Packing it in

by Magical Penny on July 19, 2010

Do you wish you could just pack it in?

Today over lunch two friends and work colleagues were talking about packing it all in.

By ‘packing it all in’ I don’t mean leaving the office early- they fantasised about quitting their jobs, heading to South America, and working bar jobs in paradise.

It didn’t really surprise me to hear about exotic fantasies of tropical freedom on a dreary Monday lunchtime in the UK but it did make me think: How many people would really want to run away from their current life and start afresh?

And of those that would, are they in a financial position to do so?

I know that for my friends, this fantasy was exactly that, a fleeting dream they would unlikely realise. But the option is there if you want it.

What are you saving for?

Growing your pennies isn’t just about accumulating as much as you can in a retirement account for when you’re gray.

Growing your pennies is about preparing yourself for living any life you wish to lead. And yes, that can include heading to South America, working bar jobs and never coming back.

It might be an extreme example but I’m sure it’s getting some of you excited. If you wanted it badly enough, then that life could be yours.

As with most things…

It’s all about attitude

And I’ve been writing a lot of about attitude recently, like how to avoid burn out and when it’s OK to act crazy with money. It’s because growing your pennies really is mostly about attitude.

I joked with a friend that I was going to grow Magical Penny by writing endless re-hashes of ‘spend less than you earn’ ad nauseam. And I’m sure I could because its a good message! But it’s worthless if you don’t have the right attitude to actually live the mantra.

Whilst you might not know the specifics of investing, or how to start saving your pennies, this kind of ‘tactical’ knowledge is easily learnt (particularly here on Magical Penny!).

However, positive attitudes towards growing your pennies need regular cultivation and thought.

There’s the saying that your biggest enemy is the person in the mirror. They can hold you back. But they can also spur you on to do great things.

If you’re going to successfully grow your pennies, spend some time asking the person in the mirror what their “why” is and let that thought be in your mind as you go about your daily life.

If you master the ‘why‘ then there’s no stopping you. And if packing it all in and heading off to South America is your ‘why’ then you’ll be enjoying Mojitos on the beach soon enough.

Thanks to my friends for the inspiration for today’s post as well the discovery of an amazing blog: Exile Life -it’s little different to Magical Penny and worth a read (Thx J$ @budgetsaresexy)

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Crazy Money

by Magical Penny on July 16, 2010

We’re all a little crazy.

How often have you thought someone was crazy with their money?

Perhaps you decide to go on impulsive international day trips (like my one-day trip to Dublin)

Is that crazy?

Or maybe you buy every iProduct that comes out on release date.

Is that crazy?

We’re all crazy with our money from time to time

But it’s simply a matter of perspective.

If you want to successfully grow your pennies over the long term, it doesn’t mean you can’t be crazy with your money.

Nor does it mean you have to try to live on as little as possible.

Certainly growing your pennies becomes more appealing once you understand the power that saving can bring to your life. And it becomes easier over time as you get used to spending less than you earn every month.

But you can still spend money on things or experiences that some people think are crazy! The trick is to spend money on the things you’re really crazy about and avoid spending as much on the things you’re not.

Those in the know call this…

Conscious spending

One way to be more conscious with your spending is unautomating the spending part of your finances:

  • Are your utilities still good value?
  • Are you using all your minutes on your contract phone?
  • Are you still subscribing to any magazines or gyms that you’re not fully taking advantage of?

By cutting back on the automatic ‘non-conscious’ spending each month you might find a little more money for automating your saving rate and be able to spend crazy money on the things that matter the most.

This weekend have a look at optimising your spending habits and you’ll hopefully find it easier to be able to save consistantly every month but still be able to spend your pennies on the crazy stuff.

We’re all a little crazy. So get yourself in a financial position to endulge your crazy!

What are you crazy about?

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How to Avoid Burn-Out

by Magical Penny on July 14, 2010

Have you ever experienced burn-out?

Where you feel sick of what you’re doing, or simply exhausted and just need a break?
We all get burn-out sometimes, even when we’re doing things we love. Often it’s a result of working too hard, or focusing too strongly on one thing.

Life is less fun when you feel out of balance.

Often the best thing to do is simply to have give yourself a break.

Room to breathe.

But what can you do if you start feeling burn-out from working towards your financial commitments or savings goals?

