Bankai's Journal - ERE mode:hard

Where are you and where are you going?
User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Nov 15, 2015 1:42 pm

The circumstances:

Ever since I started working, I suspected there must be other way than spending best hours of most days in a place I don’t like, doing things I’d rather not do, and talking to people who bore me. Eventually, about 2.5 years ago, when I got interested in investing, I came across Jacob’s website. While I was reading about ERE concept, I had this recurring feeling that I’m reading about something I already know deep inside, just never managed to put it in words. Action followed and so The Change started. Debts, albeit not substantial, were paid off, investment account was opened and accumulation phase begun.

Luckily, my wife is a logical creature who listens to reason, so it was only natural that she came on board. As we changed the way of thinking about money and stuff, we found ourselves happier just seeing our savings grow than accumulating more possessions. We are only at the beginning of our journey to financial freedom, but with the right mind set and determined to succeed.

Why the hard mode:

- Useless degree in history (I didn’t consider long term consequences i.e. employability and income potential, and I just followed my interests)
- Started late (at 30 years old)
- Low income (both of us earn closer to minimum than to average/median UK salary)
- Limited perspective of upping income (no skills/experience/qualifications, no interest in high stress job)
- No starting capital/outside help (as we moved to a different country)

We still consider ourselves lucky being in relatively better situation that probably 85% of world’s population, however at the moment low income is our main limiting factor on fast track to ERE.

In the next post: more detailed financial situation (with charts etc.)

George the original one
Posts: 4582
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Bankai's Journal - ERE mode:hard

Post by George the original one » Sun Nov 15, 2015 8:02 pm

Following your interests in college is not such a bad thing. Myself and 2 friends flunked out of engineering school and got our degrees in: English (myself), history, and political science. Naturally we ended up working in computer or engineering fields regardless of the degree. I retired a week ago, the history major can retire any time he wants to (imminent), and the political science major could if he gave up his lifestyle. Of course we're all over 50 now...

User avatar
singvestor
Posts: 105
Joined: Tue Jul 21, 2015 12:48 am

Re: Bankai's Journal - ERE mode:hard

Post by singvestor » Mon Nov 16, 2015 2:13 am

Interesting journal. As always I would be curious to see some stats...

I have a degree in political science and it never harmed me - would disagree that it makes things hard. Without much effort I landed a high paying job, so I would do it again in a heartbeat.

Which country do you live in now?

Did
Posts: 667
Joined: Mon Apr 01, 2013 7:50 am

Re: Bankai's Journal - ERE mode:hard

Post by Did » Mon Nov 16, 2015 3:34 am

@bankai Did you say you were Polish in the introduction? Just curious have you considered your retirement there for the cost of living advantages?

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Tue Nov 17, 2015 5:37 pm

@George the original one: yeah I definitely don’t regret my choice of degree* as I spent 5 great years there and I met a bunch of amazing people that are still a part of my life today (including my DW).

*I never understood “What would you do differently in your life” exercise since every decision you make has certain consequences which shape you as a person, and making different choices would make you a different person. Therefore, if you like the person you are right now, why would you want to change your past?

@singvestor: any tips for landing a high paying job with not related degree? What field are you in?

@Did: yes I am Polish. I did consider retiring in Poland however decided against it. COL is indeed lower than in UK, however not by as much as you’d expect (i.e. my bank pays me £5 every month just for having an account with them while in Poland I’d have to pay 1) a monthly fee for having an account, 2) a monthly fee for having a debit card, regardless if I use it or not, 3) a monthly fee for having an overdraft facility, again regardless if I use it or not, and 4) fees for things like internet transfers, checking balance at cash machine etc.).

The issue with going back to Poland is that I got ‘westernalised’ over 8 years I spent here in UK and would find going back to old ways quite challenging (i.e. bureaucracy, taxes or people’s attitude towards minorities). We still consider other options for geo arbitrage but Poland is most likely not going to be one of them.

