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Our journey to Financial Independence

Tag: Financial Thinking

Around the world

Should I live abroad? To Leave or Not To Leave

By

On January 7, 2021

In Financial Minimalism, Financial Thinking, Personal Growth

Should you live abroad?

How difficult could it be to go abroad?

People, do it all the time, don’t they?

I was confident when I decided to leave Switzerland. Living abroad was going to be a walk in the park. Although, I had always worked and lived by Lake Geneva. English and traveling had been a big part of my upbringing. On the other hand, it never felt like quite enough – I wasn’t fulfilled.

All my friends had gone abroad to study, learn a language, or on internships. 6 months here, 6 months there. Surprisingly, most of them have decided to drop their bags in Switzerland — it was my turn to go out and explore. Yes moving abroad meant turning my back on the infamous “Swiss Salaries” but I needed to do it.

Sometimes decisions have to be made despite FI/RE as mental wellbeing is paramount.

Just like every 22 years old, I was convinced I had everything under control! Once I found a great job opportunity in London, it was very straightforward, get there: find a flat and go to work. Friends, finances, and all the rest will just fall in place.

They will right?

Well… it wasn’t quite that easy. Let me share what I learned, hopefully, it’ll make your life easier.

Living abroad can feel extraterrestrial

Sounds obvious, doesn’t it. Of course, I expected a few things to differ. From the currency to the language or the cost of living. Somehow differences are hidden everywhere. Even within Europe, social expectations, work culture, and mindset are drastically different.

People were bonding in different ways. Where back home we tend to be straight to the point— in the UK people would take offense. Where working overtime was customary (and paid), it was now frowned upon or hidden in plain sight. It isn’t bad far from it. It just took some time to get accustomed. None of these things were deal breakers, I’m more than happy to be abroad. But when preparing or thinking about a move abroad take the time to research smaller things. It won’t always be plug and play. The learning curve can be steep at times but golly gee is it worth it.

For example, if you are looking to move abroad and are from the USA The Frugal Expat shares amazing insights on wealth from the other side of the world.

Living abroad an astronaut on the moon

Banks, credit score, and more...

Oh, how naive I was…

Why did I expect everywhere to function like the Swiss system? I have no idea… most likely I was arrogant. Take it from me at least research how to open a bank account. Sounds straight forward right? Well, it wasn’t… I had to go to at least 10 banks before I could start the process. They didn’t understand how time-sensitive it was. I mean how was I supposed to receive my salary, pay rent, get a phone?

Once again this could have been avoided with a bit of research. Had I known which documents were needed for what — it might have been easier. I’d recommend researching the following:

  1. How to open a bank account?
  2. How to get a phone plan?
  3. Public transportation or a car?
  4. How does healthcare work?
  5. Do you need to change your driving license?

The list goes on. But had I figured out the 5 above, my driving license wouldn’t have expired…

Look for financial opportunities for example in the UK you can open an ISA (a tax-free account) and opening a brokerage account tax-free is simple! Whenever you are making a move abroad take the time to look for opportunities. If you are in the UK learn how to start investing with Index Funds here. If you are in Switzerland check-out this article 2 Step Guide To Achieve $1,000,000 In Your Voluntary Retirement Account — Swiss Edition by Fast Track.

There are many more to find and countries all have their hidden tricks. Luckily you can find Personal Finance bloggers all over!

Banks abroad piggy bank and coins

Building Trust Abroad

Leaving your support system behind for a city — you’d traveled to once is tricky. I expected building a new support system would be easy. Somehow knowing which supermarket to go to was already a challenge.

The problem, when you move abroad for work and not for studies, is people are at different stages of life. Some have a family, some have a favorite pub, or group, finally, the other new guys are also completely lost. Although, I quickly found circles to join building trust and true friendship took time.

Thankfully, I stuck through it. I got out of my comfort zone and got to know these lovely people. Since then I have formed a tight-knit group of friends and met a wonderful young lady. The rough start was definitely worth it. I’m now blessed to have true friends both in Switzerland and in London.

“No distance of place or lapse of time can lessen the friendship of those who are thoroughly persuaded of each other’s worth.” — Robert Southey

Homesickness is sneaky

6 months… they flew by — it hit all of a sudden. What in the world was happening? Everything had felt normal until that moment. This intense feeling of doubt and dread suddenly dawned upon me.

I might never live there again.

A crazy thought. The 1-way flight ticket should have made that obvious. I remember the Sunday 17th of February 2019 like yesterday. It suddenly all became real. I picked up the phone and called home. Hearing my mother’s voice was all I needed. I guess there is just something about rainy Sundays in Watford that makes you nostalgic.

Instead of letting the feeling control me — I let it flow. 

I dug in what did it mean?

The sadness was not that I left, it was the realization I was creating a new home in the UK. A new identity, even though I grew up in Switzerland — I can exist elsewhere. Every time, I feel it since then, I take time to reflect and I look at my partner — it’s worth it. No doubt here! I’m happy, but I would lie if I said I didn’t miss the mountains.

