wolf's journal

Where are you and where are you going?
fingeek
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Location: South Wales

Re: wolf's journal

Post by fingeek » Sun Dec 30, 2018 1:02 pm

Bloody hell wolf, a sustained 89% SR throughout the year. This is fantastic progress, and I will just point out that a >25yrs of FI and < 4% WR is by many metrics FI! This means you've reached true resilience and you now have the freedom and choice to decide what to do. Whether that's coastFI, part time working, or just continuing doing what you're doing. The rest is just details, and down to comfort levels :)

Congratulations is very much in order!

---

Now might be a good time to start thinking out the logistics/mechanics of living off non-work income. I attempted to highlight my plan at viewtopic.php?f=9&t=9064&start=20#p162744 and it's working out well. £400/month (~20% of needed expenses) now is coming from my own salary, and I've practically got the structure in place now to completely separate my work salary into a different bank account that I need not touch. Worth thinking about for next year?

wolf
Posts: 832
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Sun Dec 30, 2018 2:21 pm

Forskaren wrote:
Sun Dec 30, 2018 12:49 pm
It looks like that you were very frugal already before giving it a deeper thought.
What happened the year when your savings rate was low? Did you include some big purchase that year, like a car?
In comparison to my current spending (~1 JAFI) I was not frugal in the years between 2005 till 2015, because I spend at least 2-4 times as much.
Luckily I started saving with my first paycheck back in 2005. I guess saving, being frugal, optimizing, reducing, increasing efficiency etc... (INTJ-things) have been always a part of me. So I was able to save between 40-60% of my income.
Then came 2012 and 2013. :D I finished a big project at work and I was motivated to "achieve" something big in my (leisure) life. I decided to do a seven months sabbatical. It was life-changing for me, because I used to by shy and restrictive. And then I were travelling alone in Australia and SEA. Although it was expensive (therefore 0% SR), it was totally worth it. I am so thankful, that I did it. :D

@fingeek: Thank you! I'm thinking of the "logistics/mechanics of living off non-work income" for quite some time. So far I make a simulation based on Living Off Your Money by Michael McClung. The results are promising. And I plan for further "margin of safety". Of course one huge margin of safety is the very low spending. But I could improve on the income side. I want to build another income stream, which would be independent from the current ones. Well, and I'm building my portfolio. The market downturn is quite useful in that sense.

Nicolino
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Re: wolf's journal

Post by Nicolino » Wed Jan 09, 2019 10:01 am

wolf wrote:
Thu Jun 28, 2018 11:33 am
Thanks for putting that speadsheet together. Very interesting.

Following your journal. Very interesting, also very interested in Germany. I have always been fascinated by the country, and absolutely fell in love with Bavaria since visiting a couple of months ago. I dream about living a couple of years there...

Rooting for you!

wolf
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Location: Germany

Re: wolf's journal

Post by wolf » Sat Jan 12, 2019 3:06 am

Thanks Nicolino.
Where have you been to Bavaria?

Nicolino
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Re: wolf's journal

Post by Nicolino » Sat Jan 12, 2019 11:09 am

I spent almost a week in Munich, also spent a day in Freising and Bamberg (but that´s Franconia). I also spent 4 days in Vienna (I think you are fron there?), really liked Vienna and thought it was a wonderful city, but was just in awe with Munich in regards of the quality of life people seem to have there. Thought the city was the perfect size, exciting but not too crowded with excellent infrastructure, lots of green spaces. Expensive though, wondered if elsewhere in Bavaria you can get that same quality of life but with a more affordable price tag? Always have been a great fan of Germany, visited Berlin, Dusseldorf and Koln 10 years ago, so I was happy to go back last year. Also really like Dusseldorf, but felt that landscapes in Bavaria were a little bit more inspiring.

I really want to get my partner excited about Germany since that is a country where I could eventually see myself rising a family...

wolf
Posts: 832
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Sat Jan 12, 2019 11:28 am

Munich is a great city to live and work, but very expensive unfortunately. I don't know all cities from Bavaria, but I guess that there is not another city with the quality of life like Munich. There are smaller cities, which are also very great, e.g. Regensburg, Obersdorf, Würzburg, Passau, etc. Bavaria is a great place to rise a family, if you have a regular income (either by work or investments). Bavaria, and many other states in Germany, is very family-friendly. But Bavaria supports a family with children with an additional children support. Where are you from?

