Friday, 26 February 2016

February monthly report coming soon.

Wow, another month gone by, i cannot wait to see the results, as i got few unexpected expenses this month, but thanks to my cash reserves, i was good to go. It is crazy when i this what could happen few years ago, when i was not prepared at all. Because at the end of the day, it this more actual than ever that preparation is 90% of wining the game.

See you soon.

Tuesday, 23 February 2016

Quote of the day

"Thriving is all you understand anymore. Mediocrity is a mismanagement of your innate human potential. "

This is some interesting thought. You are not successful if you are thriving. But you are a failure if you are average, because this mean that you are not reaching for more. You are not giving 100%. You are not doing everything you can. This made me think about a Japanese story, when the novice go to the Master and ask him how much he need to meditate to became a wise man.
- One hour every day, the Master said.
- And how fast i will reach my goal?
- Five years.
-What if i meditate 8 hours every day, how fast i will become a wise man?
-30 years.

Conclusion: when you are giving all you can, less is more.

And i have even a follow up story.

After few years the novice return to the Master.
- My Master, i try to become a wise man, i did tremendous efforts, but i am still an ordinary person, what i am doing wrong?
The Master pushed his head under the water into the river nearby. After one minute he let go of him and left. Very angry, the novice ran after the Master and asked him why he did that.
- What were you thinking after one minute under the water? said the Master.
- I was longing for air, nothing else.
- When you will try to become wise as much as you wanted to breathe, when we were at the river, you will become almost instantly.

Conclusion: We are under-performing constantly, when we are not using our full potential. As Richard Bach said, our biggest sin is to limit ourselves, do not limit yourself in any way.

Thursday, 18 February 2016

Why millennials to not have a chance to be happy, when they will get old?

It started with this article and mainly this phrase:

"Today’s 25-year-old need to save the equivalent of £800 a month over the next 40 years to retire at 65 with an income of £30,000 a year, according to Rebecca Taylor, director at the Chartered Institute for Securities and Investments."

And then the hell break loose, as you can see it on this link.

What i can say? I do not know if first i will be sad or i will wonder if the total lack of financial education is an intentional purpose. Something like this should be learned in school, in the same time with native language an maths. This is my opinion!

Tuesday, 16 February 2016

Money and happiness research

One more reason for pursuing your own financial independence:

A research done in regard to the direct link between the amount of money you receive and your happiness shown us something very interesting. Happiness increase directly linked with money received for your work, fast at the beginning, and then slows down, reaching a plateau after 70.000$ per year. So, after this limit, your happiness will not increase at all.
This is something contrary to even the hedonic adaptation of a normal person in normal circumstances, but for us, the ones engaged in F.I.R.E, is a good news, that will support our theory that you do not need huge amounts of money to be happy, just enough to live comfortable.

That's all for today, have a good week!

Saturday, 13 February 2016

Quote of the day

When the financial crisis was at his height, in 2009, someone asked Warren Buffet how to survive during a crash. His answer was:

"Financial staying power requires a company to maintain three strengths under all circumstances:
1) a large and reliable stream of earnings;
2) massive liquid assets and
3) no significant near-term cash requirements."

If you will make analogies with a company, then you need to think at:

1) A reliable stream of earnings: Staying in one job for the long haul is a great way to earn the confidence of your employer. But even then, nothing is certain. Make sure you have disability and life insurance to provide a reliable stream of earnings if something should happen to you. Multiple income sources is the word.
2) Massive liquid assets: Here's a point that many fail to heed. At a bare minimum, you should have enough money set aside to provide for you and your family for six months if you lose all sources of income. Keeping a little cash on hand to take advantage of stock market dips can pay off as well; then, while other investors panic-sell, you can buy shares of your favorite companies at a discount.
3) No significant near-term cash requirements: This can be a little tricky if you're just about to buy a house or send a child off to school. But in the end, what Buffet is really talking about here is being smart with your money  i.e. not making bets that you can't afford to lose.

Tuesday, 9 February 2016

The maths behind the healthy weight and our financial independence

I am into analogies nowadays, so i will talk a bit about the similarities between how to get a perfect healthy weight and how to reach financial independence, as you will like to be healthy when you got enough money to stop doing that menial job and instead to start doing whatever you really dreamed to do.

We all know that being overweight is not a good thing, for multiple reasons like increased risk in developing angina, heart diseases, diabetes, some types of cancer or joint/lower back pain. In order to not go there you need to tweak with your energy requirement (how many calories you need to survive and do you stuff). Energy requirement (ER) is equal with Basal Metabolic Rate (BMR) multiply by Physical activity levels (PAL).


Physical activity levels (PAL) are:
Level 1: Sedentary
This level of activity is described as little or no exercise. The PAL factor is 1.2.
Level 2: Light exercise
This level of activity includes frequent walking in a job / daily activity or 60mins of intense activity in one week. The PAL factor is 1.375.
Level 3: Moderate exercise
This level of activity could be a job that is quite physical throughout the day e.g. shop work or intense physical activity 30 – 60 minutes three or four times a week. The PAL factor is 1.55.
Level 4: Very active
This level of activity could include a highly physical job such as brick laying or farming or intense exercise for 60 minutes five to seven days per week. The PAL factor is 1.725.
Level 5: Extreme
This level of activity could include full time training for a sporting event; this level of activity is usually only reached by elite athletes. The PAL factor is 1.9.

