Nick Halden's Journal

[NickHalden]

August 2016 update: BABY ARRIVED AND SPENT ALL THE MONIES.

Well. Spent every penny that came in this month. And even slightly more. It was an awesome month though, especially last week when my second daughter was born.

So what happened financially? Even though the baby cost some money because we had to buy some trivial stuff the biggest splurge was that we spent close to 1500€ on porch materials and new garden furniture.

and a hanging swinging egg chair thingy that my wife insisted on having - and I have to admit it is awesome.

https://dutch.alibaba.com/product-detai ... 38442.html

And then the car needed some repairs (350€). And my oldest daughter needed a new bed. (200€).etc.


Anyways, this is the cold hard truth:


So how does that affect my Net worth? Not too much fortunately, but still in terms of FI a wasted month.


So for next month I expect some large bills concerning our porch roof and floor, but I will account that partially as house value because this awesome porch will undoubtedly improve the value. I will provide some pictures in my next post when it is slightly more finished.

[McTrex]

Van harte gefeliciteerd!

[NickHalden]

Update September 2016

Thanks MrTrex for your congrats on the baby. The baby is doing great and even though two little kids really keeps us busy day and night it is again a wonderful experience.

Income vs expenses. Not a bad month for us at 38% savings rate, especially since I accounted some renovating costs as expenses and we bought some new clothes this month.


Net Worth graph:

So no complaints on the savings rate but as I told in previous post we had a few big bills incoming concerning our new porch. So technically we saved the money (hence the fine savings rate) but by paying the bills we basically invested it all immediately in our property (orange area in graph) because this porch is certainly adding value to the property, but downside is that the cash buffer is running thin (grey). Well, cash is not that useful anyways, the money we really want to save we put in our index investments (+4,12% this year). At least we almost caught up with our dotted forecast line!

The overall plan is to spend most of the left over money on our house, and finish it all up by the end of the year. Next year all the savings will then go straight to the investment accounts.

[NickHalden]

October update

Net Worth (+1287 €)
Savings rate (+35%)


Caught up with the forecast line and exceeded it by 2.5%!

Even though we overspent on flowers in our garden, car repairs and groceries we managed to save on other things and also our income was much higher than anticipated. Also forecast for the remainder of this year looks good. I would be happy if we cross the 15k mark by december. If we manage to reach that goal we will have saved about 35-40% this year, which is a very good result to us.

This is only our first ERE year, as we are still in the transitioning process and renovating the garden and house (and ofcourse we cannot account 100% of these costs towards our NW).

Short update - hope you like it. Baby is doing great btw

[rube]

Congrats on the baby!
Looks like you're doing pretty well for a family of 4 and your age.
Good luck on the 15K mark by December.

[vraxxos]

0-15k in a year is very good going, especially with two kids and living in Holland.

[NickHalden]

Thanks for the kind words Vraxxos & Rube.


For anyone interested: this is my conservative prognosis for the next few years and the first 100k. I will be 30 years old by that time. Seems quite slow, but I guess it is better than any other option.

[rube]

I expect you'll reach it earlier. You mentioned that you are making 20% more then your peers. But realize that you are young and many older people are making a lot more. You will be able to make much more too if you make the right decisions. I am speaking from experience. I am making twice as compared to 6 years ago and probably about double compared to my peers (same study and age, not my current expertise).

The first 100K will take the longest, it will go much faster thereafter!

[NickHalden]

Good news!

Today I got confirmation that I will be promoted to a strategic C-level position, starting 1-1-2017.

To me this proves that even more than hard work it is extremely important to plan ahead, say the right things at the right time, know your office politics and know how to influence people. In fact most of the things I have been doing for the last 6 months have been planting seeds for this moment. I have no idea how this is going to affect my ERE path, as salary has not yet been discussed. To be completely honest I do not care much about the money, I need the experience and the ability to work directly with the CEO and other board members much more than the money.

[NickHalden]

November update

Income (3700 €)
Spending(2500 €)
Savings Rate (30%)


Net Worth (+1,150 €)
Total NW: 14,4k

Net Worth graph


Nothing special, had a few bills incoming related to the home renovation that are one time only. Next month is probably going to be similar to this one, but we should hit the 15k mark easily this year.

