Congo Dandies vs American Consumers

I recently watched a RT Documentary titled, “The Congo Dandies: Living in poverty and spending a fortune to look like a million dollars” on YouTube (link).  According to RT, “Congolese soldiers returning from France after WW2 brought back the latest Parisian fashions and took to dressing like Dandies”.

congo_dandies_1

Source: YouTube

Today, “Les Sapeurs”, as those in the La Sape movement call themselves, allocate more time than their wives getting dressed, spend relative fortunes on imported clothes, and show off their well-dressed frames along muddy, trash-filled streets.  One of the men interviewed mentions that he spent two years of savings to buy a pair of dress shoes.  From watching this documentary, two main things stood out to me, along with their correlation to Americans.

First, these well-dressed men spend their productive time and life savings on their own personal appearance.  Instead of spending it on their wife, children, and home, or improving their earning potential, they buy high-end name brand dress shoes, suits, and glittery watches.  One man even admitted that normally he would “have bought a plot of land” if he hadn’t spent the money on his pair of shoes.  While most Americans have basic utilities and don’t live in such an environment, the same financially self-destructive tendencies still exist.  We know we should be saving for a rainy day and adding money to our retirements accounts.  And yet we don’t.  And even when we do save money, it is an afterthought and only a pittance of what we should be saving.  Instead, we max out our credits cards, buy newer cars with $20k+ loans, max out home mortgages; or some combination there-of.  Are we really that different from these flashy poor?

congo_dandies_2

Source: YouTube

The second main takeaway is how these men are regarded by their peers and community.  They aren’t viewed as crazy or berated by their wife for their spendthrift ways.  Rather, they are viewed as celebrities when they walk around town.  One vendor in the market hailed a passing Les Sapeur as the “pride of our area”.  Even his own wife views herself as lucky to have such a showy man, when he could have had any girl.  While this seems ridiculous, is America or any country really that different?  We praise the person driving a luxury car, even if if they are loaded with debt and are living paycheck to paycheck.  Income, but especially spending, are our barometers of success.  Not net worth or savings.

While a longer video at 26 minutes, even watching the first 5-10 minutes should make you blush as you think about some of your own spending habits and initial opinion of someone based on their looks.

 

Copyright – PrudentCoin.com

Financial Status Update – Nov 2016

So… We did it!  And a month early!

The goal at the beginning of the year was to reach a $50,000 combined balance in all our investment and savings accounts.  We just climbed over that last hill with some automatic contributions and a rebound in the market (mainly oil stocks) after Trump was elected.

perscap_nw_2016_nov

 

NEW GOAL: Blow by $75,000 and reach $100,000 before the end of 2018.

 

Being Frustrated With Where You Are At Financially

Yesterday I posted our Sept 2016 Financial Status Update.  While our savings are growing and we are getting on the right track, I feel horribly behind.  We are a year or two away from 30 years old, and have only just started making decent money.  The multiple irons in the fire are starting to pay off.  But my plan of “earlier” retirement in my early 50’s seems impossible many days.

Here is the current estimate given actual savings rate, a retirement at age 50, and with working a little bit part-time from 50-65 ($15k/year).  I delayed taking Social Security until age 70, and conservatively estimated an annual benefit of only $20k combined for my wife and I (SS is heavily underfunded and currently estimated to pay 76% of benefits after 2037 – link).  There is a chance I would run out of money before I turned 70, and a really good chance of completely running out of savings in my early 80’s.  Very bleak.

perscap_retire50_actual_2016_sept

perscap_retire50_actual_incomeevents_2016_sept

Astute readers will notice there was a $700 drop from yesterday to today in total savings/investments.  Got to love market volatility, mainly from oil prices and the Wells Fargo scandal.  Good thing I am a long-term investor as I have many years and decades to weather these storms.

 

What gives me some hope though is that the “$18,908 per year” that Personal Capital “sees” me saving each year is probably a low estimate since I have only been using them for a little over a year and I have already saved $23,000+ in 2016 so far.  With the same numbers, except increasing annual savings to $25k, I have a better chance of retiring at 50.  I won’t be living it up at $45,000/yr nor will I leave an inheritance, but there is a good chance I wouldn’t run out of money before I die.

perscap_retire50_25kyear_2016_sept

 

And if I increase the savings to $30k per year, I am even better off.  I should be able to save that much money in all of my retirement and investment account combined, but it will take some effort.  And it looks like it may be required if I want to retire at 50-ish.

perscap_retire50_30kyear_2016_sept

 

This last chart looks amazing with a 98% chance, right?!  To make this happen, I only need to save $30k per year and work until I am 65.  Not ideal and probably overkill for my needs, but it lets me know that my actual retirement is probably somewhere between 55-65.  Hence the frustrated title.  Some get frustrated and give up; most have at least thought about it.  The only way to change the numbers is to make more and save more, which I am working on.  Perseverance, hard work, and being uncomfortable with where you are at are key to getting ahead.  But it is a painful process.

perscap_retire65_30kyear_2016_sept

Financial Status Update – Sept 2016

Posting your personal finances online for all to see is rather intimidating.  The modicum of privacy the internet provides is making it easier, however there is always the fear of your private matters becoming too public and not being as successful as you had hoped to be.  But, I have been reading financial blogs for years and loved seeing real numbers.