Nicolino
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Re: wolf's journal

Post by Nicolino » Sat Jan 12, 2019 11:39 am

Indeed, I got the feeling it was very family friendly, saw a LOT of families and kids in comparison to other places in Europe that I have visited recently. I am originally from Argentina, but I live in Chile right now. I have Spanish citizenship, that I think would make moving to Europe easier. I have always wanted to spend some years in Europe but have trouble convincing my girlfriend. She wants to be close to family (don´t all women want to?) and prefers the warm weather/ beach and "modern places", I much rather prefer temperate/cool weather and prefer the more urban / historical feel of most Europe.

Tiarellla
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Re: wolf's journal

Post by Tiarellla » Sat Jan 12, 2019 4:39 pm

@Nicolino,
I suggest to have a look at Nürnberg, Fürth and Erlangen. These are actually my favorites with respect to quality of life and living cost. Now I am living close to Munich as my DH works there but as soon as he decided to quit his job we will move to this area. Especially apartments are much cheaper and easier to find. And people are more down to earth compared to Munich where status is extremely important.

Nicolino
Posts: 17
Joined: Thu Dec 06, 2018 6:16 am

Re: wolf's journal

Post by Nicolino » Sun Jan 13, 2019 9:17 am

@Tiarella. Thanks for the tip, I went through Nurnberg on my way back from Bamberg and looked like an adecuate sized city with many options, will take a look at Furth and Erlangen. Anyways this is not much more than a pipedream for now since a move like this would sure be no sooner than 5+ years down the road... But evey journey starts with a step I guess.

@Wolf I see you are debating yourself wether to coast to FI or push for accelerating results. I say stay to the later, you are clearly having a lot of momentum with your savings rate and also feels like you get a kick out of achieving this resutls. Also, if you feel your job could be affected in the short term, I think the extra flexibility would come in very handy.

Jin+Guice
Posts: 347
Joined: Sat Jun 30, 2018 8:15 am

Re: wolf's journal

Post by Jin+Guice » Sun Jan 13, 2019 10:53 pm

@wolf: Serious props as always, I am very impressed by your spending rate, savings rate and modest humble approach. I also hope to travel to Germany someday, perhaps we could hang out.

wolf
Posts: 832
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Thu Jan 17, 2019 1:26 pm

@Nicolino: thank you for the feedback! I appreciate it.

@Jin+Guice: you will like it ;-)

I wanted to know if working part-time [PT] would be financially better than working full-time [FT].
With "better" I mean paying less taxes and having a higher net share from the gross income. Above all, I wanted to compare the net worth change.

So I started a calculation. Please be aware that this calculation is based on German tax and social security laws.

Option 1 [FT]: working full-time as an employee (salary man), 35h per week, with my current gross income
Option 2 [PT]: working part-time as an empleyee (salary man), 20h per week, with the accordingly gross income (same hourly wage as full-time work)

I neglected: inflation, income adjustments/increases, income from investments, changes of tax and social security laws.
I considered: constant spending of 15k p.a., payments to my pension account both the employee's and employer's share, health insurance

First I calculated all total numbers* for FT work with a time horizon of 5 years. Without vacation and holidays one would have to work 8050 hours in total in those 5 years FT work.
With those 8050 hours I calculated the needed time horizon for PT work. One would need to work 8,75 years PT in order to have the same amount of 8050 work hours. That gives me the same base, especially with the same gross income.

Then I calculated all total numbers* for PT work for those 8,75 years.
Then I compared the total net income.
Result 1: The total net income for PT work would be 10% higher than FT work.

