ELLIOTT’S RULES ABOUT MONEY

[Middle Class Caveman 980]

Hey folks, in my PPR I said I wanted to put some ideas in here about money - so here they are!

 

First, let me just state that these are MY rules and they are how I have accumulated my wealth - they might help you, they might not. I would gladly welcome any and all suggestions from people about how they have done things.

 

So, money. It’s a fickle thing and by no means important at all. However, it does create opportunity and luxury. So let’s dive into Elliott’s three rules of money.

 

1. You will never be rich working a 9-5

 

I found this out early on in life and I’m glad I did. We as humans love homeostasis - we do this with money as well. We will always accommodate our lifestyle to our income, when I was 22 and earning £20k a year I though I was rich, I spent every penny. Now I’m older, earning a greater sum than that and I spend every penny lol. How is it that no matter how many pay rises I get I’m still rarely looking at money in my account at the end of the month? Homeostasis.

 

However, with my extra income from my business I use this to invest, save and multiply my wealth. If you want to increase your wealth then you’re going to need to get a second job or become a bit entrepreneurial. That way you can dedicate all of your extra income to wealth driving behaviour without impacting your lifestyle.

 

2. If you can’t afford 5, you can’t afford it

 

This rule I put in place to help me make large purchasing decisions, or luxury items. If I want to buy something and I can’t afford to buy 5 of them (or replace them several times), I can’t afford it - it’s above my pay grade. This has worked wonders because it makes me become a bit more of a penny pincher and only truly treat myself when I know I can actually afford it. 
 

the most obvious win here is that it takes away all credit from my purchasing decisions, the only thing I have on credit is my house and my car (that’s a story for another day - I appreciate that my 19 plate Merc may well contradict this rule but I will tell you more about this in time).

 

so if you’re thinking about buying something luxurious or expensive, ask yourself ‘can I afford 5 of them?’. 
 

examples of things I haven’t bought because I can’t afford 5? The latest smart phones, a humidor (just got one on sale that was 1/5th the price it usually is!), a PlayStation pro, a new TV for my gym and an Apple TV for my gym to connect my iPad. I can afford 1 of all these things right now but I can’t afford 5, so I’m not having any of them. Do I need any of them? Nope. So I’m not suffering in anyway.

 

Have a think about the things you’ve bought recently, can you afford 5 of them?

 

3. Never leave ice cream in the fridge

 

I always frame this rule like this at school with the kids but actually it helps to make a lot of sense. Most people can’t leave nice food hanging around. If you put a tub of Ben and Jerries in my freezer - I’m gonna eat it. All. Rapidly. Because the temptation is too great.

 

The same goes with money, if you can get access to it, you will spend it. 
 

That’s why at the start of each month I pay 10% of my wages into an investment app, 5% into an isa that’s fixed and in my wife’s name (so I can’t see it) and then make an over payment on my mortgage.

 

I cannot get to any of that money to waste it or spend it on luxuries. It’s working hard for me earning interest and value through the stock exchange. I do of course have an emergency fund I can get hold of so I’m not completely blocking my access to money if the boiler dies for example.

 

I used to use quite a sophisticated platform for my stock trading but now I just use Wealth Simple, a really easy app that assesses your risk and invests for you. Remember, all investments need at least 5 years to see a sizeable return.

 

 

Those are Elliott’s 3 rules for money. By following them it stops me spending money on things I don’t really need too often and saving money that’s working hard for my future.

 

I hope this has helped!

 

Elliott

[GazzaGarratt 11,049]

I think it's all down to how you find that extra cash from a job or different avenue. I've been working that for a while and its finding the one thing that doesn't upset work/life balance more than anything.

 

Going self employed as a contractor would see me nearly triple my salary eventually but I can't do it at the moment because life needs some stability.

 

Not everyone is as creative as yourself, that's not a bad thing, but it does inhibit how quickly you can find that extra avenue of cash.

 

It would be good to explore number 1 rule deeper, specifically how you worked out extra avenues, as after working for a Building Society for 15 years I'm pretty savvy on saving and spending control.

 

Nice thread though mate. I like the thought process. 3 is always the number.

[Plumbers Crack 4,062]

A very interesting read Elliott 👍

 

I noticed you don’t specifically mention pensions - what’s your take on this?

