Early Retirement Extreme Forums

Thank you c_L, very much appreciated.
Yes, I would say so, that mostly I "settled into a calm consistency to maintain this low spending output" (well said c_L)

In the last few months I bought some new computer games and movies/tv series. I were always patient and bought them when they were offered for >50% less off the official price. By the way, I were surprised that entertainment stuff became so cheap. I compared the prices from today with prices 20 years ago (when I also bought some movies / tv series on DVD). Entertainment stuff has become so cheap. You basically get better quality movies / tv series / computer games for the same amount of money, you would have to pay for it 20 years ago. Inflation practically didn't happen on such entertainment stuff.

In terms of spending I don't try many new things anymore. Buying used/on sale/in bulk, repair, find creative ways, DIY, wait, avoid, optimize, question... and other spending optimizing tactics are so normal to me nowadays, that I don't even think of it anymore.

One challenge though is, that (as strange as it sounds) my TTM spending is increasing slightly during the last 24 months. My spending a year ago was even lower and since then it has been rising. This has to do that I don't visit my family on weekends that often anymore. They moved. The challenge is of course not monetary based, because I'm still very ok with the level of it. The challenge is more psychological based. Since starting ERE back in 2016 I only experienced decreasing expenses. That trend changed during 2019. Since then I "must" experience increasing expenses. Increasing spending is something I "naturally" try to avoid, but it happens. And I get proof of it every single month when I do my monthly financial controlling. I know it's no big deal at all, but still a new experience / challenge for me. Therefore I try to aim to stabilize my TTM expenses in the upcoming months. And I will succeed, if nothing unexpected occurs.

In other news (c_L and 2B1S) I found a way to "make peace" with investing. I didn't forget that you guys motivated me back some months ago. I acknowledged that I had to implement a investment strategy, that works for me. And since the return of dividend investing and real estate investing was not too good, as I did it, I chose to accept it. Since July I continued to invest monthly (aka DCA) some money into equities. With buying monthly, I will slowly reduce my cash buffer over the next 24 months. I don't want to invest a lump sum at the moment, so I chose DCA. I always found singvestor's monthly investing good, who also invest monthly. So I'll stick to a investment strategy I know I can handle. On the other side I have to accept average returns. But better I get average returns than doing investment with lower than average (or zero) returns.

...

Year end financials 2020

• Expenses = 5698€ (without health insurance)

• Savings Rate = 91%

• Withdrawal Rate = 2.00%

• Change of FI money compared to Jan 1 2018 = +40k€ (+17%)

• goal of 420k€ FI money = 68%

It was a great year expenses and income wise, but it was only a normal year NW wise. I earned a good amount of money, due to increased working hours. I spend little. But I couldn‘t increase my NW as much as I hoped for, due to the stock market crash in March. Still, it was a very good year and I don‘t want to complain about it.

detailed expenses in categories:

• housing, internet, etc.: 52%

• transportation: 6%

• food, health, personal consumption, etc: 34%

• other („wants“, e.g. books, computer games, movies/TV shows, etc.): 8%

long-term charts of financial progress

* SR 2012 was 0%, because I spend everything traveling during a sabbatical


*I read the first time 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

DCA-investing into equities and Asset Allocation
Since June 2020 I intensified DCA-investing into equities. It took almost four years of finding the right asset allocation and investing strategy for me. And probably it will change in the upcoming twenty years. But right now, I‘ll continue with DCA-investing into it until I reach my target AA and portfolio value. Having the milestone of 420k€ FI money in mind, I‘d like to have it all invested. My target AA is as follows:
12,5% international government bonds
12,5% cash
15% Gold
15% USA large caps equities
15% Europe large caps equities
15% Asia large caps equities
15% International small caps equities
This AA would be the starting AA of Equities Glidepath. In the long run, I‘d like to increase the equities share to >90%.

new books I read
Flow: The Psychology of Optimal Experience by Mihaly Csikszentmihalyi
Escape Everything by Robert Wringham
Moneyless Manifesto by Mark Boyle
Homo Deus by Yuval Noah Harari
Survival Guide by John 'Lofty' Wiseman
Walden by Henry David Thoreau
21 Lessons for the 21st Century by Yuval Noah Harari
Can‘t hurt me by David Goggins
Motivation and Personality by Abraham Maslow

books I re-read
In Over Our Heads by Robert Kegan
The Renaissance Soul by Margaret Lobenstine
Lost Connections by Johann Hari
12 Rules for Life by Jordan B. Peterson
Sapiens: A Brief History of Humankind by Yuval Noah Harari
ERE by Jacob Lund Fisker
Siddharta by Hermann Hesse
Der Steppenwolf by Hermann Hesse
Into the Wild by Jon Krakauer
Range: Why Generalists Triumph in a Specialized World by David Epstein
Enneagramm by Richard Rohr
Various Stoa texts by various Stoa authors

Work
I worked an average of 40 hours per week (vacation and holidays not included), due to a project, which I managed. In the years before I usually worked around 37,5 hours per week. Due to the increase of work hours I got paid more. The project lasted almost the whole year, so I was pretty busy. I had many chances to learn new things. It kind of felt like being a Renaissance Man at work due to the nonlinear, loosely coupled work. It was a great experience. I liked it very much. >90% of the time I worked from home, which increased my satisfaction with work even more.

