Why I Decided to Share Our Finances

Sharing your finances, your income, your expenses, and your lifestyle with the world is seen as taboo. We all grow up hearing that it is unacceptable to ask how much money someone makes. But if we all started to share our income and expenses with each other, I believe we can liberate ourselves and help each other grow towards the atypical life of freedom.

When I shared Atypical Life with my parents, the first comment was:

Do you really want to share all of this information online? What about your family? Who is your target audience? ~Pops

I appreciate my dad’s input and understand where he is coming from. In his generation, it was seemingly unacceptable to share one’s income, even with their own family. I never learned how much money my own dad made until he was retired. I will not share it here, since sharing income is a very personal decision.

I hope to answer his concerns below.

Do you really want to share all of this information online?

scary man
What the media wants us to think all people are like.

Of course I want to share my finances online. The world is full of people that are scared by the media. The media does their best to make the world seem like a scary and unsafe place to live. The internet is only full of trolls and those trying to steal your personal information, right?

I am an optimist and do not believe all of the scare mongering that the media likes to put out. People are good at heart. I have no qualms about sharing my finances online. I have an engineering degree from a renowned university and make a reasonable salary for that degree. I have taken the chances that have been afforded to me and have been rewarded for taking those chances. Why is this something to hide?

If we all were to share our finances online, then we would be able to better compare how we are doing against the rest of society. Is the job we are doing underpaid in comparison or are we living the good life with a good company paying above average wages? This question and many more could be answered if we had access to the information that I want to provide to all of you.

The human resources department of every large company does market research to determine wage levels and set pay grades. This allows them to make sure they do not “pay you too much”. It goes to show, the information is out there and shared anonymously between companies, but is not available for the public, to do their own fact checking.

glassdoorGlassdoor is a company that allows you to share your income and job titles anonymously. This website is a great way to post your income levels for all to see, if you don’t want people to know your identity. You can contribute to the benefit of all by sharing your income and job, so we all can do comparisons across industry and the economy. It is also a good way to research prospective companies since you can leave reviews on the company culture and other information that is not easily available online.

Why I Share my Atypical Finances

I want to share my financial information to help people. Living the atypical life is great, but being able to help others achieve the atypical life is truly exciting! Through this blog, detailing my finances and tips on how to live the atypical life of freedom, I hope to inspire more to pursue freedom on their own terms. I will share my income while I am employed by my company along with the other benefits of employment.

The second part to sharing my finances is sharing my expenses. There are 2 reasons I want to share my expenses:

  1. to help my readers see that low expenses really are possible.
  2. to help keep me accountable and lower my expenses further.

mr money mustacheMr. Money Mustache was the first financial independence retire early (FIRE) blog I came across and he inspired me to pursue the atypical life of freedom. One of the main takeaways is that the lower your expenses, the less money needs to be saved for early retirement, and the more money you can save each month. These 2 effects compound together to bring freedom super quickly. By sharing my expenses with my readers and the world, I hope to inspire you to reduce your expenses as I reduce mine in the pursuit of freedom.

As seen from my 2017 goals, I hope to lower my monthly expenses by $300 per month on miscellaneous expenditures. By blogging about my monthly income and expenses I hope to control my own habits, so that we can live the atypical life of freedom from the man sooner.

By sharing my investment strategy and investment contributions, I hope to educate you about investing. Investing is always shrouded with mystery and portrayed as something best left to the experts. I hope to share my own journey through investing and show the endpoint that is super simple. I will be sharing all of the information that I wish I knew, when I started out on this journey 7 years ago. By sharing this information, I hope to shorten the length of time to investment enlightenment for all to follow.

Identity Theft Concerns

I am not concerned about identity theft. Atypical Life is anonymous (obviously my name is not Atypical), and will certainly stay that way until at least I leave the workforce. Sharing my income, expenses, and investments is just sharing values. In order for identity theft to happen, a thief would also need account numbers and lots of my personal information that is not available. Because of this, I am not concerned.

Atypical Life Target Audience

I will answer my dad’s final 2 concerns here. My target audience is all of my readers and the public that wants to know about freedom.

I hope to help people through my openness about finances and share with others our story about how we achieve freedom.

I would love to share Atypical Life with my family, however, there is the concern that they may be jealous because of the income level I am at after only working for a few years out of college. I understand the concern here, and will likely share this only with my family that I think would enjoy the read and learn something along the way. There really is no reason to be jealous of my income because it was all earned and deserved. Because of my engineering degree, my starting salary out of college is significantly above the average college graduate, but actually low to median for engineering salaries. This coupled with my acceptance of an expat assignment in China has allowed us to pursue an atypical life.

In Conclusion

Yes, I will share my finances here on Atypical Life. Sharing of our finances both income and expenses, I hope to inspire my readers to reduce their expenses, increase their income, and achieve the atypical life of freedom sooner. Sharing your finances online and in general is a deeply personal decision, and I believe the benefits to ourselves and society greatly outweigh the risks.

Thanks Pops for sharing your concerns and helping me to realize that freedom is paramount. blog post text

Do you have a blog? Do you share your finances online as well? Why or why not? Let me know in the comments.