“Maybe you had to leave in order to really miss a place; maybe you had to travel to figure out how beloved your starting point was.” — Jodi Picoult

The best decision of my life

Despite all of this, leaving home was the best decision of my life. Of course, staying would’ve been easier. On the other hand, going home now has a completely different flavor. I enjoy every moment with my family and friends tenfold. I have also created a support system and met the most wonderful person here.

The beauty of leaving is not knowing when I’ll return. The open ending means my life is up to me. I get to choose my direction, my purpose, and my passions. Although traveling for vacation feels liberating, nothing compares to packing your bags and leaving. A 1-way plane ticket feels and is entirely different. How could I regret being truly alive?

If you are contemplating making this decision. I couldn’t recommend it more. Get out of your comfort zone, travel, live elsewhere. You’ll never regret it.

What was your big decision financial or travel-related? What makes you feel alive?

pins on a map

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2020 in the rear mirror

2020 Retrospective: 10 Important Lessons

By

On January 2, 2021

In Financial Minimalism, Financial Thinking, Saving Money

The time has come to say goodby to this awful year. Finishing the year with a retrospective is a great way to appreciate our growth. Yet at the same time… Saying the past year was tough is an understatement.

Like many, I was determined not to let 2020 go to waste. It would be easy to wallow and think that we wasted 365 days. Inaction is always the easy route. This year especially required creativity to grow and improve. 

On the other hand, despite all its flaws 2020 was an amazing learning opportunity from self-improvement to personal finance. Never has my life changed this much. This article is an opportunity for introspection and a window into my mind.

Embrace uncertainty

If I had to take 1 thing away it uncertainty is unavoidable. I always thought I could design my future. 2020 showed me you must make the most of the cards you are given. 

It was liberating as it taught me to be more laidback. I take things as they come and enjoy the moment.

Better late than never

Before 2020 my investment portfolio was all of £200. I had tiptoed into using a roboinvestor but it had never really stuck as a habit. That was until I discovered the power of compounding interest. 

When I realized that £500 per month for 20 years would be worth £312k with an interest gain of £173.7k. I became impatient and had to start that instant. If you want to get into investing check out my article on “Investing with Vanguard.”

It would’ve been easier to think why not wait an extra year? As I had already lost the first 2 years of my career. On the other hand, I could start today and reap bigger rewards. 

It was a no brainer

coins in front of a clock money is time

Just start

As I grew up, I had a flawed idea – I believed in perfect timing. There was no point starting something if all the stars didn’t align. If I wanted to work out my body needed to be in top shape. 

Yet as I spent most of the year on furlough. I realized that appetite comes as we eat. The first minutes of exercise, writing, or cooking might feel dreadful. But as it goes on the result feels more rewarding and empowering. 

All I need to do is get going.

Define yourself

I grew up in a family of very hard-workers. Coupled with the societal belief that your work defines your identity. As I was sent home for the foreseeable future in March – I felt directionless. 

My goals and purpose had been solidly tied to my job and before that to my studies. For the first time, I had no given path. It left me with an empty feeling. Until my partner helped me wake up and showed me life had more to give. 

As 2020 went by I rediscovered what mattered to me and how I would build myself. This lead to Cent by Cent and countless memories!

Remain true to your values

values Strong like an oak

My own mortality

I was always aware that I will die. Luckily, I’ve always been in good health. Never had the thought will this be my last breath crossed my mind before 2020. As I was struggling to breathe in March – the thought dawned on me. 

“I might not wake up tomorrow”

The hospitals were full… people were dying and the UK was in crisis. I was laying there wondering how I would draw air in. There were no regrets to be had but I was lost. The situation only truly became apparent as I looked into my partner’s eyes. She was sharing my pain. 

I have lived a life that leaves me with no regrets. Every decision has led me to where I am today and for that I’m thankful. Yet one thought kept ringing in my mind.

It’s too early I still have so much to do, see, and create.

Creativity is within us all

My talent for the arts is close to none. I can’t draw or paint and you most definitely do not want to hear me sing. On the other hand, I’ve always been drawn to art – the need to create was buried within. 

The game-changer was writing. As I started publishing on Medium I found my voice and strived to help people on their Personal Finance Journey. Do my early articles make me cringe? Undoubtedly but they are a sign of progress.

Unlimited

It was easy to think that I wasn’t:

  • Talented enough
  • Creative enough
  • Funny enough

2020 is the year I realized. I create my own limitations. It’s up to me to set my limits and break them. There is no limit to my personal growth. The only way I stop growing is when I stop learning. 

A lifelong learner is unstoppable.

Agility is key

This year was a nightmare for all control freaks. Everything went out the window. Rules society relied on for decades were gone. Some reacted by closing themselves up and throwing up the white flag. Others used 2020 as a catalyst and put down the fight of their lives. 

A situation although immovable is what you make of it. 2020 could have been a lost year but I decided to make it mine. 

Was it perfect?

Far from it. 

But I adapted to this ever-changing world and made the most of it. My friend the Financial Imagineer shared this bit of wisdom: 

“When the wind of change blows, some build walls, some build windmills.”

