Tonight, I’d like to tell you about a decision I made today and why it was a fail for a practicing frugal artist.
You know, I was planning to give you a post on how to know whether an ISA is a good one for you. It is almost there; an hour or two of work and you’d be reading an erudite, well-constructed and, hopefully, useful article about selecting the ISA that is right for you. I had to abandon this plan – I simply couldn’t bring myself to finish the article.
It is a worthy topic. I have something to tell you that is different from what you’d normally find on a personal finance blog. Why did I postpone the project?
Because when I arrived home from a day in the office my legs were shaking, my heart was racing and my blood sugar was so low that everything inside me gently rang from tiredness. Including my usually sharp mind.
Today started as any normal day. My alarm went off at 7.06 am (don’t ask). I jumped out of bed, brushed my teeth and checked my citations and blog mentions (just kidding, dear; only the teeth brushing part is right.) Did some work and then…
…Decided to cycle to the office. It seemed like a the thing to do; just like running bare foot through a field of cacti may seem like a good idea at the time.
Now, I’m passionate about frugality as an art form or, as this is also known, frugal artistry. I’m a practicing frugal artist. Let me remind you what this means.
When practicing frugality as an art form, our decisions are result from:
- Complex thinking that considers variety of factors. This way of thinking precludes silliness like driving 50 miles to save 5 pence on a can of baked beans.
- Broad concerns including quality of life, relationships and happiness. Cooking from scratch, for instance, is not only cheaper but is also healthier (less salt and sugar in meals) and can create a communal spirit (as in cooking together sharing some nice wine).
- Long term vision. Suffice to say that frugality as an art form precludes actions today that would cost us dearly in the future.
Becoming a practicing frugal artist doesn’t come over-night; it needs changing your mindset and developing new, sometimes counter-intuitive, habits.
Once I figured out the difference between simply being frugal and being a practicing frugal artist I spent years training myself in the art.
And today, I still got it completely wrong.
Why I thought cycling to work is the right thing to do?
Cycling to work has been on my mind for some time now because of the interesting combination of advantages it usually offers. These are:
- Cycling is good exercise.
- My office is far enough to get my blood pumping and close enough not to have to cycle for hours.
- Cycling saves me on transport.
- Cycling means that I’m getting my daily aerobic exercise while commuting; this saves time.
This has the makings of frugality as an art form, right? I can be getting exercise, saving on transport and saving time at the same time. Health benefits galore (if I manage to avoid being run over by a bus, that is).
To top it all off, today was a bright and crisp day – just perfect for cycling.
Why cycling was the wrong decision?
What I missed in my decision making was that I’m not very fit now and that I have early morning meetings at the office.
Yes, I’m getting fitter. This is from running though and cycling uses, as I was reminded today, somewhat different kind of fitness. Probably a mile into the cycling, I started finding it hard. I still had to push hard if I were to get to the office on time for my meetings.
You get the drill – I arrived out of puff, red-faced and slightly sweaty. Not the way I like to start my working days.
The ride back was even worse. While I could take it more gently, my behind was so sore that I was eager to get back home.
Instead of saving time, I wasted couple of hours – I felt so tired when I got home that I had to rest instead of finishing my article for you.
In the balance, was it worth saving £3 (the return bus ticket)?
Not for me. I know that many people can, and do, cycle to work every day and no doubt experience all the benefits I mentioned above.
I am not fit enough, I’m wobbly on a bike and too nervous of traffic. From now on, I’d stick with walking and using the bus.
Have you made a decision you thought will bring you many benefits just to find that you’ve been wrong?
photo credit: byronv2 coastal cycle via photopin (license)
If you were wondering what the second part of this sentence means it is:
Christ is risen!
This is the traditional Easter salutation in Bulgaria (and I suspect in several other Slavic language countries). The response is:
Voistina voskrese! (In truth is risen!)
My friends, you already know that I don’t do religion very well. Believing in God, particularly in a God that can be an evil, stubborn and angry deity, is not possible for me. Similarly, I can’t be an atheist: atheism in its extreme is no better (probably even worse) than fanatical faith.
I’m agnostic. This way I can recognise that God may not exist but he/she is still real: so much has been done in his/her name. Being an agnostic also keeps my options open: when desperate I can still resort to praying to a supreme being of my own choice.
