The grass is greener on the other side

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I think it is only human to think that it must be better somewhere else but here. Right? Is it based on the fact that you know the amount of work that needs to be done wherever you are right now and that it is easier to underestimate the workload elsewhere?

Currently looking at my current situation, worked at the same place for 6 years. Of course there are days when I think that things are hard, and look at the fence and think that maybe it is better on the other side? But then again, I've worked at other places and I know that there are positive and negative to be said of pretty much every job.

So, should I take a risk and jump to something new or stay and put in the workload needed to optimize the current situation. I know that a lot of people advocate a job-change every x months but I'm starting to disagree. Of course if you want a big jump in your salary that is probably the only way to go, but there is so much more to life than just money. A little strange to write that sentence on a blog focusing on investing etc, but hear me out as its not that contradictory in the end.
What I've been advocating is for people to stabilize their economy, start paying themselves first, paying off debt and start to save and invest for themselves. It has in the end not that much to do with getting rich, if that is what you want then by all means jump jobs and maximize that paycheck. But what I am after is quality of life, I want security and in the end be able to retire much earlier then 65. And for that you don't really need to maximize the paycheck, even if that would help.
If you work hard on getting on top of your personal finances, that debt you paid off will result in a bigger return per month then most job-changes and after that it will just escalate when that cash flow is put in investments instead.

In the end of the day, a bigger paycheck but lack of discipline will not get you closer to richness.

Of course there are things out of our control that can change the path that we are on, there are situations that would make me change my job, but at the moment it is not the pay (always open for suggestions tho :))

The same goes for investing, I am currently focusing on 2 companies and they are doing great. But from time to time, I get the feeling that I should own other companies as well. But my current strategy involves a focused portfolio and I really haven't found anything else that fits so well. So lets not rush into something that cannot be controlled and keep to the strategy that is in place.

In conclusion, don't rush into change, the workload is the same if not bigger on the other side. But if you have worked your butt off to maximize your current situation and there is nothing more to gain, then by all means go look over the fence for additional challenges that could improve your situation.

I don't really know if any of the above made any sense. It is getting late, 0125 in the night and I am watching the Oscars. So I'll blame my ramblings on that :)
Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

How to pay off debt

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This is a follow up on my previous post 'Reasons to avoid Debt'.
Say that you already are in debt and want to start taking care of it to get a little peace of mind, but don't really know how to do it. Here's some ideas that might help you.

Start paying off the smallest debts first

This way you will get rid of them fast, and also free up cash that in turn can be used to pay off the next smallest debt that you have.
I think that many people want to get rid of the big debts first as they are the ones that hurt the most, but it is hard to pay off more than you already do on them as the rest of your money is going to other loans.

Lets picture a scenario

Random person X has the following debts at the moment, not taking into account interest rates etc. Just calculated on X months left and how much it costs per month.

Appartment	Study loans	Car	Samsung Curved 65" 4K	iPhone 7 128 GB
€300000	€5000	€18000	€2000	€750
€800/375 months	€60/83 months	€350/52 months	€166/12 months	€62/12 months

As we can see, the living expense is the highest per month. After that comes the car. First ask yourself the question do I need to live in this expensive appartment or drive this expensive car?
If for any reason you answer no to any of the debts you have, get rid of the item. Buy a cheaper one, or not at all? DO you need a TV? :)

If you feel that you could downgrade:

• Sell the item
• Buy a cheaper one
• Use whatever money is left to pay off the loan
• Continue to pay off whatever is left on the loan.

Hopefully this tactic has cut of a couple of months on your payment plan.

If you need the things but want to pay them off quicker

Ok, So somewhere you need to get the extra cash to start paying off your cheapest loan, in this scenario the cellphone. If you can muster an extra €60 per month for a while by cutting other expenses you will have paid the phone in 6 months.

After 6 months, you have learned to live without that €60, and also freed up another €60 so you have €120 extra per month to pay off another debt.

Next small fee per month would be the study loan, but it has so long term left. At this point 77 months so lets focus on the TV.

The TV has 6 months left, but with the extra €120, you can pay it off in 3.5 months, so 4 months.

