Budget Check-In: January

In the spirit of trying to be more self-accountable, here are the monthly figures. I have to say I feel quite proud of having actually engaged with the budget during the month – I do realise that’s the point, but as noted I have tended to treat my spending tallies more as a summary of mistakes rather than something I can use to tweak behaviours and get back on track.

About to end! Photo by Glen Carrie on Unsplash

I have been tallying up my budgets weekly and found it really helpful. It also takes such a short time, and removes The Fear of having to suddenly spend four hours pulling it together at the end of the month.

So, how did I do? Not badly in some ways but not great in others:

  • I spent 95% of my monthly planned budget, or £4,414 out of a planned £4,645. In some ways this is great since it’s under budget – but looking across the lines it’s clear I should have spent even less. Some annual costs (such as kids’ extra curricular activities) are budgeted for monthly but I didn’t spend anything this month, meaning in theory that at some point I will overspend if I don’t pull it back from elsewhere. I spent quite a bit on gifts but January is birthday heavy for us so this one should work out.
  • I still spent 150% of my grocery budget. This is SO ANNOYING – I was at almost exactly £400 on 30th January but we had a birthday dinner to host today so I went crazy in (the most expensive) supermarket. I knew as I was doing it that I was already regretting it. Something to continue working on, clearly.
  • We hadn’t planned for the impact of Brexit. I feel like, in the words of Lily Tomlin, it’s going to get a whole lot worse before it gets worse, but the immediate impact was that we couldn’t watch the telly. I might appreciate that this is small beans compared to, well, so many other things, but – the telly! We normally watch Prime, through my UK account, and pay additionally for some channels. 1st January – nada. I spent a frustrating amount of time trying things out (turns out you can’t get Brit Box in Europe, since apparently it’s only available in Anglophone countries) and did the single mum thing I hate – asked One Of The Dads to help since technology is a Boy Thing. Shakes fist at self. So I ended up buying an Apple TV box, cancelling my Prime subscription and trying HBO Nordic. We don’t have terrestrial or cable TV so I don’t mind paying for *something* but this was not budgeted for. It turns out my mum also won’t be able to send over gifts for the kids (or me) in the same way, so watch this space for the reign of terror which begins when I run out of marmite.
  • The kids’ schools are closed since Christmas and after a few weeks my son started to get neck pains. So whilst we had laptops from last time, my shopping-general budget took a hit to buy mice/keyboards/ whatnot to set him up, and a webcam for us both so we can use a proper monitor. I managed to find an old monitor and some bits and pieces, and we asked first on the local freebie marketplace, but still had to fork out.
  • There are still some things I haven’t budgeted for. Almost the entire ‘family’ spend this month was on helping out a very old friend. I can afford to do it, and he has done the same for me in the past, but it wasn’t anywhere on the list.
Item Monthly BudgetSpent Jan% of monthly budget
Childcare costs £         1,100.00 £             790.5472
Car (insurance, tax, petrol) £             125.00 £                99.5080
Charity £                66.67 £                25.6338
Eating out £             120.00 £             104.2287
Entertainment – subscription £                50.00 £                72.77146
Entertainment £             100.00 £             340.09340
Kids – extra curricular £             250.00 £                        –  0
Family £                50.00 £             170.39341
Groceries £             400.00 £             597.15149
Holidays  £             300.00 £                        –   
Insurance £             200.00 £             127.8764
Personal care £                30.00 £                47.02157
Shopping – general £                25.00 £             165.37661
Shopping – gifts incl birthdays £                58.33 £             167.97288
Shopping – clothes £                29.17 £                        –  0
Rent and Bills £         1,700.00 £         1,638.5796
Transport £                41.67 £                67.46162
TOTALS £   4,645.83 £   4,414.5595%
Enjoy the little things – like British TV? Photo by Brigitte Tohm on Unsplash

With that done, what did I save?

 Monthly PlanJanuary% of plan
Mortgage Capital  £                    865 £                    865100
Mortgage Overpayment  £                1,250 0
 Emergency Fund  £                    10015001500
ISA £                1,25050040
Kids savings £                    248248100
SIPP £                    300300100
  £   3,148.00 £   3,413.00108%

This went pretty much to plan. In January I had to move my house deposit over to Denmark and I lost some money in transaction and exchange rate costs. I also need to now boost my emergency fund as I’ve taken it down to £4,000 (or one month’s expenses). It’s definitely not enough in these uncertain times, so rather than focusing on my usual goals I need to spend a few months getting that back up to at least three months’ worth.

Overall I saved 44% of my income, and spent 56% which is a little better than planned.

Given the overspend in some areas, February should be a month of clawing back – though it does include half term holidays… Watch this space!