The Problem of Money Related Burn-Out

Reaching financial goals can be particularly pressured because there is often a real urgency or need to reach them. Perhaps you: –

  • Have to find a new place to live?
  • Need a new car?
  • Must fix that faulty roof?

When financial pressure gets too much or you get ‘burn-out’ from trying to save every penny you can’t always simply just give yourself a break as you have bills to pay. Or maybe you’re finding it hard to afford a group holiday but you don’t want to let your friends down.

If you start feeling burn-out or you feel your good money intentions are wavering or you’re not reaching time-specific goals, then here are some things I’ve found useful to stay on track.

Automate where you can

Regular readers will have heard this Magical Penny rallying cry before but it really does work.

Making the process of paying bills and putting your pennies into savings automatic takes the will-power out of the equation.

We only have so much mental will-power before we start getting burn-out from all the effort of being ‘good’ with our money so setting up standing orders or direct debits is a great move (US readers should look into auto-bill-pay).

Over time you’ll get used to only having available the money you have left after you have made your payments to yourself (in the form of savings) and others, leading to automatic financial success!

Recognise the things that sap your energy and see what you can do about it

All forms of burn-out have a cause -the key is working out what it is. When it comes to trying to staying on track with your finances there may be something in your life that is making it harder to hit your goals or simply get the bills paid!

Perhaps your friends are encouraging you to spend a little much at the bar, or you’re tempted by online product promotions in your inbox.

Spending money on the things you love is not bad at all but if it’s stopping you from reaching your savings goals or if you’re simply finding it hard to make it to the end of the month then it’s worth trying to work out what you can do about it.

To use a personal example: I find I can spend ridiculous amounts of money on food if I’m not careful!

To counter-act this I’ve set myself multiple  ‘food challenges’ when in a given month I record how many times I bring my lunch into work, or hold myself to account to stick to a strict budget when I’m in the supermarket.

By looking for the things that sap your budget you can make reaching your financial goals much easier and avoid the burn-out that comes when you have to scrimp and save later on in the month.

Read or do something completely different

You can recover quickly from burn-out if you do something completely different. When it comes to staying true to your savings goals there are lots of different new things you can try to keep your momentum and resolve.

  • If you drive everywhere you could try going somewhere on public transport for a new perspective,
  • Or you could look for new money-making opportunities in your area or online.
  • You could even keep it simple and have a ‘no-spend’ weekend, just for the fun of it. It’s all about perspective.

Odd but true: When I was feeling a little burned out from work recently I did something completely different to my normal daily routine and ended up reading everything there is to know about interior design (prompted partly by my new awesome friend Betsy). As it is so much outside my normal interest and knowledge I found it an fascinating and successful experiment.

Doing or learning something new truly can help you recover from burn-out and help you get fired up again on your own projects and goals.

Reexamine your purpose

Humans are largely purpose driven so if you’re feeling burn-out after working on a particular project or towards a specific goal, it may be that you feel you are lacking a purpose. If you’re finding yourself struggling to save for a particular thing perhaps it’s because you have begun to change your mind on the purchase or it simply is not as important as other things.

I’ve found this happening a lot myself as I began saving for medium-term items. In fact it’s the benefit of saving for things you want rather than financing them through debt -you have time to reflect on whether it’s something you really want.

And it’s OK to change your mind!

Giving your goals a purpose is really important if you are to reach them so do change your goals if you find they are less important to the person you have become since you first set them.

Give yourself some room

Doing nothing is still OK sometimes.

I wrote at the start that financial goals can be harder than other goals because they often is an urgency or real need to meet them. However, the most important point of all when it comes to dealing with burn-out is that as long as you’ve got the basics (food, shelter and utilities)  it’s OK to not move towards your goals all the time.

  • You don’t *have* to be growing your net-worth every month.
  • You don’t *have* to always be spending less than you earn.
  • Sometime you just need some time to recharge and reassess.

You don’t have to be a perfect money manager all the time.

As long as you recognise you’re giving yourself some time, that you’re consciously letting yourself off from working towards your goals, then you’ll be fine –just don’t make a habit of it OK? 🙂

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How Using Storage Can Help You Grow Your Pennies

by Magical Penny on July 12, 2010

This is a guest post from Drew, working with Big Yellow Self Storage. I had not really considered how storage could help you grow your pennies so I hope you find this post a really interesting take on the subject.

Living in any big city, you quickly come to understand that space = money. With this in mind, we have three money making/saving suggestions that will maximize your space.