I also believe that our destiny is in our own hands and the alignment of considerable number of conditions. I believe in social structures and agency (you see, the former provides opportunity and constraints and the latter the willingness and ability to act).
Even today, on this holiest of holy days in the Christian calendar – particularly in the Easter Orthodox Christianity – my mind is very far from God.
But I respect tradition.
I celebrate Easter and follow the traditions of my grandmother and the ones who come before her.
We don’t celebrate with over-prised chocolate eggs. Why would I miss on preparing some of the most delicious seasonal food? (Dropping the chocolate eggs also saves a lot of money.)
There are three essential parts to celebrating Easter in the Orthodox Christian tradition:
#1. Traditional Sweet Easter bread
I still remember my grandmother and my mother making sweet Easter bread. They used to get up very early in the morning to make it. It took the good eight hours of physically challenging work to make the dough, to have it raise couple of times, to shape the bread and to bake it. I reckon, only making the dough equals four-five hours Cross Fit.
Now, chunking up makes sense when so much effort is expanded. We always ended up with a lot of sweet Easter bread. Two days later my Dad will almost have to take an axe to the sweet bread to be able to cut it; the only way to eat it was either with water or with yoghurt.
Don’t let this put you off though. Things have moved on and sweet Easter bread may be 2-3000 calories a look but it is delicious.
I make it in the bread making machine. Here is how:
2 ½ teaspoons yeast
520 g white flour
200 ml whole milk
120 g sugar
½ teaspoon salt
1 teaspoon orange zest (or lemon)
2 tablespoons olive oil
2 large eggs
Egg for glaze
#1. Place the milk, 260 g of flour and yeast in the breadmaker and process on dough setting (on mine it is programme 16 and takes 2 hours and 20 minutes)
#2. Mix the rest of the flour (260 g) with the sugar, salt and orange zest.
#3. Once the first dough cycle is complete add the flour mixture, olive oil and eggs. Process on dough setting again.
#4. When the second cycle is complete, remove the dough on floured surface, punch down and form into a ball.
#5. Cover with a towel and leave it to rest for 15 minutes.
#6. Divide and pleat.
#7. Allow the dough to rise (about an hour or place in a over at about 50C for 20 minutes)
#9. Bake for 35-40 minutes in an oven pre-heated to 170C.
After the Easter bread has cooled down, rap it in cling film to prevent it from drying out.
#2. Painted eggs
Painted eggs are a must for good Easter celebration. If you wish to try painting them you need to hard boil a dozen (or more) eggs. This takes approximately 15 minutes. Don’t forget to put a bit of vinegar in the water and to lower the flame after the eggs start boiling: otherwise the eggs will crack and would be no good as Easter eggs.
To colour the eggs, you need to buy special paint; this is sold by many Polish shops or you can buy it on amazon.com.
On Easter day, having an ‘egg fight’ is one of the entertainments. This means that you try to break each other’s egg and the one whose egg is still unbroken at the end of this wins. (I never win.)
Naturally, breakfast includes a hardboiled egg.
#3. Roast lamb
The celebratory lunch is roast lamb. We just had this and I feel so full that my lids are gently closing while writing this.
There is nothing much to roasting lamb. Except that my sister taught me to put is in tray (after rubbing some salt, paprika and olive oil in it) with a cup of water and well covered with foil. Roast it like this for two and a half hours (190C) then take the foil off and keep it in for 20-30 more minutes in the oven.
Easter in Eastern Orthodoxy is also about respect. Young people visit their older relatives to show their respect.
We hosted my family this year.
Now the celebration is over and we have another day of rest. May this day be the first a new, productive cycle for John and me.
Yes, it is April Fools Day. I’m not trying to fool you though – I’m not very good at doing that.
I’m in love!
Still, John has nothing to worry about because I fell in love not with a person but with Colorado; or at least what I’ve seen of it.
As some of you know, I have been in Colorado – Boulder and Denver – since last Sunday. A colleague and I attended a conference at the University of Colorado, Boulder.
I’m not going to bother telling you about the conference: like any event like that it had its ups and downs. Regretfully, many of the downs were about content and substance of the conference and the ups about the location and receptions that it offered.
