One of the goals of this blog – as stated in the About Me page – is to meet like minded people along my journey to FIRE.
How to do that? Easy: join forums, communities, social networks, physical meet-ups, read other blogs…
Simple to say, hard to do. My life is getting ultra busy in this first half of 2017: getting married, planning (and then doing) the honeymoon, playing in theaters, planning for another hiking trip during Easter, getting 40 years old (sic!), working (80%, thankfully).
I don’t have much time left for this human interaction thing. I skipped few European meet-ups and I don’t plan to attend expensive (scammy?) Chautauqua. Sad, super sad!
“So RIP, are you going to dig a hole and stay forever alone?”
No, no, wait my imaginary friend. I’m still doing my best to be as much social as possible!
Second, I read a lot of other blogs (probably too many) and join the discussions in comments when I think I can add some value.
Third, hey, I’ve done my MBTI test and ended up being a ENTJ, clear? There a big E (extrovert), not a I! I strongly recommend you do the test. It’s free, it takes 15 minutes and it’s fun! Check out this amazing post by FIRECracker (Millennial Revolution) about “MBTI and Money“. If you like it, go ahead and reach out this deep “average human vs FIRE blogger” post on freedomthirtyfiveblog.
So yeah, I’m a proven social person, backed by solid data!
“Hey RIP, you mocking us? I heard you’re wasting your time making jigsaw puzzles in your spare time…”
It’s just a rumor, cmon! Who does puzzles in the third millennium??
Anyway, ok, I may not be the most social blogger out there, but I’ve established strong connections with several bloggers that are now officially part of my blogging family.
People with no immediate financial problem, but locked into a job they don’t like.
People with apparently no financial problems, seeking for ways to improve quality of their lives.
Well, the list may go on and on but to keep the post readable let’s focus on the above mentioned categories.
What are the basic steps you should take to improve your situation? Let’s take a look!
Step 1: where are you?
First step should always be: write your financial self assessment. Where are you? What’s your actual financial situation? Instead of running after emergencies and panicking, take your time. Breathe. Sit down, set 2-4 hours aside and start your financial self assessment.
Understand and quantify your monetary assets. Sum up your valuable assets. Do you own a house? A car? A valuable collection? Money on your bank accounts? Other kind of equities/securities? Art pieces? Precious metals? Pension funds? Savings? Piggybanks? Lottery winning tickets?
Be realistic: only track assets you can actually monetise and track them at their expected resell value. I suggest to skip tracking minor stuff whose selling process may end up being more expensive than the item’s value itself.
Remember that over time some of your assets will depreciate (your used car, your jewelry, your used golf clubs set) while other may appreciate, like your house, your pension fund and your Coca Cola Company stocks. Note: there’s no guarantee that any of your asset will appreciate.
Understand and quantify your liabilities.
Do you have debts? Mortgages? Loans? Credit cards debts? Family debts? Unpaid bills?
Write all of them down. Write the full amount due and – aside – the interest rate you’re paying on each liability. The interest rate is not useful in this self assessment phase, but it will soon be when we’ll talk about taking actions.
Produce your Net Worth document.
Your Net Worth is a number that tell you “where you are” on the financial path.
If you’re below zero it means you have more debts than assets. It means a homeless, or even a kitten, is richer than you.
Obviously that doesn’t mean the kitten will have an easier financial life than you: you probably have other non monetary assets that provide opportunities to change your trajectory, like your skills and your social/professional network.
I have my NW document publicly shared. Feel free to take a look and be inspired.
Before running to any conclusion, ask yourself few questions: did you expect to be where your NW shows you actually are? Do you feel relaxed? That’s good. Do you feel anxious? That’s good too.
Anyway, congratulations! You’ve taken first step toward a path that leads to improve your permanent well being. Who cares if your scale says you weight too much on day zero of your diet? It’s actually better, more room for improvements!
Step 2: where are you going to?
You now have a snapshot of your financial situation. It’s like a single frame in your lifelong financial movie. It tells you something but not everything.
Start tracking your Net Worth over time.
Your assets will change their value, your liabilities will increase/decrease. Track your first magic number over time, on a monthly/quarterly/yearly basis. Or have some mechanism in place to track it in real time, like financial apps (personal capital, mint, …) or a simple spreadsheet – and a nerdy attitude.
Tracking your NW will tell your wealth derivative: the rate of change of your NW. Is it increasing month by month? Is it decreasing? Where do you expect to be in a year if you do nothing? Does it scare you?
Let’s go further, let’s try to anticipate the future.
Take expectations into account.
Are there any financially impactful events expected to happen in the near future? Do you have huge bills expected to come? Do you have kids leaving your home and lowering your expenses? Do you have an expected inheritance coming sooner or later?
Try to do a qualitative analysis and see how these events will change your financial situation.
Take desires into account.
Are you planning for an expensive summer vacation next year? Do you want to buy a new car soon-ish? Do you want to have a kid? Do you want to move to a bigger home with your (possibly growing) family?
Play with numbers and try to do a quantitative analysis of the impacts of your desires on your Net Worth. Can you afford them? Are they worth? Most of them will surely be, some of them maybe not.
Understand unknowns and try to take them into account.
What if you lost your job today? What if you had an unexpected 1000 Euro expense tomorrow? What if your landlord wanted to evict you at the end of the month?
Do these questions terrify you? Sorry friend, you need to face them. Life will happen.
How to take them into account, though? It’s hard to understand the impact of the unknowns based solely on your Net Worth.
Step 3: why are you going there?
We’ve seen how to understand what’s your movie about, by analysing some frames and speculating over few known events. We don’t actually understand why things are happening, we’re passive spectators at the theatre, who just opened their eyes and discovered that’s an horror movie the one we’re looking at, not a Pixar’s one!
Track your cash flow.
Track down each of your income streams and each of your expenses. Make a budget. Understand where your money is actually going. Track this over time.
Do you have a positive or negative cash flow? Assuming your assets don’t change their values, if you have a negative cash flow your NW is going to decrease. If you keep having a negative cash flow you’ll have to sell some of them in order to pay your bills.
Do you have a negative cash flow due to low earnings or high expenses (or both)? Do you understand the impact of each entry in your cash flow?
I know tracking expenses may be a lot of work, but it’s an extremely valuable tool if you’re seeking for financial help. Whoever tells you how to fix your situation without looking at how you currently spend your money is a liar.
Tracking individual expenses is not always necessary, though. For example I’ve been lazily skipping that for a very long time, but I’ve always been in amazing financial shape and without big spending troubles. I belong to the category of those with “apparently no financial problems, seeking for ways to improve quality of their lives“. I restarted tracking my expenses when I started this blog (June 2016), with the goal of improving further my finances to reach earlier my goals.
Even if you don’t want to track individual expenses, I strongly recommend you to understand the total amount spent and to get a rough idea of your main expense categories.
Ok, now you have knowledge and awareness over your finances. You don’t just passively observe that “your NW increased by 500 Euro last month“, you knew and predicted that because “your earnings were 300 Euro greater than your expenses and your other assets appreciated by 200 Euro“. You can finally explain why your NW is changing over time.
… You achieved Financial Intelligence, congratulations! You’re fully aware of your current situation, your directions and the impact of each one of your choices.
You understand what’s happening on the movie so you can stop laughing when others are and actually understand the jokes instead!
Step 4: where else could you go?
This movie is a good one isn’t it? I like the characters, I understand their behavior, I can anticipate what’s happening… but are they taking the right actions? Are they driving the plot toward a nice ending? How many different finale can you imagine for the movie? How many interesting paths were left unfollowed so far?
