Bankai's Journal - ERE mode:hard

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Re: Bankai's Journal - ERE mode:hard

Post by jacob » Tue Mar 08, 2016 10:21 am

Bankai wrote: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.
Speed up the process by focusing your efforts at making the "unworthy" clothes fall apart by wearing the most worn out one first/as much as possible. Then the second-most. It should be part of each laundry cycle. It's like a debt-snowball paying off the highest interest card first, etc.

Also, change from "worthy clothes" to "unworthy clothes" outside work.

Incidentally, if you're generating "unworthy clothes" faster than you can wear them out there's no shame in donating them. You're in a mathematically impossible situation---the only way would be to reset the point at which office-worthy becomes unworthy to a later point.

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Thu May 12, 2016 6:00 pm

@Ydobon - I'm actually considering changing provider as the level of service offered by my current one decreased over last few months. Also, with 3 price increases in last 2 years, I'm sure there are better deals around. Hence I'm not willing to lock myself in for another year.

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Thu May 12, 2016 6:03 pm

March and April update

Data:

Image

A good month, followed up by a bad month.

March has seen the lowest ever spending, at £274. This was due to not paying Council Tax on time and not spending any money other than on food, broadband and mobile. Spending on food was in line with last few months, despite attempts to reduce it.

April has seen surge in Utilities due to double Council Tax payment. Clothing included couple of pants and tops my wife bought for work. Travel & gifts were AirBnBs booked for our incoming holiday as well as some expenses for my wife's best friend's hen night.

My average expenses for last 6 months now stand at £489. With £146700 required to support 4% withdrawal rate, I’m about 20% through to FI (or 27% with pension savings). This is not good, considering I started the journey over 3 years ago.

The following options will all be considered:

1) Further reducing expenses:

Here are average monthly figures for 2014-2016:

Image

• Good progress made in Eating out; eliminated alcohol expenses. Going to restaurants is just too much hassle for us now, we much prefer to cook ourselves and eat at home, leaving restaurants for maybe 2-3 occasions a year. Warrior diet also supports eating at home.
• Travel/Gifts category doesn’t seem to work; I’ll split it in 3 separate categories: Travel, Commuting and Gifts to have a better understanding where the money goes. We do plan to travel and will probably be looking to allocate certain budget to it per year – this needs to be discussed further.
• Stuff in nicely down and will (hopefully) stay this way, although some expenses due to wear and tear are unavoidable (i.e. I’ll most probably have to replace the graphic card in my desktop as it appears to be dead).
• Cash – this used to be a black hole with money disappearing left and right in the past. It’s now under (semi) control – good enough category.
• Clothes – we spend below 40% of what we did in 2014. Still, not good enough. I’m toying with the idea of fixed clothing budget per year, i.e. £100 per person. This would force us to explore alternative ways of supplying clothes (we now pretty much only buy them in stores) like charity shops etc., although we tried it in the past and struggled to find anything fitting us, especially me (I’m tall and skinny, with long arms and legs). Either way, there’s definitely a room for improvement here.
• Big, bad and ugly – food. £255 a month despite trying to buy as much veggies and fruits as possible from Aldi & Lidl’s offers. Action plan is the following: we will empty fridge before going on holiday, which gives us a fresh start in June. I’ll be in charge of grocery shopping, prioritising Aldi & Lidl (as we do anyway) and keeping all recipes to identify main culprits. I suspect we might be spending too much on discretionary items like Coconut or Hazelnut milk. Cutting £50 per person here means £15000 less capital required for 4% withdrawal rate.

2) Increasing withdrawal rate:

• It wouldn’t be the end of the world if I were to briefly return to work at some point in the future.
• There are bank and savings accounts offering 5-6% nominal returns in UK, although on limited balances. Inflation currently stands at about 0.5% and there’s no tax on first £1000 in savings interest.
• Stock market has been working well for me so far (although my portfolio is down in 7 out of last 9 months, and overall down 8% since peak in July 2015), yielding way over 4% CAGR.
• All of this means I’m more and more comfortable with a withdrawal rate of over 4%, and possibly will be aiming at 5%.

