Year end financials 2019
Expenses = 5522€ (without health insurance)
Savings Rate = 88%
Withdrawal Rate = 2.26%
Change of FI money compared to Jan 1 2018 = +56k€ (+30%)
long-term* goal of 420k€ FI money = 58%
*btw. 2024 to 2028
detailed expenses in categories:
- housing, internet, etc.: 52%
- food, health, personal consumption, etc: 21%
- ULAL/BARM: 6% (ultimate life‘s adventure list, becoming a renaissance man)
- other (gifts, „wants“, etc.): 12%
long-term charts of financial progress
* SR 2012 was 0%, because I spend everything traveling during a sabbatical
*I read about ERE in April 2016
*without any health insurance and without any margin of safety, therefore (and because work is not so bad) I continue working
Year 2019 review
BARM (becoming a Renaissance Man)
I started a personal project called „becoming a Renaissance Man“. It is based on the ERE ideal and polymath ideal. I started by defining several modules, as you can see when you read my journal posts about it. Since then I wrote many focus sprints about becoming a Renaissance man. It is a combination of brainstorming, conceptualizing, thinking out loud, creating ideas, etc. Many times I thought of processes and goals. And that was inspiring. So I don‘t think of a „web of goals“ anymore. I call it „web of goals and processes“, because it consists all of my self-defined modules with their habits, routines, actions, projects, etc.
Started with two items on my ULAL (ultimate life‘s adventure list)
First one is pc gaming. I wanted to play some pc games for a few months now. Therefore I bought myself a used pc and a new gpu. I installed Manjaro Linux and Steam. When games were on sale, I bought them. It cost me less than 250€ to build a gaming pc with a gpu and some games. So far I bought and played Tomb Raider, Bioshock, Civilizations 5, which I love to play.
Second item from my ULAL is experiencing city life. Honestly I must say that I neglected the opportunities of the city in the recent years, although they are easily accessible. But I was focused on other things. Now I bought myself a subscription of the local public transportation, in order to have easy access to the city whenever I want to. That project is limited till November this year. Then I think I will cancel that subscription again. Till then, I experience city life. Due to that my expense are going to increase for the upcoming 11 months at least.
Shifting focus from total height of investment towards passive income cash flow
In the second half of the year I also started to shift my focus from total height of investments toward the cash flow, including my passive income of dividends and bond yields. So far, I stored most of my money in cash. I only invested in corporate and government bonds some years ago. But cash is generating not much income in the ZIRP environment of the EURO-Europe. I use only 57% of my FI money to generate a passive income. My goal is to increase that passive income, until my passive income of investments exceeds my expenses.
Started DCA investing into equities
I knew that I had to start investing in equities. By reviewing some papers on the internet, I figured out that investing a lump sum with the currently overvalued stock market includes a high downside risk. Therefore I started investing into equities by using the dollar cost averaging strategy. Since a few month I have been investing roughly 7k€ per month into the stock market.
Slow FI
I stumbled over the concept of „slow FI“. Originally it means that one can/should become FI with a SR of 30% to 50%. The SR is higher than the average household savings rate and it is slower than the SR of a usual FIRE approach. When I read about „slow FI“ I instantly thought of some aspects of a semi-RE lifestyle. I found a blog post about it (see link below), that resonated with me. It is about the diminishing returns in enjoyment of life due to increasing to extreme SR levels. I have a very high SR and I honestly start feeling the diminishing returns of further increasing my SR level. So I thought about the concept and its aspects. As a result I think I will be also ok with a SR that is slightly lower than I had in 2019. I aim for a SR between 70% to 85% in the upcoming years. That is 100% compatible with deliberately coasting to FI (DC2FI), which I officially started this year.
https://cityfrugal.com/marginal-utility ... uit-of-fi/
new books I read
Design your Life by Bill Burnett and Dave Evans
12 Rules for Life by Jordan B. Peterson
Sapiens: A Brief History of Humankind by Yuval Noah Harari
Please Understand Me by David Keirsey and Marilyn Bates
Lost Connections by Johann Hari
Atomic Habits by James Clears
Ultralearning by Scott Young
The Renaissance Soul by Margaret Lobenstine
Personal Village by Marvin Thomas
How Google Works by Eric Schmidt and Jonathan Rosenberg
In Over Our Heads by Robert Kegan
books I re-read
Principles by Ray Dalio
Quiet by Susan Cain
To Have or To Be by Erich Fromm
Early Retirement Extreme by Jacob Lund Fisker
Thinking, Fast and Slow by Daniel Kahneman
Chop Wood Carry Water by Joshua Medcalf
Work
I got a pay raise of about 5%, which increases of another 5% in the next year. And I am not affected by the ongoing job cuts. Although I work a full-time job, it felt like working part-time in 2019. Why, because of that:
- regular 35 hours per week,
- 27 weeks with only 3 or 4 work days (due to vacation days and holidays)
- 1 week of IT training in Berlin
- worked from home on 99 days
- worked 58 days less than 5 hours, due to flexible hours (I measure them as 0.5 work days)
So overall, I am pretty happy with my current job conditions.
I did four QURSOs (quarterly review, status and outlook)
(description of it see here:
viewtopic.php?f=9&t=9636&start=100#p182931)
I measured my mental well-being, by using the Warwick-Edinburgh Mental Well-being Scale I had an average score of 82%.
Outlook on 2020
My spending is going to increase, due to „experiencing city life“, which consists the subscription to public transportation plus activities. In total I budget about extra 150€ p.month)
I started my withdrawal cash flow system which is a part of deliberately coasting to FI. In short it means, that I save/transfer 100% of my salary to my savings account and I then withdraw a certain amount of money each month. Although that doesn‘t increase/decrease any money in the system, it is shifting my focus towards a withdrawal based cash flow system, as I describe here
viewtopic.php?f=9&t=9636&start=100#p188469
mid-term milestones
In the last year I started a personal challenge of „becoming financially independent in 5 years“ using Jacob‘s benchmark. That challenge started at a fictional zero net worth in April 2016 (when I first learnt of ERE) and is ending in March 2021. If you want to read more about it, have a look here:
viewtopic.php?f=9&t=9636&start=120#p192270
Another mid-term milestone is about investing. I want to invest in total >= 168k€ into equities until October 2021. With that I want to increase the amount of passive income.
Thanks for reading and feedback is always appreciated.