Author Archives: Jessica

Dear Grandma

by Jessica Dang

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My dear mama, you passed away earlier this month.

You had been ill for a long time, so it wasn’t unexpected. At least you were surrounded by family when it happened. Everyone dropped everything to go to your house that night. There were a lot of tears.

You lived a hard and busy life, immigrating from Vietnam to England forty years ago bringing your ten children with you. With such a big family, your house always had people coming in and out to visit, to talk about everything and nothing, to eat and drink tea until late into the night. Weddings, birthdays, and Chinese New Years have always been hectic and wonderful and full of food and laughter.

In the end though, old age took over. You got breast cancer, and eventually liver cancer and other ailments that made you so weak you needed help with everything. We all did our best to take care of you, getting you the best treatment we could, but in the end, we had to let you go.

Growing up, you didn’t have much. You married a man, my grandfather, who was from a village in the mountains near the border of China and Vietnam. You had to have ten children because you were so poor you didn’t know how many would survive until adulthood. Some actually didn’t survive—as close as we all are, there are members of our family that I would never know.

So it’s no wonder you valued money so much. Having it meant the survival of your family, which was everything to you. When you all came to England in the 1980’s to look for a better life, everyone worked hard at the few years they had at school to learn English so that they could find work. My own father, who was 14 at the time you moved here, only had a single year of education. Those first few years were all about learning to survive in a new world.

Eventually everyone found their feet. All ten children became adults, found jobs or started successful businesses and married and had children. Some even went on to have their own children and you and Grandad became great-grandparents. Ten years ago, Grandad passed away and although you were alone without him, you were never lonely with all of us being there for you.

We started with nothing but now our family has more money than we could have imagined as refugees from a mountain village. You started a dynasty, but we haven’t forgotten our roots. Although money is useful, it isn’t the most important thing. To this day every one of us would do anything to support each other.

You were a minimalist by circumstance, not by choice. You didn’t have much, but what you did have and all that mattered were things that money couldn’t buy—good health for as long as possible, a loving family, and living a full and happy life. You had everything you ever needed, and I’m glad for that.

May you rest in peace.

‘Dear Grandma’ post was originally published via Minimalist Meditations.

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On Maturity — What would I tell myself if I could go back 10 years?

by Jessica Dang

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It was my 27th birthday this month. Although I don’t feel that old yet, almost every day I’m reminded of memes I don’t understand, trends I haven’t heard of, or technology I didn’t know existed. I feel a big difference between myself and ‘kids these days’. In fact, I have a brother who is 11 years younger than me, but it often feels like he’s from a different generation.

Amongst all of this change in the world, I realise there has been a lot of change within myself too. I wasn’t always so comfortable with not being up-to-date on the latest fashions and gadgets. Like most teenagers, I overcompensated for my self-confidence issues by trying in my own way to be as cool as possible. For me that meant having cool stuff like the latest iPhone or laptop to show off with. People would gather around me and it would make me feel better about myself, but only for a while. Obviously buying stuff wasn’t a long term fix for my insecurities. Those times sowed the seeds for the minimalist lifestyle I developed soon after.

As a teenager I dreaded getting older, but a decade later I’m in a much, much better place. The biggest lesson I learned is to not give a f*ck. Who cares where I live, what job I do, or whether I have the latest iPhone? No one! Or at least, no one cares nearly as much as I thought.

Realising that and being okay with it has been huge. Once I let go of other people’s expectations of me, I was free to do whatever I want—it’s unlikely people care enough to judge me for it, and even if they did, who cares! Certainly not me.

Hence living minimally to avoid debt and save up enough to be able to quit my job in my mid-twenties to start my own business. Could I have done that if I was concerned about what people thought of me? Probably not. I would have felt too self conscious to say no to spending $100 on a night out, worrying about what outfit I was wearing, or which car I was driving, or staying in a luxury hotel so that I could instagram it, instead of saving up the start up capital I needed to be free of those kinds of traps.

Two years on, I only work a couple of hours a week but earn twice as much as I did in my soul-sucking job. I have the freedom to pursue anything I want to. I can sleep/read/travel whenever I want, and thanks to not being tied to a desk all day, my health is better than ever. On top of that, I can give more to people and causes I care about, because I have more to give.