3) Increasing income:

• I don’t want to label myself as a low income earner, although with my current salary of £19000 per year I fit in that category. There’s certainly a scope for improvement.
• Current low level office job has the following advantages: commute by walk takes 15 minutes; nice, friendly atmosphere; low stress environment; employer matching 7.5% pension savings. On skill level vs. challenge level it’s mostly “boredom”, sometimes “control”. These are some strong advantages, which combined explain why I wasn’t very actively looking for something else. I don’t think it’s worth moving for 10-20% rise.
• I don’t have any particular skill in high demand. I’m prepared to spend time learning a skill giving 25%+ increase in income with potential to double income in 2-3 years. Will need to explore options for this.

The biggest change since my last update is my wife going part time. She is now only working 3 days a week and will use the extra time to explore her interests and other ways of making money (she already has a short term side gig with hourly rate much better than in her day job). She is just not build for full time work and we are both looking forward to her working less.

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Re: Bankai's Journal - ERE mode:hard

Post by 2Birds1Stone » Sun May 15, 2016 6:46 am

Hey there Bankai!

Glad I found your journal. I am Polish as well living in NY, USA.

A big part of our plan is for my SO and I to spend about 50% of our time once retired in Poland/Europe/Southeast Asia.

Geo-arbitrage is very appealing to us. My parents own a flat in Rzeszow and have no plans on selling it, one day it will be passed on to me. I did some back of the napkin math and we could retire comfortably in Poland in ~6 years.

I enjoyed reading your progress, sounds like you are pretty darn optimized aside from the income at this point. How far along are you in your progress to financial independence?

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Re: Bankai's Journal - ERE mode:hard

Post by JamesR » Sun May 15, 2016 8:05 am

hard mode - that's the real fun!

I found it interesting you paid £40 for a pair of Skechers. The way I shop for shoes is to go to a major budget/department store chain like Walmart/Zellers/Tesco (not sure what you have in the UK), and just look around in the cheapest shoes section until I find something that I can tolerate. So I pay like £5-10 for a pair of shoes, I usually wear it every day and it'll start looking like crap in 6-8 months, but I'll wear it for between 1-1.5 years. I'm not sure if this is optimal, but it's cheap :P

In terms of grocery shopping, I would avoid almost any brand-name goods except when they've been heavily discounted by 50%. It might help to have set expectation on prices for various goods, and only buy when it's near that price you expect. For example, I expect to only pay $3 CAD for a 1kg jar of peanut butter, but it's normally listed between $4.5 and $6 at the nearby grocery stores, so I only pick it up when it's on sale, or when I when I happen to see it somewhere else. You might also try dropping juices and milk and pop if you already buy those, and stick to water & tea.

Are there any skills you have an interest in developing, or any skillsets you already have that could be developed further and parlayed into a job? I recommend two books 'So Good They Can't Ignore You' by Cal Newport & 'The Subversive Job Search' by Alan Corey.

Alternatively if you have the time & energy, you could just focus on developing a side-opportunity, maybe something with your wife since she'll also have some more free time towards that. Just make sure to pick something you can stick with consistently for 2-3+ years until it really starts to pay off :P

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun May 15, 2016 1:33 pm

@2Birds1Stone

Hey! I like your idea of spending 50% of time traveling. We also want to travel a lot, but haven’t decided yet if we will just go on one long journey (2+ years) or spend half of each year in UK and the other half traveling. Both options have some advantages.
Speaking of travel, we are going to Romania now for 12 days. I’ll report cost of living etc. when we’re back.

@JamesR

Some interesting points.

Re shoes, since I don’t have to wear dress shoes to work anymore, I only really need 2 pairs – hiking boots which I also wear in winter/when it’s raining, and lighter pair of shoes for summer/hotter days. The last 2 pairs of really cheap ones I bought fell apart after 3 weeks and 6 months. I decided to spend a bit more this time to compare cost per month.

Groceries are really tricky for us, we mainly shop at Alid & Lidl, so it’s even more bizarre why we spend so much. We don’t drink any juices, although we buy vegan milk for coffee/cooking. I’ll take charge of shopping in June and keep a track of everything bought, and then analyse it in detail. I’m determined to get food spending down below £200.

