As you can probably tell from recent posts, I’m moving away from “Personal Finance 101” topics and on to more complex topics around investing, taxes, and retirement. These topics can be straightforward if you live and work in one country, but they become infinitely more complex when you are trying to deal with two different tax jurisdictions.
I’ve been reading a lot of Mr. Money Mustache recently. If you haven’t come across him, Mr. Money Mustache is a former software engineer who lives in Colorado and was able to retire by the age of 30. He and his wife live off passive income from their investments, plus some money they earn from part-time work (and I’m sure from his blog, now!). He’s one of a growing number of people who advocate for living a very minimalist life – saving money wherever and however you can, so you can buy more time for yourself and your family.
While it’s difficult for me to take on much of his advice (sure, I could retire early if I lived in Colorado, biked everywhere, hadn’t been paying off $200,000 in student loans, etc.), this post really stuck with me. In it, he suggests listing out all of the things you enjoy spending your time on, writing down how much each of those activities cost, and then re-sorting the list in order from least to most expensive.
I’ve now been on this quest to improve my personal financial situation for over six months, and I think I can safely say that I’ve mastered the basics. I’m living within a budget, I don’t have any credit card debt, I’m on track to pay off my student loans within the next year and a half, and I’ve built up my emergency fund. It’s now time to turn more seriously to the topic of investing my money.
Hello! Sorry for having gone quiet for a few months. I haven’t abandoned my goal of mastering my personal finances – on the contrary, I’ve been busy studying, researching, and even starting to attend some free workshops. Over the coming weeks and months, you can expect some book reviews, as well as a much closer look at tax and investment advice for American expats (I’ve found someone who specializes in us, and has agreed to give me some free advice!)
For now, I wanted to share some reflections on my September project: selling things I own online. I’ve been reading a lot about “side hustles” – the ways people earn money outside of their day jobs – to understand more about them. Mainly, I’d love to find a way to do writing or communications consulting on the side, and start to build up my own business – but as I delved into the subject, I realized I had another way of generating income: selling things that are cluttering up my house that I no longer need.
I’ve been spending a lot of time setting savings goals and getting my spending under control, but one question I’ve been afraid to tackle is – just how much do I actually need for retirement? It’s so difficult to estimate that I’ve been avoiding it altogether, and instead hoping that the rule of thumb re: investing 15% of your gross income per year will be sufficient. Finally, I bit the bullet and dug in.
For the past few months, I’ve been exploring the highly riveting world of credit reports. Without going into the details (because I don’t want to put you to sleep), I’ve had to obtain copies of my UK credit reports, and understand what they are telling me, because I still can’t get a credit card in the UK.
As part of this research, I’ve dipped into the world of identity theft – or, more precisely, understanding how I can prevent someone from stealing mine. I thought it might be helpful to share what I’ve learned, so here you go!
If you’re an expat or avid traveler like me, you’ll be familiar with the hassles of juggling multiple currencies and working out how to get the best exchange rates and minimize transaction fees. You may be using PayPal so people can pay you in multiple currencies, or maybe you’ve found a card with low or no withdrawal fees. Up until now, I’ve been using my US Capital One account when I travel – no foreign transaction fees, and free international ATM withdrawals. Unfortunately, even that has become a hassle for me, because I can’t use the US app on my UK phone to check my balance, nor can I log onto the website, because their two-factor authentication uses either the app (which I can’t access) or a US phone number (which I don’t have).
It’s definitely a slog.
Last week, I wrote about how $350/month can become $1 million in 30 years, thanks to the power of compound interest. Many of you commented that this was a fantasy, because the calculation assumed a 12% return, which was unrealistic. (I was THRILLED to see so much discussion, to be honest, because it helps me learn.) So this week, I did some more research to see what level of return I can realistically expect over time.
Guys (and girls). People. Whatever. Remember back in college when some well-intentioned adult told you that you should start saving early to take advantage of the power of compound interest? And remember how you were like “yeah, yeah, I’m 21 years old, I’ve got loads of time. Besides, I’m living month-to-month, how do you also expect me to save?” And then remember how you kind of forgot about it all?
Check out this chart:
Raise your hand if this was your reaction to the title of this blog post: “Yes, I get the concept of paying myself first, but after taxes, mortgage/loan payments, credit card payments, and life expenses, there’s not really that much left.”
That was my reaction, and I’m betting at least some of you had a similar one. I have always said “I’ll start saving seriously, once I pay off my student loans”, or “this month was a really expensive one, but I’ll save some more next month.” Of course, with that approach, I never saved anything substantial.
Then I came across this worksheet from my new favorite author, David Bach.
Austerity Kate 