With world leaders running around spending billions – no, make that trillions – of dollars of our money in an effort to avert a global financial meltdown, it’s easy to fall into the trap of thinking your little stash of cash pales in comparison.
Rubbish. I know from personal experience that as little as a thousand bucks can change your life.
Coming up with a grand shouldn’t be too much of a stretch, especially if you’ve read and implemented a few suggestions from last week’s column. And if you didn’t, readers on my Herald Sun blog this week have added dozens more tight-ass tips.
Then again, if all else fails, the PM is playing Santa Claus this year so look for your cheque under the tree.
Let’s look at half a dozen ways where money can buy happiness.
Pay off your debts
Getting on top of your debts, starting with as little as $1000 will stop a lot of stress, and perhaps even save your relationship. According to Relationships Australia, 80 per cent of relationship bust-ups happen because of money (and monogamy).
There are really only two ways to pay your debts down quicker: lower the interest rate, and increase your repayments. Why not do both at the same time? If you’re like most people and plastic is your poison, become a rate tart by transferring your card balance to a zero per cent sucker deal, then spit it back at them by clearing your balance before the interest-free period ends.
The best card to do this with at the moment is the GE Coles Myer Source Card, which gives six months interest free, more than enough time to escape the cult of credit.
Digging yourself out of debt could be the making of you. I’ve seen it happen time and again. The ability to save and make repayments, to delay gratification, and to see a bigger financial picture is the ultimate boot camp for future millionaires.
Get some Mojo
When I wrote my book, The Barefoot Investor, I thought that teaching people about the wonders of compound interest was the sexiest subject. Yet judging from the thousand or so emails I’ve received from all over the world, the most popular strategy was simply setting up a “Mojo” savings account.
In the first draft of the book I described the strategy as “having some FU money”. My publisher, however, suggested that as the book was rated JO (Jamie Oliver), we should have a nicer sounding name which is where Mojo money came in.
Regardless of what you call it, the idea is the same. Having bucks in the bank will give you a psychological boost. You’ve shown yourself you can save, and you’ve got a bit in the tank for unexpected events.
Should your brother get sick, or a once-in-a-lifetime opportunity arise, you have the cash to take charge of it instantly.
That’s a psychological tonic that has struck a cord with many of my readers.
Sock a grand into a high-interest online savings account that pays no bank fees and you’ll feel the power yourself.
Best investment this year
The best investment you’ll make this year is to see a financial adviser. But not because they’ll whip out a crystal ball and tell you where the markets are headed. (If they knew that, they’d be sitting on a deckchair in the Caribbean, instead of a vinyl Officeworks seat and pine desk combo.)
The real value of seeing a good adviser is that they can lay out a plan to safeguard your future.
As professionals, they’ll pick up things that you haven’t even noticed – kind of like your mother-in-law.
Remember though, just like a lady of the night, or the kid who mows your lawn, make sure you pay them by the hour.
Start a web-based business
The internet is finally justifying its early hype, breaking down barriers that allow small players to compete head-on with the big guys.
Sure, any young blonde from the Gold Coast can make a motza taking a few dirty dollars from freaks all over the world, but you don’t have to take your clothes off to thrive on the net.
Almost 53,000 Australians make a business selling stuff on eBay. Millions more write a blog on a topic they’re passionate about and receive ad revenue via Google Adwords. And most start off their online empire with less than a thousand dollars.
We live in a wonderful age. The internet gives you the ability to start a side business that could pay its way, and perhaps grow into something more lucrative and fulfilling than what you currently do to pay the bills.
Loose change legacy
Think about how different your life would be if on your 21st birthday your parents had given you a cheque for a deposit for your first home.
What about if you’d learned the powerful effects of compound interest when you got your first job?
Teaching your children (or grandchildren) how to handle money is the ultimate legacy, and kids learn by seeing – not hearing.
Starting with a thousand dollars and tipping in your loose change every week you can get the ball rolling. The best account that Barefoot has seen for doing this is the IOOF Wealth Builder Australian Share Investment Bond. Hands down, tax-effective accounts like this are the best long-term saving vehicle for the children in your life.
Change someone’s life
No matter how bad your financial situation, there are billions of people who would love to have your money problems. Just because of your birthplace, you’ve scooped the pool. You’re one of the wealthiest people on the planet.
But perhaps you don’t feel like it.
Here’s the ultimate antidote. Loan $1000 to Third World entrepreneurs through Kiva.org, the web-savvy, not-for-profit Third World microlending phenomenon.
If you do, you’ll see hardworking women borrow $100, invest it into their small business and use the profits to pull both themselves and their family out of poverty. Not only will it help you put things in perspective, you may just learn the lessons required to survive and thrive through this financial crisis.
So, there you have six things that can change your life (or someone else’s). Don’t buy into all the doom and gloom. It’s in dark financial days like these that fortunes are made starting with as little as a thousand bucks.