It wasn’t easy getting here, but neither was it that hard to be honest. It was a series of small sacrifices and good decisions that paid off. I only wish I started started sooner. That is, if I could go back ten years and give advice to my 17 year old self, or indeed to my younger brother now, I would say, “Hey, you. Stop worrying so much about what other people think, they don’t know all the answers themselves. Breathe. If you do what you feel is the right thing, you’re going to find happiness. I promise.

‘On Maturity’ was originally published via Minimalist Meditations.

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On Vanity — how valuable things can actually be worthless

by Jessica Dang

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Why do we buy stuff? Not everything we buy is useful, so there must be other reasons why we work so hard to buy things.

Maybe it’s because we find a sense of happiness or satisfaction when we buy something new, but we all know that that feeling soon fades (even though we almost never remember this every time we buy something new).

Why we buy stuff has less to do with the object itself than with ourselves. When we buy expensive clothes, the newest gadgets or a flashy car, it’s because we believe it will give us recognition from the people around us—we’ll ‘show’ them how successful we are so that they’ll accept us, or even love us.

Humans crave recognition. To be part of a group, or at least not be in some else’s shadow. Most people are more influenced by what other people think of them than what they actually want ourselves.

Think about it—if everyone in the world disappeared tomorrow and you were the only one left (apart from the upset you would have from losing your friends and loved ones) what would you do now that you could have anything you desired?

You could just walk into someone’s mansion, even the most beautiful castle, and have it all to yourself. You could pick and choose anyone’s finest clothing and jewellery, even put on the crown if you wanted to! Drive a Ferrari, swim in bank notes, have hundreds of iPhones. But after a while, what would happen? With no one to impress, the chances are that you’ll find somewhere more convenient and easier to maintain than a huge house, you’ll wear clothes that are more comfortable, you’ll drive something more practical and you’ll get bored of the latest gadget.

Things you thought were worth a lot won’t matter as much any more. You’re the last person on earth, there’s nothing left but to find something worthwhile to do, something that makes you happy, not anyone else.

If no one was around to validate our existence, as society has defined by how much stuff we have, we would wouldn’t actually care about it. Hardly anyone would actually choose to have their life’s purpose revolve around buying things, but so many people do exactly that every day, without stopping to question it.

We don’t have to go as far as erasing every other person on Earth. If we just cared a little less about what other people think, we’d care a little more about what we want, and what really matters to us.

‘On Vanity’ was originally published via Minimalist Meditations.

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The most important thing to minimalise in 2018

by Jessica Dang

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http://www.dreamstime.com/stock-images-hot-air-balloon-festival-image18811474

 

Having lived a minimalist lifestyle for nearly ten years (by my definition anyway), I don’t have a lot of things left to get rid of that I don’t use or need.

But there is one big thing that I can do with much less of this year—distractions.

I have noticed lately that I have been finding it more and more difficult to focus solely on a single task.

Whenever I sit down to do some work, whether it’s reading, writing, studying etc. I hardly last 10 or 20 minutes before I’ve got a tab open on something new, or I’ve absent mindedly moved onto something else without realising it. Before I know it, it’s 9pm and I haven’t gotten much done that day.

Distractions come in so many forms. It’s impossible to get rid of them all, but there are some major ones that would make a big difference if I were to reduce them as much as possible.

Distractions 

  1. Daily news. Given the political environment, following the news last year always made me angry/upset/confused. There’s always something bad going on in the world, and there’s a line somewhere between being informed about world events, and knowing too much that it’s just upsetting.
  2. Social media. Even though I stopped following people on my feed years ago, I ended up replacing them with news sites that used to be informative, but have degraded to pointless videos about things that don’t add value to my life.
  3. TV. Every time one show finishes, and I think I can take a break from TV, another one starts up again and I end up watching about 4-8 hours of TV a week which I can do with halving. There are many better things for me to do with an hour each day.