An old Chinese saying

money in a tissue box

Money isn’t important

Sorry for misleading you. It is. But not as much as we think. Money is a tool. It allows us to purchase freedom and peace of mind. On the other hand, money isn’t the key to happiness. 

Have you ever tried hugging a stack of banknotes?

It’s cold and probably feels very lonely. Wealth is important as it allows you to focus on your true values. Falling in love with money is greed personified and a slippery slope to loneliness.

I explore this more in-depth in my article “Financial Goals: Why I Was Wrong”.

Never Alone

The grind is often sold as a 1 player game. Work as hard as you can neglect your relationships and build your wealth. On the other hand, you’ll reap the rewards down the road they say.

I have a simple question what is the point?

Throughout this year I was lucky enough to move in with my Significant Other, spend time with family and friends. After all, I found a community of like-minded people online that I’m excited to grow with. 

2020 might’ve been the year we were all a part but for me, it shone a bright light on my relationships. Don’t give up building meaningful relationships in pursuit of wealth. Life isn’t made to be lived in isolation.

If unfortunately, you had to spend the Holidays in isolation or alone. Please know that you are loved and valued whoever you are.

2020 retrospective

This year was full of surprises good or bad. But looking back, never have I grown and learned this much. Although, it came with its load of troubles 2020 counted double in many cases. 

The end of the year doesn’t mean the end of the pandemic, unfortunately. Yet it’s a great time to reflect and learn. What have you drawn from 2020 and how will you apply it in the future?

fireworks on 2021

5 Easy Personal Finance New Year’s Resolutions for 2021

By

On December 23, 2020

In Financial Thinking, Saving Money

New Year’s Resolutions or Financial Goals

Every year the same dance begins. We look back onto the last 365 days and realize we haven’t turned our life around. What’s the next logical step you might ask?

It’s easy we engage in the yearly ritual of New Year’s Resolutions. 2021 is a blank slate that we are determined to transform into a new chapter. From new diets, learning a new language, or more exercise everything will change. Instead of seeking a gradual change, we decide to make drastic changes.

Surprise, surprise…

We never stick to them. How many times have I told myself: “Next year I will exercise every day” more than I would care to admit. Unfortunately, I cannot say I’ve stuck to it so far.

So why not try a new type of New Year’s Resolutions? Let’s set financial goals and build the base of new healthy habits. Whether you decide to try out all of my tips or only to set 1 goal is up to you. Remember small changes are always preferable to no changes.

1. Build an Emergency Fund

If you don’t have one yet this should be at the top of your list. If 2020 has taught me anything it’s that life is highly unpredictable. Building an emergency fund is a great way to cover your back. 

You are ready to face any curveball directed at you. Take a look at your essential monthly outgoings from food, rent, and energy. Then keep in a high-yield saving account the equivalent of 3 to 6 months of these expenses.

Learn more about building your emergency fund for 2021 with my article “How To Build An Emergency Fund”.

2. Invest in being debt-free

Consumer debt is a plague in today’s society. The average Personal Debt in the US was $16,529 in 2018. You might think if everyone has it why do I need to pay it back? Isn’t it just part of life? I’ll make more money by continuously investing. 

If you are an Index Fund Investor and invest in an S&P 500 tracking fund such as VTI or VUSA. You can expect an annual return of around 7% although it could very well fall. On the other hand, Credit Cards charge an APR of 16+%. 

When you invest you are hoping for a return nothing is guaranteed. All you have to do to get an instant return on investment of 15+% is repay your debt. It’s the first step towards Financial Independence.

If you can’t afford to pay the balance in full, work towards paying more than the minimum deposit. Future you will thank you!

grow your investments graphs going up

3. Plant the first seeds

2021 is the year to invest your first $1. It might sound scary, risky, or even pointless to invest so little. Your mind is more at ease with the cash in a savings account. There is 1 simple problem with that…

High-yield saving accounts earn around 0.6% at most in 2020. Whereas inflation is on average at 1.2% in the US. You effectively lose 60 cents by 100 dollars you keep in the bank. 

You can start investing easily today with Vanguard for example that offers a wide array of index funds. If you were to invest $1 per day into an S&P500 index fund you would have 16,949. The power of compounding interest is mind-boggling.

If you want to learn more about investing with Vanguard and Index Fund investing discover my article “How To Start Investing With Vanguard”. If you want a no-fee and easily accessible trading, I use “Trading 212”. Give it a try with as little as $1 and if you use my link you will get a free share valued up to $100.

Change your life  by getting a headstart on your New Year’s Resolutions by starting today.

4. Learn Something New

If you are like me you need to know what you are getting into. It might be the Swiss in me but I like planning ahead. On my side, I use 2 tools books and financial podcasts. My favorite is adding a book to my library as I can always come back to it and grow my knowledge. 

If I had to read 1 book on the subject it would be “Your Money or Your Life” by Vicki Robin. If you are one of my regular readers you probably can’t stand me talking about this book anymore. But it truly changed the way I view money and my relationship to finances. I won’t spoil any more of it but it will change your life.

