Saving Money

How much freedom did I buy today?

/ humblefi / 7 Comments

I was having a very tiring day today…a few tiring days actually and I was totally spent when I came home. I checked my blog emails and found some uplifting comments from readers of one of my blog posts. My spirits got recharged due to those comments. Thanks to Tristan (Dividends Down Under), Ambertreeleaves (ambertreeleaves) and Mister SLM. I decided to put my recharged spirits to good use and write a blog post that I have been thinking about sharing for quite a while. This is my way of paying my dues for the good karma that came my way today from the three wonderful people mentioned above.

Back in mid 2014, I defined what Financial Independence means to me in one of my very early blog posts (link). The plan definitely has changed a bit over the last two years. But, I have been executing this plan with all the motivation and money that I can muster

Along the way, I realized one profound motivational idea that I will share via this blog post. I have spreadsheets that track my monthly dividends going all the way back  a few years and in there, I track which of my monthly needs are funded fully by my current passive income.

One day, while updating that, I realized this profound motivational question. Every now and then, I have a rough day at work or at home and sometimes both 🙂 I keep myself motivated by asking myself this question: How much freedom did I buy today?

Here is my answer.

  • My Passive Income goal is
    • $4000 per month (Why $4000 pm?)
    • $48000 per year
    • $131.5 per day ($48K/365)
  • By end of this year, if all goes well, my monthly passive income will be $750 per month. This has come through a lot of sacrifices…both by me and my family.
  • How much freedom will $750 pm buy me?
    • $750/$131.5  =>  5.7 days per month => 136 hours per month => 4.38 hrs a day (31 day month)
  • To put this in perspective, here is the amount of freedom $750 pm of passive income will buy me:
    • 4.38 hours     of absolute freedom every day!
    • 5.7 days         of absolute freedom every month!
    • 68.4 days      of absolute freedom every year!
    • 2 months      of absolute freedom every year!

When I started working many many years ago, saving was defined as money that I did not spend. I was very aimless and had no idea of Financial Independence. Obviously, money vaporized like water. It took a nasty and depressing curve ball in life to start me on a search to something different and I ended up discovering Financial Independence by accident (my first blog post). Thanks to the wonderful world of FIRE bloggers, I found my “something different” i.e. Financial Independence and Early Retirement. Though, it is not going to be as early for me…but better late than never hey !!

The question that keeps me motivated and fills me with enormous drive is the question:

  • How much freedom did I buy today?
    • My answer is 4 hours a day. 
    • What is yours? 

Hope this question motivates you to keep striving for FIRE!

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Live now vs Save for FIRE….

/ humblefi / 5 Comments

I read a wonderful article today written by my fellow Belgian FI blogger AmberTreeLeaves. The article of his title was “endless doubt on FIRE“. I was behind on my FI blogger reads and read it a week too late. But, the article was very thought provoking and I would really recommend a read.

Since there were already quite a few posts, commenting there was probably not going to be too helpful…hence this new post 🙂 Hope AmberTreeLeaves does not mind stealing an idea for a post from his blog!

That post by AmberTreeLeaves raised a conflict that I often had and continue to have within myself. One sentence from the post captures this conflict very well: The conflict is mainly between travel /live now and prepare FIRE.

I go through the same conflict in my mind….not just with travel, but also things like buying a car, etc. My parents sacrificed a lot in their present and postponed all their enjoyment to the future. And it did not end well. I went through some years where I did the opposite…living for the now..I guess I was running away from my parent’s philosophy. And when I discovered Financial Independence, I swung the other way….live for the future only and my family was none to happy about it 🙂

But, I have now come to a fair medium. I have come up with a decision framework that helps me rationalize live now OR live for the future vs the benefit I am getting. This has helped making sacrifices easier. Let me state two example cases.

  1. Lets assume a family vacation costs $5000 on average and hypothetically our family’s post tax take home salary is $60000. My requirement is that I want to have one vacation each for the next 10 years before my kids head out to college. So, I need roughly $50000 to fund all the vacations. $50000 adds one additional year to my family’s expected FI target. Considering that we will never get that many chances to spend time together as a family after kids head out to college, this addition is worth it to me.
  2. Now consider purchasing a new luxury car like some of my friends have. The car costs $80000 and after financing and maintenance costs, it can rise up to $90000 at least…yes, I could not believe it 🙂 With the same post-tax family salary of $50000 per year, it would add almost 2 years to my expected FI target. For me, getting freedom 2 years earlier is more important than driving a luxury car. Don’t get me wrong…I like the cars…I have sat in them and I think they are awesome….but not awesome enough compared to achieving freedom 2 years earlier…for me.