After that I wanted to know the difference in the change of net worth. In order to do that, I had to consider health insurance payments for 3,75 years (8,75-5) to Option 1, because one would have to pay it extra for the 3,75 years without work. (public health insurance is paid directly from gross income). I considered a constant spending rate with 15k p.a. for both options.
Result 2: As it turned out the total change of net worth** is 39% higher for PT work in those 8,75 years compared to FT work with the same amount of years. (considering both spending and health insurace payments)

In this scenario (German based) PT work is financially better than FT work.
One would have a 39% higher net worth change after 8,75 years working PT than working 5 years FT.


*numbers like: gross income, taxes, social security payments, pension payments, health insurance, net income
**starting point was zero

Thanks Jin+Guice! Your post motivated me to do this financial comparison. (Part-Time Work Extreme)

wolf
Posts: 832
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Location: Germany

Re: wolf's journal

Post by wolf » Wed Jan 30, 2019 11:14 am

I'd like to change my journal towards non-FI-focused topics. In the last couple of months I regularly posted my monthly financial progress. And I am very glad, that it improved significantly. But in the last few weeks I became aware of the fact, that it (my monthly journal post) was focused too much on FI and money KPIs. Although I like to keep track of the progress, I want to shift the focus more towards “real life” topics. I learned a great deal of things by controlling SR, cashflow, WR, etc. I learned that I can improve if I focus more on that specific topic, e.g. by controlling or writing about it.

First of all I don’t know how to structure my journal posts now. Maybe I am gonna post monthly or quarterly. Well, let’s start.
The weather is not quite good in Germany. It’s cold, it’s dark, it’s winter. Luckily I have some hobbies which I can do indoors. And I don’t feel cold when I am in my apartment anymore. You know, I don’t heat my apartment. Therefore I wear three layers of clothing. I also repositioned my place where I work from home with my computer to the (relatively) warmest place of my apartment. My goal regarding heating for this year is, that I heat less than 4 days. So far, I haven’t heated.

Next topic. What have I been reading in January? I read “Principles” from Ray Dalio and “Designing Your Life” from Bill Burnett and Dave Evans. The last one is on sale on Amazon right now. There will be changes at work ahead of me. So I’m preparing for that changes by reading “Designing Your Life”. The method is based on Design Thinking. It is not as complex as “Principles”.

I spend a few sentences about finances. Everything is going well. The progress is very steady and going in the right direction. I’ll wait a little bit longer before I invest in the markets again. First I wait for the Brexit decision and secondly I’ll wait for the results of the trade war negotiations between US and China.

I cannot go to work by bike due the winter weather. I use public transportation instead. Therefore my expenses are a little bit higher than usual. Hopefully I only have to use public transportation in February again and then can bike again in March. Fingers crossed, that the weather in March is my friend. While going by public transportation I read books (see above) and listen to podcasts. Two podcasts were from the Financial Mentor, who wrote also a guest post on Jacob’s blog. Currently I listen to podcasts about transitioning from a money-focused mindset to a life-focused mindset. As I wrote in other posts also that is a challenge right now for me, because accumulating and controlling FI-KPI’s is so much easier than living and enjoying life to the fullest.

I started writing my first quarterly review, status and outlook report, or QURSO as I call it. It contains a review and the status/outlook of important areas in life. Together with my daily journal it will be a good combination to reflect on topics in my life. Taking action and trying stuff is my weakness. So I’d like to improve in that dimension. I’m good in thinking all through, but not so good in taking action.

That’s it for January. Thanks for reading.

theanimal
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Re: wolf's journal

Post by theanimal » Wed Jan 30, 2019 11:40 am

For your quarterly report- If you don't mind sharing, what areas are you measuring? And how are you measuring them?

