The Year of Investing - October 2017

What a month! It was crazy expensive, I saved a tonne of money and I went out, with people! I'm not a huge social butterfly but I'm always up for a good costume party. There was a hint for summer for a day or two, and then winter laughed and laughed and took over again. At least the finances went well.

Budget Reboot Challenge: Good Ol' Fashion H20

Hello Budget Reboot, have you tried turning it off and on again?

Money saving posts are always the same - stop doing this, stop buying that, stop having any fun and live a sad deprived life while watching the numbers in your bank account tick up and up. Of course, they don't frame it that way, but when someone asks you to give up something you love in the name of money, we get pretty defensive.

Instead of 'giving up' let's try something new. Hit the refresh button on your spending habits with this Budget Reboot Challenge.

This month's challenge: Replacing all your bad habits with a glass of water

Did you try last months Budget Reboot Challenge: Fast Fashion?

Asking you to replace a bad habit with a glass of water sounds like a joke, and not a funny one at that. However there are plenty of things to consider, starting from the mundane to the obscure.

Firstly you can replace expensive drinks with water. Sweet teas, fruit juices, soft drinks, and especially energy drinks add up to hundreds of dollars marching out of your wallet each year. However water (and I'm talking about water from the tap, not expensive bottled water) is just a few cents per kilolitre.

Replacing habits with water

If you are tired and need a pick me up it's easy to reach for a coffee, an energy drink or something sugary to try and spike your energy. But if you are dehydrated you'll only experience a small rush, followed by feeling even worse than before. If you are dehydrated a couple of glasses of water will be a better pick me up than an energy drink.

More than replacing drinks with drinks, you can reduce other expensive unhealthy habits as well. If your dehydrated, your brain will send hunger signals. Rather than buying an expensive packet of chips from the vending machine, first have a glass of water.

To truly stretch this experiment - can water help you quit smoking? Maybe. If you're smoking is an excuse to walk away from your desk and go outside, consider swapping one cigarette a day for a glass of water. It may satisfy that need to step outside, to fidget with something, to have a break.

Reducing needs by drinking enough

There are other things that are indirectly connected to how well hydrated you are that are costing money on a daily basis.

I have three different moisturizer tubs - one on my work desk, one in my bag, and one in the bathroom. Despite this I have been dealing with dry cracked hands for more than three months. The moisturizer is covering up the symptoms, but the cause is that I am dehydrated.

Just as I carry two lip balms around - instead, I could be carrying around a bottle of water.

Lastly, I very rarely take painkillers for headaches. For small pains I drink a glass of water and go on with my day. For bigger aches I have a couple of glasses and a nap. Only when the pain is bad enough that I can't nap I take painkillers. I only need to use painkillers once or twice a year - in most cases an extra glass of water solves the problem.

Click to embiggen!

Turn it off and on again: Bad Habits vs. Water

The point of the Budget Reboot Challenge isn't to force you to change your ways, but to commit to something for a set period and see what it's really like. Turn off snacking, smoking, your moisturizer reliance, and turn on water instead, and at the end of your commitment, ask yourself if you really need to add that habit back in again?

How long can you replace a habit with a glass of water? One Week? One Month? One Year? How much can you save doing it?

I can commit to drinking two litres of water a day for a month!

At the end of that; well to be honest this is a habit I'll probably keep. I have been using a lot of moisturizer as my hands have been extremely dry and scaly. In the last week drinking two litres of water a day I've already noticed an improvement. I'm hoping that by simply drinking more water, I can stop moisturizing every day.

Whatever you're replacing with water, ask yourself at the end of the month:

Do I need my old habit?
Do I feel healthier?
Did I save money?

Budget Reboot September, how did you go?

Back in September I asked you to try buying less clothes, or even none! I committed to buying nothing, except for one costume. And I have to say, I failed. Wondering what I bought? What super exciting item was it that ruined my plans. What glitzy, glamour piece caught my eye? Nothing exciting, I bought socks... wheee!

Total cost of socks? $8 which I will wear until the holes are so big they don't stay on my feet.

Miniature Homesteading: I got worms!