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finances, sharing, income, expense, savings

Minimalism: Living with Less

Minimalism is the act of living with less and the pursuit of living with the least amount reasonable in each situation. While away on vacation in Indonesia, I got a chance to relax and reflect on where I am in life and where I want to be. I read a wonderful book by Ben Night titled “Adopting the Minimalist Mindset”. Here at Atypical Life, we follow almost all of the suggestions in the book when it comes to managing money and frugality, however, we have also been overcome by possessions.

If you have read my 2017 goals for the year, then you will remember that I used to spend $600 per month on things or shopping. This budget over the past 4.5 years has ballooned our possessions to the point that we have lots of things and many that are just sitting around.

Minimalism is all about spending your time with the most valuable people and objects in your life. ~Ben Night

Ben pointed out what we already know. Pursuing the atypical life of freedom, we know that the time for experiences and the time for family and friends far outweighs the benefits of many possessions.

Because of our many possessions, I get to spend much of my time each week on maintenance and upkeep of all of these possessions. The main takeaway from Ben’s book for us was the below point:

Find something in your house each day and trash it, donate it, or give it away.

His book detailed lots of ways to declutter your house and had sections on each area of the house and how to declutter your life. I was struck by the above quote because, in general, instead of throwing things out or getting rid of things when we no longer use them, we stick them in the drawer or in the back of the closet in the distant chance that we may one day use them… You never know, right?

This hoarding habit has created a stockpile of stuff in our apartment here in China. Luckily, we had the chance when we moved here to donate a huge load of possessions to Goodwill. Not everyone gets this chance. Moving is a great opportunity to remove unneeded things. We were able to remove old kitchen appliances, sofas, beds, tables, kitchen cookware, clothes and many other things in the move.

Somehow we still ended up with junk boxed up by the movers and delivered halfway around the world to China!

If you have possessions that have been in the box for 3 months and you haven’t needed or used them, do you really need to keep them or should you just trash them?

I say make the atypical choice and get rid of them. The choice is up to you which method to use to liberate yourself from possessions.

  • Donate it
  • Trash it
  • Give it away

I have started going through our belongings each weekend and enjoying the process of getting rid of things. My first foray this year into freedom of possessions was to go through my clothing. I was able to donate nearly 30 lbs of clothing and free up space in my dresser and closet. I had been holding on to clothes that I didn’t like, weren’t comfortable, or didn’t fit, just because I paid for them. Maybe I thought I could wear them later and they would magically be better?

I have been cycling for nearly 15 years and acquiring clothing for nearly that long as well. I still have some clothing from my early days of riding, but it rarely if ever gets used anymore. It feels liberating to remove this old stuff and get rid of it. The goal for me now is to remove items and not to replace them.

This past weekend I spent some time going through our junk drawers. We all have these. It’s where we throw all of our small trinkets and whatchamacallits. We have 2 gigantic 4 drawer office filing cabinets full of files and junk. I went through most of these and was able to get rid of more old things that will never be used again. It truly is amazing how much stuff you accumulate over time.

Why do we keep all of this junk?

Its hard to understand the psychology behind hoarding, even in small doses. All of us have some small emotional attachment to our possessions. This small attachment makes us feel that we cannot possibly throw whatever it is out.

Maybe the attachment is rooted in the fact that we paid for it.

“Aunt Rosie” bought it for us, and even though we don’t like it, we can’t possibly get rid of it. She might notice!

I don’t use it now, but maybe, just maybe, in the future, I can find some use for it.

I was raised going to Boy Scouts. I love all of the experiences that Boy Scouts gave to me and the morals it instilled. The Boy Scout motto is:

Be Prepared.

The Boy Scout motto definitely influenced me. I try to always be prepared for anything that can happen, or any activity I want to participate in. I do my research and acquire the gear needed, even if it could be rented. The outrageous prices that vendors charge for renting gear, steers me to buying and bringing my own. Personal gear can be just the right size and suited just for you. Because of the my desire to be prepared, I have certainly accumulated quite the collection of outdoors gear. It also stops me from getting rid of it because I feel I may one day need it again even if I have already upgraded to better.

In Conclusion

I have started to free myself from my belongings. The atypical life of freedom not only applies to freedom of the man at work and financial freedom, but freedom from belongings. It is okay to maintain belongings and be prepared for whatever may come your way, but there is a time when it is time to let go.

I have just started this process. Ben Night suggested to get rid of one thing each day, and after a year or 2, you will be down to a reasonable amount of things. This journey is just beginning for me, but I already feel better knowing that I am releasing the stranglehold my belongings have over me.

Join me on our pursuit of freedom. Can you get rid of something everyday? Once per week? Let me know in the comments.

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minimalism, living life with less, less is more

2 Weeks in Paradise: Cost Review of Indonesia

One of the benefits of living abroad as an expat in China is the Chinese New Year’s holiday. We were able to spend 2 weeks off on a wonderful vacation bike tour in Indonesia because of a week long holiday mandated by the Chinese government. I spent one week of my vacation and we were able to travel for 2 weeks. Chinese New Years (CNY) goes along with the lunar calendar and is the annual lunar new year. It is between mid-January to the end of February each year and lasts at least a week of festivities for the Chinese. It is also the largest human migration annually in the world, as lots of Chinese head to their home towns to visit family and celebrate another new year.

We took our chance to escape the chaos of China and the huge migration by leaving before the new year stared and returning after the government mandated holiday. This allowed us to miss some of the crowds.