After that you have €286 per month to work with and we are 10 months in.

Apartment	Study loans	Car	Samsung Curved 65" 4K	iPhone 7 128 GB
€292000	€4380	€14700	-	-
€800/365 months	€60/73 months	€350/42 months	-	-

At this point you start to get options. I would recommend you to start setting up a savings account if you don't already have one, say €50 per month as a started, you still have €236 to pay off next debt with. So lets continue our scenario.
Study loans in 15 months or Car 25 months. Lets look at both

Option 1, pay the study loans first
After 15 months, you would up your paying power to €316 and then be able to pay the rest of the car in 14 months. Total of 29 months.

Option 2, pay the car first
After 25 months, debt paying power is up to €586. Study loans paid in 5 months. Total of 30 months.

So, I guess we will go with study loans first. So after a total of 39 months, 3 years plus some change you have paid all your loans but the apartment and should have 1450 on your savings account, not to mention the extra €646 per month that you can use to build up your buffer and start investing. You could also use it to pay off a bit on your apartment to minimize the risk if the house prices should turn down.

Be sure to read my series on how to stabilize your economy:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Get out of your financial comfort zone

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this is where the magic happens.

When training and you stay in your comfort zone, the gains you gain will not be anything but average. But when you make that extra effort and move outside of the comfort and into the pain then the results follow automatically.

And it is the exact same thing with your personal finances as well.
If you always do whatever you always do, the results will be the same as your previous results. It takes a little extra effort to start building financial freedom. But when you do take those steps outside of your comfort zone, the results will start to follow.

If you feel that you want to make a kick-start into your financial future, then look at what to cut away from your daily/weekly/monthly spending habits.
Even if you only cut the things for a couple of months, the extra momentum you gain will pay of in the long run (by the power of compounding)

So, just to get started. Try cutting some of the following for some months and automatically transfer the cash to your investment/savings instead and see for yourself what happens.

Some ideas of things that might be worth cutting

	SEK
Spotify	100
Netflix	100
HBO	90
Amazon Prime	60
XBOX Live	80
Lotteries	120
Daily News Paper	250
Cable TV	400
Strava Premium	85
Total	1285

The prices above are in SEK as that's what is visible to me. But USD and EUR estimates are just a division by 10 away.
We have some of the things above, some people that we know have them all and they don't know where their money go.

So, try cutting some of the items above, maybe you don't need all of Cable TV, Netflix, Amazon Prime and HBO at the same time?
Can you cut out the lotteries for some time so that you can actually save some money so that you can start investing instead?
And do you read your daily news paper, or could you do it online just as well?

In the end, it does not look like a lot of cash but if you have the daily news paper for a year it goes to 3000 SEK. (roughly $300)

But you want to watch TV, right?
Your choice, stay in your comfort zone or do something drastic to start seeing results. :)

And when you start to see results, it may be OK to back away into your comfort zone again. But who knows, it might be in a new place.

Be sure to read my series on how to stabilize your economy:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Your problems are yours to solve

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A little rash title but really. They are your and yours only to solve.... :)

How often have you heard a dialogue that goes something like this:

Person 1: I have this big problem that stresses me out and no one is doing anything about it
Person 2: OK, have you tried to...
Person 1: No, it's no use... Because this and that prevents me.

I am really tired of hearing these kinds of reasoning from people and nowadays I tend to just walk away. I don't want to get dragged into the negative spiral.

Don’t waste your energy on things you can’t change. Walk away from toxic people and hopeless situations.

So what can you do to prevent yourself from being that lost cause that people walk away from?
Some steps to follow in situations like the above:

Create a Plan

Create a plan on how to tackle a problem, if it is a bigger problem then break it into smaller sub-goals. Once you see that the step to start making progress is small, it becomes easier to take it.

Act on the plan

When you start to work on the problem, people around you will react, you will start to receive feedback. Both positive and negative.
By nature, feedback is always good. If you want to do something great you need to listen on the feedback you get and make decisions on how to respond or not to respond.
If the reactions are negative, but you are sure on your thing. Ignore them.

The reason why feedback is good is because it means that people are noticing that whatever it is that you do, is changing something that impacts them.

