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Is saving 50% of income enough?

  • 10-04-2011 6:23am
    #1
    Registered Users, Registered Users 2 Posts: 423 ✭✭


    I got my first proper job two months ago. The pay is quite good. I'm saving around 50% of my income, but is this really enough?

    For budgeting I "pay myself" a fixed amount of cash every week (every Sunday night 20,000 yen goes into my wallet. (I live in Japan)) that is used to pay for food, some of my smaller bills and any fun/goodies I want. I force myself to spend all of this money (over the medium term, meaning that I can carry over a surplus from week to week if I want to buy something big in the future, but refuse to allow myself to save any surplus from this budget) to make sure that I enjoy life.

    I pay rent and other bills from my bank account. Whatever remains in the bank account each month I transfer into a brokerage account for purchase of long term income generating assets. As far as I'm concerned the money I transfer into the brokerage account is "gone forever," though obviously I'm hoping that over the long run I might build up enough passive income generating assets that I could live a life of workless idleness and excess in this beautiful country.

    Anyway, I still get left with a feeling that I'm not really saving "enough", or rather, I find it baffling how people could put themselves in a situation of only saving say 10% or less of their salary. Even with saving 50%, one is only buying oneself one year of idleness for every one year worked. Even if I did this for 30 years, assuming that my savings maintain their purchasing power, I'd only have enough to last me into my mid-80's, I might not even be dead by then! (My Grandad turns 85 in two weeks.)

    In addition if I lost my job (depending on how long I would be unemployed) it would obvious do some pretty bad damage to my long term capital accumulation. If I got married and had children my expenses could soar in a manner difficult to control. Also if I had a wife who wanted to do something fiscally insane like borrow several times my income to buy a house (or worse, buy that mobile wealth destroying entity known as a car), it could really mess things up aswell.

    However in contrast to this since I save any windfalls that I get and will be holding my consumption budget steady even if my income rises, I have the potential to save significantly more than 50% of my income should I get a better job. But to be honest I feel quite overpaid already so I'd be surprised if I could convince some crazy company to pay me more.

    I would be interested to hear any comments from other people about how they are managing their own savings and budgets. I wonder are there many of you that have pushed your savings rate significantly above 50%? What would you guys envision as a "safe" rate of saving? Also, for those of you accumulating capital aggressively, what type of income generating assets do you convert these savings into? (e.g. special bank deposits, REITs, dividend paying stocks, preferred stocks, bonds etc.)


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Comments

  • Registered Users, Registered Users 2 Posts: 590 ✭✭✭chelseavera


    I got my first proper job two months ago. The pay is quite good. I'm saving around 50% of my income, but is this really enough?

    For budgeting I "pay myself" a fixed amount of cash every week (every Sunday night 20,000 yen goes into my wallet. (I live in Japan)) that is used to pay for food, some of my smaller bills and any fun/goodies I want. I force myself to spend all of this money (over the medium term, meaning that I can carry over a surplus from week to week if I want to buy something big in the future, but refuse to allow myself to save any surplus from this budget) to make sure that I enjoy life.

    I pay rent and other bills from my bank account. Whatever remains in the bank account each month I transfer into a brokerage account for purchase of long term income generating assets. As far as I'm concerned the money I transfer into the brokerage account is "gone forever," though obviously I'm hoping that over the long run I might build up enough passive income generating assets that I could live a life of workless idleness and excess in this beautiful country.

    Anyway, I still get left with a feeling that I'm not really saving "enough", or rather, I find it baffling how people could put themselves in a situation of only saving say 10% or less of their salary. Even with saving 50%, one is only buying oneself one year of idleness for every one year worked. Even if I did this for 30 years, assuming that my savings maintain their purchasing power, I'd only have enough to last me into my mid-80's, I might not even be dead by then! (My Grandad turns 85 in two weeks.)

    In addition if I lost my job (depending on how long I would be unemployed) it would obvious do some pretty bad damage to my long term capital accumulation. If I got married and had children my expenses could soar in a manner difficult to control. Also if I had a wife who wanted to do something fiscally insane like borrow several times my income to buy a house (or worse, buy that mobile wealth destroying entity known as a car), it could really mess things up aswell.

    However in contrast to this since I save any windfalls that I get and will be holding my consumption budget steady even if my income rises, I have the potential to save significantly more than 50% of my income should I get a better job. But to be honest I feel quite overpaid already so I'd be surprised if I could convince some crazy company to pay me more.

    I would be interested to hear any comments from other people about how they are managing their own savings and budgets. I wonder are there many of you that have pushed your savings rate significantly above 50%? What would you guys envision as a "safe" rate of saving? Also, for those of you accumulating capital aggressively, what type of income generating assets do you convert these savings into? (e.g. special bank deposits, REITs, dividend paying stocks, preferred stocks, bonds etc.)

    You for real???!!


  • Closed Accounts Posts: 927 ✭✭✭turbobaby


    A perdect example of an excellent post followed by an idiotic post.

    Keep up the 50% savings rate!

    To put it into perspective it is generally accepted that you should spend a max of 33% of your income on accommodation. I know fron experience that rent and food is v expensive in Tokyo at least so you're doing very well there...

    The forum is littered with some good and bad investment advice so have a read through it for some ideas.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    turbobaby wrote: »
    A perdect example of an excellent post followed by an idiotic post.

    Keep up the 50% savings rate!

    To put it into perspective it is generally accepted that you should spend a max of 33% of your income on accommodation. I know fron experience that rent and food is v expensive in Tokyo at least so you're doing very well there...

    The forum is littered with some good and bad investment advice so have a read through it for some ideas.

    Thanks for your response. Around 22% is going on accommodation. It's the one area left that I think I have significant scope to reduce expenditure without hitting quality so hard. Going to stay where I am until my lease is up (August 2012) and then will see what I can find elsewhere/negotiate down a new contract.

    Food is actually reasonably cheap here. I feel like I've just started to "master" this expense recently. First I got a handle on how to make healthy but cheap meals at home and recently I've finally got on top of hammering down the price paid for lunch at work. Rent comes out of my capital budget, so any reduction in rent means I invest the savings, but since food comes out of my consumption budget any savings mean I get to spend more on goodies. I think it's good from a psychological perspective that my efforts to cut costs reward both my capital and consumption account, as it keeps me motivated from two perspectives.

    Another area I'm looking at trying to slash is my phone. Currently paying 6,200 yen a month for unlimited data and a small amount of calls. Hoping to figure out how to slash this to less than 5,000 a month once my year contract is up in August.

    So asides from the fat left to trim from rent and phone bill, I think the rest of my spending is at the optimal tradeoff for price/quality. Once I address these two I think I should focus my energies on improving my earning potential, though as I mentioned in my original post I think it might be quite some time before I could find myself in a position of being able to command a higher income.


  • Registered Users, Registered Users 2 Posts: 315 ✭✭strmin


    Save as much as you are comfortable with. Don't sacrifice quality of your life for more savings. Concentrate on investing your saved money instead and let it compound.


