Last night I was in Messenger, and I said hello to a contact that I haven't met in person, but he was someone with whom I'd chat with about 2 years ago. All was well until I mentioned to him that I started sharing my bedroom in the apartment I rent.
He didn't ask me why, but he quickly went on to judge me (someone he hasn't even met). He asked my age. I'm 36. Then he went on to ask me about my posessions. Do I have my own house? no
Do I have a car? no, and I don't want one. I live only a few minutes walk from the subway and a major avenue. I definitely don't want to waste money on a car. Then he went on to tell me that I don't even know if I'll have food to eat tomorrow. That isn't the case, but I didn't feel like correcting him since he didn't seem to care about my situation only my posessions.
He then told me that I have nothing. Then he continued to tell me how he has his own house and furniture and he pays his bills.
The difference is that he lived with his parents most of his life and his parents gave him for free the lot to build his house on. The hardest thing in a megacity is to find WHERE to build a house and actually buy it. The actual construction here is very easy to manage once you own the land. It is very likely he never rented. I'm not saying anything he did to have his house is wrong. What I'm saying is that his arrogance is wrong since he basically lived off of his parents while I have had to pay rent and bills and yes, I buy my furniture too. If he had been renting since his early 20s like I have and had he bought the land his house is on then I'd admire him. Since that's not the case, I think he's a jerk who deserves retribution for being so arrogant.
Should I have my own place by now? I suppose I really should, but my income isn't high, and I'm single. Most of my income isn't considered when applying for a loan. He also works independently, but since his parents gave him the land, he didn't even need to request a loan to build. Land in a megacity/metropolis is very expensive. If I lived in a small town or even a small city, I probably would be able to buy an empty lot for not so much.
As for his scolding me for sharing my room, I think that was just stupid, but that shows you how backwards people are. Instead of praising you for making a sacrifice to finally get ahead financially, they scold you since you really should spend as much money as possible and somehow manage to buy a house of your own while single on a low income. Sorry, but I'm not going to buy into that backwards thinking. That's what leads people into mortgage foreclosure and living on the street or with family, because they spent instead of saved.
No, I don't regret not living off of my parents during my 20s and then have the option of being an arrogant idiot like him. I'm very proud that I've been able to survive without having to ask my parents to support me or to give me land for my own house. I only regret not posting the roommate advertisement years ago! I'd have a lot more money saved today if I had a roommate sharing a room not only an apartment. I also wouldn't have had to move a few years ago when times were tough if I had shared the rent of my room with another.
I definitely want to continue to live with roommates and yes share my room (I started sharing this month). Some of the money I save will go toward bunk beds. The rest of the money I save goes toward my financial independence and early retirement. I definitely hope to have my own home, but I'm not going to be a jerk about it when I do. As long as I am single, I plan to have roommates! It just makes sense to share. Housing costs are normally the biggest expense and rent money isn't an investment. You pay it and it is gone. When I buy my own place, I also plan on having roommates. If I'm lucky their rent money will pay the bills or most of them. I will be able to have my own place and still retire early.
I actually could get a small loan for a tiny house without a yard on the outskirts of the metropolis, but I wouldn't be able to live there while I am working since it would be about 2.5 or 3 hours away and since there is no yard I wouldn't be able to have a garden. Those houses only have 1-2 tiny bedrooms so I wouldn't be able to share. It wouldn't be a very good investment since it wouldn't be a place I'd want except in an emergency. It makes more sense for me to invest in dividend stocks and bonds.
What do you value? Do luxuries like a car make you feel like you have more value that someone who takes public transportation? I think a better measure of how you are doing is in stability, the ability to cover your basic needs, and safety for the future. Having your own home gives stability, but only as much stability as being able to live in it and pay the bills. A car doesn't make you more stable, it eats money. A car is a convenience. How many months could you survive if you stopped working your regular job today? If I stopped earning money today, I could easily live 7 months and 10 months if I only cooked basic food at home.
Showing posts with label my finances. Show all posts
Showing posts with label my finances. Show all posts
Sunday, August 19, 2012
Sunday, July 1, 2012
Having Roommates makes a big difference! Reduce your housing costs for Financial Independence.
