Henk's journey thru life

Where are you and where are you going?
Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Hi "Aus_expat", may be I am not calculating yield correctly? I have no mortgage on it, so the only thing I calculate is "Net Rental Income / Value of Real Estate", and when I am conservative, then I use "(Net Rental Income - Buffer) / Value of Real Estate". I can chat offline where Real Estate is located (PM me)

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Someone suggested (cannot remember who) to read this article:http://www.bravenewlife.com/05/corporat ... +New+Life)

I responded on this:
I like the cynical tone, at least a “shock” will get through the numbness of the working dead :-)
Personally, I think we cannot get rid of the big Corporations anytime soon, but awareness helps you to make a more conscious decision how you would like to play the game. From the 20 years that I have been part of this system, 15 years I have been living and working around the world, so had a chance to experience difficult cultures, people and great locations, and it provided at least 50% extra cash and free benefits (so quicker road to FI). It still means, you need to play the game, and sell your soul, but it was a smoother and more interesting ride than staying in my home country.
I do see changes in society, there is a “movement” coming from bottom-up, that is changing the Corporate chains, and make people more collectively responsible for a certain function in society, and stop the management nonsense (and high overhead in payments). I have now seen this happening in Elder-Care, Alternative Energy, Transport/Travel, etc.. and I think, this is going to spread further. So I am positive that we will face more alternatives. The traditional big Corporations will get minimized in the future.

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Another interesting article: http://lifehacker.com/stop-trying-to-be ... socialflow

Reaching happiness is very much correlated with the ERE philosophy

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Today I have accepted a 1-year extension to my Contract, but in a new Country, max will be 2 years. It was a long process to get to this conclusion, instead of going straight to ER phase. I will use this year to prepare myself better (mentally) for ER, as Financially it is more or less okay. It might be seen as a defeat or weakness not to jump right now, but to my defense, I only recently got my head around this FI/ER concept, while if I would have planned this way back (like many are doing well on this forum), it would have been a different process. Still, my mind has changed, and I feel happy with the decision and I am looking forward to the ER phase after this extension. Of course, the extra Cash will come handy as Emergency fund and start-up costs when we start in a new Country after I finished work. It means, being 49 or 50 when starting ER, not bad, considering the history.

Chad
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Joined: Fri Jul 23, 2010 3:10 pm

Re: Henk's journey thru life

Post by Chad »

Hankaroundtheworld wrote:It might be seen as a defeat or weakness not to jump right now, but to my defense, I only recently got my head around this FI/ER concept, while if I would have planned this way back (like many are doing well on this forum), it would have been a different process.
I don't think you need to defend yourself. Make the decision that's right for you and don't worry about what everyone else is doing.

rube
Posts: 883
Joined: Tue Oct 02, 2012 7:54 pm
Location: Europe (NL)

Re: Henk's journey thru life

Post by rube »

And you will be able to go inthis this year (or two) with another mind set. It will likely make your experience of the comming year in a new county also different.
Good luck!

mxlr650
Posts: 165
Joined: Tue Apr 05, 2011 9:33 pm

Re: Henk's journey thru life

Post by mxlr650 »

hank wrote:It might be seen as a defeat or weakness not to jump right now, but to my defense, I only recently got my head around this FI/ER concept, while if I would have planned this way back (like many are doing well on this forum), it would have been a different process.
All of us suffer from status anxiety and every tribe has its own status markers. In the corporate world it is job title, number of direct reports, etc, and on ERE forum it is how young one retires, how low their SWR is, and how self-sufficient they are etc. It is beneficial to recognize these patterns so you do not get sucked into the competition or be fixated on it – use it to customize your life in a way to make it enjoyable to YOU . Take MMM and BNL for example: they go on and on about big SUVs, consumerism , corporate BS etc — and it never occurs to them that they are just another mindless breeders that thinks riding a bicycle makes look better than someone who drives an SUV (and childfree). IMO any environmental impact a person's consumption has pales in comparison to the litter that breeding produces for generations.

You have seen lots of cultures, have chosen to be child free, so you have done very well indeed!

DutchGirl
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Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: Henk's journey thru life

Post by DutchGirl »

Hi Henk,

Congratulations on taking the extension. I would also have congratulated you if you had chosen the other choice, so I guess I think you had to make a choice between two very good options and couldn't go wrong either way.

It seems to me that having one more year to think about what to do next can be very good in your situation. Good luck with the extension and with the new job location.

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Thanks all for the nice comments!

mxlr650: true, you should indeed never compare with other lifestyle choices or people's ERE indicators :-), only what your inner-self likes (your goals - as pure as it is possible - because you are always influenced somehow).

Luckily, we do not give a lot on status symbols (no fancy cars, houses or gadgets, etc..), the only thing we like is Traveling and sometimes retreating in your house at a nice location (we read a lot, and enjoy dinners with friends, take nice walks in nature, we can fill our lives with that as well)

At the moment, we are selling a lot of our stuff that we hardly use, it feels good, get rid of clutter, and we can get it back to 20cbm for transport to new location. After that, we want to reduce it even further before we move to our final destination (which most likely will be Turkey - but that depends on how it goes the coming 1-2 year, Erdogan is not really predictable).

