Journal of MDFIRE2024

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MDFIRE2024
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Journal of MDFIRE2024

Post by MDFIRE2024 » Fri Jun 16, 2017 6:51 am

Hi Everybody.

After some time of consideration I decided to start a journal. I have been active in this forum for some months.
I have already introduced myself here: Living in Germany and trying to achieve FIRE in the year 2024

In my journal I want to write about my progress toward my FIRE-goal. As you can imagine from my nickname my goal to FIRE is in the year 2024. There lie some years before me and therefore I want to write and update my journal regularly. Also it is a good training to write and express my thoughts and feelings in written English.

I have some ideas about my journal. For some years I have implemented ERE principles in my life, e.g. minimalism, simple living, downshifting, saving, investing. Last year around May I came across ERE and MMM. Actually I don’t remember what I found first. Well, but I do know that also my colleagues from work had some influences on me. They talk a lot about retirement and also about early retirement. In German the name for it is “Vorruhestand”. It could be that I googled for early retirement and then found Jacob’s site.

I only had to connect the pieces of my life into a consistent way. My web of goals grew and made sense. It felt good from the beginning and it made sense. Since then my motivation and discipline got even stronger and I implented further ERE principles and ideas in my life.
A year ago, in June 2016, I have sold my car. And after one year with a carfree life I haven’t regret that decision once.

So what is my current situation? Currently I work hard in order to save as much as possible. Since last year I started a monthly cost controlling and my numbers grew almost exponentially. My saving rate for this year is currently at 86%. My rolling withdrawal rate of the last 12 months is 5.8%. (not counting my real estate).
What’s my goal? MDFIRE2024 stands for FIRE in the year 2024. I aim for a withdrawal rate below 4% with around 350k€ net worth. I want to be invested with >90% of that.

This year 2017 I want to reach some shortterm FIRE-goals, e.g. saving rate, income, expenses. Beside that I want to simulate my FIRE-lifestyle. I want to find out if my current lifestyle (with the high saving rate) is really sustainable. I am interested how is life without regular work as an employee. In order to gain some experiences my idea is to take a long vacation (3 weeks) and stay at home. Usually I have travelled every year for 15 years now in my vacation. This year will be different. Maybe I can also try something else. I also want to experience a lifestye with part-time work. With the rest of my vacation days I could also plan some weeks in a row with only three working days. I am really interested in these FIRE simulations.

It is ok for now, I guess. Feel free to ask or comment anything. Thanks for reading and I am looking forward to write my journal.

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singvestor
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Re: Journal of MDFIRE2024

Post by singvestor » Sat Jun 17, 2017 3:12 am

Fellow German here. Am looking forward to following your journal and seeing your progress. Some details on your investment plans would be interesting!

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Sat Jun 17, 2017 2:45 pm

Hi singvestor. Right now I have big cash buffer in order to invest. But currently I think EU and US markets are quite overvalued. Therefore I wait a bit longer. My target asset allocation is:
40% Emerging Markets (small, dividend and medium/big equities)
40% Developed Countries (same diversification as above)
10% Precious metals and/or mining stocks
10% commodities
My portfolio is hold about half in € and in $ index ETFs.

frihet
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Re: Journal of MDFIRE2024

Post by frihet » Sat Jun 17, 2017 3:09 pm

I like your allocation, sounds like à good idea to diversify between emerging markets and developed and between two major currency's , one of them reserve currency of the world. And good to see that you keep 10% in real money also 😉

Put it in Tyler's SWR calculator impressive results on a 25 year time horizon. 10% gold 10% commod. 40% emerging 20% US total 20% europe

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Sun Jun 18, 2017 12:28 pm

frihet wrote:
Sat Jun 17, 2017 3:09 pm
I like your allocation, sounds like à good idea to diversify between emerging markets and developed and between two major currency's , one of them reserve currency of the world. And good to see that you keep 10% in real money also
My portfolio is one part of my (future) networth. If I add the other three parts (cash, real estate, government retirement saving) I will have/get a rough 80/20 share between developed market and emerging market money/accounts. That networth diversification is also important to me.

fingeek
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Re: Journal of MDFIRE2024

Post by fingeek » Fri Jun 23, 2017 10:11 am

Great work on your high SR! With a higher exposure to more "risky" Emerging Markets, what are your thoughts on any value drops in the market? Or do you plan to change to more "conservative" shares at FIRE time?