  • Registered Users, Registered Users 2 Posts: 7,639 ✭✭✭PeakOutput


    Even with saving 50%, one is only buying oneself one year of idleness for every one year worked. Even if I did this for 30 years, assuming that my savings maintain their purchasing power, I'd only have enough to last me into my mid-80's, I might not even be dead by then!

    maybe im pointing out the obvious but your investing your savings so you are earning (compound) interest. if you save 50% of your savings a year at a rate of 10% compound interest (returns from investment / interest / whatever) for 10 years you actually have 20 years worth of salary saved not just 10.

    obviously this affect increases as time goes on so after 30 years saving you would have far more then 30 years of living money saved. even if the rate of return was only 5% i think you would have at least 40/50 years of living money after 30 years of saving (not allowing for inflation and everything else but you know what i mean)

    sorry if that is obvious or if im missing something but your post is quite interesting and that is the only thing that jumped out at me


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  • Registered Users, Registered Users 2 Posts: 5,150 ✭✭✭homer911


    And dont forget to give something to charity!


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    PeakOutput wrote: »
    maybe im pointing out the obvious but your investing your savings so you are earning (compound) interest. if you save 50% of your savings a year at a rate of 10% compound interest (returns from investment / interest / whatever) for 10 years you actually have 20 years worth of salary saved not just 10.

    obviously this affect increases as time goes on so after 30 years saving you would have far more then 30 years of living money saved. even if the rate of return was only 5% i think you would have at least 40/50 years of living money after 30 years of saving (not allowing for inflation and everything else but you know what i mean)

    sorry if that is obvious or if im missing something but your post is quite interesting and that is the only thing that jumped out at me

    Where am I going to earn a 10% real return? The world economy is only growing at a bit above 4%, and that's higher than the recent average rate. I think one of the reasons people save so little is that they expect to make insane returns on their investments. However if one takes a more realistic view on what real returns are available, I think one comes to realise that a much higher savings rate is necessary. In saying that though, even a 3 or 4% real return causes significant compounding over the long run.


  • Registered Users, Registered Users 2 Posts: 3,130 ✭✭✭Rodin


    Where am I going to earn a 10% real return? The world economy is only growing at a bit above 4%, and that's higher than the recent average rate. I think one of the reasons people save so little is that they expect to make insane returns on their investments. However if one takes a more realistic view on what real returns are available, I think one comes to realise that a much higher savings rate is necessary. In saying that though, even a 3 or 4% real return causes significant compounding over the long run.

    Genuinely, I think people save so little because they don't have it to save
    You're very fortunate to be able to put away 50% of your income


  • Registered Users, Registered Users 2 Posts: 7,639 ✭✭✭PeakOutput


    Where am I going to earn a 10% real return? The world economy is only growing at a bit above 4%, and that's higher than the recent average rate. I think one of the reasons people save so little is that they expect to make insane returns on their investments. However if one takes a more realistic view on what real returns are available, I think one comes to realise that a much higher savings rate is necessary. In saying that though, even a 3 or 4% real return causes significant compounding over the long run.

    I only used 10% because it was an easy round figure but someone on here said recently that anybody should be able to make 9% a year on investments if they do their research properly, before everyone jumps down my throat that is not what I am saying its just something that I read here and nobody in the thread disagreed with them


  • Closed Accounts Posts: 4,001 ✭✭✭Mr. Loverman


    homer911 wrote: »
    And dont forget to give something to charity!

    My hole, most charities use nearly all the donations for their wages and administration costs.

    You ever met someone who works for a charity? L-o-a-d-e-d.


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  • Registered Users, Registered Users 2 Posts: 5,150 ✭✭✭homer911


    My hole, most charities use nearly all the donations for their wages and administration costs.

    You ever met someone who works for a charity? L-o-a-d-e-d.

    I hope you, your family and everyone you know are never in need of some so..

    The charities I know off all operate on a shoe-string, and the staff are mainly volunteers, or underpaid!


  • Registered Users, Registered Users 2 Posts: 5,377 ✭✭✭Warper


    Is this a brag?


  • Registered Users, Registered Users 2 Posts: 11,205 ✭✭✭✭hmmm


    In saying that though, even a 3 or 4% real return causes significant compounding over the long run.
    From the sounds of it you're only starting out on your career. I think the key thing for any young person who has realistic prospects of higher earnings in the future is to live below your means and not get trapped into spending all your future raises. People get into trouble financially when they spend all their pay cheque, having savings in the banks is a great stress reliever. Having large savings that are compounding is even better.

    You'll be surprised how quickly savings compound - the first 100k is the toughest.

    A balanced equity portfolio has earned about 6% real return over the past 30 years. You can mix in bonds or property to lower your risk, at the cost of a slightly lower return.

    If I was a 20 something again I'd probably put most of my savings into a balanced global index fund, with perhaps a quarter of my savings in a relatively high risk fund (e.g. Quinn's Biotech fund). My mistakes at that age were investing in things I knew nothing about but I thought were shortcuts to wealth, e.g. mining stocks.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    PeakOutput wrote: »
    I only used 10% because it was an easy round figure but someone on here said recently that anybody should be able to make 9% a year on investments if they do their research properly, before everyone jumps down my throat that is not what I am saying its just something that I read here and nobody in the thread disagreed with them

    Sorry I didn't mean to sound so harsh, am genuinely interested if you have any ideas on earning stronger returns.

    Warper wrote: »
    Is this a brag?
    I'm here trying to get some constructive feedback and would be very happy if others managed to put themselves in better financial condition as a result of what comes out of this discussion. I'm looking for financial security, not a silly misplaced sense of superiority.
    hmmm wrote: »
    From the sounds of it you're only starting out on your career. I think the key thing for any young person who has realistic prospects of higher earnings in the future is to live below your means and not get trapped into spending all your future raises. People get into trouble financially when they spend all their pay cheque, having savings in the banks is a great stress reliever. Having large savings that are compounding is even better.

    I think you hit the nail on the head. There's nothing like knowing even if I lost my job or had a sudden large expense I could cope without issue. Of course I'm not at that position at all yet, having just started out but it's what I'm aiming for. In that sense you could say I'm actually somewhat driven by fear, or at least a strong risk aversion.
    hmmm wrote: »
    You'll be surprised how quickly savings compound - the first 100k is the toughest.

    A balanced equity portfolio has earned about 6% real return over the past 30 years. You can mix in bonds or property to lower your risk, at the cost of a slightly lower return.

    If I was a 20 something again I'd probably put most of my savings into a balanced global index fund, with perhaps a quarter of my savings in a relatively high risk fund (e.g. Quinn's Biotech fund). My mistakes at that age were investing in things I knew nothing about but I thought were shortcuts to wealth, e.g. mining stocks.

    Invest in what you know would seem to me to be the way to go. It can be tempting to take outright punts based on a small bit of analysis of stuff that one really doesn't understand. I'm probably making that mistake right now. Need to reflect on this a bit more....


  • Registered Users, Registered Users 2 Posts: 5,933 ✭✭✭daheff


    u should make sure that you are investing in your pension plan.

    Not sure what the tax reliefs are in Japan, but here you get a benefit for every contribution..so 100 Eur by you is actually around 130 Eur


  • Closed Accounts Posts: 1 rtygy


    hmm ... Could you share your plan with us? I know you already did share a bit of detail, but I would love to "copy" you ...

    I have been trying to budget and failed a few times. I think I am too ambitious and then it doesn't work ... I am in a similar situation like you. I should be able to save about half of my salary but right now it is all messy. I do save but it is just sitting in the bank aimlessly and I am not sure how I save what I save and what I spend the rest on. I like your idea to "throw" a small amount for riskier investments ...

    So, how do you divide things into capital expenses and others?

    Thanks a bunch in advance.


  • Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    hmmm wrote: »
    If I was a 20 something again I'd probably put most of my savings into a balanced global index fund, with perhaps a quarter of my savings in a relatively high risk fund (e.g. Quinn's Biotech fund). My mistakes at that age were investing in things I knew nothing about but I thought were shortcuts to wealth, e.g. mining stocks.
    Great advice. Young people think they need to get rich quickly; much better to get rich slowly and not be wiped out. Secondly, I am not a fan of funds. Indexes/ETF's are one thing (as long as costs are low), but most funds under-perform an index after fees. It's also important to remember you're buying a company, not a bit of paper. Personally, I keep the majority of my cash in a basket of good companies with great track records (Berkshire Hathaway, Coca Cola, Proctor and Gamble, Nestle, Tesco, etc.). With about 20% of my portfolio, I play around with with companies in the smaller cap area. Even though I spend a massively disproportionate amount of time looking at these companies, I only get out-performance of about 2% on these picks from my basket of great companies. It's probably not worth the time I put in, but it's a nice little hobby to have.

    If you start off in your mid-twenties and put a couple of hundred Euro into quality stocks every month, I would say that you would have enough in 30 years to retire. You don't need to be a genius - just stick with old reliable's and diversify.


  • Registered Users, Registered Users 2 Posts: 18,057 ✭✭✭✭Thargor


    Do you mind me asking how many Berkshire you have and how they're performing for you Raskolnikov? How did you get them anyway I thought there was a waiting list or hereditary crap or something like that with them?


  • Closed Accounts Posts: 927 ✭✭✭turbobaby


    Great advice. Young people think they need to get rich quickly; much better to get rich slowly and not be wiped out. Secondly, I am not a fan of funds. Indexes/ETF's are one thing (as long as costs are low), but most funds under-perform an index after fees. It's also important to remember you're buying a company, not a bit of paper. Personally, I keep the majority of my cash in a basket of good companies with great track records (Berkshire Hathaway, Coca Cola, Proctor and Gamble, Nestle, Tesco, etc.). With about 20% of my portfolio, I play around with with companies in the smaller cap area. Even though I spend a massively disproportionate amount of time looking at these companies, I only get out-performance of about 2% on these picks from my basket of great companies. It's probably not worth the time I put in, but it's a nice little hobby to have.

    If you start off in your mid-twenties and put a couple of hundred Euro into quality stocks every month, I would say that you would have enough in 30 years to retire. You don't need to be a genius - just stick with old reliable's and diversify.

    So you're not worried about a major drop in shares (i.e. crash) when quantitative easing eventually stops?


  • Registered Users, Registered Users 2 Posts: 11,205 ✭✭✭✭hmmm


    Young people think they need to get rich quickly; much better to get rich slowly and not be wiped out.
    Spot on. When you're young you have time to recover from financial mistakes, so it's usually worth the gamble to to take on some higher risk investments. But, keep the core of your funds in slow and steady investments and you'll be thankful as you get older.
    Secondly, I am not a fan of funds. Indexes/ETF's are one thing (as long as costs are low), but most funds under-perform an index after fees.
    I agree, but for someone putting away a few hundred a month funds are usually cheaper than direct stock market investment. As your fund grows, it then becomes cheaper to move your long term investments into ETFs.
    I only get out-performance of about 2% on these picks from my basket of great companies. It's probably not worth the time I put in, but it's a nice little hobby to have.
    Same here, I think it's the investing equivalent of feeling optimistic after buying a lottery ticket.
    turbobaby wrote: »
    So you're not worried about a major drop in shares (i.e. crash) when quantitative easing eventually stops?
    There's always some new disaster waiting around the corner. Global shares have recovered massively in the past two years yet most people are sitting on the sidelines out of fear, by the time they return to the market most of the gains will have already gone.


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  • Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    Thargor wrote: »
    Do you mind me asking how many Berkshire you have and how they're performing for you Raskolnikov? How did you get them anyway I thought there was a waiting list or hereditary crap or something like that with them?
    Anyone can own Berkshire. I was given my first Berkshire B stock for a confirmation present back in the early 90's. My next came when I graduated from university in 2006. This was all before the B stock was split, so now I have 100 shares. I like to keep a balanced portfolio, so I have never actually bought any stock myself. Having said that, I haven't, and will never sell a share as long as Buffett lives.


  • Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    turbobaby wrote: »
    So you're not worried about a major drop in shares (i.e. crash) when quantitative easing eventually stops?
    Like hmmm says, there's always something to worry about. Personally, whether the market is good, or bad, I will always assign a certain % of my salary into my brokerage account. I generally don't sell unless I see something extremely worrying from a company (I can't time selling to save my life). Although I do keep powder dry to buy on dips, usually to snap up a company that's on my watch list for cheap.


  • Registered Users, Registered Users 2 Posts: 18,057 ✭✭✭✭Thargor


    Sorry what? You're worth more than 10 million then or am I being thick? What do you do for a living? Make a thread and tell the rest of us how you did it then for fecks sake :p


  • Registered Users, Registered Users 2 Posts: 1,152 ✭✭✭Idu


    The B stock trades around 82 dollars


  • Registered Users, Registered Users 2 Posts: 18,057 ✭✭✭✭Thargor


    Ah right, knew it had to be something like that.


  • Banned (with Prison Access) Posts: 13,018 ✭✭✭✭jank


    Some good advice here I must say. Been meaning to invest in stocks in a long time. Have played a bit with Rabo funds and so far they have payed off for me, well better then the 2% interest I am getting for my money(up around 10% overall). (60% cash 40% spread over 6 funds at the mo with rabo)

    I am going to look again at the end of the year at the funds performance and will probably sell up. TBH once I get more then 2% after tax & fees ill be happy as it was just a punt to get me interested in investing, see how this game works....
    In the future though I would be more inclined to invest in ETF's

    Anyway now I am in OZ and have some savings built up think I am going to step up to the plate and put down my bets so to speak.

    Want to keep some disposable cash near me just in case so I am looking presently at 50% cash (5% interest at the mo), 25% blue-chip stocks e.g. RIO, BHP, WES etc. 15% mid cap stocks and 10% on the small caps (speculation really!)

    Hopefully this strategy will pay off in the medium term. Plan to be in OZ for at least the next two years so hopefully I can ride the commodity and resources wave for that period.

    The thing I find most difficult is actually picking out the actual stock to invest in. I read the financial review most days and look at stocks and sectors that may have good growth in them but my brain over a few days just seems to overload itself and I can never just pick one stock over the next. Maybe I dont know what I am doing!:P

    What is the deciding factor for you? Do you look at future earnings along P/E, EPS etc. or is it sector based rather than company based. What is the x factor you look for in a stock that makes go for it. You can read stats from 10different companies and come up with 100 different conclusions i feel. Some analyst's give a stock the thumbs up while others are more bearish. Just find the information overload too much sometimes.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    rtygy wrote: »
    hmm ... Could you share your plan with us? I know you already did share a bit of detail, but I would love to "copy" you ...

    I have been trying to budget and failed a few times. I think I am too ambitious and then it doesn't work ... I am in a similar situation like you. I should be able to save about half of my salary but right now it is all messy. I do save but it is just sitting in the bank aimlessly and I am not sure how I save what I save and what I spend the rest on. I like your idea to "throw" a small amount for riskier investments ...

    So, how do you divide things into capital expenses and others?

