May, June, July update
I was planning to update this journal every 1-2 months, however a lot has happened recently, hence the delay.
has seen above average expenses due to our holiday in Romania (and a summer jacket for my wife). Contrary to a popular belief, Romania is a very nice country with a lot to see and do. Majority of people speak at least basic English. It also seems safe, or maybe we were just lucky. We spent less than £600 during our almost 2 weeks there and had a great time. Here’s the breakdown of our expenses:
Staying here for longer would probably be at least 50% cheaper – flights are one off, and AirBnB would offer 30-50% discount for staying for at least a month. Cooking should be about 50% cheaper than in the UK – although some things are for some reason slightly more expensive (i.e. broccoli or various nuts), most veggies and fruits are 2-3 times cheaper (some examples: strawberries under £1/kg, mandarins under £0.4/kg, apples about £0.5/kg).
was fairly average. Eating out were few soft drinks while watching euros in pub. Gift was a wedding gift for my wife’s best friend. Health were some drugs as my wife was ill.
was also about average with some household items and GPU for my PC needing replacements. We also stocked up on supplements and some bulk food, which is why our food expenses went up to over £200 again.
At the beginning of July we got a notice from our LL as the flat we were renting for last 7 years goes on market. The flat was excellent for our needs:
• 15 min walk to my work,
• 5 min walk to cheap grocery stores,
• 1, 10 & 20 min walk to 3 different parks.
• Quiet neighbourhood with lots of old folks
On the other hand, it’s on a quite noisy street and no work was done on the flat for over 10 years. Overall we liked it a lot, and we didn’t have rent raised since we moved in.
July proved to be a terrible month for flat hunting. Initially we missed some good opportunities as we dismissed some flats based on price, only to find out our expectations were based on 2009 rents. Thousands of students looking for accommodation at the same time as us didn’t help either. Eventually we found a nice flat in a pretty good location (hopefully we’ll be moving next week), however between higher rent & council tax and me having to now take a bus to work, it will cost us some £225 more a month, increasing our total expenses by ~20%.
Until this moment I was undecided on buying vs. renting, with my calculations showing it’s a close call money wise, and decision being down to how much flexibility we want. With new housing expenses figures, mortgage rates expected to go even lower due to base rate cut, and housing market in the city we live in finally starting to pick up after 7 years of flat/falling prices, next year seems to be good time to buy. We will see how things unfold brexit-wise, but for now I moved from 50/50 to 75/25 towards buying.
Few days after getting notice from LL, my wife was told by her boss that her working part-time doesn’t work for the company (why did they agree to it in the first place then?) and was given a choice between moving to a different position, involving physical work, or 2 months’ notice. With her considering quitting anyway, the choice was obvious. She’s now staying at home unwinding and focusing on her side gig. She’ll still be paid for few more weeks. We’ll see what happens next.
So in 1 week our financial situation deteriorated tremendously – we lost about half of our income and our expenses went up by 20%. Few years ago this would be devastating. Now we see this as a change and opportunity to grow. My wife has 3 years of expenses saved, isn’t stressed by the job she didn’t like anymore and now has plenty of time to develop her side gig into business. Still, savings rate is going to plummet at least short-medium term.
Savings / Investing
Income in June and July was higher than usual due to bonus (June) and double paycheck (July). This came very handy at the time when my portfolio was getting hammered by brexit turmoil. Portfolio rebounded partially in second half of July, although it's still about 7% lower than 2 months ago. What I learnt though is very valuable. Firstly, preparing in advance for even very unlikely outcome is generally a good idea. Secondly, I seem to be resistant to panic moves, selling at the bottom etc. This might be at least partially due to the fact that I don't (yet) have a lot of money in shares (less than 50% of my NW or about 4 years of expenses). Some charts:
Having to move proved to be a good impulse for saying bye to some stuff:
• got rid of about 1/3 of our close to 500 strong book collection (gave to friends, charity, sold online). Selling stuff online seems to have terrible ROI.
• disposed of plenty of clothes that didn’t fit anymore or haven’t been worn for ages
• digitalised most of our paperwork shrinking it from over 10 folders to only 3
• thrown away some random rubbish we kept for no reason
• sold/gave away almost all CDs/DVDs
We’re feeling pretty good with our new, fewer belongings. We plan to keep ~30 books and get rid of the rest, but there’s no rush. All remaining CD/DVDs will go as well. Another thing I considered getting rid of is a desktop computer, since it’s huge and requires desk & chair. However it still works and might still work in 5 years time. So it stays, for now.
Other things that caught my attention
One of my colleagues revealed she goes to the hairdresser every second paycheck and spends a total of £1000 a year on that. Her husband goes every fortnight and pays £15 per visit. That’s about £1400 unnecessarily spent every year or £35000 more capital needed to support this habit. At the same time she complained she’s only able to put away £100 per month. She could easily increase her savings rate by over 80% simply by doing her own hair.
Another colleague buys 4 (!) coffees a day while complaining that retirement age being increased to over 70 years of age by the time he will be eligible for pension.
I might be moving slowly and through a bumpy road, but with a feeling that sooner or later, just by avoiding mistakes like these, I'll eventually arrive at my destination.