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Post Rant

Money is not evil

A few months ago I had talked about my relationship with Money and how it has shaped my behaviour. Today I will ask you to think about why is money is not evil, and it brings access.

Money the root of all evil?

Before we proceed, pause for a second and try answering: What do you feel about money? Keep the answer to yourself before reading on.

Money is behind all the Corruption in the world

Most people would consider that all the corruption in the world is because of Money. If this money would magically disappear, the world might be a nicer place.

This is only partially true, sure unethical pursuit of money will account for most corruption and wrongdoings and yet, eliminating money will not change it. It is the battle between ‘having wealth‘ and ‘not having wealth‘ is what really will still continue in one way or another. Money is just an easy way to represent value of things / objects / services. We rely on an exchange of goods and services, and till the time some people own a resource in scarcity, they will hold power and others will covet it.

If I pursue money, I am selfish and self centered

If you are like me, you might have that thought too. For a very long time, I have had this notion that if I am going after higher income or chasing money then it is a bad trait. All because, money is evil right?

The fact is, this is not true, just because you want a better worth of your efforts and believe that your skills / business have a higher value, there is nothing wrong in chasing it. Millions of businesses fight between being cheaper to customer and others attempting giving higher but expensive quality. None of those are wrong ideas, the value of product often will represent the quality. It is not a zero sum game, that to win someone else must lose.

Your employer is renting your time to get things done, so if you think your time is worth more you must demand a better price.

The pursuit of Money will change my relationships with people

Now I really explored this from a scientific end and there is some evidence that the richer people get, the less compassionate they become. If your relationships change, they might actually need a rethink and you also need to think about your value system. However, there is a big element of what money really brings when you become rich.

Money brings access and gives you voice

The real fact is that inspite of all the democratic talk of us all having an equal say, the world does not work like that. The real strength which money brings is access and freedom. It also gives you a voice on the table where the big decisions are made.

The first step to get that access and have a voice is to earn more and grow more money. There isn’t another way.

Money is still just a store of value, and yet it gives you the power to bring change. Now, if its abused then Money is evil and if its used for good, then Money is not evil. I’d so, pursuit of money is not evil so long as you remain ethical about it.

Categories
Coronavirus in Germany Financial Planning Post Rant

Surviving Job loss in Germany : Read this!

Arbeitslosigkeit durch Corona by Zeit.

It is all very convenient to write as a blogger to invest the dips, and I did this too last week! Lets get real, we are facing a very high chance of recession and job loss soon. Thus surviving job loss is a very real theme for so many of us.

Why talking about surviving job loss and income loss is important, now?

As Germany crossed 10,000 Coronavirus cases this morning, we are heading for a complete shut down.

The fact is that retail shops, travel agents, salespersons, cooks, restaurants, waiters, their suppliers, airports, airlines, ground staff, freelancers, event management companies, movie theaters, arts and many more are at severe risk of losing their jobs. Globally the picture is no different and its already starting to get ugly for some.

We are going to face millions of job losses, crushed busines demand, and misery.

Even if this virus goes away as trillion dollars pump into the market, funding for dying companies, it will take years to recover. The Dow Jones has plumetted 2000 points today(had to change this while writing!) 33% less than all time high a month ago! A MONTH AGO!

All this, within 20 working days!

Surviving job loss: Emergency fund.

Every FI blogger has talked about it. For some of us, this is already too late. If you have already lost your job, income and do not have enough to cover then you must reach out for benefits.

If you are still in your job, fear the reduction of pay or job loss, this is the time to tighten your belt. However, If you are confident to ride through, go read another post.

  • Save everything you can, be super frugal, avoid any unnecessary purchases.
  • If you can save 6 months of expenses, try 8 months, if you can do 8 months, try 10 months.
  • Were you planning a apartment purchase? Delay it.
  • If you were planning to get a car, even an old one, delay that!
  • Do not invest in the market, stay away and hold cash

Surviving job loss: Arbeitslosgeld

There is no shame in this, you have been paying into the social security for times like these. As things escalate, more people will seek this and there will be delays in handling all the capacity.

Please visit the Arbeitsagentur website (in English too). You must immediately inform them of a job loss as soon as you know have a confirmation from your employer. You can also call at +49 (0)800 4 5555 00

Please make copies of your payslips, bank statement, resume and existing job contract ready. You will need those.

Surviving job loss: Fix your living situation

The next advice is not for all, neither is something I prefer. If push comes to a shove, find a room-mate to share rent, or move in with your family.

There is a moratorium on evacuation in various states, read this!

Surviving job loss: German Governments loan scheme

Over 2.3 million people work as self employed, they are at significant risk. There is a high chance there will be a scheme to help them through a 0% loan or more.

If you are a small business or freelancer, you can get a credit loan from the German Government, you can also get tax breaks and subsidies for loss of business. Please click here to read the official guidelines.

Categories
Financial Planning Personal Rant

When you fail to reach savings goals – Survival checklist!

I have a confession to make in this post. In the months of November and December, I failed to reach savings goals. I saved nothing in November and saved half of what I wanted to in December. Es ist mein schuld! It is my fault (schuld is also used as the German word for debt!) and am now trying to cope with lack of discipline while chasing Financial Independence.

Did Black Friday made me fail to reach savings goals?

The truth here is a combination of gift giving and planning for future travel. In the past 30 days I spent money on gifts for our anniversary, my wife’s birthday, a dinner on that birthday and gifts for a friend who just got married. You see a pattern here?

