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Make Money Blogging – All About WordPress

WordPress Logo

Make Money Blogging - All About WordPressWordPress is the most popular free and open source blogging tool. It is completely packaged with all configuration done through a user interface. WordPress is very intuitive and malleable – You can install plugins to enhance any feature you need.

Remember that when you are first starting out, your domain name is not pointing to any content. Before that can happen, you will need to create the blog structure. That is done with a few clicks within the control panel of Bluehost. In the cPanel, scroll down to the Website Builder section and click on the WordPress icon.


Follow the instructions on-screen and start a brand new WordPress install. It will automatically set up all the files you need to start blogging away. You now have a proper blog attached to your domain name and it is instantly available online.

Getting Familiar with WordPress

After logging into your blog, you will be presented with the basic navigation menus. Take some time to explore and familiarise yourself with the user interface if you have never used WordPress before. It is intuitive enough but here is a short description of the standard menus to speed up your learning process:

1. Dashboard

This is your home page with a collection of information you can monitor in one place. You can rearrange the display to your liking. There is also a sub-menu to install updates when they become available.

2. Posts

This section will contain all your posts and allow you to write and publish content to your blog. You can create new posts, edit drafts, modify published articles from here. You can also group your posts by defining categories and assign tags to them.

3. Media

This area will allow you to review all external files you have on your blog and upload new ones to use. It includes pictures to enhance your posts and other files for readers to download.

4. Pages

With WordPress, a blog post has a predefined structure and follows a generic setup, for instance being attached to a category. If you would like to create a web page that is not a blog post (e.g. custom home page, privacy policy, etc…), you can create that web page in the “Pages” section.


When people comment on your articles, you can review them in this area. You will be able to moderate them as well, edit or delete them if necessary. Always make sure you answer readers’ comments; that will allow you to build a relationship with them and entice them to come back. It also shows people that your blog is active.

6. Appearance

The look and feel of your blog is a critical part of your success. In this section, you will be able to manage your visual theme, configure buttons, menus and toolbars, and edit your blog’s format, styles and colors.

7. Plugins

Plugins are third-party code packages performing a specific functionality on your blog. It’s like an app for your blog. This is why WordPress is easy to use; there are plenty of  plugins and you don’t need to code anything. No matter what feature you want, someone else will already have designed it and all you have to do is install it. And the best part? Many of the good plugins are actually free.

8. Users

In this section you can see all the users registered to your blog. Provided you are the administrator, you can add new users or delete existing ones. You can also change their access rights and configure their role in the blog.

9. Settings

In this section, you can configure your blog default settings as well as any plugin you install afterwards.

Customising WordPress

Customisation can be one of the most-time consuming activities for bloggers simply because there is a lot of flexibility in terms of what you can do and what kind of features you can add to your blog. It’s very easy to get caught up in tinkering. I’ve scooped the features out and can offer some personal recommendations about the types of features that should appeal to anyone starting out:

1. Security

Like any website, your blog may become the target of cyber attacks by hackers and spammers. If you’re like me, you’re probably wondering why anyone would bother hacking your blog. I’m not sure either.

But it does happen! Especially once you start gaining a little bit of profile and being referenced by search engines. Thus, it is important that you secure access to your administrator area. That means you need to do five important things:

a. Choose a strong password

By most standards, a strong password is long – at least 8 characters, contains letters, capital letters, numbers and special characters (e.g. #, @, &, etc…). If your password is a word that exists in the dictionary, you are baiting to be hacked and have your account stolen!

These kind of “sensical” passwords are dangerous because hackers will often run brute force programs against websites, trying to gain access. If your password is in the dictionary, it is more likely that a hacking program will find it. Make it a bit more difficult for them by making something memorable up.

b. Create a new admin user

By default, the user “admin” is given administration rights on your WordPress account. Most hacking programs for WordPress will try to login as admin and break the password using brute force, i.e. trying all combinations of characters.

A first step to preventing those attempts is to create a new username with administrative rights and delete the “admin” account. This superuser should be different from the one you use to publish your posts, otherwise you’ll be giving away your admin login and your effort has been wasted.

c. Restrict number of failed passwords

WordPress does not restrict the number of failed login attempts by default. This means that a robot can try a whole dictionary of words to crack your password and you would be unaware until it is too late, i.e. someone has altered your blog or removed you from it!

To prevent that from happening, you can install a plugin. The one I currently use is Limit Login Attempts, which is one the of the best free ones available. With this plugin, you can stop hackers after a handful of attempts, get their IP address and blacklist them.

d. Remove all user registration

You really need to be careful about two settings. If you are not, you could give anyone access to create a new username and immediately become administrator of the blog. That means they can delete user names and appropriate the blog for their purposes.

To make sure that does not happen, you need to change your Settings > General:

  • Remove the Membership option for anyone to register
  • Make sure that the New User Default Role is set to Subscriber

WordPress Membership

This does not prevent readers from subscribing to your blog posts and receive updates by email. It is different from having a registered account on the blog for publishing and administrative purposes.

With these settings, only an administrator (you) will be able to create new registered users.

e. Review all comments before they are published

Allowing people to comment on your articles is a great feature. It enhances your own content and creates interaction with your readers. However, comments are only good when they are appropriate. Some comments are inappropriate, irrelevant or even offensive.

In addition, there are a lot of spamming programs that try to bombard your comments section with advertisements. To avoid this, you’ll want to screen comment before they are posted on your website. The best way to do this is by requiring all comments to be approved by an administrator (you). Under Settings > Discussion, you should tick the box below:

WordPress Comments

2. Appearance – Choose a Theme

The look and feel of your blog is critical. It needs to be visually appealing to people – Otherwise it is unlikely to hold their attention and people will be more likely to leave than read. No one likes to browse a website that is clumsy and ugly.

One way to ensure a nice appearance is to choose a theme. A theme is a combination of formattings, colours, fonts, structures, etc., which are consistent. It creates a uniform visual environment for your blog and helps you stand out from the crowd. Luckily, there are many professional looking themes that are completely free to use.

But you can also pay for more advanced themes if you want to have something more unique. Some of the best looking themes I have found are on MyThemeShop.com. I got the theme for this blog from them and – best of all – it was free. They have many different themes to choose from, check the referral link below:

Premium WordPress Themes

How do you do it? Well, all you really need to do is pick a theme you like and download the zip file to your computer. Afterwards, go to Appearance > Themes > Install Themes > Upload, browse for the zip file, install it and activate it. Within a few clicks, you will have a neat looking blog without having touched a single line of code.

Another way to install a theme is to browse through the list of themes available directly in WordPress under Appearance > Themes > Install Themes > Search. However, if you choose this option, you may need to know the name of the theme. Again, most of the themes are free.

3. Permalinks

Permalinks are the URL web addresses under which your blog posts are stored. It is important that you have a meaningful link that is as short as possible and doesn’t contain unnecessary words or data, e.g. the publishing date. This will improve your visibility in search engines.

My recommendations would be to use the Post name. You will be able to customise its label further when editing your post. This is configured under Settings > Permalinks:


Make Money Blogging – Finding the Best Web Host

Bluehost Sign Up

Now that you are aware of the prerequisites to start a successful blog, it is time to begin the process of creating the blog itself. The first step in making your blog available to others is picking a website host.

What you decide to do and how you host your website depends on how you plan to use your blog and who your target audience is.

If you are going through this process like I did, there is a high chance that you are going through the same questions that I had.

So these are the points I think are worth mentioning from my personal experience. Below were my lines of thought and the final choice I made to host this blog.

Free or Professional Hosting?

The good news is that plenty free web-hosting services exist. For instance, you can create free hosted blogs at WordPress.com or Blogger.com. However, things that are free usually have drawbacks.

Generally speaking, if you start a free blog, you may face restrictions monetising your blog with advertisement networks or affiliate marketing. That means you will also be blogging for free! Additionally, your brand will tend to be tied directly to these websites, e.g. the domain name will be something like myblog.blogspot.com rather than something more snazzy.

If you’re thinking that you might start out free and then move to a paid service once your blog gains popularity, be careful! Moving your content once the blog is running is tricky for a few reasons.

First, you may not be able to simply shift your content, but rather have to repopulate it. Second, your web address (URL) will change and this means that you may lose some of your audience, as well as search engine hits and backlinks. So it’s better to start on the right foot from the beginning.

If you are serious about blogging, pay for the website hosting. It’s not very expensive and websites pay for themselves. All you need to do is drive sufficient traffic to your blog; then the advertisement income you generate on a professionally hosted platform will cover the hosting costs.

Choosing a Domain Name

One of the key advantage of professionally hosting your blog is that you can have your own domain name. And with all professional web host, it’s free when you sign up!

Many websites will let you check whether the name is already taken or not. If available, you will be able to buy the domain name as you sign up for your hosting account.

For your convenience, I have embedded the Bluehost widget below so you can check domain names availability without having to leave this page.

You should choose a unique name that is easy for people to remember, somehow relates to your website topic, and has aesthetic appeal. Try to use a .com address whenever possible; it tends to be more easily recognisable and thus inspires more confidence than other suffixes. It is also more memorable!

