Egg's journal

Where are you and where are you going?
Dave
Posts: 297
Joined: Fri Dec 19, 2014 1:42 pm

Re: Egg's journal

Post by Dave »

I have to think that you are spot on about the placebo effect. It always feels good to align your values with your actions, so I can see ardent vegetarians feeling good just in general from practicing their beliefs. And eating a good amount of fruits and vegetables does feel better than not doing so, so they probably do feel physically good, in addition to the psychological benefit.

My motivation for limiting meat intake was financial, so I did not get those feelings. I have developed a greater appreciation of the environmental and in some cases ethical benefits to a low-meat diet, but they were not and are not primary in my decision.

Haha and very true, I just noticed our monthly posts are very similar. Great minds think alike!

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

Well, I don't normally post outside of my mothly updates, but I've made an "accounting change" to the way I record things, and it led to a bit of playing on my Excel spreadsheet. Nothing major has changed, but I have decided not to offset my student loan against net worth. There are three reasons for this:

1) If I were to retire right now, I'd stop having to pay it back and it would ultimately be waived after a number of years

2) I haven't been maintaining an accurate record of the size of that debt, but just mentally applying a blanket £20k. That's not too far off, but I repay around £160/month directly out of my pay, which I haven't been counting in either income or expenditure. Since I haven't counted it there, it is more consistent not to account for it in net worth either.

3) I thing about gains (or losses) in real terms. As my loan attracts no real-terms interest, but is used to generate real-term gains, the money acts in exactly the same way as any other money I control.

With that phantom £20k leap in mind, I thought it's been a while since I shared my rolling 12-month graphs, so here goes the main one:

Image

I can't help myself sometimes, but I added a NW projection tab to my spreadsheet with two columns:

1) I can select compounding percentage to see how existing savings would grow if I just covered my living expenses with other income

2) Projected compounding + savings (my 12-month average savings are extrapolated as the default)

Image

Just because you can, obviously doesn't mean that you should do these sorts of things in Excel, but aside from the nerdy pleasure I get from it, I hope this will focus my mind on the gains from working to increase NW as opposed to the snowball factor of wealth. At the moment, my work is the driving factor in increasing NW, but the larger the starting point, the less compelling the case for work to increase wealth becomes. In effect, though, my snowball has yet to gather any significant steam of its own, which is a little mentally frustrating for now.

Ydobon
Posts: 412
Joined: Fri Aug 29, 2014 9:15 am
Location: Scotland

Re: Egg's journal

Post by Ydobon »

Spooky.

Made the same decision 10 minutes ago, for the same reasons and then went straight into your diary :lol:

vexed87
Posts: 1488
Joined: Fri Feb 20, 2015 8:02 am
Location: Yorkshire, UK

Re: Egg's journal

Post by vexed87 »

I don't count my student loan (£9k remaining), it also annoys me profusely that the SLC only send annual statements.
I keep a mental note of the debt though and have the funds stashed away should I need to pay it back in a hurry, in theory the rules surrounding paying back could change, and if interest rates shot up to ridiculous levels, I would rather clear the debt as I expect I'll still be "working" when I'm FI.

Ydobon
Posts: 412
Joined: Fri Aug 29, 2014 9:15 am
Location: Scotland

Re: Egg's journal

Post by Ydobon »

Agree with Vexed, I keep informed about what my loan is doing (PDCA style), but won't act unless it suddenly rockets. That said, I suspect any significant rise in interest rates would have me worrying more about my six figure mortgage than the £10k or so I owe the SLC.

thrifty++
Posts: 902
Joined: Sat May 23, 2015 3:46 pm

Re: Egg's journal

Post by thrifty++ »

I have thought about the same thing with my student loan. There is 0% interest. But if I earn $19k or more per year it cuts in as 12% of my income I have to pay to it. I am not able to live off a passive income of less than that so I still include it in my NW calculation. If you retired in the UK would you be forced to pay some of your passive income to student loan? Is there an income threshold?

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

Ydobon wrote:Spooky.

Made the same decision 10 minutes ago, for the same reasons and then went straight into your diary :lol:
Heh. I often get the same thing with a whole variety of topics, where I think about something (also often when I hear about something new) it then appears on the internet/in a book/in a conversation seemingly randomly. Maybe we've just got one of the world's duller superpowers?
vexed87 wrote:I don't count my student loan (£9k remaining), it also annoys me profusely that the SLC only send annual statements.
I keep a mental note of the debt though and have the funds stashed away should I need to pay it back in a hurry, in theory the rules surrounding paying back could change, and if interest rates shot up to ridiculous levels, I would rather clear the debt as I expect I'll still be "working" when I'm FI.
Mine's bigger than yours (as it were ;) ) but yeah, I definitely don't plan to totally forget about it, just exclude it from certain ways I think about my wealth.
thrifty++ wrote:I have thought about the same thing with my student loan. There is 0% interest. But if I earn $19k or more per year it cuts in as 12% of my income I have to pay to it. I am not able to live off a passive income of less than that so I still include it in my NW calculation. If you retired in the UK would you be forced to pay some of your passive income to student loan? Is there an income threshold?
The threshold is a little over £17k. Any unearned income over £2k has to be declared, and is presumably treated in the same way as salary income. However...

