Rube's journal

[rube]

@Nickhalden: it was after we payed of 40% of our original mortgage. We recently increased the mortgage on our own house again (against a much lower interest as originally). How to start: read, investigate, make (worst case) scenario's, visit houses etc. Note that we're doing this for the cashflow, not to make a lot of money. Majority of our savings comes simply from saving our salaries.

Update
2016 is not ended yet, but I don't expect any major changes anymore....

Our average expenses are already 4+ years close to 2500 euro / month and lately getting close to 2600 euro. Probably it is increasing slightly do to the wedding, a new car and growing up kids....we can cut if we want, but this level seems to be okay for all persons in our family
Income has increased due to raises in the last 4+ years and the income from assets (mostly rentals now). We should see another jump next year when we receive the rent of the 3rd rental. This should push our savings rate over the 70%.

With some slight adjustment in appraising the real estate, still quite conservative, NW is now around 500K.

My target date to quit is September 2019 or, if I can stand it it will be March 2020 (6 more months will result in about a 9 month normal pay due to a bonus + tax advantage). We'll see.

Some graphics again after a very long time:

(click for a larger version)



I met my supervisor earlier this month. On my question what I should change or improve he said just keep doing what you are doing. Ok....that is not really pushing me or helping my motivation but I'll take it .

I wish everybody in the ERE community the best for 2017! Hope to meet some of you (again) in the (near) future in person.
Thanks for reading.

[J_]

Looks so good Rube. You are a kind of excellent example of using ere principles, and one of those is reaching in a very short period financial independence, even with children, and even in a country with very high taxes! Chapeau.

[rube]

Thanks J, but I don't feel we're doing anothing exceptional job. Many others do earn less then what we spending, and/or are being a more renessance person. But maybe I am comparing myself too much to the E's types here who fit well in the Extreme part .

The third rental was rented out end of last week. Cashflow of rentals and interest/dividend do now cover about 90% of our average expenses (assuming no unexpected maintenance, vacancies etc.).
Going strong, but want more to be able to cover to college cost for the kids, some future plans and buffer in case of vacancies, maintenance, costs of property manager etc. Stretch goal is to reach 200%. But will accept 160% if that is what we can do in the next 33-39 months.

Currently on a business trip of 2 weeks. It is ok but being around other people so much is costing me a lot of energy (besides jetlag). But I'llmake sure I enjoy the food paid for by the employer and do some exploring during the weekend!

[rube]

Back home again from the business trip. Expect to stay home for a while now and travel a bit less then last year.
Finances:
NW 508K (6K increase).
Spend more then usual (3254).
Income was also more then usual because of the additional rent (but will be a bit less then this month due to the overflow of payments) (9015)
Therefore the savings ratio still was a decent 64%.

[rube]

Highlights of last month:
1) DW got a new job per April. Gross a big increase in salary, net a bit less but still about 35% increase (but also a longer commute and a few more hours). To offset the extra time away from home we probably will hire somebody for a few hours a week to help with cleaning the house. To some of you this extra spending on something simple as cleaning might look strange. But this is a temporarily tradeoff (while we are working so many hours) since we we do not want this change of job will negatively impact the time we have for our family, increase stress etc. Even if we factor in these costs, the net increase for her salary is still 25%, so it is well worth for us. Probably most importantly though she needed a change of environment.

2) We bought another appartment for a rental to students (@Dutchgirl, yes again in your city). We should receive the signed contract early next week. Transfer will be then in a few months. Aim is to rent out around July/August after an additional room is created and just before the start of a new year for the students. It will be partly financed with a loan, which we should have paid off in <12 months.

With these changes our income will go up quite a bit.
The expected rental income with this 4the one will be, not counting vacancies and internal maintenance, about 130% of our current expenses. The question is, how sustainable this rental income is long term but I guess it means, when this 4th rental will be up and running, we're kind of FI for now.
Our savings are more then doubled compared to where we were about 5 years ago. 
Each of our three main sources, income from work for DW, myself and from our assets (rentals), has increased a lot in these 5 years while expenses only have gone up a little bit. 
Due to the three income sources, I am pretty sure we can keep the snowball rolling, even if there will be a hiccup in one or two of the three income sources for some reason. 

NW 518K. Almost a 10K increase, the market helped for about 3K.
Expenses, income and savingsrate not yet (exactly) calculated.

Next month this journal is running 4.5 years. Though my journal might no be as graphical (C40, Cmonkey) or well written (ehm, almost all others haha) I hope it helps/inspire others who are just starting out, especially those with Families as this means in many cases some additional challenges.

In any case thanks for reading, all the journals and other posts on this forum.

[DutchGirl]

It's looking very nice, Rube, well done.

I assume you'll both keep working for at least as little while longer, but you are getting close to being able to sustainably sustain yourself on your assets.

[rube]

Thanks DG, indeed, according current projections we aim to stay employed in the traditional way for another 31-37 months.
But we'll see how things go.

[Family father]

Next month this journal is running 4.5 years. Though my journal might no be as graphical (C40, Cmonkey) or well written (ehm, almost all others haha) I hope it helps/inspire others who are just starting out, especially those with Families as this means in many cases some additional challenges.