How did we decide to travel to Indonesia?

We were planning a trip to Thailand to go visit Chiang Mai and the elephant sanctuary that is located there. However, when I learned from my Chinese co-workers that Thailand is a major travel destination for the Chinese, we changed our plans and set our sights on Indonesia.

Who knew, when we started planning this trip, that Indonesia is the 4th largest country in the world behind:

  1. China                     (1,376,830,000 people)
  2. India                      (1,289,690,000 people)
  3. United States       (323,675,000 people)
  4. Indonesia             (258,705,000 people)

The vast majority of the inhabitants of Indonesia’s 17,508 islands live on Java, the main island, and our destination for our 2 week adventure.

 Bike Touring to Save Cost

We brought our coupled tandem road bike with us. This was our main form of transportation once we arrived to Indonesia. We used it to tour various sites around Yogyakarta and also used it to travel across Indonesia and eventually end up in Bandung at the end of the trip where we took a bus back to the Jakarta airport.

Bringing your own transportation on a trip really frees you up to explore on your own terms.

  • It is free, since it takes no fuel.
  • It also allows you to see the countryside and stop at any location you want.
  • You get to interact with locals instead of blowing by them.
  • It is a great conversation starter.

Like the view on the side of the road where it says no stopping? Go ahead and stop and take a picture of the scenery before you continue on your way.

Mt Merapi

There are certainly downsides to bike touring:

  • It takes longer to get places than on motorcycles or buses.
  • If you are tired, the last thing you want to do is ride your bike 50 km one way to go see a sight outside of the city you are staying in.
  • While having a “real job” and a set vacation time, you “waste” valuable days riding from one place to another.

The negatives are outweighed by the positives of freedom and choice. We get to explore on our own terms.

We were able to save hundreds of dollars on bus and motorcycle rental fees by bringing our bike and traveling the way we did. One destination, Sri Gethuk, a beautiful waterfall outside Yogyakarata, certainly had no buses going to it. The only way to get there is by motorcycle or bicycle, and we were able to go on our own schedule and get to experience it.

Sri Gethuk

Bike Touring Across Java

We started our trip in Indonesia with 4 days in Yogyakarta. While here we got to explore a number of very cool sites. The first was a small waterfall that is reminiscent of the Antelope slot canyons in Arizona called Luweng Sampang. Riding there was a brute of a bike ride with a 20% climb that was over 2km long. After getting there, the riding was all flat, so the day was relaxing besides the beginning. We were able to jump off the waterfall into the canyon below, only after watching some of the locals do it. After refreshing in the water, we headed to Prambanan to see the Hindu temple complex. There were actually multiple temple complexes at the site we got to see.

We also spent a day riding over to Sri Gethuk to visit the waterfalls and the cave. This was another 40 km ride there and 40 km ride back over steep difficult terrain. The waterfall was definitely worth it, since I got to swim and enjoy the water for an hour. The last day in Yogyakarta was spent eating pizza, relaxing and then checking out some more local temples. We had big plans for seeing other places, but our fatigue held us back. That is the one downside to travel by bike. When you get tired, you really do not want to go anywhere but to eat.

Borobudur

Leaving Yogyakarta we headed up to Borobudur on the bike and explored for the day. Borobudur was a very cool and unique Buddhist temple. Another benefit of the bike is there are no parking fees, usually. Borobudur was one of the tourist traps that we went to see in Indonesia. It is renowned as the world’s largest Buddhist temple, which we can attest to is 100% misleading if not completely disingenuous. Many of the Buddhist temple complexes in China put the size of Borobudur to shame, however, it was a very cool place nonetheless.

Borobudur

Dieng Plateau

After a day at Borobudur, we continued on to Dieng Plateau, where there is lots of volcanic activity. The ride to Dieng was extremely difficult. We found out in Yogyakarta, that the hills and mountainsides in Indonesia are dangerously steep. After reviewing the route, we thought it would be okay on the way to Dieng. We were wrong. The hills were still super steep and we were super tired by the time we reached the bottom of the 1000m climb up to Dieng. We rode around until we were able to find the bus up the mountain and loaded up our bike on the bus rooftop, in order to reach Dieng. We prefer to ride, but when the time comes to call it quits, we have started to accept it.

We found a little homestay in Dieng upon arrival that happened to be our cheapest accommodation of the entire trip. It ran us 75,000 IDR which is equivalent to $5.62, quite the steal. Granted this certainly wasn’t a luxury accommodation, but it served our needs of a roof over our head and a bed to sleep in. Exploring the plateau, we saw a beautiful green volcanic lake, multiple temples, and a very cool volcanic crater that reminded me of the small ones at Yellowstone in the US. All of these locations charged to go see, them and I felt like I was getting nickel and dimed to death. In the end, their charges were equivalent to $1 or less for most of the locations, so it wasn’t very expensive.

Dieng Lake

Enjoying Pangandaran

Leaving Dieng Plateau, we spent 2 days riding across the country to Pangandaran, so we could live in the lap of luxury at $13 per night for a secluded beach inn. Our ride across the country started with more of the steep craziness, but we were able to make it to Purwokerto in one day, where we couldn’t find a place to stay except for 450,000 IDR ($36). We felt ripped off here, but it was a very nice place and we were able to dry out our clothes after being soaked for a couple of days from rain.