Minimalise by…

  1. Disabling all notifications
  2. Deleting news bookmarks from my computer and phone
  3. Turning off the colour to my iPhone so it looks boring
  4. Logging out of social media from all browsers
  5. Turning my computer off if I intend to do something else
  6. Deleting all social apps from my phone
  7. Keep a notepad to look things up later instead of doing it instantly
  8. Unsubscribing from Netflix
  9. Letting go of TV shows even though I haven’t finished them
  10. Any other 100+ ways that’s not actually difficult to do

To be replaced with…

  1. Face to face interactions. I want to spend more time connecting with people in person, including friends and family, and also I will make an effort to network more this year with people who up my game, in business, in life, emotionally, and intelligently.
  2. Learning/investing in myself. Every dollar I have ever spent on a book has been well worth it, so I attended a training workshop this month that costed a lot of money but was worth every penny. Now I’m on track to make 10x the cost of that seminar back. I’m convinced the more I learn, the more I earn.
  3. Deep work. I want to reach my goal of reading 52 books this year while making better notes so that I retain more of what I learn. I also want to spend more time writing for the both Minimal Student and Minimalist Meditations, and updating my journals on a weekly basis instead of monthly.

It all comes down to wanting to do things with intention and awareness. If I’m distracted less, I can focus more on doing all the things I want to in the time that I have.

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This year in review and the most popular posts of 2017

by Jessica Dang

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It’s the end of another year. As much as one can make the best of things despite all of the terrible things that have happened around the world this year, I’ve had a fairly good twelve months. I ran my third marathon in my fastest time, travelled to eight different countries, read 52 books, and doubled the size of my business.

During all of this, I’ve been able to keep up with writing at least one post per month for both Minimal Student and Minimalist Meditations, which wasn’t easy but I’m glad I did it. Here are some of the most popular posts of the year, plus the latest Meditations posts:

  1. Minimal Student is graduating
  2. Minimalism and the Pursuit of Perfection
  3. 5 Common Myths about Minimalism
  4. A Minimalist Guide to Money and Investing — Part IPart IIPart III

Minimalist Meditations — October to December

“As with most things in life, preaching about something only makes people more resistant to the idea.”
— How to guide people towards a life of minimalism: Minimalist Meditations on Guidance

“What would we do if we weren’t afraid of what other people think?”
— How to use power as a tool: Minimalist Meditations on Power

“Some of the happiest human beings are those who have the least.”
— You’re already born lucky: Minimalist Meditations on Generosity

If you enjoyed these, you can subscribe via RSSemailTwitter or Facebook. See you in the New Year.

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A Minimalist Guide to Money and Investing — Part III

by Jessica Dang
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This is the third part in my Minimalist Guide to Money and Investing. Here is Part I and Part II. You can also read about my Minimalist Meditations on Wealth and Money. It takes me a long time to write these posts, if you find them helpful, let me know in the comments below or on Twitter or Facebook.

Reminder: I am not a financial adviser. What I talk about below may not be best for you or your situation, please seek professional advice or do your own research before you put real money on the line. Short of writing an entire book,I can only give you the basics and tell you what I’ve done and what has worked for me.

4—Investing and Income

So you’ve paid off your expensive debt, and have a small nest egg saved for emergencies, what do you do next?

You put your money to work. Think of each dollar or pound as a little worker bee—you can let it stay in the bank and do nothing, or you can send it off to go recruiting for more dollars.

The best thing about making your money work for you, is that you don’t have to do it yourself. The more you make your money work, the more passive income you have, which means the more time and freedom you have for important things.

The aim is to achieve financial independence—this means earning enough money passively to cover your essential living expenses. Once you do that, you no longer have to work if you don’t want to. What your income has bought you is the freedom to choose. You can simply retire, or do whatever you want (painter? teacher? glassblower?). You can choose to work freelance, or part time, or even volunteer to do it for free because you no longer need the money.

When it comes to investing, the two most important things to know are:

  • how to compare yields across different types of investments 
  • how to calculate risk and reward

It is quite difficult to get precise figures, because you can’t always have perfect information and you can’t predict the future, but you can make very educated guesses which will inform you on which investments to choose.

Yield means how much money you can get back for the amount of money you put in. If you can work out the yield for any investment, firstly you can see if it’s above inflation (which is 2-5% in most countries) so that you know that you would be at least making the amount of value your money is losing just sitting in the bank (I highly recommend reading up about how inflation works against you and your savings) and secondly you can compare it to other types of investments to see if it’s worth the risk…

Risk is the chance that you will lose or make money. Risk and reward tend to be inverse, in other words, if something is easy and safe to do, you’ll get a small (but safe) amount of return, but if something is riskier or requires more research and knowledge, you’ll be rewarded with higher returns if it turns out that you were correct.