I am trying to apply this framework for every major decision…it had helped me rationalize family vacations and buying a new car. Next is applying this for buying a home. I am curious how do others deal with this conflict. Lemme know your thoughts please.

And once again, thanks to AmberTreeLeaves for a wonderful and thought provoking post. It took me back in time to a period when I learnt some important lessons.

DIGIT savings….2015 year end update

/ humblefi / Leave a comment

In February of this year (2015), I stumbled on a new way to save some additional money. That new way was called DIGIT…my first post on DIGIT is here. It is a new way of squeezing out some extra cash from my bank account. My goal was to squeeze some leftover money after accounting for all the budgeted categories (expenses, savings and investment goals). Every time the DIGIT savings account accumulated to a couple hundred bucks, my plan was to withdraw it and apply towards my Financial Independence goals….more specifically, my home down payment fund. I had a few monthly updates that  I wrote about here here. But, once the savings picked up steam and became regular, I stopped the monthly updates….why bore people hey 😉

That said, this is the end of year 2015 already. So, how well did DIGIT save money for me this year?

  • $184.34        Dec
  • $440.51        Oct + Nov
  • $280             September
  • $302.06       August
  • $654.03        July
  • $296.64       June
  • $161.86        May
  • $238.29       April
  • $2692.51     Total for 2015

The amazing thing is that this is money, all $2692.51 of it, that I did not know I could save! In fact, I am pretty sure I would have spent it on something if it were to remain in my checking account. This is almost $2600 towards my home down payment fund without as much as batting an eyelid.

DIGIT savings is an opportunistic savings vehicle for me…in addition to my planned monthly savings towards home down payment. I am really glad I signed up for DIGIT in 2015 and will continue for the next year as well!

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html

DIGIT savings….Month 4 update

/ humblefi / 2 Comments

I started using DIGIT, a new way of squeezing out some extra cash from my bank account, four months ago. I wrote about it here. My goal was to squeeze some leftover money after accounting for all the budgeted categories (expenses, savings and investment goals). Every time the savings account accumulates to a couple hundred bucks, my plan was to withdraw it and apply towards my Financial Independence goals….more specifically, my home down payment fund.

That said, how well did DIGIT save money for me in June?

  • For the month of June 2015, DIGIT squirreled away 226.64 from my bank account.
    • This is 226.64 that I would have spent on something less important than my financial independence goals.
    • Every month, DIGIT is getting more aggressive and squeezing out all the extra fat from my account…way to go!
  • Since signup, DIGIT has saved me $748.50.
    • If money is saved at the same rate for the rest of the year, I will have $1000 (!!) added to my down payment money…this is money I did not know I could save. So, go DIGIT!

But, where is the saved money going? About a month back, I wrote about my plan to benefit from the next recession here. My plan is to buy a house at a price less than the bubblicious prices prevalent in my HCOL area today. So, at the end of every month, the money DIGIT saves for me moves to my home downpayment fund. DIGIT savings is an opportunistic saving for me…apart from the planned savings towards home down payment. I will take the money however I can save it 🙂

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

If you do sign up at all, please do share your experiences, positive OR negative, via comments on this page. I would love to hear from you on how this works out.

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html

DIGIT savings….Month 3 update

/ humblefi / 3 Comments

I started using DIGIT, a new way of squeezing out some extra cash from my bank account, three months ago. I wrote about it here. My goal was to squeeze some leftover money after accounting for all the budgeted categories (expenses, savings and investment goals). Every time the savings account accumulates to a couple hundred bucks, my plan was to withdraw it and apply towards my Financial Independence goals….more specifically, my home down payment fund.

That said, how well did DIGIT save money for me in May?

  • For the month of May 2015, DIGIT has squirreled away 161.86 from my bank account.
    • This is 161.86 that I would have spent on something less important than my financial independence goals.
  • Since signup, DIGIT has saved me $521.86.
    • If money is saved at the same rate for the rest of the year, I will have $1000 (!!) added to my down payment money…this is money I did not know I could save. So, go DIGIT!

