Rules of Personal Finance (as told by various bloggers)

I have spent the last 2 years pouring through various Personal Finance blogs. Some I adore and keep going back to and others that I visit once only. Certain thoughts are echoed in every blog with varied degrees of eloquence and intensity and I agree with them, broadly speaking. I got to thinking about how I am translating them into my life and what more I could be doing.

Spend less than you earn.
*sigh*If only you could retire rich from living paycheque to paycheque. There is something quite unsettling about not being able to deal with slight changes to everyday life. For instance, last year, my gas and electricity provider was smoking that good stuff confused and charged me about three times what my bill should have been for four months in a row. Had I spent all that I earned, those would have been very sad times.

Save the difference.
I'm working on a mental transition. I am ceasing to regard saving as depravation of some sort. Instead, I am looking at it as investing in my future. I am looking at why my mind thinks I am being mean to self when I put that money in the stock market, rather than spending it on that adorable Fendi tote. I can't say it is easy – that would be a bold-faced lie. For me, I keep thinking, "What if I die before I get the chance to enjoy my money? Wouldn't all the saving have been in vain then?" you don’t have to tell me, I know I am morbid

Earn more, save more.
Knowing myself, the lifestyle change that comes with salary increases will be tough to resist. I don't naturally think in terms of "I have £££ more, therefore I should sav £££". I'll be real, my brain thinks "Oooh, I have £££ more spending money" and what I usually do is I spend it with no remorse. I guess automatic deductions from salary are the way to avoid this. That and very expensive therapy pretending I didn't get a pay increase.

Have an emergency plan.
I daydream a lot. I had a humanities teacher who tried to spin it as positive visualization but what I do is of the "Wentworth Miller will meet me somehow someday and swoop me off my feet, right after I win the lottery, set up that awesome iNGO and win a Pulitzer" variety. My overactive imagination also gives me shocks every now and then – I think about what would happen if I were to lose everything I own, or if a I had an emergency that prevented me from working for a prolonged period of time and I wonder if I could cope. At this point, for that scale of an emergency, the answer would be no. I would have to assess whether the situation was serious enough to warrant dipping into investments. If it was, I would do so in a heartbeat and not beat myself up too much about it. For lesser emergencies, such as a lost job / car accident / small medical emergency, I have adequate buffers and support systems in place. I have blogged before about what my emergency plan is. It isn't the conventional emergency fund, but it works for me right now.

Play the stock market.
Sure I can amass wealth without playing the stock market – but it's hard and I am highly unlikely to succeed. In order to accumulate wealth, one needs to beat inflation. Inflation will destroy your buying power. What my money might've been worth in 1996, when I put it away, is a far cry from what it'll fetch me in 2016 and there isn't much I can do about it. That is, besides taking a gamble to see if it can increase by more than inflation.

It's clear there is more I could be doing to get ahead in this Personal Finance quest. I'm still working on changing the money associations my mind makes. Once that is sorted, everything else should come a lot easier.

Body and Soul, I'm not a Soldier of Love

I am a young Black African woman who lives in the UK.
I am not a fan of the stuff on radio and I'm old enough to know a good love song.
I am not a fan of the rap. I like soul music - old soul, neo soul, nu soul - all of it.
And even with all this, I am not fanatical about Sade.

In fact, I don't like her music at all

I always feel like admitting that publicly will get me lynched, but today on my blog I'm saying it damnit - her music isn't for me.

I rocks with Anita Baker all day everyday. Now that's a return I can get behind.

No Emergency Fund over Here

I don't have a traditional emergency fund. Heck, I don't have an emergency fund full stop. Though I like to think of my National Savings & Investment bonds as my emergency fund, it isn't because I class it as an investment in my finance spreadsheets.

Definition of an Emergency Fund.
Money you can realise in a short space of time to help you get over difficulties. The figure varies based on personal preference and circumstance. A lot of PF bloggers advocate at least 3 months' worth of essential expenses.The money should be easily accessible – for a lot of people, this means some kind of account without withdrawal notice.

Why Don't I Have an Emergency Fund?
Simply because I don't feel I need one at this time. Let me explain:
I am single with no dependents. I live alone. I am gainfully employed, I have no debt, I have health insurance and I have at two relatives within 100 miles of where I live who would put me up for a minimum of 3 months, with food, no questions asked and no contributions sought. Whatever the emergency, I'm sure I could whack it on a credit card / the overdraft and manage to find the money before the payment became due in a month. I would sell some assets (car, nice television etc.) and if necessary, cash my bonds in. I feel my money would serve me better invested in the stock market at this point. My family, my investments and my possessions are my emergency fund.