If you decide on another domain suffix such as .net or .org because the .com address is already taken, you need to be careful. There is a chance people looking for your website will end up on the .com website instead.

It’s not a major issue if you have a unique blog. But if you are writing about tourism in Sydney and there is already a sydney-guide.com, it could be counter-productive to call your website sydney-guide.net as you may lose traffic to your competitor’s site.

Finally, if your blog becomes very successful, you should even consider buying the other domain names with different suffixes to protect your “brand” and prevent sneaky individuals from squatting your domain.

Which Web Host to Choose?

For this blog, I chose to pay for professional hosting at Bluehost. I spent several days reading reviews on the web to find the best quality/price ratio possible and Bluehost came out as the clear winner.

You could spend days wondering what the best hosting company for you is, but I’m going to try to save you some time. The key information to know is that all of the main web hosting brands (Bluehost, HostGator, DreamHost, JustHost, etc…) belong to the exact same company: Endurance International Group.

That means there is relatively little variation in service. Why choose one over the other? I chose Bluehost because it has a strong reputation for professionalism.

Everything else being equal, I thus recommend Bluehost as a reliable choice with the best price/quality ratio. The customer service is great and I’ve never had any problems with the availability or performance of my website.

I started with the basic ‘shared hosting package’, which is definitely enough for the amount of traffic I am getting. Of course, if the blog really picks up, there is always the possibility to upgrade to a dedicated server hosting your website. However, you don’t need to worry about that until you have thousands of views a day.

Signing Up for Web Hosting (Bluehost)

If you want to try it out, you can use the following affiliate link to set up your account with Bluehost. By using this referral link, you will get a discounted price ($3.95) instead of the regular advertised price ($5.95).

After reaching the Bluehost website, you will be able to sign up in just a few clicks. Of course, if you don’t like Bluehost, there are a lot of other options and they also tend to run promotional offers.

For example, on HostGator you can also get 25% OFF using the code MONKEYISM25OFF. So make your choice based on personal preference!

The good news is that it doesn’t really matter which service you go with, the steps I outline in this Make Money Blogging series for Bluehost hosting apply to any hosting website. So, just follow my step-by-step guide, set up a blog, and start making money!

Choosing Additional Hosting Features

There are a couple of additional features you can choose as you sign up with Bluehost. From my perspective, the only option you actually need right now is “Domain Whois Privacy”. This hides your real identity from people looking at your domain name. For only $0.67 a month, it is a worthy investment as it shields you from spam and other online nuisance. If you choose this option, people searching for your site will only see Bluehost as the registered public owner.


There are other features, but there aren’t really needed when starting an amateur blog. For instance, unless you are setting up an online store, you don’t need the SiteLock Domain Security. Similarly, if you want to back up your blog (and you will want to back up your blog!!), you will have access to many free WordPress plugins that will do that for you.

That means you generally don’t need to jump into the more expensive “pro” packages quite yet. Start with the basics and upgrade later if need be. Fill in the other mandatory fields about who you are, enter your payment details, and you are all set! Often the payment is made upfront, sometimes for several years at a time.

You now own a domain name and are professionally hosted. Congratulations!

Turn Your Junk into Cash!


Turn Your Junk into Cash!Whenever I get invited to someone’s home, the first thing I do is look around. Looking at a person’s living space gives you a good idea of whether they are trying to optimise their finance or not.

So I look for ‘dusty assets’ – Things of value that are sitting on shelves gathering dust and dirt, rather than generating value.

In fact, most people have hundreds of dollars sitting in their living room without even realising it. And that hidden treasure is their entire collection of CDs, DVDs and possibly video games.

Such collections are generally amassed over the years with hundreds of them stacked on top of each other. Most of them barely ever get listened to or watched or played, but somehow are still kept as mementos.

As each of these used CDs, DVDs and video games can be sold for about $5 or more on selling websites like eBay, there is quite a lot of money trapped in those collections.

So, if you don’t actually listen to the CDs, watch the DVDs or play the video games, and you are not a passionate collector, why are you letting your assets gather dust?

Rather than hang on to this clutter, I will argue that you should sell your collection. And do it quickly!

Why Collect CDs and DVDs?

I have seen people with brand-new never opened DVDs sitting on the shelf. They have generally already seen the movie, sometimes numerous times, and liked it, so decided to buy the DVD or – liked it so much – that they wanted to own the limited edition DVD too.

However, since they bought the film, they never actually had the opportunity to watch it again. But, somehow, they hold on to the DVD.

So, think about your own collection. How many times have you listened to the CDs you own and how many times have you watched those films? I would bet the answer is once or twice for most of them.

Sure, there will be some ‘gems’ in your collection – films that you have watched (and will continue to watch) time and time again. But what about the other tens or hundreds of CDs and DVDs that you have? Do you really need all of them? You probably don’t, and here is why.

First, most good movies will get a lot of airtime on TV, which means you can either record them with your DVR and watch them to your heart’s content or you can watch them when they actually air. Second, most movies don’t age well. What was cool and modern when the movie came out, quickly becomes dated and uninteresting. Third, new movies come out all the time and you may want to watch those too!

These three things combined mean that the probability of you watching the same movies over and over is quite low – So, except for some Disney movies (thanks to your kids), I suggest you “Let it goooooo!”.

There is, of course, also a technology issue. DVDs are replaced by Blu-rays, CDs are replaced by digital music formats, and video games are moving towards online content. The technology with which your assets can be accessed is slowly eroding.

Cash out or you will end up like your parents – Holding a large collection of useless VHS and audio cassettes…

In fact, music is now virtually free and there is no need to own it physically. For instance, you can listen to any song you want on Youtube, provided you can handle a few seconds of advertisement before the song starts. There are many other programs and virtual radio stations that will act as free jukebox and have any song anyone could ever want to listen to.

Why Resell CDs and DVDs?

The answers to that question is actually very simple: Because you don’t need them!

With technology evolving to digital storage, there is no need to own physical CDs or DVDs. You want to listen to a song? It’s streaming online! You want to see a TV show? It’s streaming online! You want to watch a film? It’s streaming online! In fact, there is so much choice that the real problem will be WHICH song or film to listen to/watch, rather than how to get access to it.

The other point is that, as with any technology, it’s only a matter of time before CDs and DVDs become obsolete. Obsolete technology is worthless, so you are better off selling them now, while they still have value. Just like Vinyl was replaced by audio tapes and audio tapes were replaced by CDs, the cycle continues with new digital formats! New laptops nowadays don’t even have a CD-ROM player anymore.

You might think to yourself: “No problem! I’ll just keep my DVD player.” The problem is that once the format is no longer popular, firms will also stop making the players that play that format. So, when your DVD player breaks down (and that’s only a matter of time! – see planned obsolescence), you won’t have any way to watch those movies anymore. Firms know that these markets aren’t going to be profitable long-term, so they are trying to get out – You should too!

Even if you decide to stockpile DVD players for that eventuality, i.e. so you can continue watching DVDs even though the technology is obsolete, the question is whether you will really want to. The quality is likely to be lower than what would exist at that time. Technology is made to be replaced.

It means that value depreciation of entertainment assets is very high, so the key to not being left holding worthless assets, is to sell them as soon as possible.

For instance, the best way to get a high price for a DVD is to buy a newly released DVD, watch it and then immediately resell it. If you wait even a few weeks or months, many more people will want to sell the DVD but fewer people will want to buy it. That means less money for you!

Cost Saving Alternatives

Of course I’m not suggesting that you stop listening to music, watching films or playing video games. Entertainment is important! As I mentioned above, one way to still enjoy these things is to choose online streaming options.

Providers such as Pandora and Netflix give full access to all your needs for monthly subscription fees that would be equivalent to buying one CD or DVD. But in this case, you have access to a whole collection for that price.

Alternatively, you can rent movies. For instance, if you know that you will only watch a movie once, you would be better off renting the DVD for one night. It will cost you a few dollars but less than it would cost you to buy and then re-sell the DVD, not to mention the effort!

Another option that many people forget about is borrowing CDs and DVDs from the local library. When I was a kid, we always borrowed films from the library. It was convenient, cheap and fun. If you can borrow books, why not borrow those items as well?

If you need additional motivation to sell your CDs, DVDs or video games, how about selling your stereo or TV first? Once the TV is gone, there really is no need to hang on to a DVD player or DVDs.

We did that a few months ago and haven’t looked back since. You have so much more spare time once you free yourselves from the shackles of (unwanted) technology, and some extra cash too!

Make Money Blogging – How to Avoid Failure


Make Money Blogging - How to Avoid FailureI am using this series of posts to share my experience with others who want to start a monetised blog and, hopefully, to save them a lot of time.

Had I known what I know now, the framework for this website would have been finished in an hour and I could just have concentrated on the fun stuff: Publishing and promoting content!

I initially started this blog to share my experience and express my ideas. Along the way, I realised that having a website opens new opportunities as well. Indeed, having a monetised blog fits quite well with the principles of Monkeyism.

You can think of it as another form of passive income that works towards your financial independence and early retirement!

