ERE Adventuring

Where are you and where are you going?
NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

Yeah, it's very complicated and I've noticed that discussing german (tax) law in english is not optimal. I think the biggest problem is that building a business has traditionally been the way to go, so "free agents" like us FI-people are kinda falling through the grid there. I'm really starting to understand why the rich are building all these holding companies and such. It just makes sense...

That eBook is already out, however, so no luck there. I downloaded it yesterday and will do a more thorough second pass on the weekend. Most of the information is basically there, but the nitty gritty highly individual tax paperwork just can't be generalized in a way that applies to most people, I fear.

User avatar
Alphaville
Posts: 3611
Joined: Thu Oct 03, 2019 10:50 am
Location: Quarantined

Re: ERE Adventuring

Post by Alphaville »

eh, if the book is already out your cost of research is lots cheaper.

best wishes with this! curious to see how you solve it.

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

Thank you :)
I might take a few years until I feel comfortable with doing most things myself, but I'll add my progress reports to the monthly review to keep me honest.

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

NuncFluens wrote:
Mon May 24, 2021 12:16 pm
Our wedding was intially planned for early June, but a few bureaucratic processes took a lot longer than we thought, so that is postponed for now.
Or so I thought. The bureaucratic business (fiance's name change) came to a sudden and very favorable close. My fiance got to change her first name back to what it what it originally was (as immigration messed it up 20 years ago), so we can move forward now.

The wedding will now happen on the 4th of June, as planned. Since we only decided this 3 days ago, we'll do a very toned-down celebration. Basically, the two of us (+ a photographing sister in law) will get officially married in the morning and host a barbecue with ~10 close friends in the afternoon. We'll visit our parents and celebrate with them at a later time, once this corona-business is done with. This is much less than we initially planned for, but I'm very happy to keep our wedding on the down low, as I don't work with big celebrations and lots of people.

Preparations are surprisingly stressful for what little we are planning to do, but the bulk of it is already handled. We still have to order a few flowers, buy all the food and drink, etc. But overall it's very doable, which is nice since I have to also work next week :/

The prenup won't be finished until then, but can apparently be applied retroactively. We'll have to talk this through with the notary, once he's back from vacation on monday. Hopefully he can assure us that it's not a problem. If applying the prenup retroactively doesn't work, we'll probably still go through with it and find a way to sort it out somehow.

So yeah, I'm getting married next week! Hooray!

User avatar
Alphaville
Posts: 3611
Joined: Thu Oct 03, 2019 10:50 am
Location: Quarantined

Re: ERE Adventuring

Post by Alphaville »

haha very nice. congrats!

shelob
Posts: 86
Joined: Sat Apr 24, 2021 11:04 am

Re: ERE Adventuring

Post by shelob »

Hi to a fellow German!

I had dismissed the business to manage my assets as way too complicated, but now you've got me seriously thinking about it. May I ask which book you're reading on the subject?

Kind regards from the coast and best wishes for your wedding and marriage! :)

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

shelob wrote:
Sun May 30, 2021 11:20 am
I had dismissed the business to manage my assets as way too complicated, but now you've got me seriously thinking about it. May I ask which book you're reading on the subject?
I've purchased the eBook from the Atypisch Still Blog after reading all of their blog posts. The price is a bit steep at 35€, but it's a succinct rundown of how they set up their "UG & atypisch still". The Mit Rückenwind Blog is also quite cool, as he's going a bit more into the tax side of things which he does mostly by himself.

I am however rethinking/postponing the idea as I missed one big factor in my frenzy: I am not paying any taxes yet, so it doesn't make sense at all from that perspective. What's more, with the marriage I get double the tax cuts (Sparerfreibetrag) as my fiances doesn't invest at all. So I will remain tax-free for a good 4 years or so. The only advantage would then be to get my money to a safe haven, which in itself might not be worth the running costs right now. I'll definitely prepare myself to make take the plunge in 3-5 years though.

shelob
Posts: 86
Joined: Sat Apr 24, 2021 11:04 am

Re: ERE Adventuring

Post by shelob »

Thanks a lot for the recommendations! I'm also way below the Sparerfreibetrag, so I have a lot of time to think this through. Thinking about this today, what came to mind was 1) does this protect against a possible unrealised capital gains tax? and 2) since I'm eligible for Spanish citizenship through ancestry, could I make use of this somehow?
I guess the key takeaway is that our taxation law is very complex and there is no one formula that everyone can apply, rather each person's individual circumstances need to be considered. I had previously ignored the taxation side of things, and reading through your journal has really helped me think about it. Thank you so much for writing it and providing this discussion space :-)