That Seems Reckless.
It may sound it – based on what everyone says and on different personal circumstances. The clincher for me is having family that are able to and more than happy to provide those basic physiological needs – food, shelter and water. Apart from those, there isn’t much else I will be requiring and, if there was, the burden on my fund would be greatly aided by the family looking out for necessities.

What if your Family Members' Circumstances Changed?
As I said, I have two family members who would take me in for a minimum of 3 months. Even if their circumstances changed, I am assured a minimum of 3 months to get myself together. In addition, I also have many friends who would let me crash at theirs, on average for a fortnight – I should know because I've housed and fed a few of them whilst they were going through difficult times - that is what we do for each other. I'm not putting my faith in them though – I am only citing blood relatives as my emergency fund.


This is my emergency fund for now though I fully expect my circumstances to change. Who knows? I might get a pet, and decide I can't descend on my family with my pet tortoise Gregory in tow. I prefer to invest in my future and deal with any surprises life throws my way as and when they crop up. The higher my Solvency Ratio, the better I will be at mobilizing funds if and when disaster strikes, so I choose to work on that for now.

Dubai is Awesome

Guess who's back and about 6 shades darker? And they say black people don't tan lol :)

Dubai was the best holiday I've ever had – no lie, impending ruin and all. I went not knowing what to expect and I came back wanting to pack up and move there. The weather was gorgeous though the sun was unforgiving.

We stayed in the Jumeirah Beach area (which, according to locals, is the Beverly Hills of Dubai). The area is very well run and, as all the hotels are owned by the same chain, amenities are shared. I enjoyed getting around on water taxis, though the larger more rickety ones had me praying "God, you know I'm not the strongest of swimmers, I am wearing my favourite silk shirt and I just straightened my hair..." from the moment I stepped onto them to when I got off at the other side.

All businesses close whilst the sun is at the highest point, roughly between noon and 4:30pm. On our second day, we found this life-size chess board on the grounds of our hotel and amused ourselves non-stop whilst waiting for the city to wake up from its midday siesta.

On the third day, we drove about 60 minutes to the desert and did some dune surfing. I would love to show you pictures of the action, but I can't. So instead, here is a picture of the sand before we were let loose.

I spent most of my late afternoons walking around the Diera (old / historic Dubai), trying to find a good deal. We took a guided tour that was excellent value for money. It took us to some of the cultural tourist attractions in Dubai and the tour guide did a great job of explaining what Dubai was like before the oil.

After dinner, just before the sun set was the best time to make it to the beach. It isn't too hot and most of the tourists will be gone. I don't know if I will ever get used to the sensation of sea water which feels like jacuzzi water, but I gave it my best shot whilst there.

Seeing as we were in Dubai, we went to the Burj Al Arab Hotel for drinks. It wasn't at all what I was expecting. The hotel's decor came across, to me, as gaudy. Everything was overdone, overplated and overbejewelled. However, the service from everyone was 7*. The concierge in particular went above and beyond. I think the man deserves a raise for memory, ownership and intiative. Set in the sea accesible by a very long pier, is the best seafood restaurant I have ever been to. It's called Pier Chic (I come from a coastal city, so you know I am up on my fish and crustacea)

Oh, and the Emirati? Those people know how to have a good time. Any nation that can enjoy itself without any aids – as in liquor and drugs – is alright with me. Then again, if the welfare system and infrastructure (e.g. air-conditioned bus stops) in my country was as good, I'd probably have something to smile and make merry about everyday too. I'm sure the £11,500 wedding gift from the state doesn't hurt either.

Dubai gets my stamp of approval. Now, it's back to that glorious English weather *sigh*

Shopping: the Second Favourite Sport in Dubai

****The above image is not directly related to the post. I was just floored by the size of the wal through Aquarium within the Dubai Mall. If this is what oil can do for a nation, I am praying for my homeland.***

I thought I was experienced in the art of shopping - until I tried it in Dubai. Coming from West Africa, I understand how haggling works, heck I could teach it to pre-teens if I had to. Dubai gave me an degree-level education though.

Lesson One: Everything is negotiable.
From the taxi fare, to the price of brand name goods. Don't be put off because you are in a well-known shop. Get to asking for that discount.

Lesson Two: Smile, and slash the price in half.
Sometimes it works and you walk away with a *steal*. Other times it doesn't, but by smiling and having fun with it, both parties enjoy the exchange and nobody vex.

Lesson Three: Go in for the kill near closing time
When Mr. Shopkeeper is triyng to get that last sale of the day, he is more inclined to give a larger discount for three reasons - he is tired, he wants to go home and your money is within reach. Use these to your advantage.

Leson Four: If you have US Dollars, shout about it.
I have never seen prices drop as quickly as they do in Dubai for US$. It's like the people don't want their own currency. Everyone knows the day's exchange rates and everyone is happy to apply it.