Understand your tools.
Which tools can you use if you want to change your financial direction? You may have a job. You may have few other income streams, or potential income streams like business ideas. You have skills. You have passions. You have a social network. No, I’m not talking about facebook. I mean people who care about you: your friends, your lover and your family. You have a professional network. Well, yes, I’m also talking about linkedin here. But I mainly mean people who endorse you because of your skills, people who witnessed your quality and would help you changing your job/career.
What about your Net Worth, again? What about repeating the game of playing with desires and with unknowns? Is this the right time to buy a new car? Is this the right size of a mortgage? What if soon after purchasing this dream house interest rates go up and your mortgage’s interest rate raises by 20%? Can you still afford it?
Wait, now we’ve bound actions to consequences! What if Walter White just accepted Gretchen and Elliott’s help?
Can you think alternative scripts for your movie?
You’ve been tracking your numbers since few months now and you’re able to play with them and with your imagination. Is there only one possible future? Of course not! Well, unless you believe in predetermined fate. In that case you can keep complaining with your bad luck and do nothing to change your situation. You’re in good company, that’s what the vast majority of people do!
Step 5: where do you want to go?
We’ve played with characters in your movie, we understand what they do and what they could do instead. We can make hypothesis and expect outcomes… but how would you want the movie to end? If you were the main character, what would you want to achieve? You’re in a Horror movie, are you ok with that? Do you want to make it an action movie? a romantic one? Would is your favorite genre?
Define your financial goals.
Individuals have different goals, different ambitions. Take your time to define what matters to you. Without a goal there would be no way to suggest you the right actions. There would be no right action. Whoever tells you how to fix your situation without asking what are your goals is a liar.
It doesn’t have to be a long term goal, can also be a simple milestone or the end of a chapter in your life. It actually works better if the goal is small and reachable at first.
For example: “be able to make ends meet this month”, “get rid of debts”, “buy a house and not go broke”, “quit my job”, “have 10K Euro saved”, “be able to afford 6 months of unemployment”, “increase my saving rate by 10%”, “reduce expenses by 300 euro per month”, “get a raise”, “reach financial independence” and so on.
Assignable: usually assignable to you. If you’re part of a family or a community working together to reach your goals be sure each member has a role in this.
Realistic: avoid “spend less than 100 Euro per month”, prefer “spend 100 Euro less per month”.
Time related: avoid “quit my job”, prefer “quit my job before July 2017”.
there is no favorable wind for the sailor who doesn’t know where to go. (Seneca)
Step 6: what are you going to do to go there?
You’re no more a spectator of the movie, you’re the main character. You happen to be in a movie you didn’t plot – actually you did, but you lost control over time – but now you choose to be active and drive the plot. Maybe you’re in a drama or a Horror movie and you don’t like it. You envisioned your preferred finale, or what you think it would be a nice scene: “I’m gonna kill the dragon and kiss the princess before the end of the first act!”. Ok, cool, how are you going to do it?
Force yourself to have a positive cash flow, i.e. spend less than you earn.
If you’re driving your car against a wall you can push the accelerator or the brake. If you want to avoid the collision you need to brake. Depending on your speed and the distance between you and the wall, it may not be enough to brake softly.
Same is true with money. Main rule is: spend less than you earn. No matter how tough it is, no matter how many sacrifices you need to do, how thrifty your life needs to become. Spend less than you earn.
It’s a mantra. Repeat again: spend less than you earn.
Spend less, i.e. reduce your expenses.
The Philosophical way: you’re not your purchases. Embrace minimalism and simplify your life. Take your budget, understand where your money are going and check if the expenses match your values. Cut expenses that bring marginal value to your life. Maybe cutting the top 100 Euro on your monthly grocery bill won’t sensibly impact your happiness while cutting more will. Then cut just 100 Euro.
The Psychological way: Don’t keep up with the joneses, don’t try to impress people you don’t like. Learn how to recognize differences between your wants and your needs. Avoid impulsive spending, apply the 10 seconds rule before an impulsive purchase. Invest enough time for major purchases, apply the One hour per 100 Dollars rule and the 30 days rule. Guess the price of an item (or the price you’d be willing to pay for it) before looking at its actual price. Get rid of those dangerous cognitive biases like Anchoring, Bandwagon effect and System justification.
The Pragmatical way: Embrace frugality, think long term. Buy used stuff. Learn DIY skills and get out of your comfort zone. Don’t throw money at problems, throw skills. Become a reinassance man.
The Funny way: it doesn’t have to feel miserable, make it fun! Gamify the process: find a community, join a shared challenge (like the uber frugal month challenge). Challenge yourself, see if you can live with zero for a week.
Earn more, i.e. increase your earnings.
On your current job: work harder, work more, work overtime, get better at it, be reliable, be autonomous, be proactive, show competence, show leadership, show impact, take more responsibilities, ask for feedback, document your progresses, negotiate a raise, get a promotion.
On your next job: always do interviews, don’t stay too much in a place you don’t like, change company when you think you’re not learning anything new, learn how to negotiate a salary, learn how to negotiate a severance package, get out of your comfort zone.
On your next career: learn new skills, be curious, become an idea machine, start a side hustle, fail, start another one, don’t care about revenues for the first 2 years, don’t care about revenues after two years, create value, get these thousand true fans, quit your job, go solo, think long term.
Don’t look for jobs, attract them. (Marco Montemagno)
Once your cash flow is greater than zero, amazing things happens. You now have a saving rate (i.e. savings/earnings), your financial situation is getting better month after month! It can be as low as 1% and as high as 70% or more, it doesn’t matter too much for now.
What to do next?
If don’t have one, build an emergency fund.
Cash is king. Without cash at hand you may need to sell some assets or get high interest debts. Without cash how would you feed your family in case you lose your job tomorrow? Do not rely on social security, your state can cut unemployment supports tomorrow if it needs be.
Build an emergency fund, sized between 2 and 6 months of your current expenses depending on your tolerance to risks and unemployment support in your country.
With a fat fund in your bank account you can take risks, you can sleep at night, you can bring food on the table tomorrow.
Don’t exaggerate though, too much money sitting in a low earning saving account looks like a bunch of wasted opportunities. Send your green army to fight for you instead!
You should learn how to invest but first…
Pay off your debts, always start from those with highest interest rates.
Once you have few months ‘stashed away and you can face bad news without panicking, it’s time to make your money go to work for you, bringing back more of the same.
What you want to maximize with your invested capital is the return on investment (ROI), i.e. how much (in percentage) that capital grows after a fixed amount of time. A commonly used metric is the yearly return on investment. If a dollar invested today becomes two dollars in a year, it’s 100% ROI. Pretty hard to achieve.
Lending money to you is a nice way to invest for your creditors. A nice way to get a good ROI is paying off your debts. If you have a 10% interest loan, paying it back is completely equivalent to invest the same amount and obtain a 10% return. Paying back a 10% loan is an investment with guaranteed 10% ROI.
10% ROI is very high and you can’t get anything better without risks. Credit cards debts, personal loans, payday loans, car loans… all these category of debts are usually in that range and should be killed before even start investing.
So kill your debts as a first priority once the previous steps have been taken. As a nice side effect, paying off your debts will reduce your total monthly expenses and improve your cash flow and your saving rate.
There’s a debate toward repaying low interest debts though. Mortgages, student loans… I don’t really have a position here, I’ve never been in debt.
If you think low interest debts are good, look at your debts and try to revert the question: “Would I borrow money at that interest rate to reinvest it? Which amount?”