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

shelob wrote:
Sun May 30, 2021 2:57 pm
Thanks a lot for the recommendations! I'm also way below the Sparerfreibetrag, so I have a lot of time to think this through. Thinking about this today, what came to mind was 1) does this protect against a possible unrealised capital gains tax? and 2) since I'm eligible for Spanish citizenship through ancestry, could I make use of this somehow?
I guess the key takeaway is that our taxation law is very complex and there is no one formula that everyone can apply, rather each person's individual circumstances need to be considered. I had previously ignored the taxation side of things, and reading through your journal has really helped me think about it. Thank you so much for writing it and providing this discussion space :-)
Regarding 1), what do you mean when you say "unrealised capital gains tax" exactly?
With 2) I can't really help, as that would be international tax law, I assume. I haven't looked into that, as it seemed to be even more complex that german tax law :/

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: Monthly Review: May 2021

Post by NuncFluens »

Not to detract from my ongoing conversation with @shelob, but it is the end of the month, so I'll just cram this in real quick.

Finances
One more completely normal month. Well, aside for the wedding, but that's a separate thing with a separate account, etc so let's ignore that for now.
I've decided to set a fixed saving rate of 1.700€ for the time being and move the rest of the monthly leftovers into the soon-needed vacation fund until it's at ~2.000€ or so. This does not count towards "savings" as such, as it will be used up regularly It's more of a pre-payment.
Nevertheless I've achieved a 71% SR which puts average monthly spending at just below 900€.

Image

Nothing much changed in spendings, so let's move on.

Wedding
We managed to reach the notary and he confirmed that it's absolutely no problem to apply the prenup retroactively. With that off our chests, we went to confirm our wedding appointment on friday today. All the preliminary paperwork has been done, so we can just go and get married on friday. We also met up with a florist and managed to arrange for a lot of half-assembled flower arrangements, as they didn't have the capacity to prepare the full thing till friday. So we'll have to do some work ourselves, but that's okay. Later today we will be buying all the food and drink and then it's basically all done. Well, apart from setting up and decorating the location on thursday and planning a few games for the wedding, but still.

Work
Work is getting more stressful as new projects come in. My system is still not working 100%, but apparently that's alright and can be fixed with "chaos engineering" ala Netflix (i.e. breaking and rebuilding it better). I'm still in the process of figuring out solutions and processes for all known failure modes and am producing technical documentation like a madperson. This has me spread a bit thinner than I'd like, but we've organized a task force for working out job offers in hopes of attracting new talent. Overall it's still doable and I'm able to resist new responsibilities quite successfully.

Fitness & Adventuring
Hiking has been on the backburner as I'm working on my strength training right now. I've made quite some progress on my routine and am seeing first improvements to my physique. What's even better is that all my joint niggles (elbows, knees) seem to get better. I might even start front squats again, once I maxed out my power cleans.

The "gym" (crappy basement) has been overhauled too, as we made some more space for a few pieces of equipment. I now have a bench again, so I can press my dumbbells at least. Once the wedding stress is done with, we'll make some more space and add a makeshift deadlifting platform, eyelets for band training, etc. Overall things are moving forward and I'm very excited to have a workable gym again.

shelob
Posts: 86
Joined: Sat Apr 24, 2021 11:04 am

Re: ERE Adventuring

Post by shelob »

Wow, you've definitely been busy! And sorry, I didn't mean to bother you when you're so close to your wedding and all that. I wish you a marvelous day:)

To clarify, I meant the discussion about wealth tax/Vermögenssteuer, though I have to admit that I don't really follow the news at the moment and have dangerous half knowledge at best. I'll look to remedy that before I make any further comments :shock: :? :lol:

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

shelob wrote:
Wed Jun 02, 2021 3:46 pm
Wow, you've definitely been busy! And sorry, I didn't mean to bother you when you're so close to your wedding and all that. I wish you a marvelous day:)
Thanks, and don't worry. The wedding is super low key and not all that much work. I have plenty of time to waste on the internet.
shelob wrote:
Wed Jun 02, 2021 3:46 pm
To clarify, I meant the discussion about wealth tax/Vermögenssteuer, though I have to admit that I don't really follow the news at the moment and have dangerous half knowledge at best. I'll look to remedy that before I make any further comments :shock: :? :lol:
Ah, the wealth tax... I didn't follow that discussion at all, but while google says it's theoretically in effect right now, it hasn't been enforced since 1997. Not sure it ever will be as long as the CDU has any say in things. I guess we'll have to see how the elections turn out this summer :/

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

So it looks like I'm officially married now! :D Life is still stressfull, so I'll just do a little writeup of what happened until now. I'd love to provide some photos, but am still anxious about revealing my true identity *villainous laughter*, so probably not.

