My 2016 Dilemma

To my dear Reader,IMG_2492

With New Year this weekend I can’t help but think back on 2016 and try to evaluate how it all went. 2015 was a very personally challenging year for me and I was relieved when it was over. But 2016 has been different. Personally I have felt like it has been a good one with lots of growth and adventure but without all the pain that 2015 seemed to think was necessary. Yay 2016! Globally or humanity wise though… Continue reading

Advertisements

Small Steps Make a Big Difference

When we first decided to come to Korea we worked out that we could save in one year in Korea more than we could earn in total in one year in South Africa:

%ec%a0%9c%eb%aa%a9-%ec%97%86%ec%9d%8c

At the time we knew nothing about Early Retirement or the realistic possibility of Financial Independence but we did know that we wanted to save for a house deposit. And the magic number of what we thought we could save in Korea was an absolute dream. And I mean dream: Continue reading

The Numbers: A Summary of Month 5

Month 5. It has been a REALLY busy month. Week 18 a friend came to stay with us for the weekend and we paid for most things (reflected in the eating out number for Week 18!), Week 19 saw us travel to Seoul to see family friends and do touristy things and Week 20 was Chuseok. It was a tight month (and my jacket didn’t help!) but I’m very pleasantly surprised it wasn’t tighter given how much we did. (Also, I’m trying out a new thing where I bold the week we spent the most money in each category, just to see if it highlights any more patterns in our spending):    Continue reading

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??

 

 

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….

IMG_0083

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

Xxx

The sparkle has dimmed…

It’s official. The sparkle has dimmed and the glitter has dulled. I’m no longer inhaling Early Retirement articles every moment I can. I no longer lie awake at night, too excited to sleep because I can’t help but write my next blog post in my head. I no longer feel like some brave pioneer-hero experimenting with the unknown. No longer am I entirely consumed. Instead, it has become just another hum-drum part of my life. The Brat Experiment has officially lost its novelty. It’s awful, I know, dear Reader.

I realized this last week. And proactively chose to ignore it. But I’ve decided to put on my grown-up pants and note some (obvious?) things:

  • It was inevitable. There was no way I was going to maintain my all-consuming enthusiasm for The Brat Experiment indefinitely.
  • The fact that it is no longer a “novelty” or “the unknown” is actually a good thing. It means that I’ve integrated the concept into my life and view of the world. It doesn’t mean that I have nothing left to learn. Because I do. A lot. But it does mean that the lessons I have learnt have now become a comfortable part of me.
  • Losing the initial enthusiasm and sparkle does not mean that we have given up on The Brat Experiment. (See point 2 above for starters). We are still working daily to reduce our spending and increase our savings. We are still tracking our money and reporting our figures here. We’re still doing what needs to be done. It just doesn’t consume our every thought anymore.
IMG_2619

My weird dinner combination last week – trying to finish everything in the fridge so nothing is wasted 🙂

All this means that it is not the end of the world that the sparkle has dimmed. We still want the life that The Brat Experiment can offer us. And we’re still doing everything we can to make sure that it happens. We/I just happen to be less bouncy about it now.

Xxx

Week 4: Bugger.

Again I find myself not looking forward to writing this post… The weekend, while planned (i.e. not impulsive), just felt like we spent a LOT of cash…

2600 won Milk Necessary
13 000 won Order-in Indulgence. But cheapest way it can be done.
18 000 won Beer in a pub Indulgence but SO good. And we had friends staying with us 🙂
17 000 won Dinner out We had friends staying with us and we really wanted to show them this food (which we cannot make at home).
1200 won Ice Cream Pudding after dinner out (from the grocery store i.e. cheapest it can be done)
48 450 won May school lunches Necessary. And cheap.
4500 won Coffee Necessary. Again, co-teachers took me out. I ordered the cheapest option though.
4300 won Milk