How did your January budget go? Feeling in good shape for the start of 2021? I’d love to hear from you!

PS – if you like British TV and don’t feel like your life has enough dystopian fear in then I highly recommend Years and Years (I am not paid for this – it’s just the best thing I’ve seen in a while. Terrifying).

Keeping the wheels on

So after all manner of craziness in 2020, this year seems to have started off the same. From high hopes during the lockdown over the Christmas holidays, we have continued in, um, lockdown. Last week it was announced that the school closures and strict measures here in Denmark will last basically until February half term. Since I am not a politician I am happy to do what I’m told but … jeez, I wish we didn’t have to.

So far we have done two weeks of homeschool/work from home. As a single parent it really isn’t easy, but I have a job that I can move around more or less so I can start early and finish late, and – by far the most important thing at the moment – a boss who understands my needs and helps facilitate some flexibility. It’s still tricky: whilst bookending extra hours when the kids are in bed works for the family, it’s tough for me; and whilst I give as much attention to the children as I can, it still isn’t enough. And we are so priveliged with a garden, enough money to buy and store food, and a house full of books/craft supplies/gin – my heart goes out to other single mums doing this without those things.

The cosy fire I wish we were hanging out in front of, instead of in front of our screens all day. Photo by Lucian Alexe on Unsplash

I wanted to briefly reflect in this post about how to keep the wheels on – how to keep things on track when things are tough. It’s a phrase I used a lot last year, and sometime it’s all I can managed. However, as long as those wheels are on and and turning, there are small opportunities to thrive.

Some simple tips – some of which are easier than others:

Be kind to yourself: so obvious but so important. You are doing your best in really hard times. Talk to yourself as you would a cherished friend – you got this.

Nourish yourself. The more time I spend at home, the more slovenly I become. Whilst this lockdown might not be the barbecue and soda bread glory of the first one, making sure that I eat well (with vegetables / fruit / grains / enough water / blahdy adult things), don’t have too much alcohol or caffeine (or, let’s be honest about individual vices, Cheetos) and generally treat my body like it matters, really helps. Plus I love time in the kitchen, and sticking to having all meal times around the table eating together with no screens means that there is something of a routine and care.

Work out what self care means to you – then practice it. I have a whole post written in my head about how self care for women ≠ bubble baths, but for now I just want to say – it’s ok to work out what it means for you. Do you need time to read in silence? To have fresh air? To recognise what issues are nagging in your mind, and resolve them? I do believe that personal finance is a true area of self care: the most basic meaning of taking care of yourself is making sure you are ok, and finance is surely part of that. I have a list of nagging items – decalcify the taps (thanks to Denmark’s hard water, all our taps are only ever days away from total lime-scale-seizure), sort out a drawer full of random things, fix my son’s bike – and I try and do one a week. The list never gets any shorter, but my sense that I am managing stays strong.

A semi-ironic bubble bath. Photo by Photoholgic on Unsplash

Do something offline. Not everyone might need this, but I just cannot spend all my time with a screen. Whilst we usually have an hour of TV in the evening after dinner, I try not to watch TV or go back on my computer unless I am working. Instead I am reading all the books that I insist I cannot get rid of, and also doing glamorous pursuits like jigsaws, and knitting – though I am totally crap at knitting, and just basically fiddle around with wool and sigh whilst listening to podcasts. My kids also desperately need this as they are not used to being on the computer as much as homeschool demands, and so we are also doing other things in the evening – playing board games, and doing a Su Doku or crossword together which I print off during the day, or my son has been teaching me chess and then beating me witless.

Go outside. Probably the most overused advice, but it makes such a difference. Even with the lockdown (and the weather) it’s possible to get out. Fresh air, daylight (if we’re lucky) and just Not Being In The House somehow restocks all my reserves of patience. Even Harvard research says it’s right.

Stay connected. As an expat I have always known that I don’t live surrounded by friends and family. The upside is that we make new communities every time we move. Having moved just before the pandemic hit though, we hadn’t quite got settled here before we had to lock down, and I don’t mind admitting that I have felt incredibly isolated over the last year. Some online communities, including FIRE, definitely help – others, such as Twitter, send me further into a dystopian panic. Knowing how you like to connect to others, and making the effort to do so even if you really don’t feel like it, can make such a difference. Kind of like going outdoors, but outdoors from your own mind.

Don’t lose sight of your goals. Sometimes recently my goals feel laughably pointless, in the face of so much uncertainty. But then I realised that the uncertainty makes having goals even more important, giving a sense of control when everything else has gone off piste. Having in mind a positive future makes me calmer about what’s going on now, and also more positive. I am also aware from previous sod-it episodes that it’s the small steps that really drive progress toward goals, and keeping myself accountable for achieving those small wins keeps me on track. Or at least it will do once I have finished off all the Christmas chocolates!