Seppia
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Re: wolf's journal

Post by Seppia » Wed Jan 30, 2019 3:52 pm

wolf wrote:
Wed Jan 30, 2019 11:14 am
I'd like to change my journal towards non-FI-focused topics. In the last couple of months I regularly posted my monthly financial progress. And I am very glad, that it improved significantly. But in the last few weeks I became aware of the fact, that it (my monthly journal post) was focused too much on FI and money KPIs. Although I like to keep track of the progress, I want to shift the focus more towards “real life” topics. I learned a great deal of things by controlling SR, cashflow, WR, etc. I learned that I can improve if I focus more on that specific topic, e.g. by controlling or writing about it.
Since the beginning of my journal I've also trying to mix it up with a bit of money relate topics, but mostly reflections about my life in the moment.
When I'll be looking back years from now, I'll only need an excel to understand how my numbers evolved, so I don't want my journal to be only about it
wolf wrote:
Wed Jan 30, 2019 11:14 am
You know, I don’t heat my apartment. Therefore I wear three layers of clothing. I also repositioned my place where I work from home with my computer to the (relatively) warmest place of my apartment. My goal regarding heating for this year is, that I heat less than 4 days. So far, I haven’t heated.
I like your attitude, I was trying to do the same when I was younger and not as soft, but what is the temperature profile in your area?
I had it easy when I was living in Nice, France (I managed to go a full year without ever heating and slept with the window slightly open for most of the year), but would never thought about pulling it off say in Lille

classical_Liberal
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Re: wolf's journal

Post by classical_Liberal » Thu Jan 31, 2019 2:25 am

wolf wrote:
Wed Jan 30, 2019 11:14 am
I'd like to change my journal towards non-FI-focused topics.
This seems to be the natural progression on here as anyone nears/reaches financial goals. After all, what's the point of FI if you can't learn to enjoy it? I look forward to reading more about your journey!

wolf
Posts: 832
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Thu Jan 31, 2019 12:33 pm

theanimal wrote:
Wed Jan 30, 2019 11:40 am
what areas are you measuring? And how are you measuring them?
areas I do a review and status/outlook:
- highlights/lowlights from the last 12 weeks (I do track them weekly in a few short sentences)
- work
- health, fitness
- relationships, social life, family and friends
- ERE & finances
- discipline, habits
- leisure time, play, hobbies, interests
- spirituality, transcendence
- satisfaction with life overall

In addition to that, I measure my mental well-being quarterly, by using the Warwick-Edinburgh Mental Well-being Scale

@Seppia: I live in Bavaria. So it gets snowy, cold and windy, like Munich's climate
But what can I complain about, when I have a look at the extreme cold in the midwest of US.

@classical_liberal: Yes, it feels like a natural progression. It is just a little bit difficult to talk about, because the source comes from my introverted intuition. On the other hand, controlling the FI progress is much more driven by my extroverted thinking side.

JollyScot
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Re: wolf's journal

Post by JollyScot » Sun Feb 03, 2019 2:58 pm

It has been good for me writing more about what it is I am actually up to rather than just the numbers. Has meant I have been able to look back and see how much my thought process has moved over the last 3 years. Been all over the place really, but during the time it didn't feel like that.

That said I know that people like seeing pretty graphs, so it depends on what you want to write it for I guess.

Bankai
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Re: wolf's journal

Post by Bankai » Sat Apr 13, 2019 3:20 am

wolf wrote: areas I do a review and status/outlook:
- highlights/lowlights from the last 12 weeks (I do track them weekly in a few short sentences)
- work
- health, fitness
- relationships, social life, family and friends
- ERE & finances
- discipline, habits
- leisure time, play, hobbies, interests
- spirituality, transcendence
- satisfaction with life overall
How are things going wolf?

classical_Liberal
Posts: 800
Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal » Sat Apr 13, 2019 10:33 pm

Yeah wolf, the people demand an update :D

wolf
Posts: 832
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Location: Germany

Re: wolf's journal

Post by wolf » Sun Apr 14, 2019 4:17 am

Things are going well. An update is overdue. Well, let's start.

Work:
As I have written before there will be some changes at work, which will influence me. The company is restructuring its business. Unluckily the changes haven’t been announced yet. We, the employees, wait and wait and wait some more. Hopefully I am going to know more in the next few months. That means almost everything at work is as usual as it could be. I work full-time, but it feels like part-time, because I usually work two days at home per week. In addition to that I have flexible hours, meaning I start and end work as it suits me. Both (work from home, flexible hours) is great when it comes to go to work by bike, because I can manage to avoid bad weather. ERE helped me in the last two years to “craft” my job. A consequence was that I like to work at my current employer even more than two years ago. That makes it easy for me to earn and save money and be happy with it. It feels like “deliberately coasting to FI”.

