Wednesday, July 7, 2010

Holiday 2010

I'm leaving this weekend for my annual holiday, so I won't be posting for a while. The next post will probably be in August.

Thanks for visiting and have a nice summer!

Wednesday, June 30, 2010

Declutter my life - part 4

Loosing track

The more items you get rid of, the harder it becomes to see what can still be thrown away. This does not sound logical, because less items means less items to think about. But the main problem lies in the fact that most of the things I still have left, can be easily put in boxes out of sight. This way, the room looks clean and minimalistic.
To make it easier to find new items to get rid of, I'm gonna make a list of everything I own. This way, I just have to review the list without having to look at the items themselves. And it'll make me aware of the amount of things I own.

The list

  1. computer
  2. flatscreen
  3. another flatscreen
  4. laptop
  5. computer table
  6. mouse
  7. keyboard
  8. cheap keyboard
  9. desk chair
  10. bed
  11. alarm clock
  12. desk light
  13. cd movie collection
  14. some music cd's
  15. box of items of questionable legality
  16. item 1 of questionable legality
  17. item 2 of questionable legality
  18. musical keyboard
  19. elektric guitar
  20. guitar amp
  21. guitar cable
  22. another guitar cable
  23. distortion pedal
  24. 5 mouth harmonicas
  25. irish thin whistle in D
  26. amp wired to computer
  27. 2 big speakers
  28. small wooden drawing box
  29. big wooden drawing box
  30. a little sack to put in your school supplies (pen, pensils, ...)
  31. a paper hole cutter
  32. a block of little square note papers
  33. a katana
  34. eskrima sticks
  35. 2 wooden sticks (that will become tonfas one day)
  36. a rope dart
  37. a hockey stick
  38. a billiard cue
  39. a night closeth
  40. a big wooden trunk
  41. 8 Shaman King pocket mangas
  42. a pan flute
  43. a smaller pan flute
  44. a golden chinese rat horoscope keychain
  45. a car (Daewoo Kalos)
  46. all kid paddle comic books
  47. empty classifiers
  48. 2 classifiers that hold my important papers
  49. the flemish flag
  50. a home-made pirate flag
  51. a fluorescent safety vest
  52. home-made geta
List date: 2010-06-30

This list is temporary, I still have more items to add!

Thursday, June 24, 2010

Things I do to life a frugal life

How I live a frugal life

There's a lot of things you can do, to uphold a frugal lifestyle. Most of these actions are well within reach and easy to do, others are a bit more difficult. I found an interesting list on "The Simple Dollar". But the goal of this post is to give you a list of the actions that I do, so you can follow the progress in my lifestyle change a bit. And it might inspire others to come up with their own ideas.

Assumptions

This list will not be complete, because I will only list the actions that I currently do. I can (and will) do more and when I do, I'll expand this list and let you know about it.

The list only deals with spending less, not with earning more. Earning more, has nothing to do with living a frugal life.

Things I do to live a frugal life

1. Transportation - Car: I only have one car

I need a car for work, so I need to keep this one. But I only have one. For me, this is obvious. I don't understand why anyone would need more than one car, but apparently some people own more cars. You should find one as cheap in gas usage, tax and insurance as possible, for your familie size.
Ideally, you should strive to live without a car. But in modern society, that might not be possible for everyone. And those that need a car, aren't always lucky enough to get a company car. So buy a decent, used one and keep it small and cheap.

2. Transportation - Car: Gas

Gas is expensive. Make sure the gas usage on your car is low enough. You can take this into account when you buy a car. But the most important thing is your driving style. Fast accelerations cost money. Does it really matter if you get there a couple of minutes earlier? Ever thought about leaving earlier to get there on time?
Another solution can be a tank card from a company. My company pays for my gas, so that's taken care of. The downside is, that your car will wear down easier, because such jobs require you to visit clients often.

3. House - rent/buy

If you rent, make sure the rent is low enough. If you buy, buy as small as possible. I'm currently still living with my parents, so rent is cheap for me.
I'm currently looking for a house though, and I'm looking for a small one.

4. General - Equipment

Buy everything in quality material and take care of it. This way, it will last longer. I stopped buying cheap stuff. It is frugal, if you only buy exactly what you truely need and nothing more.

5. Food & drinks - Eat out less

An obvious one. Making your own meals is a lot cheaper and can be just as delicious. I never eat out. My meals are included in the rent (an advantage of living with your parents).

6. Food & drinks - Less bar visits

Drinking beers at the bar, costs more. Me and my friends don't go out a lot and we don't go to fancy clubs, so the costs are minimal enough. Not going to bars at all, the theoretically ideal frugal way, is a little bit anti-social and makes it difficult to meet girls. But there is a difference between spending $50/month on drinks vs. $50/week.

7. Food & drinks - Bring your lunch to work

I see delicious meals being eaten at work, every day. But I consider it a luxury and never give into it. I always bring my own lunch.

8. Clothing - Adopt a minimalist wardrobe

From now on, I'm following the clothing advice from Jacob at ERE. Black, blue and gray, all the colors you need.

9. Clothing - Buy cheap

You should buy good clothes, but buy them in discount. I buy what I absolutely need, nothing more. If I buy, it's either in january (bargain season) or in september (I think... at least it's in the other bargain season). And also in Spain on the market, some stuff I need is cheap there.

10. General - Impulse buying

Buying on impulse is a bad thing. You'll buy stuff you don't really need. I've become immune to impulse buying since I started decluttering. Always think: "Do I really need this?" or "Can I solve this problem without buying something?".

11. General - Shopping

It's good to shop only when you need something, e.g. like grocery shopping. But if you only go to shops whenever you need something, you don't know what store has what items. Interesting bargains can be found, when shopping. I combine it with necessary shopping. If you need new clothes, get them. After you got them, look around for other things. You'll not be tempted to buy other things easily, because the clothes are already costing you money and you don't want to spend any more (if you're frugal, that is).

12. Entertainment - Music

If you like listening to music, youtube has many free songs. So does the internet. You could also make your own music with lmms.

You could also learn to play instruments. The internet and youtube are loaded with free music lessons. And if buy an irish whistle, for example, it'll only cost you around $10.

13. Entertainment - TV

I sometimes watch TV with my brother and my parents, but that's more of a social thing. I couldn't care less about TV itself and I'll never buy one myself.
The TV costs money, the cable subscription costs money and there's too much commercials on TV to actually enjoy TV shows anyway.

14. Entertainment - Reading

Free books are at the library. I read e-books and blogs on the computer. It doesn't cost me anything.

15. Entertainment - General

Always try to find free entertainment. The internet is full of free games, you can play cards with friends, you can take walks in nature, go for a swim in the ocean, ... use your imagination.

16. Health - Sport

Do cheap sports that require almost no gear or go jog (or find another free method to excercise). Sporting keeps you healthy. It avoids medical bills in the long run.

17. Health - Health care

I get health insurance via work. It's cheaper that way. If you have to get it yourself, try to get it as cheap as possible (while still covering the obvious health problems).

18. Transportation - Bike

I bought a bike. I use it for short distance errands. It saves on gas (althoug my gas is paid for by the company).

19. Transportation - Walk

Really short distances I do on foot. It's free and healthy.

20. Equipment - Decluttering

Decluttering makes it possible to live in a smaller house. Less stuff to have = less stuff that can break = less stuff to replace when broken.
I'm still decluttering, but I've come a long way since the first time I started.

21. Extra - Gifts

When buying gifts, you can always get something bigger and spend more. Draw a line and stick to it. For everybody you know the same price, close friends and familie get a slightly higher price. This makes choosing and buying gifts easier too.

22. Extra - Smoking

Smoking eats away your hard earned money. I don't smoke.