Photo by Javardh on Unsplash

So – what is keeping you going right now? What are your ideas for thriving in spite of the challenges? Look forward to hearing from you!

Happy New Year #2. Budgets

In preparing for 2021 I spent some more time on my budgets. I’ve written about where I underestimated my 2020 budget before, and I have added in those changes – both the unknowns (utility bills) and the real underestimation (groceries). I also spent some time thinking about what matters to us as a family and where else we could make compromises.

This led me to some interesting conclusions. One of the things I love about the FIRE movement is that you tailor it exactly to you: your own wants and needs; what you find important now and in the future; and the options you see for your coming years. For me personally, I am always juggling compromises. If I want to work, I need to have childcare and the most likely thing is that I am going to pay for it. If I want to work in my chosen field then I have to travel, and have childcare which is available overnight and for days at a time. And so on and so forth. Setting budgets though helps me to think about those compromises and priorities, and how to get a balance that works for myself and my kids. I find it really empowering because it’s taking an intentional approach to money, and matching my actions to my aspirations.

Photo by Kelly Sikkema on Unsplash

So for 2021 these are the things I am not prepared to compropmise on:

  • Childcare. We have a nanny who has been with us since my youngest was 3. With the pandemic and lockdown, I haven’t been travelling and haven’t needed overnight care etc in the way I usually do. But I still need childcare and value the care and engagement we get from our nanny, so this won’t change even though with all the additional costs (health care, insurance, travel) it’s not cheap.
  • Kids’ clubs. I was quite shocked about how much these are in Copenhagen, and I’ve gone back and forth about the right balance. Since my kids are only young once and working means I don’t have time to e.g. take them swimming every week, I have decided to keep this in but limit it two two per child. This means they get to see friends, do sports (and lots and lots of dance…) and keep broad interests whilst ensuring I am not going crazy on this budget line.
  • Holidays: I’ve kept in a decent line for this in 2021, though I hope it will be less since we have some vouchers from holidays we couldn’t take due to COVID which have rolled over to this year (well, fingers crossed that this happens and we don’t roll them over whilst staying at home FOREVER).

So what is the budget? It’s very similar to 2020’s actuals – a budget of £ 4,645 per month or  £ 65,618 over the year. The breakdown is planned as below – this is an average over the year where some costs are annual, and some come out in specific months etc:

 Annual PlanMonthly Budget
Childcare costs £              13,200 £            1,100.00
Car (insurance, tax, petrol) £                1,500 £               125.00
Charity £                   800 £                 66.67
Eating out £                1,440 £               120.00
Entertainment – media £                   600 £                 50.00
Entertainment – going out £                1,200 £               100.00
Kids – extra curricular £                3,000 £               250.00
Family £                   600 £                 50.00
Groceries £                4,800 £               400.00
Holidays  £                3,600 £               300.00
Insurance £                2,400 £               200.00
Personal care £                   360 £                 30.00
Shopping – general £                   300 £                 25.00
Shopping – gifts incl birthdays £                   700 £                 58.33
Shopping – clothes £                   350 £                 29.17
Rent and Bills £              20,400 £            1,700.00
Transport £                   500 £                 41.67
TOTAL SPEND £         65,618 £       4,645.83

To be honest it still feels like a lot.

However, the planned savings (shown below) mean that it would be another year where I spend 60% and save 40%. Again, this doesn’t include anything pre-tax, so money paid for health insurance, or my employer pension to which I pay around £17,000 per year:

Photo by sydney Rae on Unsplash
 Annual PlanMonthly Budget
Mortgage £            10,310 £                    865
Mortgage Overpayment  £            15,200 £                1,250
 Emergency Fund  £               1,200 £                    100
ISA £            20,000 £                1,250
Kids’ savings £               2,976 £                    248
SIPP (private pension)  £               2,400 £                    300
 TOTAL SAVINGS £ 41,776 £    3,148

This would put me on track to finish paying off the mortgage on my UK home by the end of 2022, earlier than I had planned, and to max out my ISA as well as paying into kids’ savings and a personal pension. So even though the spending is quite high, I am definitely working toward my financial goals.

The one unknown is housing. We’ve been looking to buy a home here in Copenhagen which would suck in savings (though this would become equity) and reduce monthly outgoings. So far, we have put in an offer and lost out on one home and we have an offer under consideration this week (please cross your fingers for me!). If we can’t find something by about March I will look to rent, since we have to be out of this rented house by July.

