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Save faster for a property, or pay down debt quicker?

Updated: May 2, 2023

One of the most effective property investment strategies is to never have card access to the account, or bank where your salary lands.

The history of savings. Where it all began.

Years ago, everyone was paid cash weekly. Everyone knew you had to go straight home, hide money in envelopes, tins, under the mattress, or in a bank (because you could only get it out by going back into the bank). Then you put aside a portion as your pocket money to go back down the pub with, or spend on whatever you wanted. The only people who walked around with their whole pay in their pocket, were drunks, gamblers and idiots. "A fool and his money are easily parted" "money burns a hole in your pocket" were common phrases for centuries.

Then companies found it cheaper and easier to pay automatically into people's bank accounts and change from weekly to fortnightly or even monthly. This was initially ok, because we’d have to withdraw cash out from the bank as pocket money or we could write a cheque.

Then someone invented the debit and credit cards, which seemed wonderful, but savings rates across the developed world plummeted and never recovered.

Now most people open their first bank account in order to access their first pay and from then on, spend their adult lives walking around with a card that lets them access every cent of it. Judging by our grandparents standards, that makes us all drunks, gamblers...

If you do not believe, take a look back at your last 6 months transactions and see how much has been disappearing without you realising.

How do you control this spending?

It is easy to open up a new bank account with another bank (to avoid the temptation of the quick account transfer) and automate a WEEKLY pocket money transfer. And by doing this, you have suddenly found a way to control your unconscious spending. If you’ve got the money for coffee, Uber eats, or avo on toast, go for it, but once the money is gone, stop spending until next week's allowance lands. We can all cope for 2-3 days with no money, but half a fortnight, or half a month is impossible.

Use the pay account to cover bills and automate as much savings as possible to your debt, or savings account.

Please try to learn the lessons from history, don’t gamble, don’t drink to excess and don’t be an idiot!

Disclaimer: this is not financial advice, and the story given here may or may not be applicable to your personal circumstances. Always seek appropriate financial advice.



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