I did four QURSOs in 2020 (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 85%. Having done eight QURSOs in total since the start, I can summarize, that this is great tool and method. You can see long-lasting changes, which I don‘t see in my daily journals. Due to the different time interval (quarterly versus daily) it‘s increasing the reflection space. It is adding content, more overarching, than focused. Needless to say that it is benefiting my personal growth, self-reflection and development.

Outlook on 2021
Probably I‘ll work from home many times, maybe even as many times as last year. There won‘t be such a big project this year, so I won‘t work that many hours and won‘t get paid like last year. Therefore I guess that I won‘t have such a high SR like last year. And I will probably spend as much (little) as last year. I‘ll forecast something around 6000€ expenses. It could be slightly higher, due to higher energy costs, due to work from home and usage of computer and TV. I won‘t change anything with my current lifestyle and setup, meaning I am going to work as a salary man, earning a good amount of money.

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. In the meantime I added increased housing costs into the equation, because I didn‘t included it in the first place. Therefore I guess that I will reach the goal of my personal challenge in mid of year 2022.
Another mid-term milestone is about investing. I want to invest in total >= 168k€ into equities until October 2021.

reasons why I switched into passive mode at the ERE Forum lately
Some of you probably noticed that I don‘t post as many times as I used to. I switched from an active into a passive mode at the forum lately. I also don‘t read as often and as many posts as I used to do in the past. This has nothing to do with my fascination of ERE, nor your engagement. In the second half of the last year I noticed that many new posts at the forum didn‘t contain any new information for me. Therefore I lost interest. That influence of course my posting behavior. I have read and experienced many things on the forum over and over. I took a break from the forums. I guess that it also had to do with the intense interest into ERE in the first place during the last 5 years. It became the center of my life, so to speak. This is not the case anymore. It (ERE, and forums) is one of a few focal points nowadays. You could compare it with diminishing returns. I got to used to all of it. Many new ERE things a few years back became so normal that I don‘t recognize them anymore. They became a habit and normal behavior, therefore I also have a very constant low cost of living without thinking about it anymore. But after I found out that a few fellow ERE forumites left, I read the thread „On deleting journals, posts, and accounts“ and I recognized that it is about the ERE community and not only about the ERE individual. That motivated me to do this post.

Thanks for reading and feedback is always appreciated.

Wolf, my main man! Always good to hear from you again. Glad to hear you did well for yourself this year!

I was wondering how it is going with your web of goals. From the sound of your last paragraph, you seem to have internalized most of the ERE concepts already. And I was also wondering: what is (or will become) your new fascination?

Awesome to hear from you wolf! Your journal is very inspiring, so thanks for updating us on how it's going now!

Glad you're still with us, @wolf. Can definitely relate to your feelings re: our little corner of the internet.

Agree, great to hear your progress!

@Quadalupe: My Web-of-Goal-and-Processes is there in the background. I don't focus on it very actively these days and I don't have a plan to develop, alter or change it. There will be a time in the future, when I'll focus on it more again. I've set up my ERE(ish)-lifestyle some years ago. It is still valid today. I guess, I'm developing quantitatively (decreasing spending, increasing NW/portfolio), but not qualitatively that much. It feels like I reached the third part of the S-curve of my Wheaton-Level with diminishing returns. I would have to make a big change in my overall lifestyle (e.g. van-travelling, change location, employer, etc.) in order to have a new/bigger potential for personal / ERE development. In this sense, I can relate to AxelHeyst's post very much can confirm points he makes. That post is great, btw ! Thanks @AxelHeyst ! Therefore and in addition to the current COVID-19 restrictions I don't have a great fascination with something these days. I just live and enjoy life within my current boundaries and possibilities and think now and then about possible future adventures, challenges, lifestyle changes.

@Wolf - It was heartening to read your annual update. I've followed your journey for the last couple years and was always impressed by your savings rate and stoic approach to life.

That looks like a really interesting reading list. What are your thoughts on re-reading old books and diving into new ones? Any major takeaways, themes, or thoughts on some of those books you'd like to share?

Thanks for reading and commenting my journal @Western Red Cedar !

re: books
If I really like a book or find it very useful then I'll buy it. Otherwise I only borrow it from the library or sell it again. I keep the good ones. And on average I re-read the good ones annually, because every time I re-read it I see it from another angle or interpret it within another context. That approach is quite worthwhile in my opinion. There are so many small and major takeaways, I cannot list them all. In some way I integrated them all into my lifestyle and way of thinking that it feels just normal. You could compare it to Jacob's ERE book recommendation list. How would you list the major takeaways of his book list? I guess you know what I mean. Nevertheless, it is important what you get out of the books.

re: "stoic approach to life"
Yes, you nailed it. That is how I feel at the moment. My life(style) feels very stable, constant, secure on the one side, but also sometimes boring, every day the same, never ending on the other side. I would agree that stoic is the right word. But I don't wanna judge. There speaks the Buddhist in me. And sometimes there is also the Optimist, Pessimist, Realist, Nihilist, Stoa, etc... It is very interesting to view life (events) through the glasses of such personal attitudes. I gotta say, that I personally developed in the last few years, whereas ten years ago I would only see life through one specific personal attitude. In that sense, I objectified those personal attitudes (see subject-object theory by Robert Kegan)

I'm going to leave the forum temporarily.

