I keep having to remind myself this isn’t about showing that I’ve got everything figured out (spoiler, I don’t), and that it’s better to just do this now than to try to get all my ducks in a row and have potential issues following through on my commitment (which is an issue I’ve had trouble with before). I’m going to try to just post the numbers and updates, and see where this goes. Start the habit, and stick with it. I’ll try to create some formatting that will be useful for this post and future posts – something I can use whenever I make an Monthly Update post.
Coming up with the numbers is just a matter of going through the motions of checking all my accounts, and copy-pasting that information here. It’s important to me that this blog and this process yields more than just a record of my evolving financial situation, which is why I want to call out some thoughts or concepts that occurred to me throughout the month as a way to reflect.
Don’t Wait to Pay Bills
This one may seem a bit obvious, but I’ve noticed myself seeing a bill, and not immediately doing everything necessary to settle it. This needs to change. Not paying the bill immediately breeds anxiety about needing to pay the bill, and anxiety about whether I will lose track of the bill or even forget to pay it entirely, incurring unnecessary and otherwise pointless fees or interest for late payments. Subjecting myself to this anxiety serves no purpose, and just erodes the quality of my day to day living. Paying bills immediately is objectively a good financial habit to build and have.
Expense Tracking Tools Provide Significant Insight
Another one that may cause people to moan and groan. I’ve tried tracking my expenses on my own using a spreadsheet and Google Forms, and while that worked for a while, tracking every single expense this way grew tedious, and eventually boring. Tracking expenses is a boring activity though – I don’t think I’ve ever heard someone say that they actively enjoy inputting every last expense and categorizing it. That being said, using an automated tool (we’ve been using Wallet by BudgetBakers for this past month) means that unless I pay specifically with cash, everything is automatically tracked and categorized (although, sometimes poorly categorized). With repeated use, it should get to the point of recognizing common transaction types and improving the accuracy of categories for transactions. At the very least, this expense tracker has forced me to be more aware of things we are spending money on, and how much it actually is. I haven’t gotten to the point of intensive analysis yet (though I’m sure that will eventually happen), but having something that does the tracking (almost entirely) automatically is nice.
Inertia is a Force to be Reckoned With
This should have been the month I actually ensured all my documents had been properly submitted, and the business investment account opened. I’ve had the relevant pages that needed adjustments on my desk for nearly 2 months – and they are the ONLY documents on my desk. And yet I act as if they aren’t there. I have no doubt that implementing automated mechanisms that remove the need for manual effort usually involved in investing (think automated 401K contributions, recurring fund transfers, etc) will dramatically impact the degree to which I follow through with my investments. It’s time to get started on these.
Leveraged Investments are Worth Some Consideration
One thing I did do this month was some investigation regarding my planned investment strategies. I read through multiple different blog posts, a few papers with the results of studies and investment backtesting, and watched several videos on the subject of different ways to attempt to increase the return on investment, especially early in your investing life.
To be extremely clear with this, what follows should not be construed as Financial Advice in ANY WAY. Do your own research – especially on the following topic.
One avenue I came across for investment strategies is the concept of using Leverage as a means of increasing your exposure to a particular asset class (usually the Stock Market) above what you might otherwise be able to attain using only the value of your own cash/assets. The concept of leverage is a VERY nuanced and intricate one. It effectively involves borrowing money for the purpose of investing. The upside is that if things go well, you keep any increase in value of the asset that the borrowed money has earned, and still only owe the initial amount. For example, let’s assume you have $100 to invest, and you want to do so in the stock market. If you use leverage to gain twice the exposure to the stock market, you would borrow $100, and invest the total ($200). If the value of the stocks you’ve purchased goes up 10%, then your investment is now worth $220, but you still only owe $100, which means that you’ve just turned $100 of your own money, into $120, netting you a 20% return. The downside, and ultimately the VERY LARGE risk of an investment like this is that it works exactly the same way in reverse. If the value of the stocks you’ve purchased instead goes down by 10%, then your investment is now worth $180, but you still owe $100. Thus, your share of the investment is $80, and you’ve lost 20% of your money. Using leverage just causes the overall changes in the market to affect (in either direction) proportionally to the amount leverage used (which is 2X in this example).
There are a wide variety of resources online that you should spend a significant amount of time exploring before even considering putting money into a leveraged investment. I was planning on including some links to resources I read through about the concept of leverage, but finding the exact ones I went through is not as easy as I thought, so I’ve decided against doing so. The specific strategy that most intrigued me is one that has been dubbed Hedgefundie’s Excellent Adventure, and involves investing into leveraged ETFs as a way to improve returns during the early stages of investment for an individual. I’m not going to go into any detail about any of that here, but who knows, I might do a post on it later.