The last 7 month's have been a little crazy for me. Before mid-December of 2011 I was in a stable roommate situation in a very cheap and very tiny town home very far out in the suburbs. I wasn't happy with my roommate due to his financial decisions (always broke do to poor judgement) and due to his occasional tantrums (even though he is one year older than me, he seemed more like a grade school student when he didn't get his way). Obviously, I wanted to change my situation because happiness is more important than money and if you are not happy at home, you won't be truly happy elsewhere.
I was offered the opportunity to share a 3 bedroom apartment in a slightly poor area 30 minutes in transportation north of downtown just a few minutes walk from a subway station. My cut of the expenses was much more than I was paying way out in the suburbs, but I had poor neighbors and I knew that I didn't want to rent alone due to the expense and of course rents are much higher in the city proper than on the outskirts of the metropolitan area. I accepted and the drama quickly started. I discovered I replaced one bad roommate with two. These were very dishonest and noisy. They loved having loud parties every holiday and all night. I tried again to find a room to rent in a decent place for a good price, but I didn't find one.
As luck would have it one bad roommate moved out in March about half way through a month he didn't pay. He owed me some money too. I paid more to cover half of his room's cost that month. I was happy that he left because I learned to despise him during the few months we shared the apartment.
In May, I discovered that the OTHER roommate, who did find someone to rent the other room the next month, had lied to me and the new (better roommate) about needing to pay an extra month of deposit. It wasn't true. Last month (May) that roommate left leaving his stuff and owing money for the electricty and water bill which he said he'd pay but never did. He of course owed money to the landlady and to me for the last month's rent and the "extra deposit" money I had given him. Thankfully a mutual friend was able to pressure him to give money for (most of ) his outstanding bills at the apartment.
Now starting July, I discover that I'm the one in charge of the roommate situation here but also in charge of paying the rent and the basic bills (internet, water, gas, electricity). I didn't imagine it would turn out like this, but life does that to you. You think everything will be just right and then everything changes!
What's different? Well I'll be signing a one year contract for renting here. It doesn't bother me because it isn't expensive and it is a good location. There was one problem. for June, I still hadn't found a roommate for the extra room so I paid 2 of the 3 rooms here. I got 1 month back from the money they got from the roommate who left in May, but that money went from my pocket back out as rent.
How does it feel to pay 2/3 of the apartment instead of 1/3? It felt horrible because my housing cost doubled. Double rent means 1267 pesos less in savings or for other expenses like clothing or whatever else I could use.
In an ideal world I'd be able to find good honest and responsible roommates from the start, but it seems you don't really know what someone's like until you live with them for a few months!
What if I had rented this apartment by myself from the start like many people? I would have saved 2533 pesos less each month for the months I have had paying roommates. That is a huge amount! People who rent a house or an apartment with more than one bedroom and don't rent out the other room are wasting money every single month. Yes, you can have bad roommates, but you can also find good ones eventually. Every month you share the cost of your home, you can save money for other things you need or for your retirement.
Lets say you don't care about retirement, but you are renting a 2 bedroom apartment alone. If you can find someone to pay 50% of your rent to stay in the other room, you could save the other half for emergencies, for a vacation (instead of using the credit card), to buy your own place in cash eventually, or perhaps for that large screen 3D LED/LCD TV you've been drooling over. Sure it might take a few months or more to pay for that television in savings, but the point is that sharing makes financial sense.
I am happy to report that two days ago after a month of asking friends in Facebook, MSN, etc. if they know of anyone who wants to share, a friend let me know of two best friends needing a place to stay. They'd prefer separate rooms, but for the moment they can share. I gave a price of rent plus general expenses to cover bills plus cleaning supplies, toilet paper, and stuff like that. NO, I won't make any profit on this. Any extra money after paying bills and other general apartment expenses I'll set aside for things requested.
Last night after their first night here, one suggested getting a washing machine. That really wouldn't be a bad expense since I hate washing by hand and a washing machine would pay for its self in 12-15 months including the extra cost of electricity, water and detergent. I didn't want to get one because I didn't know if I'd even still be living here in 2-3 months, but since I'll be signing a contract for a year and finally have people in the other room, I might just go for it if I can find a machine that isn't more than 4000 pesos. It would eat my extra savings the first month, but I'd save about 350 pesos each month by not dropping of my clothes to be washed every week. How much would I save with a full house of roommates using a washer? Probably not much, but if each pays 100 pesos more in their rent, that would cover the extra utilities and everyone would be happy. They'd save money and so would I.