De-clutter and Rent out a Room

It’s no surprise that so much of our home space is filled with useless clutter after 61% of people questioned in a Big Yellow Self Storage survey last year admitted to hoarding useless items around the house. But hoarding can really cost you -households across London could be making up to a £3 billion a year, just by storing excess clutter to rent out a room. (This equates to over £250 million a month based on average rental incomes across the UK, or an extra personal income of as much as £320 a month or £3,840 a year per household).

Just under a third (26%) of us that have a whole room in our home filled with junk and the research found that over a third (41%) would definitely rent out a room to make money to help in these tougher financial times. Looking at these figures it could well be time to get the junk out of the spare room.

Prepare your House for a Sale

If you are about to put your home on the market, then you should know that it becomes all the more important for you to make the space inviting. It’s a lot like presenting a blank canvas to a new family. Letting them see the potential for how they can make it their own – instead of getting distracted by what’s already there. And when you are giving people the tour of your home, the last thing that you are going to want to do is make it look a lot smaller by failing to clear out any extra items.

Almost every home shows better with less furniture. Remove pieces of furniture that block or hamper paths and walkways and put them in storage. Since your bookcases are now empty, store them. Remove extra leaves from your dining room table to make the room appear larger. Leave just enough furniture in each room to showcase the room’s purpose and plenty of room to move around. You don’t want buyers scratching their heads and saying, “What is this room used for?”

Self Storage Rooms As An Office

The one thing you’ll inevitably need if you’re planning to set up your own business from home is a lot of space. With the help of commercial self storage, you can make this process a lot easier, by storing papers and documents securely offsite. Records are important and have to be maintained, but storing them requires a lot of space. With self storage you can keep your files organised in one location without having to upgrade to a bigger home or office. This isn’t only relevant to smaller businesses either. Expanding businesses can use a facility for equipment, promotional material or to archive documents.

At Big Yellow Self Storage you can store things of all shapes & sizes, with room sizes from 9 sq ft up to 400 sq ft for as little as a week, month, year or for as long you’d like.

Thanks Drew for the guest post! If you feel you have an interesting take on a subject that can help Magical Penny readers to grow their pennies  do get in touch.

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My Crazy Evening in Ireland

by Magical Penny on July 9, 2010

Would you like to have the freedom to visit friends in another country on a whim? It’s not about income level -its all about planning.

Earlier this week I caught plane to Ireland before returning the next morning.

That’s right. I was away from the UK a total of only 14 hours (and six of those I was asleep!).

For some people it might seem like a crazy thing to do. some of my colleagues thought I was mad after revealing to them that I had woken up in another country that morning.

It was the most impulsive decision I’ve made in recent months but I don’t regret it all. In fact I’m still grinning from ear to ear -the surprise look on my friends faces; the exciting kart racing I joined in with; the sheer craziness of an international return flight in the space of 14 hours. It’s what memories are made of!

Of course the financial impact cannot be ignored. The trip was the most expensive holiday I’ve ever been on in terms of the cost per hour. Air-travel and karting are not two of the most frugal ways to spend your time! However, the trip truly encapsulated the Magical Penny philosophy of growing your pennies with a plan.

The aim of Magical Penny has always been to encourage you to get control of your finances to help you lead the life you want to live, both now and in the future.

Mastering personal finance is not about sitting at home, trying not to spend any money. Like a crash diet, this can only work for so long. It’s simply not sustainable. True mastery of personal finance is about working consistently towards specific goals; taking little steps towards them, and refining your budget all the time to help grow your pennies over the long term whilst not feeling deprived.

It’s true that my 14 hour trip was impulsive and spontaneous. And to the uninformed this might seem crazy. Yet it’s much easier if you lay the financial groundwork before you’re spontaneous!

Being spontaneous requires a lot of pre-planning and being impulsive always works best when there has been a lot of preparation behind the scenes.

Of course, as a process, money management is never ‘complete’  but being able to cash-flow a spontaneous visit another country for a few hours is a good benchmark for getting in control of your finances. 🙂

I’m proud I’ve managed to get to such a place. Do you want to be in such a position too?

It’s not easy but I hope this and other Magical Penny posts inspire you to take a look at your own finances to see what steps you can make to grow your pennies in the long run but still be able to do the things today that mean the most to you.

Are you up for the trip?

