My Beginner’s Understanding of Investing – Part 3: The Big Picture.

One of the biggest challenges with teaching myself about investing is that there is SO MUCH jargon and terminology. And the experts often seem to forget how little us non-experts know. All the early retirement/financial independence blogs talk about passive investing and index funds. Wonderful. Except that I had no idea what those are. So I would plug the terms into google and promptly be told that an index fund is a type of mutual fund that tracks the market index (Investopedia). Which tells me precisely nothing because I know so little that I don’t even know what a mutual fund or market index is! (I have started a Financial Vocab 101 section where I add words as I learn them, so if you don’t know a term, dear Reader, please just follow the link to avoid yourself [sometimes] hours of googling!).

My other big challenge is that in order to understand or remember something my brain likes to know how everything fits together. I cannot just learn the definition of a term – I need to be able to see the big picture of where it slots in. (As a side note, I recently read Temple Grandin’s “The Autistic Brain” which gave me a name for how I think: Pattern Thinker 🙂 ). So before I can start to feel comfortable with passive investing and index funds I need to understand how they fit into the financial investing world as a whole (P.S. for this section I found these links very helpful:

So let’s start at the VERY beginning. What is an investment? An investment is either money or time that is put into something (a business, a house, the stock market etc) with the aim of gaining some kind of benefit:

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The idea is that an investment tends to be done for the long-term, with the aim of my money working for me (as opposed to me only earning money if I am clocking hours). Genius. And definitely something that I want for my life.

So then, what do we invest in? We invest in assets:

 IMG_2879

 Simply put assets seem to work in 3 ways:

  • Assets I own
  • Assets I lend
  • Cash

However, it seems that in terms of investments (and “my portfolio”) there are three main asset classes that everyone talks about:

  1. Equities = Stocks = Shares = Stock Market (assets that I own i.e. a part of the company)
    • Think of equities as: high risk but high reward
    • Technically high risk (because your money isn’t guaranteed as it goes up and down with the value of the stocks).
    • BUT there seems to be a continuum of risk: some stocks are riskier than others (e.g. a multinational company vs a startup).
    • AND with risk comes higher reward.
  2. Bonds = Fixed Income (assets that I lend)
    • Think of bonds as: dependable income with low growth
    • You lend money (capital) for a specified amount of time and in return they: (a) pay you interest and (b) at the end of the specified time give you your capital back.
    • Very low risk 🙂
    • BUT keeping up with inflation can be a challenge (i.e. you are not going to make a lot of money)
    • Aims to provide regular, reliable and stable income.
  3. Cash and Cash Equivalents (CCE) = Money Market Instruments (cash assets)
    • Think of cash as: easily accessible but no growth
    • Cash or anything that can be turned into cash immediately (meaning that it has a very high liquidity).
    • Used for short-term borrowing or lending
    • Seen as low risk (always lots of buyers and sellers)
    • THIS is where your emergency fund should be (because you can get immediate access to it)

What’s BRILLIANT about understanding these three terms is that it suddenly means that we can understand what the hell people are talking about when they describe their portfolios 😀 😀 But more on that in the next post.

Xxx

P.S. We are off to Malaysia for 10 days now so things on The Brat Experiment will be quiet for a while… I hope that you keep well and happy in the meantime, dear Reader.

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The Numbers: A Summary of Month 3

When Husband and I started this Brat Experiment we decided to give ourselves at least 3 months to decide if it was for us or not. And suddenly, here we are: at the end of Month 3. And the good news is that there isn’t even a discussion about whether this is for us or not. We both know that it is. I’ve been trying to figure out what the core reason is for us feeling like this and I think it’s because we’ve both embraced the fact that this is OUR Brat Experiment that we can shape and adapt to suit us exactly. We are both focused on becoming financially independent as soon as possible but we also feel a certain freedom in terms of being able to spend our money in line with our values (e.g. travelling, brewing beer, books etc). And I think that’s what makes this lifestyle sustainable: it’s ours, it’s flexible and our current savings rate of 66% makes the goal of financial independence seem tantalizingly realistic (according to MMM that savings rate has us retiring in 10.5 years!!!). So on that note, this is how we did in Month 3:

 Day to day lives:

