Tuesday, 27 January 2015

Dealing with Burnout: Reset, Revitalise, Refocus

I am completely burned out at the moment.  There I said it.  I have been trying to work out how to write this blog post for the last week and I always seemed to start it but never have a great way of introducing the topic.  When I sat down today to write this post I figured that I would just tell you how and why I burned out and what I am going to do to get myself back on track.

Why did I burn out?

I took on too much...

An entrepreneur friend of mine inspired me greatly with the amount of things that we can do if we only realised how much time we had in each day.  It was a great idea and it worked wonders for me - over the last year I've done more than I could ever have imagined possible...but I'm now tired!

A quick list of things I have been doing:

  • Working a reasonably intensive job (not as bad as investment banking but still 10 - 11 hour days)
  • Writing 2 blogs in my spare time
  • Planning a wedding
  • Travelling - I think I went overseas 4 times last year
  • Attempting to have a 'full' social life (I have all my weekends for the next 2 months booked out...and it has been like this for a long time)
  • Trying to get into shape (gym 4 times a week)
  • A bunch of different hobbies with weekly commitments
  • Maintaining relationships with my fiancee and family
There are probably people out there who could do all of this on a consistent basis and never blink...but trying to do this has really taken it's toll on me and as I've gotten more tired I've dropped the ball in several departments including this blog.

...and I haven't been resting...


Tuesday, 20 January 2015

Is the currency play finally over?

Almost exactly 3 years ago I wrote a post arguing that there was an opportunity to invest in foreign index funds (as an Australian investor) because the exchange rate was far higher than it's historical averages and it seemed to me that this state of affairs wouldn't last forever.

My feeling was right and I have ridden the currency down almost 30% in the last ~5 years (this is before considering the returns that I managed to achieve by being invested in those foreign share markets).  I reassessed these investments 18 months ago and although I had already done very well out of them I felt like it still had further to go.

I'm still holding my foreign investments...but the currency is far closer to fair value


I'm still holding my foreign currency investments and they now account for just under half my share portfolio.  With the AUD / USD exchange rate sitting around the $0.82, I no longer have a strong conviction on the value of the currency.  It may be over-valued (I suspect that it might be a little bit strong) and it may be undervalued....I just don't know.

The currency play is finally over

Wednesday, 14 January 2015

2014 Expenditure Tracker...A year in review

Last year I attempted to track and budget for every dollar that came in my pay check and it was a great exercise to go through.  It was an incredibly valuable process with some interesting outcomes.  Below is a summary of how I did as well as a detailed look at where I outperformed and where I under-performed my budget.


ItemActual 2014Target 2014Perf. vs Target
Accommodation / Living expenses $27,617$26,950+$667
Car expenses$6,926$8,300-$1,374
Health / Well being expenses$6,162$6,790-$628
Entertainment / Personal expenses $15,738$14,764+$974
Travel expenses$10,299$8,100+$2,199
Other 'big' expenses$40,695$42,100-$1,405
Savings / Investments$11,393$12,613-$1,220

So what happened?

Accommodation / Living expenses: +$667

Almost every single expense line in this category came in exactly where I forecast.  Rent, utilities and insurance came in almost exactly where I forecast.  The big variances came from groceries ($600 less than I forecast), clothing ($450 more than I forecast) and apartment set up costs ($600 more than I forecast).  

If I hadn't bought my new television right at the end of the year I would have been well below my overall target.  I can't believe how close my estimates were.  It really does show how effective budgeting and tracking can be.

Car expenses: -$1,374

I was honestly a little surprised how well I performed in this particular category.  I spent a little bit more on registration and maintenance than I had forecast however my fuel costs, parking and toll costs and car washing costs were way below my forecasts. 

Once again, actually tracking my expenses made me focus on saving money wherever possible.  I used my car less, bought my own equipment to wash my car (instead of paying for it) and paid far fewer tolls in previous years because I could see it affecting my budget every time I spent on one of these items.

Health / Well Being expenses: -$628

I confess I was surprised

Tuesday, 6 January 2015

2015 Financial Goals

I love this time of the year.  Setting goals for the coming year is exciting.  Everything is a blank canvas and the year always has so much potential ahead.

