Pay Day

Today was Pay Day for me and much like being every single pay day for the last 15 years, the money only served to swell already full coffers. No overdrafts to pay, no credit cards to fund and no debt collectors to throw a bone to. The money went in to our account and I could then decide what to do with it. But it wasn’t always like that.

My First Paydays

I’ve kept track of my money the last 19 year, 4 months and 9 days but it was a lot easier in the early days when as a student I had very little of it. My view was that if I could eek out a meagre lifestyle on whatever income I had from grants, student loans, odd-jobs, and (at last resort) paid employment – I’d be fine. I consciously tried to never impose on my parents for money as my mother especially was a controlling religious fanatic – accepting 30 pieces of silver would mean I’d either be dragged to mass or harassed. I found it wiser to opt out of the financial/religious blackmail but it did mean that I didn’t have much free money.

When I finally started a graduate job, I arrived alone in a new city and with what money I had left booked a few nights in a Youth Hostel – since my company was going to provide 2 weeks in a hotel but since I arrived for a medical on the Wednesday before starting work in the middle of December, I’d wait till January to stay in the hotel. I’ll not elaborate but money was tight back then but I did get paid on the 26^th of December (or next working day) for the month – which gave me about £1,100 – I was rich again!

I went back to Ireland for Xmas and came back in January, started my residence in a hotel for 2 weeks. Whilst I might complain about my parents, they did have an agreement with me and my brothers to help us with a house deposit and I asked for £10,000 (which seemed like a lot back then but now seems unfeasibly small – but hey, this was 2005), and got it. I had done my research on the ongoing property boom and was confident that it was a good investment – even if prices collapsed, as renting was expensive. That £10,000 was swallowed by the deposit (£9,200) and legal fees (~£1,300).

Back in work, I had to ask payroll for an advance on March’s salary at the end of February. It was a simple request and within the company guidelines but made worse by the payroll people who poked their noses into my affairs and enlightened me with wisdom like “you do know, if we pay you twice in February, you’ll not be paid at all in March?” – mmm… thanks for that, I thought that I’d just get paid as normal. In any case, I got the money just in time to pay off the credit card and mortgage (£310 per month, IR 4.54% variable I recall).

But that 2 week period from moving into the flat and getting paid was a nervous one and I didn’t like it. I didn’t like being cash poor and I was suddenly aware that I didn’t have the usual furnishings you’d expect in a habited dwelling – like a bed or bedding. I took my 4 months to get a fridge (thanks to Scotland’s optimal climate for placing a plastic bag outside the window for 8 months of the year to keep things fresh.

Multiple Sources of Income

In retrospect and by comparison, I could have done a much better job with money back then. I could have cow-towed to my parents demands and taken more money from them. I could be like a cousin who engages in all manner of emotional blackmail and outright fraud & theft to get money from her parents (to this day). The fact is that I had an independent mindset – I could do it myself but it was also a very poor man’s mindset. Always looking to be cheap, save money, not spend a penny. It served me well but at what cost?

Early Pay Days

Over the years, the 26^th of the month would come along and friends/colleagues would talk about how they were waiting to get paid to spend it all. I was never like that. I kept my outgoings low (no car for example) and took in a lodger. All bills were covered and at the end of the month when I did my accounts, I had free money. That money was invested and generally grew. It was a nice pattern.

I did work out quite quickly that I hated work – hated it so much. Compared to university life where diversity, discovery and discussion were prevalent, the world of work was dogma, desks and direction – pale blue shirts in a cubicle farm for all the nice hours of the day. I knew that I needed to do 2 things:

1. Spend less than I earned
2. Invest what I earned to make it grow

I neglected the idea that if I earned more, I’d reach the final destination (Financial Independence) earlier – that’s the poverty mindset for you.

Failure to save money means you end up with the same amount of money at the end of the month. You are standing still and when inflation is raging, you get hurt. Over time, this zigzag means you’ll be working forever. If you don’t control your spending and £out > £in you end up having a bad time. But £out < £in your net worth grows. Even worse, the effect of punitive interest rates on debt keeps the poor poor and asset price growth keeps the rich rich. My most productive money isn’t money I earn today but money I didn’t spend 20 years ago.

Today’s Pay Day

I’m not in a position where free cash flow more than covers our outgoings. That doesn’t mean that income from work alone is enough but I’m not worried about getting paid on time. It’s a good feeling to know that you’ve got enough. And when they money does come in, I get to decide where to invest it – again a nice feeling. It’s a feeling of control and comfort.

When you get towards being Financial Independence, pay day is like when you are half-way through a pint at the pub when someone buys you another pint and is surprised you can’t keep up with everyone else. Add in the hip flask you have stashed in your jacket pocket and you’ve got more than enough booze to inebriate. That’s what today feels like – so happy pay day to you all. May you spend it wisely and invest it even wiser still!

Thanks, GFF.