I dream of a home in the country, with sprawling green meadows filled with cows. A dog or two sprawled at my feet and hens clucking in the distance while I drink fresh coffee with a dash of today's milk. I picture an orchard with every kind of fruit tree, with my hens running and digging under the trees. I dream of a wide open space where I can walk the dogs for an hour without leaving my own land. In my mind we have our own pond for fishing, and a creek full of frogs that dries up in summer leaving behind a bed of washed pebbles.

But right now I live in the suburbs on a teeny tiny 140m2 block. This doesn't mean I've put my homesteading dreams on hold.

Day one - 50grams of foam, 50grams
of mealworms, and the wheat bran
they were packaged with

I got worms, they're multiplying!

I read an article recently that said mealworms could digest styrofoam and turn it into usable fertiliser. This coincided nicely with realising that I'd love to have quail, but most commercial feeds don't high a high enough percentage of protein so I'd need to supplement their diet.

Of course, considering I already have chickens, getting another kind of poultry on my tiny property is probably a bad idea. Impulsively buying a half dozen quail would have been a bad idea, but impulsively buying a batch of mealworms was great!

Set up and start up costs

Foam is delicious!

Back in September I started with one small five liter container ($3), 50 grams of foam (free) and a double handful of rolled oats ('free' from my pantry). I bought 50 grams of mealworms ($8) and set them loose in their new home. 

I very quickly found myself having foam donated by my zero-waste friends, and discovered the meal worms will eat husks from bird seed and unpopped popcorn. For the first month of feeding I've spent $3 to purchase a back-up bag of oats so they aren't living entirely on foam. I've also started washing foam trays from meat packaging as another free food source.

Turns out 50 grams of mealworms don't eat much, but they grow super quickly. I've already split them into three new containers to prevent overcrowding, and I spotted my first couple of beetles yesterday!

Wait, beetles, I thought they were worms?

Meal worms aren't actually worms, they are the larval stage of Darkling Beetles (Tenebrio molitor specifically, for the latin buffs). After hatching mealworms take about three months to grow to their full size, when they then pupate. Kind of like cocooning,  meal worms become dormant for a few weeks while they transform into beetles. Approximately two weeks after becoming beetles they start laying eggs. Each female Darkling Beetle lays more than 500 eggs in its lifetime. In warm weather this entire process speeds up.

One month in - big fat worms!

So what does this mean in short? I bought 50 grams of meal worms. They've started turning into beetles so in a couple of weeks I will have 50 grams of beetles, which (if I ask google) will be close to 200 beetles. Given six months to complete a full life cycle, my 200 beetles will lay 100,000 eggs leading to (if my maths is right, and 100% of the eggs hatch) close to 25kg of beetles. In one life cycle!

Realistically this won't happen, because meal worms will prevent overpopulation by, well to put it bluntly, cannibalism. And because nature isn't perfect, so there is no way 200 mealworms will all reach adulthood and have 100% success rate their eggs hatching. Oh, and half the beetles are male and they won't lay eggs ;) However since I will be running at least 4 tubs of meal worms, I expect to end up with a couple of kilograms a month.

Cashed up with bugs

Because this is a personal finance blog, it would be remiss of me not to considering the financial benefits of these little guys. 

All the pupae slowly growing
into beetles

I purchased 50 grams of meal worms for $8. If I can find buyers for my meal worms, I can sell roughly a kilogram a month without depleting my stock. Of course, I will be selling them cheaper than a pet store (to encourage people to drive to my house, rather than a convenient pet store) so I expect I could sell a kilogram for $100, or 50 grams for $5.

Outside of the pet food market, there is also the possibility of selling them for fishing bait, or as recyclers for anyone interested in reducing their waste output - what other creature do you know that can break down Styrofoam?

Worst case scenario? I'm out $11 of supplies, plus approximately $3 a quarter for food. In return I receive an endless supply of chicken treats for my girls, high quality fertiliser and creepy crawly entertainment.

Getting rich while I sleep?  

I might not become horribly wealthy selling meal worms. If I'm lucky I'll cultivate enough regular customers to bring in a little extra money each month. While I don't plan to retire on my insect empire, I look forward to knowing that I have an asset growing in a few storage tubs, literally while I sleep.