Thanks for book recommendations! I’m considering IT, although looking at few of my friends who went in that direction, each of them put in a good few years before landing well paid (£40k+) job. There aren’t really many time-wasting activities left for me to cut away, but if I scale down on reading/internet time, I could probably accommodate maybe 1000 hours a year to developing new skill? So the questions is, would this allow me to get a job paid well enough to out weight simply working these 1000 hours extra and earning £10-11k (about 7% needed to FI in my case)? I had a look at Coursera and there are about a hundred courses in computer science. My only experience in this area is with excel so I’d really have to start from scratch.

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Re: Bankai's Journal - ERE mode:hard

Post by 2Birds1Stone » Mon May 16, 2016 7:02 am

Bankai wrote:we are going to Romania now for 12 days. I’ll report cost of living etc. when we’re back.
Very cool, I've been to Golden Sands twice. We drove from Poland. Golden Sands was moderately priced, the rest of Bulgaria was very cheap. When I went 12-14 years ago things were different and Bulgaria was still recovering from the Soviet block. Things may have gotten inflated now.

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sat Aug 13, 2016 9:56 am

May, June, July update

I was planning to update this journal every 1-2 months, however a lot has happened recently, hence the delay.

Expenses:

Image

May 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:

Image

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).

June 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.

July 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.

Moving house:

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.

Losing job:

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:

Image

Image

Image

Downsizing:

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.

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Re: Bankai's Journal - ERE mode:hard

Post by bristoldude » Fri Sep 02, 2016 2:05 pm

Just read all of your journal when I spotted you were from the UK, sounds like you're doing well. Very reasonable expenses overall, but you're right, the wage is lower than average. Best of luck to your wife's side gig.
Whereabouts are you for those rents?

Anything looks good in comparison to normal, I remember colleagues spending £7+ on lunch daily while complaining about mortgage payments..

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Oct 16, 2016 1:51 pm

@bristoldude

Thanks! I'm in Scotland.

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Oct 16, 2016 1:54 pm

August, September update

Financials


I decided not to post figures for the last 2 months. Savings rate for August was 2.7% and for September 47.6% (17.3% and 55.5% with pension contributions). August was particularly bad due to moving house. This is now over, however rent went up by £150 a month and Council Tax by about £36. I’ve not started using public transport yet and instead I just walk to work (4.5km one way) saving about £45 a month. This is only possible because autumn rains haven’t started yet. I’ll probably need to take bus/train from Nov – Mar/Apr. So far so good, though.

Unusual spending include: £110 on clothing, £110 on household (mainly storage solutions for new flat as it’s terribly lacking storage space), £60 eating out and £360 on stuff, of which £274 was for 2 smartphones.

Buying smartphones was something we were considering for a while now. Main argument for not to do it was because we already had devices doing what smartphone does (PC, laptop, tablet, kindle, dumbphones, camera, mp3 player). However, as smartphones were getting cheaper and better, we finally decided to “upgrade” (I know…). So why did we do it? I considered the following pros:

• Integrates functions of 4 other devices (tablet, phone, mp3, camera) which means less upgrading and less devices in the long term
• Less stuff to carry around / take on holiday (4 items mentioned above + second phone and charger for each vs. just 2 phones and a single charger between 2 of us)
• Facility to use internet outside home (including now being able to trade stocks while at work)
• Being able to better measure things (i.e. step counting app)
• Less energy used (reading on phone instead of computer)

So £5 a month in extra phone bill for 2 GB of data and one off £137, which translates to about £2300 capital needed considering depreciation to zero over 4 years. This is roughly the same as cost of replacing other 4 items (camera every 10y, phone 4y, mp3 3y, tablet 5y). One can also assume that although it’s unlikely smartphones will get much cheaper, they should still get better over time.

After a month and a half we think the decision was correct and should work even better financially as we rarely switch pc on anymore.