BMR calculating formula is:

Male = 66 + (6.23 x weight in pounds) + (12.7 x height in inches) – (6.8 x age in years)

Female = 655 + (4.35 x weight in pounds) + (4.7 x height in inches ) – (4.7 x age in years)

Now, if you are aiming to keep your weight in check, you need to avoid to consume more energy that what you use. This can be done in two ways:

1. Decrease calorie intake (Eating less)
2. Increasing energy requirements (Exercise more)

This is also the way to lose weight safely, do your math and see where you are now. Using both methods will get you there twice faster.

That was the biology part. Now, researching and writing this for my future book, i could not notice the similarities with the financial independence plan. There are also two ways to go there faster, to the ideal position where you reach the right amount of money to provide enough passive income to cover your monthly expenses.

When you start to build your financial independence portfolio, you will see that  you need a sum to reach (see Tony Robbins - The Money or other sources on how you calculate this sum). Let's say mine is 240.000. There are two ways to do it.

1. Start save more and more from your monthly income (also known as savings rate - 10% to start, 50% is awesome, more than 70% is mythical).
2. Start to earn more. This will help you save more in result, as you will still spend the same amount of money as monthly expenses (already calculated in your F.I.R.E. planning).

Doing both of them simultaneously will get you there twice faster too. 

I hope you enjoyed my daily thoughts.

Sunday, 7 February 2016

Dancing in the rain

It is raining and windy, it is a good time to stay at home, and yet, i am just coming back, after i was running 2 miles through the rain. Another big change due to my financial independence plan. One year ago i was quiting gym after few months, a cycle than seems to repeat often - guilt, 3-4 months of training, getting better, quiting. What is different now? I learned that, in order to reach my goals, i needed long term commitment. It all started with money, and creating healthy personal finance habits. But after some time, the same mindset started to infiltrate into other areas of my life, or as i say it now " How you do anything is how you do everything!". I was committing to increase my savings, to reduce my spending, to buy high quality products when is about my health, but not to pay extra for a name or brand, when i can find the same thing as value product. I became a person who is thinking before acting, who can control and restrain himself now, for better results later. I studied stoicism, frugality, minimalism, i started to de-clutter my life (and my mind throughout the process), I started to meditate regularly, to train myself to be in better shape, to eat and sleep properly. But not in that "i want and i do it" way, even if sometimes i used "i feel enough is enough, i do not want to continue, but i will do it anyway" way.

I don't know if you understand me, it is hard to understand all those changes myself. But i hope you get the idea.

Is it worth it? One thousand times yes. That's it for today.

Good night and sweet dreams!

Friday, 5 February 2016

After 1 year of FIRE - anniversary post

I do not know how to start. It is already one year from the moment i decided: i will be financially independent. Back then i was thinking that shares are the way. I was young and naive, i know. I was just learning. I started by making a share dealing account with AJ Bell. I did calculus, comparison, research, you know, the whole deal. After all this colossal effort a bell was ringing, maybe i can find what others already did, maybe even some that are financially independent. And what i found. I was assaulted by information, websites, books, seminars, webinars. My tipping point was the book Money:master the game, by Tony Robbins. Then MrMoneyMustache, then FIRE movement in UK, it is like another life, now that i am looking back.

Enough with the memories, what are the results, you will ask. So i will start with this.

Financial results:
-From zero to 6866 pounds net wealth (to be honest, i think it was a negative value, i didn't know what my debts are back then, right now i have 610 pounds debt remaining).
-I started my additional pension plan, with 3054 pounds saved already on Jan 2016.
-I have invested in shared, bonds, P2P, bitcoin (a hobby of mine) and real estate crowdfunding.
-I published 4 books, with royalties to be paid (i figured out that i need 60-100 to reach a safe monthly income from royalties).
-i learn to plan, to budget and to increase my saving rate. I am no longer living from one wage to another, but i save and invest any extra money.

Physical results:
- in 2015 i had on average 3,5 trainings per week (cardio, running or strength, if you do not need to work, you probably want to be healthy and enjoy your life for longer).
- I run my first 5k last December, aiming for 10 this year.
- I eat healthier than before, even if sometimes if a tough challenge.

- I learn how to restrain myself a bit better,
- I learn that less is better sometimes (I even had a 3 days complete fasting for an experiment).
- I learn to sacrifice immediate need for a future success.

- I tried to improve my chess, in order to develop that analytical mind skill set ( i did not failed this, but i did not improve too much either)
- I learn to enjoy the benefits of luxury without too much guild (when  we need it , we need it), but i always looked for alternative, less expensive options.
- I am achieving better results, i am more focused and more motivated intellectually
- I did a Nutrition and Health course, and a Harvard Justice online class.
- Fighting bad habits and enforcing better habits, although this is work in progress.

This is the resume, if I start with details, it will be enough to write a book (I decided that I will write the book after I will be financially independent, not before). Anyway, it was a difficult but entertaining journey and i am thrilled about this year to come.

Good luck to you too and good night!