Chris and Clem Meet Up #5
It's that time again. Friday night down at the local.
The past couple of months the pair have talked about nothing but DIY Pensions and saving money.
But with the Footie season just about ready to resume - their conversation might change.
The last time the pair talked, Chris was going to do some more research on his 'watchlist' of shares, and figure out more ways to save money on his availalbe budget.
"Hi Clem" said Chris as the elder one of the pair entered the Golden Lion, "What's your poison?". Nay, put your money away lad, this evening's on me - it's your birthday tomorrow. How many is that then?"
"33" replied Chris, "the years seem to fly by." "Wait until you reach my age" said Clem jokingly.
"What kind of a week have you had?"
"In a word ..." said Chris: "Wirlwind."
"Oooh!" said Clem "tell me more."
"Right" replied Chris excitedly. "I felt obliged to do some 'homework' on my investments, and I have done some, but again, not a lot. I've also taken steps to save some more money on the household budget - and from what I found, I reckon I can save a lot more."
Chris could hardly get his words out.
"But the really big thing that has happened since we last spoke has been that I have been looking for a new job."
"I told you this last time, but this week I got a reply from a chemical company down south. It would mean re-locating, but before I even think about that I'm only on their 'short list' of candidates, but I'm confident because my experience matches exactly what they are looking for."
"I think I might get an interview this next week. Maybe a telephone interview to begin with and if all goes well, then that'll be followed up with a face-to-face meeting."
"Wow," exclaimed Clem "you don't let the grass grow under your feet, do you?"
"Nothing ventured, nothing gained" replied Chris.
"Quite so" Clem remarked. "This calls for a double celebration - a potential new career for you, and, another birrthday. Sup up, I'll get you another."
"I did more research on my shortlist of companies, and uncovered one more company to add to my list. In fact, this week I'm going to weed out some of the companies that are on my list and add a few others. It'll take time, but I'm beginning to understand more and more as time goes on."
"Attaboy!" exclaimed Clem, "you've got the right attitude and that, is half the job. I foresee you doing really well in eveything that you do. Your approach to things is extremely mature."
"Your dad would have been very proud of you."
"Yeah" replied Chris "I think he would have."
"As for my investments so far - partly OK, partly not OK. I know I jumped the gun and impatience got the better of me. I shouldn't buy on a hunch alone. BT and ITV are just about holding their own, but Lloyds Bank was ill-timed. I still think they will come good, but it might be a long wait."
"I'm beginning to understand company reports, earnings, price-earnings, PEG factor and a whole load of other stuff. My pension pot is almost empty so I couldn't buy much even if I wanted to."
"I'm looking into ways of being able to invest more than £200 per month. My target is to contribute £500 per month."
"That's one reason why I'm looking for a new job. I think my salary is a little low and I'm trying to find a way of getting it up. Similarly, I'm also trying to find ways of reducing our household spend."
"I feel like I'm at a cross-roads. Everything seems to be happening all at once and fast. Wee Charlie is growing up fast. We want to be able to send him to a private school when the time comes - he's old enough now for prep school. If I get the job I'm currenly looking at we'll be able to do those things."
"Yes, I can see things are shaping up for you, and at pace. You've got a lot of decision making ahead of you. Think long and hard and make the right decision for you and your family." said Clem.
"Thanks Clem - you are such an inspriation to me. It is you that has got me started with this DIY Pension thing, and I am grateful to you for that. I may never have stumbled across it otherwise."
"I get a lot of satisfaction seeing someone like yourself making a good life for yourself and your family. So - without further ado - what progress have you made this past couple of weeks."
"well" said Chris "A little. But not a lot. I think it's going to be slowly, slowly, catchee monkey."
"I've researched quite a bit to save on our household budget"
"As you can see Clem, my biggest outlay is the mortgage. I have an idea of how to change this but with a possible job change coming up, I need to leave that alone - for now."
"I have a bank loan from when we borrowed money for some home improvements. This has about another 3 years to run - unless I pay it off, which I obviously can't do."
"But I think I can do something with my electricity and gas payments. Also my home telephone and my mobile phone could do with being less."
wait a minute! I've just noticed that I've missed off the list a
couple of expenses. The home Wifi and Soo's mobile phone. How did that
happen? I'll just have to add those on to next month's column and
adjust the spreadsheet accordingly."
