Journal (DK)

[cbroenning]

Introduction
Figured I'd make a journal as well. Will continously update the below with actual numbers and revised projections.

At this early stage (writing June 2016), ERE is rather new to me, so there is nothing impressive to see here. I currently have a net worth not worth mentioning. Should be some possibility for improvement, though.

Status (updated at least annually)
WR (calculated excl. tied up funds):

• 2016:
• 2017: 148% (nothing safe about it - nest egg is simply insignificant compared to expenses..)
• 2018: 83%
• 2019: 57%
• 2020: 43%
• 2021: 34%
• 2022: 29%
• 2023: 24%
• 2024: 20%
• 2025:17%
• 2026: 15%
• 2027: 13%
• 2028: 7.8%
• 2029: 6.7%
• 2030: 5.9%
• 2031: 5.2%
• 2032: 4.6%
• 2033: 4.2%
• 2034: 3.8%

Estimated year achieving target SWR of 4%:

• 2016: 2034 (in 18 years) - Can do better than that... Pretty horrible.
• 2017:

Net worth at YE (incl. real estate):

• 2015 = DKK 0

• 2016 (projected) = DKK 28,411
• 2016 (actual) = -

• 2017 (projected) = DKK 271,289
• 2017 (actual) = -

• 2018 (projected) = DKK 523,806
• 2018 (actual) = -

• 2019 (projected) = DKK 784,213
• 2019 (actual) = -

• 2020 (projected) = DKK 1,052,771
• 2020 (actual) = -

• 2021 (projected) = DKK 1,329,748
• 2021 (actual) = -

• 2022 (projected) = DKK 1,615,422
• 2022 (actual) = -

• 2023 (projected) = DKK 1,906,642
• 2023 (actual) = -

• 2024 (projected) = DKK 2,178,788
• 2024 (actual) = -

• 2025 (projected) = DKK 2,459,367
• 2025 (actual) = -

• 2026 (projected) = DKK 2,748,687
• 2026 (actual) = -

• 2027 (projected) = DKK 3,047,024
• 2027 (actual) = -

• 2028 (projected) = DKK 3,422,110
• 2028 (actual) = -

• 2029 (projected) = DKK 3,688,405
• 2029 (actual) = -

• 2030 (projected) = DKK 3,962,690
• 2030 (actual) = -

• 2031 (projected) = DKK 4,245,203
• 2031 (actual) = -

• 2032 (projected) = DKK 4,536,191
• 2032 (actual) = -

• 2033 (projected) = DKK 4,835,909
• 2033 (actual) = -

• 2034 (projected) = DKK 5,144,619
• 2034 (actual) = -

Annual expenses

• 2015: DKK 299,502
• 2016: DKK 181,068 (estimated on revised budget)
• 2028: DKK 127,238 (debt free)

[bestintentions]

Awesome!

Just remember that you will have to pay around 25% taxes on the DKK 140,000 withdrawal in 2032

What is your savings rate?

[cbroenning]

Thanks bestintentions

Saving 31.2% [edit: 50.5%] of net income, based on current budget. June 2016 is the first month on the new budget, which is quite conservative. So, actual expense level is probably going to be much lower. My expenses incurred up until today suggests this is true, which I am actually quite baffled by. I wouldn't have though it possible to cut expenses that much without intense effort (says more about my pre-june expenses I guess...).

Will add savings rate as a status item as well!

Actually, the WR is based on funds transferred monthly to a normal (0%) bank account, i.e. no taxes. This is obviously not viable, the cash is to be invested. It's just to give an indication of the base scenario or did you think of something else?

[bestintentions]

Are your projections based on placing all your savings in a savings account? No returns? That's a bit conservative if that's the case

How come there is a big jump from DKK DKK 406.607 in 2018 to DKK 794.486 in 2019? Just curious

[cbroenning]

So I updated the above. The zero returns-account was just a worst case scenario, to see what savings and early repayment of mortgage could evolve to. Have now based net worth on investments yielding 3% annual returns.

Savings rate is 50.5% of net income for 2016 (excl. pension contribution, 53.4% incl.).

Investments
Currently have two mortgage-like loans in the apartment (Andelsbolig, remaining amounts: DKK 375,000 and DKK 1,373,000 respectively), with variable interests of 3.2% and 3.5% respectively. As the loans can be paid off at par value, I consider the - relatively - low interest to be a good oportunity to pay off the loans, considering that the interest rate will probably increase over the 7 and 28 year life span of the loans. It simply must, even though there are a dizzying amount of factors reducing interest rates at the moment. In any event, lowering the level of debt relative to value (1:1 at the moment ) reduces my stress levels...

Even considering the impact of lower interest deductions, the ROI is high (saving DKK 695,000 (potentially more) in interest expenses while loosing a total of DKK 170,000 in deductions over the remaining 28 years.

Plan:

• DKK 30,000 paid off extraordinarily per year on the two mortgage-like loans in the apartment (loan 1 paid down in 2023 and loan 2 at the end of 2027).
• DKK 93,600 invested annualy from 2017 through 2022.
• DKK 112,000 invested in 2023.
• DKK 121,320 invested annually from 2024 through 2027.
• DKK 218,472 invested annually from 2028 onwards.