23. Food & drinks - Alcohol

Drinking alcohol costs money. The problem is, that I like the taste of a nice cold beer. My solution is to try only to drink in the weekend. And when I drink, I try not to drink huge amounts, unless on special occasions. But this category has room for improvement.
A good idea is to let people know you like alcohol. This way, it can become a birthday present. And if you drink in moderation, those donated bottles can last long.

24. Food & drinks - Sweets

I don't eat a lot of sweets, except for some potato chips. But that's mostly because it goes well with the beer. It's best to buy a huge pack of several individually packed small baggies of potato chips. This way, you can eat some chips, without having to open a big bag. It makes you eat less, so in the long run, you save money. Ideally, you wouldn't eat them, but they are tasty.
Any improvements in moderation of alcohol intake, will also affect this category in a positive way.

25. Food & drinks - Water

Water is still cheap and it's healthy too. I drink a lot of water. In fact, I only drink 3 beverages: milk, alcohol and water.

26. Entertainment - Staying home

Make your living area a nice one. One you like spending time in. It'll make it possible to stay at home more, where entertainment is free or cheap.
Gardening can be a pleasant way to spent time. And when your gardening skills increase, your garden becomes a great place to spend time. I just have one room to take care off right now, so I do my best to make it as comfortable as possible.

27. Extra - Credit cards

It's extra, you don't need to use it. Go get cash from the bank and use that. You won't be spending money without seeing it disappear, which helps you control your spending.
I always pay cash.

28. Extra - Subscriptions

Anything that wants you to pay in parts, is a bad thing in my opinion. The only exceptions are the things you need, like water, elektricity, gas and internet. Magazines are out of the question. I had a computer magazine, but I cancelled it. You'll gather a lot of them, while reading less than half of them completely. And most information can be found for free online.

29. Entertainment - Hobbies

Do free hobbies or inexpensive ones. It can be related to the gardening, sports or other activities I mentioned before.
I do 2 martial arts, which costs me 400 euro/year. For 2 martial arts, that's not much.
But I could stick to 1 martial art, that would cut the cost in half. I'm just not sure wether that's worth it, because doing those 2 martial arts is healthy and it improves me. Never cut back on anything that improves you.
I also play free computer games, I learn Spanish and Japanese online (also free) and I make my own honeywine (cheap delicious alcohol... a solution to one of my problems).

30. General - DIY

Make stuff as a form of entertainment. I make weapons and train with them. It's because of my martial arts interest. It might be an activity of questionable legality, but it's very cheap and gives you many hours of entertainment (in both the creation as the use).
You should also fix everything that's broken, instead of calling someone to do it. If you take the time, put in some effort or ask someone for help, you can improve your DIY skills and save a lot of money. Money that doesn't have to be paid to either a craftsman or a new item to replace the broken one.

31. General - Stop paying interest

Interest is something that should always be collected, never paid. I have no debt. And if I get a mortgage, I'll do my best to keep it as low as possible, so I can pay it off as fast as possible.

32. Food & drinks - Reduce convenience foods

They make a lot of easy to cook food, microwave meals, etc. They are not healthy and not as delicious as the real thing. I still live with my parents, so food is taken care of, but I'll always prefere the real thing above the fast foods.

33. Travel - Total cost

Go on a camping, in stead of a hotel. Ignore places that are too touristic. They give you a false image of the real culture anyway. I usually go camping. Camping is awesome. I also like to look for local bars in the back streets, away from tourists. And I like to visit small villages, most would not even consider visiting.

34. Telephone

I use a cell phone with a prepaid card. I recharge it with 15 euro about twice a year, sometimes even less. I don't like cell phones. I'd go without one if it wasn't cheaper than a standard telephone subscription. But it's mostly so people can call me, I hardly make calls myself (to the annoyance of friends and family, perhaps...).

35. General - Haircut

Cut your own hair, it saves a lot of money. I have a buzz cut. It's $50 for a buzzer and it'll last long enough to earn it's money back in ten-fold.

36. General - Take care of your belongings

It can be related to the DIY, but not necessarily. Use your appliances with care, clean them occasionally, ... It will make it last longer. I handle most of my belongings with care and I give the inside of my computer the occassional dust-cleaning. If only I would take more care of my car... a point I can still improve on.

37. Transportation - Distance

Find work close to your home. It saves on gas. Again, my gas is paid for right now, but my job is close to my town anyway. Besides, it lowers the wear on the car.

38. Clothing - Cleaning

If you wash clothes less, they last longer. My mother washes my clothes, so there's nothing I can do about that. But I will keep it in mind for when I need to do it myself.

39. Clothing - Drying

Clothes last longer when sun-dried. My mother does this.

40. General - Love

I have no girlfriend at the moment, so I'm in the ideal frugal situation. But if you do fall in love, it can only work out if the partner is frugal too or at least open to the idea.

Conclusion

The list contains 40 items, on 2010-06-24.

Tuesday, June 15, 2010

Looking for a place to live - part 2

A house

Living in an RV was option 1. I already looked into it and thought it was a viable option for an aspiring extreme early retiree.
There are other alternatives though, the most obvious being a house.
Living in a house has the following benefits over living in an RV:
  • You have more space
  • Your mail is always delivered at your living place
  • You can have a garden
  • It's cosy and can have nice room temperatures in all weather conditions
  • It's probably emotionally satisfying to own your own house (unless you have a strong nomadic desire, in that case you might be happier in an RV)
There's a lot to talk about, when wanting to buy a house, but I'm gonna keep this post about buying a house in another country.

Moving abroad

Why would anyone want to live abroad? One of the reasons could be, because it's much cheaper to live in a country where the standard of living is lower. Your hard earned money could last a lot longer there.
Another reason could be, because you like adventure and wouldn't mind spending several years in a certain country, to learn more about it.
And last, but not least, because you fell in love with another country (or perhaps even a girl from another country) and you want to go and live there permanently.


Reason 1: cheaper standard of living

In the spirit of the extreme early retirement lifestyle, this reason for wanting to move abroad, is certainly a good one. You earn your money in a country, where the standard of living is high, and you make that money last longer in a country, where the standard of living is low.

This tactic could make it possible for you to retire much sooner than expected. Or it can give you more certainty. The problem is, however, that countries with a lower standard of living, have that lower standard for a reason. And the live you have grown acustomed to in the country, where you saved the money, will not be the same in the country you'll be living in. This can be a good thing or a bad thing. It depends on the country, the circumstances and your own emotions.

Emotional counter arguments

This brings be to an important issue with moving abroad. You can not bring friends and family with you. And no matter how pink your glasses are, moving to another country puts a big gap in distance between you and your current social life. You can make new friends everywhere, but it's not easy to leave your old friends and your family behind like that.

The miracles of the internet make it much easier, but talking through a computer with someone versus going to a bar with your buddies... it's not the same thing.

You should also know, that you have to break with your culture. If you really want to move to another country, you should respect that new country and embrace it's culture. Why else would you go and live there? You can not expect to live somewhere and force your own culture upon them. That's rude and not acceptable.

So moving abroad brings about a lot of emotional turmoil within yourself and your social network. You'll have to deal with it in your own way. But I know people who moved abroad and love it, so it is possible to deal with it and family and friends may be shocked at first, but if they really are friends, they'll respect your choice and deal with it too... in time.

Reason 2: the adventure

If you want to find out what a country is like, by living there a couple of years... don't. It's much better to go RV'ing if you want to do that. It's cheaper and you don't have the problems of having to buy, sell or rent a house.