[Middle Class Caveman 980]

46 minutes ago, Plumbers Crack said:

A very interesting read Elliott 👍

 

I noticed you don’t specifically mention pensions - what’s your take on this?

That’s a great question Dave, I actually HAD a very promising pension through school, I paid in 11% of my salary each year and the government matched it etc. However, as with all things money it has since been changed and is now worth sod all. Lots of wasted money. I pulled out of that pension after 5 years and saved the 11% instead to buy a second house.

 

The state pension is going to be a joke when I get to 70.

 

As for private pensions - most pension companies are doing what I’m doing with the money people pay in, they are using it to buy land, property, stocks, shares, commodities etc. So, being the control freak I am, I would rather do all that myself and reap the full rewards. I think for the novice investor a private pension is a fantastic idea and everyone should consider one. However, my retirement fund is currently made up of houses and a stock portfolio getting a modest 9% return at the moment - no private pension can match that unfortunately.

 

It’s such a shame because pensions used to be so valuable, my wife’s Nan is getting her husbands pension from the Docks and she gets LOADS of money each month. Alas, they aren’t like that much anymore.

 

One thing I will say though for the young people in the forum, do not expect the government to look after you when you’re retired - you aren’t entitled to anything just because you lived in a country your whole life, make your own arrangements!

[GazzaGarratt 11,049]

On 11/12/2019 at 9:42 AM, Middle Class Caveman said:

That’s a great question Dave, I actually HAD a very promising pension through school, I paid in 11% of my salary each year and the government matched it etc. However, as with all things money it has since been changed and is now worth sod all. Lots of wasted money. I pulled out of that pension after 5 years and saved the 11% instead to buy a second house.

 

The state pension is going to be a joke when I get to 70.

 

As for private pensions - most pension companies are doing what I’m doing with the money people pay in, they are using it to buy land, property, stocks, shares, commodities etc. So, being the control freak I am, I would rather do all that myself and reap the full rewards. I think for the novice investor a private pension is a fantastic idea and everyone should consider one. However, my retirement fund is currently made up of houses and a stock portfolio getting a modest 9% return at the moment - no private pension can match that unfortunately.

 

It’s such a shame because pensions used to be so valuable, my wife’s Nan is getting her husbands pension from the Docks and she gets LOADS of money each month. Alas, they aren’t like that much anymore.

 

One thing I will say though for the young people in the forum, do not expect the government to look after you when you’re retired - you aren’t entitled to anything just because you lived in a country your whole life, make your own arrangements!

 

My company match my contribution and then it gets a yield figure - because of this matching I would struggle to do what you've done but its definitely a different spin on things. I'd like to still know in your opinion if there was a that that it would be beneficial to it a different way.

 

Also, don't forget to delve deeper into rule 1 for me. I'm really interested in that one A LOT.

[techno 3,510]

It's all very interesting but it really can sometimes depend on what life throws at you, and while in the past circumstances meant I had to watch every penny these days or while in still working i don't so much and it's really refreshing. Also if I'd had a similar approach I can't help thinking what I might have missed out on. While I hope I need money for the future I don't worry about spending it today to have fun.

[Dr Diamond 407]

On 11/12/2019 at 8:48 AM, Plumbers Crack said:

A very interesting read Elliott 👍

 

I noticed you don’t specifically mention pensions - what’s your take on this?

LOL there are going to be no pensions when i am retirement age. Which incidentally, will have been raised to about 75 or something ridiculous now doubt.

Its a massive ponzi scheme.

[Docwagon 856]

I'd highly recommend reading The Richest Man in Babylon if you have not done so.  That book, along with Ric Edelman's "The Truth about Money" helped me change my life. One line of the Richest Man in Babylon book is a guy (the one who eventually becomes the Richest Man) complaining he can't save money because he doesn't make enough. He is told that no matter what you make, someone else is getting by on 10% less. Figure out how they do it and you now have 10% of your income to save. Seems simple in hindsight, but that one line set me on the path to, over 16-ish years, increase my net worth by roughly a quarter million dollars. I started with negative net worth and almost no savings. Now I'm on the path to retire comfortably at the time of my choosing and could go a year without a paycheck before I really had to impact my lifestyle.  That's mixed with still enjoying the "now".  We take a vacation every spring and fall break, travel out of the country for one of those every other year, etc.

 

It boils down to priorities.  

[Dan94 913]

One rule I'd say would be to look into ARB betting... can easily make a couple grand before being banned.