    Thanks a bunch in advance.
    So as mentioned I have two internal "accounts/budgets", which I label "capital" and "consumption", though these labels are actually quite misleading because how I assign things to the accounts is somewhat arbitrary.

    Expenses that can be charged to directly to the capital account (meaning being paid for by bank transfer or withdrawing money from my bank account) are rent, mobile phone, internet and commuter's pass. Previously electricity, gas and water were also charged to my capital account, but I changed them to be taken out of the consumption budget to ensure that I reach my savings goals.

    As for the consumption budget, it is 20,000 yen a week. Mechanically this transfer occurs by putting 20,000 yen in my wallet every Sunday night from a pile of cash that sits on my computer desk. The pile of cash is refilled by withdrawing from my bank account in larger amounts at less frequent intervals.

    Everything that isn't explicitly defined as being paid for out of the capital account is paid for our of the consumption budget e.g. the cash in my wallet. I also use some electric money in the form of two cards (my commuter's pass can be charged up with money for use on routes that my pass doesn't cover, while I also have a "Waon" card which is a form of electronic money that you can charge with physical cash) but both of these cards have to be charged from the cash in wallet when necessary.

    So some things that I pay for out of this money are food, fun stuff, apartment supplies, consumer durables (if I want an air conditioner it has to come out of the consumption budget) the three bills mentioned above that aren't covered by the capital account (electricity, gas and water) and any unexpected expenses or losses that I incur. The special property about my consumption budget is that I force myself to spend it all over the medium term. This stops me from cutting my expenses excessively to the point of making my life miserable. When I say it has to be spent over the medium term, I mean that it is fine to build up surpluses for several weeks or even months, but ultimately it must be consumed and it is forbidden to save any of this money (where saving is defined as the purchase of income generating assets such as bonds, dividend paying shares, interest bearing bank deposits, preferred shares, REITs etc.)

    Notice that when other people use the word saving they may actually mean a completely different thing to me. “Saving” for a holiday is not saving, it is liquidity management for future consumption. If I wanted to go on a holiday I would “save” out of my consumption budget each week and then dissave the surplus when purchasing the holiday. But I would never refer to this as “saving,” even if it is a common expression to state “I am saving for a holiday.”

    From the classification of my expenses, it follows that reducing expenditures in different areas will affect my financial position differently depending on which of the two accounts the expense in question falls into. Reductions in an expense that is paid for out of the capital account will result in a direct increase in savings, as the increased surplus will be used to purchase income generating assets. Reductions in an expense that is paid for out of the consumption budget will result in increased capacity to consume other things and this increased surplus will ultimately be consumed as any surplus in the consumption account is forbidden to be saved. Thus in the this case the savings rate will remain the same, but the quality of life should increase.

    I think it is good from a motivation perspective that cost savings in different areas result in both an increased rate of capital acquisition and an increased ability to consume. So a general drive towards efficiency will give oneself two psychological rewards, a higher savings rate and a reduction in the impact of one subsection of the consumption expenses, allowing an expansion of the other consumption expenses.

    A very important property of the consumption budget is that it is paid weekly in cash into one’s wallet. This serves multiple purposes. One is to avoid savings fatigue during the massive time gaps between monthly payments from one’s corporate master. A weekly payment provides a regular psychological reward that helps maintain motivation. Receiving the payment in cash allows one to feel the “weight” of each purpose during the week and the direct connection between spending and parting with physical cash. Also, one will quickly be able to see the “good” weeks from the “bad” weeks from a consumption spending perspective, without a vague subjective personal assessment about what one thought one spent, as the notes remaining at the end of the week do not lie. A week of tight spending control will leave a balance in the wallet that has not changed much and then gets a big cash infusion on Sunday night. One can clearly see this and get satisfaction from it. Of course since we are discussing the consumption budget, ultimately this will always be spent over the medium term, but one will often need to build up surpluses from this budget in the short term.

    Related to this, in order to get the most out of the consumption budget, I recommend that you treat Monday to Friday with a “bunker mentality” when it comes to fighting consumption expenditure. As far as I am concerned, Monday to Friday is a complete “writeoff.” I go to work and happily do long hours and don’t think about how I want to enjoy myself or spend money. From a financial perspective I treat it as a damage control exercise. I don’t intent to have any consumption driven fun during weekdays, so I just focus my efforts on “leaking” as little as possible purchasing power on frivolous and unnecessary expenses. This ensures that there are only two days a week when my thoughts drift to what nice things I want to buy and by suppressing expenditure for 5/7ths of the week I am left with a much more sizable sum to expend, though frequently there will be weekends where I don’t expend on wants/luxuries in order to fund bigger wants/luxuries at a later point in time.

    However one must also keep in mind that spending today to avoid more spending tomorrow is a crucial element of maximizing the amount of real consumption that can be enjoyed from a given nominal budget. You should be willing to purchase very large quantities of non-perishable items that go on offer or for some reason or another, priced significantly below normal. These items should be hoarded and gradually dishoarded over time as one consumes them. Consider these as arbitrage opportunities. The other day 250ml bottles of Listerine were being sold at a heavy discount at a supermarket near me. I bought 15. The initial outlay will pay me back through reduced required expenditure over the next few months out of my consumption budget and since I bought these at a significant discount to the normal price, overall I will be able to consume more of other things.

    There are also other benefits to bulk buying/hoarding when arbitrage opportunities appear. After the earthquake I did not have to worry about running out of any of my basic supplies. In fact I stopped buying many things after the earthquake in an attempt to help minimize the effect that any of the supply disruptions were having. I was actually building a hoard of stuff at quite a fast rate before the earthquake, not because I thought an earthquake was coming but because I felt a boom in the air, and anticipated that I might not have the opportunity to buy stuff so cheaply in future. Anway, in this case it worked out well for everyone. I got my stuff cheaply, I was able to reduce my demand for daily goods during the post-earthquake period which allowed the economy to better cope with supply disruptions and I also didn’t have to worry about not being short of anything (not that there really was any shortages in the end.)

    As with any budget, you need information. In my case I record all monthly bills including rent as well as the price that I pay for lunch every work day. You need to know your monthly expenditure on bills in order to be able to calculate your total non-consumption account expenditure. Once you know this and get a feel for the figures you can get an idea about how big each cost is. It also allows help you decide the size of your consumption budget.

    When making cuts/reducing expenditure always focus on the easy fat that can be cut for a disproportionately small drop in quality. A lot of things you can half the cost and still get around 80% of the quality. However you’ll always reach a point when cuts in expenditure will result in disproportionate loss of quality. The key here is to push to the point of diminishing returns and then stop before crossing it.

    In regards to mentality, always push yourself to think of ingenious ways to reduce and eliminate costs. I was shocked at the price of razor blades so I was driven to acquire a device online that cleans the blades after every shave, tripling the useful life of each one and paying for itself within a few months. Another thing you need to be aware of is to avoid placing too high value on your own time. By this I mean, I often hear justifications for offloading work to service providers going along the lines that the money saved doing the work yourself would be the equivalent to a very poor hourly wage. But in my experience the time saved will just be squandered on something completely wastful, like browsing the internet. Better to work for an hour or two doing some task that you would otherwise have to pay someone else to do (like laundry) at a poor equivalent wage because at least there is a guaranteed payoff and one will learn some new skills, become faster and better at it in future and be left with a feeling of satisfaction having completed some task by yourself.