Moving to another country, brings about a lot of paperwork. If you're only going to stay for a couple of years, only to return afterwards... you're going to have a lot of trouble getting reinstated. If you keep your nationality and an address in your own country, you can still stay for several periods in another country. You'll only have to return once in a while, to collect and handle your mail. And if you decide that the new country is worth living in, you'll have connections, knowledge and more confidence to actually move there after all, if that is your wish.

Reason 3: falling in love with a country

If you go on a holiday to another country, you might have a good time there. In fact, you might have a great time there and decide to come back the next year.

Sometimes, coming back to the same country several years, can make you bored of it and sometimes you start feeling more 'at home' there. Visiting the same place every year, has it's advantages (for those that still like the place after several visits).
You learn more about the culture
You visit non-touristic places, that give you a better understanding about the country
You make friends and connections
You start appreciating the country more

Beware of being blinded by the beauty of summer, though. A country might be completely different in the winter. Especially the sunny places. They have a lot of tourists in the summer, but could be rather dull in the winter. I'm not saying they are, but they could be.
That means that you have to find out first. You need to spend several months there in the winter too. This way, you can find out about the weather, how cold it is, do the people react in the same way if you come out of the tourist season, etc.

If you still like the place after that, you might have found yourself a good place to live.

Note:
Falling in love with someone from another country is a different situation. You'll get in contact with the culture much faster and you get to know about the country in more ways. And true love can not hold you in your country anyway. That makes it a matter of finding out that you made the right choice in love, a difficult subject this blog is not about. Sorry, I can't do it all.

Conclusion

Deciding to move abroad, can have many reasons. But they all imply in one way or another, that you like the new country and are ready to become a part of it.
A big downside to it, is that you'll have to leave your old life behind. That's not a big problem when it comes to culture, but it is a big problem when you loose contact with friends and family. Modern technologie can only substitute a part of real life, not everything.
In the end, it's you who decide what's best for you and whether it's possible, both financial and emotional.
But it is a good option, one that I'll also keep open in my search for a place to live.

Declutter my life - part 3

Broken bonds

I got rid of some more items. Nothing special and unfortunately, nothing big either. But gone is gone. Another emotional bond broken. How I love this feeling...

I had some wooden sticks and a piece of wood laying around. I was going to make something with it, but I changed my mind. So this thaught me an important lesson:
Don't do today, what is not urgent. If you postpone it, you might be able to hold it off long enough untill it's not important anymore. Thus, the postponing will save you unimportant work.
Next time I want to do something, I'll see if it's important enough to do immediately. If it's not, I'll postpone it long enough to see whether it's still important or not.

It's comparable with wanting to buy something you're not sure you actually need. If you postpone the purchase, it'll become clear that you actually don't need it, thus saving you money by postponing. Postponing is a good tool. Just make sure you don't abuse it... some things are urgent... they have to be done and they make postponing still a possibility, but not an option.

Too much stuff

I also had some books that I probably won't be able to sell anyway, so I gave them to my mother. She knows someone that can use it.

I still feel I have too much stuff though. Probably because I do. I still have toys from when I was little. They still need to be sold. I have some board games I never play (anymore)... Yes, there is much room for improvement.

I also have other items that are already on sale, but so far there have been no interested parties. I'll keep it online until after my vacation in july, after that I'll give or throw it away.

I also have a mexican hat. I used it last year on a festival. It's a cool hat. But the only time I use it is on a festival. So I already found a solution for it: I'm gonna ditch it at said festival. More info on that later...

Put them in sight

All the items I don't need anymore, are not in my room. They're in a small attic. This is good, because than they are not in the way. This is bad, because you might forget about them, if you don't see them. But that's where I use the following trick:
Find some items you want to get rid off
Put them in the way (so they take up valuable space)
Put them online for sale

Now if the items aren't being sold in a month, you'll be annoyed with that stuff being in the way and taking up valuable space. This will motivate you to take more action to get rid of it. If it can't be sold, give it away. If you can't find someone who needs it, throw it away. You'll want it gone as quickly as possible.

Conclusion

Decluttering has become somewhat of a hobby that's entwined with my new simple lifestyle.
There will be a day, when I can truely say,
that the items that I own, are all I really need.
It will be a day, where all my belongings will fit in my small Daewoo Kalos.
But today... today is not that day (yet).
Thank you for listening.
You have been a terrific audience.

Monday, June 14, 2010

Blog theme

I'm playing around with the blog theme, so my apologies if the theme changes while you are reading the blog. I'm testing out the new theme engine from blogger. It looks better then my previous theme. I'm gonna try to personalize it later.

Looking for a place to live - part 1b

Detailed costs of living in an RV

I just made a calculation about what it would cost, to stay for 3 months in a camping.
I took the fees of http://www.campingjoncarmar.com, a good camping in the North of Spain, as an example.
If you go outside the high season, you have to pay the following fees:

Motorhome: 13 euro
Person: 6.40 euro
Elektricity: 4.20 euro

If I recall correctly, that would be the only expenses you need.
If we add this up, we get a total of 23.80 bucks per day.
3 months is approximately 92 days (I count 2 months of 31 days and 1 of 30 days).
If you stay longer than 7 days on the camping, you get 50% discount.
So in total we got:
23.80 x 92 = 2189.6
With 50% discount, this becomes: 2189.6/2 = 1094.8.
This is the total for 3 months, which makes for a total of
1094.8/3 = 364.93 euro per month (446.02 USD).

I don't know about other countries that well, but that's a heck of a lot cheaper than renting or buying a house in Belgium.

You also need the propane thanks, so it's a good idea to round this number up to 400 euro/month (488.88 USD). That's still cheap. And the standard of living is a little bit lower in Spain, than it is in Belgium, so you'll save some more money while staying there too.

Moving abroad

This excercise also showed me a new angle on motorhome living. It can be used for another purpose too: as a temporary living place, in case you want to go live abroad.
It will give you several options:
  1. You can live in the new country, without having to buy a house immediately.
  2. You can visit family and friends, without bothering them too much.

In regards to the first option

This allows you to find out what it's like to live permanently there. If you decide, during your stay, that you don't like it after all, you just start the motorhome and your on your way again. It's a good way to explore different areas or countries, so you can find the perfect place to spend the rest of your life.

In regards to the second option

You can visit relatives, without the need for them to provide you with a place to spend the night. You have your home and accomodations with you.

Conclusion

Living in an RV remains an interesting option, that I'm going to investigate even further. I'll also look and write about other options, but for now, it's one option that available and it appears cheap enough to support a lifestyle of extreme early retirement.

Looking for a place to live - part 1

An RV as a cheap place to live?

For someone who tries to retire extremely early, the housing cost is one of the most important one to consider. It's the biggest expense in any sane budget. To cut back on the costs here, one should strive to find a place that's not too big.
The housing price will go up with every bedroom it has extra. So less bedrooms equals less money to borrow to buy the house, wich lowers your mortgage.
I'll write several posts, that document my search for the ideal place to look, which has to be beneficial in reaching my goals for early retirement.
And to start off, I'll write something about an extreme example I'm interested in: living in an RV.

Why would anyone want to live in an RV?

Well, if you live in an RV, your housing costs will be a lot lower. That might be one of the core reasons anyone would like to live in an RV. But there is also a sort of 'nomadic' component to it. You have all your belongings in a small space, which means that you can move easily. After all, it's called a 'mobile home' or 'motor home' for a reason, right?
If you buy a small RV, parking is not a big problem. It's an ideal solution for those that like to travel a lot. They can go and see the world, taking their precious home with them.
So what are the advantages, disadvantages and which of those make living in an RV appealing to me?