As for podcasts, there are thousands out there, I was lucky enough to be on an episode of “The Art of Money Saving” that you can find here. Otherwise, I strongly recommend fasttrack.life as Yasi Zhang regularly receives high-profile guests that breakdown the essentials of Personal Finance.

a desk with increasing returns

5. Just Talk

This New Year’s Resolution is simultaneously the easiest and hardest. The best way to grow your wealth and hopefully achieve financial independence is by talking about it. 

That’s it?

Well no… but it’s a great start. Sharing your experiences and asking experts about their’s will lead to a higher understanding. You liberate yourself of stigma and make financial decisions more rational. Yet one of my favorite quotes comes to mind:

“Money is the last taboo. People will talk about their sex lives before they discuss their finances.” Marvin H. McIntyre

Money is kept in a sacrosanct position. Society and big firms will have you believe that it’s a private matter. Yet, knowledge is power. So start talking! 

What will yours be?

Now it’s time to decide what will you do? Don’t pick too many choose 1 and get started. It doesn’t need to be suggested here. I personally have the goal to have £10,000 invested by the end of 2021.

To achieve it I will need to increase my monthly contributions as soon as I get a raise or am able to monetize Cent by Cent. I also aim to make my blog a secondary source of income for 2021 and further.

What will you be doing to better your financial future?

Money Talk

Money Taboos Cost You A Fortune, Time To Start Talking

By

On December 7, 2020

In Financial Minimalism, Financial Thinking

“Money makes the world go round.”

“Don’t share your income.”

“Don’t talk about your money goals.”

“Spending money will make you happy.”

Money is part of my life whether I like it or not. Yet, I’m not supposed to talk about it. I need to be smart, invest, save, spend, etc. But by default, seeking advice is tough as people get cold feet when talking about this hidden divinity that is cash.

Just like everyone else I dream of Financial Independence. Imagine being able to work for pleasure not thinking about having to make ends meet. Money Taboos are counterproductive. 

How am I expected to reach freedom, if I can’t be open?

I was lucky, my family always talked freely about finances. Whether it from downturns to investments. It made money mundane instead of some kind of deity. We need it to live — but it’s nothing more than a tool. Vicki Robinson’s “Your Money or Your Life”, completely transformed my understanding of money.

What relationship do I want with it? 

Should it govern my life? 

How much do I need?

That last question hit me hard. When am I going to have enough? I’m not a dragon… No need to hoard as much as I can. What would be the point? Her book helped me realize that juggling multiple side-hustles, a normal job — isn’t making a living. We are dying at work. When do I get the time to live?

Money Clock

No More Shame - No More Taboo

How many times have you bought something on a whim?

How many times did you look at the object shamefully?

Yeah me too… 

The number of times I spent money on a “must-have”  is unmeasurable. When I started questioning why I didn’t share my expenses more. I realized it was because of this inherent shame. 

What are they going to think about me? 

Who spends that much on tech?

It was much easier to keep it for myself. At the end of the day it’s none of their business, is it?

That’s that I’m not sharing. But what if I did? I couldn’t shake the thought off. Some day I took the step. I started small. Talking about my overall rent with some colleagues. My gosh… it’s like a weight was lifted. By listening to their tips, tricks, and struggles. I felt like I was seeing light. Then the dreaded “Why?” came. Why do I spend this amount? Why not more or less?

This epiphany made me realize that not only am I not alone. But we are all going through this existential crisis. 

Opening up about my expenses allows me to understand why I’m spending. The need for a strict budget has passed me over. I must understand what my values are. As long as my spending reflects them — I’m doing well. No point in being ashamed either. Ridding myself of Money Taboos made me realize: What is spent is spent. Discover more about this thought process with my article Why I Was Wrong About My Financial Goals.

Monkey Money Taboos

What Am I Worth?

An intense yet important question. We are encouraged by society to keep our income to ourselves. It’s simply bad etiquette to discuss salary. Truly the most engrained of Money Taboos. But how am I supposed to know what I deserve if I can’t talk about it?

Another head-scratcher. The answer was easier. I didn’t want to sell myself short. How are the different roles compensated? Opening the discussion with my colleagues, friends, and family was a mixed bag. It was easier with my generation. We have similar roles. We were all in the same ballpark. On the other hand, it meant we had less to learn from each other.

Although starting a conversation with older generations was tough. It was beneficial when the shell started to crack. Not only could I learn about future potential earnings within my job. I learned a lot about multiple income streams. Whether it was rental income, dividends, or general freelancing.

This topic is paramount when it comes to blogging and freelancing. As we all adventure on our journey to creativity we are blind. The community and people being open about their revenue online is what gives us referral points. 

By opening up the conversation around income. I discovered options for future revenue streams. It set expectations for my financial future and a benchmark for my blogging. But most importantly, I understood my worth isn’t tied to my income.

Investments around the world

Let's Get Rid Of Money Taboos Together

Understanding money is a tough nut to crack. You can’t do it alone, yet sharing is frowned upon. By opening up about my finances – I liberated myself. I realized that I’m not alone. Sharing both my fears and my successes means they become real. The only way to deal with something is by acknowledging it.

Not only has it empowered me it has helped people around me. 

