Financial Statement – November

November: another great month!

Savings rate = 57%

Total net worth increase = + 8,445 EUR

This is great to compensate the crazy month of December. Even though I try to be frugal, I always end up buying a few things for some family members that would take it wrong if no gifts are exchanged + I go back to my home country and I met with so many people I haven’t seen for ages, which means I end up spending way more than normal on lunches/brunches and dinners.

Cash 8,350 +2,400
Net Cash flow Real Estate Business 2,500 +1,300
Pensions 89,890 +1,560
Security deposit for current house 2,500 0
Rental Property #1 115,000 0
Rental Property #2 120,000 0
Debt (Bank) -15,890 +3,185
Total networth 322,350 +8,445

I am now 36% FI 🙂

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Financial Statement – October

October was a very exciting month! We were able to grow our net worth by 9.285 Eur, which is the maximum we have been able to do so far. There were a couple of reasons for this success:

  • Our savings rate was 57%, which is probably the highest value so far. I calculate our savings rate based on our salaries and I do not consider the cash-flow yield by our real estate business. No big or unexpected expenses this month!
  • I have adjusted the value of our rental properties and increased the overall value by 2000 Eur. Still, the values I consider are at least 20% below market value, but I want to be on the safe side here in case of a market crash. To compensate for this, I have decreased by 1000 Eur the money we expect to receive when we leave our current flat. Due to our baby, the flat is not as in good shape as it should, I am assuming we need to spend some money arranging the walls and the floor before we leave (2500 Eur is my current estimation).
  • Our real estate cash-flow has yield us 1.200 Eur net, which is amazing especially taking into account that we have hardly any work and it is not high season anymore.

 

Cash 5,950
Net Cash flow Real Estate Business 1,200
Pensions 88,330
Security deposit for current house 2,500
Rental Property #1 115,000
Rental Property #2 120,000
Debt (Bank) -19,075
Total networth 313,905

I am 35% FI (still 65% to go!). Seems like a lot but I think the hardest work is done, which is to get enough cash that allows you to start investing and creating passive income. In our case, passive income is generated through real estate but you can of course decide on what products suit you the best.

Currently, I am having another dilemma: invest the money we are saving or save it and buy a property for us to live in the future?

To FIRE or not to FIRE?

I have been recently been thinking a lot about my options in terms of reaching or not reaching FI. My FIRE number, for me and my family, is around 900k and our net worth is currently a bit over 300k, which is great, but I am still veeeeeery far away. My options are the following:

  • Stay for 6 more years in Germany and reach my number (I am Portuguese and currently living in Germany where salaries are much better compared to Portugal) with the caveat that around 30% of my networth would be in my pension, i.e., I could only have access to it at 55 (whaaaat? I am only 32!);
  • Stay for 1 more year in Germany, reach barely half FI and go back to my home country where prices are lower and with a passive income that would cover 30/40% of my expenses + some cash.

This is probably a typical dilemma that many people in this community face: wait for FI or risk and try a career that does not yield that much money but you feel passionate about? In my case I have also strong personal reasons for wanting to go back to Portugal, I am waiting for baby #2 and I would really like to raise them near my family and near our friends which are having babies at the moment as well. I could also use some help from family members 🙂 But on the other hand, I feel like I am bailing on my own plan if I go back and that we did the effort of saving and investing for nothing, i.e., we would still would need to work.

I recently listened to this podcast from Journey to Launch and I am in a very similar situation as her: in a corporate job with a great salary, waiting for a baby, and it got me thinking whether I should just take this opportunity where I will be out of the workforce anyway (due to my maternity leave) to not go back to this job. I am definitively a Type-A personality and I know I will not be able to stop working, I need projects, I like business interactions and I am passionate about so many topics. None of them would allow me to get a similar salary to the one I have now (not even 1/3) but I feel like I could give it a try. Worst case scenario: I am young and I could go back to working in Banking in my home country. Not ideal as salaries are not very high and hours are long..

Problem: my partner believes we should stay for a couple of more years and that my 900k estimation is too optimistic, especially taking into account that we will soon have 2 kids. He is also very risk adverse and does like the instability of an entrepreneurial lifestyle.

What are your views? “Suffer” until you reach FI or reach half FI and risk a new job/occupation that fulfills your heart but would still have to yield some cash?

Financial Statement – September

It’s been a while I don’t update my financial statements (last time was in May!) and many things happened during this period:

  • I stopped investing in Peer to Peer: it yields me less cash flow than my rental properties and I believe that once the economy turns around many of these debtors will not be able to repay the loans. It will probably not happen now but I think it will at some point.
  • I have established a proper company to manage my 2 rental properties that are currently rented for tourists. It is more efficient in terms of taxes.
Cash 3,600
Peer to Peer 0
Pensions 86,780
Security deposit for current house 3,500
Rental Property #1 100,000
Rental Property #2 133,000
Debt (Bank) -22,260
Total networth 304,620

My net worth has actually increased very little from May to September, less than 24k. This is due to the fact that we bought a second house and had to pay extra taxes, which we do not count as equity, and also the fact that we bought furniture for the new apartment and I do not account for that either in my net worth calculation. I have also decreased by 500 Euros the amount of security deposit for the current house. In general, I prefer to be on the conservative side.

From now on, as no costs related to the business/rental properties are expected, apart from the recurrent ones, we should be able to keep up with the 50% savings rate on our salaries and hopefully increase our net worth by around 8k every month. We now have income from our salaries + passive income from 2 rental properties. Our 2 rental properties should yield between 400 and 1800 net per month, depending on the season, which is very exciting.

Now that we are having extra cash and real estate prices are completely crazy, where shall we invest? I am thinking index funds dividend related. What is your view?