Small spaces

I like big spaces. Yes, if I'm outside, I like to be able to look far to the horizon. This is a problem on the inside of the RV, because it's designed to be small. But with an RV, you can drive to sunny places and be outside a lot. And there's a lot of space outside...
The small space itself, could also cause problems for storing your belongings. If you have too much of them, there might not be enough room to put everything in. But as I wrote in another article, having too much items is nothing more than excess emotional bonds that make life more difficult. This problem is already being taken care off, because I'm constantly in the process of decluttering my life. I live in a small room at the monent, even a smaller place than an RV (although that's just the room I sleep in and entertain myself in). But it has forced me to get rid of all the stuff I no longer use.
I'm actually striving to decrease my possesions to a point that they can fit in my car. And if it fits in my car, it will definently fit in any RV.

The costs of living in an RV

The good thing about the costs of living in an RV, is that you have no property tax to pay and the initial investment is much lower than that of buying a house. The bad thing is that you have to pay gas. And with rising gas prices, it does not sound like a low cost. You don't have to travel if you own an RV, but your RV becomes your car too, so you'll have to drive it anyway.
But let's presume that you can keep the gas costs to a minimum. What other recurring costs does an RV imply?
There's propane, because you need to be able to cook. The propane thank probably needs to be replaced every 3 to 4 weeks. That's not so bad, because in a house, you might use propane thanks to cook too.
Elektricity... something modern life requires. But you are not hooked up to the power net, so you'll have to get elektricity from the RV battery. Most RV owners use a special battery for their suppliances, in combination with one or more solar panels. This way, the energy from the sun gets stored in the second battery and their elektricity is taken from sunlight, without the danger of not being able to start the RV after a few days being stationary.
I'm no expert in that field, but that looks like a pretty cool solution. It's definently one of the things I like about living in an RV. But the costs of a solar panel are pretty high, I think... ? Well, it'll probably pay off in the long-term.
Another important cost are the bi-weekly fees you need to pay to dump your sceptic thanks in an RV-park. But compared to rent or a mortgage, those costs are very low. You'll also need to fill your water thanks, possibly at the RV-parks too.

The overall costs?

I think that with carefull planning, the costs of living in an RV can be much cheaper than living in a house. But RV's weren't build for permanent living, so you'll put a lot of money in modifications and appliances in the RV will break faster. Adding everything up, you will still be cheaper off than with a house, providing that you don't travel too much, to keep the gas costs low enough.

My view on living in an RV

I think it's the perfect solution for travelers, as long as they stay in the places they visit for a couple of months. You'd never have trouble finding a place to sleep, you don't have to worry about your belongings at home... they are with you all the time.
But it will cost money to maintain and upgrade, so in the end, it's only worth it if you want to live the nomadic lifestyle.
The main issues I have with it are that the material breaks faster, there are not as much camping sites or RV-parks in Belgium as in the U.S. and parking places here tend to be rather small.
And the biggest downside is that housing prices rise with the year, so the sooner you buy a house, the better. Well... I'm not really sure about that yet, but I tend move more towards that way of thinking.

Conclusion

With careful planning, living in an RV can be cheaper than living in a house.
It has it's downsides, but also it's charms.
At the moment, I think it's better suited for people that have a more 'nomadic' personality, but I'm keeping it open as an option. If it appears to benefit my journey towards my goal of extreme early retirement, then I'm willing to try anything. Wouldn't you?

Notes

Some blogs I found to be an interesting read on the subject are:
and

Monday, June 7, 2010

Two types of businessmen

Two mentalities

The way I see it, there are two types of businessmen (or women):
A The salesman that can sell almost anything he wants
B The man behind the screen, who's good with money and knows how to make the right decisions

Type A

The first type will generally be more extrovert. They know what to say and will stop at nothing to convince others of their beliefs, if they need to. They are people of action. They like to take action and they like to experience action.

Type B

This type can be both extrovert and introvert, but because they are thinkers, I'm more inclined to say that most of them are introverts. They know how to handle money and they know how to make good decisions. They make strategic decisions and think ahead. They are planners. Failing to plan, is planning to fail, in their book.

Type A and early retirement

Looking at this type in terms of early retirement, they can get the money they need, whenever they want to. If they lack money, they'll sell something. If they have nothing to sell, they'll buy something and sell it with a profit. This is a good skill.
There is a small problem with their mentality, in terms of the early retirement, though. Because they like action, they'll try to get it in their free time too. This can be in many forms, but a lot of them cost money. They might like computer games, skiing or snowboarding, paintball, carting, or other hobbies with a lot of action. And most of these high action hobbies, cost money.
They like to live in the moment. If they need money, they can get money. But they'd rather use it, then save it. If there's a person with an early retirement mindset, who also falls under this cathegory, we have a clear winner. It would be a person who can get there and he can get there fast. Unfortunately, most of them do not have the early retirement mindset.

Type B and early retirement

These people are not that good at getting the money they need to reach early retirement. But they will take their time to become good. They will make a plan and try to stick with it, unless circumstances require them to make plan-changing decisions. In terms of early retirement, they will take their time to set up a system, that let's the money gradually come their way. Certainty is more important than quick results. Those who have the early retirement mindset, can get there. It'll take longer for them to come up with the money, but with careful planning and making the right decisions, it will happen.

The last of the coffee table

Remember that coffee table I was going to get rid of? This gives me a good example for these two mentalities. I consider myself to be of type B. I can't sell things, I'm not good at it and I don't really care much about getting good at it. It's just not my thing.
My brother, on the other hand, is a very good salesperson. He likes to sell stuff and he often succeeds in making a profit.
So what did I do to get rid of the coffee table? Nothing, I told my brother to sell it. He actually sells most of the stuff I want to get rid of. That means it's less trouble for me, more chances of actually getting it sold and for what he earns, I split it 50/50. All I have to do is take pictures and give it to him. It's a win-win situation.

Final notes

I talked about two types of businessmen. These types are what I believe to be true. They are not facts, but my personal view on the matter, perceived through observation of both professional salesmen and company bosses I have had. It doesn't matter what type you belong to, if you are aming for early retirement (or even extreme early retirement), both types can get there. All it takes, is to know your qualities and use them to your advantage.

Thursday, May 27, 2010

Declutter my life - part 2c

Bye bye, coffee table

In the previous post, I talked about luck and taking action. Harsh decisions can help you, when you are in doubt. I apply these techniques myself, so I'm not just talking about something I bearly know anything about. I know what I'm talking about and I only give information that's been useful to me too.

That's why I took my decluttering and simplifying another small step forward, by deciding to get red of that coffee table I was talking about. Another item I'm no longer bound to. And it feels great. And what a space saver this is.

Why do I get rid of it?

It's a good coffee table, good quality and it's in perfect condition. But I still live with my parents, so I'm only keeping it for when I move out. This could take a couple more years (especially when you look at the prices of houses). A couple of years is a long time. A lot of things can happen during that time. New coffee tables can emerge at any time, other ideas or replacements can cross my mind, aliens can take over our planet... or the world can go up in smoke. Anything is possible. Anything can happen. So why hold on to this coffee table? I'll find another one if I ever need it.
Case closed.

I'm now another step closer to being able to live out of my car.

How taking action can make you successful

Don't think, act

Did you ever feel like doing something, but you weren't sure about it. And because of those doubts, did you ever waited to long, thought about doing something for too long, so in the end nothing happened? I bet you did.

Some examples have been given on this blog before. When you try to declutter your place, it's somethimes hard to find a reason to get rid of something. And then you think about it for too long and several months later, the specific item is still there, taking up space, not being used at all...

But after those months, you can try again and get rid of it anyway. There are, however, situations where such a lack of determination or decisive power can result in failure that can never be retried. Some events in life only give you 1 chance. Just think about talking to a girl meet once, that you like. If you don't talk to her on the moment you see her, you may never see her again. Thus, you loose the chance of talking to her... perhaps forever.