Boulder took my breath away. I love everything about it: the sleepy feel about it, its informality, the beauty of the mountain views and the warmth of its people.
Our driver from Boulder to Denver told us that ‘Boulder is a big bubble’. Bubble it may be and very pleasant one at that.
(Boulder also took my breath away literally: on the day after we arrived I misguidedly decided to go for a run and this made the coming on altitude sickness so much worse. It is finally abiding and tomorrow we’ll be flying home. Next time, I’ll come with John and (possibly) our son and we’ll stay for longer, enjoying the mountains.).
I also got to hang with my blogging buddy Michelle Jackson. Michelle made our day in Denver very special and we got to appreciate the city so much better. We also got to experience the foodie culture of Colorado (Denver): I don’t think I’ll ever again taste pecan, chocolate and bacon pie and love it.
Here are some pictures and talk soon.
This is a view of the pedestrian street in Boulder. On the right you could see the Deli where I had breakfast in the morning; and it beat the hell out of the over-priced breakfast at the hotel. Listening to the Beatles while eating breakfast was a bonus.
This picture was taken on the University of Colorado, Boulder campus. What is impressive though is the sky: I don’t believe I’ve see this colour sky before.
This is a picture of me a Michelle.
Of course, there will be something about money where I go. Did you notice that visiting the Money Museum is free? (My colleague went to the the Modern Art gallery but I skipped: me and paintings, even modern ones, don’t do well together.
This is what I had for dinner at a great restaurant called Bacon. Basically, it is a place for everything ‘bacon’: including the pudding.
Enjoy the rest of the weekend, my friends, and think of me on my 20 hours track back to the UK.
It is time to catch up on our news, friends.
Over the last year or so, I’ve been working very hard to make The Money Principle a fun and helpful reference for many things money. I’ve initiated you in the mystical formula to work out whether you are ready to retire affectionately known as ‘f*ck that index’; I’ve introduced you the five ways to make your money work for you; and wet your lust to improve your credit score.
Making The Money Principle a resource for all who want to achieve financial health doesn’t mean that our personal relationship has to suffer. This is why it’s time to catch up.
I’ll start first by telling you my news; and while some have financial implications they are not straight forward ‘money news.
Let me start by explaining the title of this post.
For about a month now, John has been calling me ‘Professor Squared’. Yep, this is what I have to put up with – my family pulling my leg because…
…well, because I really became a ‘double professor’.
On the one hand, I’m still Professor at my university. On the other, I’ve been appointed as Visiting Professor in Research Policy at a Swedish university. My new appointment is for three years and comes with a proportion of the pay of a Swedish professor (after all, I can’t have two jobs, right?). Thing is that having a fractional appointment in Sweden is a bit like eating celery – by the time I’ve paid tax, I’m barely left with enough money to cover my visits.
I’m still very happy about it. Being a Visiting Professor of Research Policy at this Swedish University is not a gig, it is an opportunity. Now, I’m busy planning and making sure that it won’t be a lost opportunity.
There is another development that keeps me excited: from July 2017 I’ll be starting an eighteen months long sabbatical. This is another opportunity I’ll have to make sure I don’t mess up. Can you imagine – a year and a half on full pay and two international research projects? And the freedom to do anything I decide will be most beneficial for where I wish to be in five years’ time.
So, here is the thing. People ask me what I am going to do. There are some decision to be made but I intend to use this time to write two books: one would be academic and one will be on personal finance.
What do you think? Should I add a historical novel to the mix?
My next news is that after a long time of indecision, destiny took charge and, as I jokingly say, I’ve become a ‘podcast legend’. Okay, not a legend yet but since early January I’ve been interviewed on two podcasts: you can listen to the interview with Shareradio.com and my interview on Informed Choice Radio.
What I say about my radio appearances is that ‘I don’t sound as a complete half-wit’. What people who know me and have listen to the podcasts say is: ‘All the time I was listening, I imagined the faces you’d make when talking.’
Correct me if I’m wrong but this tells me that radio may not be my medium. And since at the last FinCon I stalked all talks about video I’ve decided that it is time to move into this a bit more. You see, it is not a matter of looking good (the thing that has been stopping me); it is a matter of making all I want to tell you about making, managing and investing money a bit easier to access. Watch this space!