We also hit up the local bike shop for parts and repair. I can fix all my own gear, however, when parts break, there is no other option. My front derailleur cage broke and we needed a new one. At the shop, I was able to get a new one and get it installed along with adjustment of the disc brakes. The bike was not responding well to Indonesia and needed these parts to feel safe riding in the mountains.

Riding from Purwokerto to Pangandaran was a very nice ride besides the one crazy mountain (not steep) where the drivers were all over the road and seemed intent on running us over. We got rained on for several hours, but it was still a beautiful ride. We arrived to our beach paradise, and decided in the end to stay here for 3 nights. Given no schedule we would have stayed longer, but we still wanted to make it to Bandung at least.

We had a very nice day on the river with a guide company taking us up and floating down the Green Canyon. This included jumping off 15m high cliffs along with floating through rapids. It was a beautiful experience and one of a number of experiences that are budget friendly in Southeast Asia. I prefer no-cost fun on the bike, but trips for adventure excursions are still very fun.

The next day we spent a day lounging around on the beach and exploring the mangrove forest. It was very nice to just hang out and relax after several long days of bike riding. The fatigue we built up so far on the trip was starting to get to us. I got to spend my birthday lounging on the beach enjoying the clean air, beautiful water, and quiet surroundings.

Pangandaran Beach

Riding and Exploring Bandung

We were sad to leave Pangandaran, but the roads were calling and we were rested. The ride from Pangandaran to Tasikmalaya took us along back country roads that should have been very nice pavement had they not all been washed out from the heavy rains. We managed to stay upright the entire time, but the roads were doing their best to throw us off. We climbed up several mountains under the beating sun to reach Tasikmalaya. We feasted on roadside fried goodness on our way and made it to town after 94 km and running out of water.

The next day was our last ride of the trip. It was an okay ride to Bandung. We were on the “major” highway, highway 3. It was only a 2 lane road and was not supposed to be steep, but the 2 mountain passes we went over certainly qualified as steep (10-15%). It would have been a lot nicer of a ride, but the clouds were up and visibility was low. Also, the final push to Bandung was through unending suburban sprawl, which is no fun to ride through. In the end, we made it to our hotel in Bandung and set about figuring out an activity for the next day.

We found a volcano to go hike up, Tangkuban Parahu. It is the most popular volcano in Bandung, and is a terrible ripoff for foreigners. It cost less than $2 for locals, but the cost for foreigners is 10x the local cost! We still trekked up there on buses and by foot, refusing the many offers of additional transportation. The crater at the top was very cool and the views from the top were second to none. In the end, I felt stabbed through the heart at the time for 10x local cost, but we spent a total of $144 on entrance fees and attractions for 2 weeks, which is not too bad at all.

Tangkuban Parahu Crater

Our last day in Indonesia involved riding our bike to the bus station, packing it all up and then taking the bus back to the airport to fly out the following morning.

Cost Review of 2 Weeks in Indonesia

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Transportation Costs

We flew in and out of Jakarta on our adventure to Indonesia. Because of CNY, flights are usually astronomically priced during those weeks, so we had our first foray into travel hacking and flying on rewards points. During our investigation into living in China we were flown over to China by the company multiple times and we were able to rack up 56,000 rewards miles on Cathay Pacific. Nearly enough points to fly both of us round trip to Indonesia. The tickets for this trip were supposed to cost $400 each, but by using rewards points the cost was $90 in fees. We also had to purchase points, which is a major rip-off at $60 per 2000 miles, for a total round trip cost for 2 people to Jakarta, Indonesia from China of $210. I did not see us using the Cathay Pacific points anytime soon and they were set to expire as well, so purchasing points to travel made sense in our situation and it worked out for the best.

Along with the round trip flight to Jakarta we also were scammed into a higher cost in-country flight from Jakarta to Yogyakarta (Jogjakarta locally). When I went to book the $35 flight in Indonesia, it would not accept any foreign credit card. I had to book via a travel agency raising the cost to $50 per ticket. This is one of the drawbacks to traveling on a schedule set by work. If we had time and freedom, we would have just arrived to Jakarta and then booked the ticket to Yogyakarta.

Our trip worked out to be more expensive than I expected, but very cheap in terms of time-limited vacations. 40% of our cost was transportation, and of that 40%, 92% ($467) was just to get to there and back. This goes to show, that the longer the trip is, the cheaper it is per day. Our trip was 40% transportation cost, almost entirely spent on getting there and getting home, so if we had doubled the trip length, transportation cost would drop to 20-30% of trip cost depending on increases of food, housing, and activities.

Housing Cost

We paid on average $20 per night for accommodation for a total trip cost of $297. $20 is the upper limit of what I like to spend per night on accommodation in locales in Southeast Asia and it affords pretty nice hotels. We got ripped off a couple of times because we were staying in a tourist trap and because we didn’t book ahead. We learned to book at least a day ahead using Agoda to secure the cheapest cost and to find the lowest cost hotels in a city/town. Our favorite stay in Pangandaran in a small house by the beach, with included breakfast and the sound of geckos all night was $15 per night.

Food Cost

Food in Indonesia left something to be desired. Everything was fried, which is pretty good when you start, but after awhile gets old. One thing I will never get tired of though, is a dinner cost for 2 of $2.25. No the food is not exquisite, but it is not bad either. Indonesia does spicy right. Just one dab of their hot sauce is burn your face off spicy.