Harsh decisions

To be successful in life (or love, for that matter), you need to take action. If you don't do it, it doesn't get done. That's how simple it is. And when in doubt, you need to take harsh decisions. That's how you can overcome your doubts. You shut down your brain for a couple of seconds, you stop thinking so hard. In fact, you stop thinking about what you're thinking. You simplify your decisions and become logical.
You ask yourself some questions: What do you want to do? What does this require?
And then you act accordingly, completely on autopilot.

Lucky

When you want something done, or you want to achieve something, nothing ever happens by itself. You'll see no progress if you don't take the appropriate actions. And because of that, people are prone to blame other peoples success on luck. They succeed (quicker), where you don't. Why blame it on the fact that they took the appropriate action, when it's easier to blame it on luck? I have done that too. But then I learnt something important...

Luck does not belong to 1 person. It is everywhere, flying around us. It's there for the taking. All you have to do, is set up receptors or traps, so some of that luck will fall into your hands.

Allow me to clarify this with some examples...

Lucky - example 1

If some strange person throws money at you, but you don't pick it up... what happens? People around you will jump at the money and pick it up for themselves. Are those people lucky to get that money? No more than you. The luck part was, that they where at the place, where someone threw money. You where there too, so they are no luckier than you.

Is this luck? Yes. How can you get this luck by taking action? Go outside. This increases your chances to meeting someone who'll just give you money. That strange person is there, independent of whether you are there or not. By going outside, you increased your chances of experiencing that event of him throwing money at you. You put yourself open to receive that luck. Why do they get it? They took even more action, by grabbing the money. Action will get you results. The more action you take, the better the results.

Lucky - example 2

I'll give a better example, more in line with the previous posts.
If you want to be successful in decluttering your place, you need to get rid of stuff. Not thinking about getting rid of stuff, but actually doing it. If you come across an item of which you are not sure to get rid of, you might put it in an 'undecided' box. So what happens? Nothing. Absolutely nothing. The item will remain their until you take action.

If you do take action and decide to get rid of it, you gain space and become emotionally free of that item. But you also put yourself open to lucky events:
  • you might get a lot of money for it, if you sell it
  • you might be able to trade it for something you really needed
  • by getting rid of it, you might find an item that you lost, long ago, that was laying under it or behind it
  • ...
Anything is possible, taking action activates a chain of events. Some of those events might be related to the luck that's flying around us.

Lucky - example 3

If you want to have a girlfriend, you need to talk to girls. You can't wait for some girl to miraculously appear in front of you, we don't live in a fantasy world. There are 6 billion+ people in the world. Half of them are female, so that makes 1 billion women that might like you (raw estimate of girls you can date, both legally and morally). But guess what? Almost none of them will come to you and tell you they like you, even if that's the case. To be able to find out if a girl is right for you, you need to take the appropriate action. You need to go to them and talk.

People who do that, can find out that either a girl is right for them or not. If they are, they might end up together. For those who don't take action, it looks like people with girlfriends where lucky to get the girl. No. They took action.

For someone who's really shy, this too can be a harsh decision. To stop thinking too much and actually talk to girls, it requires you to change your mentality and do something you don't do everyday (if you're really shy). But you accept and open up to girls, which improves your chances of finding the love of your life. Love is not luck, but if you want it, you can handle it the same way.


It starts with a plan

To become successful, you need a plan. Following this plan, will get you where you want to be. It's not luck that happens to come your way, it's taking action. Here's what you can do, to let luck come your way:

  1. Find out what you want
  2. Find out when you want it
  3. Think about way to get what you want, write it all down
  4. Break it down in little steps, going from small subgoal to the ultimate goal
  5. Put it in a graph or on a piece of paper, to track your progress
  6. Take action, according to your plan
  7. Change the plan afterwards, when you feel it is absolutely necessary in order to be able to achieve your goals
  8. Stick with it and let your progress motivate you

Conclusion

Luck is all around us. Changing our life, by taking appropriate actions, will make some of that luck come to us. This will make us successful in whatever it is we want to do.
Love works the same way, if you don't open up, nothing can come your way.
To be successful, you need to set up a plan and stick with it to the end and
let your short-term goal progress motivate you to reach your long-term goal(s).

Tuesday, May 25, 2010

Declutter my life - part 2b

I got rid of the CD closet. I gave it to my parents. It's in the living room downstairs now. The funny thing is, that the wood of the closet seems to be the same as the wood of the speakers that are attached to the TV closet that's already there. So it fits nicely. And storing DVD's and my brothers games in there, in stead of in the TV closet, makes the TV closet look less messy.
And now my room has a little bit more space... it's a win win situation.

Thursday, May 20, 2010

Declutter my life - part 2

Expanding the territory

As soon as I started seeing the benefits that simpifying and decluttering brought, I found more places where I could apply the same techniques. I decluttered my mailbox, I reorganized all the files on my computer, etc. The results still amaze me. I can navigate my computer faster, it's easier to find files I need, my mails are easier to maintain...

It's challenging to find new ways to simplify. There's always some aspect of your life you can simplify, even if you haven't thought of it yet. And by doing so, your productivity level will increase and your emotional state will evolve in a positive way.

Living out of a car

As I mentioned in a previous post, I'm a fan of the ERE principle. On that blog, Jacob has written an article about living out of a suitcase. I liked that article, it inspired me. He lists the most important items someone needs and I think he made a good list, a complete one. I would throw in a compass and a pocket knife, but other than that, it's a perfect list.

It is, however, a perfect list for those that move around a lot and that can only transport the absolute minimum required. I don't think it's suitable to live like that forever. It might be possible, but I need a couple of things more. That's why I have expanded on the idea and I'm now trying to get rid of as much clutter as possible, so I can live out of a car. And my car is a Daewoo Kalos, so it's a small car. I think this is perfectly possible and it's seems like a good goal to reach for.

Furniture

Furniture is big. It's the biggest problem in moving. I don't have a lot of furniture, but some items are very big. There's my bed, my big computer table and a low table. What you can do, when moving, is getting rid of the furniture and buying new ones when you get to your new place. I'd like to avoid that as much as possible though. So for the furniture, I have to find solutions.

Japanese style bed

I gain a lot of inspiration from the (older) Japanese homes. The Japanese have always lived in pretty simple homes, partly because most of the houses in Japan are small. If you look at the bedrooms, we can find a solution for 1 piece of furniture: the bed.

My current bed has a wooden frame. I don't need it. I can use a Japanese futon instead. It's basically a combination of sheets that you put on a collection of tatami mats. Those tatami mats can be stacked in the car and the futon itself will not occupy too much space, because it's just some sheets you can fold up.

There's more inspiration to be retrieved from Japanese homes. Most of their rooms don't have much in them. And yet, they have beautiful houses in my humble opinion.

I currently still live at home, in a small room upstairs. This has made me aware of the benefits of not having much clutter. If I can get op the biggest pieces of furniture, I know I can make this challenge. That would make it a lot easier to fit it all in a small car.

Small table

I have a coffee table. My parents wanted to get rid of it, so I kept it. A free coffe table, good quality. If you have to buy that, it will cost a lot of money. I was thinking about using it to eat on in my kitchen, when I move out. This is still under severe questioning though, because it doesn't fit in my car. I made it fit in my small room, withouth much trouble, but the room is still bigger than the car. A solution will hopefully follow in a later post...

Tiny table

I also have a tiny square table. This table was about to get thrown out too, but I took it. It's a very small table, 0.50 square meters or something like that. It has a square shape, so it fits practically everywhere. This fits in my car perfectly. It's a bit small to eat on though, but it's totally managable. And you can can put something under it too. to save even more space. This table is one thing I will keep.