Beer

Necessary. We shared one beer (would NEVER have done prior to this Brat Experiment) to celebrate me surviving my open class (other teachers coming to watch and assess my teaching).
5200 won Beach beer Necessary. Started the weekend by cycling (free!) to the beach and having a beer (from a grocery story so the cheapest it can be done).
27 800 won My clothes Unfortunately necessary. My work clothes show too much shoulder for Korean culture, which is becoming a problem now that it’s warming up and I’m no longer wearing a million layers…
14 900 won My clothes As above
15 500 won Gifts Necessary? Indulgent? But we do so love giving gifts…
165 170 won Groceries Necessary: 98 110 won. Indulgent: 67 060 won.The indulgence included bulk beer, salmon, chips, a bottle of wine, brie cheese and some other stuff that I can’t remember and can’t read off the Korean tillslip.
7770 won Groceries Necessary
79 800 won Shoes Necessary. Shopped around and these were the best option weighing quality and price. (Husband’s last dress shoes lasted 5 years and were only just thrown out because they had holes in them).
36 100 won Gifts Necessary? Indulgent? But we do so love giving gifts…
44 900 won Gifts Necessary? Indulgent? But we do so love giving gifts…
130 000 won Back pack Necessary for travelling. And did a LOT of research into prices, bags and weighing quality and price – this bag was the best option. However, it is a once-off extra – will come out of our 200 000 won buffer (see the current plan).
850 won Water Necessary

Week’s total: 637 040 won

Necessary: 538 130 won (85%)

Indulgence: 98 060 won (15%)

Is it alright to say a swear word now??? 😦 Our total spend for this week was more than 1 person’s budget for AN ENTIRE MONTH!! 😦 😦 And we were doing SO well!! And now in our final week of our first month on The Brat Experiment…. *sob.

One redeeming thing is that our ratio of necessary vs indulgence has actually improved from last week – mini yay. Also there were absolutely no transport costs – we walked and cycled everywhere. AND we didn’t eat out at all once our visitors left (despite much discussion about samgypsal and dakgalbi!).

Ok, so where did it all go?? We knew that we had spent a lot but hadn’t imagined it could be this much…

Gifts: 96 500 won (15%)

Once off investments that we won’t replace for years (bag & shoes): 209 800 won (33%)

Clothes: 42 700 won (7%)

School lunch: 48 450 won (8%)

Our best way of looking at this week is:

Our combined weekly budget is 200 000 won.

We have a 200 000 won buffer per month for once-off/unexpected costs.

So we overspent by: 237 040 won (i.e. more than double our weekly budget).

Bugger.

Xxx

Your FIRST priority

One of the hardest lessons in my life has been getting my priorities in order. I traditionally tend(ed?) to be a people-pleaser and so attempted the impossible/crazy task of trying to keep as many people as happy as possible. In other words, prioritizing no one and telling (through my behaviour) the people who were the most important to me that they weren’t as important as the other random acquaintances in my life. Not cool. It was such an ah-ha moment for me realizing that:

  1. The important people in my life are exactly that because they are top class gems of humans. Seriously. The absolute best. (Although I always knew this.)
  2. And they deserve to know that. (Because sometimes they don’t know this.)
  3. I can let them know with my words (which I often do) but more powerfully with my behaviour.

You see, dear Reader, value (love) is an action, a behaviour. And so I should act accordingly.

When I first started acting on my priorities I got really anxious (beating heart, increased breathing, slight sweating etc). But I quickly got over that because it felt so good to have my actions and values so inline. It felt wonderful to stop inadvertently hurting the most important people in my life and what a relief to no longer be trying to please everyone!! But there was another surprise side-effect: I realized that I was also allowed to prioritize myself from time to time too 🙂

So, what the hell does this have to do with money? Well, I had a similar ah-ha realization about saving. As much as we know it’s good to save, Husband and I haven’t been making it a priority and acting on it. It was something that happened at the end of the month (if we had anything left over!) In other words, our behaviour concerning money sent the message that our selves and our financial security came last after EVERYTHING else. Again, not awesome priorities.