Last year I tracked every single dollar I spent and allocated all of that cash to achieving goals which I set out at the start of the year.  My ability to do this going forward is limited by the fact that I now share finances with my fiancee (although we are not fully integrated yet).  Given how tedious tracking every dollar is I'm not going to ask her to do this and so I'm going to have to settle for a way of tracking my goals which is less hands on than last year.

 But before we get to the 'how'...I'm going to outline my savings and spending goals for the coming year.

My financial goals for 2015

I set my financial goals this year with my fiancee.  This was the first year that I had to do it with someone else and I had to reign in what I wanted to achieve in order for us to accommodate both of our goals.

The goals listed below are joint goals.  I tried separating these out but it really was far too complicated and I couldn't work out how to track them separately either.

Goal #1: Get Married.  Required savings: $5,000

My fiancee and I decided to have a shorter engagement rather than a longer one.  Neither of us really wanted a long and drawn out engagement.  This was for a variety of personal factors including life plans and age and also neither of us want to drag out the wedding planning phase for too long.

I have outlined my wedding savings plan before.  We have budgeted $40,000 for the wedding itself.  Some serious saving done through 2014 means we only have $5,000 left to save for the wedding.

Goal #2: Go on a grand tour of Europe for our honeymoon.  Required savings: $20,000


The best part about planning a wedding is definitely the honeymoon.  I love travelling and I really wanted to travel through Europe before I had to settle down with children.  When I budgeted for my wedding in 2014 I was also budgeting for my honeymoon so although it looks like I haven't saved anything it's because it has all been allocated to the wedding (which comes first)

Goal #3: Save for a home deposit.  Required savings: $40,000

Ok - for all those who were worried that I had suddenly changed into a person who had totally given up saving and investing don't worry - I haven't.  Saving for a home deposit is something that I've been doing for years.  I haven't explicitly said that is what I was doing but every time I put money in my investment property's home loan offset account it was to form a deposit for my own home when it came time to buy it.

Friday, 2 January 2015

December 2014 Net Worth: $568,000 (+1.2%) and Expenditure Tracker

This is my last net worth and expenditure tracker for 2014.  The detail and effort I put into maintaining my budget tracker this years sometimes had me wanting to give up but I'm glad I pushed through with it.  I'm probably not going to include the same level of detail next year for several reasons but it was instructive to go through the process this year.

The expenditure targets in these series of posts come from my 2014 Financial Goals post where I set out a lot of what I wanted to achieve for the year.  This was a 'no saving' year for me - I tried to pack in as many goals that I had been meaning to do for a while (and a few new ones) without dipping into my savings at all.

December 2014 Net Worth: $568,000 (+1.2%)


Value% Change
Assets$932,000+1.2%
Liabilities$364,000+1.2%
Net worth$568,000+1.2%


What drove my net worth performance this month?

I was really surprised at how good my net worth performance was this month given that there were several negative factors to come through.  Most of the factors relating to performance this month were actually expenditure related however there were one or two quirky factors which I have outlined below:
  • Positive factors
    • A quirk in my bonus calculation made up more than half my gain this month
      • My bonus is paid in November and the large step up can be seen in that month.  However in November I had not yet been allocated my deferred compensation so I included a tax adjusted estimate for this compensation in my net worth calculation
      • In December I was actually allocated the number of shares.  These shares are not taxable until they vest in a few years time and I don't include the tax impact on these shares until they actually do vest
      • As a result I got a 'write back' of the tax that I had included in my November net worth post
    • A rebounding share market helped...a lot
      • The last few months have been quite painful on the share market however the December rally definitely helped my performance
  • Negative factors
    • I started paying for my wedding
      • I have been saving for my wedding for the entire year and although most of the expenses will be in 2015 when I actually get married I started having to put down deposits for things like the venue and engagement party etc. 
      • Although I have budgeted for all of these they still impact my net worth as I spend the cash
    • I bought and paid for (part) of my sports car
      • I have been talking about buying my sports car for years and this month I finally did it
      • Again this was fully budgeted and saved for however the cash has actually started to flow out.  As I'm buying it from Japan I haven't paid all the costs yet.  I've paid the Auction House for the value of the car and also the compliance center here a deposit to start the process of bringing it in. 
    • I loosened the purse strings a little around Christmas / Boxing Day
      • I actually spent a lot of money this Christmas on going out and presents but I also spent a lot more than usual at the Boxing Day sales this year.  I bought a new TV and gaming console which set me back $1,500
      • This isn't like me at all but I have been trying to live in the moment more and I gave into a bit of consumerism.