Once the housing is exactly known I will tweak the budget. I do feel like we could save more, and will keep coming back to the budget throughout the year to see what else we can trim away. Either way, we’ll keep on enjoying the free pleasures in this life, and the knowledge that we are trying to live mindfully. What’s your plan for 2021 and how are you going to stick to it? Let me know!

A beautiful (free) day out walking in the snowy woods in what we hope will become our new neighbourhood ❤

The Red Briefcase: 2020 spending review

‘It’s the most… wonderful tiiiime… of the yeeeeaaaar’ <sings>. Hannukah is just finished and we are heading into Christmas, both of which we love. And we’re up to the end of year spending review, which we are *hoping* to love.

2020 has been quite the year, hasn’t it? I am writing this whilst we are in self-isolation (again) and trying to enjoy ourselves without all the usual festive celebrations of friends, family, and going out. It is particularly hard this year since we can’t travel and it’s just the kids and I far from home. In spite of that I know we are in a much, much luckier place than others with a stable income; living in a fantastic country; and in a house big enough to play, work and study in for weeks at a time. At this time of gratitude and miracles, I am definitely counting our blessings. But this post is also about counting our income, outgoings and savings.

It hurts me to share any space with Britain’s Chancellor of the Exchequer Rishi Sunak but that red briefcase is the traditional home for the spending review going into the UK parliament. No comments here on that budget. (Photo by TOLGA AKMEN/AFP via Getty Images)

So what was the plan?

I set my plan for spending and saving back on January 21st, the first blog post here. Below is the actuals and percentages. Overall I spent around £65,000 this year, £15,000, or about one-third more than planned.

Item Monthly Annual Actual % spent
Charity  £              30  £              360  £          830.00 230%
Insurance  £            277  £           3,324  £       3,324.00 100%
Rent and utilities  £         1,500  £         18,000  £     20,098.77 112%
Childcare  £         1,000  £        12,000  £     21,939.86 183%
Groceries  £            300  £           3,600  £       6,160.68 171%
Holidays  £            300  £           3,600  £       1,910.71 53%
Transport   £            300  £           3,600  £       2,723.52 76%
Entertainment  £            200  £           2,400  £          917.20 38%
Eating out  £            175  £           2,100  £       2,006.95 96%
Family       £       2,986.73  
Shopping      £       2,090.63  
TOTAL  £         4,082  £         48,984  £     64,989.04 133%

What the reckoning showed me, once I got over feeling queasy, was as follows:

  • I radically underestimated some areas – I had no budget for shopping (clothes, gifts, personal care), for example. I also hadn’t understood some of the bills needed to be paid in Denmark (hello surprise £ 1,000 utility charge that I thought was part of the water bill!). I also spend 180% of the grocery bill, and whilst some of this is just poor planning and shopping, it is also clear that costs here are much much more than the UK given that I still shop at LIDL.
  • Whilst COVID didn’t impact my income, it meant that there were significant spends on unplanned areas such as holiday childcare when plans to have my parents come and stay (or the kids go to them in the UK) had to be put on ice – I spent 170% of childcare and holiday budgets due to these changes. Some of the grocery spend was also COVID related: at least now I have long-life milk and a lot of pasta and rice in the hold!
  • The uncomfortable truth is that I budgeted without working on a frugal plan meaning that I consistently didn’t hit targets because I have been using the budget as a guide and not as a plan. I added a budget line of ‘family’ then just added in everything which might upset the budget lines elsewhere, but of course the overall overspend is the same.

This budget also doesn’t include – money to savings, pre-tax contributions to health insurance and pensions, or the income and expenditure on my UK property. So what did I save?

Mortgage overpayments £         11,576
 Triodos  £         11,000
Stocks and Shares ISA  £         11,673
Kids savings £           2,976
Pension (SIPP) £           2,900
 TOTAL SAVED / INVESTED £    40,126
Feel better about this bit!

So I spent 61% of my income, and saved 39%. Given the unexpected (or poorly planned) expenditures, I am really happy with that.

Celebrating with our amazing Christmas tree 🙂

Net Worth Snapshot

Confession time – previously I was calculating my net worth at the end of March, since the UK tax year ends April 5th. This means that I have the 6 month change, and the 18 month changes, which is useful but not quite the ‘end of year review’ I had in mind. In any case, here they are. The big additions from the budgets above is the employer contribution to pension.

 Value Dec 2020Value April 2020Value April 2019
 Pensions  £         163,540 £         134,240 £       105,675
 Savings  £           83,287 £           68,500 £         26,000
 House Equity £         343,000 £         323,223 £       304,000
 Emergency Fund  £           10,000 £           15,000 £           3,500
  £         599,827 £         540,963 £        439,175
Changes in net worth

Three of my four pensions are ‘defined benefit’ meaning that increases here come from money paid in to my current work pension (also defined benefit); and money paid in plus changes to investments on my SIPP. Over this time, my house hasn’t increased in value, so any change is mortgage capital paid off. There were a ton of challenges or mistakes this year which I tried hard to put right – I pulled money out of the S&S ISA when I panicked back in March, and put £5,000 back in which has grown again with the shift in the stock market at the end of the year.