I realized that the ONLY times in our lives when we have successfully saved have been when we have made it our first priority i.e. it was the first thing we set aside when we got our salaries. This started with paying off my student loan and since then has occurred anytime that we wanted to travel. Even while living in South Africa – we always magically found the money when we previously thought that there was none to be had (see the pictures from Italy! 🙂 ).

What this tells me is that our problem isn’t that we can’t save. Our problem is our priorities. And not acting in line with our values. We’ve never even considered if our spending is in line with our values. We’ve certainly never prioritized saving for our selves, for our financial security, for our future. If so much good came from me learning to prioritize the most important people in my life, I can only imagine the magic that would happen if we learnt to prioritize our money in line with what we actually want from our lives… 🙂

IMG_2492

THIS I want more of in my life. (Cycle along the river, South Korea, May 2016)

Xxx

Week 3: Ok, we seem to making progress…

We had a good week. Well, rather a spot on week. We were away from Friday night to Sunday (i.e. travel budget) so the budget for the week should have been 140 000 won (20 000 won a day Monday to Friday and 40 000 won for Sunday) and we came in just under that:

 

4000 won Coffee with school Necessary. Super socially and culturally not cool to refuse to buy coffee when going out with your co-teachers.
9500 won Order-in dinner Indulgent. But cheapest order-in we can do.
440 won Bank fee Necessary.
3500 won Taxi to yoga Indulgent. But it was raining. Also I was lazy.
2650 won Milk Necessary
4000 won Medication Necessary. Husband has been sick.
48 590 won Groceries Necessary.
4000 won Korean side dishes An indulgence. But my co-teacher especially took me there…
4500 won Groceries Necessary
18 000 won Medication Necessary. Husband still sick…
25 000 won Dinner out (dakgalbi) Necessary. Had to introduce our visitors to the awesomeness of the meal.
9950 won Pudding Beer and ice cream. An indulgence but the cheapest way it could be done.

 

Week’s total: 134 130 won

Necessary: 107 180 won (80%)

Indulgence: 26 950 won (20%)

 

Then we went away and so the weekend’s expenses came out of our travel budget. We went to a Korean craft beer festival and it was awesome 🙂 Nothing like drinking great beer with fantastic friends in the afternoon sun while listening to Korean rock music 🙂

IMG_2436

Craft Beer Festival, Gapyeong, South Korea (May, 2016)

Our expenses for this trip were more in line with what we expected than last time, although maybe that’s simply because we tracked our expenses last time.

 

3400 won Taxi to bus terminal Necessary for Husband to make our bus after work
4500 won Taxi to bus terminal Necessary for me to make our bus after work
23 400 won Bus to Chuncheon Necessary
50 000 won Love Motel Necessary. And cheap.
3200 won Taxi to dinner Necessary to find the restaurant. We walked back to our motel afterwards though (admittedly initially because we couldn’t find a taxi)
28 000 won Dakgalbi (dinner) Necessary. Chuncheon is famous for dakgalbi. Silly to visit the town and not have it.
2000 won Pudding after dinner Ice cream and Halls. Necessary.
5800 won Bus to Gapyeong Necessary
9000 won Breakfast. Indulgent. It was coffee and cake J
5200 won Taxi to accommodation Necessary. We didn’t know where it was and it was not in walking distance.
60 000 won Pension Necessary. And beautiful. And good for the soul 🙂
45 000 won Food at Beer Fest Necessary but an indulgence. Could have taken food for much cheaper.
6000 won Breakfast smoothie An indulgence but SO good.
3000 won Taxi to town Necessary. And cheap cause 3 of us in the car to split costs.
3000 won Taxi to town Necessary. And cheap cause 3 of us in the car to split costs. Problem was Husband and I were in different taxis…
5900 won Burger lunch Indulgence but also good.
3000 won Bus snacks Necessary and the cheapest it can be done.
5800 won Bus to Chuncheon Necessary
23 400 won Bus to Gangneung Necessary
2800 won Taxi home Necessary. Too far to walk. But split costs with our visitors 🙂

