A “financial awakening” is a real thing….
Calling anything an “awakening” sounds ridiculous and almost religious. But a financial awakening? I was oblivious when it came to managing money from a young age. I Spent my entire life spending and spending. A financial catastrophe was the only thing that could wake me up. And it did. But not everyone does wake up. So how do you have a financial awakening to gain control of your finances? Or are you better off learning how to avoid it?
Financial Stress – The Ultimate Wake-Up Call
This is what I’d call my origin story. I grew up poor, learned how to make money but stayed poor. If I had a super power it would be called being “crap with money”. Most financial decisions I made were carefree, mostly stupid and I was unable to learn from my mistakes. It was like Groundhog Day, but not in a funny way. I was doomed to financial failure.
Over the years I accepted that I would just need to work forever and I carried on spending. The latest Nintendo consoles, unlimited concerts, beers and expensive gifts for all. I thought I could afford it and the answer to my financial situation was make more money, which I continued to do. But it was never enough.
No Plan and No Hope
The main problem was I didn’t have a real plan or know what I wanted. I went with the flow and hit the usual milestones in life, which were great. Love, marriage, horse and carriage, mortgage and kids. I worked hard, played hard, and enjoyed my life without a care in the world. It was all a beautiful dream then reality came crashing down on me like a nightmare. I was drowning in credit card debt, with a mortgage and I lost my job…three times in two years. I was unemployed for months at a time and it was a very difficult time.
That level of financial stress will wake most people up. I had no financial education whatsoever and needed to feel that pain to open my eyes. The situation was dire and I vowed that I would get out of debt and never worry about money again.
I was open to new information and always looking to learn new things but my financial awareness was zero. I needed to land a new job but I also needed to change my never ending issues with debt. On a sliding scale of financial literacy, I was at ground zero and in need of a plan. On a whim, I bought a book to read over a Christmas break. I started my financial education with a book I’d heard was good, it was called the Barefoot Investor…
“I was drowning in credit card debt, with a mortgage and I lost my job…three times in two years […] On a sliding scale of financial literacy, I was at ground zero.“
My Financial Awakening and Evolution
Everything changed when I bought Scott Pape’s The Barefoot Investor. I can’t remember why I bought this book. I didn’t read his columns or know much about Scott Pape. It was before Christmas and I treated myself while I was up to my eyeballs in debt. When I picked it up, I could not put it down. It blew my mind. I was crawling through the wreckage of my finances, dying inside but it was ok now, I had Scott Pape helping me.
The Barefoot Investor is the perfect book for a beginner like me. I knew nothing about finances. The simplicity of it was amazing. It made sense and I could understand it. It was empowering and exciting. I was ready to take on the world with actionable steps all mapped out to guide my progress. It gave me tips on my superannuation and investing in shares, all things I’d never thought about before. I felt like I finally had a plan and I was gaining control of something I’d given up on. My mind was racing. I’d found my financial bible. It was unbelievable.
The Barefoot Investor – The Finance Book Everyone Must Read
I’m not religious but this book is best described as a religious moment for me. It completely changed the trajectory of my life and I’m not the only one. I was a disciple and I looked to share the good book to other financially lost souls. I followed Scott Pape’s steps to the letter. My wife thought I was a lunatic. I even put “Fun” on our ING eftpos card and got laughed at by bar staff while buying drinks on various occasions. I didn’t care.
The book was amazing and I recommended it to other people. Some were like me and it completely changed their lives. Others read it and they didn’t respond in the same way. One friend bought the book and never read it! I didn’t understand it at the time. How could this not change their lives too? I realised that some people aren’t open to changing themselves and their bad habits. To this day, those same people continue to complain about money issues….
Scott Pape helped me get out of debt, save up a lot of money and feel like I was winning in life. I wasn’t interested in the share market at the time but I even bought some AFI shares. I sold a boxes of junk online and decided to start investing as Scott Pape recommended. He triggered my financial awakening but I was ready for the next step. I wondered what was next as I read some interesting books like Rich Dad, Poor Dad, but I wasn’t ready for it. I continued to search for the next step. Something to resonate with where I was at and what I wanted to achieve. I stumbled upon a podcast that helped me with the next step in my financial evolution.
Aussie Firebug – The Australian Financial Independence Podcast
I recall landing on the Aussie Firebug page a couple of times in the past. I wasn’t ready for the information at the time, and it never really stuck. Mindlessly, I downloaded a few podcasts one day to check out. I listened to the episode where Aussie Firebug spoke to his mate Jimmy about his FIRE (Financially Independent Retire Early) strategy. That was the one that made me sit up and pay attention. I didn’t know about the FIRE movement, and I didn’t know about passive income and living off dividends. The foundation that Scott Pape built was ready for some bricks. I was finally ready to learn more about investing.
FIRE and Passive Investing
The concept of creating an income stream by index investing was completely new to me. There are no stock tips, timing markets or high risk portfolios. You buy a diversified portfolio of indexed funds. That is it. Grow your portfolio, re-invest your dividends, and your little snowball of money turns into an avalanche of cash. An income stream where if you invest enough, you can live comfortably and not have to work forever. By the end of that first podcast, I said: “sign me up”. The strategy seemed simple, exciting and above all else – anyone could do it. Even me.