I suggest to pay off any debt whose interest rate is greater than half your expected investments return. My expected investments return is the equivalent guaranteed return I’d take for not investing. If someone comes to me tomorrow with this offer: “Borrow me all your invested money, I’ll return it to you in a year with X% interest, guaranteed“, which is X would you accept? I don’t know you but I’d take 6% for sure.
So my suggestion is to get rid asap of debts with interest rate greater than (put your number here) 3% and limit exposure to “healthier” debts to no more than 10-30% of your Net Worth.
Once no high interests debt (possibly any debt) is hunting you down you have to find other ways to make your little green soldiers (what a cool name!) work for you, i.e. you have to invest your money.
There’s a lot of common ground but in the end “how to invest” is strongly country specific. Learn about your country taxation, opportunities and synergies.
You can actively invest your time and energy along with your money to hope for a greater return or, as I’d suggest to beginners, just go passive and join a fund.
Anyway, by no means you should jump on something you don’t fully understand! Learn the basics, understand risks and expectations, build your own model and validate it against reality.
Read some books, like “The Simple Path to Wealth“, “The richest Man in Babylon“, “The Bogleheads’ Guide to Investing“, “A Random Walk Down Wall Street“.
Once you’ve enough confidence, write down your Assets Allocation policy and your Investor Policy Statement. State your goals, your strategy, your exit strategy, your failure conditions, your withdraw policy.
Then invest! Go for it!
There are well known investment instruments like: financial instruments (bonds, stocks, funds, options…), real estates (flipping, renting), precious metals, art pieces, businesses and a lot of other atypical opportunities.
I just discovered someone is still making a living by producing digital dresses and selling them on secondlife!
You don’t have to pick only one of them, you can – and should – differentiate in order to reduce risks.
And finally, invest in yourself! Choose Yourself! As James Altucher (the author) always says: investing a Dollar on yourself is likely to give you a 50x better ROI than anything else. True story!
Increase your saving rate
You’re already in the amazing world of the “positive cashflowers” (what an amazing name?? I gave you too many nerdy tips so far!) things will naturally keep getting better and better over time.
Reducing debts will lower your expenses and improving your cash flow. Investing will increase your earnings and improving your cash flow. Why not push the pedal down even more? Like with sports or with a diet: you see good results and you push harder! Let the positive feedback loop spiral you up!
Aim to increase your saving rate. Your SR is your best friend. It’s the number that matters the most when evaluating one’s financial situation. The higher your saving rate, the stronger the spiral force will push you up.
And it’s incredibly easy to reach SR of 20-50%. It’s easy for you, my financial intelligent reader, that quit luxury and useless stuff to embrace happy and funny frugality!
Differentiate & Automate
Do you have all of your eggs into the same basket? Bad!
Don’t get in love with a single strategy. Don’t rely on a single income stream. Don’t invest in a single asset. Don’t rely on a single currency. Don’t rely on a single bank/broker.
Differentiate. The more the better.
Differentiate your skills too, don’t become ultra specialist on a single task. Always be learning new skills and put them into work. Start a side project, start ten of them. Create more income streams.
You want to fail 100 times with your new projects and ideas to learn and iterate faster, but you don’t want to fail once with your wealth!
Make your savings and investing as automatic as possible. Save life energies (like your time) for things you like more.
Make your income streams as much passive as you can. Automate your earnings. Get your stocks dividends while comfortably sitting on your couch. Create, and let your creations work for you while you’re getting tanned on the beach.
Again, think long term.
… congratulation, you achieved financial integrity! Financial Integrity is “taking actions” and you now master it. You’re a machine, you no more have financial problems, you have financial goals!
Is that all?
The movie never ends. You’ve reached the finale you think you wanted but spectators are not leaving the theatre! You may realize that’s not a finale, that’s just the beginning of another movie. Or you may want to change your mind and rewrite the entire story. You’re confident in your tools and you have so much control that you can start experimenting. If things go south who cares, you can fix them and write another script. You’re now more a screenwriter than a simple character of that movie.
Happiness & Freedom
Here’s when money starts fading in background. You’re in awesome financial shape and headed toward never have to care about financial issues anymore. What’s next? It’s up to you. What do you value most? What makes you feel happy? Do you like your job? Do you like your house? Do you like the country you’re living in? You have tons of options. Here’s where you realize that money is the tool, the enabler. Once you have anything enabled money doesn’t matter anymore. Anything, not everything like the Joneses want to make you believe.
Intelligence is giving yourself more options, and I wholeheartedly believe that. As your financial situation gets better you can take important decisions like: taking a less paying but more interesting job, reducing your working time, retiring earlier than normal, retiring extremely earlier than normal, travel more, launch a business, fulfilling your dreams, seeking happiness and find your purpose in life. Achieve self-actualization.
Passion: learning as much as possible (curiosity).
Purpose: building something that positively impacts other people’s lives (creativity).
Spending too much life energy working on a job (even though I have the best job in the world) won’t bring me there, that’s why my next natural goal is to reach Financial Independence and quit the rat race as soon as possible.
December 2016 is gone. Well, the whole 2016 is gone.
What a year! Half of the singer/actors died, terrorism and wars are everywhere and populism is slowly destroying the human species.
Sorry, I can’t help but share the cutest image ever, as a sign of hope for an amazing 2017. Here’s a kitten with a froggy hat.
Anyway, sad episodes apart, this 2016 guy has been incredibly good for RIP’s economy! I don’t know if we’re inside a (tech?) bubble or not, but everything went well beyond the most optimistic expectations!
Let’s not rush and follow the steps: as end-of-month routine I’m here showing my detailed numbers and getting positively surprised by them. That’s another over the top month, where along with an expected very high saving rate we achieved yet another gargantuan NW increase.
The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.
Last month, we got the third comma (in Italian Lira), a round number I dreamed about when I was a kid! Apart from breaking walls, we increased our NW by ~22K and I thought that this trend was going sooner or later to reach an end.
Not today! December 2016 went actually better, NW increased by 23.8K EUR!
Here are the major wins for December 2016:
Good investments’ performance, especially the STOXX600 fund! Go Europe go! Actually, just before Christmas things were even better, with investments peaking and EUR weaker compared to CHF and USD. Delta NW was close to +28K, doomed to decline to a modest ~+24K 🙂
(Expected) Amazing saving rate,83.4%. Mainly due to thirteenth salary and stocks vesting. Anyway, these factors were already accounted for in previous months (rows 11 and 34).
Greater than expected yearly bonus at Hooli. Expected 20-22K, got 26K. This bonus will be credited in January 2017, and that’s the 17K you can see in row 34. In November we had ~18K credits, part of it was the 13th month, part the expected bonus (lower than the actual one). Now I’m putting in 17K, which is the (pessimistic) net expectations for the 26K gross bonus, while the 13th has been cashed. That’s a nice contribution to NW increase.
Losses of December 2016:
Close to rent the Milan apartment, potential tenant declined at contract signing date. I hate my failure-remembering apartment. I’d rather sell it and put a big stone on this.
Unexpected medical bill for an October Miss RIP’s doctor visit we forgot. 437 CHF. We’d been below 4K without it. We received a suspiciously low bill of 134.50 CHF in October and here is the “remainder”.
Pillar 3 Buy in of 6,768 CHF done. Started a new Pillar 3 with PostFinance.
80% part-time request at Hooli approved! I’m starting in January 2017. Sadly, first 2 Fridays are already gone for a trip to Rome to visit RIP Sr. which is in hospital for some heart problems. Anyway, being able to go to Rome 4 full days (Thu 5th evening to Mon 9th evening) without having to take vacation (just trade the following Friday 12th with Monday 9th) is one of the aspects that makes this life closer to what I expect FI would be. I can be there to help and support instead of being at work.