Re-evaluate your goals

Actively evaluate the effort you put in towards the end goal.

If the struggle is still worth it 

Continue with your plan.
Winged words from a video game meme:

If video games have taught me anything, it's that if you encounter enemies, you are going the right way

If it is not..  

It is OK to stop. In that case you have tried something, learned a lot and gained experience. So in the end you walk away with gains that can be used in your next project.

The key here is to stop wasting energy on the issue if you cannot change it. Don't blame it one someone else.

Let go gracefully and focus on your next project.

Workplace

If the issue is at your workplace, initiate a dialogue with your manager. If your manager is the one that is negative towards your goals... then you have the choice to work elsewhere. This is your choice and you can make it. There is nothing more toxic then working at a workplace where you do not have your own manager holding your back. Just find something that suites your goals better. 

Cat tax bonus

Thanks for reading. I hope this helps someone out there. 

Until next time: Work to Live, Don’t Live to Work

Reasons to avoid Debt

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We live in a world where you can consume even when you can't afford the things that you crave for, especially during the month of January that generally speaking is the poorest month of the year. But you still crave for things..

So lets list all the reasons why we should avoid debt.

• Either you can afford something or you cannot.
  Instead of taking the easy way out and buying on credit try to figure out why you can't afford it at the moment. 
• It's cheaper to buy with your own money then with the banks.
  You do not need to pay interest rate, billing fees etc. Imagine that you buy a new TV, smart-phone, playstation, laptop, tablet etc one year. The interest that you pay over the coming years would have allowed you to upgrade the thing in a couple of years. Instead, you are probably going to continue to pay the interest when the smart-phone breaks. Not a nice feeling if you have been there.
• Work to Live, Don’t Live to Work
  Without debt, you don't have to work. If you can get food on your table in any other way, you can do it. But with debt, you still have to earn even if you could survive in other ways. 
• Respect your money.
  You are less likely to buy things that you do not actually need if you need to buy it with your own money that you put an effort into saving.
• Peace of mind.You do not have to worry down the line
  You bought it, its yours. You don't need to worry each month if you can afford to pay the fees.
• You can work on your long term plan
  Put away money into your own money machine, instead of feeding a machine that is owned by someone else. You do not get rich by giving away your money.

There are a lot more reasons but these are from the top of my head.

If you already are in debt, make sure that you have a plan on how to pay it off. We have 3 items (not counting our educations). 

• The house we live in,
  Where we put in money each month. It seems popular to only pay interest these days but I really want to get rid of this debt. So each month, we put in a payment and I have calculated it into my retirement plan
• Our 2 cars.
  One could argue that we do not need 2 cars, but we live on the country side.
  One could argue that we could have bought used ones, but been there done that and in the end this is cheaper for us as neither of us is a mechanic.

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Financial Freedom

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Financial freedom, and how to achieve it. In previous posts I've tried to tell our story and how we gained a little peace of mind regarding the issue.
I know that my better half tends to linger on the subject of money and still stresses a bit for example if one of us is sick and would receive a smaller paycheck the coming month. But during the 2 years that we have followed the plan, we have started to figure out that we can manage through quite a bit of financial stress and even though we still think about it (a good thing), we are not stressed about it.

So how to reach it? How to stop stressing about money? I guess it depends on who you are, but for most just starting a savings account and buffer could do the trick.

A lot of people argue that they cannot afford putting away money. It seems to be the same kind of people that argue that they cannot change any of the situations that they are currently in. But you know, strength of character cannot be taught. And if an individual is not ready to make a change, then it cannot be pushed upon them either. It is a bit like the old proverb (or maybe not so old)

When the Student Is Ready the Teacher Will Appear

It is a little like trying to stop smoking, most people know that smoking is a bad habit and know that they should probably quit. But, a big but, they have not made the decision to quit. A whole business area is built around the fact that people know they should quit. And a lot of the advertising is rubbing in the fact that it is hard to quit without their products. In reality it seems that their product only prolong the addiction to nicotine in some way.
I have a lot of people around me that say that they will quit next week, they will quit together with someone else, they will do this and that. But nothing happens, as they have not made the decision. They have not owned the problem. For us, when we quit it was quite easy when we made the decision. It actually didn't take that much strength.
And my view of things it is the same thing with your financial freedom. When you decide that you need to do something about it, the change will come naturally.
Maybe you end up selling stuff on e-bay just to get started but you will do it for yourself and by your own free will.

