to satisfy the ‘economic problems’ of life, the struggle to survive, leaving us all with the remainder of our days to do what we deemed best.

Now I know what you’re thinking, a 15 hour working week is a joke, a pure fantasy only to be found in Utopia, I myself am writing this article having worked a 50+ hours week, but if we all thought, acted and consumed differently then it’s a dream that we could become within touching distance of. How? Most people go to work to earn money with which they exchange for various things…your mortgage payment, utility bills, food etc, but a huge part of that goes on unnecessary expenses, expenses that certainly weren’t around at the time of Keynes writing about the economic possibilities for our grandchildren.

You may even be thinking ‘but’ 50% of my salary wouldn’t even cover the bills, and you could even be right, but how many of your bills have, like many a luxury, entered your house as a guest and settled down to become the host? Could you live without two cars (or even without cars altogether)? an expensive mobile phone contract? satelite TV? holidays abroad? eating out in restaurants? the latest must have gadgets? regular wardrobe/home updates? expensive entertainment choices? lavish gifts at easter, valentines, birthdays and christmas (there are other ways of show how much someone means to you).

‘I see all this potential, and I see squandering. God damn it, an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.’ Tyler Durden, Fight Club

Of course, you might even ask yourself what would I do with all this free time? Every man and woman needs to live with a purpose but what they don’t need is for work to be their sole purpose. Life should be more about the never-ending cycle of working, resting from work and indulging in retail therapy (to make you feel better about having worked!).  Every person has it in them to be more than just a full-time consumer and to adopt an approach of spending their leisure time with purpose, producing rather than consuming. Learn to play an instrument, become part of a community group, volunteer your time to help others, try to make something, spend more quality time with your family, begin a new hobby (photography, art, hiking, sailing), go for a walk in the woods/on the beach, learn a new language, read more books or even try writing one! The list is endless, you may even begin to do something that you both enjoy and produces an income, an opportunity to be your own boss and to be in control of your own life.

Could it really be possible? Whilst the dream of a 15 hour week may not be in the reach of most, a 4-day a week most certainly could be. On the days of the week in which my son is looked after by others, after taking in the consideration of childcare costs, the associated transport costs for getting to/from work, additional pension contributions, taxes, national insurance payments, I calculated my daily take home pay to be less than £30 (around $45), meaning I could essentially work 1 day less a week, for just £120 less a month. I’m sure there are plenty of people reading this whose situation is very similar.

Debtfreeminimimalist say: If we continue to follow the same-old path of filling our lives with excessive amount of material possessions (and its companion, consumer debt) we will forever continue on this treadmill of overworking and lack of time. But what not try the alternative? Live a simpler life, a life with more time to enjoy on your own terms (rather than the one dictated by your employer). It’s time to take a moment to examine your true priorities in life, to decide what you truly value in your life. You may even find that you’re a satelite tv subscription (or car payment, gym membership, iPhone contract, luxurious holiday, new kitchen etc..) away from the possibility of working a little less and enjoying life a whole lot more!

Look after the pennies and the pounds will look after you! (A tale of accumulated marginal gains)

Look after the pennies and the pounds will look after you!

(A tale of accumulated marginal gains)

penny pounds

‘A small leak can sink a great ship’ – Benjamin Franklin

Do you ever get to the end of the month, without having made any substantial purchases, yet still find you have very little (if not none) of your salary left? I suspect this is a familiar experience all around the globe, yet many do nothing about it. You may even ask yourself where has it all gone? In the hope that it’s not you that is responsible for spending everything you earn, you may even attempt to blame someone else (your partner, your kids).  Once I actually called up my bank convinced that I had been the victim of bank fraud, that was until the bank clerk began to whistle through the last 15/20 transactions on my account….to which I replied ‘yes, yes, yes, yes….oh, it looks like I’ve actually spent the money!

