Dopamine and buying things

Most people get a dopamine hit when they buy something. It feels comforting to acquire something. 

I think we also get a dopamine hit when we think about something to buy. Usually my thought process goes like this: 

Think of something I am missing eg I am feeling tired and a coffee would help me feel better, or my ears are cold and I think I should buy ear muffs, or my breath is stinky and I think I should get some mints. 

Each time I think of the solution I get a little dopamine hit. But each of these things costs a lot of money and are more likely behaviourally-trained. 

But there are better, less convenience based ways of solving that problem that don’t involve the transfer of funds from me to other people to pay for the convenience. 

I have a hat at home. 

I can buy mints in bulk / I have lozenges at home. 

I can make a coffee at home or bring one with me. 

Same as financial independence. I think of the problem (financial pressure or work pressure), then I think of the solution (having a ton of money), then I feel better. 

But it doesn’t solve the convenience problem - I “pay” in lost productivity when I think about things along these lines. 

Being in control of your life involves recognising these circuits and stopping them when they are not useful, like when you are trying to save money, or when you need to be more productive and not distracted by social media. 

Money plans over next 6 months

 I am glad that our monthly childcare expenses won’t increase dramatically when I go back to work full time, because baby won’t be under 1 anymore so the daily cost goes down. So instead of $2201 for 4 days a week, per 4 weeks we will be only spending $2240, which is only a 1.2% increase. 

And for kid, there’s a chance we will stick to the current childcare plan of 1 full afternoon and three half afternoons, as I will take her to piano class (and maybe swim?), and she has a language teacher / babysitter one afternoon a week. So those costs will still run about $1000-1200 per month. 

So total fixed monthly expenses right now on childcare: 

$2500 baby care (adjusting for most months having slightly more than 4 weeks) 

$1200 after school care 

=$3700 on childcare (which we get 40% back, so cost is 2220). This is fixed for at least the next 4 years until baby is in school. But even then it will only go down by 15%. And kid’s expenses will not go down. If we get an au pair,  expenses would run about $1000/month also but we would be potentially more flexible. 

$1570 rent 

$500 transport 

$500-$1000 groceries 

=5290 total. Our take home income is around 15000 so this runs at 30% of that. It doesn’t feel like it but I guess this is the reality.

My reasons for a move would be: 

- trying to do work that is more interesting 

- potentially having more compensation 

I’m currently in a hybrid job where I can work 3-4 days a week remote and commute to the office the other 1-2 days. The workload is fine. It used to be very interesting but they brought on someone who is slightly more senior who has positioned himself between me and my former skip level and taken all the interesting work for himself. I am therefore left with pretty much the secretarial tasks (note taking) and shitty tasks (mediating between colleagues who are arguing). 

While this has reduced my workload substantially and that is great with 2 kids under 7 (I probably only work 15-20hrs per week really but get paid full time) I am worried about flatlining on my career. We also could use more money, who can’t. 

So I guess - job with no responsibilities and an annoying manager, or something where I could potentially make more but would probably have to work more. 

I guess the answer is clear - stay as long as the role stays like this, and get a certification/skill/degree in the meantime, or just spend time with the kids, and keep and develop good health habits like exercise and diet, for the majority of the next decade. I guess both should be fine and if I stay in this type of position it will at least be a wonderful financing of another programme. 

When I am 45 I guess I want to have raised 2 well adjusted kids and have a job that I can do for at least a decade longer. Maybe at that time I will do a PhD or some other degree. Pharma stuff is interesting to me and I guess I can try and position myself to go forward in this area. I guess you can never spend enough time with your family, nor spend enough time exercising. 

Can I stay in this position for another 2-4 years? Only time will tell… 

check in: net worth $1,050K ($698K)

I guess most of the growth in my income comes not from actual savings or anything important but from EXCHANGE RATE ISSUES - the growth of the Swiss franc in relation to the Canadian dollar. But it happens on both fronts between Canada and the US. 

It's crazy the differences and a little disheartening that over the last year and a half I've just barely managed to increase my Swiss net worth by 48k CHF. If you look at it in Canadian terms, though, it looks completely different - over this timeframe my net worth has increased by a pretty decent $168k CAD, and I've reached "millionaire status"; this happened back in April already, but you know my life has been pretty baby-dominated for the last 8 months. 

In terms of insights? Well, it looks like I can do better on savings, actually, although my numbers look good because of the exchange rate and because I'm measuring in Canadian dollars. I should probably keep moving cash into Canada given the current situation (which I expect to improve, given what I believe is the continued strong state of the Canadian and American economies).  

I will keep making updates. It's good to know that by end year I will have just over 700k Swiss francs almost regardless of whatever else happens. 

Baseline spending over last 3 months

Ok, here goes a total breakdown of all of my personal spending from November 2022 - Jan 2023, aka the last 3 months. 

As a parent with no time for other things I basically only spend money on two things: 

1) Groceries / Food 

2) Things for the kids including clothes, gifts for parties, etc. 

My transportation expenses are paid once per year - it's just a general subscription to the national transportation system. One-time payment of $2800 per year and I'm covered. 

All amounts in CHF. 

Spending	Nov 2022	Dec 2022	Jan 2023	Average
Total	845	1131	1202	1059
Total Food	626	776	1159	854
Total Other	219	355	43	205

Total spend: 1059 per month 

This is approximately equal to my budget, surprisingly. So I guess that's fine. But it doesn't account for vacation purchases or a few big Christmas gifts for husband, for kid, and for the broader family. 

