Small and winding road to freedom

Where are you and where are you going?
Aspirant
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Location: 65 deg north

Small and winding road to freedom

Post by Aspirant »

The four freedoms of the aspirant:
To desist from possessions and security
The abolition of fear
The discovery of one´s own way
Instinctive individual action.

So this is where I am going towards. But how? Where to start? I am going to puke it all out in the first post (just to get started) and I hope to get feedback and help on how to start the path.

Currently I am middle aged father of one, married and live in an house and own a car. So I am stuck with the basic middle class trap that is quite common with today´s society. I have 13 years to go with the parenting sentence, so its quite hard to retire early Jacob style. We live in northern post-socialist utopia with good security nets and consequently very high taxes and cost of living.

Luckily I haven´t made _all_ the mistakes so things are still quite manageable (I know I deserve some eye rolling from ERE crowd and few face punches from MMM). No consumer or student debt. Lots of house debt but that is rather manageable if you take into account that I have a few shares of rentals.

I have a rather good job, working for a non-profit. This alignes with my values and coworkers are nice so can´t complain about that.
I have studied business so the money part is not that hard to learn

Now I have dozens of goals and they keep changing over time and I don´t have the natural tenacity to follow through and complete them as fast as I can think of new ones :) I just list a few life goals below and try to elaborate on each of them in separate entries. I just need to get everything off my chest and tackle them one by one so this mess gets to be more manageable. Also I need to formulate retirement strategy :lol:
First priority of this journal is to make myself accountable secondly I would like to write my thoughts on the philosophical side of all this...

Current plans
1. Health first
Stop the passive and stressful lifestyle
Move 2-3 times per week
Gym, home gym, walking, jogging, playing with kid, be outside with family
Add more veggies to diet
--> Consequently lose weight and get fitter

2. Family life
Remove stress from daily normal life
More common things to do with the family
Put more time and effort to the kids hobbies

3. Side project 1
Planning in the beginning of the year with the team
Event planning
Marketing and lobbying strategies
Selling
Financial planning and follow through on accounts

4. Finances
Save a nest egg / emergency fund / war stash
Achieve 30 % savings rate
Optimizing saving and make it an easy routine
Monthly accounting of expenses
Making NW calculations
Course in investing (professional level 1)
Pay off one rental

Aspirant
Posts: 125
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

INAB I Need A Budget
I managed to dig last year´s expenses from the card. There is so much miscellaneous crap, that accurate management on yearly basis is difficult. I would need to Now I will try

Main figures
Net income 37000 --> 3000/month

Expenses
  • Joint account transfer 650
    Savings account transfer 883
    Food 405
    Lunches 25 (mostly deducted from salary so actually +100 €/month)
    Gasoline 81
    Car 42 (not any repairs 2019, will go up 2020)
    Health 55 (should be 80+)
    Electricity 54
    Phone 26
    Hardware store 26 (should increase 2020)
    Shopping & sport 105
    Beer & restaurants 241
    Travel 100
So according to this list my expenses are approx 1800 €/month. This would give a great savings rate, but no.
I did transfer 10600 to savings, but I also used money from that account. Most of it was purely frivolous (bday party) but some could be considered as investment (downpayment capital for side project).

For 2020 I need a budget and I will try to track spending monthly.

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

This budgeting is still quite messy, but it is a start.

January was a weird month. 2300 went to savings but obviously I didn´t earn all that. Expenses are still too high, so I need to curb shopping and beer...

Income 2979,2
Joint account transfer -1600 (double transfers from december)
Savings account transfer -1800 (double transfers from december)
Food -351,35
Lunches -63,85
Gasoline -122,4
Car (not any repairs 2019, will go up 2020)
Health (should be 80+) invoiced in February
Electricity -53,97
Phone -42,1 (wtf?)
Hardware store (should increase 2020)
Shopping & sport -290,9 New running shoes, expenses for house gym, legos for almost 150 €
Beer & restaurants -118,04
Travel -227,2 work trip + transfers to holiday account
Misc -397,72 Clearing credit cards from december
Broker account transfer -500

Aspirant
Posts: 125
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

I have been pondering about my investment strategy - or the lack of it.

