wolf's journal

Where are you and where are you going?
fingeek
Posts: 92
Joined: Wed May 24, 2017 8:16 am
Location: South Wales

Re: wolf's journal

Post by fingeek » Sun Apr 14, 2019 6:38 pm

Great to hear from you wolf, and great progress as always.

I'm sold on this thinking for investments - https://www.youtube.com/playlist?list=P ... sECXiqVFpI (30 mins watch). Basically, a global world index tracker.

Your diagram looks similar to one I built a while back (
viewtopic.php?f=9&t=9064&start=20#p162744). My aim here was to break the tie between main salary and expenses. It gave me quite a lot of information and confidence in proving how much my investments can cover our month-to-month living. Eventually when I no longer need to push money from main salary->expenses then I know I am FI

classical_Liberal
Posts: 1073
Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal » Sun Apr 14, 2019 9:40 pm

Sounds like things are going very well!

Testing the waters by living off investment income is a great idea. I think any mental tricks to make oneself more comfortable with potential withdrawals is great, it seems to be a huge obstacle for most people. I'm considering reading some books for philanthropists, although I haven't narrowed my search yet. Not because I'm anywhere near that rich, but the first natural step for the mega-rich would seem to be learning to stop accumulating more money. So maybe there will be help from those sources in that realm.

User avatar
Bankai
Posts: 590
Joined: Fri Jul 25, 2014 5:28 am

Re: wolf's journal

Post by Bankai » Sun Apr 21, 2019 3:13 pm

You shouldn't worry too much about your work since 1) you don't really need it & 2) you're able to find as good or better employment without much difficulty.

Parents downsizing is a strategically good move in the long term. Them being more secure financially will benefit you as well mainly by the peace of mind.

Great set of figures, as always. I'm a bit surprised index tracker fees are as high in Germany. In the UK they are as low as ~0.1pa.

Mindset change is another great idea, if you live off your investments (and supplement it with side income) for a few years before retiring, you'd be so much more confident about actually pulling the trigger. There are plenty of examples of people with enormous stashes who still work in their 50's even though they could have quit years ago, so anything that can help with mental challenges of firing is worth doing.

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Mon Apr 22, 2019 12:23 pm

@fingeek
Yes, it looks similar. I wanna prepare for the mental mindset change. And also, I wanna see how it (withdrawing from assets) works, also mentally and emotionally. I have read several times that it's indeed a mental challenge to change the modes from saving to withdrawing.

@classical_liberal
...books about philanthropists. I never have thought of such books. Those could add some new perspective on the topic at hand. Well, I try to pick up some. Do you have any recommendations?

@Bankai
you are totally right. I shouldn't worry too much about work. I am confidant that I could find other work, but would it as good as my current one. I don't know. Due to my INTJ-ness I'd like to stick to my current status quo, because it is highly optimized. Well, let's see. Currently I only can guess. So probably I shouldn't worry.
The average tracker fees for my portfolio is that high because it contains some Emerging Market index that are expensive (0.75p.a.). Overall the index tracker fees in Germany are not as low as in the States or UK. Usually they are about 0.1-0.2p.a. higher.

Seppia
Posts: 1141
Joined: Tue Aug 30, 2016 9:34 am
Location: Italy

Re: wolf's journal

Post by Seppia » Mon Apr 22, 2019 4:05 pm

Yes indexed are a bit more expensive in souther Europe compared to the USA and the UK.
Here in Italy we can access vanguard Europe Stock Market for 0.12% and Emerging stock for 0.25%, but one has to add the 0.2% per annum tax (it applies to anything though so not just for indexes).

One thing wolf: bonds, especially if with longer duration, fare terribly in a rising inflation environment, as the higher the inflation gets, the higher the yield has to become, hence lowering the price of the bond.

I’m saying this only because you mentioned it, don’t want to lecture you but thought it may be interesting to you if I did not misunderstand what you wrote.

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Fri Jun 28, 2019 6:57 am

It's time for an (quarterly) update.

Work:
As I mentioned already in the last months, there will be some changes at work. Most likely jobs will be cut. Luckily I won't be affected of the job cuts. But my place where I work could change. Nowadays I go by bike to work. Maybe, if the new workplace will be too far away, I won't be able to go by bike there. Well, let's see. It looks like that I can count on a steady income stream from work. That eases my mind, because then I am in a much better position to choose. Either I stay with my current employer or I try to find another one, which suits me better.