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Today some reflections or emotions between my wife and myself around the following topics:
* My passion to look at the future -- and sense the positive developments / sometimes dreams-like
* Translating future perspective back to actions for today
(in a way this is true for ERE, for Climate Change, etc...if you want to create a better future, you need to shape it from today)

May be it is a fundamental difference between Man and Women, but my wife has problems looking into the future and to imagine different scenario's. She also does not like it, it sucks energy for her to do that. Hence, when I talk about ERE, Climate Change, Singularity, you name it.... she is not interested at all....so I learned not to share too much of my future thinking with her. She, however, is a Master in enjoying the "moment", she really enjoys the little things in life (non-materialistic), and she tells me "we only have NOW, so enjoy this, and let the future, be the future, who cares, you only have NOW, and you should be happy now"

To be clear, I have no problems with this fundamental difference, it is complementary to each other, and it indeed helps me to focus more on the "now", and she is happy that I plan for the future (as long as she does not have to hear about it :-) )

I guess, the only problem I have with this "we have only now" mindset, is that we might do a lot of harm for humans and other species if we do not plan ahead, and change our behavior in the "now" to ensure future generations have a better "now".

Anyway, as said, some reflections ....

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

As part of moving to a new Country, we are rigorously selling of all stuff that we do not use, or giving it away. Wow, we see our Transport Volume already reducing from 33cbm to 20 cbm. It is also preparation for our ER period that will happen in 1-2 years time, we want to reduce clutter/wast and only keep the basics and a few things emotional (from our journey around the world). This reduction in stuff is good therapy :-)

DutchGirl
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Joined: Tue Sep 06, 2011 1:49 pm
Location: The Netherlands

Re: Henk's journey thru life

Post by DutchGirl »

:-)

When comparing my boyfriend and me, I'm the one who is planning the most for the future. However, I'm also pretty good at enjoying my current life, while my boyfriend sometimes keeps fretting about missed opportunities. So personally I don't think the difference is between women and men, just between people.

The boyfriend definitely IS better at discussing climate change with you, he knows more facts about it. I just believe that it exists, but I also know that I don't know the solution... (And I wouldn't even know what exactly you mean by singularity... )

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Haha, of course, I did not expect this to be a pure women/men split of mind, but I do notice that on average the men are more focused on future-thinking, at least if I look around my own network of people.

Regarding Singularity: better have a peek at the book from Ray Kurzweil: "The Singularity Is Near: When Humans Transcend Biology". It is a typical Californian / Silicon Valley happy dream how we will merge with Technology and solve the world problems, and expand into space :-) May be a dream, but there is some truth in it, nice reading !!

Hankaroundtheworld
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Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Am I dreaming?, all my investments are going up, even related to stock market, it seems somehow too good to be true (knowing that the world needs a pause or correction), but dreaming can be nice, as long as I keep the personal goals in mind and not get too distracted by money....

DutchGirl
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Location: The Netherlands

Re: Henk's journey thru life

Post by DutchGirl »

Ah yes, I saw it too. It is nice to see, but indeed you don't know what it'll mean in the end.

Since I now have roughly 12k euros invested in stocks, the "swings" that I see have become bigger (in terms of euros), so I'll have to start reminding myself that they are still swings and that "gaining" 400 euros in one month is not a reason for partying and "losing" 200 euros in another month is not a reason to be down or to sell. I used to have 2000-ish euros in stocks, and then I would see losses or gains of tens of euros, which is more "understandable" for my brain. If I keep investing in stocks of course I'll see swings of thousands of euros regularly. I've never before had to deal with this kind of money, so that will be really weird... Lucky for me, it'll be a while before I'll actually have more than 100k euros in stocks...

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

yes, true, I have a lot more in stocks, so swings look "dramatic". My way to stay sane with this, is to keep 3 years of cash buffer at hand, so in case, the swings are too negative (crash), I can survive and wait till stock market is back on its feet. This strategy is correlated with the Strategy to rely on Rental income during a crash, so you trim your spending during a Crash to the level of Rental income, and not touch stock investments (only cash buffer if needed, because even Rental income could be affected during a crash).
Would be interesting to know how others plan for crashes during ER(E) because they for sure will happen a few times

rube
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Re: Henk's journey thru life

Post by rube »

Hankaroundtheworld wrote: Would be interesting to know how others plan for crashes during ER(E) because they for sure will happen a few times
I guess the most basic ERE thing: lower your monetary needs (even further).
Some here are very extreme and could not cut a lot anymore, but there is also a bigger group (including myself) who can still cut a lot if needed (sell the car, don't spend money on holidays but find alternative ways, rent out a room, grow vegetables ourselves etc.).

If we would do that and a little more, we might be already financially independent actually :D
(but then without any buffer)

IlliniDave
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Re: Henk's journey thru life

Post by IlliniDave »

Hankaroundtheworld wrote: Would be interesting to know how others plan for crashes during ER(E) because they for sure will happen a few times
My primary safeguard is twofold, to have a superabundance of assets and to keep them allocated in such a way that I have some amount of stability through diversification (in other words, a fair amount in bond funds, and a small amount of cash).