Having money talks is beneficial. It made me understand that my income doesn’t represent my worth. It is a building block I use to reach fulfillment.

I would love to hear from you. What helped you break the Money Taboo? How to you go around Money Talks?

money in a tissue box

7 Deadly Personal Finance Sins To Avoid In 2021

By

On December 2, 2020

In Financial Minimalism, Financial Thinking, Smart Spending

How do Personal Finance Sins impact you?

Whether you are religious or an atheist – you commit these Personal Finance sins. They have led to bad financial habits. You might not notice it but they wreak havoc over your future. 

Personal finance and FI/RE are about the path to independence which requires discipline and focus. Yet, along the path, traps are often disguised as great opportunities. Which all lead to Personal Finance Hell. They range from debt, an empty pension fund to overwhelming clutter. 

Any of these sound familiar?

We often don’t realize the situation we are in before we take a hard look in the mirror. For me, the realization came during a move… As I was clearing my room the number of unnecessary clothes, gadgets, and other “must-haves” appalled me. I had accumulated so many pointless items. 

As the saying goes “Hindsight is 2020”. It hit the nail on the head, all these purchases were made on a whim, to keep with society, or to have the latest tech. None of them were thought out or aligned with who I am. It felt like I had gone on a gluttonous shopping spree that left me with nothing but dust and an empty wallet.

Key Takeaways

  • Take your time before any financial decision at minimum 24 hours
  • Never make big decisions when you are emotional
  • If it sounds too good to be true it is
  • Pay it forward, match every dollar spent on wants with a dollar invested
  • Be humble, you’ll never know everything about finance (or anything else for that matter)

As I moved forward I started noticing different types of impulses and mistakes. It led me to re-categorize them as the 7 deadly personal finance sins:

1. Lust - The Impulsive Buyer

Have you seen the new iPhone?

How can you live without it? The only path to happiness is to own it now. 

How couldn’t you?.. everyone else bought it. 

Even your broke friend has it. 

It can’t hurt it’s just another $34 per month or maybe just $900 today. Not only do you need it but you need it now. Before, the hype has passed.

Lust makes you crave unnecessary things just for imaginary pleasure. Social Media and events, such as Black Friday, are tremendous enablers. They spam you with ads, reviews, and deals. You to fantasize about the amazing new features. 

Aaaah the “IT”, the purchase to rule them all, to satisfy all cravings. You just know you’ll be fulfilled once you have “IT”. For that reason, no point thinking much – let me enter my credit card.

The purchase has gone through – you own “IT”. The Amazon Delivery comes in the next day. My gosh is this what happiness feels like? You put the item in the cupboard – it can wait for now. 

The rush is gone it lasted all of 30 seconds. The fantasy was arguably the most enjoyable part of the adventure. Oh well, maybe the next iPhone will do the trick…

The first of the 7 Personal Finance Sins Lust is treacherous…

Tools against Lust

When your mind gets filled with dreams of a new marvel. Start a clock, give yourself 24 hours during which you don’t shop around for accessories, look up the stats, or research good deals. 

Take the time to discuss with someone you trust – explain why you must have it. Ask them about their opinion. How would they use it? Don’t try, to convince them instead of having a conversation.

If you still want it. Start researching for another day. How much does maintenance cost, how long does it last, and what’s the best deal. If you are approaching Black Friday or the summer sale be patient. You’ll be thankful to have saved 20+% on your purchase.

Shopping Lust

2. Gluttony - The Overflowing Wardrobe

I often feel gluttony creeping up when I go grocery shopping. I have a clear list of what I need. I have a distinct plan of which shops and where to go. 

Yet when I get to the shop it all goes through the window. The offers, sales, and yellow stickers draw me in. Another box of cereal of course. Obviously, the pack of 3 only cost $1.29. How could I not… there’re only 5 others in the cupboard.

The never-ending cycle of stockpiling. Suddenly I have an overflowing bag and a 30-minute walk home. 

If only it stopped here. As you go online to buy a new pair of running shoes you notice the nice looking shorts. You definitely could use more of those. Down the rabbit hole we go… 1 hour and $150 later you have bought 2 t-shirts, 1 shorts, and a football but you forgot your running shoes. It doesn’t matter the deals were so good. 

Now where to put them my wardrobe is full…Not only had you not bought these shoes would you’ve avoided clutter. But in 20 years these $150 invested in an ETF could be worth: $605.81. That small decision cost you over $450. Start your investment journey with Trading 212 (and get a free stock valued up to $100)

As discrete of a personal finance sin, gluttony is not to be underestimated.

Tools against Gluttony

Reverse engineer sales; do your research. My favorite habit to get in the right frame of mind is withdrawing the exact amount of cash I need for each trip and leaving my credit card behind. 

Ok… I add around $10 just in case but it means unless I find the deal of the century. I cannot give in to my gluttony and leave with exactly what I planned for. It might sound rigid but after a few times, I promise you will not think twice about shopping trips. 