Next, I’ve firmly got back to running. In fact, I’ve been joking with my blogger-friends in the US that I’ve started a movement – no flabby Brits at the FinCon in October. This is not it though. One day in late December I just got fed up with feeling sluggish and aching the wrong way. I closed my book, got off the sofa and went to the gym. Have been running for seven weeks now and feeling so much better for it. I may run a marathon again, inshallah.
This is it for now, I suppose.
What’s up with you, friends? Care to share your news?
Editor’s note: I first met Tom slightly over a year ago when we talked about his book: the chat was a rare pleasure. I was deeply impressed by his understanding, curiosity, open mindedness and the drive to move forward and try new things. More recently we got chatting about the ways in which life has changed: in my case for my children and in Tom’s for his generation. This interview is the result. I hope you enjoy reading it. I also hope that it’ll make you look beyond the ‘ battle of the generations’ and see problems and opportunities in a new light.
Q: Tom, tell us a bit about yourself?
Tom: I am in my mid-twenties and live in London. I used to be a suit tailor, measuring CEOs and lawyers in the City, but now I do something very different.
I run a community website called Latest Deals, where people help each other save money. The best discounts, freebies and money saving tips.
In the media I am known as an Extreme Bargain Hunter and a “life hacker”.
Q: What made you decide to get involved with LatestDeals.co.uk?
Tom: There are two parts to this answer: First, how the idea came to be, and second, how I achieved the means of doing it.
First, the idea:
Deepak Tailor, my friend and now co-founder (there are three of us in total), and I were having dinner in a Brazilian steakhouse. We tried to find a voucher code for the restaurant and could not find one.
We ranted. Finding discount codes was too difficult. Existing money saving forums seemed antiquated. Could we do something better?
For hours we brainstormed what we would do. How things could be improved. Latest Deals was born there, on a back of a napkin.
Second, the means:
It’s one thing to have an idea, it’s another to do it. I was a suit tailor. I didn’t know anything about coding or software! And Deepak was busy running another company.
How could we afford to do it, and what if it didn’t work?
At the time I was reading The Black Swan by Nassim Taleb. He discusses the impact of unpredictable outliers: earthquakes, terrorist attacks, freak stock market events.
But towards the end of the book, he also speaks of the flip side: Positive swans: unpredictable outliers that have good consequences. The unicorn start-up, ‘miracles’, and things usually attributed to luck.
Taleb writes that if he were to invest his own money (I paraphrase), he’d put 90% of it into the safest Government bond indexes, and 10% into high-risk venture capital funds.
While you ought to diversify your risk in preparation for a black swan, you should also be open to a positive swan.
However, this is impossible for most people because venture capital funds usually have a minimum investment of £100,000. At 10% of your portfolio, that means you’d need to have means to invest £1,000,000.
Unfortunately, that wasn’t and isn’t me.
The idea stuck and I couldn’t help thinking Latest Deals could be a positive swan. Or at least, I should be open to it being a positive swan.
Being a web-based company, it had next to zero start-up costs. You can get free servers if you look hard enough, you can teach yourself to code if needed, and marketing is just a matter of creativity.
The only real cost is time.
Thinking again of Taleb’s theory of diversifying financial risk 90:10, it seemed to me that if time were your only cost, then it should be invested conversely 10:90.
If your only cost is time, then you should invest 90% of it into high-risk ventures because you only stand to come out in a neutral or positive financial position. If money is the measure, how can you lose if the venture doesn’t cost you anything?
With this in mind, I said I could always go back to suit tailoring, but that here was a chance and I should take it.
Q: What are the top three grievances of millennials?
Tom: A millennial is someone who was a teenager through the year 2,000. As a generational group millennials (in the UK) have a reputation for moaning a lot.
The top three grievances come back to the same thing:
Property once because house prices have stretched far beyond the means of most. Millennials cannot afford to buy their own home without help.
Property twice because the cost of renting has increased to record highs. We can see this in the increase of proportion of income spent on rent: in 1985, the average Brit spent 10% of their income on rent; in 2014 this was 25%. In London people spend 40 % of their income on rent; and for me in 2017 it’s 57% (source: Financial Times).
