DutchGirl's journal

[Quadalupe]

I think that's a very powerful realization you just made! I hope it puts you in a frame of mind which allows you to cope better with stress at work and such, since you know you don't *need* this job so bad anymore. And even if you still need to find a new job afterwards, you can search for it more leisurely. This peace of mind is nice to have!

Did you share this revelation yet with your BF? It might help him too.

[steveo73]

Hopefully we can just keep going until we're truly FI, but this feels like step 1: if one of us loses their job or quits, there will be no need for panic.

My wife wants to quit but it would be hard for us to survive on her wage. I really think though that having 2 incomes in case something happens is pretty important up until becoming FI.

Once we reach FI I think my wife will quit work however I think I'll work for a little while longer to provide some buffer and potentially increased spending ability whilst in retirement.

[Hankaroundtheworld]

We could move to somewhere in Africa or so, but I don't want to do that. So we'll have to keep working on it. Together, our savings rate is something like 30k euros per year, so maybe in five years I can tell him: "Yes, we can go live in Hungary, next to Hankaroundtheworld ... "

You are most welcome DutchGirl, our house in Hungary is almost finished (renovating), and we expect to move in by end of year. Do not be mistaken by Africa, it is more expensive than you think (if you want to be safe & have reasonable comfort). In Hungary, you can easily live on 1000 euro / Month for a couple and have a good life. But.... unless you have "online" work, there is not much work to get in Hungary to generate income, so, it is perfect for semi-retirement.

[Hankaroundtheworld]

Netherlands are plenty nice and warm enough during the winter, although Hungary does sound really nice too.. Igen! Maybe we all join Hankaroundtheworld - Is daar nog plaats?

There is plenty of opportunities in Hungary, the overall population is shrinking, there is beautiful nature (like in south of France), people are very friendly, you can buy enough land to become self-organized, get some animal stock, vineyard, walk thru nature, and sometimes combine with visiting truly beautiful cities in Hungary (nice architecture, clean, good outgoing options) and nice thermal bads, more sunny-days than the Netherlands, and last but not least, government leaves you alone, no excessive rules and control (like in the Netherlands) and no taxes if you do not work (also no tax on your possessions outside Hungary). This all, very cheap to get (the basics like house, land and transportation), less than the price of a new car. Really, Hungary is a hidden gem, probably have stayed hidden because of the language, which is difficult. That is the only thing you need to accept, you need to learn the language.

[1Vikinggirl]

Oh Hank, you make me drool - and wishing I had been more diligent with the language studies at the Lajos Kossuth University in 1989. Never thought I would roam around the world to return there so that jus goes to tell that knowledge is always helpful and that it is never possible to kmow where Life of FI will take you.

[DutchGirl]

Income 4920 euros this month; that's salary + vacation bonus + a little bit of side income (roughly a 13th month is given every May so that people can use that money to go on vacation - many need it just to pay off debts; I put it in savings and/or investments).

Expenses 3833 euros, this includes a 500 euro annual gift to a charity close to my heart, and the bill for elective health care I had in February (1590 euros). My unexpected and fun expenses per week have now dropped below 20 euros/week on average for this year, I'm happy about that.

So thanks to the high income, my savings rate is still 22% for this month; and roughly 35% from January. I hope to do better again in June, even though income will be just a bit lower again, then ; and I'm still aiming for a 50% overall savings rate for the year, but it's going to be tight.

Otherwise, May was a good month for social activities for me. I had two weeks of holiday (next holiday will be in October, ouch). This allowed me to visit family and friends, deep clean our house, get rid of some stuff, catch up with some administrative activities at work, and relax. Holidays always remind me, how nice it would be to always be boss of my own time. That's also why during holidays I always spend some time plotting my escape from work. A minimalist budget for me would be living on 1000 euros/month (400 rent and utilities, 250 groceries, 150 health care, 200 on travel, clothing, other insurances, phone bills, fun). Using the safe withdrawal rate of 4%, I would need 300k euros to be able to declare myself FI. I'm not there yet, but I'm almost at 1/4th of that, which is a decent chunk (and I'll keep going of course, and very likely the process will speed up because the assets I already have will help with the growth).

[Hankaroundtheworld]

Keep it up DutchGirl, 50% savings is a nice target. Your minimalist ERE budget of 1000 seems quite a stretch to live on (in the Netherlands, that is), but of course, if you combine with your friend/partner, then it is certainly doable.