I recently swore off side-hustles that take hours of my time and return little money, and even less enjoyment. So far my meal worm colonies haven't made a cent, but they have provided plenty of entertainment for me and my cat, grossed out my friends, fertilised my blueberries, and let me be insufferably smug about my ability to recycle polystyrene.

And in the event of a worldwide crisis (read, Zombie Apocalypse), perhaps people will start wanting mealworms for their own dinner. I should probably wean them of the Styrofoam first though.

DRP drip your way to riches

Investing can be tricky, daunting and just plain hard. In many cases the struggle doesn't end when you finally buy an investment, because then you need to manage it. You watch the value of stocks, make sure rentals have a good tenant and deal with the constantly changing value and cashflow.

One way to get the most out of your investments with minimal effort is with a Dividend Reinvestment Plan (DRP)

When I was working in a fast food store, and studying at university I wanted to buy an investment property (over achiever!), but I didn't have the money or the income. Instead I sat down and started buying investment bonds. My first purchase was Primary Healthcare Limited (ASX code: PRY) . For $2,000 I bought 20 Bonds, which at the time were returning more than 7% p/a.

I held these for a little over three years, where they paid dividends quarterly like clockwork before the bonds were redeemed and my initial investment returned. In three years I made $420. As my first investing venture this was pretty amazing! In those three years I bought Bonds with other companies, and ended up with a portfolio of $20,000.

This would be a great success story. Except... I have no idea what happened to those dividends.

The final resting place of the under-utilised dividends

While I've moved away from Bonds and into investing through Vanguard, RateSetter and Acorns, I once has a collection of bonds paying roughly $200 quarter. As a less than 20 year old, this is an amazing amount of money being brought in from a completely passive investment. However, I didn't reinvest it, and it never grew. 

Payments were made quarterly into my bank account and absorbed into my every day spending. The problem with corporate bonds such as the ones I was investing in is that they have no automated reinvestment schemes - the only option for dividends is to have them paid directly into your bank account.

While it's wonderful seeing money come into you account every three months, it's hard to partition out such small amounts.

Dividend Reinvestment Plans

When investigating new investment now, I have a few things I check, but one absolute necessity is stress free reinvestment. I don't have the time or energy to watch my investments and make sure that when I am paid $11.17 (or some other obscure amount) that I portion out that money into a new investment. It's far too easy for that money to disappear into my every day spending, and it's really hard to find an investment that let's you make such small contributions.

The majority of stocks that pay dividends allow you to enroll in a Dividend Reinvestment Plan - commonly written as 'DRP'. I love these plans for a few reasons, but mostly because I'm a lazy investor and want to do as little work as possible to earn my money.

How it works

Dividend Reinvestment Plans are super simple. To sign up you fill out a couple of online forms that takes less than five minutes. Once these are completed, rather than receiving cash dividends, your money is automatically reinvestment in the company. Without even lifting a finger, you receive more and more shares of a company each quarter. The only involvement you have is reading the statements and feeling smug about your good choices.

Discounted purchases

One of the companies I own shares in (from before I learned about Vanguard and bought individual stocks) has just announced their quarterly dividends. For everyone enrolled in the DRP they are offering a 3.5% discount on the share price. Put simply, the shares are currently worth $2.10 each, but I'll be buying new ones with my dividend for $2.02. If I was to sell them immediately, I would make 18c on each share - which is great considering the dividend they are paying is only 4c per share. 

Of course, if I wanted to sell these new shares, I'd need to pay brokerage.

No brokerage fees

One of the biggest kicks in the teeth when buying shares is the brokerage fees. When I was investing, the cheapest fees I could find was $30 a transaction. Absolute madness! When buying $3,000 worth of shares, I would immediately be behind 1% because of the transaction costs. There are new systems available that only charge $6 a transaction, which is much better, but still a fee I'd like to avoid. With a dividend reinvestment plan, you don't pay brokerage - which is money back in my pocket. 