Income for the month was 26,547 CHF (cell O57), second best month of the year, second to January when I received 2015 yearly Hooli bonus. This very high salary was expected, thanks to 13th salary and huge stocks vesting.
~15,500 CHF my base net salary + 13th month. As you can see it’s lower to twice regular salary because (1) money got taxed more (2) my 13th salary was prorated by ~90% – I worked 90% this year – and (3) some benefits are not doubled, like health insurance contribution and transportation allowance. Anyway, very good!
~7,700 CHF stocks vesting.
~2,250 CHF Pillar 2 contributions.
1,000 CHF Miss RIP contribution to shared economy.
15 CHF Migros blue coupons. Yeah, I consider them income.
Total income in 2016: 191,250 CHF(cell P57). As expected, above 190K. I’m talking about net income. Actually, net take-home pay that includes everything injected into our Net Worth that doesn’t come from investments appreciation, dividends, interests etc.
Average monthly income in 2016 is 15,938 CHF (cell R57).
2017 Target is 170KCHF. I know, it’s conventional to set a target higher than last performance cycle, but I’m going to work 80% and that’s going to make a difference. I’m cutting 10% to 2016 income and let’s see if it works. I don’t plan (for now) to have a worth-mentioning side gig or other passive revenues.
Total expenses for the month were 4,376 CHF (cell O58). Wait, before you say “Ha-ha you didn’t make below 4K as you planned!” I can explain the difference. We received an extra bill for a forgotten Miss RIP October doctor’s visit of 436.90 CHF. Without that we’d make it. In Christmas month, with two trips to Italy and huge and expensive dinners with friends and relatives. It’s totally ok!
“Hey RIP… ha-ha you didn’t make below 4K as you planned!”
Here’s the detailed list of expenses (in CHF):
1443 – Flat rent (1278) and condo fees (165). Business as usual. I figured out that the actual split is 1278 rent and 165 condo fees. Just saying.
863 – Health.
437 – Doctor’s bill. Unexpected. From October.
426 – Insurances (213 each one). Lower than the other months since we removed Miss RIP’s accident insurance. Next month on, this expense will grow into 490 CHF per month, since we changed provider and all providers are raising their premiums by 10% at least. Apparently healthcare costs are raising, that’s the second year in a row. And they say inflation in Switzerland is below zero… If you wonder how does healthcare work in Switzerland, there’s enough complexity that I feel time has come for a post about it.
674 – Groceries. What the hell… We spent more on groceries during this month than the previous 3 combined! I had to do the math twice to be sure. Well, we’ve organised (and paid for) several huge dinners during this Holiday season. Plus we’ve done some convenient grocery bulk purchase in Italy and returned 100 EUR to Miss RIP’s dad for a grocery bulk purchase done in November.
532 – Travel & Transportation:
251 – Mexico trip. It seems so far away now, but yes, we returned on December 4th.
101 – Local Transportation. My local monthly pass and few Metro tickets in Milan. I could and should have biked this month. The weather has been nice and it never rained. January looks way cooler and I can’t stand below zero biking, for now.
85 – Flight tickets to Rome. Told you I’m using my first 2 Fridays to go to Rome: Jan 5th to 9th. I purchased last minute tickets using my Miles&More miles and got a nice offer. 15K miles for the “fare” portion of the ticket, i.e. 200 CHF. They offered me to pay the 85 CHF taxes and “fuel surcharge” with another 15K miles but I’d rather keep them and optimize their value. Btw, why there’s still a fuel surcharge when oil price is at its minimum?
43 – Gas. Twice in Milan, used Miss RIP’s family car. Yes, I know, I bragged about being car free since 2008 but we’re going twice per month in Milan for secret project X and we need to be surgically fast and time efficient.
42 – Trains. We paid for December train trips to Milan in advance, so this expense is for January Miss RIP’s solo trip to Milan.
10 – Tolls. Italian highways.
217 – Dinners Out. Christmas time, friends time and 100 EUR associated to Project X here.
125 – Leisure. Few items purchased. In this category I also put 50 CHF for Theater Acting! The news is that after too many years without acting I’m back on stage 🙂 The financial news is that I joined a self funded company and at subscription time you have to pay a one-off entry deposit of 500 CHF. They say when you leave you get the money back, assuming shows tickets will cover costs (which they claim it happened for 20 years out of 21 since the company exists). To be safe, I’m assuming I won’t get my money back. I don’t wan to call a 500 CHF expense for December, so I’d keep an asset in “Other – CHF” (row 36) which will depreciate by 50 CHF per month for the next 10 months, generating 10 monthly expenses of 50 CHF. If I’ll get back my money when I leave the company (hopefully very far in the future) that would be a nice unexpected small windfall.
111 – Taxes. Extra property tax on Milan apartment…
100 – Cleaning Lady. A single 4 hour visit this month.
75 – Utilities & Phone.
63 – Fees. Half of it is Interactive Brokers fee on 40K sale of my Tech ETF. More on this later. Then bank fees and Project X fees.
<5 – Not tracked.
That’s ok, that would have been below 4K without the unexpected late medical bill. We could have saved on groceries and maybe some dinners out, but it’s Christmas, that’s essentially why we’re getting a thirteenth salary: to spend it on stupid useless things! Or, in my case, to ‘stash it entirely!
Total expenses in 2016 is 59,740CHF (cell P58). Below 60K, cool. Above last month’s ambitious target of 59K. It’s ok.
Average per month: 4,978 CHF(cell R58). Finally below 5K per month.
2017 Target is 70K CHF. Whaaat? Less income and more spending? What’s wrong with you RIP? Well, Project X will cost a lot. It would involve some math and there will surely be some positive financial consequences too, but still expenses will skyrocket.
Savings & Saving Rate
Total savings for December are 22,035 CHF (cell O59). That’s… fun!
Total savings in 2016 is 131,510CHF (cell P59). As expected.
Average monthly savings are 10,959 CHF (cell R59). Boom! 11K saved per month! It’s more than I earned in 2006. Earned, not saved. In 2006, not December 2006. That’s amazing!
Saving rate for December is 83.4% (cell O60). Out of every 6 CHF earned, 5 have been saved. Enough said.
2016 saving rate so far 68.8% (cell P60). Big jump toward 70% but not enough. We should have spend less than 2200 CHF in December to get the platinum badge! Anyway, I’m temporarily in first position but I heard that Oliver at Frugalisten will break the wall. Good for you mate! 🙂
Target for 2017 is 60%. Can’t cheat with Math. Less income, more expenses… 60% is actually hard to achieve.
Net worth at the end of the year is 551,973 EUR (cell O41 or P41). More than expected! Thanks Mr. Market!
Delta for December 2016 is +23,712 EUR (cell O42). Again, best month in 2016!
Delta Percent December 2016:+4.49% (cell O43).
The logo of this blog changed accordingly:
With another big jump of +2.37% toward the big goal.
Net Worth Delta in 2016: +169,459 EUR (cell P42). Being a high income FIRE seeker, most of it is due to savings. Still roughly 38K EUR come from investments, though. Not bad!
Net Worth Delta Percent in 2016: +44.30% (cell P43). Last year we achieved +53%, which is ok since all of it came from savings and the starting point was lower while earnings were similar to 2016.
Net Worth Target for 2017 is 670K EUR: expecting a 8% returns on investments (optimistic, given that we’re at all time market high) and lower savings.