[Cornerman]

That's a very decent chuck , nice work read your journal and it is inspiring. Keep going !

[DutchGirl]

It was very inspiring to be at the meeting. It was very inspiring to meet some people who "made it", to meet some people who are further along than I am, to meet people who are younger than I am and who at that young age are already looking consciously at how to proceed (at that age, I was just consuming rather mindlessly), and also to see how people make different choices than I do, or are using different opportunities. Maybe I can adopt some of their methods.

I also liked to really meet people and think "Hey, they want this too and they do this too, so I'm not crazy". Or maybe we're the same kind of crazy, together. Ha.

I'm still going for the 50% savings rate this year, but it looks like this month will be another 35% savings rate month. Low expenses, but also low income due to taking a holiday for two weeks in May and therefore only earning my base salary for the month (no extra hours worked). Because this was my last holiday for the year, except for one week in October, my income should go up again from now on, because I'm always working more hours and I get paid for them.

[mstrax]

Hey Dutchgirl, for me it was also a nice meeting. I'm thinking of the possibility's en was thinking, what can we do to earn more en what can we do use less. What would help is to get/do some things without a relation to money. In which ways can you get/do some things without spending money. For example we got clothes for our children en we give the clothes from our children to someone else. For our holiday we borrow some stuff from friends. I'm curious if you do the same en can give me examples.

[DutchGirl]

Hi MsTrax,

That's definitely a good idea. But thinking about it, I don't use a lot of strategies. Here are the few that I/we use:

1. The library. It's not free but it's a lot cheaper than buying a lot of books, and in essence it is sharing books with others
2. We do share meals. We invite people over and they share our meal, and then we go to them some other time and they share their meal with us. It's fun, it's a bit cheaper (cooking for four is cheaper per person than cooking for two), and it means less time spend in the kitchen per person per meal. (More time spend at the table though, but fun time).
3. Some trading of stuff, particularly within our families. I got my mother's old bike that way; it's a great bike.
4. My parents and I are still planning to do a house exchange for a week. They would live in our house, and we in theirs. They would explore the city, we would enjoy the countryside. However, due to different schedules, we haven't actually done this, yet.

I know there are small organizations where people trade their goods and services with each other. They are called "ruilkring" in Dutch. I've considered becoming a member of one of them, and then I didn't do it in the end.There are also facebook and other online groups who exchange stuff for free. I must say I mostly bring my old stuff to the kringloopwinkel and don't expect anything in return. I'm a bit lazy in that sense.

Maybe I'm forgetting something that is so obvious to me that I overlook it. But I don't think I am. If you have more ideas, let me know

Oh PS, turns out my salary for this month will be just a few hundred bucks higher than expected, which makes my savings rate look better. Hurray. I will report on it when it's July, though, you never know what happens in the meantime.

[DutchGirl]

Income in June: 2670 euros plus a little over 1000 euros tax return (mostly getting back money I gifted to charities last year)
Expenses in June: 1385 euros, a bit too much, due to more public transport costs and also a bit more fun/unexpected costs than hoped for. Still, pretty nice.

Savings rate this month: 48% . Nice
Average savings rate for the year: 37%

Net worth is roughly 73k euros, depending on what mood the markets are in . Maybe I'll see the 75k when my next salary comes in at the end of July, that would be nice.

I just spent a morning in the park with my favorite cousin and her two kids. She commented how she "knew a guy who does pension plans" and that she could get him to talk to me about my pension. Err... Thanks, I'm good. Didn't tell her much more, yet. I keep my plans a secret mostly, and I would like to be on more solid ground (like 3/4rd there) before I talk about it much to family and friends.

I've got no inspiration to tell more. I guess my brains are being baked by the current local hot weather. Very glad with the ventilator we bought a few years ago for 15 bucks. It doesn't get much use, because it isn't hot here, very often, but when it's hot, it's nice.

[radamfi]

Hi DutchGirl

I've been reading your journal for some time. The reason is that I'm a big fan of the Netherlands and have always dreamed of living there at some point. I'm a public transport and cycling enthusiast and the Netherlands is great for both of those things, and is of course by far the world leader in cycling. I'm from England so it is of course not very far to visit and I have been visiting several times a year for about 20 years. Originally the plan was to get a job there after university but I met my girlfriend then and so I've had to stay near to where she works. I'm now 40 and have been FI for a few years now. So now I'm thinking of retiring to the Netherlands, or at least live there without working for a few years. Of course almost all Dutch people speak English very well but I've been learning Dutch in my spare time for the last few years and I intend to take several months off work next year to learn full time. There is now greater urgency because if the UK votes to leave the EU in the 2017 referendum, it might be necessary for British people to get a visa to live in the Netherlands.