But, where is the saved money going? About a month back, I wrote about my plan to benefit from the next recession here. My plan is to buy a house at a price less than the bubblicious prices prevalent in my HCOL area today. So, at the end of every month, the money DIGIT saves for me moves to my home downpayment fund. DIGIT savings is an opportunistic saving for me…apart from the planned savings towards home down payment. I will take the money however I can save it 🙂

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

If you do sign up at all, please do share your experiences, positive OR negative, via comments on this page. I would love to hear from you on how this works out.

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html

DIGIT savings….Month 2 update

/ humblefi / 2 Comments

I started using DIGIT, a new way of squeezing out some extra cash from my bank account, two months ago. I wrote about it here. My goal was to squeeze some leftover money after accounting for all the budgeted categories (expenses, savings and investment goals). Every time the savings account accumulates to a couple hundred bucks, my plan was to withdraw it and apply towards my Financial Independence goals….more specifically, my home down payment fund.

That said, how well did DIGIT save money for me in April? Quite well in fact. For the month of April 2015, DIGIT has squirreled away 238.29 from my bank account. I got a tax refund that I was a bit lazy in moving towards a goal. DIGIT pounced on it and increased the savings rate automatically. This is good in two ways for me:

  • This is 238.29 I did know I could live without and
  • This is 238.29 that I would have spent on something less important than my financial independence goals.

Since signup, DIGIT has saved me $360….this is money I did not know I could save. So, go DIGIT!

But, where is the saved money going? About a month back, I wrote about my plan to benefit from the next recession here. My plan is to buy a house at a price less than the bubblicious prices prevalent in my HCOL area today. So, at the end of every month, the money DIGIT saves for me moves to my home downpayment fund. DIGIT savings is an opportunistic saving for me…apart from the planned savings towards all my goals, including home down payment. I will take money however I can save it 🙂

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

If you do sign up at all, please do share your experiences, positive OR negative, via comments on this page. I would love to hear from you on how this works out.

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html

DIGIT savings….Month 1 update

/ humblefi / 1 Comment

I started using DIGIT, a new way of squeezing out some extra cash from my bank account, exactly a month ago. I wrote about it here. My goal was to squeeze some leftover money after accounting for all the budgeted categories (expenses, savings and investment goals). Every time the savings account accumulates to a couple hundred bucks, my plan was to withdraw it and apply towards my Financial Independence goals.

That said, how is DIGIT doing? Very well 🙂

As of today, DIGIT has squirreled away $106 from my bank account. It started slower than I originally anticipated, but it seems to be learning fast and squeezing more money out of my account. This is good in two ways for me:

  • This is $106 I did know I could live without and
  • This is $106 that I would have spent on something less important than my financial independence goals.

So, go DIGIT! By next DIGIT update, I will talk about how I used this money towards my financial independence goals.

 

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

If you do sign up at all, please do share your experiences, positive OR negative, via comments on this page. I would love to hear from you on how this works out.

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html

DIGIT savings update….

/ humblefi / Leave a comment

I wrote about DIGIT, a new way of squeezing out some extra cash a couple of weeks ago, here. After money flies away from bank account for all the budgeted categories (expenses, savings and investment goals),  there is still some dollars left over. This left over money varies every month…sometimes it is $50, sometimes it is $100. Instead of leaving it in there and spending for something else…believe me, the force is strong enough…I wanted DIGIT to squirrel away the left over dollars to a savings account. There is no interest paid for the money in DIGIT accounts (as of now), but that is okay for me. I do not plan on leaving the money there for a long time. Every time the savings account accumulates to a couple hundred bucks, I plan to withdraw it and invest it towards my Financial Independence goals.

That said, how is DIGIT doing? As of today, DIGIT has squirreled away $14.95 from my bank account. It is a bit slower than I originally anticipated, but it is learning my spending habits and hopefully, it will speed up the money savings. This is $14.95 I would have spent on something less important than my financial independence goals. So, go financial independence and go DIGIT.

 

PS: If you want to sign up and try it out, go directly to Digit’s website here at https://digit.co/

If you do sign up at all, please do share your experiences, positive OR negative, via comments on this page. I would love to hear from you on how this works out.

Link to Yahoo Article: http://finance.yahoo.com/news/29-old-invented-painless-way-170000170.html