New flat

Other that higher rent and distance to my work (I know…), everything else changed for the better. The flat is very bright, more spacious and better furnished/decorated. It’s also 2 minutes’ walk from large park and within 15-20 minutes’ walk from 2 other great parks. We now go for walks much more often. We still have Lidl and Morrisons nearby, although we lost easy access to Aldi. Which means less micromanagement and less time spent shopping (no more “put these £0.39onions back, they’re at £0.35 in Aldi). Neighbourhood is much nicer and safer as well. Overall then, we’re quite happy with the move (just not the rent).

Work

Still walking to work, only now it’s 4.5km each way instead of 1.5km previously. I initially experimented with walking really fast (7.5-8km/h), however even though I generally don’t sweat much, it was enough not to feel comfortable at work. So I settled for my normal pace of 6 km/h which translates to an extra 20 hours a month spent walking. I just consider it free exercise and listen to podcasts on the way. I now worked my way though You Are Not So Smart and Farnham Street podcasts – if you know another comparably good source, please share.

Total distance walked in September was over 400km. Would be really nice to walk 5000km a year, will need to see if current trend is sustainable.

Health

Since moving my energy level was getting lower and although I had quite a few good ideas, I haven’t followed on them. I identified it to be caused by a mixture of being tired with so much walking, not having enough sleep and having poor quality of sleep. As I now spend an extra hour a day walking, and didn’t cut after-work activities to allocate time for that, I ended up inadvertently cutting 1 hour from sleep. I also didn’t adjust my calorie intake up. Add to that lower quality of sleep (reasons for which I haven’t figured out yet), and here I am being fatigued. I decided to try going sleep and getting up at fixed times to have at least 7.5h of sleep each night. I’m also not sure if Warrior Diet is the optimal choice anymore. I only eat 2-3 fruits between waking up and coming back from work, and then usually have 3-4 portions of food over 4-5 hours. So it’s between forcing an extra 300 kcal worth of rice/porridge/lentils in the night, or breaking fast with a morning smoothie. Not sure which is better or if there’s other solution.

Diet

After 6.5 years of not eating meat and 1.5 years since I stopped eating dairy, I now also dropped fish. I credit this to some excellent articles/videos on fish/seafood/omega3 at Nutritionfacts.org. However, I’m reluctant to label myself as a vegan because, although I’m not eating meat or fish at all and in case of dairy I’m not buying it, I still consider eating it very occasionally at friend’s/family when served birthday cake or something. 99.9% is good enough. Also, one less label feels good.

Another thing to note is how easy the change was. Recently I read on forums something along the lines that being an outlier is a skill in itself, and going against the herd is easier each time. I can definitely see this is ourselves.

Lack of direction

I seem to lack focus/direction. I have too many projects going on, I started reading too many books without finishing and generally my attention is spread too thinly. I’m trying to do all of the following and many more: exercise, eat healthy, spend quality time with my wife and friends, research shares, educate myself on investing and several other topics like global warming or nutrition, regularly read stoics, follow several very interesting blogs and websites, spend a bit of time skimming news, football etc. so I have something to talk about at work… but between work, sleep, maintenance and commuting I have maybe 3-4 hours a day left, and those tend to be hours of lowest energy (after work and few big meals). My “to do” list is only growing, and so is my “to read” list. Therefore a different approach is required.

I decided to focus my time and energy on 3 most important things:

1) Health consisting of diet, sleep and exercise. First 2 require some initial set up to automate; exercising daily will then be a priority,

2) Reading on investing and researching shares for 1 hour a day

3) Reading one book a week for personal growth.
I also printed a weekly goal organiser sheet to better measure progress.

Urge to help

Often, when dealing with friends and family members, I have this urge to start throwing at them solutions to their problems, be it obesity, lack of money or others. I’m sure it’s a very common feeling. It’s a bit like having a key to a treasure chest someone is holding while complaining that they can’t open it. Or an antidote for someone’s poison. But when you offer it, they just can’t see it for what it is.

There is no good solution to this. If I don’t offer help while hearing a friend complaining, I feel like I’m withholding a cure from a patient. On the other hand I can’t aggressively promote my viewpoint either as this is a violation. Being an example to follow doesn’t work either, since people have different priorities and might not necessarily want to follow. It’s just sad watching someone struggle and not being able to reach them. One can only wait until the other person is ready, but this may never happen. It might boil down to identity trap on my behalf and different priorities and no willingness to pay the price on their end.

