March 2017 Financial Update – Marriage edition

Hi RIP voyeurs,

March 2017 is gone, spring arrived earlier this year in Switzerland. At the time of writing this post it’s 23 degrees and I’m biking to work wearing only shorts and t-shirt!

Welcome back to my monthly update. As usual, the reference doc is my NW spreadsheet.

Overview

A very unusual month and hard to compare with others, mainly for a special reason:

♥ We got married ♥

Yes, Miss RIP is now finally Mrs. RIP. Ok, I previously explained that we’re going to celebrate in Italy later this spring with relatives and friends, but we got legally married few days ago in Switzerland! So yeah, I’m getting married twice this spring. Cool. And turning 40 years old. Less cool.

Ok, back to the finances. From a financial standpoint, getting married in Switzerland means life is split in before and after. We keep as individuals, what we had before. We share what we’ll earn after. It means we now have individual economies and a shared economy. Since almost 3 years we were already contributing into a shared account so we’re used to a shared economy. But we did that just to cover for shared expenses, not to accumulate wealth. Contributions were similar to taxes. Each one had to take individual decisions to manage his/her own wealth.

Now every source of income goes directly into the shared account. We’re responsible together for every new purchase, debt, investment. To make this manageable, Mrs. RIP delegated shared wealth management to me – but I demanded we do monthly reviews together and I’ll also offer some basic financial lessons to her. I’m not ok with being alone understanding our finances.

About expenses, we need approval of both for shared expenses above a certain amount (still undefined) and we allow 500 CHF each for monthly individual expenses with no question asked. At the end of each month we send 500 CHF to our individual accounts.

Net Worth. I used to track my net worth plus the shared one. Since we plan to reach FI together and since I just care that we, together, will reach FU Number, I’m going to merge the NWs and track the sum of them. I know, it’s risky for several reasons:

  • Mine is bigger. I mean my NW is an order of magnitude greater than hers. But we’re together and I don’t care. I’d already be FI if I had to cover just for my personal expenses.
  • I lose a bit of control over Saving Rate and NW: every individual Mrs. RIP expense would impact the saving rate and our total NW. But yeah, that’s true anyway 🙂
  • I lose a bit of control over Asset Allocations: Mrs. RIP has some cash, more than what’s reasonable for a normal emergency fund. She’s not into investments and I don’t want to force her. I’m ok to push for aggressively managing our shared wealth, but not her individual one. Summing our NWs would skyrocket the cash component. Not a big deal, I will compensate as much as I can reducing my own cash reserve and the shared one.
  • I lose expenses trackability: I don’t want to (and I totally shouldn’t!) track Mrs. RIP individual expenses, but I’d like to get a sense of total amount. I’ll keep accounting individual expenses I see on our credit card into their own bucket, but her cash payments are not tracked individually. When she withdraws cash, I just consider it as a Leisure expense at withdraw time.

Given all the above, this month we had an obvious nice jump on total NW, with a NW Delta of +45,331 EUR I’d like to fuzzy a bit Mrs. RIP’s NW so I won’t provide many breakdowns.

Anyway, as usual, here are the major wins for March 2017:

  • We got married. It’s a win 🙂
  • Mr Market got a cold mid month but he’s back on track! My Euro Stoxx600 ETF, where I invest ~150K EUR, went up 3%. Both Emerging Markets and Pacific went up 2.5% – 3%. US market ETFs stayed stable overall, with Tech (again!) covering for Small Caps’ losses.
  • I’m the new swordmaster! I did something unprecedented (well, I’m not sure) in Swiss history: I contested a medical bill and got a reduction! Well, not much, just 16 CHF from 354.40 to 338.60 but believe me it’s a great feeling. The story is: understanding Swiss medical bills is impossible, they have hundreds of complex entries. Even though my German is not very good, it’s good enough to understand that they charged me ~40 CHF for a “phone consultation” of three 5-minutes blocks, i.e. 15 minutes. What actually happened is that they call me to tell me “your blood exams are good, let’s meet again end of March, bye bye“. I went thru my call history and I found the call to be 2 minutes and 9 seconds. I walked in their building ready for a fight and I obtained a 5 minute block cut from our “phone consultation”. Plus I canceled the checkup visit.
  • Hooli stocks vesting. Extra money. I sell them automatically as soon as they vest. The proceedings are sent to my IB account ready to be invested. I have vesting events in March, June, September and December. June and December are major vesting events, March and September are minor ones.

Losses of March 2017:

  • Too many expenses. Dangerously close to 7k CHF. Ok, there are one-offs here, like 2170 CHF Wedding related, 830 CHF travel related, the above mentioned 340 CHF for the medical bill, but there will always be one-off expenses every month (hopefully not wedding related after July!).
  • Stronger EUR currency. Since I measure our NW in EUR and we own assets in EUR, CHF and USD, having a strong EUR means our NW performed worse. The USD was losing 3% till few days ago, it eventually recovered most of if.
  • Naked Hooli salary. No bonuses, just my naked salary this month. Sad.
  • Having hard time keeping up with my waking up early habit. Several late evenings both due to theater and celebrations of various kind. But it’s ok and I’ll be back on track soon.