Automation

I am such a millennial - my favourite part of DRP's is that they're automatic. I am lazy. Whenever I have to think and plan, I get tired and I want to nap instead. I have a finite amount of brain function each day, and I love doing absolutely nothing to recharge.

Having a completely automatic reinvestment plan is great.

DRiPping my way to riches

Dividend Reinvestment Plans are amazing for the lazy investor, because they create a set and forget path to wealth. The quarterly distributions remind you that you own a piece of a company and should keep an eye on it just in case, but otherwise there is nothing to do. Historically some of the most successful investors have been the ones who simply forgot they had investments, and uncovered them years later.

The Year of Investing - September 2017

September went so well I set myself an investing stretch goal! It may have been a quiet month on the blogging from, but the weather has turned wonderful, my accounts are trending steadily upwards and life feels good.

Focus on your day job

A popular idea in the personal finance sphere is to start a side hustle. An online business, babysitting, or even a blog like this one can bring in a couple of hundred a week if done right. Of course it can also bring in next to nothing if you don't do it right (ask me about my blog profits ;) ). However we (almost) all have day jobs that are where we make most of our money.

Given a little love and attention these day jobs can make us a lot more money than any side hustle - for the same number of hours a week.

Side Hustle Rates

The income from side hustles varies wildly. Babysitters can charge $20-$25 an hour, maybe more for multiple children or overnight stints. Pet sitters generally only charge $20-$25 a night. Freelance writing rates vary from $10 an hour to $40 an hour, or sometimes $5 for 500 words, up to $20 for 500 words.

For every wildly successful freelancer out there, there are 100 more people make a measly $5 a week from online surveys or less. 

Of course, we don't often talk about the unsuccessful hustlers. Their stories just aren't as interesting, but they outnumber the success stories at least 100 to 1, maybe even 1,000 to 1. Or ever more!

Day Job Rates

Minimum wage in Australia is $18.29. While this might not seem very exciting when compared to making $40 an hour freelancing, day jobs have these wonderful things called promotions.

But before starting on the idea of making more money, remember that day jobs also come with annual leave and sick leave. In my position I earn 4 weeks annual leave each year, and 12 days sick leave. I also get public holidays off and get paid the same for a public holiday week.

With 4 weeks annual leave, 12 days sick leave and 12 public holidays, there are 44 days each year that I don't need to be at work, and still get paid.

Considering minimum wage, the rate on paper is $18.29 - $695.02 a week (38 hours) or $36,141.04 a year. However, consider that a full time employee can take all their leave and will still be paid $36,141.04 for only working 46 weeks a year. 

This means your actual hourly rate for the time you are at work is $20.67. This is a couple of dollars higher than your 'on paper' rate and well worth keeping in mind.

A freelancer on the other hand, does not get sick leave, annual leave or public holidays off. They can walk away from work whenever they want (assuming they still meet all their contracts) but the money won't follow them.

Earning more

There are two ways to earn more with a side hustle - work more, or charge more. 

To earn more with your day job you can't pick up more hours (in most cases anyway) - you just have to figure out how to charge more for your time. This comes through in terms of payrises, promotions and bonuses.

It seems easier and more enticing to earn more through a side hustle. After all so many nights are spent watching bad TV, so we have so much free time to trade for money. It also seems to happen instantly, just a few hours set up work for quick returns. 

However, side hustles are terribly draining. Human beings need to work, rest and play. We need to do nothing to take care of ourselves. While the draw of easy money is hard to resist, there isn't much money, and it is terrible for our health and well-being.

The simple alternative is to put in an extra 5-10% effort at work. It's boring, it's dull and when you do it day after day it can feel like it doesn't return much. However we often forget that we have infinite earning power. There are people being paid million dollar salaries.

While a million dollar salary might feel out of reach, by hustling at work rather than on the side, seeing a 5 - 10% pay rise each year isn't a far fetched idea. Starting from minimum wage, a 5% payrise each year for five years would mean you're now earning $23.43 an hour, an extra $200 a week. If you secured a 10% pay increase each year you would now be earning $29.45 a year, an extra $425 a week. 