User avatar
Egg
Posts: 134
Joined: Sat Oct 04, 2014 10:59 am

Re: Bankai's Journal - ERE mode:hard

Post by Egg » Wed Nov 18, 2015 3:01 am

Cześć Bankai. This is interesting to me as I live in the UK with a humanities degree, have dual nationality (including Polish), and am seriously considering moving over there after the accumulation phase. It's where my parents live so I go there a lot, and I really like the country.

What I would say is the grass is always greener. Having mostly lived in the UK, I find westernisation a little less refreshing than you. It's a debate for another time, but it's a mixture of positives and negatives and I don't see Poland as worse on balance for a retiree.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Nov 22, 2015 4:20 pm

Finances

Data:

Image

*The last 2 categories were only created this year; for previous year those expenditures were included in food/household.


Things I consider optimised (to the point of diminishing returns):

1) Housing: we currently rent 1 bedroom flat within 15 min walk from where I work and 30 min commute (walk + underground) from my wife’s work. The rent is £425 a month which is below market value. Ideal location would be in between our workplaces, however rent increase would easily out weight £450 a year savings on my wife’s commute. Also on the way to work she’d need to pass industrial area, which is not safe.*

2) Our mobile plans are £5 a month each. Incentive to look for cheaper options is just not there.

3) Electricity: £54 a month is about half of what most of our friends pay. Small flat has some benefits. So does LED lightning.**

4) Internet: £22 a month. This was the cheapest option when we signed up for it 2 years ago. It’s possible to find something slightly cheaper now; however possible savings of maybe £5 a month would probably not cover additional costs (administration fee, engineer fee etc.) of changing provider. Not to mention the hassle. Also, what we have now is very reliable and we’d rather not risk getting poor service, as we got from our previous provider.

5) Council tax*** cheapest band in the city we live in.

6) Eating out/alcohol: £40 a month. We went alcohol free 5 months ago and never looked back. We only eat out few times a year when there’s a good reason to (birthday, our anniversary etc.). Quite happy with current level of spending.

7) No TV.

8) Being car free.

9) Being child free.

* We are actually looking to buy a flat in the next few months; more on that later on.

** We just received a letter advising of an increase to £67 a month. Interesting, considering our energy usage actually dropped over the last 12 months.

** Local tax contributing to public services; also includes water and wastage.


Areas where improvements are needed:

1) Food/household expenses: average of £260 a month is just way too high. Getting this below £200 (£100 per person) will be a priority. The issue here might be the amount of fresh fruits & veggies we buy – we follow Dr Fuhrman’s Eat to Live diet and only eat fish couple of times a week; no meat or diary. I probably need to keep all recipes for a month to trace where the money goes.

2) Clothing: £66 per month is just ridiculous. What we already have should last a decade or more. I own 14 pair of trousers/jeans even though I only wear 2 pairs outside. The issue seems to be that when clothes stop looking “good enough” to wear them to work, we buy new ones. As a result, we own 4-5 times as much clothes as we regularly wear; those are at different stages of wearing out, but are still perfectly fine to use.

3) Travel/Gifts: £110 a month is a tremendous improvement over last year (£408 a month, although this included one off help to my mother). We will be looking to get this figure lower still, ideally to below £1000 a year. This means one inexpensive holiday abroad a year and maybe 1-2 short trips. Also includes cost of fuel we share with friends when we go hiking - this is one of those excellent near free (once you have gear) activities which I’d not consider cutting out.

4) Stuff: £46 a month is a lot, although this figure should go down without any effort on my side. I already upgraded/bought all items I wanted to this year and I can’t think of anything more I’d like to own.*

5) Cash: money that just disappears without trace. Used to be £56 a month last year so it’s improved, however I want to take this down to zero.