Pleasure time:
I bought and watched the final season of Game of Thrones. It was ok. I enjoyed it. I treat buying and watching movies and tv-shows as a luxuries. So I don't allocate much money to that kind of expenses, but I also don't want to reduce it totally.

Books:
Due to the discussion around Robert Kegan's development theory/modell, I bought and read "Please Understand Me". Although I knew MBTI already, I found the book quite worthwhile. I gained a lot knowledge from the different temperaments.

Ego-development by Jane Loevinger and Robert Kegan's model:
I like to learn about psychological topics, theories and modells. Therefore I read a lot about Jane Loevinger's Ego-Development model. I'd like to read also about Robert Kegan's model, too. And then I also found out about Erikson's model. Self-actualization and self-realization is something I can spend hours reading about it. Of course I also want to do the "second step": Learning by Doing and using it.

Morning ritual:
I follow a strict morning ritual. I'm used to get up at 5:15. I make some green tea. Then, from Monday till Friday I write for about half an hour about some topic of interest. On Saturday and Sunday I review my journal entries from the week and write again about half an hour about a topic from there. After drinking tea and writing I brainstorm 20 ideas. In the end I write down 5 points I am grateful about. After that I exercise for about half an hour, shower and go to work. As you can imagine I do value routines and habits. That morning routing gives me a great start into the day.

Financials:
Savings Rate = 91% (12 months rolling average)
Withdrawal Rate = 2,05% based on actual yearly expenses without any margin of safety and without health insurance
Milestone of 210k€ = achieved
(distant) Goal (in the future) of 420k€ = 52%
JAFI = 0.95 (assuming I had to pay health insurance like I were RE)

The first half of the year was great. I achieved my financial milestone earlier than expected. In addition to that I was able to even reduce my expenses, due to eliminating unneccessary consumer goods&services. My withdrawal rate was getting lower from month to month. But it doesn't reflect the total picture. Currently I'd like to find the lowest expenses, that are possible. When fish wrote something about "diminishing returns" I could also relate to that.

ERE-related:
When I read Jacob's blog post "How I became financially independent in 5 years", I thought that it would be quite a good benchmark. Maybe I could use that as a kind of motivation for the next few years. You know, I started with ERE back in April 2016 with what I had. So I thought: If I would have started in April 2016 with zero NW, would it be possible for me to be FI (SWR=4%) in April 2021? And if I have some of those ideas, which fascinate me from the beginning, I gotta do something. Calculating it is quite easy, because I have all the numbers available. My current (fictional) WR would be 5.7% (17,6 years NW). And the projection I calculated says, that it would be possible to be FI in April 2021 (fictional calculation, of course). Why do I use such a fictional calculation? First, because it could be my next milestone. Second, to gain some motivation. Third, because it's a challange.

So far, so good. :-)

7Wannabe5
Posts: 5327
Joined: Fri Oct 18, 2013 9:03 am

Re: wolf's journal

Post by 7Wannabe5 » Fri Jun 28, 2019 10:12 am

Morning rituals are a very good thing. The problem with my morning ritual is that it takes almost half the day, and then I don't really have any time left to make any money before my afternoon nap.

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Fri Jun 28, 2019 12:10 pm

@7w5: :-) Are you a morning or evening person? You get up early?

7Wannabe5
Posts: 5327
Joined: Fri Oct 18, 2013 9:03 am

Re: wolf's journal

Post by 7Wannabe5 » Fri Jun 28, 2019 12:59 pm

I am a morning person. I get up quite early. The problem is that I am also a slothful, aging , inefficient person, so it takes me 4 mugs of coffee and almost until lunch time just to do the basic things I need to do for physical and mental health, organization and grooming. For example, a full-time job would greatly interfere with my morning ritual of "garden or walk in nature for at least an hour."

bigato
Posts: 2218
Joined: Sat Mar 05, 2011 12:43 pm

Re: wolf's journal

Post by bigato » Fri Jun 28, 2019 1:33 pm

hey wolf, sounds like you are in a great position, congratulations! Looking at how you focus on bare minimum expenses, your percentages now look about the same as mine will at my intended exit. You can say that you could sustain twice this current level of expenses if you count on 4% over inflation per year. That sounds like a nice margin of safety over bare minimum, in line with what I should see when I quit. Doubling that will put you at 1% swr. What is the reasoning here on setting your target so high?

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Sat Jun 29, 2019 1:50 am

Thanks bigato!
Why am I setting my target so high? I guess you mean my goal of 420k. That is a pretty good and obvious question. I thought about that, too, today when I reviewed my journal entry from last week and wrote about it. Let's try to answer it somehow.