A few important points:

  • Investing is not gambling—even though risk is involved, if you choose your investments wisely, the risks should still be very low. The riskiest investments you should be willing to consider are ones that you can either make nothing or at most only lose a small part of your capital. You should not consider investments that are not backed up by anything of value, or where you can lose everything—that is gambling.
  • Diversifying—having many different types of investments is how you can balance risk and reward. The bulk of your investments should be safe, even if they give low returns, with a few medium and higher risk investments in the mix to add to the returns. How you balance the ratio of low/medium/high risks depends on your own risk appetite, how much money you have, what your financial goals are, and how close you are to retirement age (when you can no longer work even if you wanted to).
  • Getting yields of 5-10% is very respectable. A lot of people might think that getting £10 for every £100 invested is a very small amount (“But it’ll take 10 years to make back my money!”) but the point of investing isn’t to make back all of your money as soon as possible, that’s what owning a business is for (breaking even on what you’ve spent and then making a profit for all the time and effort you are putting into it). Investing for a passive income, on the other hand, is about getting the money that would have otherwise earned nothing as savings working for you. £10 might not seem a lot, but if you invested £10,000 with a 10% return per year, you would be earning £1,000 basically for free without doing any work.
  • Compounding is the 8th wonder of the world. Furthermore, if you reinvest what you earn, you can earn interest on your interest and it wouldn’t take you 10 years to get your money back. In the example above, you may earn £1,000 in the first year, but if you add it to your initial investment of £10,000, making £11,000, 10% of that is £1,100, and if you add that on you’ll have £12,100 invested which will yield £1,210 etc. So you’ll be making money on your money that made money. Compounding is such a powerful force that if you achieve 10% returns per year, it would only take you 7 years to double your initial investment (£10,000 becomes £20,000).

So you can see that the more and the earlier you can invest, the more quickly you’ll achieve financial independence. The step after that is financial freedom—when you earn enough to cover both your essential and non-essential (i.e. ‘luxury’) living costs.

One of the easiest and safest ways to start to put your money in a low risk, low cost fund, such as an Exchange Traded Fund which now, thanks to the internet, you can find an abundance of low-cost platforms for online (Google ‘ETF’ to find out more about what they are). You can start with just a few dollars and earn anything form 3-5% return on your money. Considering inflation is about 2-3%, you’ll not only be preserving the value of your savings, which would otherwise be worth less and less over time, but you’ll also earn a tidy amount of profit on top.

There are hundreds of different ways to invest your money, and I won’t be able to go over all of them, but I can tell you what I do. Through all of my research, I have found that for me and my situation, property is the best investment for several reasons:

  • Location—I live in an area where rental demand is high, but supply of housing is relatively low (this means with the rental income I can achieve yields of of 7-10%).
  • Economics—there is a very healthy employment level and growth prospects for this area, and the other areas that I am investing in.
  • Leverage—I can leverage my investment by applying for a mortgage (ie. instead of having to save up £100,000 which would take a long time, I only have to save £25,000 which is much less, and borrow the rest, yet still receive 100% of the rental income). Property is one of the only investments that banks will lend you money for.

To give you a concrete example and show you it can really be done, I own a two bedroom apartment that costed £125,000. I supplied the 25% deposit of £31,250, and got a mortgage for the other 75% of the value at £93,750. The market rent is £850 per month/£10,200 per year (£10,200/£125,000 = an 8% yield). Maintenance and other expenses amount to about £120 per month, and the mortgage costs £310 per month. This leaves a profit of £420 per month, which is £5,040 per year—a 16% return on investment of £31,250. Best of all, after doing the initial paperwork, it’s all passive income.

On top of that, at the time of writing, the value of the property has gone up to about £160,000 so I have also gained £35,000 in value in just two years, and in the future I can refinance it to get these funds out to reinvest. And this is only one of the properties in my portfolio. At the moment, I have achieve financial independence, which is why I was able to quit my job, but I intend to reinvest 80%+ of all my passive income over the next 5-10 years to increase my passive income until I’m able to achieve financial freedom.

