Finances

Monthly Budget: October 2016

This post has taken so long to prepare that my original savings plan is now completely out of date. I’ll recalibrate that later, but for now, let’s see how I did in October. I’ll preface this by repeating that I have no intention of putting myself through extreme privation to be able to leave for France with $10,000 more than I would have otherwise – I would rather live a reasonable lifestyle and take on a little bit more work while there, which I absolutely recognize as a privilege I’m very fortunate to have. In general, I find the “if you still have cable, you’re worthless and bound to die with an insufficiently diversified investment portfolio” attitude of some corners of the personal finance world a little, uh, rich, if you’ll allow the pun. This isn’t supposed to be the Misery Olympics, as I never tire of repeating.

If you’re playing along at home, here’s a clean copy of the really simple budget spreadsheet I use to track my spending. I put absolutely everything on one of my frequent flyer mileage cards (let no mile go unearned!), so I just tally everything up off of my credit card statement(s). I purposefully started off with a straightjacket budget of $1,000 in disposable income to see how I would do and what would need to be adjusted. Note that this amount did not include any of my fixed costs: rent, utilities, insurance, subscriptions, etc. All of those are detailed here.

Budget & Spending by Category

Category Budgeted Spent
Lunch $150 $172
Transport $100 $0
Health & Beauty $50 $138
Going Out $150 $591
Cat $100 $47
Gifts $50 $27
Activities & Clothes $50 $236
Misc Activities $150 $203
Groceries & Amazon $200 $499
Total $1000 $1917

As evidenced above, October wasn’t a great month for budgeting. Several of the behemoth categories – “going out”, “groceries / Amazon”, and “activities / clothes” – I blame on having spent 8 days on vacation on a fairly pricey island, but really, I could’ve easily gotten by with half the amount in each category. I also bought a $130 wool blazer – a very rare occurrence these days, but a necessary purchase and unlike anything I already own – and ordered $100-something worth of French books on Amazon, which is a spending category I’m really trying to rein in until I read all the books I actually, you know, have. Although I overspent egregiously, I think $1,000 is still a good benchmark to work towards.

A few things helped me out here – I used account credits to cover bus fare and a few Ubers, the frequency of which has dropped dramatically compared to my style of Ubering of months (years) past. I’m all set on shoes forever, literally for the rest of time for the fall/winter, and the only thing I’m still looking for is a replacement wool coat.

November & Beyond

What definitely won’t help me in November is another (yes, another) vacation – I’m taking my mom to Brazil. A sidenote here: my mom was exceedingly generous in financing my studies and getting me on my feet, so I take her on a nice trip every year. I keep an eye on my spending in this category, but I don’t obsessively budget for it, nor do I cut out experiences based on price alone if I think they’re worth it, within reasonable limits – I booked a $350 hotel inside of the Iguazu Falls park, for example, because why the fuck not. I won’t go out for lavish dinners every night, and I love street food as much as anybody, but if there’s an €80 mollusk platter on offer and I know the process of eating through it will give us a million funny stories to look back on years later, I’ll get the platter and tack on a bottle of sauvignon blanc (or two). I’d much rather enjoy that experience with my family than have an extra $100 sitting in savings, which is one of the most important things my first boss ever taught me – at the end of the day, it’s just money. If I have to cut out a four-cocktail night at some overpriced DC watering hole full of pumpkin spiced congressional staffers and bad taste wrapped in J.Crew to balance out those expenditures, everyone will surely be better off in the long run.

I do try to maximize benefits on travel, though – I booked a hotel in Rio through Rocketmiles, for instance, and expect to earn about 17,000 United miles on it. Another good option is Hotels.com and their “one night free per 10 nights stayed” promo, which one of my friends swears by. I won’t overpay to access promotional offers, that’s the oldest trick in the book and one you should never fall for, but if the price is comparable to what I’m seeing on Booking, miles or points or free nights are just free money waiting to be taken, so damn right I’m going to take it.

This brings me to another point – I’ve been working bit by bit on a post detailing exactly how to maximize credit card miles and points for super cheap travel. I know The Points Guy and others have written literal thousands of articles on the topic, but that’s just it, isn’t it – for someone just starting out, the flood of information you’re hit with online is virtually unintelligible and, it should be noted, almost always subjective, because most of these bloggers earn commission on application referrals. I’ll try to bridge that gap in my next post.

Finances, French

Timeboxing 36 hours a day

I was away for a week in Roatan, a Honduran tropical paradise island known for its biodiversity and scuba sites. Originally, the point of the trip was to get PADI certified, but I came down with an awful cold and, separately, decided that I just really didn’t like scuba diving, and that’s okay. Also okay – our dinner views:

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That said, I got a decent amount of French reading done, upwards of 300 pages of modern non-fiction. On the budgeting side, however, I’m seeing some deficiencies, which will be a topic for another post.