Either way this shows an increase in net worth of £68,000 over six months – an average of £10,600 per month, or £154,000 over 18 months, a monthly average increase of £8,500. That is incredible – and I know based partly on having a great salary and a lot of other privileges and benefits like having bought a home at a good time etc. But it’s something to be proud of, and to spur me on to a much tighter-budget in 2021!

How was your 2020?? And how is it making you feel as we head into planning and dreaming for the year ahead? I would love to hear from you!

Photo Credit/ Matthew Hoffman

Loving what is

With apologies to paraphrasing Byron Katie, I’ve been thinking a lot about ‘loving what is’. I am prone to envy – an emotion so toxic and at odds with my ethics that I rarely even admit to friends that I feel like this. In trying to unpack why I feel envious, and the impact it has on how I interact with others and live my own life, I keep coming back to gratitude.

And it’s a relief – it’s so much simpler to find ways to be grateful rather than trying to ‘stop being envious’. It struck me that gratitude is the only tool available for digging out the roots of envy and getting on with a positive life.

Say it loud!

In thinking about this area, I realised I have some limiting – and, frankly, horrendous – beliefs. I share them here not to totally put you off me (though I understand if that’s the case) but because recognising them is part of forgiving myself for feeling this way then weeding them out:

  1. I worked hard for what I have – others were lucky. This is not something I believe with any part of my rational brain, but I see thoughts based on this popping up when someone is doing well. This has been really stark for me with housing, partly because in the UK at least, people who were on the property ladder some time back, or had family support at a crucial moment, are in a position that nobody could get to starting from now. Our landlord recently told me that the house we rent from them (at huge cost) has gone up $100,000 in the last year. Whilst the system is stacked in a certain way, I conveniently forget the times it has worked in my favour.
  2. I deserve more. Oh dear. This is particularly toxic because at its core is dissatisfaction and lack of gratitude for where I am now. Which – whilst it’s not perfect – is ridiculous. My income puts me in the top 1% world wide. I am healthy and so are my amazing kids (touch wood) – and I have amazing kids. I live in the fifth happiest city in the world, one which is so safe that my 11 year old can go alone to hang out with friends. There is so much to be grateful for I am amazed that I can find the brain space to focus on the bullshit instead of weeping with happiness every day, but somehow it happens.
  3. It wouldn’t be like this if I wasn’t a single parent. I have a specially wide jealous streak for two-parent households where I compare their options (including to work hard, take breaks, have an income double mine because there are two adults in their household) which is also unfair. There are all sorts of reasons why people are where they are on their path, and all sorts of unseen compromises. I had to make the decisions which were right for my family, and manage the consequences instead of constantly thinking ‘what if’.
Recognition is the first step in resisting.

So why does this matter? Apart from it making me unpleasantly whingy (at least in my head) these kind of thoughts become limiting beliefs and it takes work to get over those. This has led to limiting myself – if I really believe that others are lucky and I work hard, why bother working hard? If I am ‘unlucky’ how do I believe that things are going to work out? Its also exhausting and boring to feel this way, and it makes me negative. Consciously hearing how these beliefs play out in how I talk to people, and interact with them, has led to some very uncomfortable recognitions about myself.

But happily none of this is ingrained – every day provides a chance for change and growth. Now that’s something to be grateful for!

Should I buy or keep on renting?

One of my goals from the list last week was to work through some options for housing since this is by far our biggest spend.

As so often happens, once the thought was there, things started to move around it. I had a call from our landlord saying they are moving back to Denmark from overseas, meaning that we definitely have to move by June 2021. We love our house but in some ways this is good news – since we have to move anyway, it’s forced me to look at options.

In this blog I use all my real figures, except… I have never shared the real cost of my rent. Because it’s HUGE and makes me feel ridiculous. It’s not super expensive within the Danish market, given the size of house etc, and we already chose to live out in the ‘burbs to save. But the real cost is (gulp) £3,350 per month. That’s the equivalent to more than £40,000 per year or one-third more than the total average salary in the UK. Copenhagen is 16th most expensive of 589 cities in the world, but I still do a little vomit of terror every time I pay rent.

To note – in my figures to date, I have removed a chunk of the cost of living benefit I received, and the same amount off the rent. So the figures balance, but it’s not exactly accurate.

Hygge – the ultimate Danish approach to staying home. Photo Credit. if this was us I assume my other kid would be off making us hot chocolate!