Forecast for 100% FIRE: 32 months left (-4 months, again), i.e. forecast Fire Date is August1st 2019, (cell T20). Forecasts are drugged by these incredible months where I’m cutting 4 months each month and it just can’t keep up forever. I’m also going to slow down in 2017, so I guess I’ll need way more time.
So far I’m forecasting using current year’s data. To avoid getting depressed by an eventual bad 2017 start I’ll keep using a 12 months window. Plus, I think I’m going to review the Million EUR goal soonish.
Current Monthly allowance: 1,533 EUR(+66 EUR, cell T26). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today. This month I created another 66 Euro per month, forever!
Current Withdrawal Rate – Real: 10.10% (-0.51%, cell T29). This represents the WR I need to support current spending regime with my today’s NW. It got better this month because we increased our NW and reduced yearly expenses compared to previous forecast.
Current Withdrawal Rate – Ideal: 6.04% (-0.27%, cell T32). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with my today’s NW. When this number will be equal to the desired Withdrawal Rate (cell T11) we’ll be FI. Getting closer…
Pillar 3a. Opened an account with PostFinance and moved there 6,768 CHF, i.e. maximum Pillar 3a contribution for year 2016. I’m letting the money sit into a Pillar 3a saving account. PF allows you to invest part or all the money into some Pension funds with high stocks component, like Pension 75. I’ve been thinking about it for a while, but these funds are kind of crappy: high fees and the stocks are mainly Swiss stocks, which are not performing well. I can change my mind anytime, so no need to rush. Plus, we may be forced to cash it out when we leave Switzerland so we may lack the required long term horizon for a stocks-based investment. I’d also like to close the UBS 3a position (3 years of contribution, ~20.5K CHF) and move the money to PF. I don’t know if it’s possible and how much it would cost to me though.
Stocks & ETFs – Strategy. I didn’t set up time in this crazy December to write my Investor Policy Statement (IPS), redefine an assets allocation strategy and study which investment tools are better for my situation. Anyway, I’m giving myself room for corrections, i.e. I’m hoarding cash and differentiating by currencies. I’ve sold roughly 40K of Tech US ETF (sell price per share 116.51 USD, price now is 116.35). I’ve converted USD from the ETF sale to EUR, roughly 40K EUR (USDEUR price was 0.954, it’s still 0.954). I’m keeping cash, I’m expecting another ~35K CHF cash coming by end of January (Hooli stocks sale and 2016 yearly bonus). I plan to rebalance my portfolio by end of month, and I’ll need a strategy by then!
I didn’t start the process of getting rid of UBS account yet but I changed all the electronic bills and direct debit instruction to PostFinance shared account. I’ve also opened a personal PF account.
Missing: move salary over the new personal PF account, close Pillar 3a account (and ideally move the money to my PF Pillar 3a) and get a non UBS credit card. No need to rush but I’d like to get it done early this year.
Installed access apps for my banks and few mobile payments apps. Bye bye access card readers! On the downside, I’m even more bound to my phone. It’s the single most important thing I own, and not for its value but for the data you can access from it. If I lost it or it gets stolen I’m ruined.
Most important pieces are defined, details (tons of them) need to be resolved, but that’s the fun part of the project!
“Hey RIP, you think you’re funny? You want to grow a hype around this project none cares about? Just tell us what it is, who cares?”
You’re rude! Not now, be patient!
Tax credit for 2016
We do taxes in March but with a click you can postpone tax time to September and that’s what I usually do, as a first class procrastinator. Not this time, though! In 2017 I want to file my taxes as soon as possible.
Like last year, the Pillar 2&3 buy-ins will likely generate some tax credit that I want to add to my NW asap (look at the +5,366 CHF entry on cells K36:O36, it’s about 2015 taxes). Tax credits and debts are resolved in 3 fiscal years, so in 2017 I expect to have to pay 2014 tax difference of 784 and be left with 2015 and 2016 huge tax credits. I’m not sure 2016 tax credit will be huge, since I’d need to pay taxes on ETFs dividends even though my ETFs are accumulating and not distributing, i.e. I received no dividend, the fund itself reinvests them. The Swiss tax authority has a list of dividends payments by fund and you’d better check it out before buying shares of a specific fund: if yours is not in the list, the whole capital gain (normally not taxed in Switzerland) will be considered dividend!
So, assuming 2% yearly dividend on my 250K investment basis we’re talking of 5K taxable, which means 2K taxes. I still expect to get back more than 3K. Good.
I was close to rent my apartment starting January but the tenant declined at the very last minute. His current landlord demands 3 months notice to leave the apartment. I don’t understand if he started this process though. I’m not sure he’s assuming I’ll wait till April, without any signed agreement. I don’t know, I’m losing hope here.
On the bookkeeping side, I’m planning to simplify these reports: there are too many details here and information is too spread. I’ve set up the spreadsheets for 2017: a fully detailed one (the master, maybe not shared), an aggregated one with less information and cool to share, an expense-centric one and a dashboard one (cool graphs are coming).
I’m also going to stop including work credits, like “vesting” stocks or portion of 13th and bonus each month. It will lead to greater variance between months and in general smaller NW growth, since I’ll only add credits when they are 100% guaranteed. For example in case I’d lose my job the bonus and not vested stocks won’t happen. They are not guaranteed, so I don’t want to consider them until the money physically sits in one of my accounts.
The year is gone, I’m 6 months into this blogging thing and I’m still ultra-motivated and want to write about so many things that it feels frustrating not to have enough time. Winter’s weekends are perfect for writing, but on each December weekend I’ve been busy traveling or hosting friends.
I only published 4 posts in December, one per week, and 52 posts since the beginning (i.e. 2 per week).
Readership is slowly growing and it makes me feel good. I’m not doing anything special to make it grow. I don’t set growth goals, I’m not selling anything and this blog is ads free, ideally it will be like this forever. It’s rewarding to see readership growth, though. It’s a morale boost!
I think with 3-days weekends I’ll have more time to write but I can’t commit to that. Several weekends will be spent with my Theater company, preparing our next show (8 dates between March 30th and April 9th).
Uff… ok, you’ve been patient enough. I and Miss RIP are getting married in June 2017 🙂
It’s an Italian traditional wedding so it will not be as frugal as I would have liked. I set up a budget of 20K EUR but I may overflow to 25K… Probably half of it may come back as gifts. Moooore on this in another post: the non-frugal wedding of the RIPs!
Those who know me know how I don’t usually like gifts.
No, I’m not an ultra evil person, let me explain it a little bit more. I hate to have to buy gifts for “special occasions”, which appear to be every other day.
The RIPs are very social, especially Miss RIP. We have tons of friends. Add to that tons of relatives in both families. Plus, we both have lived in several places, like Rome, Naples, Milan and Switzerland. In every place we’ve established strong connections and dates to celebrate.
Integrate this over almost 40 years and essentially every day in your calendar is: “today it’s exactly 17 years since we painted the living room, what a coincidence, how are we going to celebrate?”
Or something like:
Miss RIP: “Honey, tomorrow will be exactly 1000 days since the child of WhoTheHellAreTheySorryIHaveForgottenTheirExistence-Friends was born! What are we going to gift them with?”
Mr: “I don’t know… btw, if tomorrow is the 1000th days it means we’re getting close to his 33rd month, can’t we wait and just gift once for both these ‘special days’?”
Miss: “Uh… you’re right…”
Mr: “Thanks my love 🙂 I knew you’d have understood and agreed on a single…”
Miss: “You are right… you are right… in 5 days it will be exactly 33 months since whatever and I wasn’t prepared… panic mode on! Check out how many pajamas that kid has, be quick!! Let’s look for one that matches the shirt he’s going to get from us for his 1000th day!!”
