Journal From A Dane

[herp]

Even though I don't budget per se, I've rediscovered YNAB. I remember trying it a couple of years ago when it wasn't in its current web-based version, and I couldn't quite make it behave how I wanted it to. I think I made the mistake of trying to input transactions and set budgets for months that had already passed in order to get some history going, but you should probably just track going forward.

I'm finding it quite useful at keeping a clear view of my expenses and also tracking my credit card usage. I'm still on the trial, but it's a piece of software that I could actually see myself paying for. I know I could just use an Excel spreadsheet to do largely the same thing, but for $7 a month you also save quite a bit of time.

[herp]

February:

Earned income 3480
Insurance 100

Rent 1045
Union + unemployment insurance 144
Food 215
Transportation 62
Phone 10
Healthcare 124
Entertainment 7
Fees 8
Associations 58
Electronics 7
Gift 4

Savings 1896

Savings rate 53%

Much better savings rate than January, as I expected. I think I've decided that it makes sense to add credit card expenses in the month where I actually pay them, so that's what I've done for February and what I will continue to do. I honestly doubt if it's even worth churning for the rewards, though.

The enthusiasm that I had for YNAB last month has faded some, as I've been obsessively checking my bank accounts for deposits and withdrawals. Probably no need to do so as often as I have, so I've scaled that behavior back. Still haven't quite decided if I want to use the software for tracking long term, as I don't really feel that I need it. Additionally, there's a couple of things in YNAB that annoy me, like deposits to accounts being tracked as expenses when they are really savings, but I guess that's the model they decided on as every transaction should either be an expense or income.

[herp]

March:

Earned income 3387
Sale of items 33
Insurance 67

Rent 1043
Union + unemployment insurance 144
Food 250
Healthcare 168
Transportation 62
Utilities 77
Fees 4
Phone 10
Taxes for 2017 420
Entertainment 20
Other 3

Savings 1286

Savings rate 36%

Savings rate wasn't quite as high as I had hoped, but that was mainly due to owing taxes for 2017 where I had expected to be closer on the mark on the annual tax return. No biggie though, the interest is low enough that it's a net gain if you invest the difference.

For April I'm expecting a very high savings rate as my rent will be abnormally low due to receiving a large utilities refund like last year. So I'm looking forward to next month's report

[herp]

This update might sound as if I'm spinning around in circles (and you could certainly argue that I am!), but lately I've been re-considering the offer to take over the vacation home.

After doing a bit of investigation, it turns out that my father doesn't actually receive much of a property tax discount as a retiree, so that point isn't too relevant. Secondly, last year an agreement was made in parliament for a new property taxation system. The method of taxation will largely stay the same (i.e. an ongoing value-based tax), but the rates are being lowered in tandem with new (and in most cases, higher) public valuations coming next year. Additionally, if you purchase property before 2021, you will gain favorable treatment that may allow you to defer increases to your property tax liabilit. My father has also abandoned the idea of selling the vacation home on the open market, insisting that I should inherit it. Finally, with a bit of luck, the long term increase in the value of the vacation home should more than make up for the ongoing property taxes, as the property is in a desired area.

All of these factors are making me ponder the option once again. I think irregardless of what I decide, we should get back to the task of setting up a meeting with an independent financial advisor.

[justtherightamount]

As a fellow dane, 31 years old (although no kids yet but a GF) I have been reading your journal with great interest.
My question is regarding buying or selling my property in Amsterdam, and what to do with the profit.

>Monthly
Current financial situation in DKK (post-tax):
Earned income 19200
Pension 2500

Andelsbolig in CPH (housing cooperation) loan 3900
Andelsbolig in CPH (housing cooperation) rent 2700
Union + unemployment insurance 300
Food 2000
Healthcare 0
Transportation 100
Utilities 0
Fees 0
Phone 100
Taxes for 2017 1000
Entertainment 1000
Gym 300

Savings 3000

>Assets
Saving 20000
Stocks 20000
Rental property in Amsterdam (mortgage 1 mio, equity 1 mio)
Andelsbolig (shared with GF) mortgage 671000 3% rate

>Current financial outlook
After several years of working I applied to finish my masters degree, which consequently will affect my financial situation starting September.