CD closet

I have a big standing closeth for storing cd's, but I've been using it to store other things. It has a glass door, so you can see what's in it. The advantage of a glass door is this: you see what's where, without opening the closet. This makes storing and retrieving items from the closeth, a quick and easy action. The disadvantage is, that you need to organize everything perfectly, otherwise it will look messy, even when you close the door.
I never glued it together, so if you pick it up, the bottom will fall off. But this also means that I can take it apart again, so it becomes easy to move around. That makes it worth holding on to, if I have interesting items to store in it. But then again, I'm trying to get rid of most items and I emptied it last week... so at the moment, I'm gonna keep it, but I might change my mind about it later.

The wooden box

I also have a big wooden box. I use it to store all my paperwork, degrees, martial arts information and plain paper I can use to write on. This is important, you need a place to store your paperwork. You could use a suitcase for it, or something else more portable. But I like to be able to take out my classifiers in an easy way, so everything stays organized. I don't want it to take too much time to put new papers in the classifiers. It's important to keep your papers in the correct place, well organized. It makes filling in your taxes easier.

I use a 2 year classifier system: 1 classifier contains 2 years worth of paperwork. When the biggest year on the classifier is more than 5 years ago, I can throw the content of that classifier away. It's a good system, though 5 years may be too much, if I want to be able to store it in my car.

If the wooden box can fit in my car, it's a keeper. It can be used as a container for items, but you can also sit on it. My dad made it, so it's quality material. He's good at making things. I'm gonna keep this, until I find out that it doesn't fit in my car.

Conclusion

So far, I have a wooden box with paperwork, a Japanese style futon with a couple of tatami mats and a tiny square table. This is what I can keep, so my items contain just the stuff that can fit in my car. There's still more though, so I'll make another post to come up with a solution for that.
This quest is not over yet... I still have a long way to go. I'll keep you updated on my progress.

Tuesday, May 18, 2010

Declutter my life - part 1

Decluttering

In the previous posts, I talked about how to declutter your life, material bonds with items, etc. I'm now going to tell you what I have done myself, to declutter my life.

The reason

Why did I suddenly feel the need to declutter my room? Well, over the course of many years, I gathered a lot of toys and gadgets that I wasn't using anyway. But I had a big room, and a small attic I could use to put most of that stuff. This was in our old house, however and we had to move because of renovations being done to the houses in my street. This meant that we had to move to a newer house.

That was good news, because our other house was getting old. But it also meant that I had to move to a room that was half the size of the room I had. Without getting rid of at least half of the items I had, it was impossible.

The first purging

It was a dreadful task. Just by gathering up everything I could review, I got discouraged by the sheer amount of toys I still had from when I was little. And the gadgets I never used or the junk no one ever uses... it was a discouraging sight to look at that big pile in the center of the room.

But it serves no purpose to just sit there, being discouraged. Nothing gets done by thinking alone. Action is the key to getting things done. So I just started getting rid of things I knew I never needed.

This made me invent the first method I explained, two posts ago. It was a rough version of it, but worked nonetheless. By getting rid of all the obvious things, I already got rid of 50% of what I had. Well, it wasn't gone yet. It was placed in a 'GET RID OF' pile.

After the first purging

When everything was reviewed, I still had too much items. But I first concentrated on getting rid of the 'GET RID OF' pile. That's a whole subject on it's own. There are many things you can try, to get rid of it: sell it, give it away to people you know, donate it to an orphanage, etc.

Selling it, is not an easy task. We put some items on the internet, but only certain items can be sold like that. There's also an indoor junkyard sale in our town, every wednesday and friday. It costs a bit money to stall your items there and unfortunately, you can't sell anything unless you ask for very little money. And the place is infested with foreigners, mostly Marrocans and Polish people.

So my solution is more mentally rewarding and satisfying: give it away. I've given toys and color pencils to a kindergarten teacher my mother knows. They have to buy that stuff if they don't have it. So I made her very happy, because she can definently use it. If someone is happy with something I don't use anyway, than the item in question is better of where it can make someone happy.

The second and third purging

I could not stop there, because I still had too much stuff lying around. A lot of items I had, where junk no one uses. That's easy to get rid of: you just throw it in the garbage. And I can guarantee you, I filled the garbage can many times. But slowly, I could see progress. I was gaining more space and loosing more junk. I was like a liberation.

I could feel my materially bonded mentality change to a more independent mindset. I loved the simplicity I gained and the freedom it gave me. Freedom in terms of space, but also emotional freedom. For every item you get rid of, you no longer have to think about what you should do with it. You no longer have to worry about possibly breaking it if you step on it or use it. You no longer have to worry about cleaning it. It can no longer make your room look messy. Getting rid of things became a real eye-opener. It showed me the benefits of living a simple life.

Conclusion

I purged my unused items 3 times already and it has changed my mental view on materialism.

Giving unused items to people who can use them, is a mentally rewarding way to get rid of things. Donating it, is an option I haven't tried yet.

But I still have too much items. The purging is not done yet. This just shows that the decluttering methods can be reused over and over, to make your clutter smaller and smaller.

Monday, May 17, 2010

Declutter your life - part 2

No worries

Let's continue where we left off.
An important tip: Don't think about 'getting rid of clutter' as 'getting rid of items'. Instead, think of it as 'getting rid of worries'.

I might need to explain this better... The best thing I can do, is give you an example. Suppose you have a low closet, with nothing on top of it. You think it looks a bit empty, so you decide to buy something to put on the closet.
Suppose you buy an expensive crystal sculpture to put there. Now you have a beautiful sculpture, that looks very nice under the light. But you didn't gain 'just' a sculpture. Now you also have the worries that go with it: being affraid to accidently break it, wondering whether it was ok to buy something so expensive, etc. An emotional bond emerges between you and the sculpture. One that brings worries, that weren't there before.

You have such an emotional bond with all the items in your room/house. That's right, all of them! So the more items you get rid of, the more bonds you break. And the more bonds you break, the less worries remain.

The monk and the man

An extreme example, that might clarify this more is, the following: suppose there is a monk who has nothing but a small walking stick. Next to the monk, stands a man that has a frigde, a car, a big TV, etc. If they both get robbed and most of their possessions get stolen, who suffers most?

The monk will loose his walking stick, which is not much in terms of goods, but it's 100% of his possessions. If the man's fridge, car and TV get stolen, he'll loose 3 times as much items, items that are worth much more (in terms of money), but that may only account to 30% of his posessions. After all, he still has his house and his furniture (it's just an example).

So how I explained it, means that both of them could be the worst off after the robbery. It all depends on how you look at it. But the monk will probably be able to replace all his posessions very easily (he just needs to find a new walking stick), whereas the man needs to work hard and long to be able to replace his stolen possessions.

And if the monk has no emotional attachment to his walking stick (it's just a walking stick), he'll suffer no meaningful loss whatsoever. The man needs his car and his fridge. And he likes to watch his big TV. So emotionally, the man is way worse of, after the robbery.

Conclusion

Decluttering your room and/or house, actually means decluttering your life. We all have emotional attachments to our items. By getting rid of them, you don't just create more space, but you also break the material bonds you have and you get rid of worries that accompany those bonds. It's a win win situation.
So good luck decluttering your life. The more items you throw away, the better you'll feel...

Extra

One more tip: you can expand these ideas and declutter everything that needs decluttering. If your room is a mess, you can use these techniques, but your mailbox can be a mess too, your foto collection, your address book, your agenda, ... it can all be decluttered in practically the same way.

Wednesday, May 5, 2010

Declutter your life - part 1

Getting rid of clutter

If you're getting rid of clutter, you enter an emotional state. It's difficult to get rid of most things, because you become emotionally attached to it over the period you possess it. This results in going over all items, throwing some of it away and eventually being left with almost the same amount of items you had, before the decluttering.