I have developed a three pronged plan to support myself when retired. My target number is 3000 / month (my current income level). I will try to get something like this going and adjust on the way if necessary.
Pension 1000
Rental income 1000
Investment income 1000

1. Pension 1000. We have this ponzi-scheme called national pension system. Actually something like 32 % of my true salary is deducted before I even see it (paid py the employer 25 % paid by me 7 %). So _theoretically_ this is pretty great. However this all goes to common portfolio and I will not see my share of it. I´ll get about 40 % of my current salary if I work to the official retirement age. Its 67 now and subject to political change when the money runs out (or fertility rates drop). So I am less than keen on working until about 75 and then dropping dead on my first day of pension. Since I can´t Jacob myself out of this, I will work until I am guaranteed minimal pension (about 1000 €).

2. Rental income 1000. This should be net of taxes and expenses with a margin for repairs. Real estate is not as diversified so the risk of something hitting the fan is substantial on the way. Currently I have this +/- 0 when the rentals are paying for themselves. In about 15 years they will be debt free and provide about 700 €/month. So I will need to expand the portfolio from here. Currently the interest rates in Europe are close to zero, so this is the way I will leverage them. The building cycle is at an "interesting" junction in my town so I am less than eager to put more money (and debt) into this just now. If you take average return of 5 % after expenses and take account taxes to get 3 % return, I would need a rental portfolio of about 489 000.

3. Investment income 1000. Getting 12000 net per year would require 17000 pre-tax. This would require 428 000 €portfolio with 4 % SWR. If that 4 % accounts for taxes and inflation, I will need 300 000. I know the market returns about 6-7 %/yr but I am considering if that is prudent enough in this stage of market cycle. This really doesn´t seem realistic to achieve in 10-15 years, but I think I will need to try.

4. The fourth prong will be side hustles. Since I am currently handicapped by work to pursue real estate as fast as I should, I need to figure out something else. I started a start-up side project last year, and that will be one of my priorities this year. There are significant risks for the business, and even if everything goes well the upside is not much. But I consider this a social project and chance to learn a lot of new stuff. So even if it goes bust, I am already getting a positive outcome (mentally).

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

The post above seems pretty overwhelming. I have known that the road ahead will be difficult one (with the combination of low pay and high taxes). I think I could pull this off, if I could work for just one person. Advice on getting my wife aboard would be much appreciated :)

Now if you have made this far without injuring yourself with all the eye-rolling, I could mention something actually related to this forum/blog. Maybe if I could adjust the number "needed" a little this plan could actually be manageable. For my current expenses, I have included loan repayments, and in 15 years I assume to have at least paid back the house I am living in. I might have debt for rentals, but those should come with income as well.

If I actually need 36000 /year, that would be 900000
If I actually need 24000 /year, that would be 600000
If I actually need 12000 /year, that would be 300000

I know it´s possible to live with 1,5 Jacobs per person but that lifestyle is not very desireable. My mom lives like that. She was ever frugal, and retired 5 years early. She didn´t invest a penny and is extremely risk aversive.
I think 36 k is little too difficult to achieve, but 12 k and 24 k are doable. --> So the basic ERE stuff comes to the equation.

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

Now it seems that the only way to eat the elephant is one bite at the time.

I should trim the lifestyle bit by bit, until I can get achievable numbers for FI.

Some background on the big 3.
Housing is about 1450 sqm and 6 km from city center where I work. Maintenance fee is 220 €/mo, My share of loans is 320. So bare minimum housing cost is 440 /month. This would account for my half so total is 880 (approx). However I need to consider maintenance done by myself as cost and some allowance for depreciation. I think a fair estimate for my half would be 650 €/month.