I have been looking at the practicality of ERE in the Netherlands. Of course it is a relatively expensive country, but I've been looking at house purchase and rental prices and while it is expensive in the west, it is quite cheap in the north-east, say near Groningen or Assen. Cheaper than where I currently live in the south of England. My main worry is the 1.2% wealth tax. All my investments are totally tax free if I live in the UK as they are in "ISAs" (Individual Savings Accounts) which I can withdraw whenever I want. If that is taxed at 1.2% in the Netherlands, that's quite an issue. Also, I was wondering about healthcare costs. In England, the National Health Service is free at the point of use, except £8.20 for prescriptions. Dentists and opticians are not free but I don't spend much on those as I have good teeth and eyes. But I understand that I would need health insurance in NL. Is there a cheap option for that? I don't mind a high deductible, if that helps.

[DutchGirl]

Hi radamfi,

Sorry, I can't really help you about the tax question. I'm not sure how it works for someone who isn't Dutch, but who is living in the Netherlands, but not working there. The rules are often different for each pair of countries, too. There are always some treaties to prevent double taxation, but how it works out for you... I have no idea. I would probably find a "belastingadviseur" / Tax Advice company who has experience with dealing with expats (and maybe in particular, expats from the UK).

As for healthcare, I am also not sure. Might there be a way to just "export" your UK health care status to the Netherlands? As long as you might keep paying taxes in the UK (perhaps on the UK assets that you have), you may also be eligible for health care in the UK, and you may be covered for a similar package if you're outside of the UK? I have no idea how the NHS works in that way. For a Dutch person living in the Netherlands, health care works as follows: you pay some money for health care through your work, it gets deducted from your paycheck and you never even notice that you had it. Then, on top of that, you select a health care plan from an insurer. Most basic plans can be bought for roughly 1000 euros per year, or 88 euros per month or so. There is also a mandated 370 euros per year that you have to pay out of pocket when you actually use health care, with the exception of visiting your GP. However, you can get a subsidy if you don't have enough income NOR enough assets (think roughly 22k euros of assets) - I don't think you will qualify for that, as your assets will probably count.

On top of the basic insurance, you can also get extra insurances. The basic insurance does cover most things. It covers catastrophic health care events that could ruin you financially (like cancer, heart disease, etc). It covers more normal things like visits to the GPs, blood tests, hospital stays and surgery for whatever, etc. There are some things that the basic insurance doesn't cover. Most notably, I think, dental care and physical therapy. But also things like dietitians, glasses, sterilization, birth control for people older than 21 years. For me these things weren't important - most things in those extra packages I'll never need, and if I ever do need them, I will just pay for them myself, that's cheaper than paying that extra premium. YMMV for the extra insurance packages; so look into what's covered with the basic insurance and what kind of extra insurance you can get (the extra packages differ per insurance company).

Dental insurance for adults is pretty much a rip-off: you pay for example 250 euros of premium per year, and the maximum they will ever pay out is something like 500 euros per year. So if you fall and break all of your teeth, or if you need two root canals in a year, you get 500 euros to help you with the dental costs, and you'll still have to pay the other costs yourself (which can run into the thousands, I guess). I'm self-insuring for that.

[radamfi]

Thanks DutchGirl for your detailed reply.

According to

https://en.wikipedia.org/wiki/Taxation_ ... etherlands

“Possessions like savings, shares, houses that are not the primary living etc. over € 21,139. are assumed to have an annual 4% yield which is taxed at 30%, regardless of the actual annual yield achieved. Consumer goods like cars and furniture, that are not held as an investment, are excluded. An Aston Martin DB5 can, for example, in some cases be taxed, as an ordinary family car will not be.”

So, suppose you have half a million euros in shares that you are living off, you would have to pay (500000-21139)*0.04*0.3= 5746 euro a year in tax. Put another way, with a withdrawal rate of 3% as generally recommended on here, you would be paying nearly half of that on the wealth tax alone. I would have thought that any Dutch person considering ERE would need to know about this. I read somewhere else that pensions don’t count, however, so maybe the Dutch tax office might class a UK ISA as a type of pension. This certainly needs careful investigation!

