Financial Statement – December

Our savings in December.

Euros November December Gain
Mine 36,500 38,800 2,300
M 24,600 28,200 3,600
M Pension 27,000 30,000 3,000
My Pension 23,350 24,750 1,400
House guarantee 4,000 4,000 0
House paid 55,000 55,000 0
Total 170,450 180,750 10,300
Cash 61,100 67,000 5,900

Overall, I am satisfied. We managed to save, in terms of cash, 60% of our salary and our total equity has increased quite significantly, not only due to my pension fund, which is paid by my employee every month, but also because we have finally checked how M’s pension is worth and we have realized it has grown in value quite significantly.

According to Mr Money Mustache we would need around 12.5 years working until we reach financial independence. However, we need to bear in mind that: 1-we have already started this journey almost 2 years ago, and 2-if you plan to move to a low cost living country in the future the number of years you need to work actually decreases.

I am also very excited by the fact that, from this month onward, M’s salary will increase 15% and my salary will probably increase by 2% (still pending the final confirmation). Even though some extra expenses are expected, as we are having our first baby soon, they will certainly be lower than the salary increases.

Happy new 2017 and wish you all a quick and fun path towards financial independence!



You are your biggest asset

When you have no assets that can generate passive income, think of yourself as your biggest asset. Generate the maximum possible income, have low expenses, with the minimum amount of time spent working.

Think of your time spent at work as an investment, i.e., try to get the most out of your work, not only in terms of cash-flow but also in terms of what you learn from it. I have realised that since I have assumed I will not work many more years and, therefore, I see my work as temporary, I take most advantage of it, I enrol in all kinds of interesting trainings, I put myself in challenging situations because I feel I can learn from them and I am not afraid of failure anymore, because I know I will also learn something from failure. I am also more confident to say what I think in meetings and more prone to apply to higher level positions. So, I guess I am better at work and this is due to the fact that I have decided I do not want to work forever and take it as a temporary situation. Ironic, right?

You are your biggest asset! At least until you have no other assets you can live from, think of yourself as an investment: you have to yield the maximum return to your shareholder, which is yourself!

Financial Statement – November

Here is the result of our savings in November.

Euros October November Gain
Mine 34,250 36,500 2,250
M 23,200 24,600 1,400
M Pension 27,000 27000 0
My Pension 21,950 23,350 1,400
House guarantee 4,000 4,000 0
House paid 55,000 55000 0
Total 165,400 170,450 5,050
Cash 57,450 61,100 3,650

I am not totally satisfied with the result as I believe we can save way more every month. We had some extra expenses this month due to the fact that we have bought some additional furniture, Christmas gifts and maternity clothes but, on the other hand, we did not travel so no money spent on that. I would expect, every month, to save, in terms of cash, 5000 Euros.

Next month will be better 🙂

Financial Statement – October

I am currently just updating you with my savings as I have to admit I do not account properly my expenses every month (I should!)

Mine 34,250
M 23,200
M Pension 27,000
My Pension 21,950
House guarantee 4,000
House paid 55,000
Total 165,400
Cash 57,450

I am very conservative in what concerns the house guarantee that I expect to get back when we move out of the new house. We have actually paid 5200 Euros but I will assume we will only get 4000 Euros back. Additionally, in M pension, since we are not sure how the pension fund is performing, I will assume a growth rate of 0%. Better to be conservative and then have positive surprises, I believe.

Despite being an unusual month in terms of expenses, as we have just moved into a new bigger house, I am happy to say that our equity increased by 4765 Euros.

Our cash has decreased due to the fact that we have paid 55000 Euros in our first real estate investment. The rest of the payment (45 000 + taxes + furniture) will be paid once the apartment is totally built, which should be in December/January. I am very excited about my first investment and looking forward for my first passive income generator to start working!

The real cost of owning a car

Owning a car is more expensive than what it seems. Even a cheap car can turns out to be a very expensive deal. Additionally, cars require not only expected expenses (cost of the car, taxes and insurance) but they can also mean non-expected significant expenses. In particular for new cars, the money that you loose on devaluation is very significant.

Check my calculator (The real cost of owning a car) with 2 examples and feel free to play with it. The values on the excel sheet are in Euros and they should be considered as pretty representative examples of the European reality. In the calculator I assume that the car will be sold after 5 years at a certain price that can be defined.