Other Financial Facts

  • Changed Target Safe Withdrawal Rate (SWR) to 3.25% after a very deep dive thru the incredibly amazing Ultimate Guide to Safe Withdrawal Rates, on earlyretirementnow blog. Everyone who’s planning to retire on investments should definitely read all their posts! Previous target SWR was 3.33% so it means we’re playing it safer and we’d require a bigger FU Number.
  • Increased Target monthly allowance to 3000 Euro per month. Another safety margin at play here. Another FU Number increase. I don’t know if it will be the last one, I may play with monthly allowance more in the future. Anyway, these two factors pushed FU Number to slightly more than 1.1M EUR.
  • I’ll Track Saving Rate (SR) with and without Wedding Expenses. Wedding is (hopefuly) one-off. We’ll face wedding expenses till July (Honeymoon) and forecasts are north of 25k EUR, including Honeymoon. My principles say that I should save at least 50% of my take-home pay and I want to measure it against standard expenses, not extraordinary ones.

Other Facts

  • I lost weight. How much? Roughly 5 kg. How? A combination of few things worth a post on his own 🙂 Here’s a teaser trailer: strong motivation (getting married in June in Italy, want nice pictures), accountability (signed up for a half marathon happening in few days, a 5 days hike trip in Italy with Mrs. RIP during Easter and a triathlon in August) affirmation (got inspired by Tim Ferriss Show episode with Scott Adams, anyway, more on this in its own future post), mindfulness eating and tracking. I’m not done. I plan to keep going till end of the year and hope these new habits will stick and become the new normal.
  • Theater Acting Intensified. I’m on stage these days. 2 weeks of plays. We spent most of March doing rehearsals even during the weekends. I love this kind of life. That’s another taste of FI. I remember back in 2002 when I started (ouch, 15 years have been passed, how old am I??) I was close to quit my studies to go all-in with theater acting. Good thing I didn’t, but at the time I wondered “what if…”. Well, reaching FI means I can discover “what if”! I’m really craving for it. I look forward to having more time to play even more intensely. That’s yet another reason not to go out for dinner or spend money on happinessless things.
  • I blogged almost ZERO this month. Too many things on my plate. But I’m way happier thanks to increased physical activity, more outdoor time and theater acting, so I don’t actually care. But yes, I have a new series (and several dozens of new post ideas…) for this blog coming soon. Stay tuned!

Numbers & Details

Total Income for the month was 16,770 CHF (cell G40). High income due to Hooli stock vesting and Mrs. RIP salary. I’m not counting Mrs. RIP Pillar 2 contributions yet.

Total Expenses for the month were 6,932 CHF (cell G41). Without Wedding expenses 4,765 CHF (cell G45).

More details on my expenses sheet.

Expenses highlights:

  • Wedding. 2,167 CHF, some payments for rings, dresses and a luxury lunch with close friends here in Switzerland.
  • Housing. Italian condo fees 120 EUR.
  • Health. 338 CHF for the doctor visit and the phone consultation I mentioned above.
  • Transportation. Good month here. Few trains tickets purchased for Mrs. RIP’s family to come to visit us beginning of April (to see me acting) and no monthly local pass for me. I bike to work with this nice weather!
  • Travel. Paid off our 5 days hiking trip with Mrs. RIP along the Via Francigena during Easter (in a couple of weeks!) and purchased some gears for it, mainly hiking shoes (mine wore out after more than 10 years).
  • Leisure. As I said, Mrs. RIP cash withdraws go here.

Total savings are 9,838 CHF (cell G42), not bad, above the acceptability threshold.

Saving rate for the month is 58.7% (cell G43), excluding Wedding 71.6% (cell G46).

Saving rate for 2017 so far: 71.4% (cell Q43), excluding Wedding 77.4% (cell Q46).

Net worth is 623,424 EUR (cell G17), Delta is +45,331 EUR (cell G18), percent 7.84% (cell G19). As I said, these numbers are kind of meaningless this month since we joined our NWs.

The progress bar changed accordingly, from 57.81% to 56.28%, with a step of -1.53% toward the big goal. This is because we moved the target away.

Forecast for 100% FIRE: 34 months left (+4 months), i.e. forecast Fire Date is January 1st 2020, (cell V10).

Current Monthly allowance: 1,688 EUR (+136 EUR, cell V13).
Current Withdrawal Rate – Real:  9.08% (-0.44%, cell V15).
Current Withdrawal Rate – Ideal: 5.77% (+0.00%, cell V16).
Years of Ideal expenses accumulated: 17.3 (cell V19).

Next Steps & Other Updates

  • Not closed UBS account yet, too busy. Will April be the month?
  • Not made any decision about Pillar 3a investments for both me and Mrs. RIP with PF yet.
  • I have 10K CHF and soon 3.3K USD sitting on my Interactive Brokers account. Need to think what to do with them.
  • Not planning to invest shared money in April, even though our cash reserve is higher than planned. Keeping cash for Wedding & Honeymoon expenses.

How was your March?

