They say that the journey of a thousand miles begins with a first step.
To be honest I had no idea if I was going to succeed or fail.
Nor did I know where this journey would take me.
What I did know was that if I didn’t do something and take ownership of my life and money, my future life in retirement was going to be a lot like it was now (at 24 years old) i.e. no savings, limited choices and probably dependent on some form of government assistance.
So it was in that moment and having no idea; other than the thought of “it’s better to have tried and failed than not tried at all” I took my first step forward.
My first goal was not some lofty ideal life vision or to be financially independent.
It was simply a test I gave myself to spend less and use my savings to build up an emergency buffer of money in my bank account.
The goal would require me to save $3,000 over three months ($250per week).
That was twenty four years ago and it is still one of my proudest achievements.
Because I stood up to my fears and I was so afraid to not be a failure to myself that it called every cell of my being into action.
I asked for extra shifts at work (at the time I was a casual worker at Novotel Hotel). I made all my own meals with no frill labelled food and I spent my down time reviewing my budget, tracking the progress to my goal and sleep. There was no going to the pub, buying pizzas, buying magazines or hiring videos.
The thing is, while the struggle is no fun, I discovered that it’s in our struggles we gain greater clarity of who we are (not think we are) and the opportunity to grow stronger from the experience.
Another realisation was, humans are incredible at adapting to change and more than surviving, they embrace new ways to thrive, in the face of adversities.
It was a real challenge! And looking back, if I hadn’t passed I’m not sure I would be where I am today.
Not only did I achieve my goal, by the end of the three months I had save $5,000.
The thing about momentum is that it’s easier to keep moving forward once your're moving. So filled with the self-confidence and evidence of my achievement (my bank account balance) I planned my next goal.
This next goal would take longer but have a “bonus reward” only if I could achieve it.
The goal was to save $15,000 by my 26th birthday (9 months’ time).
The momentum I had was the already saved $5,000. Any money I saved above $15,000 balance I could spend on whatever I chose, guilt free.
I had no idea about investments As such I stuck with what I knew best i.e. work more hours, earn more per hour, spend as little as I could and constantly benchmark my progress along the way.
By my twenty sixth birthday (12 months from my taking that first step) I had saved $19,687.
WOW!!!! With my 4 weeks holidays accrued over the last twelve months, I headed off to back pack SE Asia for a month. First Singapore, then Malaysia, Thailand, Laos and Burma. Total cost $4,500.
Refreshed, inspired and back from my holidays I now knew the ideal life I wanted to live. It was to fund a lifestyle of travel and financial security. The cost $52,000 per year.
Sitting down with my legal pad, pencil and calculator in hand I wrote long hand each year saving $12,000 at a 10% annual return. It would take me 22 years to save $1,050,340 to achieve this goal.
I remeber thinking twenty two years and feeling very depressed. I would be 47 by then!
I set my goal for Year 2 was, to somehow grow by bank balance from $15,000 to $40,000.
The same thoughts as I had when taking my first step filled my mind “it’s better to have tried and failed than not tried at all”.
This goal would require a change of tactics.
Firstly I physically couldn’t work more and secondly my bank account paid me only 5%pa interest (yep those were the days).
I had to increase my knowledge of investing, so I invested in a book “The Idiot’s guide to getting rich”, This is where I first learnt about managed funds, shares, bonds, borrowing money etc.
I opened an investment account (CFS Geared share fund) with $10,000 and invested in a managed fund saving $500 per month.
With my new found passion for investing I applied for a job at a bank as a teller and kept my casual hospitality job working nights.
At this time (1997) Telstra was listing on the share market. Shares would be offered as an instalment i.e. pay half now and the balance in 12 months’ time.
Fortune favours the brave and I applied for a personal loan $12,000 and $3,600 of my own cash I applied and was give 8,000 TLS shares (instalment was $1.95 with a further $1.35 or $10,800 to be paid 12 months later).
By the end of the year my Telstra shares were worth $6.50 ($6.50 x $8,000 = $52,000). Less my borrowings I had made $40,000.
I was hooked!
Starting Year 3 my wealth had grown from $0.00 to over $50,000.
Over the next 12 months I would see my TLS share price rise more up to $8.83 ($70,640), my CFS geared share fund would go up 50% to just under $25,000 and my emergency savings account in my bank $5,000.
By the end of my third year I had grown my wealth to $100,000.
As I reward I bought myself a second hand pinball machine.
And if you come to my office you will see it. If you’re lucky we may even have a free game (since I have the keys).
The lesson of this is the following.
There are three primary drivers for results in life:
- Your actions (habits)
- Your strategy (choices)
- Your luck (randomness)
Only two of these three are within our control, however if we can master these two then we have the opportunity to increase the odds that luck will work for you rather than against you.
Note:I sold my TLS shares and my CFS magaed fund in 2001 to fund a home deposit, however I still have my pinball machine :)
If you are stuck in a funk or you’re lost in a cloud of complexity feel free to contact me. Most often in life we just need someone to talk things through and to lighten our load a little. The following articles may also be of help
This post was written by Peter Horsfield, as such they are his personal views. Peter helps you to focus on what’s most important, the right strategies at the right time. To learn more about How to become Financially Independent visit Peter Horsfield Smart Advice
General Advice Disclosure
Sources of this information are considered to be reliable but are not guaranteed. Information published in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs.
Peter Horsfield in an Authorised Representative and Investsure Holdings Pty Ltd ABN 16 050 286 630 as trustee for Horsfield Family Trust ABN 55 609 068 513 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523