* The list of stuff acquired this year includes: MP3 player, earphones, PC mouse, kettlebell, kindle with cover, hiking poles and microspikes, blender, proper scissors to cut my hair, anti-virus license, new dumbphone (lost my old one during a hike; it served me well for 2 years for a monthly cost of £0.83) and a new messenger bag. All this new stuff is of good/very good quality and should last few years or more.

A few words of how we arranged our finances. We don’t join our finances, but we share expenses in the following way: my wife pays for rent & electricity; this allows her to have a fixed savings rate of just over 60%. I, on the other hand, pay for everything else, which has 3 advantages: 1) it’s easier for me to keep a track of every pound spent, 2) as I earn slightly more and DW started saving money later, it will allow her to eventually catch up in absolute numbers, 3) motivation to seek improvements is mainly on me as I’ll benefit the most. It’s working for us just fine for some 2 years now and we both like it this way.

Looking at the figures, it’s perfectly possible to reduce expenses by as much as £200 a month. This would increase my savings rate from 50% to 65%. Still way to go to 75%, but it would be a good start.

Charts:

Image

Image

Image

Any comments or analyses are welcome.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Nov 22, 2015 4:30 pm

Hej Egg! Seems our circumstances are somewhat similar. I like the idea of spending few weeks at the time in Poland, however I find living there full time more challenging. Obviously YMMV. What do you think of people's general attitude and how do you find public services? Also, if you run the numbers, by how much (% wise) would retirement in Poland cut your target net worth compared to retiring in UK?

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Dec 06, 2015 10:40 am

November Update

Data:

Image

Expenses in November were lowest this year, 31% lower that 2015 average and 53% lower than 2014 average. Adding rent and electricity (paid by my wife) total monthly expenses were £933 (or £11200 / $16800 a year, or 1.2 Jacob per person).

Good progress in Food/Household category, although this needs to go below £200. Clothes as always are the main culprit. Still below average but not good enough. Everything else is under control.

Goals for December: get food budget below £200 (or £100 per person). Don't buy any clothes.

User avatar
Egg
Posts: 134
Joined: Sat Oct 04, 2014 10:59 am

Re: Bankai's Journal - ERE mode:hard

Post by Egg » Sun Dec 06, 2015 5:09 pm

Bankai wrote:Hej Egg! Seems our circumstances are somewhat similar. I like the idea of spending few weeks at the time in Poland, however I find living there full time more challenging. Obviously YMMV. What do you think of people's general attitude and how do you find public services? Also, if you run the numbers, by how much (% wise) would retirement in Poland cut your target net worth compared to retiring in UK?
Fair enough. My girlfriend is Polish and far less sentimental about the country than I am, as is every young Pole I know. I personally enjoy the more traditional attitudes over there. I also find people friendlier than here in the UK, although foreigner experience is always different to native, and I get a lot of credit for my shaky Polish.

I'd expect to live in Poland on around 50% of what I spend here, but that's real finger in the wind estimation.

User avatar
stayhigh
Posts: 111
Joined: Sun Dec 06, 2015 4:20 pm

Re: Bankai's Journal - ERE mode:hard

Post by stayhigh » Mon Dec 07, 2015 12:32 pm

Bankai wrote:Also, if you run the numbers, by how much (% wise) would retirement in Poland cut your target net worth compared to retiring in UK?
I did that some time ago and it was like 30-50% diff, depends on your lifestyle and cities/areas you compare.