Having built the habit, I no longer need the trick but my gosh am I grateful. So is my wardrobe…

3. Greed - The Vicious Circle

Greed is in the same vein as Lust. You can’t resist your appetite. It’s more than a fantasy you need it. You are willing to do anything for it. As a result, Greed is the greatest of the Personal Finance Sin. 

You are willing to sacrifice social ties, your credit score, or your emergency fund to get it. Greed is what sucks people into Multi-Level-Marketing (pyramid schemes). The promise of riches and freedom sound so good don’t they…

People that buy into these programs sacrifice their family ties, their dignity, and their financial prospects. Not only does the initial investment come at a high price. For even the smallest ROI  you must leech on your family. Down the line, you are left with an empty bank account and no social ties. 

Greed leads you to emptiness and hopelessness. The only thing holding you together is the object of your greed. Soon, that too fades away as you can no longer afford it…

Tools against Greed

The only tool against greed is patience. There are no get rich quick scheme you need to invest in today. There is no point in going into debt to buy a brand new car or to kick-start your MLM career. 

Take your time if you cannot afford it today don’t dive headfirst. As I explained in my article around financial goals understanding what you value will lower your greed.

Don’t forget to be humble and seek advice! It will lead you to review the objective impact of your decisions.

4. Sloth - The Lazy Text

From Takeaway to uneducated purchases… we all pay this tax once in a while. How often have you been sat on the couch thinking “I’m too lazy to cook: I’ll just get a pizza delivery.” Instead of spending ~$1 on your meal you’ve just spent $10.

We’re all culprits here and honestly once in a while fair enough. Indulge in a small pleasure. The trick is it quickly snowballs into a regular offense. Just like everything else… If it’s ok today it means I can do it again tomorrow. 

This leads to the $10 quickly transforming into $50 or more. Imagine that $50 a month… that would be worth $10,681.24 in 20 years. 

The Lazy Tax also strikes when purchasing new items. If you don’t take the time to shop sales or find deals with apps such as Honey (the US mostly) or Pouch (the UK only). This is a harder amount to put a number too. But if the purchase isn’t an emergency why buy it today?

Money Clock

Tools against Sloth

TAKE YOUR TIME. Personal Finance is all about the long game. If you aren’t in a rush shop around and wait for the next sale if you can. This not only lets you think twice but leads to you being ready for sales.

As far as takeaway goes, I’ve gotten into the habit of matching my spending with an investment. For each dollar I spend – I invest another. This has transformed takeaway into productive action. The easiest way to lower your food expenses is to meal prep and freeze your leftovers. You just need to fish them out when you feel lazy!

Sloth is the easiest of the Personal Finance Sins to get rid off all it takes is preparation!

Wrath - The Decision Maker

This one is going to be short. You make a lot of financial mistakes when emotional. A great example is the March 2020 market crash. Many rushed to selling and closing their positions expecting a bearish market for the year.

Yet the S&P 500, for example, increased more than 60% since then. With many other financial indexes reaching all-time highs. Whereas by selling and buying in once more. You pay the fees and spread twice. Without benefiting from Dollar Cost Averaging.

Tools against Wrath

This one is tricky… emotions are incredibly difficult to control.  I can tell you to stick it out. But if you’re in fight or flight mode you won’t remember. I’ve learned meditation and breath-work has helped me stay in control as my adrenaline rises. 

What are your tricks to handle wrath?

6. Envy - Lifestyle Inflation

Stop trying to “keep up with the Joneses”. Whether it is through credit cards or spending all our income on payday. We need to keep up appearances. What matters isn’t how our bank account and future looks but what our Instagram feed reflects. 

Social Media is consistently trying to sell you something. Whether it’s holidays on the other side of the world or a new car you need the likes. AT WHATEVER COST. Influencers in Russia have started renting studio space to make them look as they can afford a private jet…

We look forward to our next raise or bonus as it will allow us to have more. You need more right? You need that Tesla. Instead of seeing the potential of additional investments we see a new wardrobe. 

In the end, we are blinded by the likes and the clout. It’s all that matters. Whether the investment brings us value or not.

Tools against Envy

Take a break from social media. I’ve uninstalled Instagram for around 2 months now. My gosh have my purchasing impulses changed. No longer do I feel like I need all the latest tech. I’m happier to take time to discover what works for me and around me. 

I now invest in what I value instead of what others do. It has made a huge change in my life. 

Unsubscribe from brand newsletters. From Amazon to Converse they bombard you with offers and “1 time opportunities” opportunities. Worse they share the most popular discounted items. In an attempt to generate sales. As strong as we think we are, such spam unconsciously creates needs.

7. Pride - The Knowledgeable Ignorant

The biggest mistake you can make as a Personal Finance enthusiast is thinking you know it all. Because you go through blogs and watch a few videos you assume you know the market 

Remember that Monkeys have consistently outperformed fund managers. They generated higher returns for prospective clients. If you want to learn more about our Monkey Overlords I recommend this article.

By consistently taking more risks and assuming we know better we expose ourselves to great losses. I lack the knowledge to get involved with day trading and options. Therefore I avoid them entirely – they are akin to gambling.