The health insurance doesn’t sound so bad. I doubt I could “port” my NHS entitlement to NL. For example, quite a few English students study at Maastricht university now because they have low tuition fees compared to England and Maastricht offer a lot of courses taught in English. I know they have to pay health insurance. I also think that if you moved to the UK you should be entitled to free NHS health care just like me, if not immediately, in a short time. Now, whilst it is free, a lot of people in the UK are not satisfied with NHS health care because of long waiting times so they pay for private insurance, or just pay the full price when necessary. But there is always the option of going abroad for treatment if it is expensive, especially for dentistry which is also expensive in the UK. Hungary is well known as somewhere to go to get cheap dental work.

[rube]

Yes, you pay the wealth tax and it is a disadvantage. But you are not paying any other tax on the income from your wealth (e.g. dividend, rental income, profit on stocks etc. like you do in many other countries). And for low incomes there are some other tax advantages so that working a little bit on the side and earning a few thousand each year is very profitable (from a tax point of view).
The government talks btw about making this wealth tax system more 'fair' since somebody with a savings account never made 4% in the last year's (but somebody with stocks did way more). So who knows what's gonna happen, here in the Netherlands or even in a couple of years from now in the UK.

In our case, as a family we don't need to pay wealth tax over the first 44K and not on our own primarily house. That means that at the moment we're paying this wealth tax over less then our net total wealth and effectively it is about 0.6% of our total net worth (but this will vary depending on your personal situation).

As an 'ERE' person we will need to stay flexible and if the burden becomes too high, change locations or situations in order to 'win' or at least not 'loose' from 'the system'.

But per DG advice: talk to somebody who really knows the details. Especially for expats, people from abroad there are special treaties which you might be able to use.

[radamfi]

Yes, I can see the advantage of the wealth tax system, especially not having to pay capital gains tax, which appears to be a particular issue in the US based on Jacob's ramblings. As far as I can see the Netherlands is not a bad place to save for ERE while you are working because of the lack of CGT, the good transportation situation and good wages.

Also, a good point that things could change in the future. At the moment, the UK is particularly good for investing because of the tax free ISAs and the ISA allowance has increased dramatically in recent years. But that could change at any time, although probably not under the current government which if anything is trying to make it even better for savers with increased allowances for bank interest and share dividends in the latest budget.

[UrbanHermit]

I'm normally a big fan of bogglehead style portfolios, but faced with a direct wealth tax I would immediately switch to a Permanent Portfolio.

The stock and bond portion would necessarily remain in brokerage accounts where the government could continue to pillage it. All new savings would flow into the gold/cash portions until they reached the 25% target. This money would never live in an electronic account. There would be no documentation. If anyone asks, I spent it drinking and gambling. The gold would be lost at sea in a tragic boating accident.

Two or three small safety deposit boxes in a friendly foreign nation with a reputation for discrete banking (switzerland? lichtenstein? england?) would quietly fill up with bills and bullion.

[DutchGirl]

I'm normally a big fan of bogglehead style portfolios, but faced with a direct wealth tax I would immediately switch to a Permanent Portfolio.

The stock and bond portion would necessarily remain in brokerage accounts where the government could continue to pillage it. All new savings would flow into the gold/cash portions until they reached the 25% target. This money would never live in an electronic account. There would be no documentation. If anyone asks, I spent it drinking and gambling. The gold would be lost at sea in a tragic boating accident.

Two or three small safety deposit boxes in a friendly foreign nation with a reputation for discrete banking (switzerland? lichtenstein? england?) would quietly fill up with bills and bullion.

So you would evade taxes. If the government ever found out about it, you would pay hefty fees. This is not the thing I would do, I don' t think it's very ethical either. Foei.

Also, you're refusing to pay 1.2% of taxes on your money, and you're putting the cash in a safe somewhere, where it will grow by 0%. The real value of that money would shrink, as inflation would eat at it. Instead, you could have put the cash in a CD, where it still grows at a rate of something like 2% per year (here in the Netherlands) if you put it away for ten years. This is a very low interest rate by the way, maybe in the future you would earn something like 4% interest again. But even right now, putting the money in a CD for 2% and paying 1.2% taxes on it will mean that the money grows by 0.8%, more than the growth of money under your mattress.

[vexed87]

DutchGirl, regarding evading taxes, yes it's risky, but have you read "How I Found Freedom in an Unfree World"? It gives a very convincing argument about why governments probably won't ever find out about your law breaking if done "properly'.