I’m not telling you all this to show off, and I’m not necessarily advocating property as an investment for everyone. It’s just an example to show that with a minimalist lifestyle and a bit of hustle, I was able to go from nothing to something like this. If you set yourself an income goal that depends on how much you can live on a year, even if you were to have more than a few luxuries, say £30,000 per year, you can see how just by owning a couple of investments like the one earning £5,000 per year can realistically get you there.

Don’t wait to win the lottery. There are opportunities to make passive income everywhere. You’ll never be free if you slave away at a job you hate, trading hours of your life for cash, and you’ll never make it just by wishing for good luck. You have to take control of your finances, because it’s not about the money, it’s about freedom.

The magic formula for success is: Education + Action. This post only briefly covers things that took me months to learn, and then more months to implement. If there’s anything you didn’t know about or didn’t understand—feel free to ask me in the comments, but most importantly, do your own research. Here are some resources that I’ve found extremely helpful:

The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich

Image result for The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich

This book was life-changing for me when I discovered it when I was twenty years old. It introduced to me to the art of setting up a passive income business so that I wouldn’t have to work for money. Not only is it possible to earn money while you sleep, but it is perfectly achievable if you want to and believe you can do it. It also introduced to me the concept of taking retirement breaks now (doing things like travelling, volunteering, spending time with family etc.) without having to wait until I’m 65. I also reread this book every year to remind me not to let my business become another job.

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely

Image result for how to own the world book

A lot of investing books contain too much jargon and formulae that I don’t want to get into as someone who doesn’t want to be investing full time. This book is the most approachable one I’ve found for beginners, and I recommend it to people who are getting started. It explains in more detail the things I’ve mentioned in these posts about the basics of investing—why you should do it and how best to choose your investments wisely. It teaches you how you can compare different types of investment and how you can decrease risk by basically buying a bit of everything (i.e. ‘owning the world’).

The Little Book That Still Beats the Market

Image result for The Little Book That Still Beats the Market

This book is a great introduction on how to assess businesses to see if they’re worth investing in. Before this book, I stuck to ETFs because I didn’t think I would be capable of analysing company’s accounts and putting it all into complicated ratios and so on, but after reading this I realised that I can rule out a lot of the work by comparing some fundamentals to narrow down the number of companies I’m looking at. I genuinely believe the advice I got from this book will make me a lot of money in the future.

 

Blogs: Rockstar Finance links to all blogs worth reading in personal finance. I recommend signing up to their newsletter which I receive and read every day. In fact, if you liked this article, please submit it to share with others!

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5 Common Myths about Minimalism

by Jessica Dang
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Throughout human history we’ve never had so much stuff in abundance that we would voluntarily choose to have any less than we can get. Given the chance, it’s in our nature to take everything we can for the sake of survival.

But in modern times, taking has gone way beyond the necessities of food and shelter, and consumerism has taken over to the point that we’re killing our own people and destroying our own planet for the sake of the latest gadgets.

Thankfully, in the last couple of years, things have turned the other way and the minimalist movement has picked up momentum.

While I’m happy that news about minimalism has become mainstream, I’m not a big fan of articles that show people sitting like monks in their bare one bedroom apartment with a toothbrush and a towel laid out in front of them.

These articles only show one type of minimalism, and in my opinion intimidates regular people for who it isn’t feasible to live under such extreme circumstances.

There is still so much misunderstanding around what minimalism actually is. Here are the top five misconceptions I hear most often:

Top 5 Myths

1. You can only have 100 [or insert number here] things or less. Don’t you dare have 101 things otherwise you’ll have to get rid of something! Only kidding, there’s no need to keep strict numbers on your possessions. Just follow the general rule of only having what you need, clear out every now and then, and you’ll be fine. The world will keep turning if you have a few more things than an arbitrary number plucked from the sky, yet people think that minimalists are obsessed with counting each sock. There are some who do, but the rest of us spend our energies actually living our best lives.

2. Your home/walls/furniture can only be white, no fun allowed. Although I’m a big fan of minimalist interior design, it’s really only a Pinterest/Tumblr hobby, not reality. Let’s look at the bigger picture. Rather than focus on the things that we don’t have, or are depriving ourselves of, let’s focus on what we do have, and which of those things give us the most joy and add value in life. This applies not just to how we decorate our homes, but also to the people, commitments and things we spend our time on/for every day.