How did I get there?

My failing to save in November was quite disappointing, and I had resolved to make amends in December.

Come December, I fell off the wagon, I avoided reading any FI content to hide behind my shame. Today, I finally felt brave enough to look myself in the mirror and forgave myself.

I have little regret for spending money on people I cared about, and was conscious to not go overboard. What I did fail at was not being able to plan these expenses.

and survival checklist?

Ah yes, the Dave Ramsey approach is to eat rice and beans! My checklist to survive when you fail to reach saving goals:

  • Is this a symptom of a bigger issue? Am I not able to control myself here? No
  • Is this temporary or a permanent expenses which I cannot handle? No
  • Were my savings goals too big that they simply put me off and I felt I won’t get there anyway? Maybe

So, I aimed to save more than 1k EUR per month, and the goal was far too high to achieve. Like my dieting attempts, the high goal simply made progress impossible. In the tight months I could have lowered the targets and survived the frustration.

My survival tip to manage goals is to attempt Incremental changes, small steps lead to big results, else your old habits are hard to break. In fact in a way I just ignored my own advice.

I also suggest this beautiful Everyday App, which makes it super easy to track changes.

Categories
Financial Planning Rant Real Estate

The debate around Rent control and Rental yields

Twitter, last week, was filled with a trending topic of #eigentumswohnung. The real culprit behind this massive outrage with an article on Rent control in Berlin, titled Ganz schön unsolidarisch.

The writer has ruffled some feathers, talking about people who bought apartments and with rent control, their yields will collapse. Germany, is a rental country, and very few individuals purchase houses. This opinion peace has received a backlash as rent control will be applied for next 5 years in Berlin. The issue in Berlin is a little serious as rental prices have gone up significantly in the last 5-6 years and risk gentrification. Sadly, all of this sudden hate resulted in the writer quitting twitter!

Now, am no expert on this topic, but a few months ago I did listen to Freakonomics Radio and an excellent discussion happened on this very topic, the website covers the most of it. Housing in Germany is a different animal, house supply is also tightly controlled and coupled with ultra low interest rates the prices are inflated. In fact Munich seems to be have been called out for this.

Suche Wohnung - Searching for an apartment
Suche Wohnung – Searching for an apartment

If you are trying to search for a rental apartment in Germany in a big city, you are probably competing against 60-70 other applicants at any given time!

At the time of this writing my portfolio has a cash component of 53% cash, largely because we are trying to save for a car and an apartment. The biggest challenge I face today is that our speed of saving is slower than the real estate price increase in our city.

For us, buying a home for self use is our primary goal, but we know that this will pin us down to a place. While I do not know what the future holds, but surely capping is not the right solution here. The demand for housing, social housing and approval of such plans has lagged all across Germany in the big cities. The fact is, people are moving to bigger cities, and rental control does not fix the lack of supply.

Sure, the rental yields will be lower, but at the current house prices, they are already insignificant. Getting a rental yield of 4% on an apartment of 400k EUR is just not possible, it may not be a great investment and might just get added to list of money mistakes.

Categories
Rant

Side Hustles are hard!

Get yourself passive income, add to your monthly income stream to reach FI fast, I am doing it, and so can you.” Did you ever notice that far too many blogs and Youtube channels have these list articles, and explain how easy it is to side hustle. A typical post picks some Side Hustle statistics like the one below to prove how its way more common than you think, and how you are missing out.

The Millennials are at it again…usual suspects

Not convinced? Look at my recent Youtube search, the results were seemingly infinite!!!

The reality is, most of these hustles require way more effort and time, and do not guarantee a steady or any return. Sometimes, the ones telling you about the hustles are pushing their own ebooks or courses instead.

…..but Side Hustles work, don’t they?

Well, some of them do. The fact is, that only some side hustles or nebenjobs are quick to start with (Uber driving or food delivery) with no initial investment.

Most Youtube channels or blogs fail to indicate how hard it can be to start off on most side hustles, often they are touting their own storefronts, blogs, ebooks or online courses. Their platforms are for their own marketing. The lead time, the effort and uncertainty is often hidden.

No association with this guy, but he kind of covers every side hustle ever!

If it were all so easy, wouldn’t everyone be doing it?

….I think I can still my side hustle work

Great, if you have an idea or time to work on a side hustle you are confident with, then please go ahead and do it. I do not want this post to sound that this does not make sense and you shouldn’t try. All I wish to say is that be aware of the potential failure and hard work needed. Finally, be aware if it is a long term thing or a short term gig.

…so what does actually work?

If I knew, I’d be doing it :-D.

I think skill based side hustles really make sense, if you can coach a sport, or help kids with homework, or teach baking. Skills which are real, and local are the ones which I’d opt for.

Finally, first try to maximize your skills and income at your job, this will have a compounding benefit as you grow more.

…what is Mr A’s side hustle?

I don’t have one. I do get those ideas, but my daily work and family life keeps me occupied. A side hustle has a cost of time on it, and right now I am not willing to sacrifice my family time chasing a side dream. I am yet to have an idea which I feel can be long term sustainable for me.

I am yet to have an idea which I feel can be long term sustainable for me. Also, I do not regard this blog as a side hustle, I do have ads and some affiliate book links, but I’d be surprised if I can recover hosting costs from it (also not our goal)