    One more point I would make is that the point of trying hard to crush some of the expenses that are paid out of the consumption budget is actually just so one can enjoy large consumption spending on the stuff one really wants. This stuff may well be expensive/high end/luxury goods. I’ve been trying hard and succeeding at driving down the cost of my lunches each day because I’m working hard not to eat overpriced, frequently unhealthy lunches, but to acquire other goods that give me a greater satisfaction. I used the extreme tightness in avoiding excessive lunch costs to save temporary surpluses in my consumption account and then I went out and bought AWESOME BOOTS that cost 40,000 yen. At the moment I’m building up surpluses by slashing day-to-day and week-to-week costs so that I can buy the things I really want – which for the next few months at least will be clothes. I asked myself, what do really want, these fat clogged lunches everyday, or those nice clothes I’ve been drawn towards for years? The choice was simple, so I slashed, saved and got what I wanted. You can too!


  • Registered Users, Registered Users 2 Posts: 1,559 ✭✭✭pocketdooz


    Interesting thread .......

    Thanks.

    .


  • Registered Users, Registered Users 2 Posts: 2,650 ✭✭✭cooperguy


    My hole, most charities use nearly all the donations for their wages and administration costs.

    You ever met someone who works for a charity? L-o-a-d-e-d.

    I have to take you up on this. It's completely wrong and an excuse people use when they are too tight to help other people. All the big charities have published accounts on their websites. They spend very little of the income on admin and wages


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  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    cooperguy wrote: »
    I have to take you up on this. It's completely wrong and an excuse people use when they are too tight to help other people. All the big charities have published accounts on their websites. They spend very little of the income on admin and wages

    While I don't want to get sidetracked into a debate on charity, in my view it is the government's duty to ensure that all people are kept out of poverty. The existence of private charity implies that the government is not fulfilling its duties correctly. But the solution is not private charity, it's government policy.

    So while I am happy to pay taxes (to the Japanese government) I would never consider giving to a private charity. If I was outraged at some socio-economic disaster, I wouldn't give money to a charity that's trying to reduce the consequences of the problem, I would instead lobby the government to put policies in place to fix the problem. If this government action requires me to pay more taxes to reduce inflationary pressures from the additional government resource use, then I am more than happy to pay.

    I label myself a socialist by the way.


  • Registered Users, Registered Users 2 Posts: 183 ✭✭ManwitaPlan


    So as mentioned I have two internal "accounts/budgets", which I label "capital" and "consumption", though these labels are actually quite misleading because how I assign things to the accounts is somewhat arbitrary.

    Expenses that can be charged to directly to the capital account (meaning being paid for by bank transfer or withdrawing money from my bank account) are rent, mobile phone, internet and commuter's pass. Previously electricity, gas and water were also charged to my capital account, but I changed them to be taken out of the consumption budget to ensure that I reach my savings goals.

    As for the consumption budget, it is 20,000 yen a week. Mechanically this transfer occurs by putting 20,000 yen in my wallet every Sunday night from a pile of cash that sits on my computer desk. The pile of cash is refilled by withdrawing from my bank account in larger amounts at less frequent intervals.

    Everything that isn't explicitly defined as being paid for out of the capital account is paid for our of the consumption budget e.g. the cash in my wallet. I also use some electric money in the form of two cards (my commuter's pass can be charged up with money for use on routes that my pass doesn't cover, while I also have a "Waon" card which is a form of electronic money that you can charge with physical cash) but both of these cards have to be charged from the cash in wallet when necessary.

    So some things that I pay for out of this money are food, fun stuff, apartment supplies, consumer durables (if I want an air conditioner it has to come out of the consumption budget) the three bills mentioned above that aren't covered by the capital account (electricity, gas and water) and any unexpected expenses or losses that I incur. The special property about my consumption budget is that I force myself to spend it all over the medium term. This stops me from cutting my expenses excessively to the point of making my life miserable. When I say it has to be spent over the medium term, I mean that it is fine to build up surpluses for several weeks or even months, but ultimately it must be consumed and it is forbidden to save any of this money (where saving is defined as the purchase of income generating assets such as bonds, dividend paying shares, interest bearing bank deposits, preferred shares, REITs etc.)

    Notice that when other people use the word saving they may actually mean a completely different thing to me. “Saving” for a holiday is not saving, it is liquidity management for future consumption. If I wanted to go on a holiday I would “save” out of my consumption budget each week and then dissave the surplus when purchasing the holiday. But I would never refer to this as “saving,” even if it is a common expression to state “I am saving for a holiday.”

    From the classification of my expenses, it follows that reducing expenditures in different areas will affect my financial position differently depending on which of the two accounts the expense in question falls into. Reductions in an expense that is paid for out of the capital account will result in a direct increase in savings, as the increased surplus will be used to purchase income generating assets. Reductions in an expense that is paid for out of the consumption budget will result in increased capacity to consume other things and this increased surplus will ultimately be consumed as any surplus in the consumption account is forbidden to be saved. Thus in the this case the savings rate will remain the same, but the quality of life should increase.

    I think it is good from a motivation perspective that cost savings in different areas result in both an increased rate of capital acquisition and an increased ability to consume. So a general drive towards efficiency will give oneself two psychological rewards, a higher savings rate and a reduction in the impact of one subsection of the consumption expenses, allowing an expansion of the other consumption expenses.

    A very important property of the consumption budget is that it is paid weekly in cash into one’s wallet. This serves multiple purposes. One is to avoid savings fatigue during the massive time gaps between monthly payments from one’s corporate master. A weekly payment provides a regular psychological reward that helps maintain motivation. Receiving the payment in cash allows one to feel the “weight” of each purpose during the week and the direct connection between spending and parting with physical cash. Also, one will quickly be able to see the “good” weeks from the “bad” weeks from a consumption spending perspective, without a vague subjective personal assessment about what one thought one spent, as the notes remaining at the end of the week do not lie. A week of tight spending control will leave a balance in the wallet that has not changed much and then gets a big cash infusion on Sunday night. One can clearly see this and get satisfaction from it. Of course since we are discussing the consumption budget, ultimately this will always be spent over the medium term, but one will often need to build up surpluses from this budget in the short term.

    Related to this, in order to get the most out of the consumption budget, I recommend that you treat Monday to Friday with a “bunker mentality” when it comes to fighting consumption expenditure. As far as I am concerned, Monday to Friday is a complete “writeoff.” I go to work and happily do long hours and don’t think about how I want to enjoy myself or spend money. From a financial perspective I treat it as a damage control exercise. I don’t intent to have any consumption driven fun during weekdays, so I just focus my efforts on “leaking” as little as possible purchasing power on frivolous and unnecessary expenses. This ensures that there are only two days a week when my thoughts drift to what nice things I want to buy and by suppressing expenditure for 5/7ths of the week I am left with a much more sizable sum to expend, though frequently there will be weekends where I don’t expend on wants/luxuries in order to fund bigger wants/luxuries at a later point in time.

    However one must also keep in mind that spending today to avoid more spending tomorrow is a crucial element of maximizing the amount of real consumption that can be enjoyed from a given nominal budget. You should be willing to purchase very large quantities of non-perishable items that go on offer or for some reason or another, priced significantly below normal. These items should be hoarded and gradually dishoarded over time as one consumes them. Consider these as arbitrage opportunities. The other day 250ml bottles of Listerine were being sold at a heavy discount at a supermarket near me. I bought 15. The initial outlay will pay me back through reduced required expenditure over the next few months out of my consumption budget and since I bought these at a significant discount to the normal price, overall I will be able to consume more of other things.

