On Deciding Mortgages Are For Suckers & Using Money To DWYL Instead
by Dawn Kofie
Monique (not her real name) is a 50-year-old massage therapist in Edinburgh.
Hi Monique! Could you tell us a bit about yourself, who you are and what you do?
I’m a massage therapist. I’ve been living in Edinburgh for 11 years and working as a massage therapist for 9 years. Initially part time and then full time for the last 5 years.
So what kind of shape would you say you’re in financially?
I feel like I’m in quite a good, stable position at the moment. I’ve managed to make my business work in a relatively amount space of time. And I have savings in the bank, so I know that if there’s a disaster I can last for a few months. That’s really important if you’re self-employed, because you’re really vulnerable. I feel like, although I don’t manage my finances particularly well, I know that day to day I don’t have to worry about anything.
What have you done to make sure that that your business has worked?
I’d saved about £10,000 towards a deposit on a house, and then decided that that was for suckers, and it was stopping me from living the life I wanted to lead. So I used that money to keep me going for the first two years.
That’s a big part of what made it work, that I was able to have that security.
Do you still think that mortgages are for suckers?
I’d chosen to live with my mum for two years to save for a mortgage, and I knew that I wasn’t going to be able to afford anything particularly nice on what I was earning as a local government worker. Then my best friend died and I thought, ‘Oh God, I hadn’t had her round for tea in the past two years because I was living at my mum’s.’ I was grateful to my mum but I decided that, instead of saving for a mortgage, I should just rent a flat and start living life more fully.
Part of that was to look into massaging full time. So it’s not that mortgages are for suckers, it’s that I think that people can get really trapped. If I was paying a mortgage I would never have taken the chance of being a massage therapist. It’s too much of an on-going commitment.
In what ways do you feel you’re not managing your money well?
I have no idea what I’m earning from month to month. I keep a note of it, but never have time to review it until I’m doing my end of year finances and then go, ‘oh, so that’s what I earned last year!’ I don’t set myself a specific budget for each month because I earn enough that I almost don’t have to worry about doing that. When I looked at what I earned last year I suddenly thought, ‘I earned quite a lot, where did it go? Because I haven’t bought anything.’
I’ve also been thinking about provisions for the future, because I don’t have a state pension owed to me. So I’ve started to see a financial adviser. It’s made me realise that financial advisers aren’t just for people who are earning a lot of money — they’re relevant for everybody, even somebody at my low level of income. It’s been really helpful to speak to a grown up and figure out whether I should have insurance, or save for a pension.
So what have you decided, pension-wise?
To put a lump sum payment into a pension once a year. I don’t want to be committed to any monthly payments when you don’t know what’s round the corner. And I’m not going to bother getting any insurance I’m going to trust to, I don’t know, good fortune. Because I couldn’t afford to do both, so I decided that the pension is the thing I’m more likely to need.
Do you have an emergency fund or savings account?
I do, I have ISAs [individual savings accounts that earn tax free interest]. But, again, I don’t manage them very well. I occasionally put money in them and should probably move them to a high interest account, but I haven’t bothered. So I’m definitely guilty of not looking closely enough at putting my savings in the most sensible place. It’s something that I’ll look at next year.
How much of what you earn goes on living? Rent, bills, food that kind of stuff?
I’m lucky because my rent’s below the market rate, £425 a month, which is really reasonable for a one bedroom flat. I have a gym membership. I need to have that to keep me fit enough to do the job I do because it’s really physical. And, other than utility bills and a bus pass, I don’t know where the rest of it goes. I don’t really eat out much ever, and I occasionally buy clothes, but it all just seems to go.
Have you ever tracked your spending to see where your money’s going, or is that not an appealing prospect?
I like that sort of thing and did it a few years ago. It was really interesting because you just saw the little bits: a bottle of wine here and there, and how stuff like that does adds up to more than you think it would. I’d probably think about doing that again to get a better handle on where the money’s going.
Last year my earnings before tax would have been £27,000, which is really good. But the flip side of that was that I went several months with only one day off a month. So there’s that whole other side of being self-employed. Most years I’m only taking two weeks holiday and a couple of sick days at most. This year I didn’t have a summer holiday because I had to take time off to recover from surgery. This year I’ll earn substantially less because I’ve cut way back on what I do and the hours I work. But I’ll have weekends off now.
