DutchGirl's journal

Where are you and where are you going?
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Re: DutchGirl's journal

Post by herp » Fri Jul 27, 2018 5:11 am

Doesn't sound good with the lack of aircon. Good thing I'm off work this week and next week, because it's pretty hot up here in Denmark as well.

Those ceilings just won't stop coming apart, will they?

Payday is indeed fun! I love thinking about my net worth growing a bit every time I make a contribution to my investments. I wonder how much I will miss it if/when I pull the plug to working. I suppose working part time could give you some of the same benefit.

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Re: DutchGirl's journal

Post by rube » Fri Jul 27, 2018 10:16 am

Good luck with the ceiling. And the heat, but that goes for more people.

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Re: DutchGirl's journal

Post by m741 » Sat Jul 28, 2018 8:00 am

Glad to see you making progress in spite of the heat and ceiling.

A little too much heat sounds good from Uruguay, where it's consistently 10-13 C (and rainy) right now :).

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Re: DutchGirl's journal

Post by DutchGirl » Wed Aug 01, 2018 1:29 am

July results: income 4200, expenses 2620 euros.
Total income after taxes for 2018 so far 26,800. Total expenses so far 18,960, so a savings rate for the year of 29%.

Income was high due to 600 euro income from my very parttime job-on-the-side and a high income at my main job due to a one-time pay-out of some type of bonus, and due to working increased hours (they already started paying me for 32 hours/week, I would have expected that to start with my August paycheck, but I'm not complaining).

I paid my annual (term) life insurance premium this month. It covers my total mortgage debt; I don't completely need that, but I want it to be as easy as possible to pay off my mortgage if I were to die ... and getting a life insurance payout will make it quite easy I think, easier than my heirs needing to find and sell all my investments (which would be the other way to pay off my mortgage). I will cancel this insurance in roughly five years time, as by then the mortgage will be so low that it becomes inconsequential.
I also spent 330 euros on "other stuff" this month, including two dinners with friends and families for 75 euro total, two books about money for 35 euros and a footmassage machine for 58 euros. This is a bit much, and I need to work on getting this amount lowered in August and beyond.

I also found out this month that I will get a tax refund for 2017 of slightly over 800 euros. The Dutch tax agency will wire this to me some time in the next three months.

Thanks to the increased income I was also able to finally put some decent money into investments again (well, 1000 euros), which felt good. Hopefully more to come next month.

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Re: DutchGirl's journal

Post by Berninger » Tue Aug 07, 2018 12:52 pm

Hi dutchgirl,

I red your journal. You have a come a long way, and are nearly at the finish :-). Nice to read.

I am also from Holland. I have a wife and 1 kid, second kid is comming in september. We bought a house last year, and working hard to pay of our mortage asap. 121k left atm.

I just starting my journey towards FI. I was wondering if you have some tips for me. Especially on the investing. Can i ask how and where you started investing? And how much interest did you get over the years with investing?

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Re: DutchGirl's journal

Post by DutchGirl » Wed Aug 08, 2018 5:20 am

Hi Berninger. First things first: paying off the mortgage faster than required is probably not the best financial move. What's your interest rate like, after taxes? (Because often our Dutch taxes mean that you get some of the mortgage interest you paid refunded). So say you paid 4000 euros of taxes for your mortgage in 2017, but paying the mortgage and owning the house gave you a total tax refund of 1500 euros... then the mortgage interest is more like 2500 euros, which on a 121k mortgage would be something like a 2% interest rate. It's extremely, extremely likely that in the long run your investments will do much better than that on average.

So... if that is the case for you as well, I would pay the mortgage off according to the requirements, but not more than that. And I would instead start working on creating investments.

Of course, as you might already know: investments are volatile. Stocks are volatile and bonds (obligaties) also, although a bit less than stocks. So if you start investing, it's possible that you will see a reduce in value of your investments if the markets tank. However, keep at it. If you put money in diversified index funds, at some point the market will recover and so also the value of your shares will go up again.

I would focus on low-fee index investing. The Dutch companies to do that with, are Brand New Day, Meesman, Binck and DeGiro. Each of these offer decent index funds and ETFs for investing. Binck and DeGiro offer also a lot of other options, but I would steer clear of those.

I would also check whether you or your wife still have "jaarruimte" or "reserveringsruimte" ... these are Dutch words that mean that you still have some money that you can set aside in a tax-friendly way for retirement. This blogpost explains it well, in Dutch. If you have the option to set aside money in such a tax-friendly way, then this money will be a tax deduction for this year, meaning that you can deduct the money that you put in from your income, and see a much lower tax burden in your highest tax bracket. (So, if you're in the 40% tax bracket, then if you put in 500, you'll see 200 of that returned to you; if you're in the 52% bracket, then putting in 500 means you'll see 260 back next tax season).