Whilst you can become transfixed with reducing the big fixed monthly outgoings (your mortgage, car loans, loan repayments etc.), what many don’t realise is that every month substantial amounts of money are paid out through numerous small bills/costs, payments which could have been reduced or eliminated altogether. These innocuous, frequent, sums of money, the ones which make up 3-4 pages of your monthly bank statements, can stealthily consume equal to or far more than the big outgoings, the ones you sit and agonise over, yet they warrant comparatively little or no attention.

David Brailsford, the multi-gold winning coach of the Team GB cyclists, is accredited with much of the team’s Olympic success through his emphasis on the ‘aggregation of marginal gains’. Put simply, it’s how small improvements in a number of different aspects of what we do, can have a huge impact on the overall performance of the team (or in this case, the state of your finances). To turn Team GB into a gold machine he examined every aspect of the team’s performance, from the streamline design of their helmets to the shape of the pillows on which the cyclists slept. Fast forward to the 2012 Olympics, it was with the accumulated gains from hundreds of micro-improvements, that Team GB won 8 golds (double the golds won by Team GB in any other discipline), 2 silvers and 2 bronze, earning David Brailsford the reputation as one of the most respected sport coaches in the world.

Where can you find marginal gains? Once you delve below the surface you’ll begin to find that the opportunity to achieve marginal gains is everywhere (a bit like clutter). How about turning the thermostat down a single degree Celsius (3-5% savings on your gas/oil bill and you won’t even notice it), or cancel a magazine subscription (they only encourage you to consume). Reducing your car use can save you hundreds of pounds, I’ve saved almost £500 ($800) this year by cycling, on just 2 days of the 5 days I work each week . You will probably have all heard of the ‘latte factor’, but how about the ‘leftover factor’? The cumulative savings of eating last night’s leftovers and other perishable food items in your fridge/cupboards (which otherwise would soon to be destined for the bin) will save you another £400 per year (using a prudent £2 per day approximation).

At home I currently enjoy high definition TV (via FreeSat), broadband and home telephone (inc. line rental) for only £10 per month. 3 years ago we were paying over £200 a year interest on our bank overdrafts, now the banks PAY US £300 per year, despite ending most months with little more than a few hundred pounds in credit. Last years we were paid £400 to move our current accounts and £100 to move energy suppliers, with the additional bonus of both offering market-leading products. Use a combination of cash-back websites such as QuidCo/TopCashBack (with caution) and cash-back credit cards (3% Aqua Credit Card = £100 per year) to shave pounds off retail purchases. Shop around for telecommunications packages.

If I was to list all areas of potential marginal gains this article could easily become a book in itself so here is a list of the key words relating to further potential marginal gains which you may wish to try for yourself. Water butt to water garden, reuse supermarket carrier bags for green points, use own brand toiletries in expensive branded bottles, pay bills by direct debit, use first litres of cold water in shower to wash hair, turn off heating an hour before bed, porridge for breakfast, cut down on alcohol, no gambling, meat-free Monday night dinners, do it yourself, energy saving light bulbs, don’t pay to park, fresh cooked dinners, switch off not standby, no lottery tickets, increase insurance excesses, wash your own car/windows, use restaurant vouchers, grow your own, don’t buy newspapers, no coffee shops, bulk-buy during offers, flush toilets less, borrow not buy,  cut out unnecessary car journeys and don’t use air-con.

Debtfreeminimimalist approach: Applying the aggregation of marginal gains method to your home finances might not bring you instant wealth, and may even at first appear a lot of effort for little reward, but like most approaches suggested by thedebtfreeminimalist, it is a philosophy which will, over time, enable you to live a simpler life, free of debt and free of the pressures with which having no money can bring.

It’s all about marshmallows! (A tale of deferred gratification)


It’s all about marshmallows!

(A tale of deferred gratification)

Could you resist temptation if promised an incentive for waiting? On a daily basis in our consumerism-driven society we’re presented with something hugely desirable (maybe its a new iPad, a latest smartphone or a new car) and suddenly you are hit with the consumer’s dilemma, should I buy or shouldn’t I?  The moment is often filled with small thoughts in your head, can I afford it? shall I put it on the credit card and deal it with next month? do I really need it? Increasingly the answer is buy it and worry about it later (when the bill drops through the letterbox).