Property thrice because stagnant wage growth means the cost of living grows every year. For the last decade, average UK income growth has stagnated at 1-2% (source: Trading Economics). But rental costs have grown far higher, and much faster, than this.
If older generations quaff at such complaints, there is another cost of living factor that is exclusive to millennials they may not have considered. It’s essentially an extra tax: student loans.
These have changed a lot and as it now stands it does not matter how much debt you have, what you pay back is determined by how much you earn.
After you graduate, you’ll repay 9% per year of whatever you earn above £21,000 (regardless of the size of your debt). This means if you’re earning £30,000 a year, you will repay £804 per year (source: Which?).
No previous generation has this cost which works as an additional tax.
Q: Some people my age tend to dismiss these grievances as the ‘petulant complaints of a lazy generation that expects high and immediate returns for little effort’. What do you think; are these grievances legitimate?
Tom: If anyone – millennial or not – expects high and immediate returns for little effort they will soon experience a rude awakening once they step into the world of work.
There are many things millennials should be grateful for:
I wrote about this in a blog post called How New Generations Can Be Richer Than The Old Without Owning Property.
In short, we have more food available to us than a Medieval King, clothing costs are 1% of what they were just 100 years ago, we can now travel the entire world at a fraction of the cost and at previously unimaginable speeds, we have access to so much entertainment we could not consume it all even if we wanted to, and there is more knowledge accessible than ever before.
However, because of the increased costs of living outlined above, there has also been a shift in thinking. I spoke about this with Jeremy Vine on BBC Radio 2: that millennials care less about owning things, than they do about sharing experiences.
Renting for life has become matter-of-fact; subscribing to music and films is considered the norm; staying in people’s homes, not hotels when traveling is thought of as the obvious choice; co-working spaces instead of private offices; open-source instead of proprietary; Wikipedia, not Encyclopedia Britannica; Kickstarter not venture capital.
It’s all synced together into a different idea of identity: if I can’t afford to own things, then I have to do things, and if I have to do things, then I have to share the experiences to be recognised.
This goes full circle back to the original question – millennials seem to have a lot of grievances… are they legitimate? The grievances are being shared because there is now a global platform through which they can share it for free (social media), and doing so is sharing an experience, the act of which is what now defines their identity.
Whether or not the complaints are legitimate doesn’t really matter. It’s that the complaints are being read and they’re getting little red notifications. For many, this is now the basis of identity.
Q: What are the top opportunities, in your experience, to make a decent income today? Are these opportunities generation specific?
I see two polar opposites as top opportunities to make a decent income today. On one side is engineering and programming, on the other side is traditional bespoke crafts such as suit tailoring.
The first, engineering and programming, I mean more in the Latinate sense, ingeniare, to devise: creating and inventing solutions that help people such as space travel, artificial intelligence, sustainable energy. This is about solving complex problems that have a global market.
The second is the complete opposite. Catering to a tiny localised market by producing bespoke, handcrafted quality goods. I experienced this first hand as a suit tailor. While globalisation increases the quality of life for all, there will always be some who want something extra special. Something that machines can’t make. Much of it is actually about empathy. This way to make income is about listening to someone and translating their feelings into a physical product.
In between these two extremes is a wide U-shaped curve. I feel we’re all somewhere along that line in-terms of what we do and how much money it can make.
Are these opportunities generation specific? Maybe at the extremities of age, but usually it’s not too late, nor too early, to learn a new skill.
Q: What are the best ways to build wealth? Are these open to millennials?
Tom: Readers should read other articles on The Money Principle to discover the answer to this! But, as I wrote in my book, Money’s Big Secret, there are two rules that seem to stand the test of time: diversify and wait. The latter part, waiting, is very open to millennials. If there’s one thing they have, it’s time.
Q: How is your money doing, Tom? What are your main investments?
Tom: My rental costs are 57% of my income.
I invest 37% of my income into various index funds.
That leaves 6% disposable income.
Yes, I live on 6% of my income – but I did tell you, I’m an extreme bargain hunter!
My investments have grown 9 – 12% year-on-year since I started, which is more than my tolerance of 5 – 6%. I’m on track for a healthy retirement.
I have declined to take on any debt, other than a student loan.
I have automated my investments to split into various index funds, the majority of which are Vanguard LifeStrategy funds. I spend approximately 15-20 minutes a month reviewing them.
