Stonage journal

[Starman]

Hey Stoneage,

How's your ERE journey since 2015? What have you improved some things?

As you're in countryside, do you have a gardener?

[stoneage]

Hi,

I went from a net worth of 234 K€ to approx 400 K€. I'll go into more details during this week-end if you wish, i'm not on the right computer to look at my saving rates.

House is paid for, as I mentionned, and liquidities represent 130-140 K€. So liquidities are a little less than 10 years of spending.
This is not accounting for the fact that kids are around 20-25% of the recurring expenses (food, activities, holidays,...). So more like 13 years of spending when they'll be gone.

The only thing is...130K€ is also what two Masters degree costs in france...that is a thing I've never taken in consideration up until last year !
I'll encourage kids to work during holidays when they get older, but for now I am assuming I'll pay for the entirety of their education. The first one would leave house in 2027 or earlier, the secound one in 2029, and I would be "kids free" in 2034

Maybe they'll never get that educated anyway....or stay forever doing drugs in their rooms... who knows ?

As for the gardener, who needs one when you can damage your earring driving huge riding brush mowers ?
I have >12 000 sqm of land (mainly prairies) and 150m of hedges I cut every year. That is a 5 days job. not fun, but this costs us approx 250-300 € per year maintaining it (renting the brush cutter + gas)
I could keep sheep and save some money, but sheep fencing is expensive and wolves are a threat (15-20 attacks last year on sheep in my area)

[Starman]

Good estate increase!

Your land size is impressive. Does it contribute to your ERE quest (cultivate vegetables, fruit trees, chickens, firewood)?

Children are expensive for sure, they're a "friction" (using Jacob's terminology) with the ERE goal, that said they don't make anything impossible

[stoneage]

Hi, my dream was living a simple life, homesteading, so the land serves many purposes :
- keeping neighbors at a reasonable distance
- allowing me to harvest fruits, vegetable and cereals (starting wheat this year)
- sustaining "free range" hens that produces chicken and eggs (killed and eaten 10+ chicken this year)
- growing trees

unfortunately, we've had severe drought for 2 years now, so some trees died, and vegetables did not do so well.

This helps us manage living costs.

As for "friction", for sure...but I wouldn't want to live without them. They're great and do great. I've spent the day taking care of them and it's been joy, although it killed by productivity for the day.

[Starman]

Haha, your first point killed me! A great one isn't it

Do you have a water collector to adress the drought problem? (Filled by your gutters). If it's a bit high from the ground you don't even need a pump to use it.

As for your dream, I share it.

Where do you invest your funds?

[stoneage]

Haha, your first point killed me! A great one isn't it

Do you have a water collector to adress the drought problem? (Filled by your gutters). If it's a bit high from the ground you don't even need a pump to use it.

As for your dream, I share it.

Where do you invest your funds?

Sorry, didn't see your answer

Yes we have a 800L water collector, but at some point it is not enough : Here the last rain was 20mm and before that we've had >2 months with no rain.
Planting trees is becoming essential to block hot winds and sunshine to lessen evapotranspiration.

Wev'e had to recycle grey water (from showers and washing the dishes) to water some saplings. It worked, we did not loose too many this year (20% ?).
But last year and the year before we had around 60% loss !

AS for my funds, they are mostly in P.E.A and P.E.L.
P.E.L is old so it almost maxxed out and offering 2.25% on it
P.E.A was initally invested in ETFs, but now I'm moving most of it to stocks in the energy sector.
Of course I have also an old "Livret A", but it is mostly for emergency savings.

[Starman]

The nature you live in seems a bit harsh sometimes! Your vegetation losses are significant. How do you feel about it overall?

Did you consider investing in real estate? You can do self-sustaining operations if you manage it well (with a 20 year mortgage).
You could then sell when you need funds (child studies).

[stoneage]

The nature you live in seems a bit harsh sometimes! Your vegetation losses are significant. How do you feel about it overall?

It wasn't supposed to be. This drought is exceptionnal in the region. I saw a dry storm for the first time in my life !
It is a mix of bad luck and climate change I guess...
I feel a bit overwhelmed and honestly a bit sick about what's going on.
I'll get over it. I'm just waiting for the rainy season to come.

Did you consider investing in real estate? You can do self-sustaining operations if you manage it well (with a 20 year mortgage).
You could then sell when you need funds (child studies).

Ah ! Proper french thinking here (no offence meant though).
Yeah, no. Considering the state of demography in the country (boomers hitting 70 year, fertility rate dropping), I think a lot of people my age or older will inherit flats and houses in the 20 years to come (one for each parent in my case). A lot of people are also rushing to real estate thinking "stone cannot depreciate", and try to buy apartments for investment purposes (and see it as an alternate retirement plan). Real estate is booming (too) hard, and I don't want to be the one trying to sell a really expensive tulip.
Immigration can save demography, but people coming won't be buying flats or be able to sustain high rents anytime soon.

[Starman]

Courage Stoneage! Bad luck indeed but you're managing it right.

On real estate, I mostly agree with you. Nevertheless, prices have increased differently through territory. There is still areas where prices are reasonable compared to rents. You're right about demography; but if the deal is good enough, you get a check at the end, with positive cashflow every month in the meantime. Even if real estate looses 50% of its value, you're still profitable cause you didn't paid for it anyhow.
For the operation to be profitable you have to perform well at every stage though (from research to negotiation and tax optimization).

Note that this strategy is only possible because of the very low mortgage interest rates (around or under 1% now).

Doing it right take a lot of time however!

[stoneage]

Courage Stoneage! Bad luck indeed but you're managing it right.