Before I get into the finance side of things, one of the things I have realised during this blog is that as a single mum, my approach to financial decisions has a big chunk of emotion in the mix. Whilst that’s probably true for a lot of people, being solely responsible for small people means that I focus a lot on home, safety, and planning for what would happen if I lost my income. We also moved around a lot when I was a kid, then as a serial-expat, moving has been something I do at least every few years, often living in company-managed accommodation where I know it’s only temporary. And whilst home is super important, my work (and personal and other financial issues) mean that my 11 year old son has lived in 11 homes to date. So – lots of emotion around decisions about where we live.

So I came from the position of wanting security, and wanting to see where we could make savings (and potentially make some money at the end, but it’s not guaranteed). I have four years on my contract here, and the kids are loving Copenhagen. So I decided to look into buying a home. Doing that whilst an expat is complicated – there is a fantastic and very detailed guide here. If you want to buy before you have lived here for five years, you need a special permission and you are also obliged to sell the property within six months if you leave the country. So there is a higher risk that you might have to sell at a bad time. For me this has meant thinking more about the home I would buy and discounting some which I like because there are things which might make it hard to sell – road noise in particular seems to be a no-go.

Not buying a house like this but isn’t Copenhagen pretty! Photo Credit.

With that in mind, I started to explore mortgages. And I have to say, coming from the super-cautious (at least after the 2008 crisis anyway) UK, this has been really easy. I need a 10% deposit, but the mortgage interest is only 1%, fixed, for 30 years. At that level, even living here for five years means I would pay off a decent chunk of capital in addition to having lower monthly costs. I will have to pay taxes which are included in my current rent but with this, the amount I will save on monthly outgoings (including paying off a small loan I need to take out to get to the 10%) and capital paid off is as below:

      Two years Three Years Four years
 Savings on monthly outgoings     £          31,617  £          47,425  £          63,234
 Capital paid off     £          30,713  £          46,511  £          62,610
 TOTAL saved + capital owned    £        62,330  £         93,936  £       125,844

For me, there is enough wiggle room in there to take the risk that the house will need major repairs (these should come out in the ‘condition report’ which is like a survey) or the value goes down, for it to be worth it. It’s not a totally fair comparison since the amount we can borrow means we will have to move a couple of train stops further out where rent would be slightly cheaper anyway, but it’s close.

All the reading and reflecting I have been doing the last few weeks has reminded me again that FIRE, and financial decision making in general, is based so much on what we want out of life, and what that translates into in terms of balancing risks and benefits. 

So this week I am going to start looking at houses!

Getting intentional: maximise time, and other limited resources

So I feel like I haven’t posted much recently about actual finances, and I promise to come back to it – I’m finishing off a review of my September and Qtr 3 total spending, and will share more detail and reflections on that in coming posts.

I also firmly believe that the FIRE discussion is about so much more than finance: it’s about working out what matters in life, and how to live consciously. Paula Pant is a total star in helping think this through and her Afford Anything podcast is regular inspiration to me. As she says, “You can afford anything but not everything”. Anything which is a limited resource – so yes money for sure, but also time, focus, commitment – needs to be managed conciously in the way which gives you the best version of yourself.

Paula asks two questions and uses these as a way to dive deeply into a range of subjects. Recently I found myself going back to these:

  1. How can we make smarter decisions about our money, time and life?
  2. How can we align our daily behaviors and habits with the lifestyle we
    value most?

Whilst question 1 is something I spend a lot of time on, question 2 has been more lacking. There are moments, as in my exploration of my Beauty Habit where it has come more to the forefront. In addition to asking the question “Do I need to spend money on this? What does it add to my life?” I also asked “How does buying this align to my beliefs, about the planet, and about how I value myself?”. But building this question into a more regular habit is trickier.

I’ve talked about two books recently but they have really shifted things for me in the past few months: Make Time by Jake Knapp and John Zeratsky is first. There’s a lot of information in this excellent book (and blog) and to be honest I have acted on maybe 10% of it. Key things have been under their pillar of ‘laser’ intensity – getting rid of white noise. So I have trimmed through email subscriptions, apps, meetings (blimey I wish I could do this with more meetings, but working out what would be career limiting, and seeing how to model and incentivise keeping meetings to an essential minimum with my team). Basically decluttering the things which take up my time when I don’t see the value. Make Time also talks a lot about highlights which speaks directly to where I struggle in reaching my goals: finding the activities which fall between long term goals and short term tasks. Spending a few minutes in the morning planning a highlight around these activities, even if it’s focused time with my kids, means that I start the day with something in mind that really matters.

