Petty Finances - Our Philosophy, Goals, and the "Why" behind it

Many people have asked Melissa and I how we handle our finances and why we do it the way we choose to.  This blog post is an attempt to answer some of their questions in a concise posting that provides a few links.

Our Philosophy

Finances – Many philosophies on how to handle them, but few of those found online preach the true urgency of saving.  Over time, I’ve become a big fan of Mr. Money Mustache (MMM) – an early retiree/financial independent that, through aggressive savings and successful after college incomes, retired at age 30.  Although Melissa and I fall short of what MMM demands, we strive to meet his some of his basic goals:

1.     Focus on happiness itself

2.     Spend less – you (and we) already have a luxury life when compared with 90% of the world.

3.     Invest the excess in index investing.

Now, let me repeat this.  We are not perfect at this.  I’m certain that all my family and friends can highlight this, but I believe our family and friends can also speak to our frugal spending in less important spending categories.

Our Goal

Melissa and I have a goal to be Financially Independent (FI) by age 45.

Wikipedia defines FI below:

Financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.

Now, this in by no way means that I will quit working completely at age 45.  Working for the State Department now is undoubtedly the most meaningful job I could have.  I make a difference.  I’m able to strengthen my abilities.  I continue to learn and have incredible professional growth.  Quite literally, I’m excited to go to work 98% of the time.  I don’t think too many people can say that!

I am happy to report that Melissa and I are on track for our goal!

How do we do it?

This is all great, but how can we do this?  Here are a few things that we do.  Maybe you can get some ideas for your family.

1.     Budget, track spending, and review weekly financial position on mint.com

a.     Make a budget with realistic, but disciplined estimates.

b.     Cut money out of places that don’t make you happier.

c.      Normally we complete this review on Mondays as a precursor to our Family Home Evening.

2.     Talk about nearly all expenses

a.     I have to convince Melissa that my expense is good and she has to do the same.

b.     With the exception of a very modest “personal” budget, the rule above applies.

                                               i.     For me, this has blocked unnecessary electronic purchases, going out to eat too often, and other stupid, male-typical purchases.

                                              ii.     For Melissa, this means home décor, occasional baby stuff, and a few other stereotypical female purchases.

3.     Does it cost over $1000?

a.     You have to get these purchases right.  Take them seriously and ensure you’re not going to take huge depreciation when you don’t have to.  Can you get the same purpose without losing your shirt?

4.     Forgetting about “big wins”

a.     A few times, I’ve received extra money due to a major project at work or a major award at work.  Instead of spending the money on anything, we throw it immediately into our investments.

5.     Stay at home

a.     From entertainment to dining, we do our best to keep activities at home.  It is nearly always cheaper and is just as fun. Things that we do outside of our house are generally are free or very inexpensive.

6.     Travel

a.     Although flights and rental cars always get us, we generally try to avoid lodging costs by staying with family or cheaper AirBnBs.  This is without a doubt one of our excessive spending areas, but when in the Foreign Service, it is a little bit of a necessary evil in an attempt to live a normal life.

Saving that much?  You can too!

In one of my favorite personal finance articles, MMM shares The Shockingly Simple Math behind Early Retirement.  In this article, it explains that retiring is prevented by spending, not saving.  By spending less, saving is automatic.

No doubt though – this is something you have to want.  Sacrifices to convenience and affordable luxuries on sometimes a daily basis feel very real.  And even with an income above the US household average, our savings rate (currently 52.3% of take home pay) brings us much lower than that same household average income.  Many things we would be able to afford, we can’t.  Otherwise, we won’t meet our FI goal.

Hopefully this explains a little more on the position we take.  We’d rather spend an evening with friends at home than out at an expensive venue.  We cherish the simple joys that come free and more often than not, more meaningful than the ones that cost lots of money!

Do you think you could get on-board with an MMM philosophy?  What items do you spend money on that don’t make you legitimate happier?  Check out your projection for FI here.

Our first impressions of Baku

Salam, everybody!

As I mentioned in my earlier post, we moved on to our new post about two months ago.
So far, we are really loving it here!
Azerbaijan is a country that most people we talk to have never heard about. It has just in recent years become a little bit more known to people because of the Eurovision Song Contest that Baku hosted in 2012, the first European Olympic Games and a Formula 1 race that both took place in Baku last year. I hope Azerbaijan is going to host more international events and attract more tourists in the years to come. Anthon and I have traveled quite a bit in the past few years and agree that Baku is one of the most beautiful cities we have been to and is therefore definitely worth a trip.

