Like I mentioned last year, up until 2018 I’d never actually used a budget myself. I was being a terrible example, telling everyone else what to do, and then doing the exact opposite myself. I was just like, um, well pretty much every politician I’ve ever heard.
So what happened when I actually set a planned budget. Did I stick to it, or did I just carry on spending as and when I felt like it?
Let’s get straight to the numbers.
Welcome to 2019. Happily we no longer have President Zupta running this place, but unbelievably there’s still a weird orange man in a big white house trying to build an impossible wall. Enough of the politics though, like we did in 2017, lets see what I learnt in 2018.
Yes we all do a lot of very stupid things, but the stupid things I’m talking about here are things we probably don’t think are stupid, but boy do they affect our pocket.
The SAA business model
Kristia from Just One Lap grabbed me at the 100th podcast celebration as the other speaker was running late. Happily she never told me it was going to be recorded, or even that I would be speaking otherwise I’d have been far more nervous
Take a listen here: https://justonelap.com/podcast-how-to-be-financially-independent-with-patrick-mckay/
And if you’d like to follow me on twitter, click here: @worldisee
Sorry Mr Cat Stevens, but life’s too short and boring not to make any changes, and so I’ve decide it’s time to shake things up a little and see if I can improve my lifestyle, and also my investments.
It’s budget reconciliation time
For far too long I’ve been spending with wanton abandon and not even caring enough to add up the numbers. How could I be setting such a terrible example to all the millions of readers who don’t make their way to my blog. This is going to to change. Starting from now there will be an annual post where I air the dirty laundry of my multitude of credit card receipts.
So now to go and break tradition with seemingly every other blog post I read lately, I’ll actually get straight to the point and just pop the numbers out. None of this read my life story before you get to the delicious recipe, or navigate past all the annoying subscription popups before I actually get to see a number on the page. No, just no!
My spending is right here:
Happy Easter, don’t let the bad fish eat all your chocolate
If you’re thinking that title sounds familiar you’d be right. Once upon a time I wrote an article based on real people called “Your car doesn’t cost you R5800 p/m it costs you a million dollars you fool“. One of those people was my wife, the other, someone I worked with. This didn’t have a good outcome. In the first case, even though I mentioned how both my wife and her Mini had rather sexy rear ends, she wasn’t happy at being used as an example, and promptly let me know that.
In the second case my use of pseudonyms for said colleague’s name was insufficient considering there was no use of a pseudocar in the blog post. The very next day after it was published I had an email in my inbox saying “Nice article” with a link to what I wrote. I felt anything but nice, especially due to the fact that the fast car loving colleague was a person I quite liked, and wasn’t actually remotely a fool, he was simply an Audi nut.
Thanks to that experience, I’ve learnt my lesson on using family and friends as examples. It’s not worth the risk of upsetting a friend or sleeping on the couch. That’s why this post isn’t about a family member. It’s almost certainly also not about a friend. Maybe. Let’s just say it’s about a fictional character named Art. And no Art isn’t short for Arthur, Bartholomew or Stuart. In fact he doesn’t even have a name, he’s completely made up. In the same way that criticism of the president is completely racist…
Now fictional Art is quite astute financially. He’s avoided the trap of buying a house far bigger than he needs. He’s actually even avoided the trap of buying a house, and rents instead. Art has also never bought a new car. In fact, he only recently replaced his completely worn out first car with another boring used Japanese sedan.
These things along with a number of other frugal habits passed on from his parents has resulted in Art being able to save quite a lot. Around R10000 a month lately. Thanks to that he’s recently crossed the R1 million milestone in his investment accounts at the relatively young age of 29 and a bit years, something he is rightly very proud of. What’s even more impressive is that Art achieved all that, while swimming upstream. Not just any stream, but a piranha infested one.
“…I want to find out whether there’s any truth in the belief that money can’t buy happiness.”
I often write about things I don’t like spending money on:
- Balloon payments for a car. Remember those, the deposits you still have to pay AFTER you’ve paid for the car for the last 72 months. The Americans have a better term for these types of loans, they call it a bullet loan. Bullets are scary so this makes sense, balloons are happy which you won’t be when your payment is due. Don’t let someone aim a loaded bullet your way when you make a car purchase, it’s going to hurt, a lot.
- Expensive label clothing. Are your genitals on display? No? Then consider yourself dressed. Feel free to spend money on quality clothing though, if it lasts a long time it is often more cost effective than buying cheap clothing more often.
- Outrageous unit trust fees. I hate them, the people who dream them up, and all of the suckers who fall for them which means they’re still not extinct. Fortunately they are on the decline, and even Steen Jacobson, the CIO of Saxo Bank knows their days are numbered.
- Taxes. It probably wouldn’t be so bad if most of the money didn’t go towards Nkandla, #1’s girlfriend at SAA who managed to lose R1.4 billion last year, our international relations minister with a hole in her head or the SABC boss who lied about finishing school, and now forces everyone else to lie about the news and to literally sing his praises. In a less corrupt country I’d have no problem with this. I’d even happily pay the Swedish 60% tax rate if the money would go back into social services rather than the pocket of politically connected hyenas.
- Bond payments. You can argue with me until you’re blue in the face. Your house is not an investment, finish and klaar. I don’t care if you have one, but don’t kid yourself, it’s a lifestyle purchase, not an investment. The only positive I see is that it force the typical South African’s with money allergies to save.
Today I want to talk about something I love spending money on. It’s appropriate too, because I’ve recently spent a lot on it!
Yes, well done you uber foxy person you, you now have an extra R1.2 million to invest. This is such a common problem, I thought we should address how to handle it. Firstly, I would like to advise against spending it all on hookers and cocaine like this overly honest guy would do. Sure it’s fun, but how much of that month will you actually remember, and after you’ve lost your job, wife and the bridge of your nose, life might just suck a little afterwards. Ideally you’ll invest your winnings, but should you do it all at once, or should you spread out putting it in investments over a year or more?