Royally Frugal Life: What it means for us?

What exactly is a royally frugal life? If you have ever had this question, prepare to be answered today.

When we were wondering what to call the blog this name stood out and called to us because it is exactly the kind of life we have and want. We are not Royals. Yes a lot of people in our country can actually boast of royal blood we are not one of them. We are not rich either, when both of us started working we were provided with one month’s of assistance from our parents and then were supposed to feed ourselves.

I have talked extensively about how we started off and how our spending mentality gave way to saving mentality. Not only was this a big change in how we view money but also our life.

Royally Frugal Life: What we want and love

We love food and our travels around have made us not only aware of various cuisines but have also led us to crave them. A big part of our spending was devoted to eating out. This definitely did not result in empty pantry at home. No sir, we were still buying ingredients and also cooking though far less than we should have. All we have to show for these food indulgences is bigger waistline (for me at least) and a smaller bank balance. Before we moved to the expensive city our food indulgences were both satisfying as well as not as heavy on the pocket. With expensive city the taste has gone down while price tag has gone up. Thankfully we learned how to eat organic food at a much smaller cost to our pockets.

Another one of our major expense is travel and it would not be wrong to say we are addicted to it. A long spell without travel (visiting family doesn’t count) leaves us suffering from various withdrawal symptoms like yearning, lack of focus and hating our job and finances. Thankfully very early in our travel escapades we discovered that luxury travel is simply not for us, our pocket or our taste buds. Don’t get me wrong we love a five star stay any day of the year but there is definitely something to be said about roaming the streets, eating street food and socializing in a nice hostel.

Like majority of people we love to live in a clean, dry and nice house with enough space for us to walk around without bumping into things and small enough to clean by ourselves. Being comfortable with a comfy couch and a good mattress with little maintenance is far more important than the latest style of furniture. We love to live with our things for as long as possible, changing furnishings every three years is definitely not for us. That being said we love new things as much as any other thing, the element of surprise and a new feel is awesome. But I also love owning and using dependable things or repairing my appliances so that they last me a long time.

That is it for us as long as we have a nice clean place to live in eat the kind of food that we like and get to travel the world we would be happy.

Royally Frugal Life: What we don’t care about

We do not dream of owning an expensive car and burn fuel as we speed along on the highway.  No good sir, we are far happier being the lazy people we are and let someone drive us to the destination in public transport. We save fuel, environment and our energy required for driving and navigating. Does that mean road trips are not our style? Nope. We love them but we equally love sleeping the night away in one of the sleeper trains of India as they take us hundreds of miles away. Maybe when we have the luxury of time to slowly travel we would love to ride or drive our way around the vast expanse of our beautiful country. Guess what we need for that to be a reality- yup, financial independence and retirement so that we have time we need to bring our dreams to fruition.

A lot of people would see us with relatively sparse household (I am trying to get rid of few more things) riding around on a 5 year old motorbike and taking non ac sleeper trains around and assume we don’t know how to live our life. Then these people would wonder how we take so many trips and if we earn that much where is our big car. Sometimes the lack of correlation is simply mind boggling.

This is what our royally frugal rich life looks like to us- simple yet fulfilling and with less things in our life to worry about.

I have written extensively about how not owning a lot has helped us claim back both space as well as peace of mind. Remember stuff is not always physical a lot of us carry around excessive mental baggage as well. Maybe unloading the overload will help us all.

In past three months that we have outlined what we want to achieve as well as what our future goals are we have started working our way to living our version of a royally frugal lifestyle. It may not be a cheap thing to start with especially if like us you believe in bulk buying or if your appliances decide to give up on you together.

What I can say with experience is it will get better. Once you get the hang of cooking for yourself instead of spending money eating out you will actually grow to love the taste of your food better. Once you get the knack of finding deals and looking for the cheapest and effective way to meet your requirements you will never want to spend unnecessary money.

We value efficiency and not owning a lot of things as well as devising our own procedures for tasks have helped us achieve a better work life balance not just with our jobs but also with our chores. I hope to have the same lifestyle we have now with limited work and all the time in the world to travel and pursue all of our other desires and hobbies.

Royally Frugal Life: What kind of future we want?

Does our future royally frugal life include full time travel? Maybe. But there is an equally big chance that we do nothing else except sit on our ass and go through life in peace.  For us the freedom to choose what we want to do every day is what a life like royalty means. We have the additional benefit of not having to keep up any appearances which most royalties suffer from. We have thought about this in detail and have not been able to find a way to achieve the luxury of time apart from following frugal ways.

What is your definition of Rich life? Does it include expensive cars or the freedom of travelling the world or maybe the freedom of seeing your child grow up? There is no right answer and we would love to hear from you.