Groceries

 24%

467 321 won

64 290 won Big shop
41 600 won Husband school lunch
2 700 won Choco pies
36 060 won Groceries
1 900 won Garlic and cucumber
8 500 won Korean side dishes
2 600 won Milk
150 040 won Big shop
15 910 won Groceries
1 000 won Chocolate milk
5 450 won Groceries
2 000 won Ice cream
1 450 won Chocolate milk
42 680 won Groceries
13 770 won Groceries
4 980 won Rice
26 000 won Husband’s school lunches
38 251 won My school lunches
8 140 won Groceries

Eat out

10%

186 400 won

 

 

 

7 000 won Bap-bin-su
13 000 won Gimbap dinner
48 300 won Dinner and beer out
27 000 won Dakgalbi
2 200 won Ice cream
7 000 won School juices
15 500 won Pizza
2 200 won Ice cream
3 000 won Juices
9 800 won Coffee at the beach
11 800 won Mom’s Touch (burgers out)
1 700 won Milkshake
5 400 won My school juices
13 000 won Pizza
17 500 won Bu-da-jig-ae for dinner
2 000 won Ice cream for pudding

Clothes

 7%

135 500 won

2 500 won Socks
22 800 won Pants and a skirt
6 000 won Shoes
51 500 won Top 10 sale
34 900 won Uniqlo
7 900 won Sunglasses
9 900 won Shorts
 

Alcohol

 6%

112 000 won

 

74 900 won Brewing kit
6 000 won Beer
6 600 won Boxes for brewing
2 700 won Water for brewing
6 000 won Beer outside the convenience store
15 800 won Wine

Once-off

 6%

113 340 won

2 000 won Nail polish
9 000 won MicroLego
29 640 won Clothes, sheets, hat and slops for Malaysia
40 200 won Headlights, sun cream, insect repellent for Malaysia
32 500 won ENGLISH books J
 

Bills & Fees

 13%

250 200 won

 

720 won Bank sms fee
21 670 won Fee for sending money to NZ
42 180 won Internet fee
103 850 won Building management fee
39 600 won My cell phone
42 180 won Husband’s cell phone

Transport

 2%

36 500 won

 

 

 

3 000 won Taxi home
3 300 won Taxi home
4 000 won Taxi to dentist
3 400 won Taxi home after dentist
3 700 won Taxi to dentist
3 600 won Taxi home after dentist
3 200 won Taxi home after E-Mart
3 500 won Taxi
3 200 won Taxi
5 600 won Taxi
 

Gifts

 2%

44 300 won

 

8 000 won Birthday party
19 800 won Gifts
9 000 won Gifts
3 300 won Gift
1 600 won Gift
2 600 won Gift cards

Medical

2%

47 300 won

24 900 won Dentist
10 700 won Dentist
10 700 won Dentist
1 000 won Plasters

Travel:

Transportation

 157 800 won

41 800 won Bus to Daegu
4 000 won Taxi
4 000 won Taxi
7 600 won Taxi
10 000 won T-money card
41 800 won Bus home
4 800 won Taxi
22 000 won Bus to Icheon
3 100 won Taxi to bus station
4 400 won Taxi to bus station
29 200 won Bus home
4 900 won Taxi home

Accommodation

56 500 won

55 000 won Motel
1 500 won Bag locker

Food

 205 100 won

 

9 000 won Gimbap dinner
2 500 won Bus snacks
38 000 won Pizza out
52 000 won Curry out
4 000 won Cool drinks
7 000 won Gimbap lunch
3 700 won Coffees
9 000 won Beer and chips
11 000 won Lunch
5 100 won Food
53 000 won Samgypsal for 4 people
10 800 won Burgers

Alcohol

 123 750 won

20 000 won Alcohol
2 750 won Beer
11 000 won Beer
90 000 won Alcohol

Shopping

n/a

Tourist Things

n/a

TRAVEL TOTAL: 562 950 won (28% of total month spend)

Daegu: 263 950 won

Red Hot Chili Peppers: 299 000 won

Week 10 total: 630 300 won

Necessary: 538 400 won (85%)

Indulgence: 91 900 won (15%)

Week 11 total: 350 250 won

Necessary: 302 740 won (86%)

Indulgence: 47 510 won (14%)

Week 12 total: 309 660 won

Necessary: 231 180 won (75%)

Indulgence: 78 480 won (25%)

Week 13 total: 665 601 won

Necessary: 544 401 won (82%)

Indulgence: 121 200 won (18%)

MONTH 3 TOTAL: 1 955 811 won (over budget by 55 811 won)

Total necessary: 1 616 721 won (83%)

Total indulgent: 339 090 won (17%)

This is our first full month using our new plan (1.9 million for day to day and travel combined) and I’m chuffed with how it has gone. Or more accurately: (a) I know we could have very easily cut out 55 811 won out so that we came in under budget BUT (b) I’m really chuffed with how the month felt (the vibe of Our Brat Experiment as it were). We are enjoying life, doing things that we enjoy but still watching the money. It all feels VERY sustainable.