    There are also other benefits to bulk buying/hoarding when arbitrage opportunities appear. After the earthquake I did not have to worry about running out of any of my basic supplies. In fact I stopped buying many things after the earthquake in an attempt to help minimize the effect that any of the supply disruptions were having. I was actually building a hoard of stuff at quite a fast rate before the earthquake, not because I thought an earthquake was coming but because I felt a boom in the air, and anticipated that I might not have the opportunity to buy stuff so cheaply in future. Anway, in this case it worked out well for everyone. I got my stuff cheaply, I was able to reduce my demand for daily goods during the post-earthquake period which allowed the economy to better cope with supply disruptions and I also didn’t have to worry about not being short of anything (not that there really was any shortages in the end.)

    As with any budget, you need information. In my case I record all monthly bills including rent as well as the price that I pay for lunch every work day. You need to know your monthly expenditure on bills in order to be able to calculate your total non-consumption account expenditure. Once you know this and get a feel for the figures you can get an idea about how big each cost is. It also allows help you decide the size of your consumption budget.

    When making cuts/reducing expenditure always focus on the easy fat that can be cut for a disproportionately small drop in quality. A lot of things you can half the cost and still get around 80% of the quality. However you’ll always reach a point when cuts in expenditure will result in disproportionate loss of quality. The key here is to push to the point of diminishing returns and then stop before crossing it.

    In regards to mentality, always push yourself to think of ingenious ways to reduce and eliminate costs. I was shocked at the price of razor blades so I was driven to acquire a device online that cleans the blades after every shave, tripling the useful life of each one and paying for itself within a few months. Another thing you need to be aware of is to avoid placing too high value on your own time. By this I mean, I often hear justifications for offloading work to service providers going along the lines that the money saved doing the work yourself would be the equivalent to a very poor hourly wage. But in my experience the time saved will just be squandered on something completely wastful, like browsing the internet. Better to work for an hour or two doing some task that you would otherwise have to pay someone else to do (like laundry) at a poor equivalent wage because at least there is a guaranteed payoff and one will learn some new skills, become faster and better at it in future and be left with a feeling of satisfaction having completed some task by yourself.

    One more point I would make is that the point of trying hard to crush some of the expenses that are paid out of the consumption budget is actually just so one can enjoy large consumption spending on the stuff one really wants. This stuff may well be expensive/high end/luxury goods. I’ve been trying hard and succeeding at driving down the cost of my lunches each day because I’m working hard not to eat overpriced, frequently unhealthy lunches, but to acquire other goods that give me a greater satisfaction. I used the extreme tightness in avoiding excessive lunch costs to save temporary surpluses in my consumption account and then I went out and bought AWESOME BOOTS that cost 40,000 yen. At the moment I’m building up surpluses by slashing day-to-day and week-to-week costs so that I can buy the things I really want – which for the next few months at least will be clothes. I asked myself, what do really want, these fat clogged lunches everyday, or those nice clothes I’ve been drawn towards for years? The choice was simple, so I slashed, saved and got what I wanted. You can too!


    Oh. My. God!


  • Registered Users, Registered Users 2 Posts: 114 ✭✭quiz


    As your in your early 20s and in this position my recommendation would be to allocate a higher percentage of your income to entertainment. Quickly and stop worrying about which column to deduct your rent from.

    decide how much you want to put into a savings scheme or fund each month and get out of the apartment.


  • Registered Users, Registered Users 2 Posts: 114 ✭✭quiz


    Related to this, in order to get the most out of the consumption budget, I recommend that you treat Monday to Friday with a “bunker mentality” when it comes to fighting consumption expenditure. As far as I am concerned, Monday to Friday is a complete “writeoff.” I go to work and happily do long hours and don’t think about how I want to enjoy myself or spend money. From a financial perspective I treat it as a damage control exercise. I don’t intent to have any consumption driven fun during weekdays, so I just focus my efforts on “leaking” as little as possible purchasing power on frivolous and unnecessary expenses. This ensures that there are only two days a week when my thoughts drift to what nice things I want to buy and by suppressing expenditure for 5/7ths of the week I am left with a much more sizable sum to expend, though frequently there will be weekends where I don’t expend on wants/luxuries in order to fund bigger wants/luxuries at a later point in time.

    get yourself a girlfriend and your bunker mentality will be gone fairly quickly.

    so will your money and anal retentiveness but the smile on your face will be worth it.

    when you are at the pearly gates do you want to look back on your early 20s and think, because i didnt call that girl back it allowed me to invest 35% more of my income in that textile fund.

    this is not in any way a snipe at you. its experience. re-evaluate things.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    quiz wrote: »
    get yourself a girlfriend and your bunker mentality will be gone fairly quickly.

    so will your money and anal retentiveness but the smile on your face will be worth it.

    when you are at the pearly gates do you want to look back on your early 20s and think, because i didnt call that girl back it allowed me to invest 35% more of my income in that textile fund.

    this is not in any way a snipe at you. its experience. re-evaluate things.

    In my post I actually mentioned that I force myself to spend a certain amount each week precisely to avoid sacrificing my youth to attain financial security. My point is exactly that you can build a system that allows you to "have it all".

    In my case I need a lot of sleep so even if I wanted to I couldn't do much during the week. I sleep from 21:00 or a bit later to 05:30. I work from around 07:30 to around 19:00, though sometimes I can even leave before 18:00 but on some rarer occasions I don't leave until 20:30. I get home, make dinner and if I have time I read manga to practice my Japanese (best way to learn is through something you are interested in) before going to sleep.

    In regards to a girlfriend, it might actually save money overall to get a girlfriend if we were living together. Rent and internet cost would half and utility bills would increase by less than double in absolute terms, which would be a reduction in cost once spilt between two people.

    As an aside I am a really happy person. I am living the dream. I always wanted to live in this beautiful country. I have a well paying job, I work with really kind and fun people, I am saving a fortune and am still able to spend enough to get my hands on the expensive things that I am drawn towards. Furthermore, far from being a burden, the discipline of my budget gives structure to my day-to-day life. I have always wanted to be part of a beautiful system, not "free". I do better when I am institutionalised. That's why I did better in school than in college and why I'm doing better in Japan than in Ireland, as Irish society has a freedom based collective mentality, whereas Japanese society has a harmonious system based collective mentality.

    Don't worry about me looking back in regret, I am loving every minute here. I made this post in an effort to seek advice on how to make my system better (better = a system that makes me happier, be that through more saving, more consuming (funded by efficiency gains) or in other manners less easy to define) as well as to share a system with you guys that has given me great benefit. Please keep the comments/discussion going.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    What do you do for a living if you dont mind me asking?

    If your happy thats all that matters although i don't agree with writing off monday to friday. Even if you are one of the lucky people to really enjoy what you work at it is still just a means to fund the good things in life.

    IT support in a company with around 80 people. I am probably the worst paid in the whole company, so it's not as if I'm "cheating" by saving half of a massive salary.


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  • Closed Accounts Posts: 24 Frank Grimes Jr


    I have nothing to add with regards to finding a better place to put your money. 'A penny saved is a penny earned' as the saying goes.

    I would say on a good income, it is perfectly achievable for a single guy with no commitments to be able to save 50%

    I like and use Warren and Tyagi's 'safe' limit of allowing 30% of income on wants, 50% (or less) on needs and 20% (or more) on savings.
    If you define your budget on wants and needs, how do you measure up? Are you sacrificing too much in the present for the future?