Could you make that kind of money from a side hustle? Sure, but you wouldn't have the energy left to excel at work, and you'd be eating in to your free time. Is it worth losing all that time with your friends, family and hobbies for a measly couple of hundred a week? Probably not.

Budget Reboot Challenge: Fast fashion

Hello Budget Reboot, have you tried turning it off and on again?

Money saving posts are always the same - stop doing this, stop buying that, stop having any fun and live a sad deprived life while watching the numbers in your bank account tick up and up. Of course, they don't frame it that way, but when someone asks you to give up something you love in the name of money, we get pretty defensive.

Instead of 'giving up' let's try something new. Hit the refresh button on your spending habits with this Budget Reboot Challenge.

This month's challenge: Clothes Shopping

Did you try last months Budget Reboot Challenge: Eating Less Meat?

Spring is finally here! Not just according to the calendar, but according to the weather as well. The Spring Equinox is tomorrow which means warmth, long days, sunshine, and a whole new wardrobe! Time to start shopping for new shoes, shirts, shorts, light-weight summer jackets, and all those things that you bought this time last year.

Wait, bought this time last year? If we bought all these things last year, why do we need to buy them again?

According to the ABC's War on Waste, Australians go through a ridiculous amount of clothes. In this documentary they work with a group of girls to teach that that clothes can be worn more than once. These girls actually had to be encouraged that it was okay to wear the same outfit twice, whereas I have a jacket in regular rotation that I have owned for more than eight years.

Apparently I'm doing it wrong though - apparently at the end of every season I'm supposed to throw out those clothes and buy a new set. All my winter clothes, out the door to make room for all my Spring-wear. That I'm going to toss in 3 months to buy Summer wear.

If you couldn't tell by my dripping sarcasm, I think this is bloody ridiculous. To be fair I am removing all my winter wear from my cupboard - and stashing it elsewhere in my house. When it gets cold again next year I'll shift it all back into my cupboard.

The cost of a whole new wardrobe

Clothes these days are cheap. T-shirts for $5, pants for $10, jumpers and dresses for $20. With a few hours shopping effort (why would you want to!) you could purchase a whole new wardrobe for under $300, giving you a whole new look and variety of choices for summer. 

With so many cheap (poorly made, sweatshop) clothes available it's easy to get suckered into the fast fashion movement. It doesn't seem like much at the time to spend $30-$40 on a whole new outfit. But over time, it adds up to a ridiculous amount - which chains you to your 9-5 desk for years longer.

Let's assume you replace your wardrobe each season for $300. On top of that, you buy some outfits for special occasions (weddings and such) that you absolutely cannot wear again (oh the shame of outfit recycling!). These special occasion outfits cost another $400 a year.

Each year you're spending $1,600 a year on clothes. While it might not seem like much at the time, after 10 years you've lost out on $22,000, all for clothes that only stay in your wardrobe for a few weeks. 

If you were to put that extra money towards shortening your mortgage you could knock 9 years off your mortgage. If you've got a credit card debt, letting your clothes last through the seasons could be the quickest way out of the hole - by not spending any more, and freeing up money to make extra repayments.

Why buy new when there is so much excellent
under-priced stock in the thrift shop

Turn it off and on again: Buying any new clothes

The point of the Budget Reboot Challenge isn't to force you to change your ways, but to commit to something for a set period and see what it's really like. Turn off clothes shopping, and at the end of your commitment, ask yourself if you really need to add it back in again?

How long could you go without buying a new item of clothing? Big Kid Little Adult has started a challenge, to buy nothing new for a year (underwear excluded, you can buy that). Going in to summer if you need a few more singlets, just cut the sleeves off a ratty old shirt. I have so many of these, I actually have to hide shirts from myself in summer, otherwise I'll cut them all up!

How long can you commit to not buying new clothes? One Week? One Month? One Year? How much can you save doing it?

I can commit to Buying Nothing for a month! (Except for one costume... I've got dress-up needs! But I promise to buy second hand)

At the end of that, Turn It On again: This is the fun part. After the end of your commitment, you're free! You can buy as many new clothes as you want, but first I need you to do a status check for me.