[NickHalden]

December 2016 Update

We reached our 15k goal this year! Also my forecast turned out to be very accurate (dotted line in graph below). Since this is our first ERE-year I am quite proud of that.

Net Worth: € 15,874
Increase since last month € +1,400



Summary 2016
Average monthly income: €4250
Average monthly spending: €2950
Average monthly savings amount: €1275
Average savings rate: 30%
Annual Investment results: +7.5%

Well this was an exciting year, our first full year in our new house, the birth of our second daughter and a new c-level job that is starting right now.

Forecast 2017
We are going to save a little more cash to increase our reserves a bit. Our cash reserves have always been quite low because our house and appliances are state of the art and are not expected to break anytime soon. But I do feel we need a bigger reserve in case something truly unexpected happens. Also the In Law-Family is making wrong financial decisions and I expect them to turn to us for money sooner or later. Even though I advised against most of their decisions we do want to be able to help them when they really have no other way out. Also a bigger reserve allows us to jump into ad hoc investment opportunities that probably come along.

Financially I am looking to improve our savings rate to 40% for 2017. It is nothing special in this forum, I realise that, but I feel we currently have a nice balance between living comfortably and still saving enough to be quite sure of early retirement, so most of the increase should come from increased income that comes with the new job. Net worth should be ~35k by the end of 2017.

Forecasted Retirement year: 2030
Forecasted Age when retired: 40

[NickHalden]

January 2017 update
First month of 2017

Not too great in terms of saving, mainly because our daughters went on a paid trial day care in December (in order for my wife to prepare for work again this month), which is not covered by our governmental allowance. This is just a temporary thing, starting next month we will get about 70% of our day care costs reimbursed by the government.


After talking to my employer I got a 12% salary increase this year, starting next month. It consists of a 10% raise in base salary and a 2% one off bonus to be paid in March. Also my wife was paying too much tax (for the dutchies she never submitted her 'loonheffingskorting' form ) so in addition to a ~300€ higher net income she will also get the tax back that she paid over the last 5 or 6 months (probably about 1500 euro). Which she would also have gotten if she would not have realised this, but this was a nice surprise to me. I guess you would ask why we did not realise earlier, but this has to do with the fact that her employer failed to give her her official paycheck (since she was with maternity leave for like 6 months).



Anyways, I realise things are not looking good this month, but they soon will be better than ever.

New Opportunity
Also a new opportunity arose; we are looking to buy a family owned property (7500m2 or 80,000 sqft) which contains one family house, and several rental houses and existing tenants. There are still a lot of hurdles in terms of local governmental permits, since the rental homes and the tenants are technically illegal (but this situation has been like this for 3 decades and it has been unofficially tolerated ever since). Also we have some challenges financially, because traditional mortgages here will not allow rental of parts of your property. Will keep you posted.

[Jason]

The US has the same restrictions with regard to mortgages.

[rube]

Interesting opportunity! 7500m2?! Sounds like a lot

[NickHalden]

yes Rube, it is a lot. It is basically 150m long and 50m wide property.

There are two routes that I am currently exploring in terms of financing it. I might just buy the entire property as is with a traditional mortgage and just make sure I am never late with payments so the bank will never investigate and find out about the tenants. Also it is not visible from the nearest access road. Even if local government finds out there is a pretty good chance they have to leave it as it is since it has been like this for a long time. In addition to the mortgage I would just lend 100k or so from family to finance the renovations. If they would ever find out I probably have paid back most of my loans and mortgages because of the rental income.

Another route would be to try and make it legal by officially splitting the property into several pieces, with me privately owning the main house, and start a real estate company to buy the other lots. The splitting part is legally quite tricky however, and when I would ask for permits it might raise questions about the current situation.

Meeting with two financial advisors tomorrow, will keep you guys posted.

[halfmoon]

I can only comment with a US perspective, but I would be concerned about your potential insurance coverage. If the buildings aren't permitted and/or the rentals are illegal, your insurer can possibly refuse to pay in case of loss or liability claims. Liability is the one that can break you. Examples: tenant claims health damage from mold; utility or delivery worker is attacked by tenant's dog; pretty much anyone slips on ice and breaks bones; roofer working on repairs falls and is severely injured or killed; tenant's child is strangled by window blinds (yes, this happens); etc.