Whatever you do, please please please please PLEASE don’t blindly invest into leveraged ETFs or any other leveraged asset class. Do extensive research first. Find resources online that discuss these topics, and enthusiastically follow the inevitable rabbit holes that will likely consume one or more days of your time before even considering this kind of investment.
Income for the month of June 2021 was made entirely through contracts billed by my business. It is important to note that this income is pre-tax revenue, and that taxes will need to be paid through the business for this income.
Income (USD): $4,559.50
This is where the meat of today’s post in going to be focused. There were lots of good insights from the expense tracking app. Here is the breakdown of expenses by category from June 1 to June 30.
Description Amount Life & Entertainment ฿54,719.47 Food & Drinks ฿32,176.37 Housing ฿24,350.86 Shopping ฿2,517.00 Vehicle ฿1,780.00 Communication/PC ฿1,442.04 Miscellaneous ฿919.31 Financial Expenses ฿783.41
There were a few things in particular that raised the expense total this month. That being said, there were also some expenses that I was planning for that did not come to pass. Here’s a breakdown of the big ticket expenses for June 2021. I’ll include any individual expense, or subcategory over ฿3,000.00, which is approximately ~USD$100.00.
Description Category Amount Therapy Life & Entertainment ฿28,134.33 Rent Housing ฿16,000.00 Eating Out Food & Drinks ฿12,839.25 Vacation Life & Entertainment ฿10,196.51 Ordering In Food & Drinks ฿9,770.09 Groceries Food & Drinks ฿9,567.03 Massage Therapy Life & Entertainment ฿6,100.00 Electricity Housing ฿4,965.00 Life Event* Life & Entertainment ฿4,300.00 *I am not at liberty to disclose the nature of the Life Event expense, though I feel the description is accurate enough for the purpose of this table
Given this is a blog about personal finance, I won’t go into any details beyond that I had some personal things to deal with this past month, and that required me to undergo some therapy. The expense for it was quite high (nearing ~USD$900) and this was in large part due to the fact that it wasn’t covered by insurance of any kind. Other things to note are that the vacation expenses for the month were about 50% of what I was initially expecting and planning for, so this was nice, though this is in part because we didn’t do as much as we were expecting either. Lastly, the food expenses ended up being lower than the previous post estimated, but it’s interesting to see that Eating Out accounted for ~40% of food expenses. Fatima and I haven’t been focusing on cooking quite as much, so I guess those expenses make a bit of sense, but I certainly think we could lower the overall number if more of our meals were home cooked. Clearly convenience and experiences come with a premium.
Overall, I had estimated expenses for this month around ~฿79,000.00, and so the discrepancy is about ~฿39,000.00 which is certainly not small. The difference in expenses can be attributed to the following:
- Therapy expenses were entirely unplanned, and resulted in ~฿28,000.00 worth of expenses
- Vastly underestimating the housing expenses (primarily Electricity) which had a net difference of about ~฿7,000.00
- Underestimating Massage Therapy expenses, with a net difference of about ~฿3,000.00
- The Life Event was also initially an unplanned expense, and was a difference of ~฿4,300.00
Total Expenses (THB): ฿117,769.15
Total Expenses (USD): $3,672.54
Total cash flow for the month will be a bit skewed given that expenses and taxes associated with the income earned through the business haven’t been accounted for yet. Even still, it’s a bit lower than I would like, but that’s likely to change in the upcoming months after the move back to California.
Cashflow (USD): $886.96
Once again, assets are split in 3 different currencies – US Dollars, Canadian Dollars, and Thai Baht.
Description Currency Amount Current USD Value Business Account, Cash USD $27,132.56 $27,127.56 Business Account, Cash CAD $29,777.28 $24,041.73 Bank Account, Cash USD $6,788.08 $6,788.08 Bank Account, Cash CAD $353.74 $285.60 Bank Account, Cash THB ฿14,021.09 $437.34 Cash on Hand THB ฿527.00 $16.44 Bitcoin BTC 0.03659 $1,213.43 401K, VTSAX Shares 30.258 $3,282.72
Total Assets (USD): $63,192.90
Again, this month current debts are exclusively credit card balances the tax liability for my company (which will be paid in July) is unlisted, and currently unknown.
Description Currency Amount Current USD Value Visa Card USD $12.21 $12.21 Visa Card CAD $50.84 $126.35
Total Debts (USD): $138.56
My net worth decreased this month, which is obviously not good. It appears I dropped about ~USD$2,400. I’m looking forward to seeing that go up again soon.
Net Worth (USD): $63,054.34*
I’m finding myself surprised at the amount of content I’ve been writing for this. It’s been very encouraging to get messages from everyone about the blog as well, so thank you very much for your interest and for reading through it. This upcoming month is going to be a bit of a wild ride – by the end of it, I’ll be back in the US – but I’m excited to see where it, and the rest of the year, will take me. As always, I appreciate you, and if you have any questions about the topics discussed above, or about my own personal finance situation, please post a comment or send me an email.