Did you miss shopping? Did you find new ways to wear existing clothes?
Did you save money? How much?
Did you really feel like you were missing out? Maybe you could keep going with it?

Budget Reboot August, how did you go?

Back in August I asked you to try eating less meat. I committed to finding a meatless meal that Mr. FIRE would enjoy, and I failed. Drat. I fed him Miso Soup and Eggs on Hash Browns. While he enjoyed both of them, he argued that the Miso left him hungry, and that Eggs on Hash Browns made a great breakfast but weren't enough for a dinner. The search continues!

I did eat a lot of meat free meals myself while Mr. FIRE was away for work. Mostly because it was easier (being lazy helps some times). While I normally spend $200 a month on groceries, September is on track to be closer to $150. This is a pretty big saving, but to be fair it might be more that Mr. FIRE was away, than that I spent less. Then again, while he's away I have to buy everything myself, rather than sharing the cost - so maybe I did save?

You should be buying cheap shit

Just last week I said that you should stop wasting your money on shit. A big part of that is not spending money on cheap shit that falls apart after a couple of uses and you have to constantly replace.

I'm not changing my mind, but sometimes you really should buy cheap, second-hand, knock off shit before you buy the expensive top of the range good stuff.

Let's be frank, $140 jeans are totally frugal if they last 8 years. But if you buy them and realise you hate them, it was a waste of money.

That kitchen aid gathering dust?

The thermomix you bought and discovered you hate risotto?

You got a pool then realised you're afraid of drowning?

Absolute total wastes. Good quality expensive things that have burned a huge hole in your wallet without making you happier.

If you want to buy something expensive, you should buy a cheap shit knock off version first.

Trial it, see how much you like it, see if you enjoy baking muffins in a cheap silicon tray before buying an expensive set (FYI, silicon bakeware is amazing. I make so many muffins now...)

Buy it cheap

So you've decided to start off a new diet where you drink green smoothies every morning? Good for you, but step away from the $80 NutriBullet. Instead, grab yourself a $15 Blender. Let's be honest, it might not last forever, but there is a good chance it will last longer than your obsession with green smoothies.  

Buy it second hand

Whatever it is that you're just starting out - from cooking, to hang-gliding, to fencing, and back someone else has probably done it first. Before you rush out to drop $20,000 on a hang glider, see if you can pick up a second hand glider for a measly $5,000.

Or maybe, for a more relate-able idea, you probably have a friend with a thermomix sitting in the back of their cupboard not being used.

Financially free AND gravity free!

Buy it on special

If you've have a cheap knock off in the cupboard, and you've borrowed from a friend, then you can hold out for specials. While new rock climbing shoes can cost over $100 places like Anaconda regularly have sales where you can get new gear for 50% off. 

or maybe, you'll find a new hobby

The beauty of buying cheap shit, before committing to top price, top of the range equipment is that you'll never be left with a $30,000 hang glider and the realisation that you're afraid of heights. If you're enthusiasm outlasts your equipment, then that's a great reason to pick up some better quality items. But if you're only going to stick to a juice diet for a few days, why bother dropping $80 on a blender when a cheaper version will do the same thing.

Acorns - 12 month wrap up

Acorns are offering double sign up bonuses for September, which has drawn eyes there way and lead to them being crucified in the media with sensationalist headlines. But after a almost a year I feel like I've got the right to say, they ain't that bad. In fact, the returns are decent, the apps easy to use and the mindless investing structure is a great starting point that everyone should get behind.

If you need convincing, here's an almost 12 month wrap up.

I opened my Acorns account in October last year while sitting at my desk. I found I had developed this habit of going out for overpriced lattes simply to get away from my desk and chat with my coworkers. Once I had my account up and running I started depositing $5 each time I was invited out for coffee. The same amount of money way leaving my pocket, but I was much happier with the outcome. I'd rather buy time away from my desk permanently than a few manufactured minutes.

(BTW, this review will make a bit more sense if you've read about Acorns before, you can head over to my earlier review for a bit of background.)

However, a couple of weeks later I realised that I had an account balance of $25, and I'd just paid my first monthly fee of $1.25. For some super quick maths, that's an annual fee of $15, or a ridiculous 60% of my account balance.