But I guess that if you are reading by blog you are already interested in the subject. :)

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

My Current Plan, 2016 October

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As I've hinted in previous posts, I don't follow the diversified investing strategy or invest in index funds myself. I still think that that is the best risk averse way to invest, perfect for your retirement plan or when you are saving for your kids and most of all when you do not want to put any real time into it.

That being said... I have too much time..

So, after reading a lot on the subject. Going through Graham, Buffet and numerous books that I don't remember the names of, that could be the subject of another post I devised my own strategy.
So lets go through the overall ideas that influenced me to form my own plan.

There is no one way to wealth, everyone do it in their own way

Some preach diversification, others are into value investing and then again others only want dividend payers. Buy only companies that are cheaper than the money they have in the bank, or buy into big well proven companies that are stable. Buy and hold or Buy and sell?

So there is no single path to riches.

There is no such thing as market timing.

At least not in the long run and I am in it for the long run.
This seems to be the least common denominator that everyone agrees on. Everyone meaning the authors and investors that have a horizon of a decade or five.
Graham didn't have to time the market as he basically bought the whole basket and then micromanaged that portfolio to see when things were ripe for harvest. Others buy at a nice price (not always the best) and hold the investment for a long period and see it grown.

What I look for

Management

Do I trust the management to drive the company forward into a money maker for me?

Dividend payout

I.e. a cash flow that can be re-invested. And when time comes, a cash flow that can substitute a full time job or 2. Best deal if it has a long term increased dividend strategy.

I can figure out how they make money

This is key. I don't want buy into a company if it is in a field that I don't know about. If it is unclear how the money gets created, then it is a no.

A Great Company

I don't want to go through the endless waves of small unknown companies that may become the next [insert any skyrocketing company here from your local financial news]. I want a boring old money maker with a well recognized brand that is out there and has 'always' been. Think Coca-cola.

Does not ask shareholders for a cash-in from time to time

Another no way. Steady long term business that is able to finance itself and pay a dividend.

Not my employer

I like my employer, I like working for them. But, a big but if.. If they go out of business and I loose my job, I don't want to loose my investment at the same time. Or the other way around. Just think about it. You see your investment go into ruins and the next day you get fired. Not an ideal situation. I don't buy my employer.

Is  better than the ones I already have?
If the proposed return of investment isn't better then from worst company I already own, then I might just as well buy more of the ones I know of.

When to I plan to sell

Never :)

But honestly, no.. I do not have an exit plan. I do have an emergency plan for when the

Management turns sour

As time goes by, the management team of a company change their members or the bigger shareholders want a change and it may turn out to be in a direction that I am not comfortable with. When trust is lost, that's when I might sell. Emergency plan, not an exit.

Until that happens, the market may do whatever it likes. If I trust my companies, then I'll hold on to them. Preferably for me would be if the market thinks the worst, as it just gives me an opportunity to buy more shares at a cheaper price.

So. That was a summary of the strategy that I follow. Currently holding 2 companies and buying more of them every month. Until something better comes up, I'll stick to those two.

Hope this gives some ideas to other people starting out in building their own future :)

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

Step 2: Expectations and mindset when investing

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This is step 2 of my private economy, saving and investing series. Be sure to read the other posts as well:

Step 1: Stabilize your economy
Step 2: Expectations and mindset
Step 3: Index funds

Now we have done some ground work.

An automated savings plan is in place and a buffer is filled for the rainy day. So whats next?
By now you might have noticed that the ordinary savings account has a pretty low interest rate, if at all. It has become more and more common for 0% interest rates on savings accounts.