I've come up with a tiered approach to future income.

Tier 1. Short-term barely stay alive: complete turtle-in-shell hunker down and ride out something really bad. Probably sustainable for no more than a year.

Tier 2. Austere: probably sustainable indefinitely, but probably not much fun.

Tier 3. Comfortable: similar to current lifestyle when adjusted reasonably to how things will change in ER.

Tier 4. Peak: Everything I think I might want to spend money on.

Tier 5. Lavish: Peak + $1000/month. Would have to really go out of my way to find ways to spend that much.

That's probably an excessive amount of analysis, but it's relevant to the way I think, I suppose.

So my approach is to build assets until I'll have enough to support myself at the austere level with no more than a 3% withdrawal after a 50% decline in financial asset value assuming I have no outside income sources. On the happy path (benign and modest investment performance) my invested assets at the start of ER should drop me right at tier 3 with the same 3% draw down.

I do expect to have outside income sources in the form of a small annuity (sometime after 55) and SS (sometime after 62), and there's at least a 50/50 chance I'll opt to maintain some sort of low wage part-time employment income. Those will push me towards tier 4.

To give a sense of scale, I should note that tier 4 is pretty modest by US standards. Current analysis puts it at about $3200/month pre-tax. The "lavish" tier 5 is about median US income.

Altogether it's uber conservative, maybe laughably so, but given my age, I need to make sure I get it right on the first try when I pull the plug.

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

Hi IlliniDave, I like this Tier categorization, and if I apply this to my expected situation, I come to the following Strategy, see below (a bell curve across the 5 Tiers). Note: this is a strategy for 2 persons combined, and I have not yet practiced enough the ERE/Jacob strategy, so spending levels could be lowered in the future. Note2: spending levels will be corrected for inflation in future (built into my financial model)

Tier 1. Short-term barely stay alive (I do not expect this to happen often, may be once)
* Market situation: major Crash (30-50% decline), takes 3-4 years to correct
* Spending level : around 1500 Euro / Month (you could argue that this is still a lot, ERE way, I know ...)
* Funding strategy
-- 1.1: Normally Rental Income will cover this
-- 1.2: In case Rental is interrupted, use the 3-year Buffer in Cash

Tier 2. Austere: probably sustainable indefinitely, but not much travel/fun
* Market Situation: mini-Crash (20% decline), requires 1-2 years to correct
* Spending level : around 2200 Euro / Month
* Funding strategy
-- 1.1: Normally Rental Income should cover this, but on the safe side, I expect 80% of this amount on avg
-- 1.2: In case Rental is interrupted, use a low SWR and partially the 3-year Buffer in Cash

Tier 3. Comfortable: similar to current lifestyle when adjusted reasonably to how things will change in ER.
* Market Situation: Equities are performing modest (growth and dividend around 3-5%)
* Spending level : around 3300 Euro / Month
* Funding strategy
-- 1.1: Normally Rental Income will cover around between 55-65% of this (on avg)
-- 1.2: Use a sensible SWR of around 2% to cover the rest

Tier 4. Peak Comfortable: Everything I think I might want to spend money on (nice travel budget included)
* Market Situation: Equities are performing nice (growth and dividend around 6-8%)
* Spending level : around 4000 Euro / Month
* Funding strategy
-- 1.1: Normally Rental Income will cover around between 45-55% of this (on avg)
-- 1.2: Use a sensible SWR of around 2.5% to cover the rest (max 3%)

Tier 5. Lavish-Peak. Would have to really go out of my way to find ways to spend that much (like luxury travel trips, or nice renovations in house, new hobbies, or investing in new business ideas, basically more consuming without getting wasteful)
* Market Situation: Equities are performing extraordinary (growth and dividend above 10%)
* Spending level : around 4600-5000 Euro / Month
* Funding strategy
-- 1.1: Normally Rental Income will cover around between 25-30% of this (on avg)
-- 1.2: Use a SWR of around 3.5% to cover the rest (max 4%)

As mentioned, it probably be a bell curve, so Tier-3 will happen the most.

Hankaroundtheworld
Posts: 470
Joined: Mon Feb 24, 2014 4:50 am

Re: Henk's journey thru life

Post by Hankaroundtheworld »

While in the (positive) stress of preparing for the move to the new Country, I had some extra stress of being a landlord, especially if you are remote. Some water leakage happened, and Tenants contacted me, so quickly organizing the repairs, but it requires to open up the whole bathroom ..... not nice, especially not for Tenants, and I am a bit frustrated to handle this all remotely...so I decided to take on a more extended Maintenance Agreement with a Service Company, so that Tenants can call them. Yes, I know, some do not like this, having these potential issues when you rent out Apartments, but .... fingers crossed ... it has not happened often, and once I am in the ER period, I will have all the time to organize. Considering that I want different asset/income classes for ER period, non-correlated, I still want to keep the Rental business, but 2 Apartments is more than enough :-)

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