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

Re: Bankai's Journal - ERE mode:hard

Post by Ydobon » Tue Dec 08, 2015 4:58 am

Your spending on food and household does seem high. You spend £30 more than my wife and I and we eat meat and fish (which are typically far more expensive per kilo than fruit and vegetables). Are you eating organic produce? Don't you have a local Aldi or Lidl to shop at? I think I could realistically feed two people on £100/m on a vegetarian diet sourced from one of these shops.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Tue Dec 08, 2015 1:18 pm

We don't buy organic. We also live within 5 minutes walk from both Lidl and Aldi and do probably over 80% of our grocery shopping between those 2 shops. I agree we spend too much on food but I can't pinpoint why exactly it's so high. Some changes are needed though and we started implementing them already.

heyhey
Posts: 112
Joined: Sat Jul 19, 2014 7:17 pm
Location: Herts UK

Re: Bankai's Journal - ERE mode:hard

Post by heyhey » Tue Dec 08, 2015 2:04 pm

You might also want to keep the receipts and separate out food from household in your expenses. Maybe you're buying kitchen equipment etc and it's not entirely a food issue? So comparing your "food" costs with others on here may not give you a fair picture.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Feb 07, 2016 7:31 pm

December and January update

Data:

Image

Expenses in December were the lowest that year, 35.5% lower that 2015 average and 57.7% lower than 2014 average. Adding rent and electricity (paid by my wife) total monthly expenses were £901 (or £10812 / $16218 a year*, or 1.16 Jacob per person).

* I'm using 1.5 rate for £ to $ as opposite to daily rate when writing entry.

Good progress in Food/Household category, although still didn't manage to break £200 mark.

Second goal achieved - no money spent on clothing.

This was second lowest month on record (since Jan 2014) in terms of expenses and the lowest in 2015. Overall I'm really happy with the month, especially considering it's Christmas/birthday month.

January started even better with expenses at £324.92, overtaking December as the second lowest spending month on record, albeit no Council Tax payment this month definitely helped. All categories look good, other than food, which again went over £250. Adding rent and electricity, our total expenses were £817 (almost there at 1.05 Jacob per person, although it's an unusual month).

Other news:

We recently opened Help to Buy ISAs as we are looking to buy a flat this year. 4% interest on cash is quite good, and 25% top up from government is even better. Since we contribute the maximum allowed £200 a month each, as long as we use this money for a deposit, we "earn" an extra £100 a month using this scheme. Not too bad.

I cut my wife's hair for the first time. She tricked me into this by showing me a tutorial by some famous stylist. Looked easy enough on the video, less so when I accidentally stabber her in the neck with the scissors. 2 hours and some tears/blood later, the job was completed. Now whenever we meet up with friends, she says: "Do you like my new hair? Guess who cut me!". I promised never to do it again, but recently she mentioned few times that they're getting too long and it's about time...

DIY for Christmas involved as usual cards and gifts, however this year my wife also crocheted a small Christmas tree. We could never agree if we want to have a "real" Christmas tree or not. I consider it solved now.

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

Re: Bankai's Journal - ERE mode:hard

Post by Ydobon » Mon Feb 08, 2016 3:45 am

The help to buy ISA doesn't sound too bad at all - we did much of the saving for our first home at 2.49% :)

themodernchap
Posts: 61
Joined: Thu Jan 07, 2016 10:21 am
Location: Belfast, Northern Ireland

Re: Bankai's Journal - ERE mode:hard

Post by themodernchap » Mon Feb 08, 2016 8:25 am

I am enjoying your journal very much. Where I live in Northern Ireland there are something like 60,000 Polish people. In recent years there have been lots of Polish owned small businesses opening, Polish food shops etc. As a dysphoria the Polish are doing very well here in spite of the fairly xenophobic culture here.

What are you using for your charts? They look great.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Mar 06, 2016 7:50 pm

@themodernchap

I just use Excel for charts.

User avatar
Bankai
Posts: 252
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Mar 06, 2016 7:56 pm

February Update

Data:

Image

Expenses in February went up. Finally (after 2 months of spending nothing) I bought some new clothes – a sweater and a pair of shoes for work. Both are good quality and should last a while.

When my old shoes fell apart a week ago, I realised I have nothing suitable I could wear for work. I own a pair of hiking boots (Hanwag Grunten mentioned by Jacob), a pair of snickers for outdoor sports, and 3 pairs of dress shoes, none of which is suitable for my work (no dress code). So I decided to spend £40 for a pair of Skechers. I’m now back up to 6 pairs of boots/shoes, 3 of which are never used while the other 3 are used daily/weekly. I’m going to hang onto the dress ones in case I change job.