Transportation. I own a teenage Toyota with 130000 km (81k miles). Its oldie but goldie for my main use. Car holidays and long road trips are not so much fun though. My mileage is about 10 000 km per year.
The distance to work is theoretically bikeable, but I only do that during spring/summer. Winter biking is actually doable (and I have the gear for it too), but somehow biking to work at -4°F doesn´t seem appealing :) Easy cycle path to work so its safe as well. On a sunny spring morning with a road bike you can smile while biking to work.
During winter you will wear the same expression for 2 hours because your face is completely frozen afterwards. And its probably not a smile :)

Food. Apparently I spend 405 € /month on food on average. This would imply massive grocery bill for my family if my wife spends as much. I kind of doubt that the grocery bill is not divided equitably in our family. But to optimize, I would need to know the total... I can however improve my share of it. Basically buy more veggies and less crap (and beer).

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

I think food will be my first try on web of goals. Eating is in the cross section of 3 of my goals (health, family and budgeting). Now If I can move our small system of 3 towards more planned home cooked and healthy meals I could win in all three fronts.

I think I need to chew this a little bit more to come up with something actionable that can form itself into a habit.

1. Don´t buy crap from the store (no sweets or cookies)
2. Plan meals one week ahead. Try to use Sunday for planning, cooking and general home maintenance
3. Learn veggie recipes (I can cook, but surely I can improve. Also being a responsible parent dictates that I try to cook healthier for my kid).
4. Learn more about diets (apparently there is a whole war going on in the internets about what consist of a good diet)

basuragomi
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Re: Small and winding road to freedom

Post by basuragomi »

I love winter biking, if only because there are no other bikes on the roads! I use a MTB helmet, ski goggles and a scarf which works down to -20 C or so. Is the cycle path cleared in winter?

You might benefit from first figuring out what you normally eat, what you enjoy eating, what you buy and don't use, and the habits/motivations behind each of those. 405 euro a month seems like you're eating lots of meat or processed food, it might be possible that you're exceeding your protein needs too.
Last edited by basuragomi on Wed Feb 05, 2020 10:55 am, edited 1 time in total.

AxelHeyst
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Re: Small and winding road to freedom

Post by AxelHeyst »

Hi Aspirant! I'm at the beginning of my journey to cut expenses down as well. In response to your comment about trimming the lifestyle 'bit by bit', I wanted to point you to Jacob's post on the sigmoid S-curve of effort and results, which just got served to the front page:
http://earlyretirementextreme.com/bette ... urves.html

Lifestyle changes are complex things, particularly with a family, but this idea that dipping the toe in might not be the best, is worth considering. I am endeavoring to take a front-loaded, aggressive approach to changing my lifestyle, largely due to my understanding of that S-curve (basically, "hit it hard and fast, and the change will be easier in the long run"). Food for thought for you on your journey. I'm looking forward to following along.

AxelHeyst
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Re: Small and winding road to freedom

Post by AxelHeyst »

Aspirant wrote:
Tue Feb 04, 2020 12:19 pm
Advice on getting my wife aboard would be much appreciated :)
...
I know it´s possible to live with 1,5 Jacobs per person but that lifestyle is not very desireable.
Could you relate a bit of her personality and context? Most of the 'getting the SO on board' advice around here will be tailored to that information. That said, it's often of the form to gently guide her to a point where she's motivated to the ERE lifestyle/philosophy because she has a vision in her own head of a future that is desirable. In other words, don't start with taking her on a guided tour of your radically-lower-living-expenses spreadsheet (that was my first thought). Rather, have conversations around the benefits of the philosophy, what you're trying to achieve. "What would you do with your time if you didn't have to work for money?" "How would it feel to have 10/20/30 years of FU money saved up?" etc.

