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?

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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?