What's next for me? I know I spend too much on food, but what I'd really like right now is to find a roommate to share my bedroom with. I'd probably spend 1 or two month's in savings just getting my essential stuff organized to make room for someone else, but later I'd have an extra 633 pesos each month for saving or again for whatever I want. Plus, I really like sharing with others as long as they are not noisy and are responsible. I'm really not sure if I'll put up an advertisement for sharing my room, but if anyone asks I'll be sure to mention the opportunity!
How is my financial freedom situation different from others online? I make very little money compared to most I see in forums online. I'm not an engineer or physicist or any other high paying occupation. I work freelance so my income is irregular, I just need to sacrifice more in spending. What someone in USA considers bare-essentials seems very luxurious to me with their car, whole apartment and budget that includes clothing and other extras. I'm a shy extrovert. I like being with good people so even sharing my own room would be good. If you are introverted, find another introvert for your OTHER bedrooms. Since both of you will need more alone time, you'll discover you'll chat for a few minutes and be in your bedrooms most of the time you're at home!
If you are lucky enough to have a good steady income, take advantage of the opportunity to have roommates and save money for your future. If your extra rooms and garage are full of stuff you haven't touched for at least a year, plan a garage sale, sell it on E-bay, or just donate that stuff to Goodwill!
I was offered the opportunity to share a 3 bedroom apartment in a slightly poor area 30 minutes in transportation north of downtown just a few minutes walk from a subway station. My cut of the expenses was much more than I was paying way out in the suburbs, but I had poor neighbors and I knew that I didn't want to rent alone due to the expense and of course rents are much higher in the city proper than on the outskirts of the metropolitan area. I accepted and the drama quickly started. I discovered I replaced one bad roommate with two. These were very dishonest and noisy. They loved having loud parties every holiday and all night. I tried again to find a room to rent in a decent place for a good price, but I didn't find one.
As luck would have it one bad roommate moved out in March about half way through a month he didn't pay. He owed me some money too. I paid more to cover half of his room's cost that month. I was happy that he left because I learned to despise him during the few months we shared the apartment.
In May, I discovered that the OTHER roommate, who did find someone to rent the other room the next month, had lied to me and the new (better roommate) about needing to pay an extra month of deposit. It wasn't true. Last month (May) that roommate left leaving his stuff and owing money for the electricty and water bill which he said he'd pay but never did. He of course owed money to the landlady and to me for the last month's rent and the "extra deposit" money I had given him. Thankfully a mutual friend was able to pressure him to give money for (most of ) his outstanding bills at the apartment.
Now starting July, I discover that I'm the one in charge of the roommate situation here but also in charge of paying the rent and the basic bills (internet, water, gas, electricity). I didn't imagine it would turn out like this, but life does that to you. You think everything will be just right and then everything changes!
What's different? Well I'll be signing a one year contract for renting here. It doesn't bother me because it isn't expensive and it is a good location. There was one problem. for June, I still hadn't found a roommate for the extra room so I paid 2 of the 3 rooms here. I got 1 month back from the money they got from the roommate who left in May, but that money went from my pocket back out as rent.
How does it feel to pay 2/3 of the apartment instead of 1/3? It felt horrible because my housing cost doubled. Double rent means 1267 pesos less in savings or for other expenses like clothing or whatever else I could use.
In an ideal world I'd be able to find good honest and responsible roommates from the start, but it seems you don't really know what someone's like until you live with them for a few months!
What if I had rented this apartment by myself from the start like many people? I would have saved 2533 pesos less each month for the months I have had paying roommates. That is a huge amount! People who rent a house or an apartment with more than one bedroom and don't rent out the other room are wasting money every single month. Yes, you can have bad roommates, but you can also find good ones eventually. Every month you share the cost of your home, you can save money for other things you need or for your retirement.