Just some devil's advocate to the second point: I think there's a difference between scraping by on 1.5 jacobs while still maintaining a consumer mindset, and shifting your mindset so completely to a conserver > producer mindset that you have a frankly amazing life, and wouldn't be able to figure out how to spend much more than 1.5 jacobs if you were trying. I'm still working to get there but it's a big part of my vision, and it's central to the ERE philosophy I think.

horsewoman
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Re: Small and winding road to freedom

Post by horsewoman »

Hi Aspirant, I feed my family of 3 with spending around €300 a month, so I'll share my 2 best tips with you:

Plan your meals - it does not have to be an elaborate thing, just jot down 5-7 simple meals. Personally I only plan one meal a day, since we eat the same thing for breakfast daily (porridge and/or muesli).
So I cook either lunch or dinner, depending on our schedules. Other than that we eat bread or a quick soup. Always look in your fridge/pantry/cupboards what needs to be used up and plan meals around that.

Once you know what you need for the week write a shopping list. Now commit to a set amount of money you want to spend for one week on food and divide this by the times you regularly go shopping. So lets say you budget €90 for a week and go shopping 2 times. So you have €45 for each trip.

And now the important part: keep a running tally on your shopping list and add any item that goes into the cart to the tally (I round up for convenience). As soon as €45 is reached, you are finished. This trains you to buy only things on your list and to pay attention what different kinds of food stuff actually cost. If you have not all essential items on your list, take a critical look into your cart what non-essentials can go back on the shelf.
The beauty of this method is, it works even when not paying cash since you committed to a set amount. This is limiting like having only a set amount of cash on you.

I did this for a few years, but by now I no longer need to keep the tally. I can estimate pretty accurately what the stuff in my cart will cost on the check out. Whenever I notice my food costs creeping up I do a "refresher course" with this method. Works for me! Good luck :)

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

Thank you all for your replies :)

@Basuragomi: I used to bike in winter when I was younger. Basically I have two excuses at the moment. I need to be at work and either drop or pick up the kid to/from daycare. It would take too long to do in the morning (shower at workplace) and workday ends the minute I am supposed to pick the kid up. So I need a teleport. I have been contemplating on buying a fatbike for months now. It would be fun to ride around during weekends :) Not very frugal though. My savings challenge doesn´t include spending on sports etc. If I am going to pull any of this off, I need more life energy, and exercise should make this better.

@AxelHeyst: I think the S-curve theory is valid. I would think your strategy is better. I am limited in my energy expenditure (because I don´t have any energy), so I am stuck to baby steps. This got me thinking that there are different S-curves for everything. I we could somehow actually measure the slope of the curve and where we are on it, this would enable us to reap the best "bang for the buck" for all endeavors. This is partially why I picked food as the "easy" starting point.
1. I can already cook (I used to like it)
2. I will spend about the same amount of time shopping anyway (weekly planning might actually reduce this)
3. Cooking healthier will earn me less daddy points (yucky broccoli etc), but will benefit all three of us in the long term
4. My wife also wants to increase veggie-foods so this is kind of a common goal
5. Hunting for new recipes and planning weekly meals is basically the only new thing to do

Aspirant
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Location: 65 deg north

Re: Small and winding road to freedom

Post by Aspirant »

@Horsewoman Thank you for the tips. I have actually tried the meal planning weekly. We started it and tiredness and exhaustion just got in the way.
There is a Finnish Home-economics Association (Martat.fi) that have resources of cooking and meal planning and general home-economics tips. They are actually pretty good :)

At my current state automating stuff is the key to succeed. I revert to the easiest of routines when I am tired, so I need some new recipes (cheking out the recipes thread in the forums too). I just zombie-mode through the nearest store and buy the same of everything (and occasionally have too much of that stuff then). Now if I add up new recipes, I need to add them to the mental list so routines start to form in my head.