Insights: 

1) Food spend is much higher (70%) than my anticipated 500/month. 

This does not include my many one-time expenses like vacations etc. If I do include those, the number will be even higher. So, the question is, we can try and cut down on the Food spend - less restaurants, less takeout at the train station. Or, I can budget for more and live with it as we don't really do much outside eating at all. 

2) Spending seems to be creeping up over the months. 

I'm not sure what's going on but it seems like my spending has been going up. This could be lifestyle inflation, or due to the gestational diabetes diet being more expensive (cheese, meat, almost no carbs). I can see what happens over the next few months once the diet normalizes a bit more. 

Either way, good to track this over the coming months. 

At it again... one month later :)

Well, look how long that PF ban lasted... just over a month. 

Part of it is that I just got a large infusion of $27,000 post tax (ok it's not that big, other people earn this in a normal month) and I am trying to figure out if this changes anything. Short answer, given the falling markets right now, it doesn't. 

I think around the time I hit 1m NW, I will change the way I do my accounting. 

As I started to spell out in my last post, I need to start thinking of things not just in terms of overall net worth, but in four chunks: 

1) Whether I have a primary residence paid off 

2) Whether I have enough retirement funds (separate from emergency funds) 

3) Enough emergency funds 

4) Continued savings for 2 children 

Whether I have a primary residence paid off 

This goal is going to take a long time, given I don't have a primary residence at all and have just most of a downpayment saved up. I estimate between 10-20 years. I do still believe that it is important to purchase a primary property, to help with wealth accumulation and financial security. 

This goal will probably require around $1 million in capital overall for my share (given a split with my husband). I have about $100k towards a downpayment. 

Whether I have enough retirement funds 

Given annual expenses around $40k in current terms, I will need $1.3 million at a conservative 3% withdrawal rate. I have about 500k towards this now if we count the rental apartment and pension. I should still try and put additional money into paying off the property when possible. 

Emergency funds 

Will need to cover a year's worth of living expenses, so around $40k. I currently don't have this separated from my regular accounts but have around 30k that I could immediately liquidate for living expenses. However my job is at least guaranteed till January 2024, so this is not the most essential part. 

Savings for two children

Should cover their university education expenses. If I keep working at my current job this will likely not go over $80k each (so $160k for both). I currently have $20k set aside for Kid 1 and she still has about 10 years to go, so about $6k per year into her account. 

In total, it means I should have $2.5 million minimum as net worth. It does look like I will only get there around age 55 or so barring any increase in fortune or otherwise. I will have shaved 10 years off my working life this way. 

I still have my BHAG of $20 million - but no plan to get there yet!!

ALSO - the huge point that my own finances cannot realistically be separated from that of my husband. We are a family unit now. 

Enough PF stuff for 2022!

Here's the annual "don't think about PF anymore" post. 

I am a LONG way from a (comfortable) retirement. I'm not socking away the around 200k per year I think I would need to get there. At my current savings rate, about half of that, I should be able to retire a "standard" early retirement of 57 or so but anything earlier than that is probably not going to work. So I need to stop fantasizing about leaving work in the next year or two because it's not going to happen. 

My house needs to be paid off to retire, and I must have enough money to cover substantial expenses during retirement. 

The better and more productive way would be: 

1. To figure out how to do a better job at work 

2. To figure out how to be more frugal 

3. To keep a regular exercise routine and keep flossing and brushing your teeth 

4. To figure out how to be a better parent... not to figure out ways to stop working 

And stop focusing on the numbers. 

check in: net worth $882K ($650K)

Hi, it's me again, doing a check in 5 months since the last one. 

Over time, I do see pretty substantial income and net worth growth - I've earned over 67k since the last update. I just don't see it over the day to day period so it feels a bit stagnant right now. 

The biggest drag on net worth growth has of course been the stock market, which has been on its downward trend since January (although with a nice uptick in the last few months, thank goodness I could not access Interactive Brokers during the very low period to see all the losses! It's very healthy not to access your investment accounts). I have learned my lesson about focusing too much on individual stocks, and will now return to the usual boring but stable program of Vanguard all world and all USA ETFs. 

The second biggest drag has been expenses, such as paying annual taxes, fees associated with the move, and apartment furnishings (something which can make its own separate post). 

I have refinanced my mortgage on my place and the interest rate is quite high (5.29%); however I wanted to lock in a rate now rather than see it continue to go up. So it will add another $500/month to my expenses which will come out to $30000 over 5 years going straight to the bank. But that can't be helped, and my apartment value (likely $50-100k) and equity (+$48000) will continue to grow over that time so it will offset the increased costs. The rent on our current place is so low ($1570/month) that it helps a lot with financial decisions. 

I also have big news that I am expecting child #2 early next year. I have fairly stable income of $10000/month post tax coming in over the next 10 months at least. This is great because it means I can grow net worth to hopefully close to $1M ($740k-750k) by this time next year, IF I can keep our lifestyle modest, and keep spending under control and not buy every high end thing on the market for baby. I don't think it's healthy to speculate beyond that but I have a big incentive to go back to the job soon - if I manage to return to the office and stay on the job another year I can see some fairly significant gains (around $100k) due to pension vesting, and therefore with some luck should reach $1.2M ($950k) around this time in 2 years. Of course, I have no idea what will happen at work with all the politics and senior management changes, but so far I enjoy my job and can see myself doing it for a few years more, and at least have a guarantee till the end of my maternity leave in a year. Then, I know people generally rather keep personnel on than let them go, so it should at least be ok for me to keep with the job for a bit longer. 

So, smooth sailing for now.