It’s not to say that if you’re knowledgeable there is a lot of money to be made in that space!

grow your investments graphs going up

Tools against Pride

Be humble. It’s as simple as that. Accept that however figures you have in your accounts. There will always be someone more knowledgeable. If even Warren Buffet has been wrong in the past… How can we be certain of any decision? 

You’ll win some and you’ll lose some. Take risks appropriate to your knowledge, more importantly, ask for help.

Begone Personal Finance Sins

This article was long enough to warrant a short conclusion. Personal Finance sins are inevitable we all get caught up in them. Learn how to deal with them and every mishap will have a solution.  Never forget you must take your time!

Below are the Key Takeaways you found at the top of the article!

Key Takeaways

  • Take your time before any financial decision at minimum 24 hours
  • Never make big decisions when you are emotional
  • If it sounds too good to be true it is
  • Pay it forward, match every dollar spent on wants with a dollar invested
  • Be humble, you’ll never know everything about finance (or anything else for that matter)

What are your top tips when it comes to avoiding these 7 deadly sins? Are there any you would add?

Credit Cards in a pocket

Why Your Credit Card Can Be A Powerful Ally

By

On November 23, 2020

In Credit Cards, Financial Thinking, Smart Spending

DISCLAIMER

Before you read this article, if you are in any kind of Credit Card debt, stop here. I recommend you pay off debt before any investment

“Don’t use Credit Cards… they are a gateway to debt!”

How many times have I heard that sentence? Often from older generations, but also reputable sources such as Dave Ramsey.  Yet I’m here to tell you they aren’t all evil.

As long as you pay it in full every month your credit card is effectively a debit card with perks. Since moving to the UK, I have used my American Express credit card for almost everything. Whether I’m buying a flight, groceries, or paying for gas. 

Since then I’ve acquired 40,000 miles with British Airways, a cashback of 0.5% with my purchases, and had access to airport lounges on long trips. 

Have I succumbed to the marketing, maybe a little? On the other hand, throughout this article, we will explore the pros and cons of using your credit card every day. 

Pros and cons of a Credit Card

Of course, credit cards wouldn’t be such a controversial topic if they didn’t have downsides. I believe the cure to credit card debt is understanding how they function. They are not a “get out of jail” card. To quote Uncle Ben “With great power comes great responsibility”. 

Pros

Let’s start with why you should be using your credit card as much as possible within your means.

Most Credit Cards will offer rewards. Which typically come in 3 forms:

  • Points
  • Cashback
  • Preferential Rates

The credit card you pick will greatly depend on your lifestyle. I use both points and cashback. As AMEX allows me to collect miles for BA with the “Gold or BA Card” and earn 1% cashback on my purchases with my Everyday platinum card. Whilst also offering discounts with many brands!

When paying with a Credit Card you benefit from scam protection. If you contest a purchase they will reimburse your purchase. This is a great way to cover yourself when traveling or buying online as the Credit Refund will often be faster than that of the store. 

 In the form of travel insurance and a guarantee, your credit card acts as an extra safety net when traveling. When my friend’s wedding was canceled due to COVID-19 – AMEX’s travel insurance helped me with the refund process. It took my friend 6 months to get reimbursed I had the money within 2.

This one is straight forward a good history of full repayment will increase your credit score.  I have personally gone from 0 as a foreigner to almost 900.

I was able to get over 30,000 miles by referring friends to the American Express Gold card. I currently use the AMEX Everyday Platinum if you use my link you will get £10 credit the first time you spend £1. Thereafter you’ll get 5% cashback on every purchase up to £100 cashback earned. 

As you can see there are many benefits in kind for using a Credit Card. Additionally, it also makes it easy to track expenses and builds healthy habits. I have personally set mine to Payment in full and it keeps me covered as I never go over my threshold.

Credit Card or Cash?

Cons

You won’t catch me saying that everything is great with credit cards. Their companies would not exist if it were the case. To understand where the dark side comes from you must understand how they make their money. In this article, Peter Stephens goes in-depth about each stream of income. They earn money from

  1. Predatory Interest Rates
  2. Merchant fees
  3. Consumer Fees

This leads us to the 3 risks of Credit Cards.

It’s very easy to think credit cards are free money. Keep in mind you will need to pay back everything in full. I recommend setting up a limit on your Credit Card so you remain.

If you miss a payment you are quickly stuck in a vicious cycle. As interest rates are upwards of 15% you quickly end up unable to pay. To avoid crippling debt keep track of where you stand.

Withdrawing cash comes at a high cost with credit cards. In the case of AMEX, it is upwards of 2%. Spending money abroad might also incur additional charges.

 

If the temptation of free money is too high you should stay away from Credit Cards. To help you decide whether Credit Cards are for you, – keep reading as I share my experience.

What have I learnt using my Credit Card

As I said previously, I currently use the AMEX Everyday Platinum card. Previously, I owned the AMEX Gold but only for 1 year as it was free. My experience with American Express has been wonderful. I’ve had a few issues with COVID-19 and they were able to help me. No question asked. 

