the dollar journal

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thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

the dollar journal

Post by thedollar » Tue Mar 14, 2017 9:15 am

Hello,

Found this site and had quite an epiphany. I will try to use this journal to try and make sense of my financial situation.

Currently I am living alone in a too expensive apartment with a cheap but risky mortgage. My job is part time but I am hoping to get a full time job within the next year or so. This way I would be able to increase my savings rate.

The apartment was bought at a lucky point in time and is now worth 2x the purchase price.

Finances
Annual income (2016): $24,306
Annual expenses (2016): $16,363

Balance
Assets: $840,976
Apartment (big part of the assets): $643,419
Liabilities (mortgage): $257,367
Net worth (as of today): $583,609

FIRE stats
35.67x annual spending
2.8% (S)WR
3.7% true (S)WR (due to capital gains taxes)
Savings rate (2016): 32%

Stuff I should work on
  • Reducing my "stupid" spending
  • Selling my condo and renting a place
  • An efficient way to invest the money
  • Getting a full time job within the next year or so

ether
Posts: 164
Joined: Sat Nov 17, 2012 1:50 am
Contact:

Re: the dollar journal

Post by ether » Tue Mar 14, 2017 9:26 am

Welcome!
You're essentially financially free!
What kind of job are you hoping to get?

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Tue Mar 14, 2017 9:32 am

Monthly budget

Mandatory expenses
Mortgage: $157
Property tax: $212
HO association: $243
Mandatory TV: $30
Water $17
Electricity: $74
Heating: $74
Total: $807

Other expenses
Food: $285

Total spending: $1,092
Annual spending: $13,104

I did spend $16,363 last year. Some of the extra spending comes from traveling which I do not regret. A lot of it, however, comes from eating out and ordering takeaway which I could have gone without and even have been more healthy!

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Eureka
Posts: 252
Joined: Fri Jun 10, 2016 11:03 am
Location: Copenhagen, Denmark

Re: the dollar journal

Post by Eureka » Tue Mar 14, 2017 9:35 am

Welcome to!

But if you have a swr <4% why on earth would you want to work full time?

Sell the condo, learn how to invest and support yourself with your part time job until you do not need that income any longer.

Well, strictly speaking, the value of the place where you live does not count towards your net worth before you have actually sold it. So as of now, you still have a long way to go.

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Tue Mar 14, 2017 9:42 am

ether wrote:Welcome!
You're essentially financially free!
What kind of job are you hoping to get?
Thank you!

Looking for any job within economics.. Market analyst etc.

In a sense I might be financial independent, yes. Only if I sell my condo though as the money is not invested in something that I can easily sell or get a dividend from right now.

This is my struggle since my mind has adapted to having this home (great location, ok space). I'd possibly have to exchange it for something smaller at another location . It would also mean having my housing expenses probably 2x of what they are right now. So that is what I am contemplating right now. Why keep the apartment if it means I'll have to work another 30 years when I can just rent?
Last edited by thedollar on Tue Mar 14, 2017 9:55 am, edited 1 time in total.

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Tue Mar 14, 2017 9:50 am

Eureka wrote:Welcome to!

But if you have a swr <4% why on earth would you want to work full time?

Sell the condo, learn how to invest and support yourself with your part time job until you do not need that income any longer.

Well, strictly speaking, the value of the place where you live does not count towards your net worth before you have actually sold it. So as of now, you still have a long way to go.
Thanks...

I do agree with you to some degree. In FI context the apartment probably shouldn't be counted as net worth. For all other purposes I think it should.

My goal right now is not ER but just FI. I think getting a full time job might bring some meaning and challenges to my life :D

Selling the condo and finding a new place to live will be the hardest part for me :)

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Eureka
Posts: 252
Joined: Fri Jun 10, 2016 11:03 am
Location: Copenhagen, Denmark

Re: the dollar journal

Post by Eureka » Tue Mar 14, 2017 9:59 am

Sounds like you just gave the answer: keep the condo, get a full time job that will bring your life meaning and keep on working happily ever after :D

ether
Posts: 164
Joined: Sat Nov 17, 2012 1:50 am
Contact:

Re: the dollar journal

Post by ether » Tue Mar 14, 2017 10:16 am

Eureka wrote:Sounds like you just gave the answer: keep the condo, get a full time job that will bring your life meaning and keep on working happily ever after :D
+1
Either way you're in a GREAT spot! You're definitely gonna find an interesting job in finance! Have a good time at work, and know if it ever becomes overwhelming, you're financially set and can find something new anytime. This is what it's all about. We work because we want to, not because we have to! Therefore I declare you financially free!

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Tue Mar 14, 2017 10:23 am

Eureka wrote:Sounds like you just gave the answer: keep the condo, get a full time job that will bring your life meaning and keep on working happily ever after :D
Well... If only it was that simple!

My priorities are:

1) Financial independence
2) The condo

In that order. Which would mean selling the condo.

Like many of you on this site I have discovered that a job and/or excessive spending does not necessarily equal a good life or life meaning. I don't think a full time job is a permanent solution for me but it's something I'd like to do for a limited period of time.

My goals are not static so I'll try to set my life up in a way that makes me FI and possibly the means to have a higher spending level in the future if my life is to change (kids.., etc.). That's one of the factors when choosing to continue working for some years. There's also the social stigma from family and friends regarding having a job.. but this has of course been discussed a lot on this site already.