A new car with a price of 26k will cost, on average, 500 Euros per month and even a cheap used car with a price of 5k will cost more than 300 Euros per month. Are you sure you can’t find other options to travel around? I understand not everyone can walk to work or go by bike (luckily I can go by bike) but first analyse all public transportation options. Public transportation monthly tickets normally pay off, in particular in Europe, which is the reality I am most familiar with. In Frankfurt, the monthly pass is 85 Euros per month, but, if you pay annually, you get 2 months for free, which means that you are actually paying only 71 Euros per month. These discounts are quite common in other cities as well. What can you do?

  • Be aware of the costs associated with owning your car. Yes, even a cheap car is expensive!
  • Analyse public transportation options and discounts associated with it.
  • Move closer to work. If you live together with your partner, try to move at least close to either your work or his/hers to avoid paying 2 monthly tickets. Another reason for renting instead of buying: flexibility in dealing with other costs.
  • Check other options for when you really need a car, i.e., going somewhere without public transportation or if you want to travel for the weekend. You should be able to find cheap rental places. When we need a car for a few hours (hardly ever, only for very specific reasons like going to Ikea), there is an app that allows us to pick up some cars that are parked in the city for 3 Euros per hour + 0.26 per km. When we need a car for the weekend, we check only the cheapest car available and we book it, normally at around 30 Euros per day.

Another reason for renting a car when you need one instead of buying is that also you can take into account the costs associated with the car in the travelling you are going to make. When you own a car and you travel for one weekend, it may seem you are travelling for free, except the cost of gas, but actually you are not. When I rent, I know I have to spend additional 60 Euros, which I take into account in the total cost of travelling. I have no unexpected costs now which allow me to predict much easily how much I can spend and save.

Do you agree with this approach or think it is absolutely impossible to live without a car?

Starting investing: my strategy

With more than 100k in the bank account, we have decided it is about time to start creating passive income. Real Estate is our first bet. Rich dad poor dad was probably the book than mostly drove me towards this journey of reaching financial independence and I am following some of the rules I learnt there, while adding some of our own knowledge about the real estate market in Portugal.

  • Invest in a market that you know

Portugal is definitely the way to go. We are from the 2 biggest cities in the country and we truly think that investing in the center of a city there is a safe bet. Prices are high but due to the limited space and to the increasing investment Portugal has done in previous years in transportation, which makes living in the center, without a car, possible and valued. More and more Portuguese value being close to work, supermarkets, restaurants and the possibility to move around easily to other places on the city. It is actually a European trend but it has started late in my country. It is important to know your market, not only because you need to analyse the legal contracts, but also to easily understand the taxes to pay and know the best areas to invest in.

  • Analyse the trends but do not buy an apartment exclusively based on one trend

Tourism in Portugal is increasing very significantly. Renting an apartment through AirBnB is highly profitable and many old buildings are being totally rebuilt for that purpose. Naturally, tourists pay more to stay in the city center and prefer to stay in what we can call typical apartments, i.e., not necessarily big but with national characteristics. This is what we are aiming for in the medium-turn, as the rate of return is quite high. However, we are aware that in a few years this trend may not be as strong, in addition to the fact that supply of houses is actually increasing, which may led to a decrease in prices charged per night in the future. This is why we will invest in a studio in the city centre, which can easily then be rented to students or young couples who do not have kids yet.

  • Do not aim for cheap/low-rent investment

You can always buy a cheap apartment, ask for a low rent and still make a profit. I have to tell you, it is risky, there is a high chance you have an empty apartment for some months, tenants who may not pay, more issues with the construction and neighbours. You do not have to aim for high-end but be aware that the low-end can be very costly.

We will invest 95k in a new 40 sqm studio in the city centre, next to the metro, train and near many supermarkets/restaurants/bars. For your information, check below our expected, but slightly conservative, annual returns on this investment, based on the total cost of the apartment, i.e., including all the costs, such as taxes and furniture in the initial price.