To get back to my question, I am hoping to get some thoughts on what to do in with the profit (best case 1mio DKK).
My initial thought was to cover my part of the andelsbolig loan, and invest the rest.

Any ideas?

[herp]

Hi justtherightamount,

I'm pleased to hear that you've gained some value from reading my journal.

Can I ask why you're considering selling the rental property? Too low yield? Too much work?

If you decide to sell the rental property, paying off the andelsbolig loan is not a bad idea, particularly from an emotional standpoint. You could probably get more return by investing the proceeds from the sale (no guarantees, obviously), but you would also take on more risk.

Personally, all of my investments are in a fixed asset allocation consisting of stocks, bonds, and cash. Whenever I have additional savings, they simply go into the portfolio as decided by pre-determined rules.

[herp]

April:

Earned income 3913

Rent 34
Union + unemployment insurance 140
Food 215
Utilities 46
Phone 20
Healthcare 55
Transportation 62
Clothes 24
Other 12

Savings 3311

Savings rate 84%

A superb month, but you could argue there was cheating involved as the net rent is artificially low due to the annual utilities refund. Still, it adds up.

I'm in the middle of a job change, so my income will be a bit more erratic in the near future.

[herp]

After tallying up my savings and investments, I'm also happy to report that I've crossed the 20% milestone towards my comfortable FI savings goal. Feels like a good accomplishment

[thedollar]

@herp

Can I ask; how are you investing? What is your asset allocation?

[herp]

Hi thedollar,

Sure you can.

I have two main portfolios - one for individual retirement wrappers that's more aggressive because I cannot withdraw from those accounts until I'm above age 60 (might even be near 70 by the time I get there, if politicians keep raising the eligible age), and another one for assets held outside of retirement wrappers.

For the "locked" accounts, the allocation is 75% stocks and 25% bonds, all invested into low cost passive index funds and ETF's.

Outside of retirement accounts, I have a more conservative allocation of 60% stocks and 40% fixed income because I want the flexibility to withdraw from these assets sooner in life. For the stock portion, I mostly use index funds, but starting a few years ago I began to buy individual value stocks, and plan to continue to do so. For the bond portion, I mostly hold cash as the available interest rate just about matches that of high quality bonds. For the past few years I haven't seen any reason to take credit risk or interest rate risk for similar yield. That's probably splitting hairs, though.

In addition to those portfolios, I have a decent chunk of cash that's been sitting in a savings account for a couple of years that I intended to use for a small car. However, that's a purchase I've kept delaying as I just don't find that I need it. I've thought about simply investing that chunk of cash instead and should I ever decide to buy a car, there would be more than enough fixed income to withdraw to pay for it.

When you add everything up, I'm currently at 61% stocks and 39% fixed income. By definition of how the two portfolios are allocated, over time my stock percentage will hover somewhere in the range of 60-75%.

[herp]

May:

Earned income 6448
Insurance 94
Sale of items 110
Other income 170

Rent 983
Union + unemployment insurance 135
Food 198
Phone 9
Healthcare 53
Transportation 62
Entertainment 8
Other 22

Savings 5352

Savings rate 78%

Last month was quite unusual as I got a significant holiday allowance payout, so that skews the income a lot. I expect my income to be lower in the coming months than it has been over the past year or so.

[Forskaren]

Nice income this Month.

You are a far more careful investor than me. I am just now finishing paying off debt used for for buying stocks earlier. Are you getting any interest at all for your money in ”fixed income”? Do you expect many big expenses in the near future?

[herp]

Cheers!

The interest I'm receiving is very low indeed, just shy of 1%, so it's not even enough to keep up with inflation, especially not after taxes (but still better than hiding it under my mattress). Still, I won't chase yields by taking on more risk.

