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| Pay yourself First |
In the past, when I was new in the job market and even newer in property investing, buying every book I can get my hands on with some kind of education in real estate investing, my saving strategy was very simple. All I wanted was to pay off my apartment. I sacrificed more than half of my salary for that and it helped. The way I did this was to get my salary, transfer part of the salary that I wanted to save into my home loan account on the very payday. Off course it has to be on the same day because the interest is charged daily. I just had to save that R50. And then I waited a few days and called my my bank to get a statement because I couldn't link this home loan account to my internet banking. I was almost obsessed with the statement and it helped. I saw how quick the debt was dying and that gave me some sort of adrenaline drive. Even though I've always loved a nice pair of shoes and a handbag, they just had to be on sale to deserve my money. I would see that R500 reducing my debt further. I paid myself first and then whatever that was left, paid me some more. Unfortunately, there was rarely cash left.
Fast forward, I paid up my flat in just less than 4 years. Yipeeeee!!! I remember the last few months seeing a balance below R20,000 and being overjoyed. The feeling of victory that I am soon an owner of a paid up property kept me wanting to pay more and more. Fast forwarding to a few years ago, a few properties paid up, more shoes, more bags, a better car, a bigger house, a family, woolies food, health shops, spa treatments, need I say more. Living a little is an understatement. I lived a lot. I stopped living by the very principle that took me where I was....pay yourself first. I paid me last or almost never. What helped was that I always had multiple homeloan accounts to pay, which served as my only way of paying myself. I even think thats the reason I always had a homeloan that I resisted to pay up. This is until the hubby convinced me to pay up our second homeloan last year. What a sigh of relief I had after that. I then went back to my old ways of staying with my debt until last month. I decided to pay off my only homeloan, which will take some doing. Its a sizeable amount and needs hard work in the savings front.I feel I am back in the adrenaline drive days and its exciting.
I am now back to paying myself first through my EF and paying off my homeloan. I consider paying off my homeloan some sort of a safe investing tool. I know it is not fool proof but it could be safer than investing in index funds and even safer than buying individual shares. Don't get me wrong, I buy shares knowing that its a higher risk form of investment, I try to read and listen to any sound stock investing advice. But I am a typical beginner, still harnessing books, blogs and online resources on basics of stock market investing. I have a feeling that I'm done with property investing though. I am looking at investing in REITs (Real Estate Investment Trust) and retail bonds. All I can say is, don't take my word for it. I may be buying a townhouse soon. I am so unreliable.
Off course, if you have debt, paying it will be a form of you paying yourself first. Keep at it and celebrate with every R1000 that goes down. Its very rewarding being debt free.
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