Brand New Day offers a retirement account where you can put in these sums of money and invest them. Meesman doesn't, unfortunately. DeGiro does offer it too, but the fees may rise in the near future (they're going to add a mandatory "robo-advisor" and will ask an as of yet unknown fee for that). So personally, I'm with BND for this :-) .

PS. I just read this book: "Miljonair met een gewone baan". It came out October 2017 and it's a nice introduction to the whole field of saving money, investing, reaching financial independence in the Netherlands. Maybe you can borrow it from the library? There's also a Dutch book called "Je geld of je leven", which can be found here for free. It is focused on saving and spending less and it's based on the American book "Your money or your life"; but Dutchified.

PS PS. Mannnn... is there a lot to tell about this Dutch retiring stuff or not? So ... the one other thing I wanted to tell you, is that you should also find out how much you've already saved for retirement. You probably have some AOW-rights already, plus you've probably already contributed money to pension plans or pension investments at work. Find out how much that is. This money will help you to pay your expenses once you have reached official retirement age (70 or so?). So this is good money to have, even when you can't use it when you're 40 or 50 or so.

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Re: DutchGirl's journal

Post by Berninger » Fri Aug 10, 2018 1:46 pm

Hi dutchgirl.

Thanks for your respons. You have some very insightfull tips. It gives me a lot to think about.

I understand what you mean. We went for paying of mortage because that seems 100% safe, and our monthly costs go down.
My wife has problems with investing. Because someone she knows has had bad experiences with it. However that person was taking risks and had some bad luck. Index funds seems indeed like a safer way to go.

I think we are going to start with BND next month. And we will see how it goes from then on.

I didn't know about jaarruimte, but i looked it up and we can use and invest about 4000,-. Definiatly someting to think about. But i also red that you still pay taxes when you get it back later (depending on your income then). And i have to figure out when i want to retire and use the money from my pension. Difficult to know right now. I hope to (be able to) retire somewhere when i am between 40 / 50 years old.

My pension
I also have a pension, and aow. My pension will be about 22k (netto/after taxes) when i retire at 67.
But i want to retire earlier. My pension fonds allows me to have it paid starting at 55 years. Then it will be 9k/year after taxes.

Thanks for the book tips also! I will start reading this month.

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Re: DutchGirl's journal

Post by DutchGirl » Sat Aug 11, 2018 2:18 am


So personally I plan my retirement in two stages: the first stage is before I can get to my retirement income, the second stage is when the AOW and the pension start paying out.

In your case, it seems like there may be three stages:

1. Retired, younger than 55 years old, fully having to live on your saved-up money
2. Retired, over 55 years old but younger than 67 years, living on your saved-up money and on the payouts from the pension fund
3. Retired, and over 67 years old. Probably you can now live fully on the income from AOW and pension fund payouts (NB you understand that if you have your pension start paying at 55, the distributions after age 67 will be much lower, too).

I think it's important to first make sure that the final stage is "done". So that you will have enough income after you're 67 years old. You don't want to come up short then and suddenly need to go back to work or something like that at age 70 or so. So right now you are still saving up for this stage because you're working and you're contributing more to your pension plan (I assume?). You can also fund this stage some more by using your jaarruimte, as that money will also be available to you after retirement age*. I would try to make calculations to make sure that this stage is covered (and perhaps to make sure, a bit more than covered) before you quit working.

Then there would be stage 2, where at the beginning of that stage you'll need enough money to cover your expenses for the next 12 years, minus what the pension pays out (NB pension payouts will be taxed!).

And then there would be the first stage, where you would need to have enough money to pay for all expenses during that stage, and to have enough money left at the beginning of stage 2 to fund that stage.

*Yes, you have to pay income tax when you're 67 years and older. You will pay income tax on all of your income (AOW, pension fund payouts, and retirement investments). But the percentage of income tax is lower after age 67. Say that your income is 22k euros after retirement, then you pay 14% of taxes on that. If you put money away right now, you skip paying taxes in your highest bracket, which is probably the 40% tax bracket. So you can save 40% of your money now, but will have to pay 14% or so later on. Oh, and also, in the meantime, you won't pay any "vermogensbelasting" (asset tax) on this money. So still a big win, tax-wise. The big issue with using the jaarruimte is that indeed the money is locked away until official retirement age, you won't be able to get to it sooner. So if you need more money to fund your stage 3, do so. If you already have stage 3 covered completely by AOW and your pension fund payments, then it will probably still be better to invest your money in a taxable investing account and not use the jaarruimte.

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