Tag: Spending

Rich outside, paycheck-to-paycheck in reality

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From a very young age, I knew that money was necessary. When I was making wishes as a kid, I wished for money (or a magic wand which is the same in this age). I was also lucky to be born into a family of professional engineers who believe that a good education and hard work will pay you.

My initial view of money was: get much of it, and everything will fall into place. So, I followed the classical career path: working hard during my studies, working hard after I graduated, sacrificing a lot, and finally starting to get results. My first real job was in the 60th percentile of the market (not a bad start!), and then I basically doubled my income every three years, which brought me to the infamous 1% of the population in a reasonable amount of time.

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Cost of ownership

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What is your favorite store? Mine is Home Goods. They have such cute things to make your cozy, neat nook. All these pretty boxes, labels, pillows… I can immediately imagine them in my house. I also imagine that my place starts to look like a design magazine; I already mentally turn the pages…

But then I come back to reality. I have only one medium-sized apartment, and it has just a limited number of walls and “nooks”. I cannot have all these fantastic design ideas implemented.

This thought helps. But what I found more appealing is the concept of Cost of Ownership. Think about it: as soon as you buy a thing, you take responsibility for taking care of it. The responsibility can be small (wipe out dust from a figure) or extensive (purchase insurance for your car), but still, you have it.

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Budget in plain English (…and in pictures)

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For some the budgeting looks intimidating. It looked so for me before I started. To tell the truth, it was so intimidating, that I postponed my decision to start a budget for almost 20 years.

Now I face a new challenge: I am trying to bring my knowledge to my 12-years old daughter. I literally have a 5-10 minutes span of attention to bring all the wisdom I acquired. That is how I created the explanation. Hopefully, it will be useful for others, too.

All things are difficult before they are easy.

Thomas Fuller
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I’m tracking expenses… now what? Step by step plan to optimize spending

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Tracking expenses is the first stepstone to budgeting, building wealth, and all other fancy financial applications. But for some reason, it is not an easy transition.

I clearly remember my frustration about 3 months after I started to track my expenses. I was staring at the computer monitor on the neat rows of numbers. The number themselves don’t tell me what to do, where to move. Do I save enough? How can I see the progress? What do I need to work on in terms of money behavior?

In this post, I provide the strategy I eventually follow. It was not a straight path, and I had a lot of tries and fails, but looking back, here is what I would have suggested myself in the very beginning.

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