The other book is Personality Isn’t Permanent by Benjamin Hardy. The style doesn’t always gel with me, but the overarching message does – that we are not locked into being “who we are” and that the actions we take today, however small, really do build the futures we want. If we are unintentional, then we can also create futures that we DON’T want.

Today really does create tomorrow – Image from Benjamin Hardy’s Blog.

As with many others, Hardy talks about journaling and setting goals daily. I’ve always totally believed in this idea but never found the time or motivation to do it myself. I read lots of brilliant things about Morning Pages, but the caveat that these should be THREE pages of longhand thoughts ensure that I never felt I could fit it in. Taking the ideas from these two books I started a practice last month:

  1. Get up 15 minutes earlier. For me this is 05:30, which is early but the fact that I only had to add 15 minutes makes it less painful.
  2. Take a shower, and get dressed.
  3. Go downstairs and before doing anything else (even turning on the coffee pot) sit down at the table.
  4. Meditate for 5 minutes. It’s not a lot, just a little deep breathing, a little silent prayer.
  5. Write however much I want in my journal. It’s been about 1 page per day so far. Start with gratitude – what am I thankful for?
  6. Then write a highlight and some goals for the day.
  7. And when it’s done, turn the coffee on and go about my day.

It’s a small practice but I feel the benefits. Best of all I don’t even think about doing it now – days I have slept a little late (or had one glass of wine too many the night before) or woken up with a ton of urgent work to get on with, I still do it. And I definitely feel the benefits.

What are your small tweaks which are making you edge closer to your goals?

So, how are we doing here? May budget and spends

Enough of the soul searching – what am I actually spending?

In my mind, lock-down has been a time of spending no money. Certainly you have to be both inventive and patient to hit the normal spending levels, since it has meant either queuing, or ordering things which take a long time to be delivered. I just received a fire bowl for the garden which we ordered in April and which arrived this week, but minus the actual bowl – a two month wait for a totally useless stand…

May was the month we went back to work and school here in Denmark. It was also my daughter’s 7th birthday party and since we weren’t able to have family or friends over, I definitely spoiled her a bit to try and make it more special.

It was also the month I started planning and paying for things to do in the long school holidays. Since we can’t travel back to the UK I had to cancel long made plans – thankfully being able to either move it all to next year or get refunds – but then think about what we are actually going to *do* for the next two months.

So here’s what we spent. And it reminds me why I think of myself as being ‘fake frugal’. There are no ridiculous purchases in here, nothing really out of the way or extravagant (or that felt like it, at least). And yet I still managed to overspend by almost £ 1,000.00.

 PlannedMay-20
Charity £       30.00£150.00
Insurance £    277.00£277.00
Rent and utilities £ 1,500.00£1,500.00
Childcare £ 1,000.00£1,000.00
Groceries £    300.00£793.36
Holidays £    300.00£858.84
Transport  £    300.00£36.00
Entertainment £    200.00£247.03
Eating out £    175.00£57.37
TOTAL £ 4,082.00£4,919.60
Planned vs actual spend: May 2020
Game over? Hell no!

So what went well? Bills, childcare, insurances all stayed the same. I upped our charity giving all throughout lock-down because things are so tough right now for so many people (to the Single Aid Mamas crowd fund, an amazing group of other single mums in the same line of work that I am in, a number of whom lost their income during this period: to Age UK given that older people are having a hard time: and to the Trussell Trust who are supporting food banks across the UK).

The bulk of the extra spend was on groceries. Whilst it does feel as though food is getting more expensive, this is also down to eating every meal at home (and the related decrease in eating out budget). It is also because like lots of people I have been really into cooking as something fun to do during the lockdown. As a wannabe frugaleer, I normally cook from scratch 5 nights a week, and make packed lunches. But we have really tried new things, got into baking, and also continued to keep a healthy level of food stocked up in the house in case the quarantine gets strict again.

But this was something of a wake up call. Just because I feel like we’re not doing much, or spending much, keeping track of the numbers is the only way to be sure. In May, I did manage to put  £ 800 into my savings,  £250 into the children’s accounts, and make a £ 2,000 mortgage over-payment. So whilst it wasn’t a great month, it still worked out.

Aluta continua!

A dream life: now and then

One of the first questions people ask themselves on the financial independence journey (after ‘where on earth does all my money go??’) is – why? Why would I go against the grain of consumerism, spending, striving? What do I want for my life instead?

Some people like to get crystal clear about their dream life. Dave Sawyer talks about finding what matters to you – he and his wife have a vision of their future selves in Andalusia. And fair play to them.