It surely does to some...

Thanks for sharing, rube!

[rube]

Thanks @Ffn

Quick update: NW 524K. About 5K increase.
Expenses were high (3354) due to buying some things for the kids (bycicle, furniture) and advanced payment for a new bed for us (which was really needed) among some other things expenses. Savings rate of March was still 66%, Feb was 80%. TTM 68%.
We're plugging along....

[rube]

Almost 5 months, since my last update. Much longer then I planned.
It's not that I do not read the forums*, because I check it several times a day. But I have some fatigue in posting here. Somehow anything that is not really, really needed (according myself or family) and which takes an attention span of longer then 15 minutes on the computer and is not for work, is getting hard. In general, I do things (see highlights), I do actually quite a lot, but after work in the evenings I feel often tired, apathetic and unless I have a deadline I'm not very productive (read: watching netflix too long, reading blogs on my phone etc.). I am really longing for a time when I don't need to stare at a monitor for 8 hours a day, 5 days a week. So that I can start to find the energy again to get interested in new things and have the energy to actually do them. At least, I hope that having more free time will bring this back to me. I expect so, but you never know till you are there.

All that said, some highlights of these last months:
ERE Meetup in NL in May, was great to see several members again. Same goes for the meet-up in Toronto in June.
Transfer of the 4th apartment, get it ready, rent out. So far this was the rental which required the most work, I mean a LOT of work in a (stressed) time span of about 6 weeks. Several business trips, some overseas, some within Europe. Painted the house interior, started to working on the outside. A great holiday with the family. Some very intensive periods varied with some (more) relaxing week.

Financially, expenses are creeping up (kids getting older, needed to replace certain things) but still acceptable. Income from work is increasing much more. And the free cash flow from the rentals is, now with the 4th included, even about 120%/130% of our average monthly expenses. This is excluding vacancy, management, maintenance of the interior though. Nevertheless, it feels great and we could probably manage if we would stop working now.
But I'm not where I want to be. During the holiday I thought about trying to stay on for another 30 months, but soon after the holiday I decided to go back to my latest previous target of 24 months (summer 2019). Going on longer might provide more buffer and possibilities, but the freedom to do other things is stronger.
It is getting more difficult to give an accurate net worth number because most of it is in real estate now. A rough estimation is at least 545K, but it could be even around 635K if we would be able to sell all well since the market is very hot. Net worth is becoming a bit less important though as I am looking mostly at cashflow now. The fact that we now can live from the rental free cash flow means we save both our salaries and a bit from the rental income. Projected savings are now as high as 100K / year. IT. FEELS. INSANE.

*though I stopped reading all journals. After 5+ years also here some fatique, when new people are starting their journals is often generally more of the same. That is not meant unkind, but often it's the same, just a little different. Therefore getting less interesting to me. I keep on following several journals that are going on for a longer time and several posters (C40, Dutchgirl, J_ , I liked your latest post about the last 20 years a lot, Henk. Bluenote. And Jason (wow, you have a ehm, special way of telling things. I like it). And...also others who I now forget which I shouldn't. But in any case I do no read every new topic/journal anymore as I used to do.

Well, that's it for now. in 2 months this journal is running 5 years already. Speaking about a marathon (Zalo/Olaz/Tophatfox are you reading this!?)

[DutchGirl]

Glad to read something from you, and glad that you're doing okay.

I am more and more planning to have some income during retirement. Unrealistic to think I'd never earn a cent again. More likely that I'd earn a couple of thousand euros every year. Side income, projects as a contractor, stuff like that. I'm thinking the same is probably true for you?

[rube]

Hi DG, yes very likely the same for us. It seems to be in my DNA to always see if there is an opportunity to monetize something. I remember when I was around 10 years I already bought old bicycles, repaired them and sold them. And in one way or another I have always done this besides my main/traditional work. I would prefer though to have the option to be able to choose anything to do, even if it would not make a dime. I am wondering if I can do this.

[rube]

My journal is today........5 years and 1 day .
165 posts and 32356 views since the start.

Some highlights from the post 5 years ago compared to our current status and progress:

We got all 5 years older (luckily, and all in good health so far). Went from small kids to young teenagers
Still living at the same place
Combined we’re working a few more hours due change of job of DW
Net worth went from 245K to around 560-600K (conservative estimation based on today’s hot real estate market)
Our savings rations went from around 60% to 70% (this includes income from our NW, i.e. rentals).
Our income went from about 6300 to 12000 per month (projected 12 months income, includes income from NW, i.e. rentals)
Yearly savings went from about 45K to 100K (projected 12 months)
FI estimation 5 years ago was 9.5 years based on 4% WR. At this moment the rental income is covering currently our expenses. Based on expenses and NW we’re currently around 6.5% WR.
Our current target is 22.5 months before we declare ourselves fully FI with a NW of 800K and we will very likely start to "pursue other interests". As you can see, we're counting down and up.....