We are fully aware though that The Brat Experiment is ridiculously easy to do in Korea with our current jobs (no rent or tax and very minimal travel costs) and so when we leave we are expecting a bit of a shock and adaption period and quite possibly a much reduced savings rate. But either way this year will be a brilliant jump start for us. Maybe this year is The Brat Experiment with Training Wheels that helps practice for the real world when we leave?

IMG_2890

On an evening walk (South Korea, July 2016)

Xxx

P.S. My inner number-nerd has come out and I have started tracking our monthly spending in graph form (using google docs)… but I can’t seem to figure out how to put the graph into a blog post… Anyone know how to do this??

 

 

Week 13

Week 13 and the end of MONTH 3! I can’t quite believe it. It feels like we did ok this week, despite having the big expense of all the bills coming in. Then during the weekend we travelled to Icheon to see The Red Hot Chili Peppers live – they were absolutely incredible 🙂 🙂 🙂 And in terms of The Brat Experiment the true brilliance was that we ended up getting our tickets for FREE (a saving of 320 000 won)!! And it goes without saying that the travel and other costs involved were 100% worth it 🙂

OLYMPUS DIGITAL CAMERA

The Red Hot Chili Peppers 🙂 

Groceries

 77 371  won

4 980 won Rice Necessary
26 000 won Husband’s school lunches Necessary
38 251 won My school lunches Necessary
8 140 won Groceries Necessary

 Eat Out

39 600 won

1 700 won Milkshake Necessary. My reward for my final dentist visit.
5 400 won My school juices Indulgence
13 000 won Pizza Indulgence
17 500 won Bu-da-jig-ae for dinner Indulgence. But SO good.
2 000 won Ice cream for pudding Indulgence

Clothes

n/a

Alcohol

n/a

Once-off

32 500 won

32 500 won ENGLISH books 🙂 Indulgence?

Bills & Fees

185 630 won

103 850 won Building management fee Necessary
39 600 won My cell phone Necessary
42 180 won Husband’s cell phone Necessary

Transport

 12 300 won

3 500 won Taxi Necessary to get to the dentist in time after work.
3 200 won Taxi Indulgence to get to bus station
5 600 won Taxi Necessary to get home after dentist

Gifts

7 500 won

3 300 won Gift Necessary
1 600 won Gift Necessary
2 600 won Gift cards Indulgence

Medical

11 700 won

10 700 won Dentist Necessary
1 000 won Plasters Very necessary for blisters from my shoes.

Travel

(Red Hot Chili Peppers)

 299 000 won

22 000 won Bus to Icheon Necessary
3 100 won Taxi to bus station Necessary
4 400 won Taxi to bus station Necessary
29 200 won Bus home Necessary
4 900 won Taxi home Necessary
9 000 won Beer and chips Necessary
11 000 won Lunch Necessary
5 100 won Food Necessary
53 000 won Samgypsal for 4 people Necessary and good to treat our hosts 🙂
10 800 won Burgers Necessary for lunch
90 000 won Alcohol Half necessary; half indulgence
55 000 won Motel Necessary
1 500 won Bag locker Necessary

 Week’s total: 665 601 won

Necessary: 544 401 won (82%)

Indulgence: 121 200 won (18%)

So I think that we JUST managed to scrape in under budget this month but I won’t know until I do the monthly report. 665 601 won is a little higher than I was hoping for this week though… The main money gobblers seems to be Fees & Bills and Travel… which is to be expected. So now it’s just a matter of seeing how we did in the month overall… Hold thumbs!

Xxx

 

My Beginner’s Understanding of Investing – Part 2: I’m not a financial advisor…

The other thing I keep reminding myself is that I am not a financial advisor. This is brilliant for a number of reasons. Firstly, it removes a kak load of pressure. I am not an expert. So I cannot be expected to understand things like an expert. I am aiming for bare basic fundamentals. I do not need to know about every nuance of the investing game. Secondly, I am not alone. If I want to get shmansy-pants with my investing then I can pay an expert to do this for me. There is support out there and I can access it if I need to. And thirdly, it reminds me of my limits. Put simply: I should never mistake my googling for a qualification in finance and investing.