    I would suppose I and others are making assumptions about your quality of life based on two posts on an internet forum :)

    Know yourself and what matters to you.

    I recommend reading the 'Tenets' series of articles on GetRichSlowly. It is now a multi-author blog on Personal Finance issues, I found the articles interesting and deepened my understanding of my own relationship with money. Money is a means to an end but what an end that could be - a year's expense on mediocre canteen food (this was once defined as a 'need') or packed lunches and a flight to the other side of the world?


    Define your needs, see what those outgoings are and see where it could be improved. Can you get better deals on utilities and phone contracts? Is apartment sharing an option? I house share, it's half the cost of renting a place on my own, this had a big impact on my needs and boosted my savings.


  • Closed Accounts Posts: 127 ✭✭ct89


    Stop being boring working out percentages and spend the excess cash on booze, it might make you more interesting


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    ct89 wrote: »
    Stop being boring working out percentages and spend the excess cash on booze, it might make you more interesting

    You don't get it. I am living the dream in Japan. Drinking is most certainly interesting, but this boorish attitude is one of the prime reasons why I always hated Ireland and managed to escape to a civilised society.

    But if throwing everything you have down the drain drinking in that miserable country is your idea of being "interesting", then you really are wasting your life. If I must stoop to having to impress those of you that have no existence beyond an endless stream of vomit filled nights out in rubbish strewn cities that you cannot even remember the details of in most cases, I can certainly report on having plenty of interesting drunken experiences in Japan.

    The responses to this thread need to stop assuming that I am miserable because I have developed a system that destroys waste and allows me to save half of my income at a young age. I spent more than half my post detailing about my consumption budget and how I structure it to get the most enjoyment possible out of it and make sure I spend it all to avoid wasting my youth. You people need to stop assuming that just because you fail(ed) to do it doesn't mean that the only way I can do it is by making myself miserable in the process. Typical Irish trying to drag each other down to the lowest level. I am reminded yet again why I am never going back to that ridiculous country.

    I won't say any more least I trash the decent discussion we have going in this thread by engaging in a flame war.


  • Registered Users, Registered Users 2 Posts: 8,513 ✭✭✭BrianD3


    Good thread. I'm in my 30s have been saving 50-60% of my net pay for several years although I might drop below 50% this year due to increased taxes and expenses (eg rising fuel prices which is one of my biggest expenses) I don't have much waste to eliminate but there's always scope for improvement so hopefully I can claw back some of the fuel cost increase by copying the OP and purchasing 15 bottles of Listerine at a time etc. :D

    I am cautious and have my savings in deposit accounts and An Post certs. I do have nagging worries about having all my eggs in one basket and given all the doom and gloom about sovereign default, bondholder "burning", euro collapse etc.

    Fully agree with the OP's comments about alcohol. It's quite sad if people equate "enjoying youth" with "getting plastered". When I was 19, myself and a few mates from college decided that we would not be partaking in this Irish drinking "culture" i.e giving our money to fat bastard pub/niteclub owners while we spent half the weekend hungover forgetting what happened. We've never regretted that decision.


  • Registered Users, Registered Users 2 Posts: 18,057 ✭✭✭✭Thargor


    Totally agree about the alcohol thing and good answers to the people who think you have to be drunk most evenings to be enjoying life
    Digi_Tilmitt, Im 25 and I save 50% of mine aswell although I would never tell any of my real life friends that as they're always broke because they're so hopeless with money. I don't think its that big a deal as long as you're not going out pissing it away every night of the week, also I cycle everywhere instead of running a car, the food in the canteen at work is subsidized so its cheaper than buying it and cooking it myself and really nice so I eat 2 meals there everyday and I pirate all my tv, films and games so thats a huge chunk of my entertainment budget for nothing. I still easily enjoy all the good things, holidays, nice house (rented), big tv, nice phone etc I just don't make the mistakes my friends make with the ridiculous money they spend on alcohol, food and clothes.

    I dont trust the Irish banks so most of my money is in shares, I keep 4k in cash handy in my current account and the rest goes to my broker every few weeks minus living expenses.


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  • Closed Accounts Posts: 4,584 ✭✭✭digme





    maybe this will happen :)

    50% savings is great as you're not at home with your parents.But I'd be smarter and stay a home and save 90% :)


  • Registered Users, Registered Users 2 Posts: 267 ✭✭Adrock-aka


    A lot of governments have neither the resources nor the inclination to support and help their citizens during normal economic conditions or disaster situations. Haiti? Foreigners giving to private charities circumvents this somewhat and helps alleviate plight. Government policy isn't the answer to everything. The idea of 'giving because it makes you feel good' appears to be lost on you completely. I pay taxes but I also donate to various charities because my scope for helping people is increased by doing so.

    Your posts are interesting, but the more I read the more I realise you may need some sort of phsych evaluation! Not a jab on my part by the way. It seems that you're creating a strange bubble for yourself. A place where complete control is paramount, stats and interest rates are oxygen to you, and the benefits of a girlfriend are judged by fiscal merit.

    Everything you have said makes financial sense - you're obviously an intelligent and practical person. But there's something strange going on with the way you think about certain things! Not that its a bad thing, but a lot of people won't understand it. I am not suggesting that you are miserable or unhappy in the slightest. Your control over your life gives you a lot of utility. You probably have an (optimised) function for it!

    I've taken some advice from your posts by the way - so thanks for that. Interesting thread.

    Edit - my post was off topic - 50% sounds good!

    While I don't want to get sidetracked into a debate on charity, in my view it is the government's duty to ensure that all people are kept out of poverty. The existence of private charity implies that the government is not fulfilling its duties correctly. But the solution is not private charity, it's government policy.

    So while I am happy to pay taxes (to the Japanese government) I would never consider giving to a private charity. If I was outraged at some socio-economic disaster, I wouldn't give money to a charity that's trying to reduce the consequences of the problem, I would instead lobby the government to put policies in place to fix the problem. If this government action requires me to pay more taxes to reduce inflationary pressures from the additional government resource use, then I am more than happy to pay.


    I label myself a socialist by the way.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    Adrock-aka wrote: »
    A lot of governments have neither the resources nor the inclination to support and help their citizens during normal economic conditions or disaster situations. Haiti? Foreigners giving to private charities circumvents this somewhat and helps alleviate plight. Government policy isn't the answer to everything. The idea of 'giving because it makes you feel good' appears to be lost on you completely. I pay taxes but I also donate to various charities because my scope for helping people is increased by doing so.

    Your posts are interesting, but the more I read the more I realise you may need some sort of phsych evaluation! Not a jab on my part by the way. It seems that you're creating a strange bubble for yourself. A place where complete control is paramount, stats and interest rates are oxygen to you, and the benefits of a girlfriend are judged by fiscal merit.

    Everything you have said makes financial sense - you're obviously an intelligent and practical person. But there's something strange going on with the way you think about certain things! Not that its a bad thing, but a lot of people won't understand it. I am not suggesting that you are miserable or unhappy in the slightest. Your control over your life gives you a lot of utility. You probably have an (optimised) function for it!

    I've taken some advice from your posts by the way - so thanks for that. Interesting thread.

    Edit - my post was off topic - 50% sounds good!

