Category Archives: Money

If I Had a Million Dollars

Before giving up the 9-5 I often thought about how grand life would be if I was a millionaire. I could do absolutely anything I wanted whenever I wanted without a worry in the world. But as I steamrolled towards greater financial independence through saving and a different mindset, this whole notion of money being a great liberator became somewhat diluted.

I now have a level of financial independence that allows me to travel almost anywhere, anytime and without any consideration of other factors. Yet, the world isn’t all roses. Sure, it’s much better than having to roll out of bed every morning to do something that I’m not passionate about, but the question still remains, “What am I going to do now?”

A million dollars doesn’t solve this problem. In fact, I think having financial independence in many ways brings these life questions to the fore and demands that you tackle them head-on – something which isn’t necessary when burying yourself in the 9-5. The blissful ignorance of the 9-5 allows you to hide from the deeper questions about oneself. Financial independence doesn’t.

So giving up the 9-5 for a life of greater freedom makes you face up to some tough questions whether you are ready for it or not. And boy, they are tough questions to answer.

Has your escape from the 9-5 challenged your notions of what life is all about? Can you even define it?

Is it Really Worth Saving a Dollar?

When travelling through South East Asia and probably other parts of the world, you meet all sorts of different travellers.  You meet the package tourist, the flashpacker, the stinky backpacker, the know-it-all backpacker and also a bunch of “normal” backpackers.  But there is a subset of these people that I am really interested in.  It’s the stingy traveller.  The type that will do anything to save a dollar. At times, I’m this person and it annoys me no end because in most cases it’s nonsensical.

Myanmar: Local Transport
Myanmar: Local Transport

I’m particularly frail when it comes to transport – taxis, tuk tuks, becaks, etc.  I will tend to argue for extended periods of time, refuse countless offers of transport and even walk miles just to prove the point that I won’t be ripped off by a taxi driver.  Ripped off, as in, not paying an extra 50 cents or a dollar over what I believe a reasonable price to be.  And I base my pricing on the wages which I know the local populace are getting.  Now, in the heat of battle, it all seems fair – why should a local person get an extra dollar for a short ride when the daily wage is $3?  And from an economic perspective, it does make sense.  There are farmers slogging their guts out in the ricefield for $3 in the beating sun, yet a taxi driver lounging under a tree all day waiting for a tourist to sting can make double that for a short ride.  From a moral perspective, however, it’s probably not right to quibble over a dollar and from a convenience perspective, I’m certainly doing myself a disservice!

Myanmar: Budget Accommodation
Myanmar: Budget Accommodation

As far as saving a dollar goes, the same issues apply to accommodation.  Sure, you can screw down prices to almost nothing, but if you spend an extra couple of dollars when travelling in SE Asia, you can really boost the quality of your digs.  Moving from $4 to $6 can mean attached bathroom, better outlook, less noise and a generally more pleasant stay.

What about food?  Many places in Asia are dirt cheap.  $1 for a substantial meal.  But occasionally, it’s nice to have an even nicer meal that might cost double.  Yes, $2!  I’ve met lots of people that will refuse to pay the extra dollar because it’s essentially a doubling of the expenses for the night.  But come on…  it’s an extra dollar.  And for an extra dollar, it might mean an even more awesome meal than the dollar meal.  More food, better produce and perhaps some meat that might otherwise be missing.

Myanmar: Samosa
Myanmar: Samosa

Some will argue on the flipside that the cheaper you travel, the longer you can travel.  Spending $20 vs $22 per day means you get to travel for 10% longer. For some, this might be wise, but for me…  I’m usually getting travel weary in the last 10% of my journey anyway and getting home a little earlier is no big deal – and I get a more pleasant experience while I’m at it.  What’s your view on saving a dollar?

Global Financial Crisis Round 2

I’ve been listening to reports about the situation in Europe recently where Greece is apparently on the brink of defaulting on it’s debt obligations. That is, not being able to refinance a big portion of its debt. It really doesn’t sound good to me. The pundits are saying that the best course of action would be to let Greece go bankrupt (ie not repay their loans to the French and German banks). What would happen then is that Germany and France would have to bail out their banks again as they did in the original Global Financial Crisis and the good thing about this for France and Germany is that they then can move forward and forget about Greece. On the other hand, if they lend the money directly to Greece so the Greeks don’t default on their loans, they have to rely on Greece making cuts to public spending and increasing taxes massively in order to rebalance the books which the Greek public is resisting. So bailing Greece out could be a case of throwing good money after bad! We’ll soon see what happens next as the current proposal on the table is being put to member states for ratification soon.

At the end of the day, they are talking about either Greece or Germany reverting back to their old currencies and not using the Euro anymore! Amazing! If that happens, it looks as though some other European countries will follow the same path such as Spain and Portugal… And England is in trouble as well. So it looks very gloomy. On that alone, you’d have to say that stock markets around the world will tumble.

There’s a problem in this prediction, however. America is rebounding from its disaster with jobs growth and a strengthening ecomony (meaning the worst is well and truly behind it???). China is growing so fast that it is trying to reign in its overheating economy… That is, it is booming bigger than it was before the GFC. The GFC was simply just a hiccup for China. Taking that one step further, the nation of Australia is riding on China’s back because a huge amount of minerals are being sold to China increasing Australian employment and tax revenue – the GFC was simply a hiccup for Australia too. So where does it leave those of us with investments? On the one hand, the world looks shaky. On the other, parts are being shielded by the stunning emergence of China and the US is re-emerging slowly.

You know what it really looks like to me? The balance of power shifting from Europe and America to Asia. All in the space of 5 years. Asia dominates, the west faces crisis. Australia is in a strange position of not being in the West, being a modern economy and not being in Asia. There are drawbacks of being already developed, but advantages of having enormous mineral wealth and being situated in or close to Asia. I think Australia is in a very good position. Perhaps Canada too. The American story is widely debated and no one really knows the answer.

So when you look at investments at a macro level, there is probably no long term issues if you’re investing globally and not just in your domestic economy. Short-term, however, it could be very bumpy for everyone.

Like my non-professional analysis of the world economy from an Aussie perspective? Let me know!