Teaser

At the 11th hour, we changed our holiday plans from Trinidad & Tobago Carnival 2010 to Dubai. I cannot say I was not disappointed. After all the twoing and froing and the costume changes, it would've been great to make it for Carnival.

Nevertheless, I will roll with the new plan because really, all I need for a good vacation is warmth and tolerant people.

I am currently sweltering more than I have ever before – the Emirate sun is no joke.
More photos and my thoughts on the place when I return. x

That's Not an Allocation Strategy!

How's it going blogfam?

I've been working hard, trying to impress the bosses lately. I realize that my work days could be so much more productive so I'm trying out this thing where I give 110% when I'm there and forget it for the rest of my day. It's going well thus far.

You know how I cut back on my trips to London? yeah well that didn't go as planned. And to make things worse, every time I get behind a wheel these days, I automatically cease and desist all eating / drinking /iPod changing / general (accepted and safe but in the grand scheme of things still) not paying-attention-at-the-wheel nonsense seeing as PC Shiny Buttons is still on the loose and I don't know what other zealous law enforcement officers believe in his type of policing.

***for my Non-UK readers** PC Shiny Buttons is a policeman with an interesting interpretation of "not being in control of the vehicle". He is not afraid to hand out spot fines and penalty points for blowing your nose at the wheel even with your handbrake applied. Last year, he gave an unemployed man coming who dropped a £10 note accidentally a spot fine for littering***

In other news, I realized I don't know anywhere near as much as I thought I did about ETFs. I was conducting a very routine check on my investments recently and I noticed my stocks were down in value by around £300 since the beginning of the year. Closer inspection showed one of the ETFs I hold has tanked - terribly. It's from a reputable company, in a "safe" area and I did what I thought was sufficient due diligence before purchasing. So what went wrong?

It would seem my ETF ownership is concentrated in one area.

I'm overexposed and it's my own fault. I made a conscious effort to concentrate on Large Cap initially - just because I thought that was a sensible approach to gaining a foothold and getting my feet wet. What I didn't plan to do was to target Blend stocks. I only hold two ETFs outside this box. That's worrying. I got into this mess because I was researching ETFs and determining which ones I thought were compatible with my long-term objectives. I didn't consider how they would interact together or what the complete picture would look like. You could say I became overconcerned with the minutia.

So, I'm falling back and adopting a "Big Picture" approach. I'm immersing myself in more research and attempting to come up with a balance that's more reflective of my goals. I'm aiming for a distribution that looks something like this:

I don't need to concentrate largely on Value ETFS but I am appreciative of their role in reducing the volatility of a portfolio and I'll look to adjust my target distribution once things change in my life. Until I get some real responsibility i.e. a spouse / family / dependants and/or a mortgage, that's the revised plan.

Can't Wait to Drop Kick My Brother

Singing Sweetly and Rapping Romantically (??)

I generally don't listen rap music and everybody knows this about me. However, every now and then, I will hear a song when I'm hanging out with friends who listen to the genre and I will adore it.

Case in point

Seriously?

credit
I wonder what it is about being a lawyer that makes people think you can resolve every issue they have every had that is remotely legal.

I have acquaintances who insist on asking me for favours - work related favours. They ask these favours like it's nothing. Let me rephrase, they ask favours you cannot do without asking at least four favours yourself like it's nothing.

These favours usually cost upwards of £95 per billable hour to do. They are things I am not authorized to do, so I can't just dedicate some free time of my own to figuring out. These things require me to get a partner or senior associate's opinion. Such opinions don't come easy, especially when said senior associate / partner works in a different department to you and the extent of your interaction is a polite smile at the drinks machine or in line at the staff cafeteria.


I wish there was a way I could allow the people who ask these things of me to experience how ridiculous the request is.

My Money and Romance

JK and I don't discuss our money.

I know how much he earns, his ballpark networth and how much is expenses are on average. He has the same kind of idea about my financial situation. We didn't discuss this when we started dating. It's information we already had about each other because we had a long-standing close friendship before the romancing began :).

Bottom line is, he earns approximately twice as much as I do, has no debt but has larger monthly outgoings and saves about 1.75 times what I do. As we don't discuss our money (at this point in time), we have no patterns about who pays for what when we go out. To be honest, he pays a lot of the time but I handle all fuel-related expenses and I fill his fridge with homecooked meals.

JK's philosophy is simple: don't buy it if it hurts your finances. It always has been and it probably always will be. Our financial setup works for us at this time but, if we start to do things that require serious money, we may need to address the subject and I don't know how the awkwardness can be avoided.

So, I've got to know, do you discuss finances and/or set limits when you are in a relationship? If you do, how has doing so worked for you in practice?