Sweater was not a must, but a choice (I've been rotating 3 sweaters and 2 shirts for a few months now). I own several sweaters and more than 10 shirts; however most of them fall within “looking ok, but not good enough to wear to work or public places anymore / only to use at home or under the jacket” category. I find it quite worrying that while I try to acquire as few new clothing items as possible, the rate of acquisition outpaces the rate of wearing out, which results in me having more and more clothes already old, but still needing 50+ washes before falling apart. So far I don’t see any solution to this problem.

Eating out almost not existent - £4.2 spent for 2 x sandwich for lunch due to being lazy the day before. This will not happen again due to me not eating lunches anymore (more on this later).

Utilities – no council tax again, hurray! Although my broadband payment went up – I didn’t take advantage of line rental discount by paying for full year in advance since we will most likely move / buy flat this year.

Travel / Gifts are very high – couple of gifts to family, and flights booked for holiday in May.

Our biggest (of 4) cooking pot had an accident due to being left on cooker unsupervised by my smarter / prettier half. As a result, we bought a new one online – good quality, 70% discount. Should last a long time.

Our total monthly expenses were £1019 or 1.31 Jacob. Overall, not a bad month, considering some “unusual” expenses. Average spending for last 6 months is £484 a month per person (including rent and energy which I don’t include here since I don’t pay them). We are quite comfortable with this level of spending. Considering rent and bills are £600 a month, we spend £400 on food and everything else between 2 of us. Slashing this ludicrous food budget by £100 or so a month would definitely help.

Other news:

I cut my wife’s hair second time this month. Took less than half of the time it did previously, and was much less stressful. We can call ourselves fully independent of market in this respect now.

Speaking of hair, we went no poo. My wife uses bicarbonate of soda to wash, and apple cider vinegar to condition, while I only use water with some tea tree oil. It’s now 2 weeks since I’ve used any detergent on my hair and so far no one noticed. Might be partially due to the fact that my skin is dry, hence my hair doesn’t produce much grease. It is also much softer now.

Warrior diet. We are a week in. Breakfast is an orange or pear. At work, a fistful of nuts and an apple. At home we start with a big salad (lettuce, tomato, cucumber, pickles, olives, banana, pear, cashews) followed up by main meal, different each time. Today we had salmon with steamed veggies and celeriac, apple, dates, walnuts and yoghurt salad. Dessert was dark chocolate and coconut milk truffles. All home made.

I see some instant benefits and some drawbacks of this diet. Feeling more energetic and alert during the day is great, although day is spent at work so it doesn’t really benefit us. Time saved on preparing and eating breakfast and lunch is then spent in the evening preparing multiple meals. Then after big feast we feel relaxed and heavy and we don’t really feel like doing anything productive for the rest of the evening. So we have more energy while at work and less while at home, when we need it for our personal projects. Not too happy about it so far.

On the bright side, we stopped eating in a hurry or in front of the computer (we did that to optimise time), and we now celebrate meals. We also spend more time together talking while preparing / eating / resting after food. We both suffered from headaches this week, although this might be due to detoxification. Finally, I’m now looking forward to meals and I’m genuinely happy cooking / eating, while before I didn’t really think about it too much and often skipped meals cause I couldn’t be bothered. The power of hunger. I can see this being our new way of eating for life, although we need to sort out the lack of energy after main meal. It’s only a week in, so more data needed to draw any definite conclusions.

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

Re: Bankai's Journal - ERE mode:hard

Post by Ydobon » Tue Mar 08, 2016 4:23 am

What's the problem with paying your line rental in advance? If you're not planning on changing provider when you move, they'll continue to honour the price for the year...

Post Reply