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Fri Jun 23, 2017 11:30 am

Thank you fingeek. There could be value drops of course, but I want to invest long-term, at least 20 to 30 years. I don't plan to shift to more conservative shares at FIRE time, because of the long-term investment horizon. Well, maybe I will think differently in a few years, but right now I think this is the right asset and market allocation for my personal goals. I value diversification the most and therefore I think it is best to have a very equal market and sector share.

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Fri Jun 23, 2017 11:41 am

This week I have finished a big IT project at work. Therefore I am very happy that everything was as planned. This project lasted for about 10 months and was very work intensive. It was difficult in some phases and at some time, but in the end I learned a lot. I also met many interesting new people and we had great teamwork. With such a success I really like my work. On the other hand I look forward to my vacation in a few weeks. I'll have three weeks off work and I want to simulate a FIRE lifestyle, as I mentioned before in other posts.
Usually I have traveled during my vacation. This time I will stay at home and explore the surrounding where I live. I am excited about it because I look forward to experience a FIRE lifestyle. Am I getting bored? Will I feel loneliness? ...
Currently I am reading a book about biases. There is the bias about the hedonic treadmil. It says that someone think he/she would be happy if ...
Could it be that it is a little bit the same with FIRE and the FIRE-date/year. I don't want to look forward only to reach it and then experience not the happiness as I had expected. Well, I am very curious about that and I want to try my best that I don't fall into this trap. If you have or had any similar experiences I am really interested in your story.
Next week will be the first of July. Then I am going to do my monthly financial controlling and I will update some KPI's of my FIRE-journey. At the end of each month I look forward to do my monthly financial controlling because I like to do statistics and calculate numbers. :-)

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Fri Jun 30, 2017 1:38 pm

Today I finished my monthly finance controlling. I have to admit, that I enjoy controlling a lot. Numbers, diagrams, statistics, smart goals etc. I like. Each month I control and track some key performance indicators, e.g. saving rate, withdrawal rate, change month-to-month assets...

KPI's 30.06.17
SAVING RATE year-to-date = 86% (goal 2017 >83%)
WITHDRAWAL RATE June 2017 = 5,1% (FI-goal <3,5%)
AVAILABLE ASSETS* in percent of FI-goal = 38,1% (*invested and cash)
MONTHs till FI-goal = 90

But there is more to life than financial controlling. I always have to think about that. For me it is important to focus on my life here and now. Sometimes I forget about my present life and only focus on the future. Then I go riding my mountainbike or go for a long walk in nature and I forget about future. Such activities are relaxing. On the other hand I do spend some time investigating topics like happiness, well-being, life satisfaction. Also I like to read statistics, surveys and papers about such topics. There is so much available on the Internet, because each day there is something published new. Additionaly I have access to a (online) library. Therefore I also spend a great amount of time reading books. Which is not a bad thing, but life happens out there. Then I try to reach a balance between reading and writing, consuming and producing.

At work it is getting back to normal mode, which means that I work 35 hours per week. Cycling to work is great and working for 7 to 8 hours per day is not a bad thing. I guess this is a positive aspect of the very regulated Germand work environment.

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El Duderino
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kpi

Post by El Duderino » Fri Jun 30, 2017 7:09 pm

hey MD, nice stats.

can you explain, how do you calculate months to FI?

MDFIRE2024
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Re: kpi

Post by MDFIRE2024 » Sat Jul 01, 2017 12:55 pm

El Duderino wrote:
Fri Jun 30, 2017 7:09 pm
hey MD, nice stats.

can you explain, how do you calculate months to FI?
Thank you.