The main problem I’m having right now is figuring out how to fit everything in: from the beginning, I’ve noted that my two main areas of focus are bringing my French up and being able to adequately finance this adventure. This means that between sleep, my day job, sufficient French practice (4-5 hours per day), and sufficient freelance work, I need to have about 36 hours in a day. I am told that timeboxing is a popular method, where you set specific timeframes for each activity and focus on nothing else, but I’m afraid I’m not off to a very good start – according to my timebox for the day, I’m supposed to be doing freelance work right now, and yet here we are. I’ll be on the lookout for better methods – I know I can’t become a planner person, it’s just too much color-coding and tape, plus I need another thing to carry like I need a herd of wild goats in my handbag. I don’t want to waste too much time on trying to find a perfect theoretical model here, where I end up spending more time studying the method than putting in the actual work, but I am interested in the psychology of organization to see what I can figure out from that.

The very good news, though, is that my big freelance project finally came in, and I hope to make about $15,000 on it over the last three months of the year. That cushion would really help with planning for future expenses, except I need to shave hours off of sleep to get the work in. I also can’t let anything slide at my actual job and can’t completely ignore my friends. Oh, and I’m also going to Brazil for 10 days in the middle of all of this. How this is going to work I have no idea.

For my latest experiment, I’m going to try the Pomodoro thing in a minute and try to chill out. At the end of the month, I’ll report back both on time management and money management, with the latter, despite the generous freelance dossier, being in far from the greatest shape.

Finances

Moving to France: By the Numbers

I wanted to be very transparent about the costs involved in this from the outset because there’s so little financial transparency in these conversations online, particularly when it comes to expat life in Europe. Everybody’s stories always seem to begin with “I sold everything I owned” and end with “and moved abroad”, which is like, okay, good for you, but …?! I intend to keep the financial conversation very open and honest here, and I hope this will help anyone contemplating a move of their own.

Annual Budget

The TL;DR version: in order to be financially comfortable and confident, I need to leave the US with at least $65,000. Forty-five of that will be my “spending” money, $20,000 will remain in “reserve”. This is so that I’m protected in either of the following cases:

  • I lose all of my freelance work and find nothing else while in France (the $45,000)
  • I need to return to the US, temporarily or permanently, for whatever reason (the $20,000)

Ideally, at the end of my 16 months, I would love to say that I still have the $65,000 I came with. That is unlikely, but it won’t hurt to try. Currently, I’m sitting on just under $38,000 in savings and another $5,500 in an IRA, though that I’m not touching. Here’s how I plan on filling the gap:

Savings Plan

If my estimates are correct, my annual income both this year and next will hover right around $105,000. I say “estimates” because that’ll depend on my bonus and my freelance income, which is sometimes a matter of blind luck. In addition to my full-time job, I consult for a number of different companies on the side in the field of anti-corruption and anti-fraud, broadly speaking. Sometimes these are tiny gigs, sometimes not, it all depends on the mysterious ways of the market.

If you’re thinking to yourself, “what the hell, that’s a lot of money, what’s her problem”, you’re almost entirely correct in thinking so, but I live in a very expensive city (DC), travel a lot, and sometimes get hit with unexpected bills, just like everyone else. Plus, I’m a contractor, so I pay more in taxes than a regular employee and have fewer benefits. Additionally, due to the asinine tax system we have, there are some categories in which it actually makes more sense for me to spend the money I have than to save it – for example, I could spend ~ $3,500 on “educational expenses”, or I could end up paying a very large percentage of that to the government, so instead I choose to invest in some kind of skill or competency. I can’t squirrel away huge chunks of my income every month, but I’ll obviously try to rein some things in.

The goal will be to budget carefully (I’ll post my budget spreadsheet for anyone interested), eliminate wasteful spending (more on this later), and put away $1,000 in salary per month. With a tentative departure date of October 1, 2017, I should be $12,000 closer to my goal.

The remaining $15,000, hopefully more, as much as possible, will have to be made up of freelance income. If I take on one to two projects per week at my standard rate, approximately $250 per project, I should be able to get an extra $1,500 per month, or another $18,000 total by my departure. That would put me on the tarmac at $68,000, which is a good place to be. This number shoots up astronomically if I land a golden egg client, though little depends on me in that regard, or if I become a total shut-in and work 80-hour weeks, which I could do, but won’t. Because a lot of my side income depends on precision and attention to detail, I try not to overwhelm myself, since there comes a point beyond which I’m too tired and I just risk producing a subpar work product, therefore jeopardizing future earnings.