On real estate, I mostly agree with you. Nevertheless, prices have increased differently through territory. There is still areas where prices are reasonable compared to rents. You're right about demography; but if the deal is good enough, you get a check at the end, with positive cashflow every month in the meantime. Even if real estate looses 50% of its value, you're still profitable cause you didn't paid for it anyhow.
For the operation to be profitable you have to perform well at every stage though (from research to negotiation and tax optimization).

Note that this strategy is only possible because of the very low mortgage interest rates (around or under 1% now).

Doing it right take a lot of time however!

Yeah I hear you. There is still money to make, and some to loose if you do it wrong.
Living in the country, there are cheap houses everywhere.. Unfortunately, potential tenants are rare too.
So this leaves us with cities like Bordeaux, Nantes, Montpellier, Rennes, Toulouse, Lyon, where real estate is still mostly affordable and that gain inhabitants each year. The closest to me is Lyon, and i'm litteraly outpaced by the prices : they go up faster that I can save. Our current salaries are low, so it is becoming difficult to obtain a mortgage for that kind of game. I'm not throwing in the towel just yet, just waiting for a better timing.

[Starman]

By the way Stoneage, I see that your last budget post is 5 years old!
Have you improved some things since? And how's your business?
Do you still use electricity for heating?

So many questions =D

[stoneage]

Hi, business is booming despite covid. but I don't think it will last.

I'll post an update on your requested subjects, but right now I've go to work.

[stoneage]

Alright,

MONTHLY BUDGET 2020

****************************
fixed expenses
****************************

Electricity : 184 € - Went Up, but will be revised down this year. so it is kind of stable
car insurance : 73 € - Stable
Nanny : 0 € - Kids are autonomous now
Internet/Phone/Mobile/4G : 74 € Went up (!)
Water : 35 € Stable
Life ins. : 19 € Stable
Bank fees : 7 € Stable
House ins. : 21 € Stable
----------------------------
TOTAL 413 €

I added 4G in my com line. It was necessary to improve bandwitdh and continue working from home.
But there is around 20 to 30 € to be saved from the Internet / mobile lines. I will change internet provider to improve overall costs

****************************
Food/ Gas
****************************

Food : 340 €
Gas : 80 €
kids bus/lunch : 120 €
----------------------------
TOTAL 540 €

We improved food costs because we buy everything organic and in bulk now.
The quality / price ratio has increased dramatically
Gas went down this year when factoring in lock down. but we actually drive more miles now than 5 years ago (kids got after classes activity everyday of the week, it is kind of crazy and a bit hectic).

****************************
Monthly budget for yearly expenses
****************************
Taxes : 50 € approx 600 €/yr
Train : 100 € approx 1 200 €/yr
Clothing : 50 € approx 600 €/yr
Gifts : 30 € approx 360 €/yr
Holidays : 350 € approx 4 200 €/yr
Cars : 200 € approx 2 400 €/yr
Health : 30 € approx 360 €/yr
----------------------------
TOTAL 810 €

*****************************
'Grand Total' 1 763 €
Now we earn around = 3370 € monthly, so this makes for a 47% Saving ratio.

In reality it is a tad better : In the last 12 months, we actually saved around 2.2K€ per month when you account for additional revenue sources (passive income, donations, company dividend). Which makes for a 55% Saving ratio.

[Starman]

Good saving ratio considering that you have kids!
Holidays have a decent budget too, so you're not restraining too much

Electricity is a bit high though! Did you considered using a heat exchanger for your shower?
And a wood burner for heating?

[stoneage]

Yeah, about vacations, I simply looked at previous years...

Usually, we spend
- 10-15 days on vacation in the summer or during spring holidays (abroad at least every other year)
- 4 to 5 weekends or "prolonged week ends" visiting france.

This year, our trip to italy was 10 days, and we spent around 2.8K€ total for 4 people (round trip, accommodation, - a lot of- museums , food, restaurants and ice creams).
That is around than 70€/day per person. So, that is not so bad if you ask me. Especially in Venice and the northern lakes.

That leaves us with 350€ per week end trip.
Our week ends are usually just booking a family hotel room and visiting a french city or nice landmark (last I remember was besançon).

That is a nice buffer considering the work we achieve on a day to day basis.

We also sometimes go camping. this comes cheap but is usually no less than 10€/day per person for the camp site. (I found camping in the wild difficult in France)

About electricity, you have to factor in a few things : the house is 140 sqm, and even if we use a wood stove, it doesn't come near being enough warmth for the first floor and the bathroom, which are too disconnected to benefit from it. Also, I work from home and need (relative) warmth all day long.
We already have a heat pump for heating. The next step would insulating the last part of the attic to save more energy.

[Starman]

This is nice!
Camping into the wild is difficult indeed, especially with wolfs around

By heat exchanger, I meant a (pretty simple) device whose function is to take your shower sewage heat, to input it into your incoming cold water. This way your cold water is 20°c instead of 5 (for example) and you have to use less hot water to achieve the same shower temperature.

[stoneage]

By heat exchanger, I meant a (pretty simple) device whose function is to take your shower sewage heat, to input it into your incoming cold water. This way your cold water is 20°c instead of 5 (for example) and you have to use less hot water to achieve the same shower temperature.

Do you have any reference or link that point to that kind of device ? I've never heard of it, but plan to work on my bathroom renovation next year.

[Starman]

Some examples here (english), or here and here (french).

I don't own one myself (very small bathroom in an apartment), I'm just aware of the concept.

[stoneage]

thx,

I'll look into that, some of them seem simple enough...Although I need to look if they are worth the investment.
for example : this one is too expensive for what it is.

Maybe one challenge would be to build one myself

[Starman]

It would be epic! Definitely an ERE-minded project.
Don't forget to relate it here if you do it =D