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Re: Bankai's Journal - ERE mode:hard

Post by George the original one » Sun Oct 16, 2016 4:32 pm

Bankai wrote:Urge to help

Often, when dealing with friends and family members, I have this urge to start throwing at them solutions to their problems, be it obesity, lack of money or others. I’m sure it’s a very common feeling. It’s a bit like having a key to a treasure chest someone is holding while complaining that they can’t open it. Or an antidote for someone’s poison. But when you offer it, they just can’t see it for what it is.

There is no good solution to this. If I don’t offer help while hearing a friend complaining, I feel like I’m withholding a cure from a patient. On the other hand I can’t aggressively promote my viewpoint either as this is a violation. Being an example to follow doesn’t work either, since people have different priorities and might not necessarily want to follow. It’s just sad watching someone struggle and not being able to reach them. One can only wait until the other person is ready, but this may never happen. It might boil down to identity trap on my behalf and different priorities and no willingness to pay the price on their end.
Another undesireable side-effect of helping people by providing answers is when you don't have an answer, then they're just as miffed as when you offer answers they're not looking for!

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Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Sep 03, 2017 3:03 pm

It’s been a while since I last posted. For some reason, my introvert tendencies took over and I went back to the lurker mode. Well, time to change it.

Since the last update:
• I’m still in the same job making the same money
• My wife went back to full-time employment, she likes the place she works in and although starting salary is low, she has prospects to move to more demanding and better-paid position in the future
• We are still renting the same flat, however, we are now actively looking for a place to buy with a goal to both walk to work
• Our expenses went up and we’re now spending £677 per person per month on average. This is well above our ERE target and needs to go down
• I reached £60k in savings. This is 7.4 years of current expenses or 12 years of ERE level expenses
• On the health front, things are going well. Our WFPB diet serves us well and we are at the point of fine tuning the smallest details
• Socially we didn’t meet any new interesting people and since most of our friends now have little kids, we find ourselves spending most weekends alone. This is not ideal but I’d rather spend time reading than with some random new people that add nothing to my life. Still, would be nice to have some more friends

Health

Over the last few months, my main focus was on developing good health habits. Currently, I track and rate my progress in the following 4 categories:

1) Eat the right things
2) Avoid unhealthy foods
3) Exercise
4) Sleep Well

I define 1) as eating Whole Foods Plant Based diet and every day scoring at least 22 out of possible 24 points on Daily Dozen app. Also, since I find it very difficult to eat 3 portions of beans every day, I swapped one for an extra portion of whole grains.

I define 2) as avoiding animal products and processed foods as much as possible. Generally, we only eat few kinds of processed foods: canned beans, vegan kinds of milk, tofu, small amounts of brown sugar, trace amounts of salt. The only exception I allow is to add some brown sugar to coffee.

I define 3) as a minimum of 100 push-ups or kettlebell swings a day (most days I do 200-300). I also have a goal of walking at least 10k steps a day on average.

I define 4) as a minimum of 6.5 hours of sleep the night before.

For each category where I achieve my daily goal, I score 1 point (for a possible total of 4 points a day). My goal for a month is to score 90% according to these criteria (so 108 or more out of possible 120 points in September) and walk at least 300k steps.

Flat

We want to buy a flat in the next few months as currently, we spend £6900 a year on rent while also living quite far away from our jobs. As we both work in the city centre, we want to buy a flat within walking distance from both our jobs (ideally less than 30min walk each way). We hope to save both time and money by doing this, as the monthly mortgage payment should be substantially less than what we pay now and still less accounting for maintenance, home insurance etc. We’d also save on my wife’s bus pass. We each also spend over 1h40m a day getting to and back from work. Cutting this in half would save us about 350 hours a year. So, there are some good reasons to buy and with the property market in our city picking up despite Brexit, and interest rates possibly going up soon, this seems like a good time to buy.

