How to start your money machine

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money and savingsToday, we live in a debt driven economy. Buy now, pay later. 0% interest for 1 year on our credit cards etc.  If you allow yourself to be seduced by such schemes, you are likely to accumulate a lot of debt.   You need to break the cycle and focus on:  Savings, savings, savings.  This has been the bedrock of capitalism for centuries and it is what you need to start your money machine.

Pay yourself first

“A part of all you earn is yours to keep”, The richest man in Babylon, George Clason.

If you want to be on the road to wealth, you need to pay yourself 1st.  The majority of us pay everyone else first and ourselves last, i.e we pay the rent/mortgage first, we pay transport costs first, we pay our credit cards bills first and only after all of that is done do we look at what is left, and decide what we can save.  Wrong, wrong, wrong.

Do not underestimate how important this first step is.  What does it really mean to pay yourself 1st?  Every month, put as much as you can afford to save into a savings account.  This amount must be at least 10% of your take home pay.  The best way to do this is to setup an automatic transfer of funds at your bank, why ?  So you don’t have to think about it and won’t notice it when the money’s gone !

Congratulations, you have now started your money machine.   Every pound you save is an employee working for you. Any interest earned on your savings are more employees working for you.   Put your dreams, your financial well-being and that of your families before the needs of your utility companies, your employer and your creditors.

Don’t wait until you have money to save

“If only I earned more money or if taxes weren’t so high, I would have enough money to save.”

These words sadly echo much denial or misunderstanding for if we ever want to be in a position to invest or to get on the road to financial freedom, we must cast such thoughts from your minds and settle down the simple and timeless maxim,

“Spend less than you earn and invest the difference”


That’s it I hear you say?  I know it’s not particularly impressive, sexy or exciting but when all is said and done, that is all there is.  Let me put it another way, such philosophies can be traced back thousands of years to ancient Babylon  and personally, if it was good enough for them, it’s good enough for me .

Be consistent

Most of us know this simple maxim and many of us have practised this at some point or another. But how many of you have practised this consistently for a sustained period of time? I struggled with a lack of investment capital for years until I decided to do this consistently.  That means come hell or high water, I have always paid myself first. I had practiced many personal finance strategies for years but never seemed to be making much progress and then one day it hit me.  I had been working hard and ‘trying’ to save but had been hopelessly inconsistent with my saving habits.

When you decide to do something you must stick to it and follow through.  That’s the only way to see measurable progress in a reasonable amount of time.  That in turn will inspire you to ‘keep on keeping on’ with the business of starting your money machine.  I know this can be difficult sometimes when money is tight but if you don’t plan to do this, then you are in effect planning not to have the future of your dreams.  Sad, harsh maybe but true.

There will always be bills to pay, there will always be friends and family members who need help financially but you must develop the ability to manage these things ‘after the fact’ that you have paid yourself first.  That comes before everything after all, how can you help others if you cannot help yourself ?

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photo by: 401(K) 2013

How a smart money tree will help you break your debt cycle

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Strike Debt Rolling JubileeLike most people, I wasn’t taught about money at school. I wasn’t taught about money at home either. As money really does make the world go round, it’s baffling that so many of us are not taught about it.

This site aims to simplify and demystify the topic of personal finance and money. How to make it, keep it, and have it work for you. Many people, including myself are striving for the holy grail of financial independence through either being their own boss, or by achieving ways to supplement their cash flow through passive income streams.

When you decide to become financially independent, you embark on a continuous journey of self-discovery and accomplishment. There may be many bumps in the road ahead, but there is also much pleasure and satisfaction in the learning and commitment needed to achieve financial independence and obtain the ultimate prize.

For me that prize is freedom.

Why ‘Smartmoneytree’?

“Smart money” represents making better choices with your money. Every time you receive income, you have the power to either spend it, save it, or invest it. The more smart choices you make with your money, the quicker you can get on the path to achieving financial freedom.

“Money tree” represents your personal finance structures. Rooted in savings, the trunk of the tree could be thought of as your day job or main income source.   The branches and leaves represent the limitless possibilities of alternative income streams.

We all need a smartMoneytree. Nurturing and growing it will not only improve your financial intelligence, but also improve your confidence and ability to deal with any future money troubles.

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How I tackled my debt demons head on

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Worried!My curiosity with personal finance started in my early teens. My family’s circumstances changed and we suddenly went from a comfortable life in the countryside without money worries, to an uncomfortable life in the city full of money worries.

My parents hadn’t particularly done anything wrong, they simply had too much of their cash in the wrong bank at the wrong time and their bank failed.  I vowed that would never happen to me and ever since I have been interested in financial literacy and money management.

That being said, my money problems increased greatly when I went university. If you have little financial intelligence and no money, you can only do yourself so much damage. However if you have little financial intelligence and have access to a lot of credit, the damage you can do is massive. Credit cards, overdrafts, store cards, signing contracts for services that I didn’t need — you name it, I did it and I left with an eye watering debt.

I was naive enough to believe that I’d earn so much money as a graduate, I wouldn’t notice the repayments. Wrong! I believed that myth, hook, line and sinker. I was in debt within the first three weeks of university and didn’t pay off my student loans until ten years later.

The worst thing about my spending spree was I didn’t even spend cash on expensive toys or holidays. I spent most of it on taxis, eating out and music concerts. I simply had no idea how to be financially prudent and so I only paid the minimum payments on credit cards whenever I could etc.

That’s all it takes, apathy, Ignorance and time! When the music stopped and my house of cards came falling down after a spell out of work because of illness, I didn’t have that much to show for my 10 year spending spree except a lot of debt, anger and confusion.

Up until that point, I had also been a keen investor and owned many shares. I had to sell my shares to pay the bills and this left a nasty taste in my mouth.

Fighting back

My parents misfortune and my spiralling debts after university forced me to take responsibility for my financial intelligence. I knew I had to make a lot of changes, but at the time, I just didn’t know what to do or how to do it.

I began to read many books on personal finance such as Robert Kiyosaki’s, “Rich dad poor dad ” and “Wealth mechanic” by Max Eames etc.  This enabled me to confront my situation and tackle my debt demons head on.

I had always harboured dreams of being an investor and being financially free and so during my debt repayment years, I was able to go on currency trading courses and trade part-time. I wanted to be able to read charts of the different markets and be able to gauge the mood and market sentiment.  This skill is invaluable to me today as I habitually look at the markets first thing every morning.  I also wanted to be able to analyse risk and improve my money management skills.

After four years, I mastered them well enough to win my first currency trading competition.  How could I pay for trading courses if I was in debt and broke I hear you ask? I swapped my IT skills for the training!  I’ll write more about that in a later blog but it’s important to remember, even when your bank account balance is low, you always have skills you can call on and exchange.

I started this blog because I want to build a community, share information and help as many people as I can to understand debt, personal finance and money management.



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photo by: photoloni