So why try to learn anything about investing at all then? Why not just march straight to a financial advisor and have them do it for me? Good question, dear Reader. The main reason is the Dunning-Kruger Effect. Research shows that people who know nothing about a topic know so little that they don’t even know that they don’t know. The world of social media and the mass of ignorant, but weirdly strongly felt, opinions suddenly makes sense now doesn’t it? Knowledge and your awareness of your knowledge basically works like this:

  1.  I know so little that I don’t know that I don’t know.
  2.  I know enough to know that I don’t know.
  3.  I know what I know and what I don’t know – but it’s quite new and uncomfortable.
  4.  I know what I know and what I don’t know – and it feels like a comfortable part of my knoweldge base.

For example, my brother is an engineer and he works at a plant that makes petrol. For the life of me I cannot figure out why they need engineers on call 24 hours a day… Surely, they have developed a recipe for petrol by now?! So surely this recipe can just be automated and rolled out? Easy peasy.

This is a PERFECT example of someone who knows so little that they don’t even realise that they don’t know. And you can see why it’s a very dangerous position to be in. Well-intentioned actions can have horrific consequences if the ignorant person has any power (for example, if I was in charge of my brother’s company the first thing I would do is probably send half the people on holiday because I cannot imagine how making petrol with fancy machines also needs so many fancy people).

The problem is this:

I (the financially ignorant one) am the person who ultimately has all the power with regards to my finances.

And I’m terrified that I know so little that I’m going to well-intentionally but ignorantly completely balls things up. So I suppose that we can celebrate at least that I know enough to know that I actually don’t know anything at all 🙂 I also want to learn about investing because if I do get a financial advisor I want to know enough to be able to make an informed decision about whatever the financial advisor recommends. For example, prior to The Brat Experiment if a financial advisor had said to me that I can only retire at 60 it wouldn’t have even crossed my mind that they might be wrong. So I guess, what I’m saying, is that I’m trying to teach myself the basics about investing so that I can be informed enough to make sure the experts are giving me what I want.

Also, who am I kidding? I love the self-empowering, self-sufficiency of it all 🙂 And the more I read about it the more it BOGGLES my mind that the bare basics of financial hygiene isn’t taught at school…

IMG_2871

My final trip to the dentist yesterday (South Korea, 2016)

Xxx

My Beginner’s Understanding of Investing – Part 1: Just keep reading…

Up until now I have been focusing on getting my head around the basic concepts of early retirement/financial independence (i.e. reduce spending and increase saving) and putting that into practice. Now that we are feeling comfortable with our balance of spending and saving (and consistently saving 66% of our income after deductions – can I get a “whoopwhoop!”, dear Reader?) I now feel ready to tackle the next learning curve: what to actually do with all the money we are saving.

Before even thinking of investing, the unanimous first two rules from everyone seem to be:

  1. Get debt-free. The idea is that you are most likely paying much higher interest on debt that you owe than that you could ever earn from an investment.
  2. Create an emergency fund. From what I gather once you’re securely on the path to financial independence it’s debatable if you still need an emergency fund (because you will be living well below your income with lots of investments that can be cashed in if need be) but initially it’s a necessity (for peace of mind and to avoid getting back into debt). The key with your emergency fund is that it is ONLY for emergencies. And a trip to Paris or a new dress for your cousin’s wedding is not an emergency.

Ok. That’s pretty straightforward. Nothing too complex for us newbies to grasp.

The next bit, the actual investing bit, however is TRULY like trying to learn a new language. It’s really easy to get intimidated, overwhelmed and consequently give up all efforts to learn anything at all. I remember feeling a similar way when I first started reading psychodynamic theory. After months of reading the stuff I eventually went to my supervisor and gave her the bad news that clearly the theory is too advanced and I will never be bright enough to understand it. Ever. She laughed and told me to keep reading. She said I needed time to digest and ingest the concepts. I thought she was crazy (and couldn’t believe she didn’t try to explain the concepts to me herself like I thought that she would). But I took her advice and kept reading. And to my utter shock she was right. A few weeks later it suddenly all started to click and slide into place… and now I struggle to understand how it was that I couldn’t understand what I now think of as ridiculously logical and straightforward. So I’m applying the same lesson to this scary-ass financial world… just keep reading and give myself time to digest and ingest the concepts. Don’t panic. Don’t chastise myself for not knowing. Just keep reading.