    You seem to have been able to discern alot about my somewhat odd mindset just from a few posts. Particularly the bit about building a bubble struck me as accurate. One of the reasons I chose to live in Japan is because interactions in Japan are alot more formalised. There are set ways to speak/act in many situations, making life a lot less stressful. Japanese are also very self depreciating and one never has to deal/fight with egotistical people that try to drive a given situation to their own ends with unpredictable aggressive behaviour.

    I don't think it's accurate to say I thought of the girlfriend comment purely in financial terms. The comment itself was along the lines of "if you get a girlfriend your system won't work right" so I was just responding directly to that point, not commenting on the desirability of having a girlfriend or not.

    Anyway, it is clear that I am an odd fellow, but I don't want people to use that as an excuse to dismiss trying to apply some of the points I detailed here. In any case you seem to be giving my warblings a fair chance.

    As for the issue of the role of the government, my argument is that efforts should be more focused on building a government that can and does carry out its duty to the populace, rather than alleviating the consequences of a government that does not carry out these duties. I recognise this may be difficult depending on the society in question, infrastructure in place and skills of the populace.


  • Registered Users, Registered Users 2 Posts: 267 ✭✭Adrock-aka


    To be honest, i'm very impressed with your conviction and decision to pursue what you want out of life. A lot of people will flaff around not really having any discernible goals and not knowing what gives their life meaning/structure.

    I agree with you about the government situation, it would be great if more of them could get their acts together (including ours!).

    Your personal finance mantra is probably the most well rounded, all-encompassing personal plan i've ever heard of! I've taken a lot from your posts. Kudos and best of luck in the new life!
    You seem to have been able to discern alot about my somewhat odd mindset just from a few posts. Particularly the bit about building a bubble struck me as accurate. One of the reasons I chose to live in Japan is because interactions in Japan are alot more formalised. There are set ways to speak/act in many situations, making life a lot less stressful. Japanese are also very self depreciating and one never has to deal/fight with egotistical people that try to drive a given situation to their own ends with unpredictable aggressive behaviour.

    I don't think it's accurate to say I thought of the girlfriend comment purely in financial terms. The comment itself was along the lines of "if you get a girlfriend your system won't work right" so I was just responding directly to that point, not commenting on the desirability of having a girlfriend or not.

    Anyway, it is clear that I am an odd fellow, but I don't want people to use that as an excuse to dismiss trying to apply some of the points I detailed here. In any case you seem to be giving my warblings a fair chance.

    As for the issue of the role of the government, my argument is that efforts should be more focused on building a government that can and does carry out its duty to the populace, rather than alleviating the consequences of a government that does not carry out these duties. I recognise this may be difficult depending on the society in question, infrastructure in place and skills of the populace.


  • Closed Accounts Posts: 35 FiresaleBuyer


    I record all monthly bills including rent as well as the price that I pay for lunch every work day. You need to know your monthly expenditure on bills in order to be able to calculate your total non-consumption account expenditure.
    Your "capital" or "non-consumption" account should be split in two. Pay your bills and receive your salary from your primary current account. Dont keep your savings in this account as it probably doesnt pay interest. Your savings should be kept separate and that account should only have credits on it, no debits. Nothing comes out of it. You will be able to see at a glance the rate of savings accumulation. No calculations required. Make sure it pays a decent interest rate as well.

    Preferably your two accounts should be with different banks. You can never have too many bank accounts. If you ever run into a problem with your bank, its very handy to have another one standing by, fully operational.


  • Closed Accounts Posts: 35 FiresaleBuyer


    In regards to a girlfriend, it might actually save money overall to get a girlfriend if we were living together. Rent and internet cost would half and utility bills would increase by less than double in absolute terms, which would be a reduction in cost once spilt between two people.
    You would also save on labour as one person could cook for both. A girlfriend can be a worthwhile cost saving opportunity, but be sure to get one that has her own income. A stay at home girlfriend or spouse is a financial drain. And in Ireland, the Oireachteas passed a law giving live-in girlfriends "cohabitants rights" after 5 years of cohabitation, which basically means they can sue you for a share of your assets after you break up.

    If you accumulate significant value in your capital account, it would be advisable to get any girlfriend to sign a waiver of her cohabitants rights, or else consider just staying single and purchasing escort services instead.


  • Registered Users, Registered Users 2 Posts: 423 ✭✭Digi_Tilmitt


    Your "capital" or "non-consumption" account should be split in two. Pay your bills and receive your salary from your primary current account. Dont keep your savings in this account as it probably doesnt pay interest. Your savings should be kept separate and that account should only have credits on it, no debits. Nothing comes out of it. You will be able to see at a glance the rate of savings accumulation. No calculations required. Make sure it pays a decent interest rate as well.

    Preferably your two accounts should be with different banks. You can never have too many bank accounts. If you ever run into a problem with your bank, its very handy to have another one standing by, fully operational.

    The accounts are only virtual. I only have one bank account. Being in the capital account means that the cost is not paid out of my weekly consumption budget, meaning that variance in the cost will change my savings rate, not my ability to consume.

    As you can probably now discern, being assigned to the consumption account just means a changes in the cost changes my ability to consume other things, but doesn't affect my savings rate.

    You would also save on labour as one person could cook for both. A girlfriend can be a worthwhile cost saving opportunity, but be sure to get one that has her own income. A stay at home girlfriend or spouse is a financial drain. And in Ireland, the Oireachteas passed a law giving live-in girlfriends "cohabitants rights" after 5 years of cohabitation, which basically means they can sue you for a share of your assets after you break up.

    If you accumulate significant value in your capital account, it would be advisable to get any girlfriend to sign a waiver of her cohabitants rights, or else consider just staying single and purchasing escort services instead.

    I would not get a girlfriend for financial gain. I am a planner, but I am still human...


  • Registered Users, Registered Users 2 Posts: 267 ✭✭Adrock-aka


    You would also save on labour as one person could cook for both. A girlfriend can be a worthwhile cost saving opportunity, but be sure to get one that has her own income. A stay at home girlfriend or spouse is a financial drain. And in Ireland, the Oireachteas passed a law giving live-in girlfriends "cohabitants rights" after 5 years of cohabitation, which basically means they can sue you for a share of your assets after you break up.

    Amazing! Haha!

    Scratch - so, do you come here often?

    Substitute - What is your net worth and expected cashflow generation potential for the next 5 years

    She'll be all over you!


  • Closed Accounts Posts: 35 FiresaleBuyer


    Adrock-aka wrote: »
    Scratch - so, do you come here often?

    Substitute - What is your net worth and expected cashflow generation potential for the next 5 years

    She'll be all over you!
    For most of human history marriage was a business transaction. And even today, money is one of the most important attributes that women look for in a male partner.

    If women can be mercenary like that, then why cant men?


  • Closed Accounts Posts: 35 FiresaleBuyer


    The accounts are only virtual. I only have one bank account. Being in the capital account means that the cost is not paid out of my weekly consumption budget, meaning that variance in the cost will change my savings rate, not my ability to consume.
    Well having the money in separate accounts, means you dont have to expend mindshare remembering the the current balance in your virtual capital account. Sure, your method is possible, but why bother.

    Ive been saving for nearly 20 years, and I can tell you its much cleaner to have a lump sum ringfenced in an account, with no debits on the statement, only credits. You can see the rate of accumulation, without doing any mental calculations.

    My methods allow me to predict to nearest €100 what my bank balance will be, this time next year or any year in the future. I could therefore predict a date for retirement much easier.


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