3. You can’t want or have nice things.  Let’s be clear, cheap is different from frugal. Being cheap means buying things of low quality that you’ll have to replace after it breaks. Frugal means buying only what you need, and looking for good deals for things of good quality. Therefore, you can be frugal, but still buy expensive things because you expect it to last a long time. In any case, even if it is a nice thing, if you need it, you’re allowed to buy it! So called ‘minimalists’ might frown at your fifth pair of shoes, but if you need an extra pair because running and hiking shoes are actually different things, you can have both!

4. You need to be a young single male who likes to backpack around the world. Er, no. You’re allowed to join The Minimalist Club™* whether you’re old or young, male or female, or if you have a partner or family, even if it means you’ll have a couple more things, they’ll still let you in. Kids need clothes and toys and you can’t just wear the same two things every day because you have to look respectable at work. You can live out of an actual house if you wanted, and you don’t have to travel if it’s not your thing. We all want different things in life, and as long as you can afford those things that are useful or make you happy, you’re allowed to have them.

5. You can’t get attached or sentimental about anything. Minimalism isn’t hard-core non-attachment Buddhism. You’re allowed to like the things you own, or feel sentimental about things that mean a lot to you. We’re all human after all, and we all have a favourite mug/sweater/keepsake that would make us unhappier if we lost or broke it. As long we bear in mind that although stuff will inevitably be in our lives, life is not inevitably about stuff.

If all this sounds to you like I’m making excuses for ‘non-minimalist’ habits, then you’ve still got minimalism all wrong. There aren’t any rules. People think that minimalism as a lifestyle means having less, when in fact what it really means is having more. Don’t fall for these misconceptions—do your own research and find the path that suits you.

*Unfortunately there is no such thing as The Minimalist Club™

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Minimalist Meditations — July to September

by Jessica Dang
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The latest posts on Minimalist Meditations from July to September:

“If only we could find strength and stability within ourselves, instead of relying on our belongings, other people, or things we can’t control, perhaps we’d be much happier people.”
— Invaluable practices for everyday life: Minimalist Meditations on Equanimity 

“Minimalism isn’t just about decluttering, it’s about learning to lower your materialistic expectations in life and being more grateful for the things you do have.”
— How to be happy now: Minimalist Meditations on Expectations

“Most things worth doing are hard, and hard things need your whole heart in it to do right.”
— What stops us from really living? Minimalist Meditations on Distractions

If you enjoyed these, you can subscribe to the new blog via RSSemailTwitter or Facebook.

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My Minimalist European Trip Packing List

by Jessica Dang
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By the time you read this, I might be wondering the streets of Old Town in Prague, admiring art in the museums of Vienna, or bathing in the spas of Budapest… checking cities off my List.

I’ll be mostly offline while I’m travelling, so for this month’s post we’ll take a break from the personal finance advice and go back to basics. Here’s a list of all of the things I’m taking for my minimalist trip to Europe. I’ll be carrying one backpack containing:

  1. One pair black jeans
  2. Two button shirts (that don’t need ironing)
  3. Two t-shirts
  4. Jacket
  5. Pyjamas
  6. Book (this month I’m reading Walden)
  7. Notebook and pencil (for diary entries, thoughts, ideas, sketches etc.)
  8. Sleeping eye mask and ear plugs
  9. Toothbrush and toothpaste
  10. Face wash and face cream
  11. Shampoo and bodywash
  12. Hand sanitiser
  13. Hair comb
  14. iPhone with battery and cable
  15. Power adapter

Not pictured: my iPhone which I was using to take the photo, my passport, flight/travel papers, wallet, and underwear for privacy, and the pair of shoes and socks I’ll be wearing.

That’s it! These are things I’m not taking:

  • Too many toiletries/makeup—I’m not planning to look/smell homeless, but as a tourist I doubt people will pay too much attention to what I look like. Also, coconut oil is a great multi-purpose skin moisturiser, lip balm, hair conditioner etc. which saves me having to take too many travel bottles.
  • Extra clothes—I would rather pay a few Euros for laundry/drying than carry too much around with me since I plan to do a lot of walking.
  • Gadgets/valuables—apart from my phone which I’ll be using for directions etc. I won’t be taking any other gadgets (including DSLR, see below), my watch, or jewellery or valuables that can get stolen.
  • A towel/hairdryer etc—too bulky, I’ll be staying in a mix of hostels and Airbnb which provide them.