Currently renting Owning
£575 rent £300 mortgage payment
£45 wife's bus pass £50 factor fees and home insurance
66 hours commuting £80 maintenance (based on 1% of property value per year)
40 hours or less commuting

Monthly savings of £190 and 26 hours assuming all other things being equal (they never are). Obviously, it's way more complicated than that, but buying a cheap place close to work should generally work in our favor.

This is easier said than done though. We are looking for a number of months now, and only made an offer for 1 flat so far (we didn’t get it as someone offered more). We have quite strict requirements (i.e. no ground floor, not on the main road, walking distance to Lidl/Aldi and both our jobs, not a high crime area). To make things worse, the winter is coming and the flat we currently rent is a bad place to be in during winter (there’s mold on some walls during cold and wet months; it has many large windows, which is great during summer, but not so much during winter as it’s hard to heat it up). There are some areas near the city centre which are too expensive for us, and others which are bad neighborhoods where we don’t want to live. So, the options are limited and the time is running. However, it’s also very important not to make a rash move and regret later what is likely to be our biggest financial decision yet.

Work

I’m trying to get a better job within my company. So far with no success. I will give it probably another 6 months and once we have a mortgage in place, will start looking elsewhere. Currently feeling very comfortable in my current role. People are nice, there’s no pressure to deliver and generally slow pace. So, a lot of advantages if someone wants to just coast to ERE with the minimum effort. However, with my wage being as it is, the progress in savings is very slow.

Reading

I have so far failed to implement a habit of reading consistently. I was an avid reader when in my teens/early twenties, but over the last several years I mainly read online (blogs/forums). But I want to have books back in my life. This is an area where small steps might work better for me. I, therefore, set a goal of reading at least 15 minutes a day, every day. This should be perfectly manageable.

Learning

I want to improve my thinking by learning more mental models and practicing them in my decision making. I wonder how much time should I spend on each one – a week? A month? I definitely want to go deeper than Wikipedia entry (possibly reading a book and/or several articles about each one). In Sep I’ll try to learn 2 new mental models and will adjust from Oct depending on how much time this takes.

Money

Our spending crept up a bit. It’s still not horrible, at least compared to the average consumer, however, we want to get this down. Current 6 months average is £677 a month each. Rent and bill are about £415 each so we’re really only spending ~£260 per person per month on food and everything else. This is not a time though to pat ourselves on the back, so the goal for Sep is to reduce this below £600 each.

Mood

As much as I like to think of myself as a rational being able to control my emotions, this is sometimes extremely difficult. I have generally stable mood and happiness level (probably something around 6 out of 10 for 99% of the time). However, every few months or so, I find myself doubting everything in my life and resignation taking over. It’s a depression-like state of mind, which usually lasts a few days, after which everything goes back to normal and I go back to working on my goals as if nothing happened. It’s always a difficult time for my wife, who’s trying to get me back on track. Rational arguments don’t seem to work on me in those times. I don’t know if this is depression or not, but I’m always happy when this goes away. It feels like falling from rationality/reason level of consciousness to that of doubt/apathy.

Goals for September:

Health Score 90% in the following categories:
1) Eat the right things
2) Avoid unhealthy foods
3) Exercise
4) Sleep well
And walk at least 300k steps
Reading Read a book for 15 minutes every day
Learning Learn comprehensively 2 new mental models
Money Reduce expenses to below £600 per person

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Bankai
Posts: 262
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Thu Sep 07, 2017 10:03 am

Just few days after writing here that I’m unsuccessful at getting a better job within my company, I actually got a job I applied for earlier on. My current role is an admin role and the new one is analytical. There most likely won’t be an immediate pay rise, however there’s the potential, unlike in my current role, to possibly increase my salary substantially in a couple of years. Most importantly though, the new job sounds really interesting, there’ll be a lot to learn (including some programming which I don’t have any experience in) and this alone makes it worth imo. I was looking for a new challenge for a while as I’m the kind of person that needs this constantly, and this came just at the right time.