I mentioned that there are some big expenses I can’t cut, but there are also some I won’t. I’ll cover this in a comprehensive budget post soon, but this is another thing I feel often makes expat/travel/living abroad blogs disingenuous – all of the “I moved into my parents’ basement and ate air, and so can you!” posts disregard the realities of everyone else’s life circumstances, unique by definition.

Savings Recap

$38,000 in savings today

+ $1,000/mo x 12 = $12,000 to be saved from salary

+ $1,500/mo x 12 = $18,000 to be saved from freelance income

= $68,000

As you may recall from about a million words ago, at least $45,000 of those $65,000 – $68,000 will be needed to cover expenses for 16 months. Here’s how I arrived at this figure:

Monthly Budget by Category

Rent: EUR 800 – I’ll probably use Airbnb due to advantageous credit card terms (each dollar I spend will net me 3 bonus miles) and not having to worry about hooking up wifi, cable, a washing machine, etc. I’ll try to go as low as I can here, but I have several non-negotiables: walking/tram distance to both school and the city center, a washing machine (sorry, #gringa), and pets allowed. Some kind of cable TV setup purely for constant practice/immersion would also be helpful.

Health insurance: EUR 45 – I’m overestimating a bit, but let’s just say it’ll be that

Food: EUR 500 – I’m way overestimating this category, but having a bit of a buffer here will help me to be able to move things around a bit in other categories as needed

Travel: EUR 300 – again, this is a big travel budget for someone who’s going to be doing a degree program and working, but I figured a buffer wouldn’t hurt, and I foresee a lot of SNCF in my future anyway.

Cat: EUR 50 – my estimates suggest this will suffice for food and litter. He’s pretty low-maintenance otherwise and has plenty of toys and accoutrements already – and yes, he’s obviously coming with.

Health & beauty: EUR 50 – whatever face/body/hair stuff I need, although I, like my cat, prefer a simple routine.

Phone: EUR 50 – standard.

Totals and Notes

My in-country costs for the length of the program (16 months) come to a minimum of EUR 1,795 or US $2,154 total per month, or US $34,464 for the whole getup. Let’s round up to $35,000. The program itself, which may well be France’s most expensive degree that isn’t an MBA, is another EUR 8,500 or about US $10,000. Et voilà.

As you can see, this budget doesn’t leave a lot of wiggle room for emergencies, which is where (hopefully) a combination of freelance income and the “reserve” budget would come in. It’s also lacking a fairly standard category – “shopping” – and I’ll explain why in detail a little later.

Also, these calculations don’t take any of the costs of the actual move into account – plane tickets, visa stuff, checked bags, microchipped cat, vet documents, etc. – because those are all one-time costs with which I actually do, magically, have some wiggle room. For example, I’m sitting on a small pot of United/Star Alliance miles, currently about 250,000 in all, and I expect to spend 30,000 of those on a one-way ticket, so all I’ll be responsible for are taxes and extra luggage / cat fees – under $300 total. I’m rolling all of the moving costs into a completely separate budget, though, so I’ll cover that in a separate post.

I am also deliberately leaving anything I could earn selling my stuff out of the equation. My car is in good condition; in a year, it could probably go for $3,000 in a private sale. The rest of my stuff could end up netting another $2,000, maybe less. For tax purposes, it may end up being a better idea to donate instead of selling; that’s a calculation I have yet to finalize. Whatever comes out of the sale will be added to the “reserve” fund; some of it may have to go towards a cheapo storage unit until I have the time and means to take the important keepsake stuff to my parents’ house. Conveniently, they live in neither France nor the US, so that’s going to be a whole separate process.

I am, of course, praying to all currency conversion gods that this current rate doesn’t change significantly between now and then, and I’m watching the markets carefully. I’m not so much wishing the euro would get weaker as I am for the dollar to get stronger, but if we could get to 1 : 1.05, for example, I’d be positively beside myself.

Fortunately, in the time it took to write and polish this, I completed four side projects that together came to $2,585, all going straight to savings. I should note that that sum total is not at all typical for four measly projects, I just got lucky. I’ve got one more side project confirmed, due next week and likely billable right around the $250 mark, and two more potential projects worth $1,800 total (again, atypical pricing). Once all this money hits the bank, I’ll post an update on my progress, and I’d eventually like to write more about what I do as a freelance gig and how all of that works.

The flipside to this, of course, is that the more I earn, the more I pay in taxes (taxed at the full monty rate), so I have to be exceedingly careful with all my records and really go after every possible deduction. There are some benefits to this type of salary arrangement, but it’s a never-ending cycle of preparing the next quarterly IRS payment and pulling money out of savings to cover whatever I owe every April, so I suppose it’s lucky that I really like my job.

Next up: a serious overview of my current income, fixed costs, variable costs, and what might very well be a brutal budget. Stay tuned.