Obviously, I didn’t plan my early retirement based on online advertisement income from a blog. But since I am already writing a blog, I may as well use it to generate extra income. Earning money for doing something you like; how is that for a win-win situation?

Be Passionate About Your Topic

Bluehost Sign Up

One of the main reasons most blogs die after a year or so is lack of motivation. Spending hours writing posts for only a handful of readers can be demotivating.

Getting public attention is very hard, especially at the beginning when no one is aware you exist. It takes a lot of time and effort to promote your content and if you are not passionate about what you write, you will eventually give up.

Thus, only start a blog if you are mentally prepared to publish posts that no one might ever read! You also need to be genuinely self-motivated about your chosen topic because readers can tell the difference.

If you only plan to start a blog so you can monetize it although you have nothing meaningful to say, very likely, no one will read it.

Find a Broad Topic

Inspiration is extremely important; it’s also one of the things many writers struggle with. It’s easier to come up with things to say if you have a wide-reaching topic that you can approach from many angles. It also makes it more likely that people will be interested in what you have to say!

When you decide about the topic area for your blog, think about all the different types of posts you might write – If you are struggling to come up with more than a handful of ideas, this isn’t the right topic for you. You will quickly run out of things to say. A narrow topic will also limit the amount of readers you can reach.

Write to Help People

A blog is used to express your opinion. However, people reading it will be looking for information they can use. Sharing your experience should aim at helping other people one way or another.

If readers don’t get any value out of the information you provide, they won’t come back. Most of your traffic will be coming from search engines, from people looking for answers to their personal situation.
So before you embark on this journey, are you sure readers will find your posts helpful or useful? People usually don’t like self-glorification, they actually want to read about themselves, not really about you.

Think first about what people want to read and not what you want to write. But if you can combine both, then you have found the perfect topic!

Research Similar Established Blogs

As you come up with a topic, very likely someone else is already writing in the same niche. You should therefore research and visit these websites to see how your contribution may differ. For instance, are you bringing a new perspective, is your information more relevant, etc…?

Ultimately, you will be competing with these blogs for the same readers. Given that these websites are already established with followers, you will need to find competitive advantages to get people interested in your newly created blog. If there are no visible differentiators, there are no reasons for readers to move away from the blogs they already enjoy.

Be Curious About Information Technology

You managed to browse the Internet and find this article; that means you already know a thing or two about the web; fortunately, it probably also means that you know enough to start a blog!

In fact, you can start a blog that looks like it’s been designed professionally without needing to write any lines of code in HTML, PHP, etc… Unless you really want to… You don’t need to be a computer science expert but having a genuine interest in IT will definitely help.

The nice thing is that the Internet has come a long way. Nowadays, everything can be built with a user interface, which translates the tough bits of code into easy-to-read fields that you simply populate with information. Easy as!

Of course, if you want to customise your blog or offer certain unique features (e.g. ebook, podcast, etc…), it will be an advantage to know a web language or be open to learning new IT tools.

In the following posts of this series, I will provide step-by-step instructions on how to create a blog from scratch, generate traffic, optimise online revenue and earn passive income. However, the above prerequisites are particularly important to keep in mind to avoid going down the wrong path.

Options Trading – Why Trade Options?

Wall Street

Options Trading - Why Trade Options?I used to day trade options with my personal investment account. I stopped after 6 months, not because I was losing money, but because it was too time-consuming and I couldn’t monitor my positions in real-time while having a full-time job.

I closed my account with 10% profit for myself… and 10% profit for my broker as you can read in the post “Can I Make Money Day Trading?“. The aim of these upcoming options trading posts is to present options from a practitioner’s point of view, not only from a theoretical textbook perspective.

On a daily basis, I work with institutional options traders at the major banks. Even though the way they make money trading options will differ from the way an individual would, it is still interesting to get the full picture and understand how the options market work.

Unfortunately, most people don’t have the adequate knowledge to trade options and should stay away from them. But if you were planning on trading options, you really need to know what you are getting yourself into. I will try to explain complex concepts in a simplified way.

Once you understand how options work, you can decide whether to trade them or not. I am not a financial advisor, I am only putting together useful information so you can make your own decisions.

Options Definition

An option is a financial instrument giving its holder the right, not the obligation, to buy or sell another underlying financial product at an agreed time in the future, for an agreed price. In order for the option holder to obtain this right, s/he has to purchase it by paying the option price (the premium) to the option issuer.

The future agreed time to exercise the right to buy or sell is called the maturity of the option (e.g. in 3 months time). The future agreed price to buy or sell the underlying financial instrument is called the strike of the option. Both maturity and strike values are agreed between the buyer and the seller of the option when the transaction is dealt (day 0).

An option is a derivative product because it relies on another financial product (the underlying) in order to exist. The underlying itself can be any financial product or commodity (e.g. equity, bond, foreign exchange rate, oil barrel, etc…).

A call option is the right to buy the underlying. A put option is the right to sell the underlying. In addition, you can either buy or sell the option itself. So there are 4 different payoffs with these vanilla options:

  • Buy the right to buy (long call)
  • Buy the right to sell (long put)
  • Sell the right to buy (short call)
  • Sell the right to sell (short put)

Trading the Underlying versus Trading the Option

To better understand the outcomes of trading options, let’s consider a traditional Microsoft equity stock, currently valued at $36 a share. You can buy the share today for $36 and if it goes up to $40 three weeks later, you can resell it at that future time and make a $4 profit (excluding any fees).

Or you can decide to hold the stock longer and wait until the share price goes higher so you can resell it for a larger profit. On the other hand, if the stock value tanks and never trades above $36, you can keep it and wait for better days. In the meantime, you will collect dividends if any are paid. That’s basic stock trading.

Now, let’s assume you’d rather trade options on the Microsoft stock. Instead of buying the Microsoft stock, you buy the right to buy the Microsoft stock in the future (long call). For instance, you purchase a 3-week call option on the Microsoft stock with a strike of $36. For this investment, the premium you will pay for the option is about $1.50. By the way, all these numbers have not been invented, they are directly taken from the financial markets (e.g. Yahoo Finance).

Three weeks later, if the Microsoft stock is trading at $40, you hold a winning position. You can exercise your call option to buy the Microsoft share for only $36 (strike price) when it is really worth $40. If you immediately go and resell the stock at $40 on the financial market, you have made a profit of ($40 – $36 – $1.50) = $2.50 as you need to also subtract the $1.50 premium you paid for the option.

On the other hand, if the Microsoft stock is trading at $30 three weeks from now, you will not exercise the call option and will let it expire. There is no point in buying the share for $36 when it is only worth $30. If you really want to purchase the underlying Microsoft stock, you only have to pay $30 to buy it directly from the stock market. Letting the call option expire will imply a loss of the $1.50 premium.

In summary, we assumed the stock currently trades at $36, which is also the strike of the call option. In the winning situation for the buyer, the future stock price (the forward price) in three weeks was $40. In the losing situation, the stock would trade at $30 in three weeks time

If we were trading stocks, we would have made a profit of $4 and would have kept the stock otherwise, waiting for a more advantageous situation in the future (unrealised loss). If we were trading options, we would only have made a profit of $2.50 and would definitely have lost $1.50 if the price was below $36 three weeks after (realised loss).

Why Trade Options?

So why are people trading options seeing as they seem to be worse off in terms of profit and loss compared to trading stocks in the exact same market conditions? The answer is different for corporations and financial institutions. For single individuals, I personally believe this is driven by greed and gambling appeal. I have traded options and had those feelings which I will detail later on.

For corporations and financial institutions, options are mainly used as a hedge, an insurance policy, not to speculate. For instance, Qantas needs to buy fuel for its planes and is therefore dependent on the oil barrel price fluctuations. This creates uncertainty in their financial forecasts. If the oil barrel price suddenly skyrockets, it will increase their expenses and bring down their profits. So they will be looking for a way to limit that unknown variable.

In their case, let’s assume they buy 6-month call options on the oil barrel at a strike price of $90. If in 6 months, the oil barrel is trading at $120, they can still buy what they need for only $90 a barrel. If the oil barrel is trading at $50, they will buy it directly on the commodities market and let the options expire worthless.

These options bring visibility to their balance sheet, they now have control over their financial forecasts. They know they will not pay more than $90 for an oil barrel in 6 months. This certainty is given by the call options and they are happy to pay a premium to lock the price in. The premium will be lost should the oil barrel trade below $90. But to them, it is similar to buying an insurance policy.

Options have originally been created for this purpose, to hedge uncertain future events and to ensure one knows the largest possible loss s/he will take: the premium s/he paid to buy the options.

As a result, a large part of the options market involves investment banks willing to take risks and sell options (capped gain with unlimited potential loss) and corporations trying to reduce risks and buy options (capped loss with unlimited potential gain). These are generally private over-the-counter deals (not listed), tailored by the banks’ structurers to match their clients’ needs.

Options Leverage

Along the way, people started using options to speculate rather than hedge . This is due to a particular characteristic of options: leverage. Having more leverage means that with the same amount of investment capital, you are able to multiply the amount of gain but also the amount of loss.