Azerbaijan is very fascinating to me. About 98% of Azerbaijanis are Muslim and you can definitely see some Middle Eastern influence in the buildings here, but then Baku also feels a lot like a rich Eastern European city like Budapest or Prague. You can feel and see that Azerbaijan has been part of the Soviet Union for about 70 years. Especially the political buildings and statues remind me of the former Soviet Union, but then you look around and see a mosque or a building with typical middle Eastern art patterns. Coming from Saudi, this mix is just very interesting to see.

Middle Eastern patterns on this fire tower

But then a very European looking Symphony hall

Not sure what this building is, but if you take a closer look, you can see some typical Middle Eastern arches and other adornments

Polish Embassy - the windows reminded me of Jeddah's famous Roshan windows that looked very similar

The Muslims here are mostly very liberal, eat pork (although it is not offered much in restaurants), have never been to a mosque in their life, dress "normal" and not especially conservatively, and people even celebrate Christmas. I've already seen first Christmas decorations at the stores this week and we are looking forward to experiencing our first cultural Christmas here soon.

The city is very clean, there are many old, but well maintained as well as new, modern and slick looking high rises.

Very modern looking Cultural Center

The famous Flame Towers that are lit with LED lamps

View over the city

The old downtown area is very nice to walk around, and Baku is full of little parks with fountains and beautiful trees. There is also a very nice broad 3.75km long boardwalk along the Caspian Sea with cafes, carousels, malls, museums, a ferris wheel, a bike park, and more fountains and trees.
We also really like walking around in the main downtown area that reminds us of German pedestrian precincts.

Downtown area at night

There is also an old, walled downtown area with cobble streets, called Icheri Sheher that is really nice to walk through. It dates back to at least the 12th century and has been a UNESCO world heritage site since 2000. There are several little tourist souvenir shops, a nice art gallery, small restaurants and huts where old Russian looking ladies make tendir, the traditional Azeri bread baked in a clay oven. The salespeople are surprisingly unobtrusive, which makes it very pleasant to walk and look around.

The Maiden Tower, the symbol of Baku, in the old downtown area

Walls that surround the old downtown 

I love the mix between old and new

We were put in an apartment in a high-rise about 3km away from the old downtown area (we have only little say in where we get to live). The apartment is quite spacious, but nothing luxurious and I was, quite honestly, a little shocked when we first entered our new home. I made some changes, moved furniture around, added personal touches and we now really like it and feel comfortable here.

Although I like that our apartment feels a lot more private than our home on our last compound did, I feel like it is more difficult to meet new people. It was super easy to make friends on our last compound, but I'm having a hard time meeting new people here. I guess I'm meeting new people every once in a while, but we haven't met many people that we really click with. I'm sure we will find good friends eventually, but it just takes a little bit more time than it did in Jeddah, I think.
I go to a kids' club a couple of times a week with William where he can run around and play with all kinds of toys. Before signing up, we were told that most US embassy moms sign up their kids there, so I thought that it would be a great way to connect with other mothers. I've been there so many times now and I have only met 1 other Western lady that speaks English. I have yet to meet somebody from the embassy there.
I think the problem is that pretty much all expats have nannies that go there with the children, so the mothers never really go to the club. Oh well.... at least William likes it there, right? :-)
And at least they have free wi-fi for me.

William in his toy heaven :-)

Besides the little connection problem, we are really enjoying our new city life. It makes me feel like I really live here in Baku, whereas I felt like I was living in a small, Western bubble on our compound in Jeddah.
From here, we can just hop in a cab or Uber taxi and go anywhere for really cheap. Taking an Uber taxi to the downtown area costs about $1.17 - so cheap!
We bought a nice car for a great deal before coming here, but taking an Uber taxi is sometimes more convenient.

Talking about cheap, eating out is fairly affordable here, too. For one of our date nights, we went to the Four Seasons hotel, sat down in their lounge, ordered two mocktails, a cheese platter that was pretty big, and then 4 little cake pieces. I think we paid around $24 for everything. Remember, this was at the Four Seasons, the nicest hotel in town.
Going to the movies is super cheap, too. A ticket costs $2.33 per person. So, we go together and watch an English movie, buy two popcorn cups, two drinks and only pay around $8 - that's pretty awesome!
The typical local street food, a doner (different from the döner that you get in Germany) and an ayran drink only cost 1.5 Azeri Manat, which is only $0.87.