The Wedding Ceremony
Our appointment was at 9:30AM, so we got there first thing in the morning. We didn't wear any dresses or anything so that was quite chill. The official ceremony itself was planned to be quite plain. We just wanted to sign the paperwork and get back to prepare for the real party. Nevertheless the attending government official prepared a whole speech that was suprisingly heartwarming. My sister in law (our photograph) even cried a little. But overall we were done in like 20 minutes, including photos.

The "Party"
We intially researched the Corona rules, but as it turned out 3 days prior to the wedding, those rules had since been revised. So we had to cut the party down to our absolutely closest friends. All in all we were ~10 people, with different time slots for different guests and negative Corona tests for everyone involved. It was still cool, though, as we were forced to celebrate inside due to the weather, so it was very intimate and quite a lot of fun. We had a barbecue, lots of drinks and some wedding games and it went on until about midnight. I'm very happy with how things turned out, as I don't work well with big crowds. My fiance - nay! Wife! - also enjoyed it very much, so in a weird way Corona provided the perfect setting for our little celebration :)

The Aftermath
Due to our downsized wedding celebration we couldn't invite our families, so we headed to my parents the next day. From there we drove 2 hours to see my brother and his girlfriend in Switzerland and had another little celebration. Another pair of friends will be visiting today and more appointments are sure to follow. We also didn't manage to get our rings tattooed yet, and the prenup needs to be done too. Then there are the wife's parents that still need celebrating with, so overall it seems like the post-wedding week will be just as stressful as the one leading up to the wedding. It's cool to connect with everyone, though, so maybe it's not all that bad.

Quadalupe
Posts: 268
Joined: Fri Jan 23, 2015 4:56 am
Location: the Netherlands

Re: ERE Adventuring

Post by Quadalupe »

Congratulations! Sounds like a frugal *and* fun wedding. Enjoy the nuptial bliss!

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

Thank you Quadalupe! It was much more fun than I anticipated. Very cool.

The financial side was even more surprising. I didn't really want any gifts, but we received a lot of money and broke about even for now. The prenup will set us back some, but I'm shocked about just how frugal a wedding can be. Nothing like those 20.000€ weddings I keep hearing about :lol:

User avatar
Alphaville
Posts: 3611
Joined: Thu Oct 03, 2019 10:50 am
Location: Quarantined

Re: ERE Adventuring

Post by Alphaville »

NuncFluens wrote:
Mon Jun 07, 2021 6:13 am
Thank you Quadalupe! It was much more fun than I anticipated. Very cool.

The financial side was even more surprising. I didn't really want any gifts, but we received a lot of money and broke about even for now. The prenup will set us back some, but I'm shocked about just how frugal a wedding can be. Nothing like those 20.000€ weddings I keep hearing about :lol:
hahaha! congrats on getting married and dodging the big wedding bullet at the same time.

i still recall your terror at the huge wedding idea from much earlier in your journal :lol:

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

Thanks Alphaville! I guess that specific terror was way overblown in hindsight :lol:

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

Upon rereading YMOYL I relived my early days when I would create excell sheets and project my net worth and everything. Since I couldn't be bothered to get a reliable data set back then, it wasn't very meaningful, though. This time around, I did manage to track basically everything over the last 10 months, though. So I took a few hours to make the YMOYL-graph once more. This is meant to keep track of my current progress towards FI and will be something of a wrapup of the last 10 months.

Crossover Point Graph
This is the basic YMOYL graph for figuring out my crossover point. It's making a lot of assumptions, but I think I've got a good idea now:
Image
  • The red line is my monthly spendings, averaged out over 6 months and mulitplied by 300. The trendline extends the current 6 month average indefinitely. This should represent the amount of capital I need to pay for all of my current expenses at a 4% SWR.
  • The yellow line tracks my invested capital (with no appreciation) with a moving average for the trendline. This is the worst case and assumes no market performance, only diligent saving.
  • The green line tracks my net worth (including cash and appreciation from assets, with a polynomial fit on the trendline. This is the best case and assumes that the market will continue performing as it did (lol). If it works out, I'll cross over in mid 2023. An exponential fit would put the crossover point at the end of 2025, which seems much more realistic.
Drawing this up kinda blew my mind. I assumed I could "retire" around 2029, but having the worst case crossing me over at the end of 2026 gave me another push. If all goes well I'll scale back at work quite hard in a few years. Still, there are a lot of assumptions here, so I'll note down a few of those:
  • The market will most likely not perform as it did, as I started tracking during the corona-recovery. So the green line is very optimistic. I've decided to follow a core/satellite strategy however, which will have me investing 20% of my capital into FAANG(-adjecent) stocks. We'll see how that plays out.
  • Monthly spendings are down since I started tracking. This is mostly due to my reconnecting with my desire to be free, so I'm much more diligent in saving. Nevertheless, the coronavirus kept us from travelling, so I should probably have added a 15% increase for travelling at least. There are still a few spots where I could save more, but those are marginal gains, I fear.
  • Another big factor is our current appartment, which is 250€ per person, including all utilities. If we ever have to move this might well double, leading to another 25-30% increase per month.
  • As far as income goes I don't have high hopes of increasing that soon. My current job is quite cushy and I've decided against other opportunities when I mulled it over at the end of last year. Pay raises are predetermined, too, so I won't get another raise until 2025. Since I don't want to pressure myself too much, side gigs are very unlikely too.
With all those confounders I'm still hopeful to be able to make it to at least a BaristaFI of some sort very soon. Overall I'm quite happy with this exercise and my progress over the last 10 months. I blame this forum :p

