Fringe benefits

Today I had a great chat with my hairdresser .. let's just call her B for short. She is a wonderful young woman, with two kids, a great hubby to whom she is happily married, and they have a lovely house. BUT we got talking a while ago and she opened up to me about the fact that all their income goes on servicing their debt. Mortgage debt, credit card debt, car loan debt etc etc.

Now I'm not saying that this is in any way unusual in the UK today. Many of my friends as I have discovered are on interest-only mortgages. In order to afford a home suitable for bringing up a family, sometimes that's the route you have to take.

But as B said to me, they have absolutely NO capital in anything. They have no money in the house as it has depreciated in value since they bought it five years ago. Their cars are a constant source of financial pain; their credit cards are maxed out; and they have no savings.

As we got talking I realised that she was a bright woman who understood the long-term implications of their situation, and recognised that as she got older she and her husband would not be having the kind of retirement they dreamed about - UNLESS they did something to change course NOW.

The first thing I suggested was that she read Robert Kiyosaki's 'Rich Dad, Poor Dad'. A GREAT book for anyone wanting to change their financial course in life. A few days later she texted me to say she had bought the Kindle version and was avidly chomping her way through it (not literally I hasten to add -  it's digestible but not edible)!

So when we met today I was interested to know just how she'd been getting on. Clearly the messages within the book had struck a chord and many changes had taken place in their lives since I last saw her.

1. They have changed their cars to pay off the loans completely and bought two much smaller, more economical cars. They no longer have car loans, AND they are saving money on fuel.

2. B has taken on some extra work (just a day a week). Although she has to pay for one day's extra childcare, the income she gets is going directly to paying off the credit card loan, which she thinks will in the long term be much better for her children and she makes enough to cover the childcare and make a profit.  (In September her son will qualify for 15 hours free childcare a week so that will also reduce their outgoings).

3. They have created a monthly budget which they stick to come hell or high water. As she said to me 'I used to think frugal people were so irritating - now I understand how exciting it is to find a bargain'!

4. They are looking around at better mortgage deals and looking to swap round their credit cards so that they can pay off more of the capital and pay less interest. (A great website to get started is http://www.moneysavingexpert.com/)

I was SO proud of her! She has

• believed in herself and the ability to change
• created a plan
• taken action
• been disciplined and stuck to it

Soon - she will start to see results!

I was so impressed with B - not only is she a great hairdresser, but she is starting to prove that no matter how much or little you have, you can CUT out excess, SNIP away at debt, SHAVE out unnecessary expenditure and ensure FRINGE benefits for life. There's no doubt that GROWTH will follow!

[Groans all round : ) ]