On a side note: I will say though that many/most bloggers had amazing incomes and savings rates (personal choices such as no kids, moving for jobs, etc) which almost made it seem impossible for the “average person”.  I hate using the term “Average”, or aspiring to be such, so please don’t think I am putting them down.  I just found it hard to relate because I had different life priorities (especially children, desiring to live near family, and initially foregoing college due to cost) which consumed more of my budget or precluded me from a large income early in my 20’s.  While frustrating from the financial aspect, hopefully my smaller numbers will be easier to relate to.

So, where are we at for mid 2016?  I just climbed above $46,000 in my retirement and investment accounts!  Woo Hoo!  May not seem like a big deal, but as of January 1st, I only had $22k in there.  My goal for the year was to break $50,000 and I should bust right through that!  In less than two years, I should be over $100,000!  I’m excited about entering my 30’s with a much better financial outlook than just a few short years prior.

perscap_nw_2016_sept

perscap_portfolio_2016_sept

I have been using Personal Capital for just over a year now, and I love it.  It makes it so simple to get excited about all the little contributions adding up week after week and month after month.  Before, I would have to log into each account individually and be less excited about the seemingly small jumps.  I currently have 7 different investment/retirement accounts (doesn’t include bank or credit cards) from two jobs and other personal investments.  These include the standard 401(k), Roth IRA’s for the wife and I, a brokerage account, and a Prosper investment.  When I have a choice, I use Vanguard due to low fees and excellent options.  My current Portfolio Allocation is a little crazy because I am saving for a house down-payment in one of these accounts (hence large cash percentage) and all the different accounts make it difficult to keep an exact percentage of each category.  As time goes on, I will be able to consolidate and have larger $ amounts in each account to overcome this.

 

I mentioned my financial plan before.  Another thing I like about Personal Capital is their Retirement Planner.  You input your desired retirement age, add how much you think you will need in retirement (used $45k/yr), and any other estimated expenses (e.g. kids’ college) and increases.  While merely an estimate, it does use your actual investment balance and savings rate to make it more realistic.  If I work until I am 65 and live an OK life in retirement, I should be good:

perscap_retire65_2016_sept

 

The problem is, I don’t want to work full-time until I am 65 years old.  But, the numbers look less promising when I retire at 50 and work part-time (making $15k/yr) for the next 15 years.  The main lesson or take-away here is I need to save more money each year ($25-30k minimum).  The difficulty will be balancing this living well below my means with wanting to live life to the fullest.  We will see how the numbers improve as Personal Capital “sees” a higher annual savings rate.

perscap_retire50_2016_sept

 

 

 

How to Learn Financial Maturity

Financial Maturity, similar to all genre’s of maturity, can be difficult to gain and requires learning from mistakes we would rather forget.  I distinctly remember times in my life when I made poor financial decisions (such as rushed purchases I later regretted or not postponing a luxury until I could really afford it) and later wished I hadn’t.  While not a minimalist by any stretch, all around me are things that I wished I didn’t have or things I wished I had waited to purchase.  And it’s not that they aren’t useful or cool, or that I wouldn’t purchase them someday.  Rather, I am at a point where I would rather have my total investment balance in my Personal Capital app be $10,000 higher than have all these items.  And, given the bull market we have seen since 2010, I could have easily doubled my money if I had just invested in a S&P 500 index fund!

Yahoo Finance S&P 500 5 year stock history 2011-2016
Source: Yahoo! Finance

This has made me incredibly passionate about delaying purchases.  Once upon a time, eBay was difficult for me and I just had to stop visiting.  It was easy to find “deals” that were a good value, but not something I truly needed.  Amazon has been my most recent temptation since it is so easy to add anything you could ever want to your Cart, and then see it over and over again.  You keep thinking about how nice it would be to have that one item, or maybe two of them.  You reach the $50 Free Shipping minimum and BOOM! you get it.  You receive the box in a week or less (I don’t have Prime, but my brother does, which is a whole other temptation!) and you have your shiny new items.  The new stuff gets put into circulation, you use it every once in a while, but it just adds to everything else lying around in the home.  And, the temptation for something new starts creeping again.  It’s a vicious cycle that I am working on personally.

Lest you think this is only a post about buying things you don’t need…

Where I am most tough on myself and my past mistakes, though, is not saving as much as I should have.  In your teens and early 20’s, a young adult is in an AWESOME position to save money since you have almost no expenses.  You live with your parents or in a cheap apartment, you share meals, don’t have expensive tastes, etc.  There is very little reason someone working full-time can’t have $10,000 or more saved in less than 5 years, even if they started at 16 years old.  If you attend college, the money you make from internships and part-time gigs should be able to cover a large part of the cost, allowing you to supercharge your saving at your first post-graduation job.  This is all predicated on the smart idea that you go to college for something that pays well.  Which you did, right?  Please tell me that at least you didn’t go to an expensive college for that low-paying career choice?!

As they say, “Hindsight is 20/20”.  We can’t change what choices we made or actions we did.  What we can do is accept personal responsibility, learn from past mistakes or poor choices, and make right decisions going forward.  I challenge myself and you to limit spending to only that which is necessary to live life and truly enjoy your family, and save as much as possible for the rainy day and eventual portfolio that will give you freedom.