Financial Statement – April

Savings rate = 48%

Total net worth increase = + 6,440 EUR

Our savings rate was not amazing this month because we had some expenses still related to the loan for our primary residence (which we do not yet live in but plan to do in the next 6/12 months).

Cash 18,100 +1,500
Net Cash flow Real Estate Business 4,000 +500
Pensions 101,930 +1,720
Security deposit for current house 2,000 +0
Rental Property #1 115,000 +0
Rental Property #2 120,000 +0
Primary Residence 380,000 +0
Debt (Primary Residence) -314,580 +2,720
Total networth 426,450 +6,440

Our cash did not increase significantly due to the fact that we have prioritized paying down our debt. In the following months we will have monthly amortized debt of over 3k every month (this only includes capital, i.e., no interests and no insurance are considered), so on average we will pay almost 4k every month which is quite aggressive. It is great though because we have an obligation to save. Since it is a huge monthly commitment, we really need to make sure we save even on the small things, which we did this month and we will have to continue doing over the next months.

I prefer to aggressively pay down debt in a short period of time for 2 reasons:

  1. I dont like debt. I know it does not sound very rational and might sound weird from someone who studied finance. But, more broadly, I dont like money commitments, especially the ones I know I am losing money, which is generally the case of a mortgage. There are so many costs that the banks charge you (more info on this post), I just feel I want to get rid of this mortgage as fast as I can.
  2. The faster you pay the loan, the less interests you pay. Even with a high interest rate, if you pay your loan fast enough, at the end of 3/4 years, you end up paying very little on interest rates because you are amortizing the capital very fast.

Some people feel more confident knowing that they have to pay a very little amount per month but what makes me feel comfortable is having little or no debt. So, I prefer to struggle in the short-term and have high monthly payments because I know I currently have a high salary which allows me to do it than just delaying this for the future. This is my way of buying my future freedom.

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2 thoughts on “Financial Statement – April”

  1. Congrats on a good month! I know you don’t think 48% savings rate is good, but I think it is pretty damn cool to save that much of your income. Not a lot of people can do that! 🙂

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