IMG_2858

South Korea (July 2016)

Xxx

 

Week 12

I cannot believe that I am reporting our numbers for WEEK 12 of Our Brat Experiment! When we first started this journey we promised ourselves that we would give it at least 3 months before we decided whether this life was for us or not… And suddenly, here we are. Reporting on Week 12. With the end of Month 3 only a week away…

 Groceries

 66 350 won

1 000 won Chocolate milk Necessary. My reward for going to the dentist.
5 450 won Groceries Necessary
2 000 won Ice cream Indulgence
1 450 won Chocolate milk Necessary. My reward for going to the dentist (bigger one than I had on Monday so more expensive).
42 680 won Groceries A lot of indulgence…
13 770 won Groceries Necessary

Eat Out

21 600 won

9 800 won Coffee at the beach Indulgence
11 800 won Mom’s Touch (burgers out) Indulgence

Clothes

n/a

Alcohol

15 800 won

15 800 won Wine Necessary. Wine is right up there on our values.

Once-off

9 000 won

9 000 won MicroLego Indulgence but awesome. Husband got Darth Vader and I got the Hulk 😀

Bills & Fees

64 570 won

720 won Bank sms fee Necessary
21 670 won Fee for sending money to NZ Necessary
42 180 won Internet fee Necessary

Transport

 17 900 won

4 000 won Taxi to dentist Necessary to get to the dentist before it closes after I finish work
3 400 won Taxi home after dentist Necessary. Not having a sore mouth AND walking home.
3 700 won Taxi to dentist Necessary to get to the dentist before it closes after I finish work
3 600 won Taxi home after dentist Necessary. Not having a sore mouth AND walking home.
3 200 won Taxi home after E-Mart Indulgence. But it was late and we were tired.

Gifts

9 000 won

9 000 won Gifts Necessary.

Medical

 35 600 won

24 900 won Dentist Necessary. Plus I get extra points for going given how I feel about the dentist.
10 700 won Dentist As above.

Travel

 69 840 won

29 640 won Clothes, sheets, hat and slops for Malaysia Necessary
40 200 won Headlights, sun cream, insect repellent for Malaysia Necessary

 Week’s total: 309 660 won

Necessary: 231 180 won (75%)

Indulgence: 78 480 won (25%)

We did well this week – spent the least we have all month 🙂 Our ratio of necessary vs indulgence is not as good as last week though. But that’s all good. And unless we completely bugger up this next week, it looks like we are on track to stay within our new budget plan. Only problem is… that we might just totally bugger our budget up… cause this weekend we are travelling to Seoul to see The Red Hot Chili Peppers (hell yes!!!!!!!!!) and the tickets still aren’t paid for… Wish us luck, dear Reader!

Xxx

Julia: The South African Saver

I found a gem this week: Julia 🙂 She is a South African (can I get a happy dance please?!) who has been aggressively saving for the last 8 years so that she can reach financial independence as soon as possible. And what financial independence means to her is being able to CHOOSE to work IF she wants to (when/where/how etc.). We are totally on the same page.

Here is the link to the podcast – scroll down to the 7th July (it’s from about 35 minutes in to about 60 minutes). These are the things that stood out for me though:

  • Based on the long-term history of the South African stock market your investment DOUBLES every FIVE YEARS (due to the magic that is compound interest).
  • Over 8 years she has invested R2.3 million. But compound interest means that she now has over R4 million. Beautiful, beautiful compound interest. (Based on your investment doubling every 5 years, by the time Julia is 65 she will have R128 million if she never adds another cent to her investment).
  • “Early days set me up” (again because of the magic of compound interest). In other words, it is always better to save whatever you can NOW than to delay it until later.
  • “Procrastinating their way to poverty”. That hit me hard. Not what I want.
  • She invests using index funds. I clearly need to research what the hell those are…
  • She earns a shit-tonne of money. Which sucks because it makes it too easy to write off her message with “well I don’t earn that much so I will never be able to do what she is doing”. However, if you keep listening you will hear the point: she could have easily bought a fancy-smansy car (like most people with her income do) but instead she chose to invest/save. The rest of us plebs might be choosing between buying a coffee or investing/saving but the principle is still the same.
  • [After a certain baseline] income determines lifestyle (not savings percentage).
  • Very interesting for me (because of the complete lack of blogs/information about this in South Africa) was her savings percentage: one-third to tax; one-third to life and travel; one-third to savings/investments. Her investment rate has slowed since she had a baby and bought a house though.