Private Life:
In addition to work there will be changes to my private life. My parents will move further away in autumn this year. I am used to visit my parents on weekends. That will be a bit more difficult in the future. It affects my social life, but it will be manageable. I’ll have to ride my bike a longer distance, approximately 1 hour longer. The positive side of this is, that the change of my parents will get them in a very good and sustainable position for the next years/ hopefully decades. On the whole it is a win-win-effect for the whole family. And my parents won’t have an old, big, expensive house anymore, but instead a new, functional apartment. As you probably guess, that makes a big difference financially wise. So I am really happy about it, that my parents make this move. It means less work at the current house for me. And it is also easier for my parents because of less cleaning, more financial options, positive cash flow, etc.

Because of those two uncertainties in my circumstances within the next two years, I don’t want to make further changes to my life. I am going to wait and see how things will affect me and my web-of-goals. Therefore I don’t think of concrete plans/goals to semi-ERE, part-time work, sabbatical, etc. Being happy at my work helps also a lot also, and of course earning a good amount of money each month.

ERE:
I have a good momentum currently. I’m in the middle of the accumulation phase. I sense, that I’m in the middle of the S-curve, too. It feels like a runaway mode. That doesn’t mean that I don’t plan for the future of course.
Till now, I only invested in bonds (government and corporate, emerging and developed markets), in order to mitigate a rising inflation. I hold the rest of the money in cash. As you probably know I want to invest in a buy&hold ETF portfolio, diversified in developed / emerging markets and small/mid/big companies. My portfolio would have a TCO (total cost of ownership) of about 0.5%. I am not sure anymore if I want to pay that administration fees, which could be up to 2000 € per year. So I thought about managing a portfolio with individual stocks. But I am quite unsure, if I am able to achieve the same amount of total return in comparison with the market average. Do you invest in ETFs or in individual stocks? What are your experiences? I would be quite content with the market average, if I could avoid the 0.5% administration fees.

End of Support and Service of Windows 7 will be in January next year for private users. So I had to think about my current computer setup. First I thought about buying a computer parts and assembling it by myself. It would cost my about 800 Euros. Then I had the idea to try Linux und my current computer setup. I booted a live system from an USB stick and I was positively surprised that everything worked just fine. The system ran smoothly and was quite fast, faster than Windows 7. So I ordered a SSD and installed Linux on it. And I only have to say good things about it. Linux on the new SSD runs so good that I didn’t switch back to Windows 7. For me, when I review that topic, it was quite ERE-like. I avoided buying an easy consumer product for the problem at hand. I planned for a multi-use, flexible computer. Then I thought lateral and tried Linux on a new SSD. And it was a success.

Financials:
As I wrote already, things are pretty good. Numbers tell sometimes more than words
Savings Rate = 91% (12 months rolling average)
Withdrawal Rate = 2,2% (based on actual yearly expenses without any margin of safety and without health insurance, which I had to pay additionally when RE) *
Milestone = 99% (accumulated money compared to milestone of 210k€ by end of 2019) **
JAFI = 0.95 (assuming I had to pay health insurance like I were RE)
** After achieving the milestone, I'd like to evaluate possibilities of DC2FI (deliberately coasting to FI) and semi-ERE

Another topic I investigated is the mental mindset change from accumulating to withdrawing. In 2020 I like to try something new. Inspired by Jacob’s cash flow diagrams I visualised a possible version for the upcoming DC2FI / semi-ERE mode. What the picture basically tells is, that I want to save 100% of my income to my savings account. In the beginning of the year I budget for all of my fixed and variable expenses and withdraw it monthly from my savings account to my check account. I would like to change my mindset from accumulating towards withdrawing. The change should be gradually, because at some time in the future I have to withdraw all of my expenses from my invested assets and savings accounts. Do you know what I mean?
Image

That’s it, quite some unusually long journal update. And last but not least, I follow almost all of the ongoing discussions and journals with great interest. I really appreciate all your responses and ideas. Thank you all for that. Jacob’s ERE blog and book and this forum improved my life in many great ways! And therefore I am thankful for that.

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