Going back to our Microsoft trading example, we had two scenarios, one trading the stock and the other one trading the option on the stock. Let’s first focus on the winning scenario where the share price trades at $40 in three weeks time. Trading the stock, we would buy one share at $36 today and resell it at $40 for a $4 profit. Trading the option, we would buy a call for $1.50 and make a profit of $2.50 three weeks later.

The option leverage assumes that if you had $36 in cash, you could spend it on purchasing several options instead of spending it on only one share. $36 buys you 24 call options at $1.50 each. If the stock reaches $40 after three weeks, you would make 24 x $2.50 = $60 profit. If the stock stays below your strike price of $36, you would lose all your premiums ($36).

So here is the catch, extra leverage means extra risk, larger potential profit but also larger potential losses. With an investment capital of $36, we could either make a profit of $4 (stock trading) or $60 (options trading), applying a leverage of 15 to our gain. Or we could have lost everything (options trading) instead of being able to hold on to the stock, waiting for it to bounce back in the future (stock trading).

The leverage given by options is what appeals to amateur traders. They get drawn in because they usually have a small investment capital to start with, hoping to multiply it exponentially as quickly as possible. Most of them will get burned out and lose everything for different reasons. The main ones I usually see are the following:

  • Lack of understanding on how to trade options. The finite life of the option means that you cannot hold on to it and wait for a better future time if you are in a losing position.
  • Too much leverage and risk taken. The lure of leverage means that some traders are treating options like lottery tickets. They are willing to take the risk of losing the premium if they can multiply their gains by 10 or 15.

The risk with being highly leveraged is that it would only take a few bad trades to completely wipe out all your investment capital, even if you have made profits for years. So before you start trading options, make sure you have a clear understanding of what you are getting yourself into!

Wastefulness and the Path to Self-Sufficiency


Wastefulness and the Path to Self-SufficiencySelf-sufficiency, whether this translates into becoming financially independent or living without the aid of conventional societal comforts, cannot be achieved without the proper mindset. It is thus critical that one’s practice is founded on one’s beliefs and personal philosophy.

Conviction and ideas are the real drive for change and will inspire continued effort toward the end goal. It is your mindset that gives actions meaning and coherence, and will give you the strength to move forward even when things seem difficult.

It is thus critical that you approach self-sufficiency with the right attitude, being mature and rational about the reasons behind your goal.

Freedom of Thought

Most regular followers of this blog are critical thinkers – They have the independence and thought power to challenge mainstream beliefs and behaviours and analyse whether they make sense to them. This is one of the core benefits of democracy: Having the opportunity to disagree with the masses and think differently without facing any real penalty. Indeed, freedom of thought is one of the core tenets of  democracy and a principle many Western nations are organized around.

This independence is also something Monkeyism encourages. In writing this blog, I challenge you to reflect on your own life and think about whether there may be alternatives that you have not yet considered! My goal is not to attract people who follow me blindly. In fact, this blog is written with a minority, not the majority in mind. (Otherwise I would be targeting a sexier topic, like fashion or weight loss!).

The other important thing to remember is that there is no single best way. Everyone must make decisions based on their own personal situation. Monkeyism is about you! All I do is to provide you with examples that enable you to think about the kind of things that might be appropriate within your context.

As someone working in the financial markets, people have asked me on numerous occasions to give them tips on how to make lots of money. However, it very rarely happens that someone tells me what they are trying to achieve. For instance, they don’t know how much money they want or what they would use it for. They just know that being rich is good.

However, what most people do want is financial independence. They want the freedom to decide what to do with their time. Depending on their personal circumstances, the answer will vary. What seems like “a lot” to one person, is a “pittance” to another (and vice versa).

Let’s look at my situation for a second. I am quite satisfied with the current interest rate on my savings account (4% risk free! – see the highest-paying savings accounts in Australia). Because I have worked hard to accumulate capital and because I have a low lifestyle requirement, I could envision comfortably living off the interest my savings generate. I would be happy because I could do what I would like to do.

However, my vision of the perfect life doesn’t involve fast cars, expensive restaurants or extravagant holidays! I would be happy with a calm and quiet life in the country, living off the land as much as possible and minimizing expenses. That is why I aim for the investment with the lowest possible risk: I don’t need more. That is my choice. Yours might be different.

The point is not for me to convince you that I have found the answer; the point is for you to understand the importance of asking the question in the first place: What do you want and how can you get there?

Freedom of Action

Of course it is not enough to just believe. You also need to align your actions with your belief. Unfortunately behaviour change is more difficult because it requires compromise. And we humans aren’t naturally good at compromise. It means that we generally need to reach a tipping point, i.e. realise that something is not working when we are maintaining the status quo, that propels us into action.

For us, that was the birth of our first child. It made us reflect on our lifestyle and what was truly important with us. That was the catalyst. Of course, a lifetime of thoughts and actions preceded it!

The fact is that we are unhappy about our current direction – Spending more time at work than seeing our children grow, being caught up in a cycle of buying products and services that we don’t need because we don’t have the time to provide adequately for ourselves, and engaging in a lot of activities that we would prefer not to. It feels like a zero-sum game to us.

That’s why we started asking ourselves: Why are we wasting our time and money living a life that doesn’t make us happy? And, more importantly, what can we change?

Considering the High Cost of Waste

One of the pivotal first steps of self-sufficiency is acknowledging our own laziness and wastefulness. If you don’t see yourself being wasteful in how you spend your time and money, there is little chance that you will make any changes to your life. Somehow, we have been blinded by our own waste; wastefulness is normalised in some way.

When a t-shirt becomes unfashionable, we throw it away or donate it. When our camera becomes slow to take pictures, we replace it. When we’re not sure if food is good anymore, we chuck it out. We’re very quick to throw away and replace things, without considering whether these things actually have outlived their purpose.

Interestingly, our ability to be wasteful is in some ways tied to the cost of an item. We are more likely to hang on to more expensive items longer, potentially seeking to extend their life throughout repairs and fixes. When something is cheap – like many things are these days – we don’t find it wasteful. After all, we can just replace them!

However, this kind of thinking is dangerous and has led us down the path of destructive behaviour: Wasting water when there are worldwide droughts, extracting oil at a cost to flora and fauna, logging forests to the point of extinction, throwing away clothes and replacing them with others sown by children’s hands, buying cheap flights and ignoring the damage of carbon emissions, etc…

Sure, these are harsh examples, but one simple fact remains: There is a reason these things are cheap. But financial cost does not necessarily reflect the true cost. You are not paying for the externalities or the future damage you are causing. Being a little more self-aware and a little more responsible will allow you to have a positive impact in these areas and also save money.

Monkeyism encourages you to decouple the notion of waste from financial cost. You need to look beyond the price tag and internalize the key practices of sustainability, self-sufficiency, and resourcefulness. Monkeyism is founded on these beliefs because the idea is to make real changes in people’s attitudes and that behavioural change will flow from this. Such behavioural change will ultimately improve your quality of life and your pocketbook!

Stop Wasting and Start Saving

This same mindset applies to saving money. In our apartment building, people often throw fully functional items in the garbage. These items are discarded not because they are broken but because they have been replaced with newer models. This is particularly true for electronics. This is not only extremely wasteful and bad for the environment, but is also is a lost opportunity. The items could be donated to charities or sold on classified websites.

This approach has three key benefits:

  1. Those items don’t end up in a landfill
  2. Someone who actually needs those items can get them at no cost or at a very low cost
  3. You can make a little bit of money by recycling those items.

This means that not being wasteful can have significant benefits. It doesn’t matter how much you save. The key is that you stop wasting money altogether.

That means holding on to things that are still functional, even if convention dictates that they should be replaced. It means not buying things that you don’t need, even if you are encouraged to buy them because there is a sale! Even if something costs only $1, that $1 may be wasted if you don’t need the item. Every dollar adds up!

That’s why trying to reach financial independence also implies realising how much you waste. Only when you start being able to distinguish what is essential from what is superfluous, you can start meaningfully cutting down your expenses. This could mean eating leftovers rather than throwing them out, buying pre-loved items at used stores or on Gumtree rather than buying new, or simply switching to lower cost items that perform the same function (e.g. generic brands). Less waste means more savings!

Many people complain about not being able to save money and needing to earn more. But they never stop to think about how much they can save just by making lifestyle changes. Think about all of the small incidents of spending that add up to your monthly expenses – Do you need two daily artisan coffees? Do you need to go for brunch at that hip cafe every Sunday? Do you need to buy $200 jeans? Just like everything in life, small things add up to big things.

So the sooner you can change your mindset and start thinking about how you can reduce your waste, the sooner you will be able to achieve financial independence and early retirement!

Homesteading in Early Retirement Planning

Fruit Vegetable

Homesteading in Early Retirement PlanningPlanning for early retirement means figuring out how to minimise your cost of living while maximising your passive income. Anyone who has started to think about how this might be achieved will realise that there will need to be compromise, but not necessarily sacrifice.

It is not possible to retire early and keep your current lifestyle – Except in the unlikely scenario where you are generating as much passive income are you used to earn when working full-time. I say unlikely because in order for you to be able to do that, it would mean that you have a very large amount of investment capital. If that is the case, well done!