Edit: The joy! I just noticed my formula for determining my 6 month spending average was faulty (6 months spending divided by 5 :lol:). I updated the graph and it looks even better now.

NuncFluens
Posts: 221
Joined: Fri Jun 26, 2020 6:25 am
Location: Bavaria, Germany

Re: ERE Adventuring

Post by NuncFluens »

I'm in full on reminiscing mode right now, what with the wedding turning my life on its head and all. So I'll waste some more space to answer the question (riffing on the previous post): How did I manage to save 35% of my current NW last year, when It took me ~8 years to save those first 65% ?

The Beginnings: 2013-2014
Ever since my first job as a paper girl at age 12 I went to work solely to buy the cool stuff I couldn't have. This went on all throughout my university years, where I took a job on the side to make some more money. With a frugal lifestyle in general, this left me with lots of money to spend on new guitars/bikes/whatever. Once the end of my B.Sc. in computer science approached, however, I became aware of my student loans. Seemed like I lived off of other peoples money the whole time... huh.

The student loans (10.000€) would have to be repaid over the course of 10 years, starting 5 years after me passing the B.Sc. Or I could pay 70% of that in one lump sum to get a 30% discount. But for this I'd have to save 150€ per month over those 5 years. Impossible! Or so I thought.

Upon realizing that I didn't have my money in check, I promptly ignored the whole thing for a while. Until, that is, I walked by a huge stack of paperwork that I had also ignored for way too long. With the end of my B.Sc. approaching, and all the chaos crashing back down on me once again I made a decision: I would get my life under control.

The next few weeks I sorted through all the paperwork I had neglected. Fortunately, I paid my bills on time, so the reamining letters were mostly just information regarding salaries, pensions, etc. After sorting the stack of papers into a dozen color coded binders I felt better. The student loans were still a problem, but I had quickly turned into a control freak and was riding the high of having control over my life. Consequently, I made a plan to save the required. First step: 200 hours of internet research.

Over the next few months I started reading blogs on saving, budgeting and quickly went down the FI rabbit hole. Apparently I could save enough to pay my student loans and still have a lot of money left. This was to be my "rainy day fund", the internet kindly explained to me, so I wouldn't have to live off oats if the washing machine broke. Driven by a deep need for security, I decided to start saving from now on.

Interlude - a blast from the past
I remember when I was about 8 years old, my grandma mentioned that there would be 20 million DM (~10 million € after the currency switch) in the lottery jackpot. I took that number and ran a few calculations back then. If my savings account would give 2% interest, that would be 400.000DM per year in interest! One could live of that money and never have to work! Sports cars included! Looking back, I'd like to think that this is when the first little seeds were sown ;)

The early years: 2015-2018
After deciding to pay off my student loans, I kept a close eye on spendings. I didn't buy new guitars that often anymore and used the bikes I already had. I stopped buying takeout and learned to cook at home. Consequently, I managed to save more and more. With all the FI-related reading I did, I also finally took the plunge and opened an ETF portfolio after months of research. Apparently it was bad style to put the money required for paying of debt into long term investments, but that didn't really phase me all that much. In the money went, come hell or high water.

Around 2016 another financial challenge came up: My health care provider wouldn't pay for a medical procedure unless I'd jump through a lot of regulatory hoops. I did my best, but made a few mistakes tracking my condition in the past, so I probably wouldn't be able to provide the necessary documentation. It became apparent that I would have to pay another ~10.000€ out of my own pocket. But still I tried to clear the obstacles they put in my way.