I have also been able to increase my Credit Score by more than 200 points. Which has allowed me to get approved for apartments faster and will surely help when I acquire real estate. My score was helped by paying my card off in full monthly. Additionally, I have accumulated £300 plus of value from British Airways Miles mostly through the referral program. 

On that note, if you decide to go for a credit card use a referral! You’ll get additional perks monetary or not. For example, if you use my link for the Platinum Everyday Card you will get £10 for free after your first purchase.

Share your experience with credit cards and how you use them in the comments! I would love to hear your tips & tricks and answer your questions.

I recommend checking out Graham Stephen’s video on the matter as it was very insightful at the start of my journey.

7 Steps To a Great Start With Personal Finance

By

On November 19, 2020

In Financial Minimalism, Financial Thinking, Personal Growth, Saving Money

Personal finance is just that. Personal. Yet there is a lot to learn from other people’s stories. It isn’t straightforward as a I learned when I graduated.

Everything changed the day I left University. I left Switzerland for the UK. A new country meant a new financial system. It also meant losing my financial security net.

“But Lionel, you are Swiss of course you can manage money”

My gosh, have I cursed, the reputation the Swiss bankers gave us… Yet I can’t deny it, I have a passion for personal finance. There I said it… a walking stereotype that’s what I am. The good news is I’ve learned some stuff along the way. Keep reading to start your journey with Personal Finance

1 Download a Budgeting App

Personal Finance through expense tracking

The first thing you should do is get an expense tracking app. It’s stores all my current accounts, credit cards and saving accounts. I’m able to visualize all my expenditures, find the hidden money sinks, and track my overall wealth.

I personally use Emma, it categories my expenses automatically! As soon as I get close to reaching a budget –  I receive a notification. I had no excuse for forgetting to track an expense. Not only could I visualize my expenses – I got to know myself.

I have now set up an external sheet for my budget but I still use Emma daily. It keeps me on top of my finances with one quick stop.

2 Apply the 50-30-20 Rule

At the start of my personal finance journey, it was difficult to grasp what my spending targets should be. After learning about Elizabeth Warren’s 50-30-20 rule. I had found a framework on which to base my decisions.

It suggests you should spend your after-tax income as follows:

  • 50% for needs (rent, food, transport, insurance)
  • 30% for wants (entertainment, gym, holidays)
  • 20% for savings (investments, paying off debt, saving accounts)

This rule helped me when deciding which country I should move to when graduating. And whether it was financially sound to do so. Since moving to the London, I’ve aimed at decreasing the 50% to grow my savings.

I have managed to shift take it down to around 40% in a couple of years. I cannot say I have achieved my goal but I am on my way.

Currently, I’m saving 43% of my income mostly supported by lockdown diminishing my expenses. Thankfully, it has lead me to increasing my investment rate to 25%. I mostly invest through Vanguard and ETFs although I also invest through Trading 212. (You can get 1 free share worth up to £100/$100 with my link.)

Wealth consists not in having great possessions, but in having few wants. — Epictetus

3. Paying off debt is an investment

Debt is like a weed. It will grow especially if you ignore it. Paying off your credit card debt should be at the top of your priorities. Most of the money they make comes from the predatory APR interest rate they charge.

When you pay off a debt you do not only increase your credit score. You lower your future debt as you curb the interest growth.

4. Build an emergency fund

Emergency Fund Jar

Since COVID-19 hit I have become a massive Emergency Fund advocate. I keep upwards of 3 months of expenses saved at all times. It allows me to keep my mind at ease. When the ghost of unemployment comes looming — I have breathing room.

Whenever I need to tap into this fund my priority is to refuel it as soon as possible. You can learn more about how to build your own with my article “How to Build an Emergency Fund in 2020“.

5. Check your finances daily

Every day, I take a couple of minutes to go through my budgeting app. It helps in making the money real. I know where, when, and what I spent.

Of course, I end up letting myself down every now and then; but my impulse purchases have gone down tremendously. Instead of treating “mistakes”. they are now learning opportunities.

6. Educate yourself

I try and read as much as I can about financial law, investment opportunities, and saving tips. The world of personal finance is ever-changing and different from 1 country to the next. Researching what applies to your area will help you grow and be critical about what you read online.

“Winning at money is 80 percent behavior and 20 percent head knowledge.” — Dave Ramsey

7. There is no "get rich quick"

When I started reading about personal finance; every other article talked about the X trick. I quickly learned that there is no such thing as easy money. Passive income is not a myth but it takes a lot of work before it becomes sustainable.

Take your time, let your money grow, and be disciplined it will all come eventually. Remember that passive income although it’s attainable is often looked at through rosy lenses. You can learn more here “Passive Income It’s All a Lie“.

Here’s the major problem with going on strike for more money: You cannot get rich by demand! — Jim Rohn

Personal Finance Is Worth It

Starting off with personal finance isn’t an easy thing. It takes rigor, discipline, and courage. It means tracking expenses and making every penny count. Yet, I find it freeing. It gives me control over my life and lets me decide where I’m going. You’ve now seen a few of my tricks. I hope they will help you begin this exciting journey.

Share you experience of Personal Finance and what gave you the bug! I would love to hear your thoughts and tips.

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