However, the majority of people will need to make some lifestyle changes in order to achieve early retirement. While that doesn’t necessarily equate to a decrease in quality of life, it does require some adjustment.

Early Retirement Activities

There are a lot of early retirement blogs. In most cases, the blogger claims no longer to work, when in fact s/he is running a website full-time: Writing posts, publishing e-books, organising seminars, etc…

All they have managed to do is successfully switch from a corporate salaried job to a home business. That’s great if you enjoy that kind of work, but it’s not necessarily what most people have in mind when they think about early retirement.

Of course hobby blogging can be used to generate passive income (if you’re going to do it anyways, you may as well generate some income from it!), but you need to be careful not to swap one set of shackles for another! If your goal is to retire and be independent, then don’t go out and create new dependencies.

People have very different plans for their post-retirement life – The key is to ensure that you include some physical and intellectual activities. If you have the intelligence and conviction to go through the process of achieving financial independence, you are probably smart enough to know that you need to continue some engagement in these types of activities in order to maintain your well-being.

While our core aim for “retirement” is to spend more time with our children, to focus on a healthy diet and lifestyle, and to build up a hobby farm, we also aim to join clubs and volunteer for charities. Life is about giving and taking!

Hobby Farming and Homesteading

Part of our plan is to become as self-sufficient as possible. Once we quit our jobs, we aim to use our passive income to pay for things that we cannot make or grow ourselves.

Things like property taxes that can’t be escaped or items like clothing or furniture that are too difficult to make. However, one of the things that we can gain more control over is our own food.

We thus want to lead a homesteading lifestyle. Hobby farming or homesteading is increasingly becoming popular with people looking to become self-reliant. Why? There are various different reasons: food security, financial independence, lifestyle choice, etc…

People simply like the idea of living off the land, growing their own food and harvesting sustainably, using natural and renewable resources like rain water or solar energy.

In some cases, people go to the extreme and use homesteading as a way to go “off the grid”. That’s not our personal idea of happiness – We still want to maintain close ties to the community and stay connected with friends and family.

Instead, we see growing our own food as a way to reduce our grocery bill while also giving us full control over what we eat. So, although one of our key objectives is to save money, we also like the idea of witnessing the whole food chain: From dirt to plate.

We also think the quieter pace of rural life will suit us better than the city. Having said that, we are realistic about the amount of time and effort needed for such project. Farming is one of the most difficult jobs you can have.

We’re not going in with rose-tinted glasses. We know that it will be hard and take time, but we also know that it will be extremely rewarding and something we can do as a family. We aspire to a life where the things we do have a meaning and a purpose. So, wherever we end up physically, that is our true destination!

Is it Work or Not?

Some may argue that I will not really be retiring if I take up the job of becoming a hobby farmer. Indeed, growing vegetables and taking care of animals is a demanding task. Yet, some people spend their weekends and holidays gardening or fishing. They don’t generate income, so they call it a hobby. But they’re doing what they love.

That is the ambition here. The aim would be to apply permaculture principles in order to reduce our workload. We will focus on high value, low effort produce. There is no plan to make this a full-time job. Still, any gain will enable us to offset our cost of living.

It’s also important to note that we don’t plan to grow food for profit. If we produce more than we can eat, we would aim to trade the excess against different foods or goods. For us, homesteading is a mindset and a lifestyle choice rather than a business opportunity. It just fits the economical and ecological aspirations we have.

Having lived in big cities with stressful jobs, we look forward to a simpler, slower, more genuine life centred around our family and all the outdoor activities we can do together. If you feel this way and are interested in the idea of homesteading, I would recommend reading a couple of books that I found inspiring and full of good advice.

They are targeted at people with no prior farming experience or homesteading education, who want to start becoming self-sufficient. So if you are interested and are looking for good reading material, try the following:

  1. The New Complete Book of Self-Sufficiency by John Seymour – The classic and must-read guide for realists and dreamers
  2. The Backyard Homestead by Carleen Madigan – A comprehensive introduction to homesteading
  3. The Encyclopedia of Country Living by Carla Emery – One of the most complete book on homesteading
  4. Permaculture: A Designer’s Manual by Bill Mollison – Reference book from the co-creator of permaculture
  5. Gaia’s Garden by Toby Hemenway – Another great book on permaculture

How to Escape Consumerism

Escape Consumerism
How to Escape Consumerism

Image by renjith krishnan at FreeDigitalPhotos.net

Since the industrial revolution, our society and economy increasingly rely on manufactured goods. We now live in a world of convenience, where many products and technologies exist to facilitate ease. Those items, although often branded “must-haves”, are actually “nice-to-haves”.

Of course many of these products do save you time or enable you to do things. However, you may not always want to do things quickly or you might waste a lot of time doing new things you didn’t previously do (and didn’t need to do!). We need to remember why these products exist and who they really benefit.

When someone is selling you a product, it certainly isn’t to improve your quality or ease of life. No, they want you to spend money so they can make money! Spending is what underpins our whole economic system and, under capitalism, consumerism is thus the engine of the economy. With each sale, the government earn sales tax and corporate tax. It is thus in their interest to facilitate your purchases and explains why everyone want you to buy more stuff.

However, spending more than you need, can also have significant drawbacks. In order for you to make an informed decision about how you want to spend your money, you need to understand how the system works. If you know how the system works, you can make the system work for you!

Extreme Marketing

Marketing campaigns are designed by professionals to try to create a sense of longing. They instill a desire for a specific product or service in you that makes you feel that you need to have this item. The main arguments they use to try to convince you to buy something is convenience, productivity gain, entertainment, and status symbol.

Marketing and consumerism go hand in hand. Marketeers are good at their jobs and they get paid a large amount of money for succesful campaigns. They work up their campaigns using the most recent research in business, psychology, and sociology. It’s thus not surprising that we positively respond to their ads and want the things they try to sell.

In fact, if you don’t find their ads appealing, you’re one of the few! So, don’t blame yourself for liking their campaigns. The key is to stay strong and make sure that you don’t make impulse purchases. Rationally think about the product or service, and whether it is really something that you need or want, and then carefully weigh up the pros and cons.

One good way to get around the emotive appeal of an ad or a product is to make a “couple of months” rule. Wait a few months before you decide on a purchase. If you still want the product after that time has lapsed, and you have a good reason for making the purchase, then go for it!

These days, technologies are increasingly advanced and complex. They are also pretty pricey! The higher-end the product, the higher-end the prices! Think carefully about whether the higher priced items are necessary or whether lower priced items may deliver similar functionality. Always ask yourself whether the price difference is justifiable.

Let’s use a television as an example: There are a multitude of options across different brands, different screen sizes, resolution, type of display, colours, novelty features, etc. Consequently, the prices range from a few hundred to a few thousand dollars. The purpose, however, is the same: To offer you access to television programming and entertainment.

The same principles apply to cars. Their main purpose is to take us from Point A to Point B, but the prices fluctuate vastly based on design, brand, features, and fittings. Similar arguments could be made for almost any product – So think about why you are purchasing a product and make sure you focus on that purpose. Try not to get distracted by the shiny extras!

We’re also seeing an increasing trend toward professional products. Cameras are the perfect example. We are led to believe that we need high-end professional equipment in order to capture our memories with the vividity they deserve. As a consequence, there are lots of people out there with SLR cameras, with multiple lenses and filters, that end up taking a picture not much better than what their smartphone might produce.

In fact, this equipment doesn’t make you a better photographer. You still need to know how to use it. Unsurprisingly, the more features you have, the more difficult it is to use. Thus, most of us actually take better pictures with “point and shoot” devices that do much of the work for us.

Don’t feel bad if it sounds like I’m describing you at the moment – I also fell for it and bought a professional SLR with dedicated lenses for different purposes. The problem is that my pictures didn’t get much better! I’m not such a bad photographer but the improvements I got were just not worth the higher camera price difference. So think about whether such high-end purchases work for you or against you, and make an informed decision based on the reality, not the ideal.

Planned Obsolescence

Planned obsolescence is a well-known commercial strategy that many firms pursue. It is a major contributor of consumerism. It means that manufacturers purposely design products with short lifecycles, using cheap production material or limited functional capacity. Planned obsolescence works well for companies as it generate recurrent income with every new product release.

The items are built to last only for a specific amount of time to ensure the need for regular replacement (and continuous demand). Electronics are one such item – They are built with a short lifecycle to facilitate new purchases. Did you notice those iPhone batteries and buttons keep breaking once you’ve passed the 2 years mark and have to renew your phone contract? It’s not coincidence.

It’s difficult to find products that are “made to last”. You’ve probably heard that old saying: “They don’t make them like this anymore!” It’s anecdotal but true; products don’t last like they used to. Furniture responds to design trends rather than functional need or use period. Take Ikea as a great example. They build useful furniture from materials, often pressed wood, whereas 50 years ago most furniture would have come from carpenters and been made of solid wood.