Then there is Latest Deals: I invest 50-60% of my waking hours into it. This is now my full-time job and I hope that it continues to grow so that those initial proportions change.
Perhaps then, we could do a second interview!
Q: What are your top three pieces of advice to all millennials out there?
- Switch from reading daily news to weekly in-depth analysis (you’ll be smarter)
- Start investing into index funds now and make it a direct debit (you’ll be richer)
- Stop comparing yourself to others (you’ll be happier)
There will be a celebration in our house tonight. The lamb is already in the oven, the wine left to breathe (some would say that this is rubbish but I like the ritual about it) and our grown up sons will be here any minute now.
What? No romantic meal for two? – I hear you gasp.
Well no. We don’t celebrate Valentine’s. After a fledgling Attempt at it several years back this holiday drifted into obscurity in our house.
Before you make up your mind about this one, please hear me out.
I’m not a killjoy; I’m not a spoil-sport. I like celebrating as much as – if not more than – the next person.
I love John (for more recent readers, John is my long suffering husband) dearly; he loves me too.
We have chosen not to celebrate Valentine’s because we are experienced enough to know that:
Love is Not an Event
You know, when I still lived in Bulgaria I hated the 8th of March with passion. This is the International Women’s Day and celebrated by ‘communist’ regimes. You could see men – different ages, classes and status – carrying roses. Some men carried two bouquets: one for their wife and one for their mistress.
What I’m saying is that people’s love for each other is not communicated through routine gestures occurring once or twice per year.
Love is not an event; love is a process of discovery, a string of little signs that even our consciousness may ignore.
I don’t need John to buy me flowers, a card and a gift for Valentine’s to know that he loves me. I know he does because:
- He leaves me to sleep when I’m tired.
- He remembers my favourite brand of chocolate.
- He thinks that I can do no wrong (in fact, from time to time I sit him down and remind him about my failings).
- He knows what makes me happy better than I do.
So there. If you love someone you learn to read their needs and desires and take pleasure in meeting these.
Love is not an even; it is a process of discovery and acceptance.
Consumerism is a Selfishness in a Guise
You already know where I stand on the matter of consumerism. I really think that consumerism – which the frenzy around Valentine’s and other holidays is in its purest form – is not only irrational behaviour; it is also very selfish.
Consumerism is irrational because it is about acquiring stuff not about using it. Most consumerists pay for stuff they throw away and/or keep in a wardrobe. This is not good for your wallet.
Even worse, this is not good for the planet. Over-consumption exhausts natural resources and originates mostly in our ‘developed’ world. It also increases inequality: yep, we live in a world where 20% of the population is over-weight and 80% under-nourished. Come people, we can get this one tight!
This is why, I’d call on my readers to forego the Valentine’s presents and even the restaurant meal. I bet you can think of something to do that will show your partner that you love them and won’t entail more consumption.
Occasions are Made by Knowing the Other
You see, going out is great. But is this what your partner really wants?
You know, John will remember only one birthday present from me. During our 25 years together, I’ve given him clothes, electronics and happenings. Only once I bought him a flying lesson – I knew that this is something he would love to do.
The best present you could ever make your partner is to continually discover them. Don’t stop after three years together: people change and so do their yearning.
Figure out your partners most secret yearning and create an occasion around it.
How’s this for a declaration of love?
This is why John and I don’t celebrate Valentine’s.
Now let me tell you what we’ll be celebrating tonight.
February, 14th is not only St Valentine; it is also St Trifon’s day.
Let me tell you about St Trifon
St Trifon was martyred during the Roman persecution of Early Christianity. Sad story, really. Except that the Christians of the East didn’t want to remember him as the broken, sad figure he became. So, they allocated him the day of Dionysus – the Ancient Greek god of grape harvest, wine making, madness, fertility and theatre.
In Bulgaria, February 14th is known as St Trifon Zarezan and this is when people drink the wine from the year before and put the foundation of the new grape harvest by starting to cut the vines.
Tonight we are celebrating with our sons; not St Valentine’s but St Trifon. This should be fun!
Oh dear, I really need to go and get the lamb out of the oven. Cheers!
What are the small, everyday actions that convey your partner’s love to you?