@jacob thank you for all the inspiration you provided. It supported me to do incredible changes and progress in my life during the past few years. The student must leave the teacher at some point in time, I guess. And you've been a great teacher. Right now, I assume, I have to go one step back in order to get two steps forward.

@fellow forumites thank you for the great discussions. Those helped me to broaden my horizon a lot.

Take care of you all!

auf Wiedersehen

2021 review

Hi all, hope you are doing well! I’d like to share my 2021 ERE review with you.

key indicators:
Expenses = 5431€ (without health insurance)
Savings Rate = 90%
Withdrawal Rate = 1.5%
Change of FI money compared to Jan 1st 2021 = +84k€ (+30%)

detailed expenses in categories:
housing, internet, etc.: 57%
food, health, personal consumption, etc: 34%
transportation: 2%
other (gifts, „wants“, etc.): 7%

portfolio:
30% low risk
- 2.5% cash
- 17% global government bonds
- 10.5% gold
70% high risk
- 14% emerging markets government bonds
- 56% equities

I thought a lot about portfolio and wealth management and strategies. One outcome of it is that I have a Buy-the-Dip-rules in place if my high risk portfolio components dip 10, 20, 30, 40%.

And I also set up a total expense rate controlling of my portfolio, which includes managing fees and transaction cost. I track that TER of my portfolio within my overall cost controlling. Therefore I optimized my portfolio (and behaviour) in regards to cost, e.g. avoided unnessesary transactions.

job-related news:
I still work full-time in several different projects in the IT industry as consultant, architect, sometimes developer and project manager. I like(d) all the work this year.
I also got a salary raise. In addition to that I increased my real hourly wage by working from home all of the year.

Last but not least a few long-term charts:

Another great year of savings Wolf! Always inspiring, thanks for the update. Any changes or new plans for the upcoming year?

Good update. Do you consider money a solved problem?

wolf wrote: ↑

Tue Dec 28, 2021 9:09 am

I thought a lot about portfolio and wealth management and strategies. One outcome of it is that I have a Buy-the-Dip-rules in place if my high risk portfolio components dip 10, 20, 30, 40%.

Hi Wolf,

Could you expand a bit about your buy-the-dip rules? I want to set up something similar to profit from dips/crashes, but how do you ensure that you pace your buys in such a way that you don’t spend all your available cash too early in case of a severe recession, or not fast enough in case of a small correction?

Do you invest a percentage of your remaining cash related to the percentage of the correction? If so, do you look at the individual stocks in your portfolio, an index, or something else to determine the investment amount?

@theanimal : thanks. Yeah, it was a great year indeed. No, I've got no big changes for this year.

@bankai : thanks. No, money problem is not solved. It's ongoing. It's a process. My life changes all the time (day by day, bit by bit), so does my relationship with money.

@McTrex : of course I could expand on my Buy-the-dip-rules.
First I set up something similar as MadFientist did Catching a Falling Knife (More Intelligently)
But then during the last few months my portfolio hit the ideal AA (70/30). So I had to change, because every month I rebalance with my incoming cash flow (salary) to my ideal AA. So my ideal AA is the anchor and strict baseline every month. Therefore I had to change the Buy-the-dip-rules in order to combine it with my monthly rebalancing technique.

Example:
At an all-time high (of the representation of my ideal high-risk-portfolio portion, e.g. equities) my ideal AA would be 70/30.
If the portfolio (in comparison the the all-time high) drops 10%, I'll adjust my ideal AA to 72/28.
If the portfolio (in comparison the the all-time high) drops 20%, I'll adjust my ideal AA to 76/24.
If the portfolio (in comparison the the all-time high) drops 30%, I'll adjust my ideal AA to 82/18.
If the portfolio (in comparison the the all-time high) drops 40%, I'll adjust my ideal AA to 90/10.
As you can see I use factors to adjust the AA. I want to increase the high-risk-portfolio-portion, when the market drops significantly.
If the portfolio reaches new all-time highs, then the ideal AA is reset.
Key elements: start AA, target AA, steps, multiplicators, all-time high tracker of the representation of your high-risk-portfolio-portion, e.g. equities

Attached you find a screenshot of my spreadsheet (sorry for the German names)


So far, I have implemented it, but have not yet used it, because my portfolio didn't drop that much.

Re: adjusting portfolios while living in Europe, it's kind of sucky deal, because, in most countries, the govt skims a percentage of every reallocation (unless you happen to be selling at a loss).

Thanks wolf, I’ll dive into this.

No worries about the German names, I’m a Dutch neighbor, so I can read German reasonably well.