Mine was veeeeery intense 🙂

18 comments

  1. Congratz with the wedding! And about getting 40: it is not so bad as it sounds. I have 7 months of experience right now.

    For now, I keep the SWR at 4pct. As I do not know what the CPAE will be by the time we retire, I do not adjust yet. Time will tell…

    1. Thanks ATL 🙂
      Well, about the SWR I’m playing extremely safe. I think I can easily afford 3.5% with almost no risk (I don’t think I have an horizon of 60 years of retirement), but I’d like to aim at least at capital preservation.
      Plus, I’m doing my math with current CAPE. If CAPE will go down (probably due to financial crisis) then I can adjust my SWR again. My numbers always mean “what would I need to retire TODAY?”

  2. Hi Mr. RIP. Thanks for the update, and congrats on the wedding! Very minor niggle about the spreadsheet due to my OCD: why not put the currency indicator in column C for the exchange rates as well?

    1. Thanks Pedro 🙂
      Yes, done.
      I added currencies indicators for ETFs and quote currency for the currency pairs.
      One day I’ll convert currency indicators to CHF, USD, EUR (instead of F, D, E) and currency pairs the standards (EUR/USD instead of USD/EUR). It will require script change and a number of formulas to be fixed. Laziness rulez!

  3. Congrats for the great event!

    And congrats for the great savings rate. You’re killing it this year!!

    Looking forward to hearing from your cash allocation at these market levels. I just allocated some side cash into a specific stock (TGT) @4.5% yield and long-term upside potential…. let’s see.

    By the way, tell us more about how is life working at 4 days per week I’ considering that path…

    Cheers!
    Erik

    1. Hi Erik, thanks a lot 🙂
      I think I’ll stick with my IPS. I’m waiting a little bit using the excuse that we’ll have wedding expenses in the order of 20K in the next 4 months to try to “time the market” 🙂

      Life at 80% is awesome and addictive. So far I’m using extra time for training, theater acting (few intense weekends of rehearsals), relaxing and minor chores I’ve been postponing since forever. I assume after the honeymoon (beginning of July) I can finally define my new Friday routines and I’ll let you know 🙂

  4. Congrats on the wedding, good move! And welcome to the over 40yo club from one of its most experienced members.

    Good move to reduce the SWR to 3.25%. I am usually very cautious, so in my calculations I always use 3%.
    I have one question about what I have read in your FU number page linked to this post: is health care in Italy still free? Are you sure? I mean, it is if you work there, but once you expatriate, if you then go back, do you still have that?

    1. And I forgot one thing about Swiss doctors in general: I have exactly the same experience with medical bills, but I tend to let go for the time being because my employer subsidized health plan is very generous.
      However, since doctors need to include details on the bill due to the federal law on health insurance, they tend to be “generous” (with themselves) adding 5 minutes periods at the expense of the patient.
      Several times I have seen included 3 periods of 5 minutes to study the patient’s file and when I go into the doctor’s office he knows nothing about my health history.
      Other times I have seen artificial periods to be included which make the visit three times as long, even if it only lasted 5 minutes.
      My honest feeling is that, at any appointment, they need to reach quota 250 CHF or more, which is the minimum perceived standard for a visit. And they play artificially with the bill’s entries to reach that amount.

      1. Totally agree, but I have highest deductible (2500 CHF) so I pay for my bills with my cash. Yes, Hooli gives me money for healthcare but it’s a flat reimbursement (i.e. extra salary) so I’ve still incentives to fight.

    2. Hey, I’m not 40 yet!! (few days left…)
      Anyway, default healthcare in Italy is free. Once you leave you lose some benefits (having a family doctor) but if you reenter you get everything back. Problem is: free healthcare kind of sucks. You need a RX you wait 2 months. For a MRI you can wait 6 months. And things are getting worse day after day.

      1. Ooops… then enjoy your last days in the “…enta” before going to the “…anta”!

        Concerning the healthcare, that’s very interesting! I thought you had to be employed in order to get it, so that it was financed by salary deductions!
        That is a good point for retiring in Italy. Maybe a supplementary insurance can be purchased to cope with the low quality of the default one and to get some improvements!

        And what about retiring to a third EU country? In that case a private health insurance needs to be purchased or there are more possibilities, since we would not be employed there? Maybe through self-employment?

  5. Hey RIP,

    regarding the SWR, have a look at portfoliocharts.com. Plenty of interesting charts and tools to play with 🙂

    Unfortunately it’s US-centric at the moment, but the author, Tyler, is trying to find some reliable historical data to cover other markets (EU among them).

    Bottom line is that with a heavy diversification into a pool of highly volatile assets, not just stocks (e.g. long term treasury bonds, gold, … a la Permanent Portfolio), you can drastically reduce the overall portfolio volatility, hence increasing the SWR significantly (>4%), and not just the “classic” SWR, but what we all want, i.e. a perpetual WR, leaving the principal unaffected.

    Personally it hasn’t changed my target number, but that’s just since I’m counting on having to deal with Italian tax office when the time will come… (which is going to suck way more than a 1% WR I fear).

    Cheers,

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