Salads might be cheap here, but they are a little bit too hardcore for us with the whole dill and parsley branches and no dressing :-)

Room service at a hotel. We were super hungry and ordered way too much, but we got all this for $21.

Traditional Azerbaijani restaurant

We have also found a great babysitter that we are very, very happy with. She is a local, but speaks English very well. She has been very helpful with her knowledge about the city and where to get things.
As a specialist, Anthon unfortunately rarely gets any language training, but we are surviving here with English.... and our hands and feet. It's definitely a little bit more difficult than it was in Jeddah though, where most people spoke English.



So yeah, generally the transition has been pretty smooth. Every time we drive or walk around the city, we tell each other that we are so happy to be here. It is really a nice place and we hope to convince our families and friends to come and visit us while we are here ;-) Book your tickets!

Bye, Bye Jeddah!

We moved to Baku, Azerbaijan about 2 months ago and I feel bad that we never really posted much about our 2 years in Jeddah, Saudi Arabia!
Life is busy and since having William, it seems even more difficult to sit down and write a post.
But I didn't want to start blogging about Baku without having finished our old chapter.

During our home leave in the US this summer, we had a lot of time to ponder about our past 2 years.
In general, we are happy to move on. Towards the end of our time in Saudi Arabia, we were kind of done with this place. I don't know if it had actually much to do with Jeddah as a place, or if we were just really excited to move on to a new chapter in life and live in a new, much nicer city. Probably a little bit of both.
Some expats really, really like their life in Jeddah, but for us and many other expats, it was not always that easy to deal with the traditions, the strict rules and limitations, the weather, and other inconveniences.

To review our time there, I would like to share some things that we think we are going to miss and some things that we are gladly leaving behind.


1. Our compound
Although I'm not a huge fan of living on a compound (I prefer more privacy and anonymity - so German!), there are definitely some advantages to living on a compound.
Besides being allowed to behave like Westerners (wear "revealing" clothing without an abaya on top, PDA, convenience store not closed during prayer times), you never really feel alone. There was always somebody in the neighborhood to hang out with at home, at the playground or at the pool. The compound also regularly hosted events like a Halloween party, or a Welcome Back party after summer break.

At the compound's Halloween Party last year 

We're also going to miss being able to host big parties on our compound.
We hosted a big Thanksgiving, Christmas, Valentine's and William's 1st birthday party with about 25-30 people, and we absolutely loved it. On our compound, we were able to request tables, chairs and a fridge for keeping drinks cold for free. That made hosting bigger parties pretty easy. I will miss organizing these events. I find much joy in putting together the guest list, thinking about the decoration, menu, music, and activities.

Last year's Christmas Party that we hosted for our friends and colleagues  

We now live in an apartment in Baku, Azerbaijan, which means no more bigger parties for us. We will still host parties, but definitely with a much smaller group.

Valentine's Day Party

William's 1st Birthday Party

We will also miss the pools. One was only about 10 meters away from our backyard and there were three more pools on the compound. We never really used them as much as we thought we would (so typical!), but it was still nice to look outside while doing the dishes and looking at the nice blue pool and the green plants and palm trees surrounding it.

The main pool on the compound

2. The people
When I asked people, who left before us, what they were going to miss the most about Jeddah, the most popular answer was "the people", and we totally agree.
It was very easy to make friends on the compound and at the consulate. There were always some bbqs, casual pool parties and other events going on.
Having William with us definitely complicates things and makes it difficult to get out together in the evening. But our friends have been so flexible and understanding. We feel like we really lucked out with our friends and neighbors.

Mike and Krista, our friends who were even gutsy enough to go on a Germany trip with us

Our awesome Korean neighbors - the best neighbors we could have ever asked for

                             

More friends, food and fun

3. Mocktails
Since alcohol is forbidden in the Kingdom, many restaurants offer a wide range of mocktails. As a member of the LDS church, that's pretty convenient. I never have to double check with waiters to get me the virgin version of drinks.

4. Availibility of groceries and foreign restaurants
Since there is a very large expat community in Saudi Arabia from Western countries, Africa and Asia, the grocery stores offer a wide variety of vegetables, fruit, herbs, American products, Asian, Indian and of course Middle Eastern ingredients. I like to cook internationally, so this was pretty awesome to have available. There was also a decent fish market right next to the Red Sea where we sometimes bought some delicious fresh sea food.