Total cost 101,085
House price 95,000
Registration costs 375
Taxes 1710
Furniture 4000
Long-term rent AirBnB
Annual return 5.03% Annual return 7.64%
Total profit/year 5080 Total profit/year 7720
Average profit/month 423 Average profit/month 643
Months occupied 12 Months occupied 12
Monthly rent 500
Apartment costs/monthly 25 Price/night 60
House insurance/annual 100 Occupation rate 67%
Annual taxes 520 Property manager rate 30%
Monthly expenses 120
Apartment costs/monthly 25
House insurance/annual 100
Annual taxes 520


  • Apartment is not yet totally built – it will be in December – and there can be a delay in construction, which would mean a few more months without earnings. Not very likely though as we have visited the apartment a few weeks ago and it seemed quite advanced. The only risk here is the government licence, which can only be granted after construction and may delay the process.
  • I am not a technical expert; therefore I cannot predict the problems we might have with the construction, where we will have leaking or other issues. I hope not!
  • Construction company going bankrupt. Very low risk as they have other buildings in the city, apart from being property managers of some of them. Also, they are very exposed, very active on social network. But it is still a risk!

To diminish the risks, I have talked to a lawyer to analyse the situation and to make sure there is nothing wrong with the legal contract. Additionally, I did an extensive analysis on the evolution of the real estate market and try to be realistic/towards the pessimistic side with my assumptions. I have also investigated the construction company because they are rather new in the market. But I have realized the risks are rather low and a passive investment which yields, just on passive income, i.e., without taking into account the possible valuation of the asset, which I believe might increase in value, between 5% and 7.6% is a rather good investment.

How did I save the money I currently own?

Most of the money I currently own was saved during the last 1.5 years. 2 years ago, me and my husband started looking for high(er) paying jobs outside our home country, which is a low-paying/low-opportunities country, and we actually found a job more or less at the same time but unfortunately in different countries. M went to Switzerland and I came to Germany. The good thing was that we actually were quite close, if you consider 5:30 hours by train or 1:30 flying close. At the end, we got used to it and we saw each other every weekend, either in one of the places or other places, as we took the opportunity to get to know other cities nearby and countries. I have realized what a beautiful country Switzerland is and I got to know many other cities in Germany, Austria and Poland. Yes, we could have saved more but your relationship is definitely more important than the savings rate, so I have decided to save on other things:

– Renting an unfurnished and cheap studio
Luckily my employer paid for all my furniture transportation from Portugal and therefore I could find a cheaper apartment as unfurnished apartments are generally cheaper. The studio was maybe a bit small for 2 but for 1 person it was more than enough.

– I bought a bike and I did not spend money on car/taxis/metro
I am lucky to live in Frankfurt, which is a very safe and relatively small city and that allows me to bike everywhere. I have saved not only 70 Euros a month, which normally people pay for monthly public transportation pass, but also I hardly ever took a cab. In addition, only in exceptional situations, i.e., if it is raining a lot, I take the metro. Currently, I am 4 months pregnant and I plan to bike everywhere until I feel good, hopefully till the end of my pregnancy! I did not and do not plan to buy a car, even though everyone tries to convince me cars are very cheap in Germany and I should do it. I did not fall into the trap of buying a car and having huge costs and worries every month. Not only you have to pay parking, taxes, insurance but also devaluation is a huge cost. If we need a car, which is very rarely, we can easily rent it for around 20/30 euros a day.

– I was always paying attention to cheap ways to get to Switzerland or other places to visit
I was always checking the cheapest way to travel, either by train or flying, not only to see my husband but also to visit my family back in Portugal. For Christmas and other high demand periods, I always bought the tickets at least 6 months in advance.

– I did not change my lifestyle
My salary increased by almost 4 times than what I was previously earning in Portugal. Germany is a relatively cheap country, only slightly more expensive than my home country. There is a huge temptation to change your lifestyle, i.e., buy expensive clothes, expensive furniture, go to fancy places and not to be careful about money in general. However, apart from travelling more often and buying a good bike (1 000 Euros), I did not change my habits. I still hardly ever buy clothes, I always have lunch in my canteen, go for dinner not more than once a week and hardly ever to expensive places. Most important of all, all the expensive things I bought/experienced I have regarded them as what they are – a luxury – and did not allow them to take any role in my habits. I did experience Michelin star restaurants but actually my favorite place to have dinner in Frankfurt is still the Moroccan place around the corner, where you pay 10 Euros per person and the food is amazing! I just did it for the experience, which is valuable for me, the same way I went skiing and did a biking competition of 110km, all of those are somehow expensive, but again, the most important thing is not to make them a part of your habits and regard it as an experience. On a normal weekend, we go biking around Frankfurt and we bring lunch and water with us, which makes it an almost free activity. And I love it!