Want a fried hush puppy? Here is a handful of fresh chilies to go with it!

We had an “expensive” seafood dinner one night for Mrs. Atypical with tiger prawns and fresh fish for a total cost of $18. In the end everything was very cheap in Indonesia. Even though the meals were usually not enough to fill us up, we could stop at a convenient store for snack foods and still be way ahead on cost, even compared to China.

Activity Cost

Activity cost in Indonesia is outrageous when compared with the local prices. As a foreigner, you can expect to pay 3-10x the local price to go see any and all attractions. They believe because we are foreigners, we have lots of money to spend and they all want a part of it. Our big ticket items here were Borobudur temple complex ($39 for 2), Prambanan temple complex ($35 for 2), and Tangkuban Parahu volcano ($30 for 2). The one high ticket activity we paid for, that I thought was worth it was the Green Canyon float trip with lunch ($34 for 2). All the other locations we visited were just nickel and diming us, instead of outright scamming us.

Souvenirs/Goods Cost

We like to bring back something to remember each country we travel to. Since we are on the bike, these items must be small and not break easily or we will never get to enjoy them at home. We were able to pick up 3 pieces of Batik art for ourselves and our family in Yogyakarta. The first one, we paid the same as the next 2, and they were all the same size! This goes to show, that the sellers are really just out there to scam us as best they can. The quality on all of them were the same and they were beautifully made and colored. The total cost for these was $60 and the rest of our goods cost was in fixing the bike and attempting to fix our broken camera. Our wonderful Olympus E-M10 camera had its shutter freeze shut at Borobudur, so we went more than half of the trip without our nice camera.

In Conclusion

We had a fantastic and relaxing trip to Indonesia. Living in the high stress environment of full-time employment working for the man, coupled with living in a city when you are country-folk, leads to a desire to escape. Indonesia filled that desire and then some. We were able to relax and enjoy ourselves for 2 weeks all on a reasonable budget.

We spent a total of $1,264 over the course of 2 weeks on this trip, which worked out to $74 per day. This is a sustainable forever travel budget, and I still feel it was on the expensive side with transportation cost so high. In the future when the Atypical Life family reaches personal and then financial freedom, we will be able to explore the world on our own terms at our own speed.

Have you been to Indonesia? Let me know about your trip and costs and we can learn from each other.

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Indonesia, Java, Borobudur, cost review, finance, budget

January 2017 Atypical Life Income Report

Welcome to the first monthly financial review from the Atypical Life family. We are pleased to share this with all of you, so that you may have the inspiration to achieve financial independence and freedom from the man sooner. As an atypical family, this financial review will look very different to most family budgets, however, it is 100% real and is achievable under the right circumstances. So let’s begin.

I share my finances to inspire others to reach for freedom earlier. I hope to show from my income and expense reports:

  • Income can be generated in multiple ways. The regular 9-5 job is not the only way to make money and is also the best way to be a slave to the man.
  • Lowering expenses is really the path towards financial freedom. The lower your expenses, the more you can save. Also, with lower expenses, it takes fewer savings to live on.
  • It is possible to have low expenses.
  • Becoming an expat is a great way to financial freedom
  • To keep me accountable.

Tracking Your Money

Keeping track of your money is the number one way to reach financial independence. We track all of our income and expenses and then analyze it all at the end of the month for you.

Using Personal Capital is the best way to aggregate all of your accounts into one nice easy view. With your accounts spread across so many different platforms, it is hard to get a whole picture of your finances. Personal Capital gives you a view of where you are, if you spent too much, saved too little, or went into debt. Keeping track of your Net Worth on Personal Capital is super easy.

The best part of Personal Capital’s service is that it is free! It fits in perfectly with our frugal sense and allows us to track and reach financial independence faster. Check out their retirement planner to estimate how far away you are from retirement. It is one of the best I have seen for those of us pursuing FIRE.

If you haven’t started tracking your finances, it is not too late to start. Give Personal Capital a try and you will soon be on your way to being a personal finance guru.

Income

January was a good month for us in the Atypical household. We had our regular salary and our wonderful, but regular expat income. This expat income is a 20% location premium or hazard pay in expat vernacular. It is additional income for us that is grossed up by the company, so we do not have to pay taxes on it.

IncomeAmount
Bonus$5,196.00
Company Match$569.70
Expat Income$1,266.00
Gifts Received$100.00
Interest Income$4.93
Misc. Income$170.94
Salary$6,330.00
Total Income$13,637.57

Bonus Windfall!!

We finally had our windfall of a bonus that we have been expecting since July last year. This bonus was paid by the local government here in China as a talent award to individuals working in the area that applied for it. We had to put a lot of effort into the acquisition of this award, but $5,196 is worth the effort when it can bring us closer to freedom. The money was all deposited into a Chinese bank account, so we cannot pull it out for investing. The question now is how to treat this bonus? I think we will use it to double down on our pursuit of freedom with investment into blogging and self-employment.

My company has a fairly generous 401k match at 9%, as long as we contribute 6% to the 401k. This goal is very easy for us to achieve since we contribute 50% of our income to the 401k. There is one caveat to my 401k contributions, though. They are only calculated on salary, expat income is not included. 50% of $6,330 goes to the 401k each month to ready us for a truly atypical life of freedom. 401k matching contributions is free money and we make nearly $6,000 per year from this income source.