It's not easy to get rid of the clutter, but there are several tricks to get through it easier. I'll try to explain some of those tricks here.

Assumptions

I'm gonna downscale this article into decluttering a room. If you're trying to declutter your entire house, I suggest you try to do it 1 room at a time. Otherwise, you'll be discouraged easily by the amount of items to sift through.
After all, why do it the hard way, when we can take it step by step? Every problem can be solved more easily, when you devide it into small parts. Solve each part seperately and the problem will be gone faster than you think it can.

Preparation

Empty everything, empty the drawers, the closets, the boxes... Put everything in the middle of the room. One big pile of stuff. This is the stuff we'll be sifting through. If you never decluttered your room before, chances are high that more than 50% of this stuff needs to go away. That may seem a lot to you now, but if you want space or if you want to live a simple lifestyle, it's a necessity.
For easy reference, I'll call the big pile of stuff, the 'STUFF pile'.

Method 1: The think fast approach

I developed my own system, which I like to call "the think fast approach". The concept is very simple. You look at each item individually and you give it a quick review. The item will stay or go away immediately. No questions asked.

I'll explain it in some basic steps.
Step 1:
Take out everything from the big pile, of which you know immediately (withouth thinking!), that you have to keep it. Put this in a 'TO KEEP' pile.
Step 2:
Take out everything from the big pile, of which you know immediately (withouth thinking!), that you don't want to keep it. Put this in a 'GET RID OF' pile.
Step 3:
Use the 30 second interval: Review each item from the 'STUFF' pile and try to think of why you would want to keep it or whether you still need it. You can only think for 30 seconds. If those 30 seconds are over, PUT IT IN THE 'GET RID OF' PILE!
If it was important, you would've found a reason by now. You still don't now, so it's not an important item.
Review all your items this way.
Step 4:
Look at the 'TO KEEP' pile and see how big it is. In 99% of the cases, it's still way to big. Yes, yours could be smaller too. You need to realize that you still keep too much items.
Step 5:
Our 'STUFF' pile, became a smaller 'TO KEEP' pile. But since it's still to big, we review the 'TO KEEP' pile.
Thus, our 'TO KEEP' pile is now our 'STUFF' pile and we no longer have a 'TO KEEP' pile.
Step 6:
Use the 10 second interval: Review each item from the 'STUFF' pile and try to think of why you would want to keep it or whether you still need it. You can only think for 10 seconds. If those 10 seconds are over, PUT IT IN THE 'GET RID OF' PILE!
By giving yourself less time to think, you'll be able to filter out more items.
Review all items in the 'STUFF' pile this way.
Step 7:
Look at the result. A smaller 'TO KEEP' pile. You need to ask yourself the question: 'Is this pile still to big?'. In most cases, it still is. If it is: STOP. Stop decluttering any longer. Leave everything in it's respective piles and go do something else. Take your mind of decluttering. Even if it's for a couple of days or perhaps even a week.
Step 8:
Repeat steps 5 to 7, until you are satisfied.

Method 2: Yes, no and maybe.

This is a different method, that might work better for people who just can't seem to manage being harsh in their decisions to get rid of things. You basically give yourself more time to think about it.
Here are the steps to take:

Step 1:
Take out everything from the big pile, of which you know immediately (withouth thinking!), that you have to keep it. Put this in a 'TO KEEP' pile.
Step 2:
Take out everything from the big pile, of which you know immediately (withouth thinking!), that you don't want to keep it. Put this in a 'GET RID OF' pile.
Step 3:
You can now review each item from the 'STUFF' pile and put it in one of the following 3 piles: the 'GET RID OF' pile, the 'TO KEEP' pile or the 'UNDECIDED' pile. Basically, you end up with 3 piles: a yes/keep pile, a no/get rid of pile and a maybe/I don't know yet pile.
Go over all items, until you reviewed them all.
Step 4:
Look at the 'UNDECIDED' pile and see how big it is. This will now be your 'STUFF' pile and you have to review everything in it, again.
Step 5:
Repiet steps 3 to 5, until your 'UNDECIDED' pile is completely gone.
Take as much time as you need to review everything.

Notes

Some notes and tips...

  • If you can't seem to decide whether to get rid of some items in the 'UNDECIDED' pile (see Method 2) or not, leave it in that pile for a couple of days, perhaps even a week.
  • If you use method 1, it might be possible that you get rid of something that you could've used at a later date. Thinking fast, means you are more prone to making mistakes. Don't feel bad about it. There was once a time where you didn't have that specific item and life was great. If it's gone now, it's gone. If you need it and it's gone, try using your imagination to come up with another solution.

In the next post, I have something more to say about the emotional bonds that come with items.

Extreme Early Retirement

Extreme Early Retirement

I talked about Early Retirement, in one of my previous posts and about the reasons why I want it. But there is a more extreme approach out there, called Early Retirement Extreme. It's basically retiring before you're 40 years old. This is a whole different approach. You can not use the power of compound interest, because that requires time. And add that time to your age and you will be above 40 years. But it's possible to retire this early.

Source of inspiration

I'm a fan of the early retirement extreme blog. A lot of inspiration I need, comes from that website. But I must say that there are other people, who follow the same thought pattern, who do things differently. They are just as good of a source of inspiration...

Extreme early retirement... is it something I can achieve? Retiring before 25 is not possible, because I'm already past that age, but could I retire in my 30's. This is a question I asked myself, and I'll give you the answer. It's in my blog... with every post I make, I'm slowly, but certainly answering that question. I'm not there yet, but it has inspired me to try it.

If you see something you like, but you don't know if it will work for you, try it. Don't keep dreaming about it. I live a simple life now. It could even be simpler, but I'm working towards it. I had clutter, removed some of it, but I'm still getting rid of things. I save money, but I try to save even more, when I can, wherever I can. Unless the money is used on something that improves me, only if it's not too expensive.

Every year, I look at my financial status and I can see some improvement. I let this drive me. It becomes a hobby... no, a passion to try to improve my situation. I will get to that point. And even if I can't retire before 40, I'll make it in my forties for sure, due to the power of compound interest. No effort you make, in trying to retire extremely early, is wasted. It's all beneficial and it's all worth it.

What to do

Some people think it's crazy to retire that early. They simply wouldn't know what to do. I think it all comes down to your imagination and your interests. If you don't have anything that you're interested in, that can fill your days at retirement, then by all means, continue working. Perhaps you even like working. But for me, there's too much to do in this lifetime, to not be able to do it because of work. I want to do most of it in this lifetime and I'll try anything to be able to do it.

Would you honestly, want to work for the rest of your life at your current job? If so, why?

Living a simple life

Keep it simple

In my still short career as a software developer and my life experiences, I figured out that mankind makes everything too difficult. I did the same thing, when writing software. I learnt that I make work easier for myself, when I keep it simple. But that got me thinking... wouldn't life be a lot easier too, if I kept everything simple?

Dedication and simplicity

Living a simple life, can take on extreme forms. One of them, can be seen throughout history, if you look at monks. They have almost nothing and dedicate their lifes to their religion. Simplicity does not have to go that far though, but a dedication to something can help you achieve true simplicity.

What dedications are there, other than religion? Well, it could be anything, from a hobby to a certain goal you which to achieve. Anything that relates to and results in, you living a simpler life.

Examples

1. The goal to get out of debt
By trying to cut back on luxury and enjoying the simple things in life, it will become much easier to save money and pay of your debt.

2. Early retirement
To retire early, you'll need to save money. The more frugal you live, the faster you can save, thus the faster you can retire.

