Author Topic: Want to boost my savings, but need input  (Read 3631 times)

Anje

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Want to boost my savings, but need input
« on: May 03, 2013, 05:59:05 AM »
Hello

I'm an European wannabe-mustachian who's about to start this journey. I've been reading for a few months, but there's the phase where ideas shift from ideas into action. And I would like input from great mustachians.

About me:
I've worked in a job paying ok (75$ annualy) for about 3 years. I had a small student debt, but have paid this off.

I own an apartment worth 412 $ (It's a reasonable, even good, price in a small city in my country)
145 off these are "joint" with the entire apartment complex (this is normal here, I don't know how it would be in other countries) and I can't pay anything except interest.
of the remaining 267 my debt is 75 $ (at 3,8% interest)

I also have 50$ in savings/emergency fund (most of it at 4,6% interest, some at 3,6% interest)

In addition to this I own a car to get me to work, which is 20min commute away. (the apt is new, so moving right now is not an option - but over time I plan to relocate to a smallish house)

Of my salary 1/3 goes to government tax.
Of the remaining 4.200 per month:
1.080 goes to housing
420 goes to food (including eating out - food costs are much higher than us, bur this includes plenty of fresh vegies, lean meat and more expensive food to suit my food-allergies. I do shop sales.)
170 goes to fuel (430 km per month, price of petrol is 2,3$ per litre)
1.650 goes to saving
60 to electricity (heating not included)
500 is put aside for travels (usually 1/3 ends up unused and thus saved)

My main interest is obviously traveling, and even though I do try to find inexpensive lodgings I'm a bit "nervous" about where I stay, being a lone female traveller.

What would you do to make things go faster? I'd like to not work until retirement (at 67 right now, but they keep movin' it upward) and also have the option of working only part time when I have a family (children) while not in any form relying on the salary of a spouse.

Any advice would be greatly appreciated.

Reepekg

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Re: Want to boost my savings, but need input
« Reply #1 on: May 03, 2013, 03:07:38 PM »
Congratulations, you are already saving 50% of your income (with some allocated to travel). This gives a working career length of around 17 years. Not too shabby.

Looks like you have some savings earning 3.6% and yet a mortgage at 3.8%. There's only a small difference here, but if you can't get better than 3.6% on your money through investments, why not just pay off the housing debt (with savings not making 4.6%)?  In fact, the lack of any information about investments is the main point. You have enough money that it shouldn't just be put into savings. The way to "make things go faster" is to turn your 4.6% returns into some 8-10% returns by investing.

sheepstache

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Re: Want to boost my savings, but need input
« Reply #2 on: May 03, 2013, 03:35:43 PM »
I don't know about where you are but in the US women are less likely to be victims of violent crime than men.  The overwhelming amount of violence against women comes from domestic abuse.  Therefore by the time you get into the realm of being hurt by people you don't know and outside your own home, the odds are pretty small.  Not what you were asking about, but as a lone female traveler myself I get annoyed at the people who are like, 'omigod you're a lone female traveler you have to spend like twice as much to stay somewhere nice!@!!"

Anje

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Re: Want to boost my savings, but need input
« Reply #3 on: May 03, 2013, 04:16:34 PM »
Congratulations, you are already saving 50% of your income (with some allocated to travel). This gives a working career length of around 17 years. Not too shabby.

Looks like you have some savings earning 3.6% and yet a mortgage at 3.8%. There's only a small difference here, but if you can't get better than 3.6% on your money through investments, why not just pay off the housing debt (with savings not making 4.6%)?  In fact, the lack of any information about investments is the main point. You have enough money that it shouldn't just be put into savings. The way to "make things go faster" is to turn your 4.6% returns into some 8-10% returns by investing.
Thank you. I know the savings isn't "bad" - I merely feel I'm lacking progress.

The savings at 4.8 is tied to housing. I can use it to pay down my housing dept, but I can't use it for anything else. Then there's a (small) annual saving also tied to housing. I've put it up at 4.8% interest, but it also comes with a tax deduction of 20% of the annual saving, so that is a very good deal.

The saving at 3.6% should be moved, though. (Most of it: some is my emergency fund and need to stay.) I just feel like a fish on dry land in this area...