The company I work for also has a health promotion program to help them bring down healthcare costs. This program works on points from pedometers and other health monitoring inputs to give us a maximum earning potential of $1,000 per year for the 2 of us. We both wear Garmin watches to track our steps, sleep, and exercise. I use it also to track some of my bike rides that then get uploaded to the company tracking website for bonus points towards our award. All of this is to say, I withdrew $140 from the program in January.

Expenses

Our January expenses were on track and on budget!

ExpensesAmount
Fees$2.50
Food$117.54
Home$325.00
Insurance$73.91
Shopping$288.36
Taxes$1,065.46
Travel$839.86
Total$2,712.63

I managed to keep the shopping budget down to below $300 this month, which was a huge success. January is my birthday, so we usually blow by that amount on birthday presents which we need to cut back on. This January I got birthday presents of long lusted after tools for bike repair. For those of you that are into bikes, I got a Taiwanese equivalent of the Park Tool TS-1.1 truing stand for wheel building and I also got a nice torque wrench and bits for bike repair. I also got several other cycling tools to fill out my bike shop worth of tools.

Clothes shopping this month were for Mrs. Atypical. Our vacation that started in January and went on into February was a bike touring trip to Indonesia and she needed some new cycling clothes for comfort on the long days in the saddle. There will be a separate post about our wonderful and relaxing trip to Indonesia. Needless to say, we spent a total of $780 there during January and the rest of the trip cost rolled over into February.

I do accrual accounting for our personal finances. Basically, this means, that if I paid for flights to Indonesia in December, they show up as expenses when they are actually used. So half of the expense of flights to Indonesia are in January and the other half are in February. This type of accounting is typically done in large businesses where it is required by law and not by individuals, however, I feel it makes the most amount of sense. We should account for things when they happen, not when they are charged to the credit card.

Our insurance for the month is also on an accrual basis because we paid for the year entirely in December. We dropped our company sponsored health insurance that cost us $250 per month and the company $750 per month in favor of a local insurance company that was ~5300 RMB or $890 for all of 2017. This covers us for all medical expenses in China and also qualifies us to use the supercharged investment vehicle, the HSA.

Our home cost remained at $325 and will remain at exactly that level until we finish the contract up in China. I was able to negotiate a housing cost into our contract of $325 because that is what my rent had been since I started working for my company out of college. The expat contract tries to keep your expenses the same as when you were living in the USA, so if I had owned a house in the US, I would not have to pay the company rent on my apartment in China. I cannot complain about rent of $325 to live in an over-priced ritzy-glitzy $1,000,000 high-rise apartment. It also includes all utilities besides phone and internet.

Our HSA, which has finally been successfully moved from MyBenefitWallet to HSA Bank, incurs a fee of $2.50 per month for a balance under $5,000. We will incur this fee and an additional $3 per month investment fee on that account, so we can move it to TD Ameritrade and buy VTI, the best possible investment vehicle.

Our grocery and dining budget was pretty low for the month at only $118. This has to be taken with a grain of salt, though, because we were traveling for 12 days out of that month. So an extrapolated spending would be $183, which is still amazing. We received lots of Christmas gifts in January, since our mail forwarding service is very slow to arrive to China, and in them we received all of the candy we could dream of! Sweets are definitely one of the top missed items living abroad in China.

Taxes

Everybody hates taxes. They eat away at our income and we never even get a chance to see it. Taxes were 40% of our expenses for January.

TaxesAmount
Federal$350.00
Medicare$102.44
Social Security$438.02
State$175.00
Total$1,065.46

After doing a review of my tax situation, I approached my tax preparation company about reducing my estimated taxes for 2017 and the future. I showed that I would save into pre-tax investment vehicles:

There are 2 certainties in life, death and taxes. ~Benjamin Franklin

  • $18,000 to the 401k
  • $5,500 Mr. Atypical Traditional IRA
  • $5,500 Mrs. Atypical Traditional IRA
  • $6,750 to the family HSA
  • Total Value of $35,750

This is able to reduce my taxable income significantly, and when combined with personal and standard deductions on the 1040, it brings our taxable income to around $20,000. The purpose of reducing our tax withholding is because we know best how to take care of our money. The government obviously does not know what is best for me. We can put our money to work as soon as possible by investing in VTSAX and VTI, without waiting for a tax refund at the end of the year. This can gain us upwards of 12 months of growth (or decline…). It also allows us to raise our contributions throughout the year to achieve a healthy total portfolio to pursue financial and personal freedom sooner.

I would never use a tax preparation company right now if it was not provided by the company. Taxes are not nearly as complicated as they are made out to be. Due to the tax equalization policy that my company implements for us, we have to have a professional tax preparation firm handle our taxes.

Profit

In total, we made $10,953 in January and were able to save the majority of that into investment funds. It was a very successful month financially, but that doesn’t matter if we did not enjoy ourselves. We should not kill ourselves to reach freedom. You should enjoy life all the time, knowing in the future it can be even better.

“Love the life you have, while you create the life of your dreams.” ~Hal Elrod

We enjoyed Indonesia and hanging out with friends in China. Indonesia was an amazing break from work and recharged my batteries both mentally and physically.