Becoming a Landlord- Lesson Learnt

August for all means and purposes was a good month and if September could take a cue from that it would be nice. You can read our monthly update here. In August we found a tenant and became landlords ourselves.

Renting without an agent

We are the kind of people who forgo services of agents and other service providers for renting. We do this for two reasons. Firstly, it saves us some money (quite considerable in some cases) and secondly it is easier for us to do it ourselves than coordinate with others.

When we had to look for an apartment after our move to the expensive city we took it upon ourselves. We were told by many including both the renters and landlords that hiring an agent was required. We persevered and landed an apartment which costs us at least 10% less than what we had been told apartment like ours run for. Add to that paying the broker additional 1 month rent and we did land a sweet-sweet deal. The difference is enough to make up for another year’s rent hike which if not negotiated would be around 10%.

Most of the landlords who are looking for self-servicing and industrious tenants also avoid agents. This was the same case last year when we had to shift bases in the old city to be closer to office and reduce our rent. We found a cozy two bedroom place which was 10 minutes from office parking and never had any issues. We are also the kind of tenants who believe in being fair to our landlords. If it is a small repair like replacing a tap, we’ll do it ourselves. However if it is a permanent fixing which we will not be able to take away with us- the landlord pays.

Why we used an agent this time

Even after knowing and first hand experiencing the benefits of not using an agent we had to use one to find a tenant ourselves. We have a few reasons behind the decision:

  1. Our property is in another state so travelling there to vet the tenant, draw rent agreement etc. are not just bothersome and inconvenient they also cost a decent sum.
  2. The agent we found charges quite reasonable rates which are far less than what we would have spent on a trip. These charges cover for leg work of showing the house to multiple tenants, tenant background check and drawing up rent agreement to name a few.
  3. Most important reason was that the house had been empty for almost one year. Once we concluded we would not be able to find a tenant ourselves we resorted to looking for an agent/property manager to help us out.

How it went

Months after contacting the agent we were told that they finally have a tenant who is pretty interested but believes the rent is too high. We did come to a mutual agreement on a certain price and let it out. The reason we came down on our previously decided rate were two

  1. Empty property was simply eating up maintenance costs which the tenant will take off from our hands and is over and above the rent. Even though we do have a good home loan it still means some interest which will be completely taken off our hands.
  2. We would finally start an additional income stream which would help us add more to our savings.

From what our agent and tenant tells us the going rent for a furnished flat with decked out kitchen, wardrobes and other woodwork is a bit lower than what we are currently charging. After we got the possession we had thought in depth about the way we can furnish the said flat. The cheapest option came out to be buying furniture online and avoiding the hassle of a carpenter. The itch to deck the flat was real and we had to hold ourselves back from spending more money on the flat.

Our reasoning was simple; once we have a tenant lined up we can buy the furniture and get it delivered which is what we did. The couple we are renting to were in a hurry to take up the house which meant they were there when a lot of fittings were done. The furniture required will be delivered to them so our need to have a property manager went away

We have been tenants almost all our working lives and the one time we could have avoided that we moved for our job. Mr. S has rented most of his life and I have seen my family managing tenants. This means we know what real pain points are for a tenants and how much they would be ready to wait for; or so we thought.

We were not ready for the continuous communication which will be required with a 32 year old man who is unable to find a handyman we were paying for. More than that inability to coordinate with them once we find a person from 600Km baffled us. This was very different from our approach of talking to the landlord, getting stuff done and then adjusting in the rent.

Lessons learnt:

The entire year from getting the keys to our flat to finding a tenant has taught us quite a few things.

  1. It is difficult to manage a property from distance esp. another city. We believe if we had been in the same city we would have been either living in the flat or at least been able to spread the word around better and would probably not have had to pay for the agency. More than that, getting fittings done and making the flat tenant ready would have been an easy task being in the same city.
  2. It is OK to get help and pay for it. When we finally realized we would need an agency to take over the renting process it was a bit late. We would probably have had a tenant earlier if we had understood the enormity of the task sooner.
  3. Not everyone is like us. We almost always assume that every tenant thinks like us and so do all landlords. Turns out we were wrong. People have different priorities just like we want our privacy and sleep more than not having to clean ourselves.
  4. Getting another income stream started is more important than worrying about 500/- every month. This was something which was pretty difficult for me to do- reduce rent. We finally reconciled that not accepting the tenant would result in a far bigger loss especially if you add the society maintenance and electricity we had been paying.

It is definitely a happy ending with some rental income coming in and unloading of the expenses we were incurring simply by owing a flat. Not just that with a new income stream we have the capability of saving more than what we have been doing. It will take us a few months before we recover the expenses made on the flat. Post that it is pure returns on a property.

Real Estate as an Investment?