Will a NW 800K be enough for a family of 4, where 2 kids will likely go to university in about 6-8 years, we have a dream to build our own house etc.?
Nobody knows for 100%, but I am fairly confident we can make it work. One way or another, without going back to work FT / long term. By then (43 y/o) it will be simply time to do something else, time and life it too precious to keep on chasing an ever increasing higher security.

We have by far not fully implemented all the principles of ERE, but we have several and make mostly deliberate choices when we don't follow the ERE principles (don't ask me exactly what they are, we have another thread for that). But compared to others (especially in the same income situation) we're probably in the absolute top of being effective / ERE a-like.

Now my last serious issue, according the statistics (as Jacob once said) it turned out that people become FI after around 250 posts. That means I still have about 90 posts to go, which is about 1 every week for the next 90 weeks to make my cowntdown work. This is far more then the rate of 16 posts over the last year in my journal .
Oh, well statistics. I fairly sure the standard deviation is very high so 22.5 months still work out with the current posting rate

Thanks all for reading and even more so for posting many of the interesting updates in journals and various other topics.

[DutchGirl]

Given how I'm already beyond 250 posts and nowhere near FI, please, Rube, help me keep the average intact

You're doing well and that's great!

[Hankaroundtheworld]

@rube : great progress! Question, how do you deal with the (virtual) capital gain tax in the Netherlands? Are there any constructions to lower the impact?

[Tyler9000]

Now my last serious issue, according the statistics (as Jacob once said) it turned out that people become FI after around 250 posts. That means I still have about 90 posts to go, which is about 1 every week for the next 90 weeks to make my cowntdown work. This is far more then the rate of 16 posts over the last year in my journal .
Oh, well statistics. I fairly sure the standard deviation is very high so 22.5 months still work out with the current posting rate

Why wait so long? Just make 90 posts in 90 days and retire by February!

[jacob]

I think the number was 500. There's still time.

[rube]

@DG: Good news: according Jacob it was 500 posts! And I have waited on purpose with this post till the end of the year so the average is not increasing too much . Hope all is going okay with you, your BF and the new house etc.

@HATW: thanks. Rentals are taxed below the fiscal value (WOZ) because they are supposed to be of less value due to the renters protection. It is depending on the exact situation but I believe in our case it was last year 85%. So in case the rentals have a WOZ value of about 700K, you can calculate with 85% of that and it comes to about 595K NW.

Then, assuming (once) your income from work (box 1) is zero, you can use the "heffingskortingen". See https://eerderstoppenmetwerken.wordpres ... -vermogen/
note that this is from 2016 and not up to date but it gives you an indication that tax is only about 2K.

At this moment WOZ is behind to the actual market value, so market value could even be say 900K, fiscal value is 700K, taxed value is 595K and when no box 1 working income you would pay only 2K taxes on your assets. And no rental income. Of course WOZ value will catch up (or is also lagging in case market value would go down).

I don't think that is too bad. There are still ways to lower this btw, like move your mortgage on your own home to box 3, to lower you assets that are taxed, because your own home will be then taxed with a slightly lower percentage. But this is all very depending on your personal situation etc. And keep in mind that government will always make changes so nothing is forever.

Ofcourse we work at the moment, so we have to pay more. Well, it is what is for now.

@Tyler9000: hahaha, yes, I wish it would be that simple (thanks for your great site btw)

@Jacob: 500?! I thought my memory was always very good, but it seems I overestimated it's quality. I hope I don't overestimate my ERE skills in a similar way

[rube]

20 months out at least, per current target (copied format shameless from M741's journal).

Financial Highlights
NW around 610K (after adjusting estimated value of our RE, still on the low/conservative end at this moment).
Savings ratio 70.7% TTW (that is including net rental cashflow)
Net cash flow from the rentals covered this year exactly ( plus minus a few hundred) our total expenses this year. It means we were able to save both our full incomes.

Next 0-6 months
buy a home where we want to live the next 20+ years. This is challenge with all our wishes and a hot market.
I want to buy now and make use of the extremely low interest rates. After we have quit our jobs, we won't be able to easily get a mortgage anymore.

Next 6-18 months
Buy a few more rentals (leveraged this time). Another challenge in a hot market. If we can't find anything with the yield we require, we need to wait/look for other investments and perhaps work a bit longer to make up for it. I am eager to start active looking already, but for these we would need a commercial mortgage and that might not work with a new mortgage for our own home (at least not with the conditions I want etc.). So first need to find a new house for our selves.

Happy holidays and best wishes for 2018 to all ERE members!

[DutchGirl]

Hi Rube, as for the mortgage, would there for you be a way to:

a. borrow money from your parents or other family members for your home mortgage? (It is called familiebank in Dutch)
b. borrow money from your company (this is also possible - if your company has cash, you can borrow it to pay for the house, as long as you create a contract and pay your company interest, etc).

PS. if you do a or b, the people or business lending the money to you do NOT necessarily need to get a claim on the house (hypotheekrecht). If you want more details, send me a message.

I'm glad to read that things are going well. And yes, this isn't really a good time to buy a house in the Netherlands (or at least, in the Randstad). Hmm, have you thought about moving to a different part of the country? That could be an option, although of course it has its disadvantages too.