I’ll fly with just carry on, so everything will fit in a medium sized backpack (about the size that would fit a 15 inch laptop) that weighs 6-8kg. Even though I’ll be taking very little for the trip, I’m not worried—I’ll mostly be in big cities so if I really need something, I can just buy it.

In a new exercise in mindfulness, I am deliberately not taking my DSLR so that I will spend my energy enjoying the sights in real life (gasp), rather than photographing them. If I like how something looks, instead of taking a photo and rushing off, I intend to spend an extra few minutes appreciating it in person. I might even sketch it into my notebook (I’ve been inspired lately by Leonardo da Vinci to write/draw more things down).

I could have packed more, or I could have packed less. Everyone is different, and everyone needs and likes to have different things. From my previous travels, I’ve learned what works for me and what I’m comfortable with.

Have I forgotten anything? Let me know what you think! In the meantime, check out the latest posts on Minimalist Meditations on Equanimity and on Expectations.

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A Minimalist Guide to Money and Investing — Part II

by Jessica Dang
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This is the second part in my Minimalist Guide to Money and Investing. You can read Part I here, which explains my views on Motivation and Environment, and Mindset and Education.

You can also read about my Minimalist Meditations on Wealth and Money. This post will be about:

3—Accumulating Capital and Allocation

So you’ve decided that you want to be an investor. You’ve worked hard to change your pre-existing views about money, and you’ve been reading and learning a tremendous amount about investing.  You want to have a life of freedom, but it doesn’t come cheap. How do you get started?

Well, either you save money to get started, or you make money to get started.

Saving money to invest—How much money you have depends on this simple formula:

Money You Have = Money earned – Money Spent

If you want more money at the end of the day, you can either earn more, or spend less. That’s it. But if it’s so simple, then why do so many people get it wrong? They don’t earn enough, or they spend more than they earn, which means they have little or no money left by the end of each month.

Even worse, if the money leftover is negative for long enough, people get into debt, which can spiral out of control. I understand that it’s not easy for everyone. Some might not be able to find a job, others have family to take care of. I never said it was going be easy, but most of the time there is something that can be done—downsizing, reducing purchases, eliminating entire bills/subscriptions/memberships, anything!

One of the great side effects of living a minimalist lifestyle is all of the extra money you save from deciding that you don’t need so much junk in your life. Not only that, but if you use those savings wisely, it can buy you things worth way more in the future.

I like to call this reducing your life overhead. Overheads usually refer to the costs of running a business, but there’s no reason why it can’t apply to your life. Keep your overheads low and even if you don’t earn a lot, you’ll have some ‘profit’ leftover.

I had a very average salary when I worked full time. I chose to live in a city where rents were reasonable and I didn’t need to drive a car. I had a capsule wardrobe of work clothes, only went out occasionally, and I ate well but not expensively. By the time I quit my job, whereas most people would barely have enough money to make ends meet, I had nearly a year and a half worth of savings that I could fall back on to pay the bills. If I was even more frugal, I could have lasted two years or more.

But I didn’t want to just live off my savings. My intentions were to use my savings to buy freedom. I wanted to use at least a chunk of my funds to generate a passive income with so that I didn’t have to work again. I will go into more detail about how I did this below, and in a future post.

Making money to invest—On top of your existing savings, you can always try to earn more money to invest. Generally, the more money you start with, the more quickly you will reach financial freedom, if that’s your goal. This doesn’t mean that if you have a million dollars you can just do nothing, it can quickly run out if you don’t use it wisely to generate more dollars.

Even after leaving my job I continued to earn money via various online jobs. A quick Google search will show all the different ways you can make money online.

There are so many ways to make money if you keep your eyes open for the opportunity. Even within the realm of property, there is a lot of advice on how to start investing even if you don’t have a penny. For example, you can do something called ‘rent-to-rent’ (google it) or you can build a network (free), source deals (free or nearly free), and package and sell them to money-rich/time-poor investors for a fee (usually in the region of a few thousand dollars). This is just one example to prove that if you are resourceful enough, you can definitely make money in this world. 

Okay, enough about savings. Once you have some money, how should you use it?

Capital Allocation

What you decide to use your money for is absolutely crucial. It’s what differentiates you from the Scrooges and the spenders and it determines whether you succeed or fail.