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Bankai
Posts: 262
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Sun Sep 24, 2017 10:14 am

In June, we did our first successful fast (not counting daily intermittent fasting). We wanted to go for 3 days, however, my wife had some weird side effects (lost feeling in her fingers), so she stopped after 47 hours. I stopped after 60 hours, however, I felt so good that I could go on for longer. Here are my initial thoughts as written down during the fast:

- generally feeling great, 9.5 on the scale 1-10.
- on the first night, falling asleep took me a bit longer than usual (around 15 minutes).
- the second half of day 2 - grumbling stomach
- no headaches or feeling sick or weak (had this on my first, failed attempt, when I only lasted until the noon of day 2).
- feeling light and clear minded
- you pay way more attention to what and how much people eat in movies.
- didn't feel like doing anything ambitious; on the other hand, passive entertainment, such as watching movies, was nice.
- less negative emotions. Noticed much less frustration in some situations which normally irritate me.
- we only drank tea during the fast.
- not feeling sleepy at all during the day.

Overall, this was a great experience and we plan on doing it on a regular basis. Currently, we are considering 72h fast once per quarter, or shorter one every month.

Jason
Posts: 1470
Joined: Mon Jan 30, 2017 8:37 am

Re: Bankai's Journal - ERE mode:hard

Post by Jason » Sun Sep 24, 2017 4:13 pm

I have an associate that regularly fasts and swears by it. He also has a predilection to date girls that are Z-list celebrities, like they sell home made beauty supplies on home shopping network or some bullshit like that. I think its because his father died when he was young. Supposedly he stepped off the curb and got flattened by a garbage truck. Who knows.

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Bankai
Posts: 262
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Thu Oct 19, 2017 4:29 pm

September update.

Let’s start with evaluating the progress on last month’s goals.

Health – Score 90% compliance in the following categories:

1) Eat the right things 25/30
2) Avoid unhealthy foods 25/30
3) Exercise 28/30
4) Sleep well 29/30
Total 107/120 (89%)
5) Walk at least 300k steps 302k

Overall, very strong month in the health department. I missed exercising only 2 days this month, and only missed a minimum amount of sleep once. Unhealthy foods happened when people at work were bringing sweets, cakes etc. for my last few days at work. The few days I missed ‘Eat the right things’, I was very close to my goal of 22 out of 24 ‘good foods’ for the day. However, sleeping well seems to be the most important part for me (or, as James Clear would put it, it’s my keystone habit). The one time I didn’t get even my bare minimum of sleep, I had a terrible day and missed all the other metrics as well. Overall, although a whisker below my 90% compliance target, I give myself a pass.

Reading – read a book for a minimum of 15 minutes every day:

9/30 (30%)

Certainly, below expectations. However still made progress here compared to few previous months. Nevertheless, there’s a long way to making reading a habit. The current approach of getting the most difficult and ambitious book I could find and starting to read just before going to bed didn’t work. I’m currently testing new tactics of reading sci-fi for pleasure and so far, it looks promising.

Learning – learn 2 new mental models:

I practiced inversion in multiple hypothetical scenarios and read about few other mental models. Quite happy with my progress here, I rate this a pass.

Money – reduce expenses to below £600 per person.

Fail. Spending was £696 each. Although regular expenses weren’t too bad, some one-offs (new jacket, new boots) took us over the £600 goal. I have no hope of reaching this target in October either, as we went on holiday for a week and spent some money on doctor and dentist. I therefore don’t set a spending goal for October, and instead will just keep doing the usual thing, which is buying groceries at Lidl/Aldi and thinking long and hard about spending money on anything else.

Goals for October:


Health – Score 90% compliance in the following categories:

1) Eat the right things
2) Avoid unhealthy foods
3) Exercise
4) Sleep well
And walk at least 300k steps

Reading – Read a book for 15 minutes every day

Learning – Learn 2 new mental models

Money – no goal this month (which doesn’t mean I intend to spend like there’s no tomorrow)

Other updates:

Flat

We made an offer for another flat, this one was 2 bedrooms within 30 minutes’ walk from both our jobs. Although we offered a decent premium over asking price, we weren’t successful. We are still looking, however this time of the year there aren’t many new flats being put on the market in our city, and most of what’s available doesn’t meet our criteria. It’s a pain to be paying so much in rent every month.