How was your January? Are you heading towards financial independence as well? Let me know in the comments below.

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The Best Investment Allocation

The best investment allocation is the one that gives you the most amount of freedom to live the life of your dreams. Throughout 2016 I worked through my investment portfolio spread out across Roth IRAs, 401ks, and Brokerage accounts to come to my personal consensus for the optimal investment portfolio for the needs of pursuing the atypical lifestyle of early retirement.

Initial Portfolio

When I first started investing, I had no idea what I was doing. That pretty much sounds like every other investor that starts out when they first get a paycheck. We just put money in and everybody says it will grow, grow, grow! I started with an allocation of only US Growth all in one high expense mutual fund. With my first $3,000 investment, I was not really able to tell what fluctuations really did to the balance because it did not rise and fall much at all.

For the first 4 years of investing, I pretty much had a flat-line investment growth. Where was my growth? Was I doing something wrong?

At the beginning of 2016, I decided to make a change in asset allocation to try and gain more growth. It had taken nearly 4 years to build up to where I had enough money saved in investments to actually have multiple mutual funds, all of which would be Admiral Shares at Vanguard. More in the future on Vanguard, expense fees, and mutual funds in general. Needless to say, Admiral Shares at Vanguard have a minimum investment of $10,000 each, so I needed at least $100,000 to have a 10% allocation in a certain area.

Arriving into 2016, I owned a smattering of different investments, some US Growth, some dividend, some all-in-one Lifestyle funds. With investments scattered all across the board and no real plan, I decided I needed to make a plan and start to follow it to achieve success in the confusing arena of investing.

Advice From Around the Web

I decided that the best way to go about this was to aggregate the recommendations from multiple sites together and look at them. I had no real idea of what a good allocation would look like. I had heard:

US stocks, but you need international exposure.

Don’t forget the bonds. Bonds are safe.

Bonds alone are not enough, don’t forget international exposure here.

Don’t put all your eggs in one basket, you need alternatives.

So what are all of these recommendations? Let’s first take a look at the recommendations I received from the Wall Street Journal, Wealthfront, Future Advisor, and Personal Capital.

[table id=6 /]

Wall Street Journal from Paul Merriman

The Wall Street Journal was by far the most aggressive allocation that I found, with no allocation to bonds. Bonds are the “safe” bet in the investment arena because they are not tied to company value, therefore are much less volatile. While living in the US, I figured that more weight to the US was reasonable, however, the Wall Street Journal from Paul Merriman advocated for equal weight of foreign market mutual funds and US market mutual funds. With 10% weighting for emerging market, it brings it to 40/50 US to foreign market mutual funds. The 10% remaining was to be invested in REITs, or Real Estate Investment Trusts.

“REITs gives you exposure to the real estate market which has strong growth potential.”

That sounds very clique, but after enough people have said it, we really start to believe it. Here at Atypical Life, we try to take what people say and put it into perspective to what really matters for achieving freedom.

Wealthfront Recommendation for Mr. Atypical Life

WealthfrontWealthfront is an investment advisor and one-stop investment management company. I made an account there, so they could give me their recommendation for best allocation. With this, there is no commitment to give them your money. The advice is free and they hope you will join them and let them do all of the “hard work” of investing and balancing.

Wealthfront gave an even more aggressive asset allocation, in my view, than the Wall Street Journal did. They said 35% in the US market, is good and that 50% should be held in companies outside the US. The remaining 15% were to be split 5/5/5 in dividends, bonds, and natural resources. The consolation on this split is that it is only 6 funds as opposed to the 9 funds recommended by Paul Merriman.

Future Advisor Recommendation for Mr. Atypical Life

Future AdvisorFuture Advisor is the same type of service as Wealthfront and many of the other investment management services that will manage your money that you give to them. They also give free advice when you open an account and connect your investment accounts to them. They analyze your portfolio and give recommendations based on your point in life and retirement goals.

Future Advisor had a shotgun approach to investing. More is better, right? I have simplified the recommendation for the table above, but they recommended 12 different mutual funds or ETFs with a maximum of 16% balance in any one investment. This seemed like a very complicated approach to me, especially when the goal is to gain freedom, not to weigh myself down with another responsibility of maintaining complicated investment accounts. For a do-it-yourself investor like me, the more funds the more complicated and difficult to manage. If you let an investment management firm manage your investments then there is no worries about more funds.

Of all the recommendations, Future Advisor gave me the highest allocation to bonds which is surprising, with the amount of funds they suggested. They suggested TIPS, which are US Treasury bonds, foreign and US bonds. The 3 bond funds together weighted to 20% of the allocation.

Future Advisor’s investment services and advice go far beyond asset allocation. They give helpful advice in fund location, taxable vs tax-advantaged, and fee minimization.

Personal Capital Recommendation for Mr. Atypical Life

Personal Capital logoPersonal Capital is my personal favorite financial tool for account agglomeration and overall financial health monitoring. They allow you to see all of your investment accounts and bank accounts in one place and have the best interface for visualizing investment asset allocation. They also offer advice for free. If you want to give them the freedom to manage your accounts that is an option as well, though it is a paid option. The rest is free of charge and a wonderful service.

Personal Capital had a conservative approach to foreign investment with a 60/25 split for US / foreign market allocation. Since we are US citizens, albeit we don’t currently live there, I think it makes since to have a higher proportion of our money in the US economy. I believe in it and Personal Capital obviously also believes that foreign markets may be over rated.