Modern society is increasingly short-sighted especially when it comes to their attitude towards finances. Under half of 25-40 year olds don’t have a pension, nearly 25% of new mortgages are taken out over 30 years or longer and a staggering 68% of new cars are bought with finance. Consumers of the 21st century have been trained to get what they want, when they want, no matter how much it costs them in the long-term.


What about the marshmallows? Well, for 5 year olds, marshmallows are like new jeans, iPads, smart phones etc…very tempting! In a well-known experiment in the late 1960s/1970s, conducted by Walter Mishel of Stanford University, during an interview young children were offered a single marshmallow but were offered the incentive of an additional marshmallow if they could wait (approximately 15 minutes) whilst the interviewer left the room. The results are comedy gold (just search YouTube for this experiment) but the results are no laughable matter. The follow up research which tracked the children involved in the experiment and conducted for many decades after, showed that the youngsters who were able to wait, able to defer their gratification, were much more likely to have greater life outcomes (education attainment, levels of wealth, lower Body Mass Index).


Opportunity cost is an economic term which defines the benefit that you will forgo by consuming a particular good/service….the deferred gratification. For example the opportunity cost of purchasing a new pair of £100 jeans is that I couldn’t afford to go the theatre with my friends. Unfortunately the opportunity cost of our decisions can be a lot more costly in the long run than missing a night at the theatre (time for the number crunching!). The opportunity cost of purchasing the jeans could have been a £100 investment into a personal pension, which enhanced by tax relief would have immediately become £128. At the age of 25 and invested for a further 40 years (at a modest 6% annual return), enjoying the benefits of compound investment, your initial investment of £100 would have grown to a handsome £1,400. This sum, which if invested in an annuity, would deliver an annual retirement income of £72 p.a….nearly enough to buy a pair of jeans (or a night at a theatre), every year for the rest of your, what could be, long retirement.


As the Stanford experiments show, it is that it is more than just financial rewards that mastering deferred gratification can bring. The benefits of exercise are normally enjoyed not in the moment of exercise but in the time (days, weeks, months and years) after, when you’re feeling stronger and looking leaner and healthier. So many people in the western world are obsessed with the way they look yet they look for short-term routes, which require money not effort, to look good. The fake tan, the nail extensions, the new shoes are all just metaphors for scoffing the single marshmallow, if only people would spend their time exercising not shopping, they would soon find that they would be far happier with the way they look and feel than they do by propping their self-esteem’s up with short-term fixes whose benefits fade away as quickly as they are applied.

Achieve: Putting aside my wonderful family, on reflection, my greatest achievements in life have all involved massive dollops of deferred gratification. Be it personal success in running a sub-3 hour marathon, completing a grueling 100 mile cycling sportive (only last week) or educational success in completing A-Levels at night school, a 2:1 Undergraduate degree in Accounting and Post Graduate degree in Education, the achievements I will be forever proud of have all been achieved through a huge investment of not money but time, effort and discipline. The studying until the early hours of the morning, the evenings running and cycling through weather cold enough to make you want to cry, the lack of money whilst others all around are enjoying huge amount of disposable income (and the possessions/lifestyles to match) were all an investment in my future success and happiness, an investment whose benefits I will reap from for the rest of my life.


The debt-free minimalist philosophy: Whilst we won’t all live until we’re 100 years old, there’s no harm in thinking and planning for a life that will. Unfortunately, for the majority this won’t be the the latter years which they had imagined (or seen in the adverts) simply because they couldn’t wait, for them the marshmallow was too tempting! If you don’t want to spend your latter years eating cat food on, relying on state handouts to survive (if there are any by then) or simply not even existing (due to poor health) then it’s time to start thinking more about tomorrow and less about today because one day you’ll wake up without much wealth or health and think ‘if only I could have resisted temptation!’.


“For tomorrow belongs to the people who prepare for it today”

African proverb.