How do you feel about what you earn? Does it mean you can live the kind of life you want to?
I think I’m close to that. Some other therapists I know who haven’t managed to earn as much as me have second jobs, or take in lodgers to try and make ends meet. I’m really glad that I don’t have to do that. I’m really proud of the fact that I’m self-sufficient and being able to choose to work less hours is fantastic.
Your work focuses on relieving pain, reducing stress and making people feel better. So what do you do to unwind, and how much do you spend on it?
I like to get regular massages myself, so that’s probably at least £50 a month. Going to the bingo is really important, and meeting friends for coffee. Up until last year I hardly saw friends and family because I was too busy working. So now I probably spend a little bit more socialising and meeting people. I think you kind of have to do that, it’s really important for good work/life balance.
I’d be a complete hypocrite if I was suggesting that all my clients look at their stress levels, and how they manage them, while I’m about to implode from overworking and not having a life.
You lived in New York for 10 years. How did the cost of living there compare with the cost of living in Scotland?
I would say rent was really high. I was really lucky because the rent was decent where we were. And I got loads of free beers in my local pub! But I left when New York was just on the cusp of becoming very, very expensive. Rents in my neighbourhood doubled not long after, so I don’t think that I could afford to live there now. When I lived there, I couldn’t afford to be a massage therapist. There was no way I was going to take that risk with no health insurance. It’s definitely tougher there.
You used to support adults with learning disabilities. What made you give up a secure local government job for the unpredictable world of self-employment?
Because I’d been doing it for 16 years I felt like I really wanted a change. When I moved to Scotland I was working one night a week doing massage and doing my secure job the rest of the time. Then I watched a TED talk by a Buddhist monk and he said, ‘Sometimes in life you just have to sink your teeth into something and really have a good taste of it.’ And I thought, ‘He’s so right. I can’t do care work part time but be dabbling in massage. I need to just try and do the massage thing and really see if it’ll work. And the worst thing that will happen is that I’ll spend all my savings and go back to care work. But at least I’d have tried it.’
So that’s what made me give up the security of a safe job.
It’s a real cliché, but my friend dying inspired me, my brother, and another friend to give up our day jobs and become self-employed. I think all of us suddenly thought, ‘Hang on a minute, life’s too short. You need to try the things you’re thinking about doing.’
So how are your brother and friend getting on?
My brother’s doing really well in his business. Like me he worked far too hard for the first few years, and was in danger of making himself really ill and burning out. But now he’s got a better balance. My friend opened up her own cafe and totally hated it. She’s sold it and is now happily baking cakes for somebody else. She gave up a £45,000 a year job in finance and she’s now earning about £14,000. But she’s just so happy now. Running your own business wasn’t for her at the end of the day. But getting out of the world of finance has been the best thing ever.
How did the rest of your friends and family respond when you told them that you were going to switch careers?
They were all really supportive. Also I was really lucky because I was allowed to go down to four days a week in my local government job so I could have one full day of massaging. I did that for a year before I had a two year career break. That meant that my job was held for me for the first two years of me being self-employed. So if it had gone tits up I could’ve gone back to working for the council. I don’t know if I would’ve had the courage to do it without that safety net, because I’m quite a cautious person.
What did it feel like at the end of the 2 years when you said, ‘I’m not coming back?’
Beautiful! It felt very, very good. I was really pleased because my training in massage in America took me 2 and a half years to do, and cost $18,000 dollars. So it would’ve been really sad if I hadn’t done it.
Wow $18,000, that’s a lot of money. So presumably you went over, knew that was going to be the case and had saved up for it?
No, I was already living there and decided that I wanted to train in massage. And because I was overseas I couldn’t get a student loan. So I paid for it as I went along out of my earnings. I got a husband out of my training as well!
Oh, that’s alright!
Not that it lasted, but I did the massage as well so that was a bonus.
When you went full time self-employed, what was it like not getting a pay check at the end of every month?