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My Crazy Evening In Another Country!

by Magical Penny on July 7, 2010

On Tuesday night I worked a full day before rushing out to catch a plane to another country for an evening of fun. I then came back on Wednesday morning (today!), and was back at my desk before 9am.

On the face of it, you might think I’m crazy. Or that it’s not the kind of thing someone with a goal to grow their pennies would do.

Before I spill the beans about my 14 hour adventure I’m interested to hear what you think about this!  What’s your perspective?

Do leave a comment!

I can’t wait to share the full story on Friday 🙂

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Top Business Blog Award Winner: Saving Money Category

by Magical Penny on July 5, 2010

Magical PennyTop Saving Money Blog is proud to announce it has been awarded a position in the Top Business Blog Awards 2010.

And whilst grateful for the recognition the main reason for sharing the news is for the value of the  list of award-winning blogs.

Personal finance blogs are all different and offer new perspectives so if you’re enjoying Magical Penny you’re enjoy and get an immense amount of value from some of the other great blogs as you navigate through a sometimes complicated path towards personal finance mastery!

Just a short one today but there’s some exciting things coming around the corner. Look out for Wednesday’s shocker post too!

Subscribe to make sure you don’t miss it!

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Where Will You Be Ten Years from Today?

by Magical Penny on July 2, 2010

It’s funny how, over time, things change and yet stay the same.

Last night I went back to my high school for its 10th annual music festival. I was an honorary guest as one of the student founders of the festival back in 2001.

It was a wonderful night showcasing the musical talent of the next generation. And being back at school for an evening was really fun.

Naturally, I spent a lot of time comparing what the school is like now with when I was there:

The new facilities; the old curtains.

The new staging lights; the same old corridors.

And whilst it may sound a bit rich coming from a still fresh-faced 24 year old, I felt old!

Time really does fly by.

Legacy

Setting up that first festival in 2001 was certainly nerve wracking for us, a group of inexperienced 15 year olds, but, with Mrs Kilburn’s vision and infectious enthusiasm, we got there and the night was a success (although admittedly not as good as the festivals that followed)!

We had been scared something would go wrong, or that we’d have trouble getting everyone in the younger years involved.

But it worked, and 9 festivals later it’s a regular fixture in the school calendar. Every year-group after us has memories of the annual musical event. It’s Mrs Kilburn’s lasting legacy and gift to the school.

But that’s the funny thing about legacy –you never really know at the time what’s going to stick. Nor do you mk know if your contribution and preparation today will grow into something beyond yourself in the future. Certainly back in 2001, when Mrs Kilburn first dreamed up the idea of a school musical night she never would have thought it would still be around today for its 10th Festival!

How About You?

When I started this blog back in February 2010, a few of my friends thought it was funny I was going to be evangelising about compounding returns, about saving for retirement and planning for a time well into the future.

But like building a legacy, growing your pennies takes time, and you never really know the true effect of your efforts today on tomorrow.

The one thing you can control however, is what you do today. Over time things are certain to change, and some things will stay the same. But if you take action today, and maybe try something scary, then who knows? In 10 years time you might be singing your own song of success.

Good luck!

(And happy 4th July weekend American readers!)

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How To Market To Yourself – Magical Penny Podcast #1 –

by Magical Penny on June 30, 2010

I thought I’d try something a little different.

This first Magical Penny audio post is based on Monday’s post about how to employ marketing techniques to help you save and invest money to reach your goals.

Sell to yourself!
[mp3_embed blog_plyrs=”2″]

As always I welcome any feedback on the approach -whether you’d be interested in more audio posts, or if you prefer video or simply the written word.

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Get Rich with Secrets of Top Marketers

by Magical Penny on June 28, 2010

I have a confession. I can watch shopping channels for hours on end.

It’s not what you think. I haven’t bought anything from a TV shopping channel. I do, however, find they make fascinating viewing. And if you take a step back from what they are saying, the techniques they use to peddle their wares can be very entertaining!

The techniques can also be really useful for selling to yourself! Perhaps selling the vision of your savings goals or to keep you on track.
Here’s five selling ideas and how you can use them for good not evil!

1) Use a calendar event

The best marketers often frame their offers in the context of a specific calendar event. The most obvious event is of course Christmas and the new year sales. By associating their marketing with such an event they can ride on the energy of the event and more easily get into the heads of consumers. Christmas is a big example but there are countless others. Have you ever bought anything to “get ready for summer”, or for “back to school”? How about Halloween or valentines day?