Lets say you don't care about retirement, but you are renting a 2 bedroom apartment alone. If you can find someone to pay 50% of your rent to stay in the other room, you could save the other half for emergencies, for a vacation (instead of using the credit card), to buy your own place in cash eventually, or perhaps for that large screen 3D LED/LCD TV you've been drooling over. Sure it might take a few months or more to pay for that television in savings, but the point is that sharing makes financial sense.
I am happy to report that two days ago after a month of asking friends in Facebook, MSN, etc. if they know of anyone who wants to share, a friend let me know of two best friends needing a place to stay. They'd prefer separate rooms, but for the moment they can share. I gave a price of rent plus general expenses to cover bills plus cleaning supplies, toilet paper, and stuff like that. NO, I won't make any profit on this. Any extra money after paying bills and other general apartment expenses I'll set aside for things requested.
Last night after their first night here, one suggested getting a washing machine. That really wouldn't be a bad expense since I hate washing by hand and a washing machine would pay for its self in 12-15 months including the extra cost of electricity, water and detergent. I didn't want to get one because I didn't know if I'd even still be living here in 2-3 months, but since I'll be signing a contract for a year and finally have people in the other room, I might just go for it if I can find a machine that isn't more than 4000 pesos. It would eat my extra savings the first month, but I'd save about 350 pesos each month by not dropping of my clothes to be washed every week. How much would I save with a full house of roommates using a washer? Probably not much, but if each pays 100 pesos more in their rent, that would cover the extra utilities and everyone would be happy. They'd save money and so would I.
What's next for me? I know I spend too much on food, but what I'd really like right now is to find a roommate to share my bedroom with. I'd probably spend 1 or two month's in savings just getting my essential stuff organized to make room for someone else, but later I'd have an extra 633 pesos each month for saving or again for whatever I want. Plus, I really like sharing with others as long as they are not noisy and are responsible. I'm really not sure if I'll put up an advertisement for sharing my room, but if anyone asks I'll be sure to mention the opportunity!
How is my financial freedom situation different from others online? I make very little money compared to most I see in forums online. I'm not an engineer or physicist or any other high paying occupation. I work freelance so my income is irregular, I just need to sacrifice more in spending. What someone in USA considers bare-essentials seems very luxurious to me with their car, whole apartment and budget that includes clothing and other extras. I'm a shy extrovert. I like being with good people so even sharing my own room would be good. If you are introverted, find another introvert for your OTHER bedrooms. Since both of you will need more alone time, you'll discover you'll chat for a few minutes and be in your bedrooms most of the time you're at home!
If you are lucky enough to have a good steady income, take advantage of the opportunity to have roommates and save money for your future. If your extra rooms and garage are full of stuff you haven't touched for at least a year, plan a garage sale, sell it on E-bay, or just donate that stuff to Goodwill!
Thursday, May 17, 2012
Sometimes you need to increase income to reach very early retirement
Being frugal is sometimes not enough for extremely early retirement (or financial independence)
Extremely early retirement is possible through frugal living, but it is also important to have a decent come to let you save up fast. If you only make what counts for minimum wage in your country, even a high percentage isn't much money and who wants to live on a completely bare-bones depression budget? We should live off of the basics, but not suffer to get by.
To me frugal is to only spend on what you need to be healthy, happy, and comfortable over the long term. I don't need to have a night at the cinema to be happy. At least I don't need that more than once a month (or perhaps once every two months.
I do however need to eat a variety of vegetables on a regular basis. If I don't eat my veggies, I feel bad and lethargic. I know that if I only ate the cheapest vegetables I'd spent a little less on food, but it would cause a large decrease in happiness compared to the savings of perhaps 30-40 pesos per week.
Being frugal is also not buying on impulse or getting something just because it is cool, trendy, or what all your friends have. It is living without spending a lot of money on entertainment.
Having said that, we all have to eat, pay for a place to live, and clothes to wear. Unless you have a several thousand dollar a month income or live for free with your parents, it will be difficult for you to save the 80% of income needed to retire in about 6 years. saving 80% spending 20% withdrawing 4% annually 6.25 =25/(0.8/0.2).
The less you save the longer it will take you to reach your very early retirement savings goal. I was a little disappointed to see that at my current 50% savings (about 40% more than your typical earthling), It will take me about 25 years according to the formula. 25 =25/(0.5/0.5) If I were in my early 20s that would be fine, but I'm almost 36 years old and I want to retire in my mid 40s so I need to make a plan to increase that percent!
