You need a budget and how I budget

Posted on Categories Budget, Spending4 Comments on You need a budget and how I budget

Everybody manages its budget in its own way. There is no one single way of doing it. But, everybody need a budget. This is very important. There are many reasons why it’s important.

In this post, I’m going to go over the reasons why you need a budget. I’m also going to talk about the way I’m managing my own. It’s only one of them, but if it works for me, it may work for you!

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How to integrate second pillar in your net worth

Posted on Categories Budget, FIRE, Goals, Investment, Switzerland8 Comments on How to integrate second pillar in your net worth

I have monitored my net worth since October 2017. But until now I have not considered my second pillar into it. Why? Because I do not get a monthly report on my second pillar. However, I do not really need this monthly report since I can extrapolate from the yearly results. I just was too lazy before to do it.

So, I decided to stop being lazy and do it. In this post, we are going to see why you should integrate your second pillar into your net worth. And we are going to see how to integrate it. It is very simple. And it will make your net worth calculation much more accurate. I believe it is very important to have an accurate view of your net worth.

If you do not know your net worth, first take a look at how to calculate your net worth. I strongly encourage everybody to compute his net worth. It is an important indicator, especially if you want to become financially independent.

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Changed the accounting of my life insurance

Posted on Categories Budget, Investment7 Comments on Changed the accounting of my life insurance

In Switzerland, the third pillar of retirement can be either in a bank account or in the form of a life insurance. The bank account option is the obvious solution. This is a special form of life insurance. You will get some part of your capital back at the retirement age (65 years old currently). In the case you die, your spouse will get the capital. Moreover, most of these insurance policies also cover the case where you cannot pay any more. Not if you stop paying, of course. But if you become handicapped or unable to work. In this case, the insurance will cover your fee while you can’t work.

I am not sure this is a good deal for everybody. But I think it is a good deal for me. My future spouse does not yet work and will not have a full retirement pension once she retires. Thus, if I pass away, she will have a good cover from my life insurance. For some people, it is also a good way to force them to contribute to their retirement savings.

I pay 300 CHF each month for this insurance. Until now, I have always counted that as an expense in my budget. But, I now realize it is not really an expense. It is similar to the payment I do to my bank third pillar. And I do not account for these as expenses. This is an investment. So, I decided to remove this recurring expense from my budget. Since we are close to the beginning of the year, I also decided to remove it from January 2018 and February 2018. This means that my savings rate is better in these two months. It is now 33% in January and 4.2% in February. I will update the Savings Rates shortly.

However, my Net Worth does not get better since the current value of the insurance is 0 CHF. If you take out the insurance in the early years, you lose everything. In fact, I will start accounting the insurance as Net Worth in September 2018. I believe this makes my accounting better and more accurate.

What about you? How do you account for your retirement life insurance? Do you have one?

February 2018 Update – Vacation and wedding

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Update: I changed the way I am accounting for my life insurance, this gives me a savings rate of 4.2% now. It is still a very bad month.

February is now done, it is time for another monthly update! This was not a good month at all for the financial side. But we had a lot of fun in China. And I was happy to see my fiancee again!

I have not posted on this blog since the last update, I was on vacation in China for more than half the month. I hope to post more in March.

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January 2018 Update – Ph.D. and good savings

Posted on Categories Budget, Frugality, Goals, Monthly1 Comment on January 2018 Update – Ph.D. and good savings

Edit: I changed the way I am accounting for my life insurance, this gives me a savings rate of 33.7% now.

It is time for another monthly update! After a good December 2017, the new year is up to a great start in January 2018 with yet another very good month :) I am really starting to get a hold of my finances.

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Goals for 2018

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For the first year in my life, I am gonna try to set clear goals for this year! I have set up a nice spreadsheet for my goals for this year (credits to retirebyforty for the spreadsheets idea):

My 2018 Goals

I have tried to not set goals that are too high but still strive for better than this year. Since it is the first year I am setting goals like this, I do not want to be over-optimistic. This is my first attempt at setting yearly goals, so maybe I will add new goals during the year, but I will not remove any goal nor downsize any goal.

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December 2017 Update + 2018 perspectives

Posted on Categories Budget, ETF, Investment, Monthly1 Comment on December 2017 Update + 2018 perspectives

Happy new year to you all! Now that we started in 2018, it is time for the last monthly update of 2017. After a rather poor November 2017, December 2017 is significantly better. I have been able to keep my spendings lower than usual. It was not a very eventful month. Except of course for the usual Christmas celebrations. I always spend Christmas with my family and it was great :)

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November 2017 Update

Posted on Categories Budget, China, Monthly, Travel1 Comment on November 2017 Update

November 2017 is over, it is time for another monthly update. After a bad October 2017, I have seen some improvements.

November 2017 was not bad in terms of savings, but it was a bit lower than I was expecting. The savings rate for the month is 14.25%. It is not perfect, but still better than last month. My goal is to go to 25%, but probably will need a raise to go there (I’m still gonna try without the raise).

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Save 53CHF per month by asking for a reduction of rent!

Posted on Categories Budget, Frugality, Spending, Tips3 Comments on Save 53CHF per month by asking for a reduction of rent!

I just got confirmation from my building manager that they accepted the reduction of rent that I asked for. Although I’m quite satisfied by the answer, they have been incredibly slow in answering me. They answered more than two months after my request… My base rent goes from 1175 to 1122. This will only start at the next term of my lease, on April 1st. But this means that next year, I’ll save 53 CHF * 9 = 477 CHF. And I’ll save even more the following year since all months will be lower :)

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How to save money by changing car insurance

Posted on Categories Budget, Frugality, Spending, Tips1 Comment on How to save money by changing car insurance

I decided to check all my recurring expenses and see if I could save something on at least some of them. Turns out I can! I was able to change my car insurance to save over 350 CHF per year on it.

It is very important to regularly check if there are better deals on your insurance. Even though an insurance could be the cheapest at some point, it may not be the case a few years later.

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