I’m really excited to have found Julia. And I’m also really excited to have discovered The Money Show with Bruce Whitfield. I’m becoming such a financial nerd! 😉 Now to find out about those index funds….

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Charlie Bucket looking into the sunset (Secunda, South Africa)

Xxx

Funny Humans

You know the feeling, don’t you, dear Reader? From the moment you arrive. You are assaulted by that smell. You know the one. The obsessively sterilized yet somehow infused with a distinct slice of torture. And then you hear it. The high pitched whir. And your heart suddenly feels like it’s blocking your airways because you know that it’s only a matter of time until it’s… your turn. You try to read your book or browse the magazines while you wait, trying to give the impression that you’re actually a cool kid, unfazed by the impending horror. But who you kidding? Eventually you are lead through and with a deep, determined breath you force yourself to lie down in the plastic-covered chair. The belligerent light is shone in your face and you are forced to close your eyes. Which is a good thing. Cause you don’t want to see what’s coming anyway.

I hate the dentist. Hate. I’m not sure how it started but I know that the fear was cemented in my final year of school when I got all four of my wisdom teeth out, without general anesthetic, in the chair. Aside from the obvious (the stream of metallic-tasting-trying-to-clot blood in my mouth and the sound of teeth cracking, MY teeth cracking to be more specific), the worst bit was the oppressive stench of the dentist’s breath, only made to feel more oppressive by his over-weight stomach resting on my chest while he worked, and his constant self-muttering of “this is very, very difficult… bad idea… should have done a general anesthetic”. To top the whole experience off, as I was leaving, with my swollen mouth and face, unwittingly drooling blood and saliva because I was so numb, of COURSE the universe would orchestrate for my high school crush to not only just happen to be in the waiting room to see me but to actually bound up and try to talk to me in all my horrific glory. The stuff of teenage nightmares.

Of course I have very proactively dealt with this fear of the dentist by assuming the elephant position. Only going to the dentist when absolutely forced to by agonizing pain and tooth decay. Which is about once every four years. And of course by then there is so much repair work to be done that the visit cannot help but confirm all my worst fears and beliefs about the profession.

So two years ago, when we were finally able to vaguely afford medical aid in South Africa, I decided to change my cycle of self-fulfilling prophecy and start going to the dentist once every six months irrespective of pain, fear or finance. And the first few visits were just as horrid as I expected them to be. But I got a weird kick out of being responsible and ‘doing the right thing’ so I kept at it. And now, almost two years later, I went to the dentist and for the FIRST TIME since I was in high school I didn’t need a filling. Sheez but I felt like a real-live-sparkling hero 🙂 And with no filling required the dentist was able to focus on things like deep cleaning and brushing technique, which should ensure that this pleasant-dentist-visit thing will become a permanent fixture.

I still don’t love going to the dentist. And I still don’t love flossing either. And I HATE the new weird-ass brush the dentist gave me this week. But I DO love not needing fillings, root canals or numbing injections. Not to mention not having to fork out fortunes on expensive dental procedures. Which got me thinking about the weirdness of the human condition. We will do anything to avoid a present discomfort only to experience massive pain and suffering at a later stage. Whereas if we just flossed our teeth every day or went to the dentist regularly or put part of our income into savings every month that massive pain, trauma and stress in the future would totally be avoided. Funny, funny humans.

Xxx

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South Korea (2016)

Week 11: Big Improvement :)

Last week we didn’t travel anywhere. In fact, Husband was sick so we did even less that we usually do when we stay at home. Earlier in the week we did go on a bit of a clothes spending spree though. All very intentional and purposeful but a spree nonetheless. Malaysia is now 3 weeks away and we suddenly realized that we don’t have non-work clothes that will simultaneously keep us cool and comfortable while still being respectful (read: cover up our bodies) when we visit temples etc. So this needed to be addressed ASAP.

Groceries

178 950 won

1 900 won Garlic and cucumber Necessary
8 500 won Korean side dishes Necessary
2 600 won Milk Necessary
150 040 won Big shop Necessary
15 910 won Groceries Mostly indulgence if I’m honest

Eat Out

20 700 won

15 500 won Pizza Indulgence
2 200 won Ice cream Indulgence
3 000 won Juices Necessary. And on sale.

Clothes

 104 200 won

51 500 won Top 10 sale Necessary. We realized we don’t have any non-work clothes for Malaysia.
34 900 won Uniqlo Necessary. More work clothes for this humid summer.
7 900 won Sunglasses Indulgence. But on sale 🙂
9 900 won Shorts Necessary for Malaysia.