That was really hard, again having the savings meant that I sort of managed. I think at that initial stage it can be almost quite hard to enjoy what you do, because you’re so worried about if you’re going to be able to manage. If people didn’t show up then it would really throw you off. Whereas now if I have a No Show, it still makes me really annoyed because it’s earnings lost, but it doesn’t make me feel sick which it definitely did for the first year or so.
How did you cope with that worry? And what did you do to make yourself feel better when people weren’t turning up?
I probably didn’t do anything and was just a bit grumpy and mean. That initial period definitely wasn’t nice.
That sounds really hard, especially because you’re on your own and you don’t have a team around you telling you that it’s going to be OK.
I work in a couple of clinics, and it’s quite nice because there are other people there. So you can buck each other up when things go quiet. But the flip side of that is when you’re paying to be in a clinic you’re paying for that space whether or not you have clients.
My rental for treatment room space is usually about £9,000 a year, which is madness! It’s a huge chunk of money that you know you have to come up with.
Blimey! I had no idea it’d cost that much. Really? Nine grand?
I know! But I’d rather rent space in someone else’s clinic than manage my own. I’ve considered it in the past and thought, ‘this is mad money that I’m throwing into someone else’s business.’ But I like the fact that I can walk away at the end of the day and I don’t have to worry about the roof, or the garbage pickup. So, just now, that works for me.
What financial lessons have you learnt since you started your business?
What I’ve learnt, but I don’t necessarily put into practice, is to pay attention to what you’re earning, and try to keep on top of your books. So it’s not a last minute panic at the end of the tax year. I start saving for my taxes from October, and putting money away every month towards them. It’s also managing your money so that it feels fairly stable throughout the year. I know in quiet parts of the year I can put on a special offer to get a couple of extra people in. I think keeping a good record of your income is important. I should probably keep a good record of my outgoings as well, that would help me to budget more. So that, hopefully, next year I’ll have more than four days’ holiday.
Yeah, that would be good!
People think, ‘Oh it’s great when you’re self-employed you can just work whenever you want.’ But every self-employed person I know actually works too much and doesn’t take enough time off, and that’s not healthy.
Do you do your taxes yourself or do you have an accountant?
I do it all myself because it’s quite straight forward.
For some reason I thought it’d be difficult to get everything right and in on time.
It’s quite easy and I’m old fashioned. I do it on a piece of paper every month. I write in all my income and outgoings, and I keep all my receipts in a plastic pocket. I was the lucky recipient of a home visit from HM Revenue and Customs this year to have a look over my books.
Because, at that time, 80% of my pay was in cash. So that was a real red flag to them. But then the main clinic I work in got a card machine, so now I hardly get any payments in cash.
How was the visit, did it all go smoothly?
Yeah, there were a couple of things I needed to tweak and change. The guy was a bit of a jobsworth. Instead of allowing me just to claim the general monthly charge for using your house, he wanted me to: measure up the square footage of the part of my sitting room that I use as an office, keep a spread sheet of every time I worked in that space, work out how much time I spent in it and then take it as a percentage of my gas and electric bill. Like, really?
I know! I was raging about that. And I don’t think I’m going to do it. It’s just such a waste of my time. For £10 a month! But he was like, ‘There might be some months that you’re away for a week, so you weren’t using your house.’ And it’s like, really? You’re talking pennies here!
That’s one of the things about being self-employed. I think we get really harassed by the taxman. Most of us are earning a little bit above the minimum wage, and working our asses off, and they’re going to come after us for a few pounds a month.
There are these huge corporations that have set ups which mean they pay little, if any, tax but this guy wants you to take measurements, and keep a record of what bit of your living room you’re sitting in when you’re working. For £10 a month? It’s just bonkers.
So have you got any advice for people looking to turn their side hustle into their main source of income?
I would say definitely do it. Make sure that you’ve got some savings, because you can be so worried about money that it sucks away too much of your energy. That’s important to me, and works for me emotionally. I need to have security, I don’t like worrying that I’m going to be homeless. But try it, because what’s the worst thing that could happen? It doesn’t work and you do something else. By far the worst thing is to have never tried to follow what you want to do.
Thanks very much for speaking to me, Monique!
Dawn Kofie is an Edinburgh-based freelance writer. She’s a lover of flea markets, halloumi and documentaries. Follow her on Twitter @dawnkofie.