1) I defined that specific goal back in 2016, when I started with ERE. Back then I had much higher expenses. So, when I calculated the money I need to sustain a perpetual withdrawal rate (3%), it resulted in about 350k. Then I added some margin of safety and landed at 420k. That's the amount of money I could comfortably withdraw between 10k to 15k per year.
2) When I thought about the perpetual withdrawal rate I would want, I included a budget for traveling, more expensive hobbies, etc. I expected (and still expect?) higher expenses due to that kind of things.
3) I'm risk averse and I try to be ultra safe. Of course, no amount of money could satisfy the subjective need for safety completely. But I started with that mind set.
4) Setting such an ambitious goal (in relative terms to my income), was challenging. And I like challenges.
5) I thought I wanted FIRE in the short-term
6) I was only goal-oriented and ignored the process-orientation. (e.g. I only wanted to arrive at that end-goal)

Well, nowadays I think differently about that goal. Here are the things I learned in the past few years, regarding to that.
1) I didn't thought it would be possible to reduce my expenses so drastically. But it was possible to my surprise.
2) I cannot satisfy my subjective need of security completely only with money. It's psychological.
3) I have a much more realistic view of those ideas, I budgeted for (traveling, expensive hobbies, ...) I don't need that much money. And if I do, I could budget for it in the short-term.
4) FIRE ist not the ultimate goal in the short-term anymore. The discussion about semiERE influenced me a lot in my thinking
5) I have a better balance between goal-orientation and process-orientation now (e.g. arrival is equal important to the way towards it)
6) I learned from many experienced people, especially here on this forum, that you could always earn money after FI
7) I'm experiencing diminishing returns from saving extremely.
8) Satisfying my comfort needs is possible in a very cost efficient manner
9) I learned more about myself (e.g. personality). Therefore I was able to differentiate between core personality needs and "needs"/expectations from society and other people
10) My life is more balanced in regards to money, health and life satisfaction

So far, I learned a great deal about setting my goal and dealing with it. Still, I hold onto my goal. So far, I didn't let go of it. But it is totally ok, because as I already said my life is very well balanced and I'm very satisfied and content with it.

@bigato&others: Did you make similiar/other experiences regarding initial goals?

bigato
Posts: 2218
Joined: Sat Mar 05, 2011 12:43 pm

Re: wolf's journal

Post by bigato » Sat Jun 29, 2019 2:37 am

The insight number 9) is specially useful to me in that i tend do just disregard other's opinion almost completely and just focus on myself. But reading it the way you put it made me realize that it is important to acknowledge that those two categories are there and will always be there, and that outside pressure will exert some level of influence over me despite wanting to ignore it. So, thanks for that insight!

We have some personality traits in common, as shown by the fact that I too value routine and I also tend to be conservative. But the path in my goals was quite different from yours, mainly because I started with very strict goals at reducing expenses and maybe went too far in believing how much I could reduce them. That's probably for two main reasons, one being that when ERE entered my life, I was in a pretty bad position regarding my job. It paid well but made me very miserable. So the despair to get freedom contributed. Number two was probably insight number 9) cited above! Because despite not acknowledging others do exist in my life, they are there and their influence happens regardless of whether I believe in that or not.

Another thing that was different in my path was how outside factors that where not under my control influenced psychologically and made me stray away from my focus for some years; namely, a divorce (bad) and multiple carrer changes (good) that also made me change cities twice.

When I woke up from my nightmare and put my eyes on the ERE prize again earlier this year, I realized that thanks to my initial change in habits but also due to my personality, even running in auto-pilot mode had been quite good for my numbers and that I was not that far away from financial freedom. Also noticed that since I came so far, it would make sense to keep on track a little more and complete the 20 years of paid formal labour that will grant me a social security benefit after I turn 65. Also, from my wake-up moment to quitting, I had to go through adaptation in my life again, re-learning to live more simply and in a more efficient way. So here I am, about 18 months from quitting unless something news comes up. Rumours have it that by monday a voluntary severance package will be announced, let's see if it's true!

classical_Liberal
Posts: 1073
Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal » Sat Jun 29, 2019 3:05 am

Congrats on getting to the 210 goal wolf!!
wolf wrote:
Sat Jun 29, 2019 1:50 am
Did you make similiar/other experiences regarding initial goals?
I have definitely learned 2,4,5,6,7,10 over the past couple of years. Although 2 and 5 are the most recent I have internalized and have probably made the largest impact on my decision to Semi-ERE at this point.