Financial Statement – May

Even though our savings rate was not great (48%) we managed to take care of many things related to Property #2. We will pay it completely over the next couple of days/weeks, therefore I have already excluded the cash we are about to pay from the Cash category.

Cash 600
Peer to Peer 863
Pensions 78,030
Security deposit for current house 4,000
Rental Property #1 100,000
Rental Property #2 133,000
Debt (Bank) -35,000
Total networth 281,493

Very soon I will update you on the real numbers of my first real estate investment which is yielding more than what I had previously calculated!

You have 168 hours this week

Reading is one of my passions. I love reading about personal finance, behavioral economics, psychology and business in general. I literally cannot fall asleep if I don’t read, even if only for 5/10 minutes.

About 2 weeks ago, I had nothing to read and no ideas on what to read next. I found this post from Paula Afford Anything and the 168 hours book she recommended sounded interesting. I was feeling a bit overwhelmed trying to manage a full-time demanding job, a baby, buying property #2, a constant effort/research on how to save more and where to invest. A book on time management was exactly what I needed, in particular one tailored to families and written by a woman.

Laura is amazing (you can listen to her TED talk to understand what the book is about) and her book made me feel I really have more time than what I think I do.

Hours in a week 168
Sleep (8 hours/night) 52
Work (8 hours/weekday) 40
Commute and getting ready for work (1.5 hour/weekday) 7.5
Total time left 68.5

A week has 168 hours. After accounting for sleep, work, commuting and personal hygiene/getting ready to work, I still have 68 hours left to do whatever I want. The key is to use this time on what makes you happy, which for me is my family, exercising and my sidle hustle (my investments, this blog and my passion for personal finance).

Laura made me realise than I actually spend more time with my baby than at work! Even though I only see him 3 hours a day on weekdays, which feels too little, I have the whole weekend to be with him. Plus, I found strategies to maximise the 3 hours I am with him by outsourcing what I don’t prioritise in my life. I realised I was spending too much time going to the supermarket, cooking, some days I would also do some laundry and this was all done, of course, during these 3 hours I was supposed to be with him. Non-sense! I have decided to talk to my cleaning lady and double the time she comes every week. She will, not only clean the house, as she did before, but also cook and take care of our clothes. We have also started shopping online, which saves us at least 1 hour per week. Now, I am fully enjoying these 3 hours stress-free with my baby and it is so much better/easier for everyone.

On the other side, yes, I am spending more money than what I “should” which seems not to be in line with my financial independence goals. I gave a lot of thought to this, since I consider myself frugal, but I think I will try to be more easy going from now on and think about my core competences, where really I want to spend my time on. And, I have to admit, I don’t like home work, I hate cleaning, doing the laundry, I don’t mind cooking but also don’t love it. I do like: spending time with my family and friends, my work, my side hustle, doing exercise, in particular yoga, reading, thinking about where to invest next and how to help people having a healthier relationship with money. This is where I will spend my 68 hours per week that I have left, on the things I love, and not on the things I hate, which I was doing just to save money. Plus, I don’t plan to retire early, my goal is finance independence but not early retirement. I want to create passive income so I can feel free to pursue my passions, try my luck by starting my own company and hopefully make some money while helping others.

What I have changed in my life after reading 168 hours:

  • I now have a cleaning lady 6 hours every week instead of 3
  • I use my lunch hours very effectively, either to take care of something I need, or to go to the gym or to have lunch with friends (I schedule appointments to make sure I have lunch with people I care about and not just because they are my work colleagues)
  • I don’t feel bad about spending money on books, it is an investment towards my financial future and I love reading
  • I am more organised and I plan more, to make sure I am able to do everything I want during the week
  • I am more present, I try not to get distracted and enjoy the moment. If I am working, I try to focus and get things done as quickly as possible. If I am with my family, I don’t even look at my phone.

This book is of course tailored for people living in developed countries and who have their basic needs fully fulfilled. You have time for everything. You just need to define your priorities and organize your week around them. Time is more important than money. Do you agree?

Financial Statement – April

We had an increase of +6.6k in net worth which I am pretty happy about! Plus, this month we had an additional cost of 0.8k because my husband purchased the monthly transportation ticket and, even so, we managed to save a lot!

Cash 55,800
Peer to Peer 858
Pensions 76,540
Security deposit for current house 4,000
Rental Property #1 100,000
Rental Property #2 133,000
Debt (Rental Property #2) -94,000
Total networth 276,198

Savings rate = 53%

Our savings rate is not great and we could definitely improve it. It is amazing what you find out when you really start computing the figures! I would have guessed that my savings rate is around 60/70%.

Even though we are saving 6.6k, we are still spending 5.9k a month which sounds like a lot (and it is!). Almost 40% of that is on rent which we are not willing to compromise because 1) we love our apartment and it is quite cheap for the type of apartment/area in which we live 2) is it very convenient/time saving that both of us live close to work and to the creche 3) additional costs when moving into a different apartment.

My husband is not very keen on tracking expenses and for the sake of my marriage I have decided not to force him to 🙂 He is relatively frugal by nature and willing to engage in actions that allow us to save more money but he does not want to track every single expense. I get it and accept it. This month we have decided that from now on we will go to the cheaper/discounter supermarket at least twice a month. I am not really sure but I would say that our second most significant expense is groceries, as I think we spend more than 500 Euros in supermarket on a monthly basis. I hope we can go down by 100 or 200 Euros.

Very soon we will be buying Rental Property #2 and hopefully have it ready to rent it to tourists before August. Read more about our strategies in my previous post on Rental Property #1. I still cannot believe how much we have achieved in the last 3 years, from only slightly above 0 in net worth to almost 300k and from 0 properties to almost 2!