I know this sounds alarmist, but it's absolutely common. There's also the question of whether the property taxes reflect actual current use. It may have gotten by with a wink and a nod, but that can change any time based on neighbor complaints, bureaucratic turnover, funding initiatives, ad infinitum.

[NickHalden]

I can only comment with a US perspective, but I would be concerned about your potential insurance coverage. If the buildings aren't permitted and/or the rentals are illegal, your insurer can possibly refuse to pay in case of loss or liability claims. Liability is the one that can break you. Examples: tenant claims health damage from mold; utility or delivery worker is attacked by tenant's dog; pretty much anyone slips on ice and breaks bones; roofer working on repairs falls and is severely injured or killed; tenant's child is strangled by window blinds (yes, this happens); etc.

I know this sounds alarmist, but it's absolutely common. There's also the question of whether the property taxes reflect actual current use. It may have gotten by with a wink and a nod, but that can change any time based on neighbor complaints, bureaucratic turnover, funding initiatives, ad infinitum.

This is certainly an interesting perspective, thanks. Especially the insurance bit; will look into it.

Last night I received the updated property tax info and it says the property holds 5 persons and 2 households. The number of persons is correct, but technically there are 3 households. So it does tell me that they are aware of at least one extra permanent household - which is good. So you are absolutely right that it does not reflect it 100%, but we are getting there. Probably going to hire a local expert in building permits to see what we can do.

This morning I met with some financial advisors and the good thing is that they confirmed that we can buy the entire property as is based on our current income. Also they have sent out some e-mails to banks asking for permission to rent out a part of the property. Expect answers on this question in a day or two.

[message]

Hi Nick,

perhaps a bit late... But you can also try NIBC...
https://www.vastgoedhypotheek.nl/

Also, what I have heard.. Nationale Nederlanden is also going to be giving out mortgage loans for rental houses.
It never hurts to call them to ask some details. It might surprise you what is possible...

Good luck with your endeavor!

Oh, and please keep going with that chart porn... Beautiful!

[NickHalden]

There is one bank willing to allow 3 additional households. The catch is that they only want to loan 60% of the appraised value of the property. Now that is quite an issue, because that would mean I would have to get like 150.000 euro upfront from somewhere else. But I do know some appraisers who can be very creative with appraisals, so if I can get the property appraised far above what I actually have to pay for it I might be able to cover most of the costs. And if there still is a gap I might be able to fill it with another interest-free loan from family.

Hi Nick,

perhaps a bit late... But you can also try NIBC...
https://www.vastgoedhypotheek.nl/

Also, what I have heard.. Nationale Nederlanden is also going to be giving out mortgage loans for rental houses.
It never hurts to call them to ask some details. It might surprise you what is possible...

Good luck with your endeavor!

Oh, and please keep going with that chart porn... Beautiful!

Thanks message, I will keep those in mind although based on the information on their website it is not possible to both rent it out and live on the same property yourself.

[NickHalden]

February 2017 update

Net Worth: 18340 € ( +1940 €)


Not a bad ERE-month, and close to catching up with our original forecast for this year (dotted line). No real ERE sins, other than paying a large electricity/gas bill because we did not pay enough last year. I consider it an interest free loan.

The transparent area in the graph is the updated forecast. You can see that somewhere around May we should make a fairly large jump in Net Worth due to both me and my wife getting a holiday allowance (8% of yearly income). And in addition to that I expect to get back most of the income tax that my wife paid over the last 6 months (main reason that we are now underperforming on the forecast). If all goes well we should easily exceed our original forecast line by several thousand euro's this year - but who knows what happens.


Income was much higher because we did get some reimbursement for our kids daycare. Now that they are spending more time there the costs are higher, but also the governmental allowance that comes with it.

No news on the acquisition of the family owned property. Meeting with family this saturday to figure out how to proceed, currently not looking too good. Financially we are definitely capable of buying the property and exploiting it, but since the current situation is illegal and family is not too keen on trying to get permits (because they fear it might cause more harm than good if it gets denied). Keep you posted.