Real estate is a great option but unfortunately the returns are still not enough to tide two of us over every month. I am not including rent here, just food and other expenses. Apart from this there is the huge cost we have already sunk into the house. We have discussed viability of real estate as a retirement plan quite a few times but don’t really see it as a real option for us. Will we fare better with a few cheaper properties in addition to our desired net worth? For sure and we might be able to live with just the rent and never dip into our investments. Will that push our retirement back? Definitely. That being said we are still looking into all options and there is a possibility we might surprise you with a new property in coming years. The chances of that are low for sure.

What part of your portfolio is in real estate and how much of your retirement income do to you expect from rentals? Do you have some tenant stories you would like to share?

August-Monthly Update: the month of better health

August was a month of some big changes and a lot of realizations. I am confident that the changes we made last month will have their ripple effects on coming months for sure.

We also decided in August to stop publishing our monthly expense reports because they don’t give a clear enough picture since most of the expenses are rolling. Instead we would like to talk more about the financial and other changes during the month. Which is why instead of expense reports it will be monthly updates from now on.

It started like any other month some groceries and a few other expenses. We ended our ban on eating out in last few days of July and in August we were free from and restrictions on it. This was also the month when we hosted a few friends at our place. But the biggest change was how we deal with our health.

The Hosting

We had a few friends from work over for an afternoon and another friend the next day. I love entertaining and cooking so it was a fun day with colleagues, but not so much with the friend. We have realized in past few months that most people are not fit to be houseguests. In fact our friend list needs some pruning and boundaries need to be set. These two days ended up pretty expensive and cost us nearly 10% of our monthly expenses.

The food

We are slowly turning to organic food and we bought a huge haul of organic staples which will last us far longer than the month itself. This ended up being the biggest amount we have spent on food in a long time. In fact it was almost 3 times of what we spent in July.

We started packing our breakfast for office since June-July. This month we started to slowly wean off our paid lunch in office and started carrying part of our lunch. This will help us to keep the cost down as well as eat food we like and be able to control what actually goes into our food.

Fresh vegetables and milk featured largely in our food list this month which not just makes me happy but also healthy. We were never buying too much sugary drinks but this month we simply got rid of them.

The Health

We got our blood tests done in July and the results were not quite good. Both of us were facing vitamin deficiency. We started vitamin regimen in July and in August we reaped the benefits. Biggest one of these benefits was not feeling tired anymore and suddenly we had so much more time in the evening. All of those few precious hours after office were now usable because we were not burnt out anymore. I am sure our body internally liked the vitamins even more but this was the biggest benefit we could have asked for. We were waking up fresher and sleeping better than we had been for past few months.

Mid-august I decided to take up a new challenge and help my body feel even better. I stopped drinking caffeinated drinks, alcohol and anything with added refined sugar. Water became my new staple and office coffee (free!) went out of my daily habits. Dairy and fresh fruit or vegetable juices are allowed as well. This was probably the biggest change I have ever made to my diet in my life. Even though the challenge I started for myself is for 100 day only (23 days over) it has helped me realize how good it can be to kick coffee, tea and sugar from your daily routine.

Does this help us save money? Yes and no. Almost all of my coffee was in and by office and if I don’t consume it any more my employer benefits by a few mugs a day. Apart from that I am no more ordering a glass of some drink (alcoholic of not) when I go out which saves a lot of money. Though we had already reduced our restaurant visits, this will result in saving a few bottles of carbonated drinks we bought in a year.

Apart from this we have been consciously monitoring our food, which means I decide what we eat and he eats it. Supplements and cleansing food are high on our lists especially since we do have a few new conditions to worry about.

Neither one of us have started exercising except we are cleaning our place much more, organizing better, cooking more and overall spending much more time being active in our daily life. Has this helped? Yup, we have cleaner house, better food and happier people.

The finances

We were able to contribute around 45% of our take home to our investments this month after buying fittings and furnishings for our house we rented out last month. This was not a good thing since we got increased salary this month and we should have been able to save quite a bit more.

A considerable part of our income also goes towards our home loan EMI and the principle portion of it is a tad bit over 10% of our income. Including this we come to a bit over 55% and that is something I am still not content with. There is however a limit to the amount we can save after putting in rent and other mandatory expenses.Apart from these there is a mandatory contribution to EPF which is combined for both of us is around 6-7 % of our take home pay.

In reality I believe we can achieve a maximum 60% savings rate. These savings though are still a bit away from us since we have to recoup the amount we put into our flat as well as the bulk purchases for some food and supplements which we have recently made.

The biggest addition to our income this month was adding rental income to our portfolio. It covers the interest portion of our EMI and allows us to save a bit more. The landlord experience for us newbies has been bittersweet which you should be reading about in some time.

September has continued in the same vein as August and I hope we continue to improve our health and savings.

How was August for you and what are you expecting in September?