Ok, jokes apart, I and Miss RIP have a slightly different view on who, when, how and what to give. For example, I don’t like to bind gifts with special dates. Whenever I feel the duty to give I feel something is wrong. I like to spontaneously give to people whenever I like, not when it’s exactly their 300,000th second since last time they had an hiccup. I must admit that my behavior leads to slightly less gifts in general, since there are way more “special dates” than times where I feel like giving something to someone. But it’s ok, I’m fine with that.
I don’t like to physically go buying stuff. I hate shopping malls, I hate being within that crowd of people in a fake place with fake music and fake piazzas. I feel in the wrong place. I’d rather shop online. That’s not only for gifts but for regular stuff too. I hate shopping in general, feeling forced to go buying craps for someone else is even more annoying.
I don’t like buying things that 90% of time are going to be thrashed, recycled or in best case scenario they’re going to clutter people’s houses.
I usually don’t like receiving gifts too. It’s rare I receive something I really would have purchased myself. To give you an example: last year I wanted to try to run a triathlon (failed way before taking it seriously due to several minor injuries) so I received an expensive sportwatch I’ve never used. I feel sad about it, but I didn’t need it. And I didn’t need the extra digital clutter associated to having yet another account to setup and keep up to date, yet another flow of spammy emails to filter out and god knows how many other hassles.
I believe I’m the best person in the world in the “knowing what I like” contest. And even if I like something, if I didn’t schedule the purchase it means I don’t really need that something right now.
“RIP, you’re being mean. If you have in your radar object X and I buy it for you what’s wrong? It’s free money for you, why do you complain?”
No my dear friend, it’s not free money. Yes, I’m not paying for the stuff I’m receiving but I’m paying for the stuff I’m giving to you and this is an inferior solution compared to “everyone buys their sheet whenever they want”. Plus, why the hell should we play the evil game of comparison? What if your gift is way more valuable than mine? I hear backtalks everyday on “how cheapass X is” for their giving behaviours and poor gifts choices. I hate that, seriously.
“Ok RIP, what about gift cards?”
That’s just another inefficient idea. Gift cards are money placed under a shop. Which one is better, 50 Euro or 50 Euro to be spent in shop X? It doesn’t make much sense to me. It would make sense if the face price of the card were lower that its value (i.e. if a 50 Euro gift card would cost 40 Euro) and if the receiver is already a regular customer of shop X.
I don’t even know what kind of objects people need. I’m not good at it. If we meet and talk together for an hour I will forget 90% of this experience, I’m sorry. I won’t remember how you were dressed or what’s that thing you’d like to buy. Forgotten in a second! I won’t remember most of the uninteresting things you’d tell me. Though, I’d remember every detail of the new ideas we threw on the table. I’d remember the deep discussion we had about a topic we both care. I’d remember the projects you’re passionate about and the feedback you gave to me about my ideas. I just won’t remember what colour your shirt was, sorry about that.
My guess is that people don’t need more stuff. I’ve the feeling that most of the things we exchange as gifts, especially during Christmas, are unwanted, unneeded and are going to clutter our houses. Plus, as an investor, I think the economy would still be fine without all this garbage game.
Maybe gift lists can help here. Like a wish list on Amazon or a wedding list. One should put some effort to keep it up to date and who wants to buy stuff to someone else can get inspired by stuff the receiver signaled they’re interested in. I don’t know if there’s a universal killer app for wish lists, maybe amazon’s one is fine. Anyway, no. No, no no it still doesn’t make sense. If I really want those items I’d buy them myself.
Ok, what’s left? Gifting is not just a matter of stuff, it’s mainly a way to tell someone you care about them, isn’t it?
I like handmade gifts: a handwritten letter, a knitted hat, a homemade cake, a 6 pack of craft beer, a painting that you made… The point here is that you showed you care about me, not that you felt obliged to buy me sheet. And I’d love to dress a unique hat instead of a 5.99$ one from H&M 🙂
I like consumable gifts: a bottle of olive oil (better if it comes from a farm you know directly), spices, tea, high quality pasta… The points here are (1) you don’t clutter myself in the long term (2) you let me know about a product I may like but I don’t know yet.
I like (slightly less) experience gifts: a flight ticket for a weekend in a city we wanted to visit, a ticket for a SPA experience… The point here is that you still don’t clutter me but the risk of something under appreciated is still high. Good for very close friends and/or couples.
I like (a lot) time gifts: a handwritten coupon for a binge watching marathon of Game of Thrones together, an evening of no duty (no preparing food, table, cleaning and dishes), a promise to play Pandemic Legacy together for 24 sessions straight… The point here is that I know time is your scarcest resource and you care about me so much that you’re offering part of it to me.
And finally I like idea gifts! What’s that? Please, follow me…
Surprisingly this Xmas Miss RIP approached me with
Miss: “hey honey, why don’t gift each other with an idea for this xmas?” – then she suddenly said – “… it will be tough for me, I don’t know exactly what kind of idea can I give to you, but I’ll try!”
Mr: “That’s awesome, that the perfect gift! Now, what do you mean by an idea?”
Miss: “Freedom of interpretation, ‘an idea’ 🙂”.
Mr: “But for you? For us? Ok ok don’t ask 🙂”
I really enjoyed the process of coming up with my idea: I focused on what can make her a better person. I packed my idea with a long handwritten letter (how impossibly hard has become handwriting?) with few thoughts on her and on us. I took time to focus on what’s important but not urgent and I hope she’ll appreciate my idea. I’m not going to disclose here what’s the idea, it’s not important.
I enjoyed the process so much that I’d like to make this a kind of routine, maybe yearly, maybe quarterly. I want to become a better person and I care about my beloved Miss’ feedback.
Providing some form of written, recorded and slightly committing feedback is a powerful tool to help your friend/lover and show you care.
2016, December 26th
Holy sheet Miss RIP took it seriously and offered me 10 ideas (instead of one) to improve myself by installing new healthy habits. Cool, I’ve got new years resolutions written by someone else. But honey, waking up so early every morning to exercise, meditate and write?
Anyway, I also committed her into something with my idea. Now we’ll walk together on the sharp edge of soft commitments, hoping that it’ll give strength to both our goals and our relationship.
I’m your manager and as you know we have this funny end-of-year routine where I raise your salary for no reason and give you a ridiculously high yearly bonus, planned as 15% of your gross yearly salary but usually more than that.
Well, today is your day! Base salary raised by ~2% and 2016 yearly bonus of slightly less than 20%, which prorated (because you worked 90% this year… yes, 10.78 months out of 12… yes, you took unpaid sabbatical for slightly more than 5 weeks) becomes 17.5% which means more than planned anyway, and way more than you accounted for on your NW spreadsheet, I guess!
Wow… thanks. I’m so positively surprised. But wait, dear friendly manager, how do you know about my NW spreadsheet??
“Hey RIP, how is it going?”
Hey, hi, ciao, sorry not now. It’s not the right moment my dear imaginary friend. I’m having an imaginary conversation that makes fun of my actual conversation with my manager.
“…what if I and he/she were the same imaginary person?”
Ok, jokes apart, what an amazing news! 2% increase and a super bonus way higher than expected! Anything else dear manager?
Of course! Here’s an extra stock grant for you. A small one. It’s roughly 22K (gross) worth of stocks, vesting in 4 years. It’s an extra 5.5K CHF per year (assuming our stock price stays constant over time)
Btw, the yearly bonus, in “naked numbers”, is 26K (gross) CHF. Enjoy!