Saving enough to generate much more than £20k/year retirement income (at classic 4% SWR, £500k) would be pretty unlikely in my current ideas of FI/RE. At the current rate, including a real terms annual compounding of 4%, that's 16 years away (but in reality, I'm unlikely to be in that position so soon as I have expensive ambitions like children). My loan has a lifespan of 25 years total before write-off, so hypothetically there could be a retired period whilst paying off the loan. However...

If for arguments sake I managed that £20k/year, I'd be repaying less than £20/month for the relatively few remaining years until the loan was written off. At my current rate, the loan will be paid off in a little under 10 years, so way sooner than I'd be likely to have saved an inflation adjusted £500k.

So, basically, the most likely outcomes are either:

1) I will save up enough to retire with an income large enough to attract repayments in retirement, but will have had so much salary deduction in the process that the loan is already fully repaid

2) I won't save up enough to retire with an income large enough to attract repayments in retirement, so the loan will just fizzle out of it's own accord in due time, or will have been repaid as above.

That wasn't necessarily the neatest answer or the most watertight maths, but I think the principles are sound. Basically I'm not really worried about repayments fucking up my retirement if and when that happens.

singvestor
Posts: 135
Joined: Tue Jul 21, 2015 12:48 am

Re: Egg's journal

Post by singvestor »

Regarding the dull superpowers:

This is most likely a case of Frequency Bias:

"The illusion in which a word, a name or other thing that has recently come to one's attention suddenly seems to appear with improbable frequency shortly afterwards (not to be confused with the recency illusion or selection bias). Colloquially, this illusion is known as the Baader-Meinhof Phenomenon"

Source: https://en.wikipedia.org/wiki/Baader-Meinhof_phenomenon

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

singvestor wrote:Regarding the dull superpowers:

This is most likely a case of Frequency Bias
I've heard that theory before, but I still prefer the superpower explanation.

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

October

Income - £2870

Salary - £2300
Language qualification award - £570

Expenditure - £850

Bank account subscription fee - £10
Rent - £250
Utilities - £100
Council tax - £60
Transport - £100
Internet - £20
Food - £150
Eating out/drinking - £60
Entertainment - £100

Savings rate: 70%

Image

Overall, very similar spending to last month, and a little under my 12-month average, so broadly satisfactory. There was an increased income blip too, which was good and brought savings rate up to 70%, although as a one-off payment this will not be repeated. My £10/m bank account is increasingly seeming a bit pointless. I think it is status quo paralysis, but I really may as well transfer to a free account, even before factoring in the myriad bank offers going round at the moment which offer up to £125 for transferring.

In other financial news, this month marked the beginning of my foray into equities. I transferred my ISA (~£37k) from cash to an investment platform, where I used it all to buy VHYL. So far, I am still up a few hundred pounds despite the market's drop over the past few days. Psychologically, I don't want to go into negative returns, but I think investing vs non-investing is an important step in the right direction, regardless of the wisdom of this particular choice/timing.

Work is reasonably varied at the moment, and I have been privileged to get involved in one particular tasking which sees me out of my normal routine for a couple of weeks. The job seems fairly secure until March as it stands, after which I should hear about my future. I want to stay, but it's not really in my hands.

Ydobon
Posts: 412
Joined: Fri Aug 29, 2014 9:15 am
Location: Scotland

Re: Egg's journal

Post by Ydobon »

I'm not sure that once is a particularly 'improbably frequency' :D

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

@Ydobon Not sure I entirely follow...



November

Income - £2470

Salary - £2300
Expenses refund - £170

Expenditure - £1000

Bank account subscription fee - £10
Rent - £250
Utilities - £100
Council tax - £60
Transport - £200 (of which £100 reclaimable work expense)
Internet - £20
Food - £150
Eating out/drinking - £60
Entertainment - £110
Shaving machine - £40

Savings rate: 60%

Somewhat higher spending than last month, though also inflated by travel expenses which I will ultimately claim back. I could of course smoothe out the accounting, but I prefer psychologically to paint a more negative short-term picture. Savings rate is probably roughly right as I was refunded some expenses this month, too, but isn't accurate enough to hang any conclusions on.

