Financial Statement – January

I have just realized that my last post was written on September 2017, almost 5 months ago!!! Lack of time I could say? But let’s face it, we never really have lack of time, just time management issues or different priorities. I have been a bit busy with managing working full-time + having a baby + my first real estate investment. And, although I feel having a blog is useful as it makes me fell accountable for how I manage my money, I couldn’t find the time/motivation to sit in front of a computer. I missed it though!

Since it is of no use crying over spilt milk, I will just go on and update you on what happened in my life in the past 5 months (many exciting real estate news!) but first I want to update you on my financial net worth at the end of January 2018.

Cash 44,900
Peer to Peer 700
Pensions 71,920
Security deposit for current house 4,000
Rental Property #1 100,000
Rental Property #2 133,000
Debt (Rental Property #2) -94,000
Total net worth 260,520

This is, of course, mine and my husband’s.

Check out the next post to see how I am managing my first real estate property and how I am currently on my way to buy the second one!

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Tracking my expenses

Yes, I do not (yet) track my expenses. I know how important it is but since I was pretty happy with our savings rate (around 60%) and my husband was not a fan of tracking expenses I decided there was no point in doing it myself.

Luckily, nowadays banks do this for you since they categorize your expenses automatically. You just need to make sure it is the right category and categorize a few when the bank does not have information on the correct category of a specific expense. The only thing you have to do is try to use your card always, if possible. If it is not possible and you need to cash out, which in our case it is only to pay the cleaning lady and some lunches/coffees, it is fine. So, I managed to convince my husband and we will track our expenses from today onwards!

This graph below is my idea of how I currently spend my money. In one month, I will compare it with how I actually spend my money.

expenses

Keep posted, I will keep you updated on my real expenses and on my first month as a real estate investor. I have learned so much in this process of buying a house for short-term rental and hiring a management company and I will share all the tricks and tips that worked for me!

Is renting really too expensive?

This is by far the best calculator I have found online that provides an estimate between the cost of renting vs the cost of buying. I love this calculator because it takes into account all the costs of owning a house, which are underestimated by some people, in addition to the opportunity cost of not investing in other assets that might yield better returns, in particular on the value of the down payment.

This should be used to evaluate the pros and cons of buying the apartment/house you will live in. Do not make the mistake of just comparing the monthly bank payment with the monthly rent. Much more (significant) costs have to be considered when owning a house.

An image worth more than a thousand words

The Eurostoxx 50 and the S&P 500 have historically been fairly correlated. However, since 2009/2010 we clearly see them splitting, as Europe is rather stable and the US presents amazing returns.

Index fund investing as a simple strategy is more complex than what John C. Bogle says. There are too many options to choose from. For investing in Europe I am confident that ishares is the best, do you have any other suggestion?

Naturally many other factors have to be taken into account when deciding what to do in terms of investment, in particular which index funds to buy. But, as we know, there is no point in thinking too much about an investment strategy; even financial experts rarely beat the market. So, would you say there will be a crash soon in the US? Shall we invest in the EuroStoxx? Let me know your views!

A hungry man is not a free man

Most of the people spend all their life driven by others’ expectations or by extrinsic motivation, as Dan Pink very accurately described in his book Drive: The surprising truth about that motivated us. It basically means we spend our lives looking for approval in the society mostly through money and/or recognition at work. However, this only gives us a temporary boost of motivation/satisfaction/happiness. The permanent happiness is found in the intrinsic motivation which, according to Dan Pink, relies on three principles: Autonomy, Purpose and Mastery.

My personal journey to financial freedom is actually part of a bigger journey to autonomy, to finding purpose and to having time to master all the issues I have always been interested in. However, I have to admit that the short-term focus is extrinsic, that currently I am focused on making money, not for the purpose of consumption, which is used by mostly for people as a way to fell that they belong to a certain social status, but for the purpose of saving, of being free from every-day bills. As Adlai Stevenson very wisely said A hungry man is not a free man. Therefore, only when free from obligation we can be free to enjoy life at its fullest.

Financial Statement – April

To all those people who think having a kid is very expensive.. it is just not true (in Europe)! Yes, there are a few things which are expensive and you need to spend money on (stroller, crib, baby monitor, etc) but apart from that there are so many cheap and cute options for baby clothes! I also use cloth diapers so basically I have spend 250 Euros initially and that is it! Also, the truth is you end up going out much less, which means less money spent on dinners/cinema/etc + gifts from family and friends + not falling into the trap of thinking you need to buy everything baby related = savings

Euros March April Gain
Mine 47,080 50,080 3,000
M 36,770 40,520 3,750
M Pension 30,000 30,000 0
My Pension 29,050 30,490 1,440
House guarantee 4,000 4,000 0
House paid 55,000 55,000 0
Total 201,900 210,090 8,190
Cash 83,850 90,600 6,750
Money to be spent in the apartment 44,585 44,585 0
Cash – debt 39,265 46,015 6,750

We have saved almost 65% of our salaries which is actually the number I always had in mind when I started this journey. I am pretty happy about that 🙂

Financial Statement – February and March

Those last months have been crazy! My son was born on the 6 of March and I couldn’t be more happy (and tired!). There was really no time for anything, I could now even separate what I saved in February and March. So, here is the financial statement of both months together:

Our savings in March (including February):

Euros January March Gain
Mine 40,750 47,080 6,330
M 30,770 36,770 6,000
M Pension 30,000 30,000 0
My Pension 26,170 29,050 2,880
House guarantee 4,000 4,000 0
House paid 55,000 55,000 0
Total 186,690 201,900 15,210
Cash 71,520 83,850 12,330
Money to be spent in the apartment 44,585 44,585 0
Cash – debt 26,935 39,265 12,330