When we analyze fees, for 2 equivalent funds, one in the US and one foreign market, the US fund is always cheaper in the US. My 2 favorite funds for this comparison are the Vanguard Total US Market Admiral Shares and the Vanguard Total International Market Admiral Shares. The US is 0.05% expense ratio while the International fund is more than double at 0.12%. It just goes to show that for a believed better return, investment companies charge a higher premium.

Although, Personal Capital advised 85% in the 2 above assets, the remaining 15% are in 3 additional. Bonds are split in 2 with foreign and US bonds along with 10.5% allocated to alternative investments. These could be REITs, gold, natural resources, etc.

Mr. Atypical’s Asset Allocation Decision 2016

Come March, I had done my research and decided on an asset allocation. Looking at the above recommendations, I did not understand the complexity of many. Why would they need 9+ funds to cover only 5 areas? I wanted to use the KISS method (keep it simple stupid). With an allocation allotted between 5 different areas, I can choose 1 fund that encompasses that area and then set and forget. Once I am invested in these funds I can just add money to them each month and then at the end of the year, I can rebalance to try and keep the asset allocation where I decided was the best target.

For me, I decided 50% US total market, 20% foreign market, 10% emerging market, 10% REIT, and 10% bonds was the best allocation. To arrive here, I looked at all of the recommendations and then averaged them together. I knew that the less funds the better for trying to balance my money, so I went with my favorite investment carrier Vanguard, and chose their Admiral funds for my allocation.

I bought into the marketing and put 10% in emerging markets, even though the total international fund includes those same businesses that are included in the emerging markets fund. This double weighted them and probably brought the allocation closer to 50/50. Hindsight is 20/20, and looking back now, owning both a International Total Market and Emerging Market Fund is useless. I also bought into the REIT craze and put my money here for a while. “REITs have higher dividends.”

Mrs. Atypical and I live abroad in an apartment that is supplied for us, so we wanted a safe investment in bonds to save for our house purchase when it comes to settling down back in the US. Who knows when this will be, but 10% of our money in bonds is more than enough to ensure a good buffer for volatility in the stock market when our time horizon for saving is long.

Thoughts on my Allocation Decision

After deciding on this asset allocation, it took a little time for adjustment to the new allocation. Since I track all of my investments manually with Gnucash as well as use Personal Capital, the more investments and accounts the more complex the picture.

Is complexity a good thing?

I began moving money around between funds trying to rebalance too often. When I added money to the Vanguard accounts, I was not sure which fund to put my money into. I already put a forecast together of end of year account balance with estimated contributions, so I knew where to put my money. However, when it came time to put money in different accounts and maintain the desired asset allocation, I was sorely inept. This ineptness caused multiple taxable moves from gains throughout the year, that brought my tax liability higher than needed since I should just be holding these funds until the time I need the money.

Then stepped in Mr. Jim Collins.

I read his blog, specifically the Stock Series, and after approximately 6 months of investing in my new asset allocation, I took a step back and looked at the learnings and explanations from the Stock Series.

Mr. Collins recommends the KISS method.

Keep It Simple Stupid. ~anonymous

His Stock Series is 30+ posts now, but condensed down to 4 bullet points, here are my takeaways from the Stock Series:

  1. According to Mr. Collins Vanguard is the best place for your funds. Check. Even my 401k got migrated there this year thanks to my company.
  2. People are emotional, and inherently stupid with money. Totally Agree.
  3. KISS. Invest in VTSAX. That is all you need to know. Will do.
  4. If you question this recommendation because everybody says “investing is complex”, refer to rule #3.

The Best Investment Allocation

VTSAX is the Vanguard Total US Stock Market Index Fund Admiral Shares and has an expense ratio of 0.05%. So for every $10,000 you have invested in this fund, the cost is $5 per year. It encompasses all of the asset sectors that are generally recommended to be invested in. This is the easiest way to get everything you need, minimize your risk, and minimize your time commitment all in one super low cost mutual fund.

Vanguard

But companies on the US Stock Market aren’t international?

Just look in the news to see Apple, Google, Exxon, and many others internationally. Just because a company is based in the US doesn’t mean you do not have international exposure. We have the US market covered, the international market covered, the emerging market covered, REITs covered, and alternatives covered. The only lack from VTSAX is in bonds. If you feel you need bonds in your portfolio for piece of mind, then do it.

The Trinity Study and many others show growth rate is barely effected with a bond allocation from 0-20% of total portfolio. I settled on an allocation of 90% VTSAX (or equivalent in 401k) and 10% bonds in the form of VBTLX, which is the Vanguard Total Bond Market Index Fund Admiral Shares. The 10% in bonds is to save for my home purchase in the future. Throughout the year, I will only contribute to VTSAX and then once per year I will rebalance to keep the bond percentage around 10%.

If you have made it this far congratulations. The optimal investment allocation is:

80-100% Total US Stock Market
0-20% Total US Bond Market

 

optimal investment allocation

Keep it simple. You will thank me later. We have more important things to worry about, like our freedom. Let’s lead the atypical life and invest with the optimal investment allocation.

For much more detail and my inspiration for this allocation and recommendation:

Jim Collins’ Stock Series

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best investment allocation, investing