My VHYL went into the red for a while this month, but as of right now is about £780 up on where it was when I transferred my ISA. I will not routinely include this in my journal updates, though, as anyone who's interested can easily look up the short-term fortunes of VHYL, and only the long-term returns actually play into my financial plans.

At work, Christmas is in sight to the point that work is already being deferred for the New Year. I think it's a bit premature, and there's still stuff I personally need to get done in December, but the slowdown is palpable.

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

Experiencing my first run in with temperamental old Mr Market. I'm down over £2000 on just over £35,000 invested within a couple of weeks. We'll see what happens. I'll hold pretty much whatever, but it's painful to watch!

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

I've skipped a month in this journal, but I'll just crack straight on through to January now.

January was dominated by a break-up with my live-in girlfriend of over a year, which got me down for a lot of the month. I’m pretty much emotionally over it by now, but it was the upset of my life to date. I also continued to pay half of the rent etc. for the month, even though I’d totally moved out by about half way through. On top of that, I started to incur costs from my new accommodation, so experienced a short period of being hit double. Since I’m considerably the higher earner of the two of us, I don’t actually have any problem with how that worked out. In fact all the furniture and general stuff we ever bought together, I’ve told her she can keep and I don’t want any money for it. The truth is, I don't give a fuck about money compared to the emotional side of it all.

Looking forward, I know I used to spend money faster before I got into my last relationship because, even though my basic accommodation was (and will be again) cheaper, I generally find single social life considerably more expensive. My overall spending patterns are likely to change accordingly to reflect my new circumstances. I’m going to try, though, not to let money dictate my social/romantic affairs – I’ve been guilty of missing out on life before by being too parsimonious, so I’ll try to avoid that joyless saving puritanism this time!

Apart from that, I’ve applied for a couple of jobs. We’ll see if I get any offers. My current work is fairly unstimulating at the moment, but at least it’s not stressful, quite well paid, and I like the people I work with. I’ll miss it, but if I have to go in March then I’ll deal with that as it comes.

January

Expenses – £942

Rent – £250
New room rent – £100
Council tax – £57
Electric – £22
Water – £22
Internet – £19
Bank subscription – £10
Public transport – £60
Kindle coaching – £100
Supermarkets – £90
Work canteen – £140
Restaurants – £15
Postage – £7
Phone top-up – £20
Misc – £30

Income – £2400

Salary – £2400

Savings rate – 61%

Overall another pretty decent month. 61% is about average for me, and overall expenditure was almost exactly the same as last month, even accounting for the fact I was paying for two sets of accommodation for half of it. I guess that’s been offset by the fact that crying and masturbation are cheap pastimes.

inchicago
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Re: Egg's journal

Post by inchicago »

I don't know why, but every time I see "Egg's Journal" it gives me a little smile. I have no idea why. Anyway, I'm very sorry to hear about your break-up. Not the best way to start a new year, but I have always found that there is always something better out there. All the times I have lost something, I have eventually got something better, even though I may not know it at the time.

61% is an awesome savings rate! Sometimes, I get so annoyed with myself with my spending, but the more people I talk to, they think I'm an extreme saver. Compared to them, I am! Especially, when almost every month, they are borrowing on a credit card to continue to buy stuff. At least I'm saving something and every month I'll continue to do better. So I'm just saying that I wouldn't be afraid to spend a little money if the occasion arises for you.

Just a bit of advice, you may want to get some different hobbies. :)

cjm
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Joined: Sun Dec 13, 2015 3:44 pm

Re: Egg's journal

Post by cjm »

All the best, Egg. Perhaps we should be prescribing crying and masturbation to our overly-spendy friends and family ;)

Ydobon
Posts: 412
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Location: Scotland

Re: Egg's journal

Post by Ydobon »

Sorry to hear you've had a rough month Egg, a breakup is never easy, especially when you're choabiting.

Is your new place cheaper than the old one, or about the same?

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

inchicago wrote:I don't know why, but every time I see "Egg's Journal" it gives me a little smile. I have no idea why. Anyway, I'm very sorry to hear about your break-up. Not the best way to start a new year, but I have always found that there is always something better out there. All the times I have lost something, I have eventually got something better, even though I may not know it at the time.

61% is an awesome savings rate! Sometimes, I get so annoyed with myself with my spending, but the more people I talk to, they think I'm an extreme saver. Compared to them, I am! Especially, when almost every month, they are borrowing on a credit card to continue to buy stuff. At least I'm saving something and every month I'll continue to do better. So I'm just saying that I wouldn't be afraid to spend a little money if the occasion arises for you.