For me it’s crucial to think of a dream life, now and in the future. I want to spend more time with my kids, but working like crazy to save for ten years means I’ll have time to spend with them when they are in their late teens and probably less keen to hang out with mum. Plenty of FIRE people manage both of course, and with two incomes you can make a whole range of choices: share the childcare or have one parent stay at home for example. Living off one income is naturally promoted as a path to saving money. For the single parent, there is only ever one income. I need to be able to make choices which give us quality of life now, whilst preparing for that imagined future.

In these crazy times where keeping on with saving, looking after the children and generally keeping the wheels on with life, it can be easy to lose sight of the ‘why’. Whilst I am clear about my Big Dream, and about the small steps I need to take this week, the middle bit is hazier. So in the spirit of remembering the way, I wanted to share my dream.

I’ve had the same one for almost 20 years and it still delights me every time I think about it. My plan, with the kids, is to move back to Kenya (I am not from there but spent many happy years – so this is caveated with the need to fulfill the residency requirements which is helped in most countries, including Kenya, by being financially independent). We’ll build or develop a house with a stunning view, acacia trees, the Rift Valley to wake up to. Interesting occasional work (that I can say yes or no to); sundowners on the balcony with fantastic company; friends around a huge dining table. Somewhere stable the kids can always call home. Bliss. And well worth walking this path, especially if I can do it whilst cherishing every day.

So I panicked – just a little. Here’s what I learnt

Sigh. So it’s been a month since my last post since I needed a little time to adjust to the new normal. Homeschooling my two kids whilst working full time from home (and since my job is in the field of humanitarian response, my day job has become way more hectic) is exhausting: add to that worrying about elderly parents in another country and just trying to keep the wheels on our daily life and I didn’t have much energy to spare.

After my last post, I spent another week watching my funds crashing, and it felt like my dreams and plans were crashing too. I think being so early on in my journey made this pretty scary – like watching someone lop off branches which are just starting to blossom. I was awake every night for about two weeks obsessing about what to do, and in the end, I sold.

I sold two-thirds of my savings portfolio and put it into a savings account. My savings overall took a huge hit. I know, I know: selling when the market goes down only converts paper losses into real losses. But it was almost worth it to get the decent nightly sleep I needed to face my daily litany of tasks.

So here’s what I learnt:

  1. My risk tolerance looks different to what I thought. The ability to tolerate risk is a huge part of making financial decisions. It turns out that risks feel different when they are really happening compared to how I thought it would feel (uh, duh). The COVID pandemic also meant that I had my first taste of realising risk as an investor when nothing is stable – people’s jobs, my family’s health, the general sense of how close we are to The End Of Days… Risk wasn’t just something that related to my emotions about my investments, but to the sense of stability in the world at large.
  2. My long-term game is stronger than my short and medium term. As well as my stocks and shares ISA (where I pulled money from) I have three pension pots, plus I have been working on kids’ savings. I didn’t touch any of this, or even look at the balances. These feel so long term that the crisis NOW doesn’t affect them in my mental planning.
  3. That does mean I need to work out my investment policy statement. This is a relatively simple document which sets out, why, what, how, for how long, and how you will know your approach is working. I realised that whilst in my mind I was investing for the long term, my mental planning around the ‘what next’ in my life saw me spending that money earlier than makes sense for it to be in funds. Once I understood this disconnect I gave myself permission to pull funds. But setting out a clearer strategy would have given me metrics to work through options rather than just relying on my need to sleep.
  4. Having an emergency fund really, really matters. Before I started investing, I had created an emergency fund. I have this set out to two accounts: my usual bank where I pay my mortgage, bills and whatnot has an attached savings account where I have three months of those expenses. Then I have a separate savings account (so I don’t see it and am not tempted in case I feel the need to slide money around) which has another three months plus additional in case I struggle to cut costs I anticipate would be possible if I lost my job. In total I have four months of take home pay which should cover seven months plus of all our costs. Knowing that money was there is making a huge difference to my emotional well-being. Without it, I might have felt the need to pull all my investments.
  5. It’s my money, and to some extent my decisions are therefore always the right ones. From the point of Kantian moral philosophy (bear with me) I am not a means to the end of a successful financial future: I am an end in myself. Whilst this might sound like the noise of me disappearing up my own jacksie, it is a reminder that I am more than the sum total of my financial decision making. During the obsessing, twisty turny evenings of trying to work out what to do this became super helpful. I had to stop listening to all my favourite podcasts, because they were all screeching about not selling, and I had already done so. Remembering what it’s all about, and who is in charge, for was crucial.

Living life in these hard times with a little bit of grace and forgiveness is more important than ever. As a single mum with lone and total responsibility for my household’s finances, it’s only my permission which is needed and me who has to clear it up if it all goes wrong. So whilst I panicked (a little), I am also proud that I had my emergency fund in order as well. And I learnt a huge amount that I can apply to get financially even stronger moving forward.