If I go from 50% to 60% (which would either mean packing my sandwich or rice with vegetables or eating at home everyday and perhaps washing my clothes by hand), It will take me about 17 years. That's still too long for me.
The only solution is to live frugally and increase income. The more I make while maintaining my expenses at the current (frugal, but no suffering) level, the more I will save (the higher the percent for savings).
At 70% savings, I can retire at almost 11 years. That's not bad. It is one year more than I'd like, but I am actually planning on working on my artwork so I could sell a few paintings and digital artwork and sell some graphic design. I very much doubt that Print-on-Demand websites will go away so I won't have to live 100% off my savings. I might go into semi-retirement after 8 years if I can build a small or tiny house in the country and have a garden, internet, and a solar water heater. It is hard to say since I only recently thought of the idea. It would be fun to have a couple years dedicated to creating art and design to survive on and live simply. Sometimes being a teacher with a full schedule can be stressful.
Now that I know I need to increase my income and live simply to reach my retirement goal, the next step is to find ways to increase that income. Do I want to find another job? Perhaps I could blog for someone else or write a book? I could put extra time into creating great graphic design. I could try to find more translation work. It is stressful, but a long translation could mean a lot of income if I could find someone who needs that help. I could also raise prices for English classes, but that also will increase the possibility that people will cancel when they have unplanned expenses.
Extremely early retirement is possible through frugal living, but it is also important to have a decent come to let you save up fast. If you only make what counts for minimum wage in your country, even a high percentage isn't much money and who wants to live on a completely bare-bones depression budget? We should live off of the basics, but not suffer to get by.
To me frugal is to only spend on what you need to be healthy, happy, and comfortable over the long term. I don't need to have a night at the cinema to be happy. At least I don't need that more than once a month (or perhaps once every two months.
I do however need to eat a variety of vegetables on a regular basis. If I don't eat my veggies, I feel bad and lethargic. I know that if I only ate the cheapest vegetables I'd spent a little less on food, but it would cause a large decrease in happiness compared to the savings of perhaps 30-40 pesos per week.
Being frugal is also not buying on impulse or getting something just because it is cool, trendy, or what all your friends have. It is living without spending a lot of money on entertainment.
Having said that, we all have to eat, pay for a place to live, and clothes to wear. Unless you have a several thousand dollar a month income or live for free with your parents, it will be difficult for you to save the 80% of income needed to retire in about 6 years. saving 80% spending 20% withdrawing 4% annually 6.25 =25/(0.8/0.2).
The less you save the longer it will take you to reach your very early retirement savings goal. I was a little disappointed to see that at my current 50% savings (about 40% more than your typical earthling), It will take me about 25 years according to the formula. 25 =25/(0.5/0.5) If I were in my early 20s that would be fine, but I'm almost 36 years old and I want to retire in my mid 40s so I need to make a plan to increase that percent!
If I go from 50% to 60% (which would either mean packing my sandwich or rice with vegetables or eating at home everyday and perhaps washing my clothes by hand), It will take me about 17 years. That's still too long for me.
The only solution is to live frugally and increase income. The more I make while maintaining my expenses at the current (frugal, but no suffering) level, the more I will save (the higher the percent for savings).
At 70% savings, I can retire at almost 11 years. That's not bad. It is one year more than I'd like, but I am actually planning on working on my artwork so I could sell a few paintings and digital artwork and sell some graphic design. I very much doubt that Print-on-Demand websites will go away so I won't have to live 100% off my savings. I might go into semi-retirement after 8 years if I can build a small or tiny house in the country and have a garden, internet, and a solar water heater. It is hard to say since I only recently thought of the idea. It would be fun to have a couple years dedicated to creating art and design to survive on and live simply. Sometimes being a teacher with a full schedule can be stressful.
Now that I know I need to increase my income and live simply to reach my retirement goal, the next step is to find ways to increase that income. Do I want to find another job? Perhaps I could blog for someone else or write a book? I could put extra time into creating great graphic design. I could try to find more translation work. It is stressful, but a long translation could mean a lot of income if I could find someone who needs that help. I could also raise prices for English classes, but that also will increase the possibility that people will cancel when they have unplanned expenses.