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Tue Mar 14, 2017 10:44 am

Since housing is my biggest problem I have tried to estimate what would happen if I was to rent an apartment. I live in an expensive city so the rent is much higher.

Monthly budget if I rent an apartment

Mandatory expenses
Rent: $1,893
Water: $17
Electricity: $74
Heating: $74
Total: $2,058

Other expenses
Food: $285

Total spending: $2,343 (Theearthawaits.com estimate)
Annual spending: $28,116

New FIRE stats
20.75x annual spending
4.8% (S)WR
7.3% true (S)WR (due to capital gains tax)

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Sun Apr 02, 2017 6:23 am

At some point it dawned on that I have been calculating the post-ER tax too high.

If I was to withdraw 4% from my stocks right now it would be nearly tax free. In the future I will be calculating with taxes only on the mandatory dividend (around 2% for most stocks). That would most likely be 4% x 0.5 (half is 2%) x 37% (the tax rate could be around 27-43%) = 0,74%. That's 0,74% / 4% (SWR) = 18.5%. And that would even be pretty conservative when using 37% since that's based on $43,000 dividend.

This month I've sold a lot of things I just had laying around which helped increase my networth quite a bit.

FIRE stats March
Networth: $586,025 (+$2,416)
Spending: $1,547

based on 2016 spending:
35.81x annual spending (+0.14)
2.79% (S)WR (-0.01)
3.30% true (S)WR (-0.40% due to new tax calculation)

Pretty happy with this month. It wasn't too hard on me and I made some progress. My spending is the only thing I'm unhappy with. Guess I'll keep it lower the coming months.

For April I might have a once in a lifetime opportunity to increase my numbers. My friend commissioned me with selling something for him and it seems like I will be able to close a deal this month leaving me with a huge commission. Also I've put a lot of stuff I had laying around for sale. I'm really starting to like trading and selling stuff. If you do it right everyone benefits from a trade. The buyer, the seller, me....

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Sun Apr 02, 2017 6:54 am

Image

Sadly this handsome fellow ain't me. It's Simon Spies - almost all Danes will know him - a crazy but brilliant entrepreneur.

One of his earliest principles is that you have to save half of your profits/pay/whatever and spend the other half. Sound familiar? He definitely did just that and was worth probably a billion kroner or close to it at the time of his death. He's also quoted for saying:

"You'll start by saving 100 millions and then take it from there"

Challenge accepted :D
Last edited by thedollar on Sun Apr 02, 2017 7:25 am, edited 1 time in total.

Jason
Posts: 301
Joined: Mon Jan 30, 2017 8:37 am

Re: the dollar journal

Post by Jason » Sun Apr 02, 2017 7:18 am

I did some intense investigative research (wikipedia) on Simon Spies. Besides his incredible accomplishments, he was apparently a morning person.

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Fri Apr 21, 2017 10:53 am

Jason wrote:
Sun Apr 02, 2017 7:18 am
I did some intense investigative research (wikipedia) on Simon Spies. Besides his incredible accomplishments, he was apparently a morning person.
Haha indeed. This guy was succesful in more than one way ;) truly admirable

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Fri Apr 28, 2017 12:18 am

Well, guess I'm ready for an April update. Almost no more expenses for this month besides a few dollars for the weekend.

Seems that it has been a great month. In only 30 days my networth has increased by almost 3 months of expenses! To achieve this I have been selling some stuff laying around and my stocks have helped as well. I still have a few items I plan on selling in May. Also, my "big sale" has not gone through yet so I have not received the commission. It's quite nerve-racking when we've been working on this for over six months.

FIRE stats April
Networth: $589.658 (+$3,633)
Spending: $874 (-$673)

based on 2016 spending:
36.04x annual spending (+0.23)
2.77% (S)WR (-0.02)
3.28% true (S)WR (-0.02)

thedollar
Posts: 18
Joined: Tue Feb 21, 2017 4:07 am

Re: the dollar journal

Post by thedollar » Sat Jul 01, 2017 10:09 am

My situation has changed significantly over the past two months due to receiving two sales commissions and a windfall.

Image

I am now trying to achieve runaway NW as circled in the graph above. I am also trying to get to roughly 12k yearly spending (my own goal is bit higher), 75%+ savings rate and well diversified investments.

A bit challenging to invest in stocks in this market - seems risky. However, I chose to invest 40% for now and hold 60% of my cash to invest later or if there is a market crash. If the market crashes by 50% I would "only" loose 20% of my assets which I can live with.

Investment plan (May 2017)
  • 40% stocks
    • of which 36% is S&P 500
    • 18% is 1/4 DAX30
    • 18% is C25
    • 28% is stock-picking
  • 60% cash (earning around 0,9% return before taxes)



UPDATED AS OF 2 AUGUST 2017:

No. of yearly expenses invested based on actual expenses for the month
  • May 2017: 86.26x
  • June 2017: 47.19x
  • July 2017: 60.18x
  • August 2017: 58,69x
No. of yearly expenses invested based on my spending goal
  • May 2017: 53.61x
  • June 2017: 53.71x (+0.19%)
  • July 2017: 53.13x (-1.07%)
  • August 2017: 53.24x (+0.20%)
NW in $
(differs from other numbers since my spending and most assets are not in $)
  • May 2017: $944,636
  • June 2017: $975,028 (+3.22%)
  • July 2017: $980,919 (+0.60%)
  • August 2017: $1,001,411 (+2.09%) Wuhuu!

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