I will try to make Sunday the homey-day when I do the planning and shopping. During weekdays I will opt for the closer grocery stores and they are more expensive than the local Aldi (or Lidl) and more trips will result in more impulse purchases. I will solemnly promise to find the Excel-sheet for weekly list tomorrow and try to make it with DW.

Running tally is pretty hard core :D I can imagine the DW´s face when coming back from store and "Sorry dear, I couldn´t get this and that because of running tally". But that is definitely efficient way. Maybe that would require prioritizing the shopping list so you won´t leave out anything essential.

jacob
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Re: Small and winding road to freedom

Post by jacob »

AxelHeyst wrote:
Wed Feb 05, 2020 11:13 am
Just some devil's advocate to the second point: I think there's a difference between scraping by on 1.5 jacobs while still maintaining a consumer mindset, and shifting your mindset so completely to a conserver > producer mindset that you have a frankly amazing life, and wouldn't be able to figure out how to spend much more than 1.5 jacobs if you were trying. I'm still working to get there but it's a big part of my vision, and it's central to the ERE philosophy I think.
Indeed! Huge difference between the two mindsets and therefore hard to explain. I constantly run into this problem when interviewed by [consumer] journalists who sometimes like to portray me as someone who traded FIRE for a life spent in poverty/asceticism. Here's an attempt to explain why this just isn't so: viewtopic.php?p=99322#p99322

Aspirant
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Re: Small and winding road to freedom

Post by Aspirant »

I think DW deserves a whole post to herself, but I have to mull through that before writing.

@AxelHeyst: I think you hit pretty close with this comment.
Just some devil's advocate to the second point: I think there's a difference between scraping by on 1.5 jacobs while still maintaining a consumer mindset, and shifting your mindset so completely to a conserver > producer mindset that you have a frankly amazing life, and wouldn't be able to figure out how to spend much more than 1.5 jacobs if you were trying. I'm still working to get there but it's a big part of my vision, and it's central to the ERE philosophy I think.
I think I am close tho this in that section of Wheaton scales (moving away from consumer mindset in my head but the rest of the body is still living it).
My point of mom living with 1,5 Jacobs (and still saving money) as being not desireable is not because of her spending level, but other factors. She really doesn´t live, she just exists. I have friends that live on a small budget and have amazing lives. I think its about having lots of human interaction and meaningful things to do. If I were single I wouldn´t mind living with 1,5J reading books, jogging and fishing. This is a part of why I want to move towards financial autonomy. I want more control of my time.

I have two examples of trying. I am not sure if they are truly the ERE philosophy, but this is where I am at presently.

I managed to do a home gym on a small budget. Its a common room for couple of housing units previously underutilized. We did the work cleaning and painting it, bought used sets of barbells etc and managed to get everyone to pitch in for the treadmill. So for a cost of about 300, I have a serviceable gym 10 meters from my door, got to do some physical work, get to know the neighbors a bit more, upgraded the area as a whole and (arguably) raised the value of my home by more than 300. And the 300 could pay itself back by saving gym fees. Also this aligns with my web of goals of getting more exercise (now I have one less excuse)...

Other example was that I wanted a place to learn things and socialize outside of the people I already know. I set up a company with friends and we are trying to establish a cultural center (arts&crafts). Its still in the process, but potentially I get to learn new stuff, hang around with interesting people and actually earn a few bucks for it. The problem is that I can´t participate as much as I would like to. I don´t have the time or the energy for it. Now I must concentrate on the boring bureaucracy part to get it running first. We´ll see in few years how it goes :)

Aspirant
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Re: Small and winding road to freedom

Post by Aspirant »

@Jakob: I am trying to improve the skill of living in different departments. What do you think about the examples above?

I talked about this with my friend. He has really good skills improving the quality of life with a shoestring budget. It requires some sacrificing, but on the whole I think he gets about double worth for his $ spent than I do. On the surface its just me bleeding money for stupid stuff (which I am). Its more that he is very much in tune of what his main things are in life. He spends his meagre resources on exactly those things that bring the best things for his life. This is the underlying reason why I started this journal. I have to figure out the stuff that is important for me, and concentrate my efforts on those fronts.