Saudis love American food, so we were lucky to have many American chains like the Cheesecake Factory, Shake Shack, P.F. Chang's, Papa John's, Texas Roadhouse and many more.
We felt especially lucky to have one cheaper and one more upscale Korean restaurant in town. We looooove Korean food and went there quite often.

5. English
Again because of the large expat community, most people can speak English, which made life there a lot easier. Street signs are oftentimes in both English in Arabic, the same with menus at restaurants and product labels at grocery stores.
Here in Baku, we have to guess a lot more about what we are buying since most product labels are in either Russian or Azerbaijani, which we both don't speak.



3 Things we're not going to miss:

1. Lack of entertainment
We didn't feel it too much during the 1st year of being there, but after that we kind of got bored of seeing the sames things. The "highlights" of Jeddah are the old downtown area "Al Balad", which was about 30-40 minutes away from where we lived. Al Balad consists of many old, not too well maintained buildings, some more interesting to look at than others, some old city gates, and many stores with cheaply made products. There are some cool looking spice stores and some gold and silver jewelry shops, but we were never really interested in buying anything there. We mainly went to the downtown area to buy larger quantities of nuts.

Many old buildings that are falling apart

A typical spice shop

The other "highlight" in Jeddah is the "Corniche", a boardwalk that runs along the Red Sea. Before coming to Jeddah, I imagined Anthon and me walking along the beach, putting our feet in the water, playing a little bit with the waves and collecting some seashells, kind of like you do in California. But sadly, the Corniche is not that beautiful. There is not really a beach where you can walk along the water, but instead there are huge rocks that were put there to protect the shore, so you are several meters away from the water. We have something similar here in Baku now, but it is done sooooo much nicer with a little park along the shore, very nice paths to walk, various plants and trees, cafes,....

So after walking along the Corniche for several times, I had no desire to go there anymore. Especially because I, like all other women, had to wear an abaya, a long dark dress that you wear on top of your clothing. Since Jeddah is right at the Red Sea, it was very humid and hot most of the time and wearing an abaya on top of your clothes never made walking around outside sound like a great idea (unless it was December, January or February).
So then the next "entertainment" was going to malls, of which I got tired very quickly, too. I never bought anything there, except my graduation dress, but besides that the prices were never that great.
We mainly went there to get some food at the food court.
So yeah, entertainment options were kind of limited there, but luckily we had some good friends and neighbors that kept us entertained :-)
So, since there is not too much to do there, people eat out a lot with friends.

2. Prayer times
Definitely not gonna miss those! In Islam, you are supposed to pray 5x a day. Since Saudi Arabia is a very strict Muslim country, all stores must close during the prayers. Although the prayers only take about 10 minutes, stores usually close for about 30-45 minutes. So we always had to kind of schedule trips, grocery shopping, and date nights around those times.
It was especially difficult when William was a baby and took naps throughout the day and had to be nursed every couple of hours. Another problem was that we weren't allowed to take normal taxis and had to call the embassy's drivers preferably at least 3+ hours before your trip. I just didn't like not being able to be spontaneous and leave the house whenever I wanted and whenever I could with William.
Some stores didn't even open until the evening, so you never really knew if all the effort it took to get out would be even worth it.

3. Bad Internet
Ugh... the internet there was so slow! We tried several internet providers, paid quite a bit, but they all sucked. We could never really skype or factetime with family.



Our highlight during the 2 years was probably our trip to Mada-in-Saleh, which is about 7 hours away from Jeddah. The archaeological site is also called "Saudi Arabia's Petra" because it was built by the Nabateans who also built Petra in Jordan.
Since there was not too much to do in and outside of Jeddah, it felt really refreshing to see something totally different. I don't think we would have gone there by ourselves with our very limited Arabic knowledge, but luckily we had great friends who invited us to go with them.

I couldn't decide on one picture - it was so beautiful and interesting there that I took sooo many pictures. 

I think I was about 22 weeks pregnant with William then

Elefant Rock near Mada'in Saleh and Al-Ula

Archeological remnants of a very old city called Al-'Ula

                                                 




Some other highlights were having family and friends in town 💓

Last Christmas, Anthon's parents visited us for a week

Friends in town - the Kellys

My mom and sister came to visit us, too

We're excited to tell everybody more about our new post. It's a place that people usually don't know much about, but it's pretty nice here, so we hope we can convince more people to come and visit us :-)

Saying our goodbyes before leaving Jeddah - these people made life there so much more enjoyable and fun!!!!