It is pretty easy. Months to FI is not related to finances or money. There are 90 months till the end of the year 2024.
I know that it is not absolutely correct, but my goal is to achieve FI within the next 90 months.
Also, I cross of a month each months. So I can also count down from 90 months. It's motivating and it is a time driven goal.
For now it suits me. If I reach FI earlier, it shouldn't be a problem though.

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Viktor K
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Re: Journal of MDFIRE2024

Post by Viktor K » Sat Jul 01, 2017 10:19 pm

Simple but elegant. I'm only 66 months away now using this method :D

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Cloudberry
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Re: Journal of MDFIRE2024

Post by Cloudberry » Sun Jul 02, 2017 3:45 am

Following your journal. You have really an awesome saving rate! 86%, wow!

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Sun Jul 02, 2017 8:35 am

Cloudberry wrote:
Sun Jul 02, 2017 3:45 am
Following your journal. You have really an awesome saving rate! 86%, wow!
Thank you. Nice to hear. I am pretty glad about my constant income and expenses. I don't like volatility :-) But it has a price. Sometimes I get the feedback, that I don't really enjoy comfort expenses. Although I think for myself that my quality of life and satisfaction has improved with a higher saving rate due to less clutter, more downshifting, more minimalism, less consumer stress, etc. You probably understand what I mean.

fingeek
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Re: Journal of MDFIRE2024

Post by fingeek » Mon Jul 03, 2017 10:58 am

5.1% WR - wow! It's crazy how long the long tail is from 6% down to 3-4%, and I hope you are fortunate enough to have your investments bring your FIRE date closer 😀. Do you have a plan for when you leave work? Have you considered seeing how you could pull FIRE date closer?

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Mon Jul 03, 2017 12:50 pm

fingeek wrote:
Mon Jul 03, 2017 10:58 am
5.1% WR - wow! It's crazy how long the long tail is from 6% down to 3-4%
Oh, yes. It takes time. Patience is a competence one can improve with that. Sometimes it is frustrating just to see the number go from 5.4% to 5.1% after a really frugal months with ultra low expenses. But I guess it is also the other way around. If you have e.g. 3.5%, it would take a big expense just to change that to 3.8%. So it it both positve and negative at the same time. Or do we have to evaluate anyway?

As I wrote in your journal. I guess I will try part-time work first. I'll see. Currently I am quite happy with life.

I don't have any serious plans to still improve my FI date or SR. 86% is quite high. I also don't want to work more in order to improve my income, because my work-life-balance is more important to me. Reducing my expenses is difficult because there is not much room to reduce.

figmenter
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Re: Journal of MDFIRE2024

Post by figmenter » Tue Jul 04, 2017 9:03 am

This is why I look at my (safe) withdrawal rate as years of expenses saved (4% = 25 years, 3% = 33 years).

The human mind is not good at understanding non-linear mathematical relations. The article at http://www.thelowdownblog.com/2017/04/t ... nking.html explains this well.

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Sun Jul 09, 2017 1:50 am

The project at work is finished. My three week vacation begins. :-) It feels so good to have some weeks off work because my last vacation was in September last year. Since then the project team and I worked really hard to get things done. In the beginning of the year I set goals to eat less sugar, drink less coffee and consume less news. Due to the project I could do that in the end of the project. With this vacation I want to get energy in order to get back on track.
During the next three weeks I want to:
- eat less sugar products
- drink less coffee, espresso and cappuchino
- consume less news via Internet
Positive thing is, that I will get a small pay raise beginning in August due to the very positive project closure. And, I also improved my resumee, which will help me in the future for better paid jobs. Well, I guess, I am very satisfied with work right now. I have to admit, that I somehow like to work there. That doesn't meant, that it will always stay the same, therefore I'm trying to reach ERE/FIRE. I want to be flexible and independent in the future from work income.