I feel I am way behind the game in spending though. I'm really not sure which way it will go with so much more free time. I have designed my semi-ERE life so that I could comfortably live on my current financial savings, at about $1000 mo. However, I've never done it before. I could also see situations in which my spending actually increases a bit as a result of this free time, as you have felt(feared?) in the past. At this point, for me, I think real world experimentation needs to take priority over theoretical realm. I'm starting off with a nice cashflow buffer and will adjust based on preferences. In the next year or two, I hope to find a balance between optimal time in the workplace (there are many benefits to this other than financial) and optimal spending lifestyle. If I wind up unbalanced, I will either end life very, very rich, or I will have to make conscious sacrifices to spend a bit more time purposefully earning money in some way to enjoy the spending levels I prefer.

classical_Liberal
Posts: 1073
Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal » Sat Jun 29, 2019 3:09 am

bigato wrote:
Sat Jun 29, 2019 2:37 am
Rumours have it that by monday a voluntary severance package will be announced, let's see if it's true!
Here's hoping for an 18 month severance package :D

fingeek
Posts: 92
Joined: Wed May 24, 2017 8:16 am
Location: South Wales

Re: wolf's journal

Post by fingeek » Thu Jul 04, 2019 2:13 pm

Great update wolf! I think to all intents and purposes you have reached FI, and the question is: When will (or will?) you RE? Or will you continue to find enjoyment in work, downshift to part time etc. Have you given further thought into this side of things?

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Sun Aug 11, 2019 2:19 am

I bought a used bike for 50 Euro. That was much cheaper than buying a new one. And honestly, I thought of buying a new one some months ago, because I wanted to invest in a high quality one. So currently, I own a mountain bike, a road bike and a city bike.

In addition to that, I bought a used desktop computer for 75 Euro. Again, much cheaper than buying a new one. Now I am looking for a monitor, ideally also a used one. And I'm going to use Linux as OS for my computer, as I already do with my laptop.

Other than that, I also bought "Atomic Habits". And I ordered a used copy of "In over our heads", which has to be delievered from US to Germany. Hopefully I'll receive it in the coming weeks. I'm looking forward to read both books.

With regards to the great discussion about various aspects of ERE in black_son_of_gray's Journal, I thought deeply about the connection between myself and the various systems. I compared the ideals of FIRE and ERE and came to the conclusion that I'd like to progress. Three years ago I started with a FIRE-mindset, but strongly progressed towards ERE. With the deep thoughts in mind, I again want to develop further. So I'm going to get rid of some FIRE aspects of my approach, and change more towards ERE. Thanks bsog for your great inspiration!

User avatar
Bankai
Posts: 590
Joined: Fri Jul 25, 2014 5:28 am

Re: wolf's journal

Post by Bankai » Sun Aug 11, 2019 2:49 am

Good job on finding used stuff for a reasonable price.

What elements of FIRE do you think of abandoning and what elements of ERE do you want to progress towards? From memory, you already have ERE-level expenses and aim at 2% SWR. Do you want to move more towards systems thinking?

Also, looking for your thoughts on 'Atomic habits' once you had a chance to read/test the ideas.

wolf
Posts: 944
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: wolf's journal

Post by wolf » Sun Aug 11, 2019 11:14 am

Bankai wrote:
Sun Aug 11, 2019 2:49 am
What elements of FIRE do you think of abandoning and what elements of ERE do you want to progress towards?
I wrote my thoughts down into my handwritten journal. I try to translate it as best as I can.

Basically I thought of myself, who lives in various systems, e.g. nature, health, work, family, society, needs, finance, etc.

Systems have the following attributes:
with elements, variables, parameters, constants, areas, dimensions, methods, objects, subjects, laws, centres, etc.

Systems can be described with:
continious change, (non)linearity, slack, volatility, (un)certainty, complexitiy, coincidence, connections, networks, etc.

I, myself, have only little influence on systems. They do have greater influence on me. I‘m a small part of it. I‘d like to concentrate on elements which I can influence.

As another thought step I described the ideals of FIRE and ERE.