This goes hand-in-hand with another consumer trend: We update our furniture to follow fashion trends, rather than thinking about how long a product can last and whether there is an actual replacement need. Not so for our parents or grandparents! My grandparents still have the solid oak cupboard they bought 50 years ago. I don’t expect any of my furniture to last that long.

Of course our lifestyle has also changed – We live in big cities, we’re increasingly mobile, and we have access to lots of communication channels. That means two things. First, our goods have to adapt to our lifestyle. If we are moving houses every two years, we need furniture that is adaptable or disposable! Secondly, we are more exposed to advertisements and social pressure than ever. We are continuously bombarded with images of things that we should want, things that appeal to us, and things that are hard to resist.

Remember that fashion is by definition meant to become obsolete. A particular fashion can only be popular for a finite amount of time, even if there is some opportunity for it to reappear. For instance, most people change clothes regularly, not because they are worn out but because they don’t look good anymore. If you don’t update your wardrobe, people will know and quickly begin to accuse you of “not looking after yourself”.

The irony is that the more fashionable clothes are, the more expensive they will be and the quicker they will go out of fashion. If you buy a regular pair of jeans without any of the fashion traps – flares, holes, bright colours,etc – you are likely to be able to keep them longer. Choosing plain clothes (“the basics”) that do not rigorously follow fashion will make them last longer.

Become Less Materialistic

The first step to escaping consumerism is to rid yourself of all the things you don’t need. The television is a prime example. It’s a notorious time-wasting device and doesn’t enhance your quality of life in any way. Yet, somehow, we are all oddly attached to that square box!

I never thought I could sell my TV, seeing as I grew up with television. As an only child, I have quite fond memories of it, using it to keep me company when my parents had to work late. I had my television set turned on pretty much every waking minute. Then, a few months ago, I took the plunge and sold my TV. I thought it was going to be really hard, but it turns out that I don’t miss it.

Television sucks you in and you often end up watching programs you aren’t interested in. On top of that, you are bombarded by a stream of advertisements. And there is a reason for advertisements – They work! Of course selling your TV doesn’t mean that you have to stop watching all your favourite programs – You can watch most of them online for free and the online streams tend to be much less prone to advertisements.

Recently, in order to declutter our life and moving from consumerism to monkeyism, we have gone through a period of reselling superfluous items we had but didn’t use. Pretty much anything can be sold on eBay, Craigslist or Gumtree. There is always someone who will need what you have to offer. We’ve put up ads for items that we never thought anyone would be interested in (e.g. frying pans, garbage cans, books, old computer equipment, etc…). It all sold!

So as we declutter our home, we are also earning money from the items that were consuming our space. Many people just end up buying larger houses with extra bedrooms and garage space to store junk they hardly use and should get rid of. Don’t let that happen to you! It’s not always easy to move toward a more minimalist life, but once you sold a couple of items, you will see that it doesn’t materially affect your life … And you will keep selling.

Another thing you can do in order to save money in the long-term is to replace items that break with more durable models. You may end up paying a higher price initially, but assuming that you actually need this item and will use it often for a long period of time, it is a good investment.

Great examples are higher-end kitchen knives (e.g. Henckels or WMF) that remain sharp and don’t need to be replaced if cared for properly. At present we are doing just that – We are reducing the number of objects we own, focusing on the most important and functional objects, and replacing them with high quality durable products. Of course we still have nice things; but we have nice things that are useful!

Finding The Best Place to Retire

Tasmania Retirement

Finding the Best Place to RetireThinking about where to retire early is an important part of planning for financial independence.

Of course everyone has an “ideal location” in mind for their retirement and – despite differences – some criteria are likely to be common to many of those places.

So, when you are trying to settle on a place to retire, try to stay open-minded. Remember what is most important to you and what you can compromise on. Below is our personal reflection on this matter.

Remember to change your perspective as you will be free from work, so you may not need to be as close to all the amenities as you are now.

Low Cost of Living

A good financial independence plan needs to take into account the future cost of living.

You will live off passive income; the amount of income is proportional to the amount of capital you are able to invest. Thus, the more capital you need, the more time you will have to work and save.

So most early retirees will look to balance cost of living with quality of living. Generally speaking, this means that a place with a low-cost of living is a better retirement choice. The lower the cost of living, the earlier you can retire! In this context, “low” is subjective and assessed on the basis of one’s lifestyle demands.

While one family might find that they can live off $10,000 per year, another could struggle with $20,000 a year. Similarly, the level of income before retirement will contribute to the amount of capital amassed and the perceived lifestyle need.

Consequently, assuming equal job tenure and retirement duration, a higher earner will be able to afford a more expensive post-retirement lifestyle.

The good news is that by not having the constraint to live close to work or any large business centre, an early retiree can avoid expensive towns and neighbourhoods.

Some people even take retirement as an opportunity to move abroad and live in countries with a significantly lower cost of living in order to retire earlier or live more comfortably. For instance, many “grey expats” live in Thailand, Malaysia, Costa Rica, Panama or Uruguay on a fraction of what they would pay at home.

But if this is too drastic a change for you, don’t worry! Even just moving further out of the city tends to yield a lower cost of living and increase your spending power. Property tends to decrease in price as distance from the “commuter belt” increases.

Of course there is a middle ground to be found: You probably don’t want to drive long distances to buy basic food. Besides, the cost of car and fuel is likely to offset any potential savings.

High Quality of Life

Everyone seeks the highest quality of life that they can afford to maintain – Even in retirement! Basic criteria for good quality of life includes safety, healthcare and education in the area you plan to resettle. Other factors include language, culture, customs, weather, proximity to amenities, etc…

Of course, the more of these factors are met, the more appealing a place will be, and the more people will be attracted to those locations. This increases demand and with a limited supply (especially housing!), desirability will push the cost of living upwards.

That means that if you want a low-cost of living, then you are likely to have to make some compromises. Which compromises you are able and willing to make depends entirely on you.

Additional factors you may want to consider include recreational or volunteer opportunities. This is particularly important as you will be without employment and will thus have a significant amount of time available to dedicate to your hobbies or interests.

Given that your length of retirement is likely to be much longer than the average retirement, access to physical and intellectual activities will be particularly important.

You will want to be in an active social environment. As mentioned previously, the goal of an early retiree should not be to sit at home watching television but rather to engage in projects that are close to their heart and give their life meaning. As such, choosing an environment where one can fulfill these types of objectives is critical.

Our Current Choice: Tasmania

Choosing a good place to retire is a tough decision for everyone – including us. There is no one best place to retire. Where you choose to lay down your roots depends on your relationship ties, interests and personality.

We have family living all over the world and EU passports. Consequently, Europe could be a good destination for us. For instance, the countryside in the South of France offers relatively low-cost living, free healthcare and education, good weather, and world-class gastronomy. Indeed, France is frequently ranked the best country in the world to live in.

Still, home is where the heart is and that is in Australia. With Australia competing for the same title on a regular basis, we don’t see a reason to go further afield!

We considered a lot of other options in the process. For example, we’ve looked at emerging countries in Asia and South America, which have a lower cost of living than most developed countries, but they often face safety issues and lack the education system we want for our children.

For us, Australia is the right option. This is particularly true because we are looking for a quiet life. Ideally, we would like to have a small acreage in order to grow some of our food. We want to be as self-sufficient as we can, better control what we eat, and – of course – save money.

Further, we love being outdoors, going hiking and being in contact with nature. A temperate climate is also important to us: not too hot, not too cold, not too humid, not too dry. But, as parents, safety, healthcare, and education matter to us above everything else.

Tasmania meets all these criteria. What we also love about Tassie is that its real estate prices are approximately half of what people pay in Sydney. Sure, food prices are slightly higher (there is no Aldi unfortunately!), but we plan to compensate this with our home-grown food. And we would also enjoy having four distinct seasons! To be continued…

5 Ideas to Save Money without Effort

Save Money

5 Easy Ways to Save Money without EffortThe inspiration for this post came to me when we were cleaning our dirty oven. Cleaning an oven is never a nice task, but when you’re experimenting with recipes for the best crispy pork crackling, cleaning becomes an industrial job!

We knew that it wasn’t going to be an easy task to get our oven sparkling again, so we went out and bought the strongest oven cleaning product we could find. However, despite chemicals corrosive enough to dissolve skin and cause blindness, it barely removed any of the dirt from our oven walls!

And that was despite exceeding the permissable soaking period, multiple applications, and intensive scrubbing. After we tried several of the market leading products, we decided to ask Google for an answer.

We were surprised to find that the most effective “product” was baking soda. However, we had nothing to lose, so we gave it a go. We mixed the baking soda into a paste using a little bit of water and applied it to the oven walls. After a few minutes, we wiped over the oven with a sponge (some scrubbing was required, but nowhere near the Herculean effort we had invested with the industrial strength cleaning products), and it was sparkling clean. The grease was gone!

Then we used a little bit of vinegar to remove the residual baking powder and – voila – a sparkling clean oven. We couldn’t believe how easy it was to clean the oven using these simple household ingredients! And the best part was that it cost barely any money, has no harsh odours, and minimal environmental impact.