When it comes to saving your pennies, using a calendar date can be really helpful too. Firstly it gives you a deadline. For example by saying “I will be driving a new car before Christmas” or “I will be going on an amazing summer holiday in June” you will find it much easier to start saving. Secondly like the big marketers, you can ride on the enthusiasm and energy of a specific event to keep you motivated -it really does making saving ‘fun’ when you have a clear goal in sight.

2) Have a Vision

On the biggest ‘tricks’ of marketers is selling a vision. In the classic world of ‘infomercials’ the ‘vision’ starts really glumy before giving you a solution. This montage of infomercial ‘problems’shows this perfectly:

Having a ‘vision’ of how you want your life to be in the future is great for maintaining focus on saving too (although of course for most people its better to focus on making positive visions come true rather than saving to avoid a less fortunate fate (although if that works for you, then go for it).

3) Scarcity

Another brilliant trick of marketers is the idea of making things scarce. This can increase demand and give the product in question a more premium feel.

For example, just this last week the iPhone 4 was launched in the UK, leading to queues and sell-outs in shops around the country. Marketing scarcity can create a great buzz for the product and can makes the purchase more of an ‘event’ (see #1).

I actually stood in a queue for an iPhone 4 at the weekend in London, and it was a great atmosphere. Of course, it was my friend who was going to actually buy the phone!

You may not realise it but when it comes to saving, there’s a real scarsity too – time. There’s only so many days to save for the myriad of expenses that come up in life, most notably, weddings, houses and, ultimately, retirement. If you’re in your 20s you are in the best position to start saving for such long-term goals because of the power of compound interest. Everything you put into savings and investments before your 30th birthday has over 30 years to grow and compound.

Time is the most scare resource there is so you must take advantage of it, even if you just start small.

4) The Power of the List

Marketers are always talking about the size…of their list.

‘Lists’ are contact details of potential customers that marketers can sell things too. They can be immensely helpful for everyone involved -potential customers can sign up to the lists that matter to them and can hear about amazing deals before anyone else. It also saves time for the customer as they don’t have to trawl the Internet or the shops looking for that perfect item -they can opt-in to hear about exactly the kind of things they need or like to buy. Of course lists are brilliant for marketers too because they can sell directly to people who are interested in what they have to say so they are more likely to close the sale. (I have a list too!)

Similarly when it comes to saving money, the power is in the list. If you make a note of everything you want in life, both in the short, medium and long term it not only gives you time to reflect on your possible purchases, but it also actually means you can almost guarantee you’ll get what you want as you have a goal to work towards.

Having a list helps you avoid unncessary purchases and  you get what you really want. Win Win.

The ‘list’ that works for me is actually a PowerPoint slide show of all the shiny gadgets and travel destinations I want to visit. I set it up last year and I’ve yet to buy anything or visit any of the places of the list but I’m certainly closer than I was as I have something to aim towards as I save for those shiny bikes, electronics, and trips of a lifetime.

5) Stick to What Works

When marketers hit on a particularly successful technique or campaign, what do they do?

Try something else?

Not often.

Instead they do what works!

As an example, as a marketing research consultant I’ve worked with clients who use almost the same advertising campaign over and over again. And rather than resulting in ‘burn-out’, the campaigns have become more and more successful!

Similarly, Internet marketers often use the same marketing emails repeatedly and see sales come in like clockwork. Obviously there’s only so many times you can use a particular strategy but sticking with what works can be a brilliant marketing strategy that saves money and time. There’s no need to ‘reinvent the wheel’.

It’s just the same when it comes to saving and investing. If something is working, keep at it.

There is a danger for some who find themselves trying different ‘money hacks’ or different investment strategies all the time. We all have our own money quirks and habits and things that work for me might not work for you or yours for me. When you come across something that works for you, for example having a more ‘flexible’ budget rather than tracking every penny, by all means stick to it.

When it comes to money management, there is little black and white so when you find something that’s working for you, stick with it!

I hope these tips have been helpful for when you need to market to yourself. I’m writing this on Sunday night so now, if you excuse me, I’ve got some infomercials to watch before bed!

More Reading

I’ve written about marketing to yourself before:

Financial Lessons of a cheese pedlar

I’ve also made a ‘confession’ before too:

“It Starts When You Save”

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