Holy (spread)sheet! It’s dramatically awesome. It’s terrific. Btw, what about the other news, the one I’m waiting for…
Check your inbox 🙂
Ok, cool, thanks.
Good news, your request to change your work week has been approved. You’re all set to go.
We’re happy to confirm that, effective 01-01-2017, your total working hours will change from a 100% full time basis to a part-time basis at 80% of the full time hours set out in your employment contract.
Thank you so much Hooli, you’re really the best place where to work.
So, guys, it’s official now. I’m left with 3 more Fridaysto work and then, probably, I’ll never work again on Friday.
Well, it’s not actually true, since thanks to Hooli’s awesomeness I can trade my Friday with another day of the week, each week if I want (assuming it doesn’t negatively impact my team). Plus I’m not aiming to “not work” when I’ll be FI. It’s just that I’m left with 3 more Fridays of mandatory work.
That feels just great.
Because right now I’m scared. I saw the pay cut. Ouch. It’s around 30K gross on base salary (+6K on expected bonus). I’m scared I’m paying so much to… to do what? To just fuck around?? Oh my god I’m going to become poor and lazy, watching television all day!
Let’s take a look at the actual situation:
I’ve worked 90% in 2016 and my NW increased a lot even with the 27 business days of unpaid leave.
I’m going to work 80% in 2017 and salary doesn’t scale that way: 80% of the gross is not 80% of the net. Thanks to progressive taxation I’m going to earn more than 80% of my current net salary. Say 85%.
Some benefits don’t get reduced. I’ll keep getting health supplement for me and Miss RIP in full. It’s ~700 CHF gross per month, not prorated.
Stocks will keep vesting as before. They make ~30% of my salary and this is not prorated too!
I got a 2% base salary increase for 2017.
My performance for 2016 were just “ok”. I may focus on exceeding in 2017. I have colleagues that have been promoted after switching to 80%. Expectations scale accordingly. Tons of studies show how working 30-35 hours improves your productivity density.
Given all the above I’m pretty sure I’m not going to perceive it. I’ll earn roughly 95% of what I earned in 2016 (which is a 90% year).
There’s nothing to fear.
Time to enjoy these 52 extra vacation days 🙂
Next: how to use this extra time I purchased back?
November 2016 is gone. Typing these words from Isla Mujeres in Mexico, with a sheetty internet connection but an amazing view and ~30 degrees Celsius. We’ll be back in Switzerland in few days where the only thing that won’t change will be the 30 degrees. Just… Fahrenheit!
As end-of-month routine I’m here showing my numbers and I’m really (positively) surprised by them. I thought saving rate would be bad this month and progresses would be minimal but, luckily, that was not the case. The market reacted incredibly well to the Joker election in the Divided States of America and our Mexico unplanned expenses are being low.
The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.
Last month, despite a bad saving rate, we grew by a solid +13.3K EUR. I was wondering for how many months can we keep growing in the 5 digits world. The market is going to crash, the dollar is going to depreciate, my not yet nicely balanced portfolio is going to show its weaknesses et cetera.
No, November 2016 is the second best month on record by NW increase: a staggering +22.3K EUR! For the records, best month so far has been January 2015, when Switzerland unpegged the Swiss Franc from the Euro.
More important of all… I’m billionaire!
In Italian Lira 🙂
…But apparently not for Google.
Reasons for this amazing performance? Here are the major wins for November 2016:
Euro dropped, Dollar skyrocketed again (pure luck).
Great investments’ performance, especially the S&P500 fund (facilitated luck).
Low expenses both in Switzerland (first two thirds of the month) and in Mexico (last third of the month). Almost 70% saving rate (merit).
I got another unexpected550 CHF bonus at Hooli! Nice! It will be credited in December (merit).
Another taste of freedom, traveling and relaxing in Mexico – more on this will come (planned).
Few potential tenants are interested in my Milan apartment. I see high chances of finding a tenant during December and having it rented out by January (luck).
Losses of November 2016:
I don’t see any. Well, Mexico trip was simply awesome and I’ll write about it soon-ish, but [Spoiler Alert] getting robbed, breaking a tooth, losing a flight and a luggage… well, that could be considered a loss!
80% part-time request at Hooli is ongoing. Filled all documents, got manager and director approvals, need to wait for HR. Requested to start in January 2017. Let’s cross fingers.
Switched health insurance provider for next year from Assura to Mutuel. From “Family Doctor” model to “Telmed”. Assura raised our insurances premiums and it’s no more uber-cheap. Given their sheetty service I’d rather spend few CHF more and get some quality. Plus, let’s experiment the telmed model, where you should always call their on-call doctor before physically going to a doctor. I think I’ll write a dedicated post about Swiss Health Insurance System (added to the infinite TODO list).
Income for the month was 16,729 CHF (cell N55), an above average month essentially due to stocks vesting.
~9,000 CHF my base net salary.
~4,500 CHF stocks vesting.
~2,200 CHF my Swiss pension Pillar 2 contributions.
1,000 CHF Miss RIP contribution to shared economy.
50 CHF Sold a used Machine Learning book to a colleague. I’ve plenty of valuable books that I don’t want to own anymore. I may sell them all. Is anyone interested in the whole Game Programming Gems series? 🙂
Total income in 2016 so far is 164,839 CHF(cell P55).
Average monthly income in 2016 so far is 14,985 CHF (cell R55).
Forecast for the end of 2016 is still ~190K CHF. Thirteen month, stocks vesting and bonus are coming in December! Expected ~25K CHF. No impact on NW forecast, since I’m already accounting for these credits (row 32).
No target set by end of year.
Total expenses for the month were 5,211 CHF (cell N56). Not that bad! Wait… I know it’s A_LOT but I thought I’d be above 6.5K, considering Mexico trip third tranche of expenses (Hotel in Isla Mujeres and all the food/gifts/tips/other expenses for the two weeks).
2390 – Mexico trip. Major expense here is 1609 CHF for the luxury hotel in Isla Mujeres. 7 nights, roughly 230 CHF or 220 USD per night. Very expensive. But you get swans out of towels… What’s left (~800 CHF) is for food, beverages, some entrance fees, tips, gifts and money stolen. Total Mexico trip expenses so far are ~6.8K, spread over 3 months. Expected close to 10K, so I’d say it’s ok.
176 – Local Transportation. 165 of which are for my Swiss Halb-Tax abo renewal and 11 for local trains/buses/tram. I was covered by last month delayed monthly pass till Mexico trip and Miss RIP switched to annual pass. Very cool!
32 – Gas. We used Miss RIP’s car while in Milan, for secret project X.
15 – Tolls. Italian highways…
1440 – Flat rent (1300) and condo fees (140). Business as usual.
442 – Health Insurances (mine 213, Miss RIP’s one 229). As I said, we’re switching to a new provider and it will cost us more. In the range of 240 CHF per person (current raised our premiums to ~225-230 CHF). Good news, we lowered Miss RIP premium (it will be same as mine) from December on, due to accident insurance covered by her employer. We should have done that several months ago though…
126 – Utilities & Phone.
113 – Grocery. Ridiculously low grocery bill. We consumed what we had sitting in our fridge/pantry and survived with few grocery trips.
100 – Cleaning Lady. A single 4 hour visit this month.
100 – Clothing. I purchased a pair of high quality winter shoes I planned for something like… 2 years?
99 – Dinners Out. There’s actually no dinner in this list. A brunch, few visits to fast food while in Italy and an expensive Raclette & Fondue cheese purchase for a special dinner at home with good friends. I consider them in this category rather than “grocery”. Raclette and Fondue are awesome. I love them!
