Tuesday, 7 February 2012

How many cushions do you need?

A question has been asked about my long term financial plans, lizzie is worried that I am paring things down to the bone with not much emergency back up. She asks, do I have any wiggle room in case I get sick? A good point lizzie, let me try and answer.

I was brought up in a family which didn't have any spare cash. We lived from week to week, my mum doing the best she could on the little resources she had. Her coping strategies have rubbed off onto me. When we (one brother one sister),were little, we didn't get any pocket money so we couldn't save very much. Sometimes we had cash for birthdays and Christmas, or we did some jobs and earned a bob or two. We saved for bigger things and bought them when we had enough, but we never saved long term, and that is how it has been for me ever since. I have worked to earn money, saved up for things, and also spent some on having a good time. I haven't any long term savings.

All my money is tied up in my house. I could sell it but would have to pay a heck of a lot more than my small mortgage, in rent, and there isn't enough capital in it to downsize to a smaller property unless I buy a static mobile home on a park. I don't want to do that because of the ground rent and other things I would have to pay, I would be no better off. So for now I will stay put, besides I like where I live.

My belief is that I came into this world with nothing, I would like to go out with nothing. None of us can take our cash with us so I cant think of any reason why I need long term savings. Eventually I will find a way to release the equity in my house, but not yet, I will know when the time comes.

If I am sick I shall have to throw myself at the mercy of the National Health, I hope it will still be there if I need it. My pension will hopefully be paid into my bank account untill I die, which is a comfort, at least I won't have to go back to work again. So I can't see a time when I will have absolutely no money, but if the government went bust then I would find a way to survive.

My house would benefit from some updating. I could do with a few new roof tiles, a new garage, the drive needs tarmacing, and one or two other jobs need doing, but I can't afford it, and besides it isn't a priority for me. It is a solidly built house, it has the facilities I need, and it will not fall down around my ears. That is enough for me.

I could switch the heating on if I wanted to. The small problem which stopped it working seems to have put itself right. It could have been down to the amount of snow stacked up at the side of the house, burying the pipes, but it's working ok now. To be honest if I put the heating on it has to be very cold, and then I am turning it off again an hour later, because I find it too stuffy. Give me fresh air any day.

While I was in the process of downshifting, reducing my work hours, I found myself with a lot less money to spend. I watched my bank balance shrink because I couldn't face going to work. But a strange thing happened, I didn't panic, I didn't worry about how I was going to cope, I didn't care that I hadn't got much money. So what, I was a much happier person for it. As long as I had enough to pay the mortgage that month, the rest of it would fall into place.

What I am saying is I don't look at things long term. The now is an exciting time for me, not five or ten years away. Uncertainties are a challenge I relish, the stepping out into the unknown, and using my gut instincts to make decisions. This is why I love walking from one side of the country to the other, with a map to find the way, not knowing where I am going to lay my head. This is why I don't meal plan, I cook something up with whatever I have in the cupboard or fridge, ten minutes before I want to eat.

In answer to the question do I have any long term financial plans, the short answer is no. I will sort out any problems if and when they arise. I don't know what is round the corner, and neither does anyone else. You can have all the cushions in place to give you a soft landing should things go tits up, but if the old guy up there says it's your turn now, you go, no questions.


  1. Great post MQ - I reckon you have your priorities right.
    I've been in the position where I 'had' money but life being what it is, I had several serious 'knocks' which took most of it - so now I manage on what I've got, like you, and don't worry too much about the future, what will be will be.

  2. You are so right Ilona. My Dad had everything sorted - savings, shares, mortgage paid off in no time by going to work abroad for a couple of years, Army pension, works' pensions - he never saw a penny of it. He came home from work almost 17 years ago , had a massive heart attack, was deeply unconscious by the time he arrived at hospital and died aged 55.His death changed my life forever. Yes, it would be nice to have a cushion, a well paid job and the prospect of a decent pension, but I gave up the chance of all of that when I was diagnosed with a heart condition. My life is worth more than any amount of money in the bank.

  3. Very thought provoking post. We all have our own "master plan" regarding our finances, but as we know life has a habit of jumping up and biting our bums. I'm a great believer in doing what works for you. In this world of consumerism,when people want the latest gadget and must have item, it's always good to remember what we really need to have a fulfilling life. Health, food, shelter, warmth and peace of mind.

  4. interesting, I sort of agree, but I don't fully agree. I think you should some money saved for emergencies. How much up to you, but I personally can't live with nothing.

    However, I do agree you never know what is around the corner.

    Gill in Canada

    P.S. Thanks for that post, made me think.

  5. I'm like Gill - more in favour of having a bit of money in reserve, just in case. I'm 32 and don't have high hopes for ever seeing a state pension or that the NHS will exist in any meaningful sense for much longer - the idea of growing old in a system like the US where you have to choose between necessary medical care & food/heating terrifies me.

    We're also aware that the next few years - when we hope to start a family - will also bring about a lot of financial change for us so we'd like to have a cushion, just in case.

    Having said that though, we're still living for the now in many ways. I've had jobs that paid well but made me cry-every-evening miserable. I decided I'd rather have a much more frugal life (and cope with less of an emergency fund cushion because I'm used to being frugal) than be miserable in the here and now. It's a balance.

  6. You have a different approach to me but I like it and I admire you and I will give your way some thought!! I have some long term savings and I meal plan.

  7. Iloana, it is great to find someone else with a similar philosophy. My husband and I are in the process of actually enjoying our life, we have downsized and are about to embark on a year (or more) of travel. We had planned to do this in about 15 years when we retired, but now we will have to work significantly longer so have decided to do it sooner. I have never had 'pots' of money, and often barely enough, but have managed very well, like yourself. I am at my most resourceful when faced with challenges in life, so am very confident that we can deal with things when they come along. I know it is not the way most people think, but I am already starting to enjoy life more, and you certainly can never fully plan for all eventualities.

  8. Well, Ilona, I get nervous when I see you running down your food to nothing. I work from the pantry principle as have generations before me. I dont believe in hoarding as that causes shortages but I do keep basic foods in my pantry at all times.
    A nasty dose of flu and no food around could set you back without you realizing it.

  9. Thought provoking post, I agree with your philosophy of 'living in the now'. I was planning for that dream life in the future, but it was always in the future and never now. So one day I sat down and wrote out the frugal 'today' equivalent of my future dream life. For example, a beautiful house and garden in the future equates to make the most of where I live now. Future travel equates to going somewhere different each day (new coffee shop, walking down a road I've never been down before). Successful business equates to just opening my own little online shop.

    You know it worked! I am happier now than I have been in a long time and I actually feel more alive for living in the present!!

    Keep up the great posts, you inspire me!

    L xx

  10. Very interesting Ilona and something to mull over. I also found all the comments interesting too, but then I usually do.

  11. I think that I would definitely like a bit of a buffer. Like you said, you have an income and don't need to work, but I was looking for a job over the summer and it was very difficult, even though I am quite well-qualified and experienced in a range of things.

    After I finish my PhD I am not sure what I would want to do, but I know that if I were unemployed for any length of time I would sleep a lot better at night knowing I had some savings to back me up. Then again, the Jobseekers Allowance is laughably small if you have rent to pay!

  12. What an excellent article, you have faith in your own abilities.
    I agree with your philosophy, we only have the "now". Tomorrow never comes.


  13. I've been reading through your blog and just love your attitude to life. I used to spend far too much time worrying about the future until I gave myself a good talking to! I now live for the present, I am happy NOW that is the main thing.


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