For us it was a deal with the bank to start an investment account to get a better interest rate on our house loan.
We did not know much about how the capital market worked when we signed the deal, only what we picked up in the news and movies. The popular cultural view includes

• A lot of trading. Movies love day-traders and Wall Street corruption. Buy! Sell! Follow the markets up and downs.
• Speculation and the quest of finding the next big winner. In my ears this sounds like a lot of work and a high risk.
• Small daily variations in trade make big head-lines in financial news. But then again, real journalism seems to be hard to find these days.
• The market always has the correct pricing due to the volume of trade.
• Stocks are just numbers that can be statistically analysed.
• Stock picking is everything there is to it.

The first book on the subject that I read was The Intelligent Investor by Benjamin Graham and the biggest eye-opener for me was the notion that when you buy into stock of a certain company, you actually own a certain part of that company. If your company does well, it will pay you back, if it goes bad it will not.
The strangest thing is that I never thought of that before. The abstraction of a share has taken over.

Definition of the word Invest.

"To commit (money) in order to earn a financial return"
-merriam-webster.com

"Put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit."
-oxforddictionaries.com

"To put money, effort, time, etc. into something to make a profit or get an advantage"
-dictionary.cambridge.org

The investing options discussed on this blog follow these definitions. The common idea is to put money or time into something and expect a return on that investment in the form of money.
Many people think of their house or apartment as an investment but in my mind the money you put into your house is in a very grey area, even if you make a profit when you sell it you will still need somewhere to live.. Buying an house and renovating it and then reselling for a profit is a investment. Your home should not be. If you earn some extra cash on moving, see it as a bonus and put it into your investment plan.

Don't expect to get rich fast, it will take time but in the long run if you stick to the plan you will start to get returns that in the end will blow your mind.

Mr Market

Grahams famous allegory of Mr Market goes something like this: once you become a shareholder you will start to get daily visits by Mr. Market with a price quote on your shares. But some times the quote is ridiculous and it is up to you to either trade with him or not. It does not matter if you do or not, because if you are still a shareholder the next day, he will come back. Mr Market listens closely to every piece of information and follows every lead when setting the price tag on a share.

Lets fast forward to present time, today Mr Market comes to visit more frequently. He pretty much comes multiple times per hour if we let him. But it is still you, the shareholder, who must either accept his offer to trade (either buy or sell) or not to.

Day-traders continuously negotiate with Mr Market and trade with him multiple times per day to gain a profit. They do not look at their shares as parts of a real physical business but more like paper with a price-tag on them. In my mind, this is a very high risk game and the only real winner is Mr Broker.

Introducing Mr Broker

Where Mr Market is the provider, I like to see Mr Broker as the pusher. He wants you to do business with Mr Market.

Mr Broker is the guy you call each time you want to trade with Mr Market. He does all the paperwork and takes a small fee for the favor. In the end, if you trade a lot, he is the only real winner. Think of it as the house always wins at the casino. So the key is to involve him as little as possible. Mr Broker loves the news and the manic-depressive Mr Market as they increase the amount of trades per day. Mr Broker is a very very rich guy.

One of the things with Mr Market that Graham left out of his allegory is that he is a pretty bad guy, not only does he have manic-depressive traits, he is also a stalker. Even if you sell every share that you own to him on one day, he will come back the next. And continue to do so. Meaning that you will have a pretty good picture of if the decision you made was a good one or a bad one.

Grahams strategy to battle Mr Market is to diversify your holding. Meaning that you buy into businesses in different fields, that are undervalued by Mr Market and when they rise a little you sell them back to him for a profit. And you continue to do so until you get rich one step at a time.
In my mind this requires a lot of work even though the risks are quire small.
Or you could just buy into an index-fund that is built to automatically mimic a certain markets index. This is what I did when I started out. More on that in a later post.

In conclusion.

If you get into investing with the mindset that shares are owner certificates for a businesses you will probably have a better outset than most. View yourself as an owner and read up on their business instead listening of the wild speculations done by news, media and the market in general. Take your time to read a report or two, perhaps even go to an annual meeting, and only engage in a trade with Mr Market on your own terms and limit the number of trades so that Mr Broker doesn't steal your profit.
If you do not want to do that, then stick with Grahams diversification plan and buy into an index fund with a low fee whenever you have a nice sum of money to put away.

Continue to the next step: Index funds

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.