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Mon Jul 10, 2017 1:05 am

figmenter wrote:
Tue Jul 04, 2017 9:03 am
This is why I look at my (safe) withdrawal rate as years of expenses saved (4% = 25 years, 3% = 33 years).
The human mind is not good at understanding non-linear mathematical relations. The article at http://www.thelowdownblog.com/2017/04/t ... nking.html explains this well.
Thank you figmenter for this hint. I inserted it into my monthly WR controlling.

jj89
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Re: Journal of MDFIRE2024

Post by jj89 » Tue Jul 11, 2017 12:21 pm

Sounds like me, just with lower expenses due to your housing situation :P. I'm also in Germany and do IT (software engineering). My savings rate (~60%) is much lower, mostly due to my rent. I guess rent is more likely to go up than down for me, though. Expensive city and my gf and I need more space at some point. On the other hand, my income will go up for a few years before I'll hit the ceiling.

How do you plan to deal with healthcare when you retire? I'm thinking about working a few days a week in my current job and / or something very low stress (like, waiting tables ;)). I guess it gives structure to the day and you still keep all the options on quitting anytime and whenever you like and/or changing work. I'm not even sure that I'm heading for full FI. I could just work 2-3 days a week, get full healthcare-coverage for (my possible future) kids and watch the nest-egg grow.

In which part of Germany are you, if I may ask?

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Wed Jul 12, 2017 12:11 am

jj89 wrote:
Tue Jul 11, 2017 12:21 pm
My savings rate (~60%) is much lower, mostly due to my rent.
Compared to the average SR (in Europe around 13%) your SR is pretty high, I would say! ;-)
jj89 wrote:
Tue Jul 11, 2017 12:21 pm
How do you plan to deal with healthcare when you retire?
Either I have to pay it full for myself at a minimum rate or I will be employed part-time and my employer will support it. For now I plan with a FI-budget with full healthcare costs included.
jj89 wrote:
Tue Jul 11, 2017 12:21 pm
In which part of Germany are you, if I may ask?
I live in the south of Germany.

Part-time work is always an option. When I get near my FI-goals, I will think about part-time work. Work is something that not only supplies me with money but also satisfies some other needs, e.g. structure, community, colleagues, purpose. Some days more than others. I guess, I will do some trial-runs and I try to negotiate a part-time contract. What I learned so far from other FIRE-persons is, that you have to manage the transistion from being employed or being selfemployed to being "retired". There are several possibilities to do that and you have to find the best way that suits you. Well, right now I don't think too much about that, because there are still some years (7) to go. Many things could happen till then. So I stay flexible, develop skills, competence, try to enjoy life and work.

@jj89 I saw that you are a member since last year. This was your third post. You also plan to write a journal or introduce yourself. If you are in a similar situation, we could exchange experiences and a common goal.

jj89
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Re: Journal of MDFIRE2024