This made us begin to think outside of the box, ignore marketing trends, and start looking at what actually works and what doesn’t. So, since the “oven cleaning incident”, we’ve been looking for better alternatives to the products or services we use daily, both in terms of efficiency and cost.

Below are 5 easy ways to save money. While each of them separately may do little to dent your household budget, applying several of them is going to make impact. And, of course, we shouldn’t forget to think about the longer-term savings (e.g. 10 years, 20 years) in light of compound interest. Critically, the 5 lifestyle changes outlined below require minimal effort, so there is no reason not to implement them.

1. Use bar soap

For some reason, the norm nowadays is to use shower gel and liquid hand wash. We also did that until very recently – But then we started thinking about the economic and environmental cost associated with such habits. It used to cost $5 a week for both of us to use these products; that’s $260 over the course of a year.

One day, my wife complained to me that I was using too much shower gel. Part of the problem with the convenient dispension method is that you tend to use more of the product. I was doing just that. I applied the shower gel liberally, often literally letting it run down the drain.

I started to think of alternatives and came up with the idea to trying to go back to regular soap. We made the switch and haven’t looked back since. We now buy 10 brand name soap bars with a nice fragrance and made for sensitive skin care for about $5. Those 10 bars last more than 6 months, equating to yearly savings of $250. And we also produce far less plastic household trash.

Looking back, I have no idea why we thought we need to use these liquid soaps. Regular bar soap cleans and smells just as well. Sometimes people worry about dry skin, but despite my wife having sensitive skin, we haven’t experienced any adverse effects. In fact, there has been absolutely no observable difference since we switched to using soap bars.

You may think that saving $250 per year isn’t a lot of money. Maybe it isn’t. But the question you should ask yourself is: Why spend more money if you can have the same effect for less? We’re starting to think that it’s all a marketing ploy. Indeed, a US health watchdog has recently warned against using popular antibacterial handwash.

So think about whether you can make the trade. This is one example of many about how you can reassess your everyday consumption in order to save money without effort and discomfort.

2. Cut your own hair

While I didn’t initially set out to start cutting my own hair for financial reasons, I did it because I had a baby and found it harder to steal time away to go the hairdresser. I now recommend it to everyone.

I used to enjoy going to the hairdresser to get pampered with a shampoo, head massage, cutting and styling. It cost me $30 every month, which means $360 a year. Like with any hairdresser, I could watch the whole process in the mirror. 80% of the time, the stylist was just using a clipper to shave the sides and the back. Eventually, s/he would use scissors to even and thin my hair out. It looked pretty easy and it actually is if you have a simple hairstyle!

About 6 months ago I bought my own hair clipper and some hair scissors. I cut my hair using a mirror and my wife helps me with the back. I was nervous at first – I would have liked to have practiced on someone else first… – But in the end no one noticed a difference in my hairstyle. At least no one made fun of me at work, which they would, so it must have gone well!

Of course, I did some research before taking the step to cut my own hair, and so chose a professional brand known for reliability and efficiency. The clipper is a Wahl model made in the USA. Pay attention to reviews when you make your purchase, as there are many ‘low end’ models offered that are made in China and are of significantly lower quality.

I spent around $90 upfront for a set of clippers, which I expect to last me at least 5 years. In that time I will be saving $250 the first year and $360 each year thereafter.

Some people advise that you need to change your hairstyle if you can’t cut your own hair with a clipper! This is a little extreme, especially for women. Having said that, there is no reason why you couldn’t trim your fringe and ends with hair scissors and go to the hair dresser less frequently.

Similarly, you could cut out the professional manicures and pedicures and do it yourself. That’s about $50 saved per month, adding up to $600 a year. What you are cutting back on is convenience, not the end result. You can still have a nice haircut and clean nails when you do it at home yourself. And like everything else, you will only get better with practice.

3. Shop at Aldi

Saving money on food can be done in a number of different ways, including bringing your own lunch to work and buying food in season and/or on sale. Using these techniques, we have managed to reduce our food bills by 70% over the last year. Despite a healthy varied diet, we are now spending only $3,000 a year on groceries per person.

However, one of the easiest way to save money on food without even thinking about it is to shop at Aldi instead of another big supermarket (e.g. Coles and Woolworths). Aldi’s business model allows them to offer more competitive prices without compromising on quality: pallets presentation, lack of advertisement, exclusive arrangements with manufacturers, bulk buy, etc. For instance, you can currently buy eggplants for $4 a kilo at Aldi while they sell for $8 a kilo everywhere else. In all cases, they are Australian grown, extremely fresh and tasty.

So why pay more for the exact same product? Some studies show that Aldi is on average 25% cheaper than other supermarkets.

If you are doubtful, go out and compare brand name products such as Nescafe, Nutella, Vegemite or Coca-Cola at Aldi vs. other supermarkets. You will see that they are always cheaper at Aldi. And there is no doubt that those are the exact same products.

The main reason why this is an easy move is that Aldi is often located close to a Coles or Woolworths. So you don’t have to walk or drive somewhere else, you are going to the same shopping centre anyhow! All you need to do is enter a different supermarket.

And if you cannot find exactly what you are after, you can still go to Coles or Woolworths afterwards. We still buy a couple of speciality items from other retailers (especially when they are on sale) but our main weekly shopping is done at Aldi. Aldi has a better price/quality ratio than the other supermarkets, especially for fruits, vegetable and meat – which make up the bulk of our diet. Furthermore, you should aim to buy generic brands over brand name products whenever you feel comfortable.

4. Cut the energy bill

One day, a trader I work with casually mentioned that he always run his dishwasher at night using the ‘delayed start’ option because electricity is much cheaper at that time. At first I was a bit taken aback. This guy earns more than most people, does he really need to save money in this way? It seemed a bit cheap.

On reflection, however, I realized that he was actually being smart about how he spends his money. And – as you probably know by now – I like the idea of not wasting money. So I employed his energy saving technique and also tried to find other behaviour I could make positive changes to.

One of the big money savers we’ve found is not using a clothes dryer, but rather hanging clothes on racks to dry. This will save your electricity bill as well as your clothes – did you ever shrink or melt clothes by mistake?

We are also careful about turning lights off in unused rooms and changed our light bulbs to energy efficient ones. Sockets should also be turned off if unused, especially if you have a TV or other media devices in standby mode, as these devises will still use electricity even when not in use!

Mobile phone chargers are another culprit. Even if your phone isn’t plugged in, most chargers still use 100% electricity. It is thus perhaps unsurprising that studies show most households are using 7% to 13% of their consumption on items in standby mode.

So, how about saving 10% in electricity costs just by turning off the power socket on devices that are not actually in use? It is as much about saving money as it is about avoiding waste.

5. Open a High Interest Savings Account

I have covered this topic in the post about the highest-paying savings accounts in Australia. But the main driving idea is applicable to any other countries. The sad fact is that many people do not optimise their savings rate. It would be understandable if it were a complex or unsafe process. But it is not!

Most Australians have a checking bank account with one of the big 4 banks (ANZ, Commonwealth, NAB, Westpac). But those banks do not offer the best savings rates on the market. The best rate will be offered by Internet-based companies, as these can cut on the cost of having physical branches and pass those savings onto their customers.

The best part of this is that my top choices (Rams and Ubank) are actually backed by leading banks (Westpac and NAB respectively). This means that these accounts are as safe as the ones you have with the major banks.

Having gone through the process, I can tell you that it only takes 10 minutes to open an account online. The consequence is an extra 2% interest on your savings. 2% may not sound a lot, but if we start applying this extra compounding to the capital, you’ll quickly notice a difference.

On a savings sum of $100,000, this equals to an extra $120,000 free money over 25 years. And all you need to do is spend 10 minutes filling in online forms! Seems too good to miss.

Another benefit is that the online savings account is directly linked to your current checking account at the major banks. You can thus transfer money in and out 24/7 without any fees whatsoever. I really wonder why anyone wouldn’t open such savings account. I personally don’t see any valid reasons not to! Unless you hate free money…

Money and the Meaning of Life

Money Meaning

Money and the Meaning of LifeLike many people, I have often wondered about the meaning of life. I have been told that I should study hard, get a good job and work hard, and that this will enable me to find meaning. I did those things – I worked hard at school, studied at top Universities, and got a well paid job. I never thought twice about it.

But now, looking back, I wonder why I did these things and if they will lead me to meaning and happiness. People have different paths to finding meaning in their life. For some it is religion, for others helping those less fortunate, and for still others it’s about continuing the family line.

I think a lot depends on what makes you happy. And thinking about how to achieve happiness is what set me on the path toward Monkeyism.

Sources of Happiness

Finding happiness is a complex quest because there are parts of life over which you have little control.

For instance, I knew that finding the right partner and starting a family would make me happy. But there was no certainty that I would be able to find the perfect match.

I was lucky enough to meet my wife but many people go through life without ever finding their “soulmate”.

Happiness is thus not just about knowing what you want and seeking it out, but it also requires a little bit of good luck. The key is to appreciate and enjoy what you have once you are lucky enough to find it! For me, the key thing is to stop wanting more.

Once you have something that makes you happy, you should learn to cherish it without trying to find something better. This is true for both love and life.