3. Small housing
Many people have small houses. If they don't live a simple life, without much clutter, they will have trouble living well. The same goes for small appartments in big cities. They'll have too much stuff, which makes a small appartment seem messy, even when you organize everything.
On the other end, you also have people who choose to live in small houses. Why? Because either they want to save money on the purchase of a house or they just don't like to maintain a big house. Less clutter = less to clean.

4. Martial arts
You could dedicate your life to martial arts. The martial arts monks do it in China... if you train all the time, there is no need for a tv etc.

I bet there's more you can think of...

Why living simple?

The less stuff you have, the more space you get in return. More space, can make a small house seem big. But it does more than that. The less you have, the less you have to worry about. If you have a brand new tv and it stops working, you're annoyed and angry it doesn't work. If you try to fix it and you see smoke comming out of it, you'll be afraid... afraid you're not gonna get your money back. All these emotions would not exist, if you didn't have that tv.

Another example of why living simple, is a good idea, is appreciation. If you eat out a lot in fancy restaurants, you won't like regular food anymore. Because the food in the restaurant tastes better. And this is something that happens a lot in our society. People complain about little things. People complain about food. If they didn't have food for a week and you would give them the same meal they complained about, it would probably taste delicious. So living a simple life, also makes you appriciate the regular things in life.

Money does not make you happy

It doesn't... we all know that, although it's darn convenient to have it. But most people who do have it, spend it on items and luxury. Keep in mind that a tv or a mobile phone is also considered luxury. I wonder what they actually want? Money? Or items? Because if they had a lot of money, they would probably buy more items or a bigger house. Those things cost money, causing your money to dissappear again.

I have a dream

I started dreaming about freedom, once I learnt about early retirement. With this goal in mind, the goal of freedom, I try to live a simple life. It has helped me gain a good perspective on my life and it has already brought me closer to my goal. Freedom is my dedication, freedom to do what I want. Freedom to do useful stuff (to me), that no company will pay you for if you did it during work hours.
What's your dedication? What drives you to live a simple life?

Friday, April 30, 2010

How to save money - part 2

The best way to save

In the last post, I talked about personal finances and how to keep track of them. Now it's time to talk about ways to save money. As a bonus, I'll give some information about what you could do, when you're in debt and want to get out of it as soon as possible.

Saving Method 1: The Piggy Banks

There are many ways you can save money. I will start with the most obvious one: putting coins in a piggy bank. I used to do this when I was little. It's a good way for children to learn how to save money. But there is a problem with this approach: the money in the piggy bank, is not doing anything. It sits there, waiting to be spend. And if you don't spend it, nothing else will happen.
Actually, this is not true. Money devaluates. The money you have now, isn't worth as much within several years. The reason for this is inflation. Everything gets more expensive. That's why they give you index adjustments in your salary. To cope with inflation. I don't quite understand the reasoning behind all of that, that's beside the scope of this article.

But what you should remember is this: the money you have now, will not be worth as much within several years. Money devaluates.
So we need a way to keep our money up to date with inflation. Or better yet, we need to overcome the inflation rate.

We can solve this in 2 ways:
  • Make sure we have enough money, so when inflation eats part of our money, the amount that's left is still enough.
  • Make sure the money we aren't using is still growing, by gaining interest.
For the piggy bank, the only thing we can do, is to add to the pile. This means that if you want to have more money and/or save more money, you need to put more of the money you get from working into the piggy bank. Your salary is automatically adjusted to inflation, so in this case inflation is not a problem. As long as you keep working.

If you want to save more, you need to be resourceful. Look at your financial data, look at the categories you made in the last post and see where you can cut back on your expenses. It'll fill your piggy bank faster.

Saving Method 2: the bank

When you put your money in the bank, you get some interest. But you also have to pay for basic services and inflation takes part of the money. So in the end, keeping your money in the bank levels out and thus it becomes comparable to the piggy bank method.

There is an added difficulty, however: extra services. You can get extra services, like credit cards, phone banking, etc. It's important to take only the basic package. Every extra service you take, will cause the bank method to cost you money. If you don't need e.g. a visa card, don't get it. It'll cost you a yearly fee. No matter how small those fees may be, with the basic package you almost level out. This means that the bank method does not really cost you money, but you don't gain extra money either. Expenses compensate for the low interest rates.
If you take the basic package, all you need to do to save money is work and add to the pile, just like with the piggy bank method.

Note: A savings account, gives a bit more interest. So when using this method, it's a good idea
to put the money you don't need to pay the bills, into the savings account. It might give you a small advantage.

Saving Method 3: funds

The stock market is a dangerous and scary place to put your money, if you know nothing about it. You can also put the money you don't use, in funds. Funds are basically a collection of stocks, managed by an employee at the bank. They guarantee you an approximate value in interest and your money back, if you keep the money in the fund for a predefined period.
This is interesting, because the interest rates are higher than those of the savings account. So you'll be saving even more money if you put your money in there. So what's the catch? It's simple: they promise you e.g. approximately 10% on your investment, while in reality, they try to make 20%. The remaining 10% goes directly into their pocket.
To get that remaining 10%, you'd have to look at method 4.

Saving Method 4: the stock market

There's a lot to say about this, but I'm gonna keep this simple. If you buy and sell stocks, you can earn money. You can also loose money. If you study enough and know what you are doing, you can earn money money than you loose. This method can give you the highest possible interest rates, but that is entirely dependent on your actions, your knowledge and your mentality.
The stock market is not for everybody, especially not those that let their emotions interfere with their money making. But it's a good way to make a lot of money.

Other saving methods

There are more ways to save money. I don't even know them all. But it all comes down to the same basic principle: spend less than you earn. The last methods above, are for maximizing your interest. But this is just the icing on the cake. It's not a necessity for saving money.
Look at your budget, try to follow it. Adjust it when needed and finally: spend less than your budget says. The less you spent, the more you are saving.
Keep it simple. If it's too difficult, it can get out of control. If it's simple, you know exactly what's going on and then you know where you are going.

Bonus: How to get out of debt

I said a lot about saving and I kept it simple. But some people may think that it's not simple at all. Those people might have debts. Sometimes, those debts will get out of control.
The same basic principles still apply, you just have to look at it differently. The less you spend, the quicker you'll be out of debt.
There are two methods of getting out of debt, that I recommend:
debt snowball and debt avalanche.

Debt snowball

This is a method for paying off your debt, where you take the smallest loan first, pay that off and work your way up.
Steps:
  • make a detailed list for all the debts you have
  • add the amount of interest you have to pay for each debt
  • put the list in ascending order
  • pay the biggest amount possible (according to your budget) for the debt with the lowest interest, pay the minimum for all others!
  • when the smallest debt is paid off: repeat
Pros:
  • it's the fastest method for paying off debts
  • it goes faster in the beginning, so the impatient are less discouraged, because they see the changes quicker
Cons:
  • it's not the cheapest way to pay off debt

Debt avalanche

Even though I have no debts to pay off, this is my favourite method. It's almost identical to the previous one.
Steps:
  • make a detailed list for all the debts you have
  • add the amount of interest you have to pay for each debt
  • put the list in descending order
  • pay the biggest amount possible (according to your budget) for the debt with the biggest interest, pay the minimum for all others!
  • when the biggest interest debt is paid off, go on to the next one and repeat
Pros:
  • the longer you are paying off debts, the faster the debts will dissappear
  • it's the cheapest method for paying of your debt
Cons:
  • it takes longer for debts to dissappear in the beginning, which may be discouraging for the impatient
  • it takes longer in total, to get rid of all debt
To me, cheapest > fastest, that's why I prefer this method.

Conclusion

You can now manage your personal finances, you know several ways to save money and you know how to pay of our debt. You also know the basic principle that always helps to save money: spend less than you earn.
Remember to keep it simple and save well... good luck.