Post by jj89 » Wed Jul 12, 2017 1:04 am

MDFIRE2024 wrote: Compared to the average SR (in Europe around 13%) your SR is pretty high, I would say! ;-)
Yup, sure :) I'm happy with it, but I would prefer yours :lol: Just joking.
MDFIRE2024 wrote: Either I have to pay it full for myself at a minimum rate or I will be employed part-time and my employer will support it. For now I plan with a FI-budget with full healthcare costs included.
I feel like this is a very positive thing for pursuing FI in Germany if you have kids. You can just work a few days and get your whole family covered. Are you planning for kids?
MDFIRE2024 wrote: I live in the south of Germany.
I'm living in the west, but I like the south much more. I have been to the area around Füssen for a few times and it is just amazing. I'd really like to have some mountains in my area, for hiking and biking :)
MDFIRE2024 wrote: Part-time work is always an option. When I get near my FI-goals, I will think about part-time work. Work is something that not only supplies me with money but also satisfies some other needs, e.g. structure, community, colleagues, purpose. Some days more than others. I guess, I will do some trial-runs and I try to negotiate a part-time contract. What I learned so far from other FIRE-persons is, that you have to manage the transistion from being employed or being selfemployed to being "retired". There are several possibilities to do that and you have to find the best way that suits you. Well, right now I don't think too much about that, because there are still some years (7) to go. Many things could happen till then. So I stay flexible, develop skills, competence, try to enjoy life and work.
That's pretty much the way I feel. I'm also pondering taking a sabbatical (6-12 month) to get a feeling for ERE while keeping all the benefits and a secure pay check. This may also happen way before FI because I could easily afford it. I think I'm going to work a few more years and do one to "recover". After that recharging, I may continue working full-time for a few years or switch to part-time if my finances allow for it. It will slow the path to ERE but I guess "der Weg ist das Ziel" (the route is the goal) and I don't have to rush it :) I also think I will have children in the next few years, which are relatively cheap in Germany, thankfully. This: "flexible, develop skills, competence, try to enjoy life and work." is a key component for me! I think ERE is a concept for people like us who don't really care about money but more about competence and free-time for our own pursuits.
MDFIRE2024 wrote: @jj89 I saw that you are a member since last year. This was your third post. You also plan to write a journal or introduce yourself. If you are in a similar situation, we could exchange experiences and a common goal.
Yeah and this is my second account as my first one was pruned in Jacobs' cleansing of older 0-Post accounts ;-). I'm close to finishing my third year on this path and I think I will do what you said when the first three years are checked off :)

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Wed Jul 12, 2017 9:07 am

I'd like to visualize my monthly progress.
My KPI's are:
- Saving Rate (12 month rolling average)
- Withdrawal Rate (12 month rolling average) with Margin of Safety of 100%
- %FI = accumulated FI-money compared to FI-goal

Here we go:
Image
Last edited by MDFIRE2024 on Thu Jul 13, 2017 12:25 am, edited 1 time in total.

MDFIRE2024
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Re: Journal of MDFIRE2024

Post by MDFIRE2024 » Thu Jul 13, 2017 12:09 am

jj89 wrote:
Wed Jul 12, 2017 1:04 am
That's pretty much the way I feel. I'm also pondering taking a sabbatical (6-12 month) to get a feeling for ERE while keeping all the benefits and a secure pay check. This may also happen way before FI because I could easily afford it. I think I'm going to work a few more years and do one to "recover". After that recharging, I may continue working full-time for a few years or switch to part-time if my finances allow for it. It will slow the path to ERE but I guess "der Weg ist das Ziel" (the route is the goal) and I don't have to rush it :)
Taking a sabbatical is in my opinion a great idea. I have already taken a sabbatical several years ago. It was 7 months off work. It was really a good experience. I negiotated it with my employer and we agreed on 7 months unpaid leave. Therefore my employment contract was still in place, but inactive for some months. That gave me security and stability to try things, because I knew that I will return after my leave. I travelled a lot, e.g. Australia, Singapur, Laos, Thailand. And I learned a lot about myself and made great experiences, e.g. surfing on the Australian Gold Coast, meditating in a buddhist temple, jungle trekking etc. I can only recommend you such an experience. I did it, because I never had a break between my career. Therefore I don't regret it at all. It did cost some money, but the experiences were totally worth it.

Yes, a sabbatical will slow your progress to ERE, but on the other side it is also as you said: "der Weg ist das Ziel". You have the mindset (ERE). That will allow you/us during the rest of our lifes to work and earn money, live frugally and save it in order to become FI. I think, if someone has the mindset, it is not a question about if someone reaches FI, but only when someone reaches FI. Therefore "der Weg ist das Ziel" (the route is the goal) makes absolutely sense in my opinion.

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Allagash
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Re: Journal of MDFIRE2024

Post by Allagash » Thu Jul 20, 2017 9:47 pm

MDFIRE2024, thanks for your journal. Did you post a list of your income and expenses? Not sure if I missed it. I find it interesting when people post a detailed list of their income/expenses in their journals so others can learn how they are living so cheap and saving so much and get ideas and motivation.....cmonkey did a great job of this in his journal.

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