The Best Laid Plans

So back in September, this was my estimate for my financial stats on arrival in Johannesburg:

Probably the most important parts of this projection were the numbers for my “starter” emergency savings and the balance in my checking account.

Well, this is how things really looked when I arrived:

So, I was a *little* off (What’s a thousand dollars between friends?).

My main mistakes in my projections came from underestimating:

• The taxes taken out of my lump sum payment for unused vacation days, which was part of my July paycheck
• My moving expenses (I’ll come clean, about $1,500 of those expenses was buying new clothes, a 6 month supply of hair products not available in South Africa, and other not-so-necessary items)
• Expenses for the 15 days between receiving my final paycheck and leaving the country.  And by underestimating I mean not including at all! Whoops.

In good news, I did put an extra $100 in my emergency fund and also made my final payment on the first of my three student loans (The other two are now in forbearance until I find a job).

So, I have half as much cash on hand as I was hoping.  That’s less money to contribute to our joint expenses as well as my ongoing expenses in the U.S. – mail forwarding service, Presidential campaign donations, etc.

Shit just got real.

Baby Family Finance, Part Two

What says “grown up” more than a joint budgeting system?  Pretty much nothing!

Our plan is to eventually use the yours-mine-ours system, but until I get a job the “mine” account (the $1,500-$2,000 in my checking account) will not be doing very much.

So we’ve set our budget based on one income – his.  We plan to follow the Warren/Tyagi 50-30-20 budget.

Our first step is finding an apartment that will work with our 50 percent needs allocation.  It turns out unfurnished apartments in South Africa come with absolutely nothing – not even a refrigerator – so we’re going for a furnished place.  My partner, already in Joburg, hit the pavement last week and found a couple of nice places in our range. We hope to sign a lease this week, which will lock in a big part of our one-income budget (We’re making sure my name is on the lease for a number of reasons, not least of which is the difficulty in getting a bank account in South Africa as a foreigner without an iron clad proof of residence).

Despite the lack of public transportation and crime concerns in Johannesburg, we’ll be starting out with one car.  I’ll be dropping my partner off and picking him up at work on days I need the car (for all of those job interviews!), getting rides from family and friends, and biking and walking within areas considered safe, which are unfortunately not very widespread.  Once I’m employed, the car will become his, I will take out my first car loan for a used car and join the legions of commuters in Johannesburg’s truly awful traffic.

For the rest of our needs, the far lower medical insurance costs in South Africa will help us along the way as will the lower cost of food.  Unfortunately, cars are demonically expensive, as are clothes and many other consumer goods, which are mostly imported.

Is the cost of living higher or lower in Johannesburg?  It’s hard to say.  One blogger compared costs in London to Johannesburg and found Johannesburg more expensive (extremely low healthcare costs in the UK played a role).  The 2012 Mercer cost of living survey ranks Johannesburg the 154^th most expensive city for expats out of 214 cities. Cities in the U.S. northeast, my stomping ground, range from 33^rd most expensive (New York) to 107^th most expensive (Washington, D.C.). It looks like it might be a wash for me overall, but inflation, exchange rates and a host of other factors might swing things one way or the other.

Baby Family* Finance

As part of this move, my partner and I are combining finances for the first time.

Because we’re both planners and perhaps overly fond of Google Docs, we’ve spent a good amount of time discussing our financial habits and priorities, and wrote it all down in one document as our Baby Family Financial Plan.  There’s a lot in there, but here I’m just going to talk through our financial principles and joint budgeting system.

You know how all those financial advice places tell couples to come up with a financial mission statement?  Well, we did that.  Here are our financial principles:

1. We aim to 1) maintain a level of discretionary income that allows us to lead full lives without worrying about money; 2) build wealth for our family’s long term financial security and the pursuit of impactful business opportunities; and 3) provide for and support each other and our baby family while still maintaining a healthy level of personal and financial independence.
2. We will review our current financial status and financial plan together at least once every 12 months (all checking, credit card, investment and retirement balances, as well as loans, leases and mortgages).
3. Pilot: We aim to spend 50% of our pooled income on needs, 30% on wants, and at least 20% on savings and retirement.  We aim for our housing and home maintenance costs to not exceed 25% of household income.

What do you think?

*What is a baby family?  Check out the discussion on one of my favorite blogs.

The Big Move: Financial Projections

For the average late twenties American, I’m doing pretty well on the debt front. Twenty-somethings are carrying $45,000 in debt on average, whereas I have about $10,500.

That debt is:

• $8,000 in federal student loans from undergrad (I was lucky enough to get a full scholarship and living stipend for graduate school).
• $2,500 in personal loans from two relatives.  I’m incredibly fortunate to have two family members who are willing and able to allow a further lengthening of my already slow loan payback in order for me to make this move.

My assets are not impressive.  My net worth is still negative.  By the time I leave for Johannesburg, I will have:

• A little more than $6,000 in retirement savings.
• A cushion of one month’s salary plus close to another month’s salary in payment for unused vacation days.
• $760 from the return of my security deposit
• $250-$500 from selling my furniture on Craigslist
• $2,500 in emergency savings

All told after moving expenses, I should land in Johannesburg with $1,500-$2,000 in my checking account and $2,500 in emergency savings.
So my projected financial snapshot looks like this:

Fingers crossed that all goes according to plan!

Adventures in South Africa

Welcome!

In a month I will be moving with my partner to his hometown: Johannesburg, South Africa.  This is a risky move on many levels, not the least of which is financially.  I finished my Master’s two years ago and he finished his MBA this spring, so we’re just starting out in many ways with very little savings.  He’s returning to a well-paying job in South Africa, whereas despite my best efforts it looks like I will be moving without a job offer in hand.

Like I said, it’s a risky move.

This blog is where I will write about the financial strategies we use to eliminate debt, build savings and develop our careers.