Because, if what makes you happy keeps changing, then you will never be able to be truly happy. Happiness becomes fleeting.

Of course it is equally important to avoid sources of unhappiness. “Money does not bring happiness” is a common saying. At the same time, however, we also know that “Not having money can bring unhappiness”.

In societies where self-sustainability is neither encouraged nor easy, money is the only mean of acquiring items one cannot produce.

I grew up in a low-income family where money was a real worry. The thought of running out of money for basic items such as food can be stressful and happiness is difficult to achieve in that context.

Thus, I know from personal experience that financial independence is a necessary (though not sufficient!) factor in achieving happiness. Consequently, this is one of the core tenets of Monkeyism.

Working for a Living

Most of us start life with little or no financial resources. The most reliable way to earn money is to work for a salary and many people mistakenly believe that they need to keep working forever to earn a living.

However, this is only true if you continuously spend all the money you earn. Many people do – But as this blog demonstrates, this is a result of habit rather than need.

Thus, if you can find sufficient focus to concentrate on saving money and reinvesting it, you could achieve financial independence and retire early from work.

Indeed, you can let the money do the work for you, using it to generate passive income as you pursue your hopes and dreams, and focus on those things that really matter to you.

The association between work and money has cast work in a bad light, depicting it as a key constraint in life. However, if you change the way you perceive and engage with work, aiming to be financially independent rather than financially imprisoned, then work again serves an important purpose.

Indeed, you may again see it as enjoyable, using it to move closer to your happiness. Once you have achieve financial independence, you may choose to stop working, or you may find that engaging in social or charitable work brings you fulfilment. The key is to know what you need money for and learn how to live within your means.

Your Money or Your Life

Earning money should not be an end goal. Rather it is a means to an end. Money is only useful in that it allows you to reach your life objectives.

There is a minimum amount that you need in order to live well. However, after a certain threshold, having more money becomes more of a convenience than a necessity. Indeed, this is where the law of diminishing returns applies: If you dedicate your whole life to earning a lot of money, you may not even have the time to spend it.

The key is to strike the right balance and earn enough to meet your needs. This is where planning for financial independence becomes critically important.

There is a lot of social emphasis on earning as much money as possible. In some circles, income is a status symbol. The key to remember is that you need money to live; you should not live to earn money.

In other words, having money is good only because it allows you to do the things you want to be able to do – In our case that means putting money aside in order to retire early and focus on those things that really matter like raising our children. There is no doubt that everyone needs to work. The real question is for how long. How much is your time worth to you?

How to Save Money with Kids

Money Kids

How to Save Money with Kids

When I talk about early retirement, people start challenging the financial considerations relating to accommodation and food. Once I am able to demonstrate that $3,000 a year is enough to nicely feed one person, the discussion usually shifts towards kids’ expenses and their future education.

It’s a thought that every parent has and it is only natural to wonder if there will be enough money to raise your children in happiness and provide sufficiently for them. As parents ourselves, we would not take any risk that might put our kids into financial needs.

However, going through the process of raising children, we realize that child rearing doesn’t need to be nearly as expensive as we were led to believe! I understand every parent wants the best for their kids, but maximizing the amount of money you spend on them actually isn’t the way you do this!

Diapers and Wipes

When I was born, everyone was using cloth diapers. You would wrap a piece of cloth around the baby with a couple of safety pins and – voila – An affordable nappy! Eventually, disposable diapers emerged and quickly became the norm; they saved parents a lot of unpleasant work and time, and are extremely convenient to use.

However, in recent years there has been an increasing trend to return to cloth diapers. This is because using them is actually a better choice for the baby’s bum, the environment, and the wallet! This is largely because of the improvements cloth nappy companies have been able to make in recent years. Most modern cloth nappies (MCNs) mimic the design of disposable nappies and make them (almost) as convenient to use. And there are already lots of good articles and reviews about this topic.

The main reason people shy away from cloth nappies is because they don’t want to deal with the “mess”. Unfortunately, there is no way around “mess” with babies, whether you use cloth or disposable diapers. Some things just can’t be contained! Ever heard of poo-nami? Eventually, you will get urine or faeces on you. I’m sorry if I’m the first to break that to you!

In fact, we’ve barely had any leakages with our cloth nappies – Certainly far less than our “disposable” peers. We use BumGenius 4.0 diapers and they are absolutely incredible. They are functional and come in cute designs. Unless the diaper shifts (because the baby is sitting awkwardly in the pram or carrier), the mess stays put!

But that’s not the only reason we are happy with our choice. We’ve noticed that our son gets a skin rash every time we use disposable diapers (e.g. when travelling). That makes it not just an environmental and financial choice, but also a comfort choice. We like the idea of having cotton against his skin. No plastic, no synthetics, no chemicals.

In line with that philosophy, we also make our own reusable wipes using natural flannel material soaked in camomile tea, lavender oil, tree oil and olive oil for skin protection and good smell (but there are many different options). It works extremely well, both in terms of removing dirt and smells.

The best part, of course, is that we are saving a lot of money with reusable diapers and wipes. Most children would use about 6500 diapers, assuming 6 nappies a day for 3 years. Buying a brand name like Huggies or Pampers will cost around $3,000 when bought in bulk. Buying generic brand diapers will still run at about $2,000.

In comparison, cloth diapers costs around $30 a piece and you will need about 20 of them for an upfront cost of $600. Even as we factor in the costs of laundering, it would still be half the cost. And the gain becomes even larger the more kids you have!

Kids’ Clothes and Toys

You can spend hundreds of dollars on clothes and toys that your child either never wears (our baby grew out of his 0-3 months clothes a week into his life!) or never plays with (why do they always seem to love the box more than the content??).

The fact is that young kids don’t appreciate expensive things. They don’t understand brand names or character franchises until we teach them. We learnt that the hard way when we tried to show him Goofy and he thought we were excited about the tree next to Goofy – Because he had no idea who/what Goofy was and just loves being outdoors.

Branding only works when you are exposed to it and our kid wasn’t! So before you start spending lots of money on presents, think about what your baby wants and needs. Often you’ll find that someone is a couple of years ahead of you in the parenting cycle and is more than happy to hand off their old stuff to you for free or at a bargain price.

If you need something that none of your friends or family are trying to get rid off, try a secondhand market, charity shops or low-cost stores. Places like Freecycle and Gumtree can have real treasures. The fact is, young children outgrow and stain their clothes so quickly, it is not worth investing in them. Otherwise you will only get upset when they want to play in the dirt – And that’s not fun for anyone.

Food and Childcare

Like many parents these days, we have also returned to basics when it comes to baby food. We steam and blend food ourselves to ensure it is fresh and free from preservatives and other chemicals, as well as having low salt and sugar content. This makes sure that baby starts out with healthy eating habits and lays the foundation for a good diet.

It is also much cheaper to cook your own food than buying pre-packaged foods. You can start out making small amounts and freezing them in ice-cube trays, giving baby a few cubes at a time. As the appetite increases, you can shift to making smaller portions and freezing them in containers or bags.

It is easy and I wouldn’t want to give my baby anything else. Besides, when we travelled to the US, we tried to give him packaged food. He wouldn’t eat it. None of it. We tried lots of different varieties, but he knows it’s second grade. So, there clearly is a notable difference.

Childcare is a killer in most Western countries – Australia is no exception. Not only do you spend months and months on waiting lists, after paying a deposit for the privilege, but when you finally get in, you probably don’t get the dates you want (having to start and pay for your child weeks or months before you really want to) or the days you want (only getting 2-3 days rather than full-time).

In fact, for children under the age of two, there are few discernible benefits from attending childcare. They don’t need the daily social exposure – They get sufficient interaction by playing with you, visiting friends and attending playgroups – So why are we killing ourselves to get our kids into childcare?

We made the personal choice to hire an au pair. You pay about half the price and get one-on-one personalized care. You can ask the au pair to do things a specific way, tailored to your individual child’s needs, giving them home cooked food in your home, playing with educational tools that you provide, and continue using cloth nappies (which most daycares will not do!).

It means that the au pair can build a relationship with the kid who gets sufficient attention, is responded to, and can be kept on its personal schedule (it’s not too noisy, or hot, or the staff is too busy). It also means fewer sick days, as the child doesn’t need to be removed from care everyday s/he gets sick.

Children on the Cheap

In short, saving money with kids doesn’t necessarily mean making sacrifices. It may actually mean making better personal choices in line with your philosophy and lifestyle. It’s not “cheap” to hire an au pair so your child can have the one-on-one attention it needs in the early years. It’s not “cheap” to use cloth nappies because they are better for his/her skin. It’s not “cheap” to use hand-me-downs.

These are sensible choices that benefit not just your wallet, but also your child’s well-being. So, why are we so negative about saving money? In the end, you can use this money to do something that really matters – Spend quality time with your child! And that is what really matters, what will be remembered, and what will form memories for years to come.

They don’t care whether they got the Batmobile for Christmas. But they will care whether you were there to tuck them in at night. Doing right by your children isn’t about material goods; it is about love, memories and happiness. And – as they say – the best things in life are free!