Alcohol

 15 300 won

6 600 won Boxes for brewing Necessary to keep the home brew at the right temperature.
2 700 won Water for brewing Necessary. It’s all in the water apparently. And Korean water doesn’t taste awesome.
6 000 won Beer outside the convenience store Indulgence. But happy 🙂

Once-off

 

n/a

Bills & Fees

n/a

Transport

3 300 won

3 300 won Taxi home Necessary. Too much shopping to carry or cycle home.

Gifts

27 800 won

8 000 won Birthday party Necessary. Birthdays are important.
19 800 won Gifts Necessary

Medical

n/a

Travel

n/a

 Week’s total: 350 250 won

Necessary: 302 740 won (86%)

Indulgence: 47 510 won (14%)

What did I tell you, dear Reader? I knew that we would be able to spend less this week 🙂 By almost half nogal! And that was even with our clothes buying spree! What smarty-pants we are! Or maybe smarty-pants is the wrong word… it’s more like it feels like we are finding our balance financially. It feels like we’re hitting the sweet spot in terms of reducing our spending while still feeling like we have the freedom to spend money if we want to. Yay 🙂

 Xxx

My Financial Privilege

Most of the early retirement blogs that I have read talk about their financial history and how much they had when they started their journey to financial independence. And so I thought that I would do the same.

I went to a government school (i.e. a school subsidized by the government) for Junior School (Grade 1 – 7 for those not familiar with the South African education system) and won a scholarship to a private school (i.e. not subsidized by the government and so very expensive) for High School (Grade 8 – 12). Even with the scholarship though my parents struggled to pay the other costs involved and so my Dad (because my Mom had died by then) only actually finished paying my school fees a few years after I had finished school.

I then went to University. My Dad tried to take care of things financially but it was clear after 6 months that it just wasn’t going to work. So I got a student loan for the remainder of my degree (2 and a half years) and my Honours (1 year). My Dad paid the interest THANK GOODNESS and so it meant that at the end of my Honours I only had to pay back the capital (still a significant amount though). The challenge was though that student loans in South Africa don’t work how they seem to in 1st world countries (very low interest and almost no time pressure to pay them back). My student loan had an interest rate in line with South Africa’s interest rate (i.e. high) and needed to be paid back in half the time over which I had borrowed it. In other words, I had the student loan for 3 and a half years and so I needed to pay it back in 1.75 years. On the bright side though, I didn’t gather any other debt while at University – no banks would give me a credit card anyway! I did work part time during the 2nd and 3rd year of my degree but this went to supplementing my social life – it never even occurred to me that I should (could!) be saving money.

After University, student loan debt in hand, I bundled myself off to South Korea to teach English. And with discipline and focus I paid off my student loan in 18 months. Writing that debt off was one of the best feelings I have ever had and, because my last payment happened to coincided with Halloween (we had a massive celebratory party in Seoul that night!), it’s a day that I still remember every year. With the last 6 months I had in Korea, and no student loan hanging over my head, I funneled as much money as I could back to South Africa. With that money I paid for a 2 month road trip of New Zealand, bought an old second-hand car cash and had enough money to support myself in South Africa until I found work. Still nothing was invested or saved for the long-term. It didn’t even cross my mind.

I then worked for 6 months (earning JUST enough to support Husband and I – Husband was studying at the time) and again saved nothing.

From there I went back to University and did my Masters. I got funding (based on my good academic record) for most of it but was still short. My Dad wasn’t in a position to financially help (he wasn’t even able to sign surety for a student loan) and so my dear, sweet Grandmother stepped in and lent me the money. My funding and my Gran’s money covered my expenses for the first year of Masters and during the second year I worked in an internship and was paid JUST ENOUGH to support myself and Husband (so no funding or student loan required). I did miraculously find a way to save money that year though as Husband and I got engaged at the beginning of my internship and so we squirrelled money away each month for our wedding (it’s ALL about the priorities!).

The next year we both started working (the first time since Korea where neither of us were studying and we were both working!), paid for our wedding ourselves (debt-free), bought out first car (on credit) and slowly started paying back my Grandmother. We worked for two years at those jobs, for the most part insisting that we couldn’t save anything but suddenly found a way when we wanted to go to Italy. (Again with the priorities).