Firstly, if you have any expensive debts, you must get rid of them first. Any returns you make in investing are not likely to cover things like credit card debt, pay day loans, or anything with a very high interest rate.

It would be like trying to fill a tub with a huge hole at the bottom. You have got to close the hole(s) first. Some cheaper debts such as student loans may be okay to keep as long as you calculate that the yields you’ll get with investing will outweigh the cost of the loan. This may depend on your personal circumstances.

You may end up having to work extra hours, take on a second job, or be very frugal for periods of a year, or two years, or more. However long it takes, it’s worth the peace of mind to become debt-free.

Secondly, after covering your debts, you need to have enough earnings and savings to cover your living expenses and then some, so that you have a nest egg for emergencies. Some people suggest one or two months, especially if they have specialised skills where they can always find a job, but I would recommend having at least three or six month’s contingency for expensive emergencies.

Finally, only when you have some money left over after all that (it can be as little as a few dollars) you can start investing.

I will talk more about how specifically to invest in the next blog post, but the basic premise of most investments is that you are investing for income and/or capital growth.

What this means is that some of your investing will be to make a short term return (yield) and some will be to make money in the future (capital). A lot of investments are a bit of both, such as shares which give you a dividend and hopefully go up in value over time, and property, which will hopefully give you rental income in the short term, and capital income in the future.

You will need to allocate your investments so that you earn some of both—enough short term returns to cover some or all of your monthly expenses, and enough in future capital growth so that you will have (sometimes a lot more) money in the future as well.

So what did I do in the end? After making sure that I had my basic needs covered at least for the next few months, I ended up investing a chunk of my savings into property. I chose property because it’s one of the only things you can borrow money to invest in. Also, the short term yield (the rent) will help cover my monthly expenses to live, and the long term capital growth will help me grow my income and wealth in the future. I also chose it because I live in Manchester, an amazing city that is booming at the moment and a great place to invest in property, for now.

On top of my own money, I managed to borrow some money from family, and I took out a mortgage after carefully calculating that the apartment(s) I wanted to buy would return a profit after expenses. I will go into the details in the next post, including examples of my income/expenditure/profit figures.

A brief note about borrowing money and where to allocate your debts—there is such a thing as good debt and bad debt. ‘Bad debt’ costs you money, like when money is borrowed to buy depreciating assets or liabilities, such as a car or a holiday. When you use money in this way, it costs you. ‘Good debt’ on the other hand is money borrowed to buy assets that generate money, such as property that has a rental income higher than the cost of borrowing. The property can also be sold with a healthy margin over how much you borrowed. Overall, this means you’re making money.

The key here is to have a plan. Know your numbers—how much money do you earn? How much money do you spend? How much do you have to/want to invest? When can you start?How much do you want to earn from your investments? When by?

A lot of people don’t think about these sorts of questions and go plodding along in their working life, and shopping every other weekend without stopping to think about what they are doing. Both time and money are a limited resource. They can be foolishly wasted, or they can be invested wisely to generate more free time and more money to spend.

I will write more about my specific property investments in my next post, and how you can get started with investing even if you can’t afford to buy a property yet.

Resources

The Complete Guide to Property Investment — Rob Dix

I will refrain from recommending more than one property book. This is one of the best ones I’ve read, and it will give you a good idea of how making money in property works from beginning to end. I also recommend all other books by Rob Dix, and their Property Hub website. I go to their UK meetups every couple of months to discuss property and network with other entrepreneurs.

 

 

The Compound Effect: Jumpstart Your Income, Your Life, Your Success — Darren Hardy

A great book about how small actions can lead to big results. If you think you can’t be a millionaire one day, it’s because you’re thinking about millions of dollars right now, not one or ten dollars, which will compound into hundreds and then millions in the future if you make the right decisions. This book isn’t just about money, but also about how all of the life choices you make today will affect you in the future.

 

The Magic of Thinking Big — David Schwartzi

If you want to make it big, you have to think positively, optimistically, and proactively—in other words, think big. My copy of this book is full of notes and bookmarks. Containing inspirational stories and phrases like “When you believe, your mind finds ways to do” and “In everything you do, life it up,” I’ve read this book more than a couple of times and can’t recommend it enough.

 

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