Next step is to analyze whether a golden butterfly-portfolio could work in Denmark and find a way to include the tax-calculations in my spreadsheets. The last items is killing me!! I am working on a model which calculates the cash gain by deferring taxes until FI (zero personal income from salary) compared to adding investments to the personal income bracket. It is truly agonzing, especially as the spreadsheet is getting increasingly complex...

[Eureka]

Hi fellow Dane!

I found your journal and took a look. Very interesting, but very many numbers and very many many years. What is your goal? Just to get a financial overview or are you aiming at retiring/quitting the work force early? With the time horizon you give yourself, it seems you are happy with your current situation.

One little detail, if you are going to pay off extraordinarily on your loans, I suggest you pay all of it on the loan with the highest interest.

Looking forward to meeting you,

Eureka

[cbroenning]

Hi Eureka,

My goal is financial independence as early as possible. I really, really love my job, but I currently have no spare time in the weekdays, as the work hours are extreme. In the weekends, I am quite often completely incapacitated and can only sleep. My girlfriend and I do go for walks or other relaxing activities, but a lot of the time we are working on the apartment (water damage in the bathroom, been going on since September 2014, with court trials and all) or I am writing articles to scientific journals in the weekends (really cool, relatively new part of my job!).

I love the academic part of my job, and would like to have more time for this. My girlfriend is getting increasingly worried about me being stressed, so that is a factor as well.

All this dedication to my work is for the purpose of moving up the grease pole, which results in raises and seniority. While I am very much a career-obsessed, both of the above hopefully enables me to slow down at some point, and maintain a more back office role (or simply nurture the academic part of my interest in the job!). For the time being, at least, I enjoy the exponential learning curve and the legal issues I get to work with. It is taking a toll on me and my girlfriends relationship, though, and I have absolutely no idea how it would all work out if we had a child... How people manage careers and children eludes me.

The above time line should not be seen as the time line I allow myself or aim for. It is, however, the time line I dare budget for.

I was definitely not raised to live frugally, and have never been living particularly frugal. Quite the opposite, I have been living salary to salary and have always loved spending my money on motorcycles, hifi and gadgets. Owning a motorcycle while studying at university is not the best way to save money, by the way...

In consequence, this is very much a journey for me, and this is the start - even though it does not look that ambitious to all

June 16 is the first step, and I need to get an understanding of the expense level which I can live with. This is part of my journal, and quite central for me (having a prior savings rate of 0% )

I could include only 3-5 years of projections, if that would be better, and record all actual numbers as they materialize?

[BadHorse]

Hi Cbroenning,

cool that you're starting a journal too
Yes, there sure is a lot to wrap the head around when just starting out the ERE journey.
How do you calculate the WR? I've seen it mentioned many times here at the forums, but haven't quite figured out how people calculate/use it yet.

Edit: Ha! Just found a WR example in wizard's journal. So many threads to read, so much information to digest

[Eureka]

No, no, I think you are very brave making projections to the very end. Only to me such a long time horizon seems scary. I usually never know what I'll do even one-two years ahead.

Your job seems great, though. I also enjoy learning new stuff and being challenged on a daily basis, but loath that my job takes so much of my time and energy that not enough is left for other things important to me. Reading your words makes me think we have a lot in common here.

[cbroenning]

Yes, there sure is a lot to wrap the head around when just starting out the ERE journey.
How do you calculate the WR? I've seen it mentioned many times here at the forums, but haven't quite figured out how people calculate/use it yet.

Edit: Ha! Just found a WR example in wizard's journal. So many threads to read, so much information to digest

Yeah, there sure is! Glad you found the information if you want I can send you my spreadsheet, to get an overview of how it could be presented, and a new workbook which is easy to work with?

No, no, I think you are very brave making projections to the very end. Only to me such a long time horizon seems scary. I usually never know what I'll do even one-two years ahead.

Well, I guess our situations are somewhat different. The peojections give an overview of the timeline based om cash flows, which enables me to adjust the individual variables (timeframe, expense level, salary etc.) based on life preferences both now and over a longer time span. I need to figure that out, whereas I guess you are at a place where you already know your preferences, based on prior years experiences and reflection, removing the need for such projections? The projections simply enables me to make more nuanced reflections and choices based on these

I will post it as a graph when I figure out how to post pictures.. Bear over with me!

Yeah, it really is. Nice to have that in common. I guess it is quite a common issue here. Would love to touch base on priorities and impact of choices! I really hope to be able to join the meetup in August, but if all goes as planned I will be in a northern part of Sweden hiking

[BadHorse]

Yeah, there sure is! Glad you found the information if you want I can send you my spreadsheet, to get an overview of how it could be presented, and a new workbook which is easy to work with?

Yeah, thanks, that would be great!! Though I may not be using it right away... I like to fiddle a bit with things myself first, learning-by-doing style.
So far I've got a simple function to estimate (roughly) future net worth, given different starting values, interest rates, and savings. Made in R, of course, not this newfangled spreadsheetery

[Eureka]

Cbroenning, yes let me see your graph. That will be helpful.

You show pictures here by uploading them to a free image host, such as https://imgsafe.org/, and then you insert the link from there using the img tag..