After liquidating most of my assets in 2017 I managed to pay off my student loans in one fell swoop. I cherished the feeling of being debt-free, but even though I just saved 3.000€ (the 30% discount for lump sum payment), I felt pretty poor again. Nevertheless I had proven to myself that I could make substantial headway in a short amount of time and I still had a few thousand bucks left.

Then, in 2018, I decided to use my remaining Fuck You Money to tell the healthcare provider just that. The process was arduous and had been going on for about 2 years already. Yet no matter whatever paperwork I provided, there were still more hurdles to clear. So I decided to take things into my own hands from now on. I scheduled the procedure and paid for it out of my own pocket. The results were satisfactory and I only paid ~6.000€ in the end. And I did it on my own terms!

So by the end of 2018 I had my budget figured out quite well. I remember telling my mom that I managed to save 700€ that one month, so I was on a good trajectory. Even though I "lost" 16.000€ since the start, I still had a good nest egg of about 20.000€ by the end of the year.

Getting Extreme: 2019
I think I've read Jacob's book in 2016 or so and at the time it really seemed extreme. Unhappy with my current rate of progress, however, I decided that maybe it's time for some extreme measures. I reread the book in 2019 and did another deep dive into LeanFI, minimalism and simple living. Over the course of a few months, I managed to reduce my spendings ever further. It was an adventurous time with many experiments that didn't pan out. Turns out I could only eat oats for a whole week, it's just no fun :(

By mid 2019 I had scaled back most of the stupidity and arrived at a 40-50% savings rate. I was happily moving along when the bad times hit.

The Bad Times: 2019-2020
As I wrote about before, my then-girlfriend now-wife kicked me out in mid 2019. Rightfully so, as quite a few things were out of whack. I spare you the story this time as it's not the focus right now. We got back together in february 2020 and everything is well now.

During that whole stretch, however, I fell completely off the FI-train. I had to move twice, buy new furniture and drown my sorrows in food and alcohol. After our reunion I couldn't be bothered to get back on track. My stupid-frugal ways were part of why we split up, so it took some time to figure out how to continue saving without jeopardizing the newly fixed relationship. I slowly built back up to sustainable levels of frugality, however, and decided to keep working towards my goal of being financially independent.

The Good Times: 2020-Now
After deciding to take my FI ways back up in mid 2020 I redoubled my efforts. Still, I felt directionless and was missing a community that would reinforce my values. I remembered that one time I read a journal on these here forums and decided to give it a go. I wrote my introduction in June (?) 2020 and started this journal right away, tracking my progress and reporting back every now and then.

The "obligation" to keep my journal up to date also encouraged me to keep track of all of my spending. I started tracking all of my expenses once more, and had no problems this time around. I managed to increase my savings rate from 50% to 70% in 3 short months, and learned a lot of valuable information on how to do better. The biggest help (apart from being accountable) however was the change in mindset my frequent interactions with the bunch of you brought on.

I started drawing up webs of goals, thought about what I wanted to do in "retirement" and let go of the idea that it's not worth it to start right now. I saved like I never saved before, at the same time cutting out stupid savings that had gotten me in a pickle before. 10 months later (see previous post) I increased my all time net worth by 35% in little under a year.

Conclusion
Wow, lots of history there. Overall I feel better about myself after writing this down. Going through all the little phases I've had brings back a lot of memories and victories that I'd half forgotten about. Paying off my student loans was a big one for sure. But taking that medical procedure into my own hands was a big win too.

To answer the question: Why did it take me 7 years to save 40.000€ when I managed to increase my net worth by 35% in just 10 months? I think a lot of it was a slow start into the world of savings. Growing up, money was only ever talked about in a scarcity mindset, so it was quite normal (if not helpful) for me to act like I did. So even at 25 years of age, I was a total newbie to all things paperwork/finances/tracking and it took me a long time to overcome that.

The hedonistic mindset was also hard to break out of. In the beginning I forcibly removed a chunk here or there and just stuck out the suck until it become normal. Only much late did I learn that a convincing Grand Vision makes quitting the fun but stupid stuff so much easier. I think it took me those 7 seven years to arrive at a point where I'm content with having enough.

With everything I know now, I could probably save those first 40.000€ much quicker now. I also convinced myself that the last 10 months weren't a special unsustainable period, so I should be making leaps and bounds from here on out. Freedom, here I come :D

zbigi
Posts: 977
Joined: Fri Oct 30, 2020 2:04 pm

Re: ERE Adventuring

Post by zbigi »

Alphaville wrote:
Tue May 25, 2021 8:45 am

so you need to really "invent" some kind of financial vehicle that shields your capitalist livelihood.
Sounds like annuities might potentially be a good idea (depending on details of German law).

Post Reply