Just a bit of advice, you may want to get some different hobbies. :)
Thanks inchicago. Wise words. It sounds like we have a similar mental self-admonishment when it comes to spending. I'm not saying 61% is extreme or anything - plenty manage much more - but yeah, spending doesn't make me feel good for sure. I have already been a bit looser this month on the discretionary side of things, for no better reason than that I felt like it.
cjm wrote:All the best, Egg. Perhaps we should be prescribing crying and masturbation to our overly-spendy friends and family ;)
Haha. I don't even want to imagine the reaction I'd get dishing out that gem of advice ;)
Ydobon wrote:Sorry to hear you've had a rough month Egg, a breakup is never easy, especially when you're choabiting.

Is your new place cheaper than the old one, or about the same?
The cohabiting didn't make much of a difference in practical terms - just emotionally it's very noticeable when someone goes from being around all the time to not at all. But I'm relatively okay to be honest. Thanks for your sympathy, though.

The "new place" is a room rather than a flat (albeit just for me rather than splitting expenses 50/50). It should be cheaper because it's part of my work, so I'm expecting the monthly bill to be around £200 including electric, heating, water and internet. Being kitchen-less, food will also be largely at work, so my previous supermarket spend will become ~£250/m for three meals a day at work. Beyond that, now I live at work the public transport expenses should go down. I don't really know exactly what to expect from my spending, but even with a bit more eating out/drinking I should fit broadly within the same expense envelope as before.

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

As I’ve alluded to in past posts, my current job is decently paid and actually not a bad job all round, but the probability is that I’ll be out of it by the end of March (albeit if that happens I’ll still be paid for an extra few months and get a pay off).

I’ve known this was a strong possibility for a while (now a near-certainty), and I’ve been applying for a few other jobs accordingly. My preferred option had always been to join the (British) Civil Service Fast Stream. I knew it was relatively competitive, so I never really assumed it would happen. Since I’ve now been offered the job (actually scored ~top 0.025%, so pretty comfortable in the end) I’m fairly sure that’s what I’ll go and do. On a practical level, though, at £27k per annum, and almost certainly based in London, I’ll have less than half of my current buying power. In fact, because my current employment includes subsidised food and accommodation, it’d be optimistic to think I could maintain quality of life even at 0% savings rate. I'm confident I could score a better paying job in London or in a cheaper part of the country, but I don't really fancy it as those kinds of jobs generally fuck up the quality of life equation in terms of work-life balance.

So what does this mean? Well firstly it marks a rather early resignation to abandoning the levels of savings rate I have enjoyed so far. I’m not going to be targeting 60% on a £27k income in London – I’m sure it’s possible but I’m not motivated enough to find out. That’s not to say I don’t plan to return to higher savings rates longer term – I’m optimistic that after the four year stretch of the scheme, I can be earning more than I do now.

The fact is, though, I’m quite comfortable with going down to a near-zero savings rate for now. At the age of 24, I think there is a bigger risk of me wasting my youth than fucking up my financial future. Assuming the £20k severance, I’d be sitting on around £110k net worth by the time my current job stopped paying at the end of June. I’m not saying this is amazing, but I certainly feel it’s not shabby, and the money will hopefully pick up a bit of steam on it’s own through compounding if left untouched. When I think about the reason the savings rate would go down – living in one of the few truly global mega-cities in the world, where almost every opportunity I can think of exists – it doesn’t sound so bad. Besides, the only “bad” spending in my book is consumerist spending which neither grows you as a person nor makes you happy. That isn’t what we’re talking about. I’ll still be the same person with the same attitudes – proof that there’s not necessarily any difference in ERE “virtue” between 0 and 60% savings rates.

The second aspect to losing my job is that it is a phenomenal opportunity. I won’t have to work beyond the end of March and my new job would start somewhere between September and November. This gives me a number of guilt-free months where I don’t have to work a job at all. I don’t know what I’ll do yet. I could go travelling, try to find some sort of “fun” seasonal summer work, volunteer (I just applied to the International Citizen Service), work on Kindle publishing full-time to try and get it off the ground, or any number of other possibilities and combinations. A long as I don’t succumb to decision paralysis, I don’t think I can lose.

Any great ideas for what to do April-August appreciated. I am totally free except for being in the UK in mid-May to get my Masters degree!

Egg
Posts: 140
Joined: Sat Oct 04, 2014 10:59 am

Re: Egg's journal

Post by Egg »

I should add, that if I work on Kindle publishing, I would preferably go somewhere cheap and with a nice, warm climate (Thailand?) where I can just use the internet whilst experiencing a semi-holiday feel.

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