Tuesday, May 15, 2012
Personal expenses Spring 2012
Here is a glimpse at my current expenses while working and my thoughts regarding current spending levels in each area. It will vary a lot, but you'll notice that compared to the typical person from the USA, I live in extreme poverty, yet for here, I'd probably be considered lower middle class. If I only lived with a working significant other I'd live better. Single without children living is more expensive than married without children because of having to find a roommate and you can't expect them to share all the costs only rent and basic utilities. You also never know when they'll move out and you'll have to pay more and find someone else or move to another place. Remember everything is in pesos!
I can adapt pretty easily and when I make nothing I'm good at cooking at home and walking everywhere and washing clothes by hand. When I work a lot my expenses go up a lot, but at least I can save money when I work.
I've saved 20,000 in the bank for emergency living expenses and put half in a certificate of deposit to get some interest for 90 days. Interest bearing accounts have really high minimum balances here. So now I'm starting my investing phase. I'm depositing money to my AFORE which is an independent retirement account that invests mostly in bonds and gets around 6-7%. I can't select investments the bank decides based on age groups. I can only withdraw money (any voluntary contributions) once every 6 months so it is good place to put medium to long term investments.
Rent 1267
(sharing 3 bedroom cheap apartment with 2 others) I don't think I could find cheaper near a subway station without moving to a neighborhood known for armed robbery.
Food 3000
This is one I'm working on because when I don't work this drops down to 1000 pesos. (when I don't work I cook and people think I'm vegetarian since I cut back on meat then too.)
I'm trying to get it down to 2000 while working a lot. 3000 a month is basically 100 a day (9 dollars a day +/- goes by so fast even buying food sold on the street and a soda.) I'm going home to eat between classes now twice a week and other days perhaps I can pack sandwiches or something)
Transport 1500
I teach in 3 different places right now. Atizapan (Northwest), Polanco (west-central), and Roma Norte. (almost central) I can't move near classes because 1. those areas have MUCH higer rent (perhaps 8,000 in Roma Norte, perhaps 16,000 in Polanco, and 3,500 in Atizapan) and in anycase if I lived near one I'd be far from the others and who knows when someone will ask for classes in some other part of the city.)
I take the metro (subway) and buses everywhere. It averages out to about 50 pesos a day mostly bus cost since the subway is partially funded by the state and the bus to Atizapan where I currently teach most classes is full price. If I stopped working I probably would not go there very often.
Internet 210
It is a good connection and I use it everyday when at home. I use it to communicate with family and friends and of course to check the sites where I upload artwork and designs.
When I'm financially independent I plan on just doing art and graphic design.
Cell 300
I'm on a two year contract. It is one of the cheapest plans I could find that would give me enough text messages and internet. I only get one hour call time, but I normally use its internet to send messages on facebook or whatapp. I had canceled the telephone service here since the roommates didn't want to help with the bill like they had agreed.
Laundry 400
I could wash by hand. I was working on decluttering this weekend, but we'll see. I notice that clothes wear out faster when I wash by hand even though I save on cleaning cost.
Supplies 500
stuff for creating artwork, personal care products, DVDs for backing up artwork, etc. normally 300-600 pesos.
Electricity 100
approx. it is actually a bill that comes every other month and split three ways. Electricity costs vary by usage and neighborhood. Poor areas pay less. Expensive areas like Polanco pay full cost. One of my roommates has the bill and he hasn't shown it too me and he's been at his parents' house all week. I'm worried that he's going to move back home.
Natural Gas 100
Here you buy tanks of gas of different sizes and it depends on how often you cook and if you keep your water heater on hot, warm, or off between baths.
We actually don't have a tank connected to the water heater so I've been showering in cold water. I've done that off and on for years. It isn't enjoyable at all, but it is tolerable.
If I had my own house I'd install a solar water heater and panels, but you can't do that when you rent.
In total I am currently spending about 7,500 pesos a month on the basics + laundry, cell, and internet.
Since I want to retire or be financially independent, saving 10-20% of my income isn't enough. It is essential that I reduce costs as much as possible while working. Ideally, I'd save at least 50% every month.
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