"I suppose we could all cut down on our monthly shopping. In fact, both Soo and I are a wee bit over-weight and it wouldn't do us any harm to cut down on some things."
"Maybe even get on some sort of diet plan. I bet that would save us some each month."
"I have a car payment that is £299 each month, it's killing us. I could do without it. Not to mention the expenses that come with it - especially the insurance. It's ridiculous what I pay. It's up for renewal in two months, I'll look for one of those compariosn websites to see if I can improve on what I pay."
"There are probably other areas that I could shave something off here, and something off there, but I'll make a definite efforrt to do the above - hopefully before we meet up next. I find it a big help being accountable to someone - you. If I didn't have you to answer to, I would probably take ages to get around to doing this kind of stuff."
"But of course, I have a real good reason to begin paying less for things. Everything that I can save on now can go straight into my Pension Pot. I think that's a great incentive."
"What do you think Clem?"
"I think I'd like to see the bottom line of your spreadsheet before I make any comments"
"Here is a snapshot of my incomings versus my outgoings - I know what you're going to say." said Chris sheepishly.
"Hells bells Chris!" shouted old Clem. "You're haemoraging dosh. You are living well beyond your means. I'm really surprised at you. You really need to pull your horns in."
"I know" said Chris "I always knew there was always too much month left at the end of the money but I didn't realise it was as bad as it is. And I made a mistake with Soo's mobile and the Wifi - that's still got to go on there. So something would have to be sacrificed to cover that and the negative balance."
"Wait until you see what we put away for our holidays. We decided that we want a holiday each year because we know that it makes us feel good and something to look forward to. We like the Greek Isles, Spain and Portugal. Maybe we have to lower our sights there. But I have seen a few places, as mentioned above that we can save a good deal on."
"It's also the reason why I have been looking at another job. Charlie attends a prep school right now, which is not cheap, but when he gets older, private school will not come cheap either. But we want to give him the best possible start in life."
"You know, something that we never had."
Clem went silent for a while and then said: "OK. I get what you want to do, but you need to consider what you can afford to do. I'll tell you what - it's a damn good job we got talking the other week, another year at this rate and you would have dug yourself a big hole."
"But you're young, you've got a good profession, stable employment - in fact you are very employable. Stop the rot right now, and you will be fine. Have you any idea how much money you are literally throwing away each month? It's time for you to get ruthless."
"Let's not talk about your pension this week. Concentrate on getting your home budget all sorted in the first instance. And I know you are busy busy with your work situation. It's too much for you. One thing at a time."
"Wow! Talk about a perfect storm."
"Get your next month's budget into positive territory and then we'll start talking bout some serious investing etc. etc."
"OK" said Chris, "I know you're right. I will get the finances all sorted. This next couple of weeks could be kinda hectic for me."
"As part of my cutting down on spending, let's meet up again in 2 weeks' time. Every week is a bit too much for me, besides one week doesn't give me a lot of time to research anything new." said Chris.
"Sounds good to me" replied Clem "so that would be the er.. let's see - the 25th. Sept"
"I'll tell you what Chris, let's stop pussy-footing around with this research stuff. It's time for you to get into the nitty gritty."
"What's that?" said Chris "do you want me to look at something in particular?"
"Yes" replied Clem "I have mentioned to you many times before about the guy I followed when I was learning this investment stuff and the people who he learned from."
"Warren Buffett" answered Chris "you are always talking about him."
"Yes, I am. And now it's your turn to get to know the man and more importantly, his methods. Although there are others."
"What I suggest you do before we next meet up is get a couple of books about him and study them. By that, I don't just mean read them, I mean study them."
"What's the difference" asked Chris
"The difference is my friend, is that you devour anything to do with Warren Buffett and his sidekcik, Charlie Munger. I'm not your college tutor, in fact, they don't teach any of this stuff in college, but my recommendation would be that you read one of the books I suggest and then read it a SECOND time but this time take notes."
"Get ultra familiar with Buffett's method of investing. In particular, swat up on "Value Investing."
"OK" said Chris "I'll devote my free time to what you have just said and the next time we meet, we can compare notes."
"Great - see you in two weeks."