Once in a blue moon I toy around with the idea of buying a small house in a somewhat rural area, but it stays at that level - being an idea. It would be nice to live in a more quiet area, something that I value very highly, but it would of course bring a much more significant commute and greatly increased transportation expenses as I would need a car. Right now I can bike to work in about 15 minutes which is awesome.

I also don't want to buy in the area where I live now because the rent to ownership ratio isn't favorable for owning in my case.

One of the reasons I'm relatively high on fixed income as compared to my age (nearing mid 30's) is because I haven't been fully invested through a large downturn and as such I honestly don't know my true risk tolerance. Better safe than sorry.

I also believe that my tolerance for risk is still more than high enough to meet my goals in the end, especially looking at the last few years of great net worth progress.

[herp]

June:

Earned income 3921
Sale of items 12

Rent 980
Union + unemployment insurance 92
Utilities 75
Food 162
Phone 9
Healthcare 58
Transportation 62
Fees 35
Broadband 126
Entertainment 9
Other 5

Savings 2320

Savings rate 59%

Fairly uneventful month. As I left my previous employer a while ago, I'm now paying for my own broadband. It's not a huge expense in the budget, but it's still worth thinking about cutting it to something cheaper (the payment I made this month is quarterly, so about 42 USD a month when you average it out).

Income is a bit misleading, as I received income from the same source for both June and July in June. So next month my income and savings rate should be lower, although I'll have more holiday allowance coming in to help.

[Eureka]

Are you sure you need a broadband connection? If you get a phone plan with free data (like https://www.oister.dk/mobilabonnement/t ... r-fri-fri/) and use your phone as mobile hotspot, wouldn't it be a much cheaper solution?

Anyway, what happened in your life besides money?

[herp]

Hi Eureka,

Good tip about the OiSTER approach. I actually looked into it and considered it, but I'm not quite decided yet. I'm currently on an old plan with my ISP that's no longer available and is a pretty good deal for the money, so if I give it up I can't go back to the same plan. The plan is 269 DKK a month. On the other hand, I could save 199 DKK a month by going OiSTER only (currently on a 59 DKK plan with them), which does add up in the long run.

As for the other part, I lost my last job. That's both good and bad. Good because I really didn't fit into the environment there and the nature and organization of the work was too stressful in the long run. I had been considering quitting before as well, but decided I just needed to toughen up and stick it out, which evidently didn't work out. Bad because it's obviously going to make my income decline, but I'm reasonably covered for now.

For health reasons I'm not re-entering the workforce at full pace for now, but doing something part time.

[Eureka]

Sounds great to me with all the extra free time you've gotten. I would say to enjoy it fully and deal with the money business later.

[herp]

July:

Earned income 3445
Sale of items 37
Insurance 75

Rent 978
Union + unemployment insurance 92
Food 191
Phone 9
Healthcare 53
Transportation 62
Broadband 126
Other 26

Savings 1537

Savings rate 57%

Not much to report for this month. I went ahead and cancelled my broadband subscription, and I'll be getting a partial refund on my last bill at some point in the future.

I've been struggling in the heat. I'm definitely not fit for these degrees (give me back my good old danish summer with wind and rain! ). At least this week has been better so far.

I got a chance to do some lumberjack type work over the past week as I had family that needed help cleaning up some trees. I really enjoyed it as it made me physically exhausted. It's far more common for me to be mentally taxed than physically, so that was a great change. Perhaps I should look into activities that put me into the same state on a regular basis.

[2Birds1Stone]

Vigorous exercise on a regular basis is great! It will help with the mental fatigue as well.

[herp]

Absolutely true. I do like to go for fast-paced walks and decent bike rides, but since I'm in control of the effort required when doing those things, I tend to not push myself quite enough to become exhausted afterwards. Tired, yes, but not so much that I feel like I could actually sleep.

The lumberjack work simply requires a level of effort in order to get done and you're actually being productive in a way, which is nice.