Monday, August 6, 2007

A Journey of a Thousand Miles Begins with a Single Step

I'm sure you'll all recognise the quote I've used as my title for this post. A quote from the very famous Confucius. I thought this was quite an apt topic following on from my baby steps post. I want to share with you a little of how our journey in life has changed quite significantly in recent years.

Just 5 short years ago, DH and I had goals that are quite different to our goals of today. He started farming with his father the day he left school and his dream was to build up quite a sizable farming business and get it to the point where he could employ at least one, if not more people to assist with the workload. Farming is a difficult business to find a balance in. Often there's more work than 1 person can handle but not always income for more than 1 person. Rising land prices and the increase in standard machinery prices (and sizes) were making it harder and harder to farm small acreage and the answer in our minds was to continue to increase in acreage as a way to offset the amount of equity tied up in our business.

We'd been attending a number of training type seminars trying to get a handle on the best way to run our business as well as our personal finances. One of the things we learnt was the very poor return that farming brings in relation to the number of $$ that are tied up in land and machinery. We'd also been learning about the importance of passive income in building wealth and given the poor returns in farming, it made sense to us to look to accumulating some off-farm assets of some description. It seemed to make sense to us also that investing off-farm would give us the opportunity to sell these assets should farming go into a bit of a decline through poor seasons.

In short - we were firmly entrenched on the treadmill of life that says work hard, build wealth, get bigger in business etc etc etc. At the same time, farming was going through a few reasonable years and we enjoyed the freedom of having a few more $$ to spend. Nothing hugely extravagant. A few more take away meals and eating out a little more often. Some more expensive clothes for the kids. Upgrading our vehicle to a 4WD so I could drive it through the paddocks more safely.

As is not uncommon within farming families, there were a few intergenerational conflicts. I won't go into them in depth as they're really a private matter. What I will say is that we were rather stressed out and seriously UNHAPPY. In a way we felt somewhat trapped in the situation we were in.

At that point it seemed an attractive option to us to move out of the situation we were currently in by building a house on the smallish farm that DH's grandfather had sold to us. That would give us a little bit of our own space. A place we could truly call home. Of course the cost of building a home on a farm (where houses are not really considered *worth* anything and therefore unlikely to add value to our farm) was something that gave us pause. We thought, talked, researched and prayed about the decision for a couple of years before we finally decided it was the right thing to do.

Not being all that comfortable with taking on more debt, we then discussed what options we had to repay the loan. I got interested in a particular "selling from home" type business that promised better returns than many of them did. They had the usual "you can have it all" type spiel and for a few months we thought it might be the answer to our dilemma. Then I was involved in a conference training call where the speaker advocated that it was the right thing to temporarily "abandon" your children as they would benefit down the track. I was disappointed to discover that it really was like many of the same style of business that promise "work part-time for a full-time income" only to put into practise the complete opposite once you scratched the surface a little. I concluded that it wasn't for me after all.

The next option was for me to physically go back to work (in a more regular, get paid by the hour type job). I did some basic calculations on what I thought my hourly rate would likely be (added a few dollars from what I'd been earning before) then subtracted tax, travel expenses in and out of town each day and child-care costs. All these brought my take home hourly rate down to around $2 an hour. It was going to take a LOT of hours for me to bring home the extra $5000 a year that we were hoping to find. Surely, there HAD to be a better way.

Around the same time I began to take more notice of a yahoo group that I'd been lurking on for some time. I don't even know exactly how or why I joined but most of the time I didn't even read the messages. Something made me take more notice all of a sudden and the old cogs in my brain began to turn. What if I could *save* from our current spending, the extra money we were wanting to pay for this house we wanted to build? It was an interesting thought. This was May 2004.

Little did I know what that one little thought was going to do to our lives. :-) That in reality it was the first step in the journey of a lifetime!

With some help from some very wise and generous people on the frugal aussies yahoo group, I began to examine our spending. We began by setting up a separate account for our personal spending. We needed the incentive of knowing that any money we didn't spend wasn't going to simply be absorbed by the business. Otherwise there was no real benefit to us for our efforts.

I began writing down the choices we were making that saved us money. Just small little decisions here and there that added up over time. In fact, we were stunned to find that they'd added up to almost $600 in the first month alone! I still have that list as a reminder of how far we've come.I also started to write down what I was spending in the grocery store. I had a weekly budget but had no idea whether I was close to sticking within it or not. Some weeks we spent less but other weeks we spent more. I spent what I spent and while we didn't appear to be extravagant in our spending - in reality we had no idea.

As things turned out, we finished the year with $6000 in our bank account!!!! That was after only 6 months and we were absolutely shocked with what we'd managed to achieve. Yes, it took some effort and thought. But I wouldn't say we felt we'd been deprived in any way.

Next Instalment: Joe Dominguez and my first exposure to the words "simple living". Yes, you have to wait to find out what happened next.... :-)


Kez said...

Great to ready your story - looking forward to Part 2 :)

Anonymous said...

Can't wait for the next instalment!
Madly Saving

Robin said...

I enjoy reading your blog and i have nominated you for the Frugal Award started by Rhonda at Down to Earth, go check out the details at my blog.........Congrats

Ali said...

thanks for sharing your story, I look forward to reading the next part :)

emma said...

Thanks for the inspiration (again!). :)

Lisa said...

You are such a great storyteller! Lokking forward tot he next instalment.