Deano

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Re: Want to boost my savings, but need input
« Reply #4 on: May 04, 2013, 07:10:23 AM »
What to do with your money is a tricky question. Depending on where you are in Europe you may have the wolves of the IMF at your door, that uncertainty makes me nervous for you. If you're in Germany or Scandinavia you maybe can be a little more adventurous. To be honest, having money earning 3.6% while not being in the market is a fantasy in Canada where I am.

I think one of your problems might be that you have haven't had this savings rate for more than a few years really, so you haven't built up the amounts you would like to. I'm in a similar boat, I save a similar amount to you, but only for about a year and a half now, so it sort of feels like I'm going nowhere. Patience is a virtue here I suppose. Just a thought. Personally I think you're doing great, even if your apartment cost is extremely high, you must live in an expensive city.

Anje

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Re: Want to boost my savings, but need input
« Reply #5 on: May 05, 2013, 05:46:07 AM »
I don't know about where you are but in the US women are less likely to be victims of violent crime than men.  The overwhelming amount of violence against women comes from domestic abuse.  Therefore by the time you get into the realm of being hurt by people you don't know and outside your own home, the odds are pretty small.  Not what you were asking about, but as a lone female traveler myself I get annoyed at the people who are like, 'omigod you're a lone female traveler you have to spend like twice as much to stay somewhere nice!@!!"
I do realise that as long as I stay out of the dodgy part of a city (if the city has a dodgy area - not all do) and awoid strolling down dark alleys late at night I'd mostly be safe. But I'm still a nervous creature, so then I spend all my holiday being nervous... I'm working on it!

That said, I'm not of those finding fault with the standard 9 square meters hotelrooms - it's what you can expect in Europe.

nktokyo

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Re: Want to boost my savings, but need input
« Reply #6 on: May 05, 2013, 05:55:02 AM »
Hi there, have you thought of creating some kind of passive income?

It's nice when someone other than you with your post-tax-pesos are paying for things.

Anje

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Re: Want to boost my savings, but need input
« Reply #7 on: May 05, 2013, 05:59:16 AM »
What to do with your money is a tricky question. Depending on where you are in Europe you may have the wolves of the IMF at your door, that uncertainty makes me nervous for you. If you're in Germany or Scandinavia you maybe can be a little more adventurous. To be honest, having money earning 3.6% while not being in the market is a fantasy in Canada where I am.

I think one of your problems might be that you have haven't had this savings rate for more than a few years really, so you haven't built up the amounts you would like to. I'm in a similar boat, I save a similar amount to you, but only for about a year and a half now, so it sort of feels like I'm going nowhere. Patience is a virtue here I suppose. Just a thought. Personally I think you're doing great, even if your apartment cost is extremely high, you must live in an expensive city.
Thank you for the comment.
I'm in Scandinavia, and we consider ourselves safe from the wolves. But, obviously, it could still effect things like employment rate and housing prices. For now we exist in a little calm bubble in troubled seas.

My 4.6% savings and my mortage at 3.8 is actually in the same bank... That's the oddity of our banking system. And my city isn't cheap, but have yet to reach the all high of some cities, where government have been talking of giving teachers and the like a local raise to make them able to still live in the city (with a marginal hope of owning a home or affording the ever rising rent).

Part of the high price for housing is high gouvernment demands conserning bouilding structure and safety (houses are expensive to build in pure material cost). Part is high wages (builders cost a lot - they earn more than me). And part that demand is steadily rising more than supply (and more so with work imigrants pouring in from a troubled work market further south).

I guess I too struggle with patience. It's just not my strong point..

Deano

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Re: Want to boost my savings, but need input
« Reply #8 on: May 07, 2013, 07:07:56 PM »
The best thing to do in regards to patience is to ignore your savings....just let it happen, live your life and don't pore over your accounts daily (like I tend to do). That's advice by the way, that I'm trying to take myself.

As long as your country avoids the scam of austerity, I would say you are indeed safe with your savings. Perhaps another way to make things go faster is to focus on incrementally decreasing spending, with a view to long term goals such as living closer to work etc. I've found that working on reducing my spending has really helped me feel like I'm making progress in spite of my late start in all of this, as well as the seemingly slow progress.

btw, I knew you were from Scandinavia...Canadian taxation levels and English to rival most of my compatriots!