Here is where everyone gets mad at Acorns. If you are only putting round ups in your account, then the fee structure is going to kill you. With round ups alone after a year my account would barely be hitting $200, because I'm not a big spender.

Round Ups are Acorns prime draw card. They track your spending and 'round up' each transaction. Spend $1.10, Acorns will take 90c. Except they don't, they wait for you to hit $5 worth of Round Ups, then take $5 each time. It's not exactly what they advertise, but it's still sneaky background investing that (most) people won't notice.

Except as I said, the fees on a small account are appalling and this is what most people are complaining about.

However to bring your fees down to a reasonable amount, you only need $400-$500 in the Acorns bank. While I was sitting in the passenger seat of a camper van in Tasmania I plumped my account up with a few easy button presses and dropped my annual fees down to 3.75%. The Acorns app is so easy to work with I did this even while my internet connection was dropping in and out.

Now let's be honest, that's still not a great annual fee. My Vanguard account pays a measly 0.75% per annum. However to open a Vanguard account, I would need to find $5,000 and a lot of people just starting out don't have that kind of money lying around.

When I started looking at investing I had $1,000. I definitely didn't have the confidence to drop $5,000 on Vanguard. That is the market niche that Acorns fills. Yes, the fees are higher than Vanguard, but the return (even after the fees) is going to be better than a bank account.

Remember that historically the share market returns 7% per annum after inflation. Ignoring inflation, the returns are closer to 10%. Even after paying 3.75% in fees, Acorns will return more than a bank account, but importantly it is hugely educational.

In my last monthly update I noted that I was losing more money each day than the cost of a cup of coffee, because the market was falling. A couple of years ago this would have been terrifying and a sign of a losing investment. I know now that it's simply the ebb and flow of valuations. One day I'll be down $10, the next day I'll be up $15.

And for people who haven't read this and are still paying the huge fees - well their big lesson will be how excessive fees destroy your investments.

For people starting out with investing, Acorns provides a solid return and a great education at a rather low risk.

Acorns performance

In the past I've reported returns of over 10% on my Acorns account, even after fees. However the times, they have a-changed and the last couple of months have not been kind. However this isn't just a straight sales pitch, this is a realistic outline. In the first six months I was up 10%. Now I'm only up 2.32%. If I wrote this review a month ago it would have been better. I'm reasonably confident in a month or two the numbers will move back upwards.

   
You can see on these charts when I dropped in $400 to plump up my account, and when I switched from adding $5 a week, to $75 a week in July.

In fact, the markets are changing so much that since I took these screen shots two days ago my returns since opening have bounced back up to 3.14%/ The longer that my account is around, the less bouncy these returns will be.

So if you're new to investing, I absolutely think you should sign up for Acorns. With this referral link you'll get a $5 bonus, which covers your first four months of fees. Build your account up to $500 as quickly as you can, then set a regular weekly investment that you can handle. If you start out with $5 you'll invest $260 in a year without even noticing. If you can push that up to $20 a week, you'll have $1,000 at the end of a year, without even noticing.

While you're learning to invest you can open the app each day and watch the charts bounce up and down. It's a great lesson for investing for the long haul and not worrying about day to day swings.

Stop buying shit

Shit, slang something inferior or worthless.

This is where the frugality movement and the minimalism movement come together and truly shine. Because you can be a minimalist with only a few things, but they can be crappy things you have to replace every two weeks. Or you can be frugal and buy something on super special, but maybe you didn't really need it.

Stop buying shit that you only use once

Think of all the things you buy just to throw them away again. Garbage bags are one of the five things you'll never find in a finance bloggers budget because you are literally paying money for garbage.

However there are less extreme examples like paper plates, straws, bamboo skewers, paper towels, tampons and disposable coffee cups that can be replaced by reusable items like real plates (or wipe down plastic ones) metal straws, metal skewers, kitchen rags, menstrual cups and keep cups.

Not only will you be literally saving the world with less waste, you'll be saving your hip pocket as well.