We then returned to South Korea at the beginning of this year with the intention of saving as much as possible for a house deposit. In terms of savings we started this year with nothing except a few thousand Rands in a back account in South Africa (convert R1000 into your currency, dear Reader, you will see it isn’t a great deal). But we also started the year almost debt-free, which counts for something. And I am pleased to say that debt was obliterated within 2 months of being in South Korea J In fact, by the time we started The Brat Experiment we were totally debt-free.

Looking back on my financial history I do not consider it to be a wealthy one. In fact, I think it’s pretty average (no debt but also no stockpile either). However, comparing ourselves (Husband’s history is pretty similar to mine) to most of the world’s population we are actually wealthy.

We have always had a roof over our heads. We have always had food. We have always had running water, flushing toilets and electricity. We have always had access to good education and healthcare.

But why? Why are we among the few number of people in the world to have always had access to these things? The answer is two-fold: we were born in a specific time (the 1980s when all these luxuries had long been invented); and we were born in a specific place: South Africa. And I cannot talk about my financial history without acknowledging and giving voice to exactly what that means.

I am white. Born to white parents at the end of Apartheid.

This means that, even though I had barely started school when Apartheid ended, my parents and grandparents had certain opportunities and privileges that would not have been there if they had had any other colour skin pigment. And these opportunities and privileges were in-turn handed down to me. This does not mean that I, my parents or my grandparents did not work hard. It does not mean that any of us is racist. And it does not mean that anyone at the time thought it was right (or wrong) for us to have benefited. It simply means that we did. And the ONLY reason that we did benefit was because of our whiteness.

So I cannot and should not talk about my financial history without mentioning my whiteness. Or my parents’ and grandparents’ whiteness. In recognition of that I have made a list of things that were only allowed to happen because of whiteness. These things either directly or indirectly benefited my financial standing (there are many, many other things that benefitted me that have nothing to do with money but I’m trying to stay on topic here!):

  • My Oupa’s family owned a farm in an area that was vaguely farmable (blacks tended to be given the worst land, and not much of it, under the 1913 Land Act).
  • My Grandmother’s father owned land near a financially lucrative (read: white) town (non-whites needed permission to even go into towns and so owning land in a town was totally out of the question)
  • My Oupa and my Grandmother received good education AND in their home languages (my Oupa in Afrikaans and my Grandmother in English)
  • My Oupa and Grandmother both went to University (despite being so poor)
  • My Oupa qualified as a lawyer and was able to practice in a PRIME location in town. (My Grandmother wasn’t allowed to write her final exam to qualify because she was pregnant at the time and they wouldn’t allow a re-write. Apartheid and pre-Apartheid didn’t love women – even white women). This helped my Oupa to make a lot of money and so fund the best education for my Mom and her siblings. It also allowed him to fund my Mom going on a Contiki tour of Europe in the mid-70’s where she met my Dad (a New Zealander).
  • My parents were both very well educated (never had to do Bantu Education), which meant they were able to help and encourage my education (e.g. they were able to read to me, could help me with my homework etc) – all of which increased my chances of educational achievement (along with the fact that I received my education in my first language).
  • My Dad was allowed to immigrate to South Africa.
  • My parents were allowed to date, get married and have children (because they both had the same skin colour).
  • My parents were allowed to lease a farm (and therefore had the opportunity to make money). This in turn allowed my Dad to sign surety for my student loan – and so gave me access to a University education.

This list is not to say that it was impossible to do these things if you weren’t white. For example, we all know (I hope!) that it was possible to be black and become a lawyer (in case you don’t know, dear Reader, Nelson Mandela was a lawyer). However, Nelson Mandela’s path to becoming a lawyer would have been MUCH harder than my Oupa’s. According to Critical Legal Thinking, Nelson Mandela opened the FIRST black law firm in South Africa in 1952. 1952! The fact that no one else had been able to do that prior to this speaks volumes.

White privilege is the fact is that the whiteness of my grandparents and parents removed (financial) barriers that would have otherwise been there. And so their whiteness gave them opportunities and privileges that made their (financial) lives MUCH easier. And this, in-turn, has made my (financial) life so much easier.

In terms of my own wealth: I may think of myself as pretty average but I’m really not. I may not have a heap of money saved up but I have had opportunities that make the future easily full of possibilities. Specifically my access to education, and my parents’ and grandparents’ access to education, has meant that it is relatively easy for me to improve my financial standing. What a privilege.

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Durban sunrise (South Africa, 2015)

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