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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Financial Statement – March

Savings rate = very difficult to calculate this month but for sure higher than average.

Total net worth increase = + 73,150 EUR  – Mostly due to the fact that we were able to buy our (future) primary residence and, with my husband’s yearly bonus delivered this month + some cash we had available + some financial donation from both our parents, we were able to pay for more than 20% of it in cash. Therefore, our debt is only 317k, whereas the value of the property is 380k. I am, again, being conservative here, as all our apartments have costed us more than the value I consider in my net worth calculation.

In the next months, we will focus on aggressively paying down this debt. We will pay more than 3k of capital every month. We prefer this approach because we currently have high salaries and we want to take advantage of those (who knows until when we have high salaries..). Meanwhile, we will investigate the possibility of using our Pensions money to pay for mortgage, as our pensions currently yield very little and it is very inefficient to leave our money there (unless we legally have to).

Cash 16,600 +5,750
Net Cash flow Real Estate Business 3,500 +200
Pensions 100,210 +1,750
Security deposit for current house 2,000 +0
Rental Property #1 115,000 +0
Rental Property #2 120,000 +0
Primary Residence 380,000 +380,000
Debt (Primary Residence) -317,300 -314,550
Total networth 420,010 +73,150

In my last post I have talked about the possibility of selling Rental Property #2, but at the end we have decided not to sell it and take on more debt instead. We feel less free because we have debt, but on the other hand, we are building passive income with both Rental Properties. Selling one of them would mean less passive income in the future.

According to my previous FI number, I would be now 47% FI. However, I was reviewing my numbers and I decided to increase my family FI number, in particular due to the childcare expenses that we will have in the next following years. According to my new number, which is now just slightly over EUR 1 million, I am now 39% FI.

Financial Statement – February

Savings rate = 61%

Total net worth increase = + 7,905 EUR

This month we were pretty good in terms of savings from our monthly income. First of all, I am already on my maternity leave (3 weeks to meet baby #2) which means I am spending less money overall on small things, like going for lunch and transportation. I also have more time to go to a cheap supermarket and, in addition, we have decided to stop ordering food. Deliveroo was eating a chunk of our budget and we were ordering 2 or 3 times a week. It is amazing how much money you can save by only changing small things!

I managed to pay the overall debt for Property #2 and my husband has only very little to pay off. We want to get rid of this debt because we are thinking about buying our primary residence as I have told you in my previous post. We will ask for another personal loan for that purpose but the conditions would be much worse if we have 2 open loans. We are now struggling with the option of selling one of our Properties that we are currently renting short-term, we are not sure whether to do it or to ask for a proper mortgage. Tricky decision as I am very frustrated with the amount of costs you pay when you ask for a mortgage, even with a low interest rate environment! But, on the other hand, selling one property would significantly decrease my future passive income. So, we are still undecided!

If you look at my past financial statements, the real estate business is not yielding much money in the last couple of months, which is mostly due to the fact that it is low season, which means less cash per night and lower occupation rates, plus it is winter, so overall increased costs, in particular heating costs. The revenues should start increasing from April onwards, which should boost our net worth, and also allow us to have more cash to use to pay for our primary residence.

Cash 10,850 -650
Net Cash flow Real Estate Business 3,300 +100
Pensions 98,460 +1,730
Security deposit for current house 2,000 +0
Rental Property #1 115,000 +0
Rental Property #2 120,000 +0
Debt (Bank) -2,750 +6,770
Total networth 346,860 +7,950

I am happy overall just by seeing that we are approaching the 350k networth. Seems like a cool round number to me 🙂

Financial Statement – January

Savings rate = 45%

Total net worth increase = + 9,905 EUR

My increase in net worth is mostly due to an adjustment I made on my pension and not related to any “real” increase. I was very conservative about the amount of taxes I would pay if I decide to retrieve the cash from my pension account and I have adjusted that this month. This adjustment represents a 3,6k increase in my pension value.

I got a small salary increase and a small bonus. Unfortunately, the small bonus went almost entirely to pay for the adjustment of costs than landlords in Germany do on a yearly basis + some furniture we bought for baby #2, which will come at the end of March (very exciting!). So yes, even with a salary increase and a bonus, our savings rate was lower than usual.

Cash 11,500 +1,850
Net Cash flow Real Estate Business 3,200 +100
Pensions 96,730 +5,270
Security deposit for current house 2,000 -500
Rental Property #1 115,000 +0
Rental Property #2 120,000 +0
Debt (Bank) -9,520 +3,185
Total networth 338,910 +9,905

I am now 38% FI 🙂

Financial Statement – December

Savings rate = 49%

Total net worth increase = + 6,655 EUR

December was not an amazing month as our savings rate went down mostly due to gifts and money spent going out with friends and family. We could have though about ways of being more frugal but we were a bit lazy this Christmas to do it!

We still manage to pay off our debt and to increase our cash reserves, so overall not bad. However, it is low season for our short-term real estate business and therefore it only yield 600 Eur.

Cash 9,650 +1,300
Net Cash flow Real Estate Business 3,100 +600
Pensions 91,460 +1,570
Security deposit for current house 2,500 0
Rental Property #1 115,000 0
Rental Property #2 120,000 0
Debt (Bank) -12,705 +3,185
Total networth 329,005 +6,655

This is lower than my expectation but hopefully next month, with a salary increase and a small bonus, the goal of growing my networth by 8k every month will be real again 🙂

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 🙂

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?