91 – Housing. Condo fees in Milan apartment.
55 – Health. Few medicines.
15 – Leisure. Few small purchases like videogames & post cards.
12 – Fees. Mostly bank fees.
3 – Gifts. Finally a month with almost no gifts. Gifts expenses in Mexico are not included here though.
<5 – Not tracked. Almost perfect.
Without Mexico we’d be below 3K, which is my “perfect expense amount” given current conditions. Awesome!
Total spending for 2016 so far is 55,364CHF (cell P56).
Average per month: 5,033 CHF(cell R56). Still above 5K per month but I guess December will bring us below.
Forecast for End of year: 60,397 CHF (cell S56). Not scared anymore. We’ll make it for sure below 60K.
Target for End of the Year: 59,000 CHF. Let’s be aggressive. to reach 59K we have 3.7K expenses left for December. We have already paid for the December train tickets to Milan (16-18 and 24-27). We don’t plan having other extra-large expenses. We’re not going anywhere for end of year (friends will come visiting us). We can make it.
Savings & Saving Rate
Total savings for November are 11,518 CHF (cell N57). High income month, not very high spending… wow, 11K saved!
Yearly savings so far are 109,475CHF (cell P57).
Average monthly savings are 9,952 CHF (cell R57). Getting back close to 10K per month, next month we’ll destroy that wall!
Forecast forend of year say 119,427 CHF(cell S57). But I bet on 10K more than that 😉
Saving rate for November is 68.9% (cell N58). Back on track!
Target saving rate for End of the Year 70%. To achieve that we should spend less than 2.5K and earn more than 25K in December. It’s a 90% saving rate, pretty tough. Spending ~4K with the same earnings would result in a 69% Yearly saving rate. Anyway, let’s aim for the stars!
Net worth at the end of the month is 528,261 EUR (cell N39 or P39). I had less than 400K at the beginning of this year… Wow!
Delta for November 2016 is +22,293 EUR (cell N40). Best month in 2016!
Delta Percent November 2016:+4.41% (cell N41).
The logo of this blog changed accordingly:
With a long jump of +2.23% toward the (cheated) big goal.
Net Worth cumulative 2016 Delta so far: +145,747 EUR (cell P40). It was last month’s forecast by end of year!
Net Worth cumulative 2016 Delta Percent so far: +38.10% (cell P41).
Forecast end of year 2016 Net Worth: 541.5K EUR (cell S39), +159K EUR, +41.57%.
Target for End of Year: ok, I’ve reached my Billion Lira and there’s still a month left. USD and Mr Market will surely crash… let’s more or less stick with the forecasts. 540K EUR.
Forecast for 100% FIRE: 36 months left (-4 months), i.e. forecast Fire Date is December 1st 2019, (cell T20). What? 3 years left? I cut 4 months in compared to last month! Well, let’s be honest: my investments are doing great so far but I don’t expect them to keep running at that pace. Plus, within these 3 years I’d like to slow down at work (waiting for 80%) and maybe RIP family will grow and need more house space. Maybe we’ll also review the actual “Million Euro” FU Number a little bit… Anyway, it’s exciting to track FIRE date and see it getting closer and closer each month!
Current Monthly allowance: 1,467 EUR(+62 EUR, cell T26). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today. This month I created another 62 Euro per month, forever!
Current Withdrawal Rate – Real: 10.61% (-0.35%, cell T29). This represents the WR I need to support current spending regime with my today’s NW. It finally got better this month because we increased our NW more than the actual yearly spending forecast.
Current Withdrawal Rate – Ideal: 6.31% (-0.28%, cell T32). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with my today’s NW. This went down, since ideal expenses didn’t go up but our NW did. When this number will match the desired WR (cell T11) we’ll be FI 🙂
Before the Mexico trip I left few bureaucratic things undone and I’m catching up with them. Things like Italian property taxes, health insurance change, internet provider analysis… Time to tackle bigger TODOs.
Pillar 3a ~6.7K CHF. Need to find the right Pillar 3a where to invest. I don’t want to keep up with my crappy saving account (UBS Fisca). If I can’t find a better alternative I’d go for a saving account at PostFinance, where I have the shared account with Miss RIP and EUR&USD accounts. I don’t like the ETFs based Pillar 3a funds due to purchase fees, high TERs and the fact that they invest mostly in Swiss stocks. Plus, I may take the money out of Pillar 3 in 3-5 years so it may not be worth investing in crappy & volatile products.
Stocks & ETFs – Strategy. I need to take time to think about a diversification strategy and, in general, an Investor Policy Statement (or IPS). Fiscal news say that today, in Switzerland, distributing is better than accumulating for funds holding securities traded in the US markets (due to dividend withholding claimable by a DA-1 form). Someone says that “world” based funds are better than manual diversification with few ETFs – but they have higher TERs. Someone says that the more the better (I have a friend that owns a lot of different ETFs). Someone says small caps are better than large caps. Someone says you can’t live without emerging market… A lot of information that needs to be processed and decisions that must be made. Ideally by end of the year. It’s still ok by end of January 2017, since I’ll get yearly bonus and want to invest it heavily.
Stocks & ETFs – Numbers. I plan to have roughly 50K available to be invested by end of January 2017. December and January earnings will be huge (25K each). I plan to diversify by investing more, i.e. minimize selling current assets (but I’ll surely cut half of S&P 500 Tech ETF, row 7 of my NW) in favour of differentiating by buying other assets with freshly invested money.
I currently have account on 2 Swiss banks: UBS and PostFinance. I opened a UBS accounts family (a checking, a saving, a rechargeable credit card and a Pillar 3a saving accounts) on day 2 in Switzerland, back in 2012. I went there because they had special offers for Hooli employees. Two years ago I opened another position at PostFinance (a shared account with Miss RIP, a personal checking and saving account for Miss RIP, a USD account and a EUR account). I’m fine with that but I’d rather handle a single bank. Everything would be simpler. I’d like to close my UBS position, since it’s costing 10 CHF per month and providing nothing special. No rush, but I’d like to do that in few months.
few ebills (health insurance, electricity, phone, internet) go directly to UBS, need to change that.
I have a Pillar 3a account with them. Need to transfer that to PF. Not sure how it works.
My only “credit-like” card is with UBS. Need to get a card from PostFinance or, like most Swiss do, get a Cumulus credit card with zero yearly costs and a personalized picture on it, cool!
I got contacted by several people interested in my apartment in November. Few of them disappeared but a couple of them are still interested. Renting it out would be great. I’ll invest some time to get this done.
Project X (still secret) needs to be resumed after Mexico, need to invest energies there too.
I had to slow down with posting in November, too many other things to do (aaaand 2 weeks in Mexico). I must admit I can’t write as much as I would like, for now. Life is too complex these days. I set the goal of writing one article per week (or 2 if I manage to make them shorter).
Anyway, even if I don’t publish I still see traffic on my blog, which is both awesome (people like what I write) and awful (I want to write more and I don’t have time).
I’ve been contacted by people asking for my help, which is what makes me feel so good about what I’m doing with retireinprogress. I had more joy thanks to this blog in 5 months than in 15 years engineering career.
I’ve been added to a monevator list of FI blogs after few people protested for my absence from the first draft. What to say… read the previous sentence about joy. Since then visits to my blog spiked for a while. Again, both awesome and awful. I want/need to do more!
“hey RIP, how was your Mexico trip? I just came here to hear about that.”
Oooh, I was missing you my friend! Keep following, Mexico trip report is coming next week 😉