Stop buying shit that falls apart

In the first six months after moving out together Mr. FIRE and I bought and broke three different cheese graters. Two of them broke while we were using them, the third somehow got rusty while it was in the cupboard. We then bought a cheap knock off multi-purpose kitchen dicer that came with a grater, julienne slicer, mandolin slicer, etc. etc. That broke the first time I used it as well.

So finally we caved in and spent $30 on a decent grater like this one. We bought it from a proper kitchen supply store, instead of trying to find one at a two-dollar store and it's been going strong for three years.

If I'd bought the expensive version first, I would have spent $30. Instead I wasted $50 on cheap crap before finally dropping another $30 on a decent one. 

Don't trick yourself into thinking you are saving money buying cheap shit that falls apart. Buy quality once and enjoy it for years to come.

Stop buying shit you don't need

How many coffee cups do you have in the cupboard? I can tell you Mr. FIRE and I have 6 small espresso glasses, 6 latte glasses, 4 tea cups and 4 large cappuccino cups (yeah, we like coffee). While this sounds like a lot, it works out to doing dishes two or three times a week if we want another coffee.

However, when I lived at home with my parents with had a shelf over a metre wide, and three mugs deep that was full. At a guess I'd say we had at least 40 mugs, all the same size and shape for 3 people. We used the same three mugs every day. Yet for some ridiculous reason we would buy mugs as souvenirs, as Christmas presents, as birthday gifts... I'd say we had over $500 worth of mugs we never used. We didn't need any more mugs, yet we kept buying them.

We also had a garden shed full of tools with multiples of the same type. We owned a bamboo sushi rolling mat even though we never made Nori Rolls. We had a label maker but nothing labelled. If I wanted anything, I always dug through the cupboard We had a fondue kit, a slow cooker, two different blenders... we had everything.

The thing is, we didn't need all these things. Most of them we rarely used. So many things were bought and used once or twice then never again. We bought them because it's easier to make Nori Rolls with a bamboo mat than by hand. It's easier to have a big blender instead of working in batches. It's easier to buy another trowel instead of finding one you already have.

Laziness cost us a lot of money. 

Stop buying shit you don't want

Here's a big one that costs people. How many times have you been early to a job interview, been waiting for a plane, or just had a few moments free and suddenly smelt something delicious in the distance. There are cafes on every street corner, and the biggest lure is boredom and habit.

In these moments somehow coffee and a snack mysteriously materialises in our hands, and money disappears from our wallets. Once I walked out with a coffee I didn't want and a really disappointing croissant because... I don't know? I was bored. I needed to kill some time.

I can't believe anyone wants
or needs this many cushions...

I had literally bought something I didn't want!

And it's not just quick and easy snacks either. I have found myself in clothes stores with the rest of the team while on derby trips hunting for something to buy before I realised that I didn't want anything new, and I couldn't fit it in my suitcase anyway.

Every time I go through Bunnings I end up looking for things to buy. I start with the things I came for, and if I can't find them I somehow still end up looking for something to buy.

I'm not a shopper and I somehow get lured in to buying things. If my friends are shopping, I feel compelled to shop. If I'm near a cafe, I feel compelled to snack. If I enter a shop I feel awkward leaving without buying anything. Until I got over this I used to spend money on stupid shit that I didn't even want!

Start buying your life back

So if you aren't buying shit, what are you buying? If you stop buying shit you'll find your pockets lined with all this spare money. Spend some of it on buying quality things that will last for years (we own $180 frying pan - thankfully it was 60% off) and then spend the rest of this spare money on buying free time. 

Every dollar you aren't spending on shit, you can spend on more dollars with this fancy trick called 'investing'. If you've just got a few dollars, start with Acorns. A couple of hundred, consider peer-to-peer lending with RateSetter. Over $5,000 you can break into the share market with Vanguard.

Buying shit for $20 will give you a few moments happiness, or maybe just buyers remorse. Every $20 you invest will give you back $1 a year for the rest of your life.

Do you want more shit? Or do you want to start buying your way free of the 9-5? Your choice.

The Year of Investing - August 2017

Smashed my savings goals and smashed my investing goals. A month of low bills and upward trending markets worked out wonderfully!