Now I have this general trilemma of health, family and wealth. That´s just the basic. I need to add _me_ into the equation. What is the special stuff in my life that makes things great for me? If I just strive for general stuff, I will have general pre-fabricated life :P

Jason

Re: Small and winding road to freedom

Post by Jason »

AxelHeyst wrote:
Wed Feb 05, 2020 11:13 am

Just some devil's advocate to the second point: I think there's a difference between scraping by on 1.5 jacobs while still maintaining a consumer mindset, and shifting your mindset so completely to a conserver > producer mindset that you have a frankly amazing life, and wouldn't be able to figure out how to spend much more than 1.5 jacobs if you were trying. I'm still working to get there but it's a big part of my vision, and it's central to the ERE philosophy I think.
Seems that most around these parts use the Wheaton scale, I personally use the AA multi-tiered description of alcoholism (I'm improvising) as an analogy to escaping consumerism- black out drunk in the gutter alcoholic/weekend alcoholic/functioning alchoholic/dry drunk alcoholic/thriving ex-alcoholic/forgot I ever was an alcoholic/forgot what liquor is. I personally am at the dry stage. I probably need to fix a flat tire to move forward but I just renewed my AAA so let those guys do it and I'll pay for it with the money I'm making on my investments that I used to spend on Netflix.

horsewoman
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Re: Small and winding road to freedom

Post by horsewoman »

@Aspirant - there is really no need to add any new recipes at this stage. My meal plan on busy weeks is literally "Pasta with tomato sauce - pancakes - oven baked potatoes - frozen pizza - noodle soup" or something simple like that.
There is no shame in having one or two pre-made meals in the plan, or even planning only three simple meals in advance. What the meal plan (and associated shopping list) is supposed to do, is to take the stress of not knowing "what's for dinner" away. If you are too stressed at the moment to focus on both meal planning and reducing the grocery bill at the same time, focus on getting your meal planning running first. Once this is habit is established, shift your focus on saving grocery money. Maybe this podcast might be helpful in your situation:
https://www.npr.org/2019/12/11/78716073 ... -we-become
Having a meal plan is a good habit. For me it works to do it on Sundays, while drinking a cup of coffee.

Aspirant
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Re: Small and winding road to freedom

Post by Aspirant »

Thanks for the advise.

I tried the shopping list tallying. Got enough food to last until weekend. I’ll have to negotiate with DW how to proceed together with this. Makes more sense than teying to optimize my share of spending.

I prepared an portfolio proposal of 20 millions today. I have veen reading a lot about different investment products. Now I am stuck with finding products that have less correlation with broad stock market. Maybe @Jacob can advise?

Aspirant
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Re: Small and winding road to freedom

Post by Aspirant »

February expenses

Income 3214,91
Joint account transfer -1000
Travel account transfer -100
Savings account transfer
Food -136,35
Lunches -48,75 (mostly deducted from salary so actually +100 €/month)
Gasoline
Car -289,6
Health (should be 80+)
Electricity paid from joint account
Phone -21,9 Switched to cheaper phone plan and got a dual SIM phone (paid by workplace)
Hardware store (should increase 2020)
Shopping & sport -144,99 Newspaper subscription (investment related), bday expense
Beer & restaurants -203,99
Travel
Misc
Broker account transfer
Monthly surplus 1269,33

Another non-representative month. Car got its yearly maintenance trip to the shop and mandatory vehicle inspection in March. Lots of partying for some reason (workmate retirement, university party).

Mostly I spent February just working. Year end financial statements, auditing stuff and so on went on for a whole month. Mentally this is the most aggravating time of the year and I was really tired at the end. And March was equally bad. I really needed a vacation, but corona got in the way.

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