Work

Started a new job earlier on this month. Got small pay rise which I didn’t expect. So far, this new job seems like something I will enjoy a lot. Will report more in the next update as I’m still learning and I’ve not done any actual work yet.

Mood

Since the last update, I’m in a good place mentally. My mood is stable and I’ve not had any instances of being depressed, which is especially important considering I just started a new job. I hope to keep it this way. What helps is practicing being ‘here and now’. This is not very difficult for me as I spend very little time in the past anyway, and not a lot in the future either. I also practice mobilizing myself to pay full attention to whatever is happening, whenever I find my mind starts to wander away.

Money:

Food/household/alcohol £215.93
commute £37.6
gifts £49.27
cash £20
bills £224.79
clothes £242.69
stuff £7.65
eating out £19
rent £575

TOTAL £1391.93
per person £696

Average spending for the last 6 months is the highest in 3 years, at £714 per person per month. With this ridiculous level of expenses, required ERE stash is around £214k. However, in the last 6 months, we had quite a few expenses which should not happen again for some time: good quality jacket and boots, some optional medical expenses, 2 holidays and some gifts for family. Also, buying flat should reduce our housing expenses as the monthly mortgage payment is likely to be substantially below what we currently pay in rent. Commute spending will disappear. Overall, considering these, a stash of around 150k might be sufficient.

Current NW: £61500.

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fiby41
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Joined: Tue Jan 13, 2015 8:09 am

Re: Bankai's Journal - ERE mode:hard

Post by fiby41 » Tue Oct 24, 2017 5:50 am

Flat
Also, buying flat should reduce our housing expenses as the monthly mortgage payment is likely to be substantially below what we currently pay in rent
You might be already aware of it, but I feel compelled to mention that you can use the net asset value NAV equation that's available in the blog/book/net to know if the price is right. It may help you decide weather to buy or rent.

Its similar to your annual rent times number of years you intend to live in it (full depreciation if you are not inclined on reselling it) and bidding under this price, with adjustments if you're going to get a loan and what's the interest rate.
What helps is practicing being ‘here and now’.
"Now is the only reality. Everything else is either memory or imagination."
"Yesterday is HISTORY,
tomorrow is a MYSTERY,
but today is a GIFT.
That is why it is called the PRESENT.”

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Bankai
Posts: 262
Joined: Fri Jul 25, 2014 5:28 am

Re: Bankai's Journal - ERE mode:hard

Post by Bankai » Thu Oct 26, 2017 5:55 pm

@fiby41:

Yes, I'm familiar with the equation. For my purposes, I'm using very simple cash flow calculation:

Image

I ignored the opportunity cost of capital required for the deposit, potential time savings on commuting and leverage factor re potential increase in value. However, all these are also pointing towards buying:

1) Currently, real return on savings here is negative, with dividends or P2P this might be 1-2% real return, which for 20k deposit would be 200-400 a year, nowhere close to 2400 a year saved when owning.

2)Time saved would be 0,5 - 1 hour a day for each of us, depending on the location we choose.

3)Prices are expected to go up as the city is growing in population, GDP and has several universities.

On the other hand, you have the 'hassle' factor when owning. Also, these figures assume 2 bed bought vs. 1 bed currently rented.

Now, this calculation is not ideal and I probably missed some factors, however, it should still give a fairly accurate view of the situation.

*We are currently paying 6900 a year renting 1 bed 3 miles from the city centre / our jobs. Buying 2 beds 1.5 miles from the city centre would cost 90-110k.
**Assumed 0.5% a year for maintenance.
***Since starting the new job, I'm commuting by bus. My wife is also commuting.

wolf
Posts: 684
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: Bankai's Journal - ERE mode:hard

Post by wolf » Sat Nov 04, 2017 1:24 am

Hi Bankai. You have low monthly costs per person. Is that already a sign, that you have implemented many ERE principles, behaviours, habits, ...?
Regarding "renting vs. buying": Do you expect do live in that city longer, e.g. the next few years? A huge plus could be higher real estate prices in the future. That means that if you buy and sell it some day you will have a surplus. In Germany the real estate prices in "university"-cities have exploded.

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