What is my outlook for next month?

Next month I will see a large drop in my net worth.  This is a combination of factors including more expenses on my car and wedding however the biggest factor will be the inclusion of the total cost of my wedding and honeymoon as a liability (whereas currently it only impacts my net worth as I spend the cash).  I know it is going to happen and I'm saving for it so the savings should offset the expenses and leave me neutral.

The calculation of my net worth is also going to become more complicated as I co-mingle my finances more with my fiance. I am targeting a net worth of $500,000 for January 2015 (which will hopefully reflect all the large future expenses that I have coming up).

December 2014 Expenditure Tracker

ItemApr 2014Monthly TargetPerf. vs Target
Accommodation / Living expenses $3,179$2,246+$934
Car expenses$291$692-$401
Health / Well being expenses$472$566-$94
Entertainment / Personal expenses $1,381$1,230+$151
Travel expenses$622$675-$53
Other 'big' expenses$12,001$3,508+$8,492
Savings / Investments-$6,442$1,051-$7,493


Tuesday, 23 December 2014

Merry Christmas! Here is a little Christmas nudge...

Merry Christmas everyone.  I hope you all have a very safe, happy and enjoyable holiday season. Hopefully you can take this time to step back and re-assess your goals and priorities and come back in the new year refreshed and ready to take your personal finance journey to the new step.

This is just a little post around Christmas to nudge you in the direction of some Christmas giving.

Don't forget those less fortunate than ourselves

The very nature of a personal finance journey means that we are often looking to improve our own lot in life.  There is nothing wrong with this and focusing on my financial journey and blogging about it is one of the things I enjoy doing most.

However it is easy to forget (especially as we start to build up some wealth, traction and momentum) that there are others who are less fortunate than ourselves.  

This is a little nudge to remind you (and myself) to give a little and hopefully improve someone else's Christmas.

Micro-finance organisations are great for those looking to give to others on a financial journey

Last year around

Thursday, 18 December 2014

Review: Flash Boys by Michael Lewis

I love reading Michael Lewis' books - they are almost never dry (which financial books can often be) and he has a particular skill of weaving technical information in with the human experience to create a story out of something that most people would have trouble relating to.

This is exactly the kind of book he has written with Flash Boys - a book dedicated to exposing the rise of high frequency traders and exposing an industry which most do not understand and fewer have an interest in exposing.

What is Flash Boys about?

Flash Boys is the book to read if you are a lay person looking to understand how High Frequency Trading works.  It goes through the industry participants, how the board has been tilted against investors in favour of high frequency traders and how you (as an individual investor) and large institutional investors are being screwed by the stock market which is meant to be clear and transparent.

So what is High Frequency Trading?

I don't want to ruin the book and get into the specifics because it can be extremely complex but broadly speaking high frequency traders have better and faster information than anyone else in the market and can use this information to trade faster than anyone else and make a profit in the market based on this information.

Most people don't understand High Frequency Trading because they don't understand how the stock exchanges are actually set up.  They don't realise that most stocks are actually traded on multiple exchanges in a market.  Why does this make a difference?  Say you are looking to place a large buy order of shares in a market.  Your broker sends it to exchange 1 and exchange 2 both at the same time.  The high frequency trader sees it at exchange one (because your electronic signal gets there first) and then gets to exchange 2 ahead of you (because your electronic signal takes slightly longer to get there) and pushes the price up so you are forced to pay more.  They are effectively front running you...and the system is designed to let them do this.

You as the investor get screwed because you are forced to pay a higher price than you would if you could have gotten all the shares at the market price.  Although this affects large shareholders more than small investors the reality is that even as a small investor you end up paying more for your shares than you have to.  The difference can be tiny but these tiny amounts add up to huge profits for high frequency traders.

I won't go into more detail - but will let you read the book.  It is a fascinating expose on a little talked about industry.

This book is great for any one interested in the share market...but it will not make you a better investor

I generally love books which