FIRE means to me:
4%-rule, first FI second RE, linear process (first work 100% then retire 100%), earn→save→invest→retire, focus on endgoal, money is in the centre of it, wealth only associated with money, saving money means sacrifices, absolute numbers e.g. goal of 1mio$, if...then…, good living is only dependent only of money, striving towards maximum, progress means counting down number of years one has to work

On the other hand I see ERE as:
a nonlinear process, with slack, high complexity, focus on process, a multidimensional system, skills in the centre of it, FI is a side effect, work and money is a means not the end goal, interdependence, combination and integration of elements, wealth is more than just money, diversity, no standard model given, constant change and improvement, unsteadiness, „survival of the fittest“, striving for an optimum, effectivity and efficiency

What I concluded:
thinking in systems, focus on interdependencies, renaissance ideal fittest for VUCA world, there is no absolute security, focus on process rather then end goal, everything is always changing so accept that, work is an „activity“ which can satisfy various needs, let got of SMART goals and strive instead to diverse, relative and processoriented KPIs, nonlinear thinking, risk mitigation with skills not just with money, money only one dimension of wealth, one lives always within various systems, „no man is an island“, let go of FIRE beliefs.

My ToDos:
rename various documents on my computer, review and change various goals, let go of RE but still hold on to FI as a part of ERE, define what FI means to me personally, build habits which are based on a processoriented identity (to support this, therefore „Atomic Habits“), focus more on „deliberately coasting to FI“, semi-ERE, build rennaissance ideal skills especially socializing in my case, create diverse milestones not only money related ones, let go of the thinking in sequences (e.g. first FI then RE), as I already do: focus on ERE, health and personal satisfaction in life., change my ultimate FI-goal to a longterm milestone, which I can use for orientation.

classical_Liberal
Posts: 1073
Joined: Sun Mar 20, 2016 6:05 am

Re: wolf's journal

Post by classical_Liberal » Sun Aug 11, 2019 6:12 pm

I very much enjoyed your update!

Interestingly, I have concluded that the real talent required for ERE (for me and my preferences) is the adaptation of systems. My sticking point with being able to move up the wheaton levels for ERE as permaculture is the "perma" portion. Spending so much life energy to build something that will feed me indefinitely, with very little additionally input is great. But, now I have to eat what it gives me. What if I prefer something else in a few years? What if externals change beyond my control?

With money as an additional input into the system, great optionality opens. Because now I have the stored life energy to try a different way. Maybe just go and buy my groceries for awhile, maybe try my hand at a "freegan" arrangement, maybe trade some of my skilled labor hobbies directly for food in an interdependent situation, maybe some combination of all. IOW, I doubt I will ever become a true permaculturist or a pure freegan. However, I also won't ever be a pure "go grocery shopping" person either. What I would like to become is someone who is pretty good at all of the options, and one who is constantly learning new options. Then, I can choose which to integrate into my lifestyle design at any given time based on preferences, situation, location, external factors, ect. Money provides the stop gap for the transformative periods of time.

jacob
Site Admin
Posts: 11498
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 73
Contact:

Re: wolf's journal

Post by jacob » Mon Aug 12, 2019 8:35 am

@wolf - Excellent analysis. I'm thrilled whenever I see someone getting it (beyond Wheaton 6) because it still seems so rare.

@cL - ERE is increasingly "omnivorous" in terms of what you can to "eat". There's a concept called Liebig's law of the minimum which essentially has to do with plant nutrition and essential minerals to make the plant grow---if you remove one, say, potassium, the plant does not grow no matter how much water or nitrogen you add. All that to say that my limiting factor is definitely not money; rather it seems to be "imagination" and "connections"---and as I get older, I suspect ultimately "energy" and "motivation"(*). Put it in other words, one can't become a permaculture gardener by throwing money at the problem. Money itself can solve "frictional" problems but by itself it only buys stuff. On its own (without skill), stuff is not much fun. Compare sailing to watching people sailing. Or compare being in a one-design yacht race after having spent 500-1000 hours working your way up to paying $3000 for a basic keel boat course.

(*) Motivation is a dangerous one especially in a culture that demands everybody to always be "doing" something.

I think the only downside to ERE is if you want to "eat" a hyperspecialized diet that takes much commitment and many years to achieve; for example, if you want to be a full professor at a R1, you can't unless you've spent the past 30-35 years of your life with exactly that career goal. Then again, you can't buy this position with money either.

Nah, basically, having been around people with 7--9 figures of networth and observing what they do, the main things money buys are bigger houses, better (and more) airline seats, ditto better sports-watching seats, and better restaurant seats in better restaurants. Notice a theme here? :-D It's just a difference of degree cf. what the middle class is buying. Because as long as the means are strictly money transactions, the complexity of the end result is low.

Post Reply