 

Travel total: 292 400 won

IMG_2430

Breakfast 🙂

Necessary: 226 500 won (77%)

Indulgence: 65 900 won (23%)

 

This is a MASSIVE improvement on last week’s travel ratio of necessary vs. indulgent. So I am going to take this for the win – yay! 🙂

 

Except that there is just the tiniest detail of some holiday flights we bought:

 

1 300 000 won Flights to Malaysia Necessary. Would have been cheaper except that the stupid Korean online banking is a nightmare that not even my co-teachers can negotiate. So we had to buy the flights with my South African credit card and send the money home (losing money in the exchange).

 

Which clearly blows our travel budget completely out of the water. So much so that I almost didn’t list it here. But you and I are friends, dear Reader, so I could never hide something from you, even if I’m not quite sure how it fits into this Early Retirement thing we are trying to do here…

 

xxx

We have a problem: I’m not American. Part 3.

However, cultural and free stuff aside (see Part 1 and Part 2 if you haven’t already), there seems to be a bigger problem with the fact that I am not American. And that is the numbers. The actual maths calculations required for working out how much you need to retire on. And it turns out, dear Reader, that this number is dependent on which country you live in. Bugger.

All I can say is thank goodness for my brother. My Humanities brain had skipped over the numbers, being much more interested in the philosophy, culture and way of life behind the idea of Early Retirement. Don’t get me wrong, I knew that the numbers were important, but I figured that they were minor details that I could grapple with when I felt like it. So I absorbed the 4% rule, felt like a hero and marched forth 🙂 But then my brother, who miraculously marches face-first into numbers without any fear, pointed out that I might have a little problem…

This is because the 4% rule is 4% because:

IMG_2307

Except that I’m not American. This means that I need to use numbers specific to where I am living. The challenge is that while the inflation number is quite easy to find, the average investment return is not. So with my best googling foot forward this is what I’ve guesstimated:

In terms of South Africa:

  • South African average investment return: 14% (8% real return + inflation – fin24)
  • South African inflation: 6% (tradingeconomics.com/south-africa)
  • Therefore, South Africa’s magic number is: 8% (and I need to save 12.5 times my living expenses to retire). On a side note, maybe this evens out the lack of free stuff in South Africa?

But, I not currently living in South Africa and don’t plan to for a few years. We are currently in South Korea but are planning to head to New Zealand next year so:

  • New Zealand average investment return: 7% (rounded down from returns over 20 years – NZ returns)
  • New Zealand inflation: 1% (rounded up – tradingeconomics.com/new-zealand)
  • Therefore, New Zealand’s magic number is: 6% (and I need to save 17 times my living expenses to retire)

What this means is that if we are going to do this Early Retirement thing I can’t rely on my Experts to give me my exact numbers. And given that I haven’t been able to find any South African or Kiwi Early Retirement Experts (if you know of any PLEASE let me know!), I am going to have to take a deep breath, put on my grown-up pants and try to work out the nitty-gritty of my numbers myself.

Xxx

P.S. Since writing this post I have spoken to a (South African) friend of mine who is MUCH better with numbers and money than I am. He says that South Africa’s challenge is that our rate of inflation for education and health is higher than normal, which means that 8% isn’t going to cut it in the long term. Instead he says that 5% is our magic number. Now, dear Reader, you don’t know my friend so let me tell you a little about him: he’s brilliant with numbers, a rather intelligent fellow and highly risk adverse. In other words, if he says 5% is safe then it absolutely is.

P.P.S. It hadn’t even entered my brain as a possibility that there could be different rates of inflation for different things. And it scars the crap out of me. I’m going to need a bigger pair of grown-up pants…