Being stuck in the house under "lockdown" may not be ideal but it does has some benefits.
Perhaps the main upside is less spending on frivilous pleasures i.e. eating out, drinking, socialising. We may want to go out on the town but the choice has been removed - pubs and restaurants are shut and will be for the foreeable future.
Also many of us will not be spending as much money on petrol.
For nearly two months I worked from home and didn't have to fill up the car at all which saved a small fortune.
Now that the lockdown has eased a little and I'm back in the office three days per week, I will have to spend a little on fuel. This isn't too bad, especially now that unleaded is below a pound a litre for the first time in what seems like decades.
With the surplus cash I've had no option but to save over the last couple of months I decided to clear up my finances.
I wasn't in any real debt, just some small amounts. Though they were small they would still irritate me when I thought about them. I had a low 4-figure balance remaining on a loan and also had a "cashback" credit card that I used to use a lot when I lived near an Asda.
Listening more and more to Dave Ramsey's podcasts has changed my perception of debt and specifically credit cards with "perks". Getting 1% cashback for purchases seemed like a no-lose prospect at the beginning but in the end the reward didn't merit the effort of handling it.
I spent nearly 3 years in a financial limbo waiting for my divorce to become final. It cost thousands of pounds of solicitor fees with the result being a meagre windfall at the end. The effort involved in juggling this expenditure whilst avoiding paying any interest caused some minor stress - I had to stretch my wages and also regularly move the solicitor fees to 0% credit cards when my wages wouldn't cover the entire monthly bill.
Moving the balances before any interest was added always caused headaches. Managing a cashback credit card balance involves similar monthly scheduling which reminds me of all that hassle and I've realised it simply isn't worth it.
It's only because it was a cashback card that it was ever used. Nowadays I no longer have to pay half the mortgage on a house I don't live in. This means I have more cash in my bank account. I have no need for a credit card because I can use my debit card. I just don't really need to mess around making sure the credit card balance is at zero each month. It's just another hassle and it's far, far easier just to use my debit card or cash.
So I've now destroyed the card, claimed and spent the last of the cashback and sent a letter to close the account.
Yes, I'm missing out on Asda vouchers but I can live without a few pounds of "free" shopping each year.
As for the loan, I used my some surplus cash to pay that off a few months early. So no more monthly loan payments which frees up several hundred pounds of income.
I want the Dave Ramsey idea of a good life - surplus cash in the bank and no need for any "credit score". Getting rid of a loan and a unnecessary credit card gets me a step further.
Technically I'm now on Ramsey's "Baby Step 3" - building up an emergency fund of 3 to 6 months of household expenditure. This shouldn't take too long to achieve as I don't have any regular payments aside from my household bills. Also, I imagine I can count retained earnings in my company bank account as an emergency fund.
The budget has been created and I know what I have each month. I own my car outright and it has several years left in it. Time to save to make sure that I've plenty of reserves ready for the next pandemic or national emergency.
And, of course, so I can ensure my Lifetime ISA is filled each year.
The LM portfolio as at close on 22nd May 2020:
| Code | Sector | Date Bought | Cost | Value | Gain/Loss |
|---|---|---|---|---|---|
| LM009 LM009-2 |
Gas, Water & Multiutilities | 05/02/2019 04/02/2020 |
£2020 | £1930 | (4.91%) |
| LM012 LM012-2 |
Real Estate Investment Trusts | 20/05/2019 28/11/2019 |
£2030 | £2300 | 12.94% |
| LM023 | ETF | 19/05/2020 | £1020 | £1030 | 0.98% |
As you can see there is a new position. I opened this on the 19th May as my weekly checks highlighted a potential trade.
This is a commodity rather than a share. I've bought an ETF which aims to mirror the commodity price. Each week the Friday closing price will give me an indication of what the stop-loss is on this trade. Whilst I don't use automatic stop-losses, I know I am disciplined enough to close the trade if my weekend checks tell me it's time.
It's good to have a new position in the portfolio as the cash I have in the LISA isn't earning any interest and each week that goes by is a week less that I have to earn that 18% yearly return I need!