The best part was Aussie Firebug showed monthly updates with dividend payments. I couldn’t believe that he went into details like how much money he saved. What bills he paid. It was crazy and it was all there on his blog. It de-mystified finances and investing and showed how easy it could be. I always enjoyed his podcast and Aussie Firebug was a wealth of information. The pod was well researched and simplified for my puny brain to understand. As much as I loved the content, I didn’t know how I could get in on this passive investing racket? I wanted to get involved but my circumstances wouldn’t allow it. This eventually led me to my next financial evolution…
Peter Thornhill – Debt Recycling Strategy
I became interested in passive income streams and dividend payments. But with a rental property, a young family and a family home/mortgage, I had very little disposable income. How could I invest enough to build my share portfolio? What if I saved $250 a month? Would I ever have enough to invest and make some serious mailbox money? Building a share portfolio was a pipe dream in my current situation. My Scott Pape priority was staying out of debt and paying off my mortgage. I would follow Aussie Firebug’s FIRE journey and dream of being able to do what he was doing. The reality was there was no way I could do it.
That changed when one night I was listening to Aussie Firebug’s chat with Peter Thornhill. I’d never heard of Peter Thornhill and he spoke about something called Debt Recycling. This involves using equity from your family home to invest in indexed investments, building a passive income stream. The dividends received pay down your home loan. As your home loan debt decreases, you increase your debt to your equity loan and buy more shares. You are transferring your home loan debt to your equity loan. Making your home loan tax-deductible and saving money in the process.
Peter Thornhill makes over 400k a year in passive income via dividends and he paid off his family home in under 10 years. He was singing my song. I could not believe this strategy. Let me say, when I finished listening to that Podcast I did not sleep that night. Not even Valium could have put me to sleep. My brain was running through the numbers and the possibilities. I was so excited because I had a way to pay off my home while building a substantial share portfolio.
Motivated Money
I went out and bought Peter Thornhill’s book Motivated Money. It was fantastic. I had the blueprint to get me where I needed to go. I had to do some research to make sure it was possible while I got my finances in order. Peter has some very clever rules, with the main one being “Borrow less than you can afford”. And like Aussie Firebug, Peter was very open (and blunt) about his journey and his success. I re-listened to his podcast and watched any video he was in. His book was read and re-read. I felt like I had the knowledge and the plan to pull the trigger. I knew what I had to do. Peter Thornhill’s Debt Recycling strategy would help me achieve financial success.
Only financial Success Can Fail Me Now
I was ready to pull the trigger on my Peter Thornhill debt recycling strategy than Covid hit and I lost my job…. Jeezus!
You Lost Your Job Again? What The….?
Having lost my job a fourth time in my professional career was bad. The huge pile of free redundancy cash I received was good. Luckily the market was hot, and I’d danced this dance before. I was good at being unemployed and under pressure. There were a few tricks I’d learned in getting noticed and getting roles… fast. I was able to work a few contract roles for fun and experience before I landed a permanent role within a year.
The stars were aligning and I could finally apply for new bank loans to start my debt recycling strategy. Thanks to my financial awakening, my finances were great and the fourth job loss wasn’t a big deal. But I do wonder what if I didn’t learn from that first redundancy. Would I keep repeating the same mistakes I made my whole life? What if I wasn’t able to learn from my mistakes? How could anyone help me? It does pose an interesting question to answer.
“Having lost my job a fourth time in my professional career was bad. The huge pile of free redundancy cash I received was good […] I’d danced this dance before. I was good at being unemployed and under pressure.“
Financial Awakening or Financial Education?
I don’t think I’d wish a financial awakening on anyone to be honest. Some dummies (me) need one because they can’t see how bad they are with their finances. I needed a crisis to finally snap out of it. But is there another way?
Is there such a thing as a financial intervention? Would that be a better option for most people. Even a subtle intervention. For example, buying a copy of the Barefoot Investor, giving it to a friend or family member to read. Then be open about the steps and see if that can help them. I know that not everyone wants to be helped. But I imagine raising awareness of the book and the way it has helped thousands of people could help. I also wonder what would have happened to me if that book didn’t exist. I probably wouldn’t be writing this blog for a start!
Speaking and learning about money from a young age will help you to not need a financial awakening. Early financial education is starting to get more press. Scott Pape has taken up this cause (my hero!) and of course I read and enjoyed his Barefoot for families book. I’m using those lessons for my children now, and I hope my children don’t repeat my mistakes. My financial education started late but imagine… kids learning how to save, spend and invest. No financial Awakening required, just a solid financial education. That is the dream.
Summary
Money was always a source of misery for me. My financial awakening wasn’t always fun but it changed my life for the better. I just needed that first domino to fall. On a sliding scale of financial literacy, beginners should start with Scott Pape. Move onto Aussie Firebug, listen to his chat with his mate Jimmy to learn about FIRE. And anyone beyond that should already have Peter Thornhill’s book on their shelf. All three are smart guys I am figuratively in debt to.
So yes, a financial awakening is a real thing. Tell me all about yours in the comments below.
M. Moneyman
