August 2016 Financial Update – “how to save more than 80% of your take home pay” edition

Hi all, August 2016 is gone. Amazing weather and a lot of fun here in Switzerland! As end-of-month routine I’m here showing my numbers!

Off topic: I’m getting lost in a very long post about investments that probably will have to be split in several smaller posts. I’m glad it’s end of month and I can take a break! E.T.A. for the investment post(s): soon-ish.

Disclaimer: I know I came up with 1,200,000 Euro FU Number against an initial gross estimation of a Million, but for now I decided to keep RIP Logo Million based. I need time to think about it.

The good news: this was an amazing month savingwise. We’ve saved more than 80% of August income! The report is about my individual economy and the shared one. Since most of the expenses are shared, I can claim I saved close to 100% of my individual economy. I’m not reporting here Miss RIP individual data. She saved somewhere in the range 90-100% too. If we’d merge all together we’d be over 85% saving rate this month. AMAZING! Aggregating over 2016 we’re not yet at 70% (that Platinum badge on MustachianPost…) but very close. It helped to have been to Hooliland for a week with almost zero costs on my side 😉

The bad news: September is not going to be so awesome. I postponed some expenses to September (tickets to Italy, November expensive trip booking,…) so I expect my saving rate for next month to drop below a shameful 60%.

The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.

Overview

Last month we’ve seen the biggest NW delta in our finances, mainly due to crazy investments returns. This month we’ve achieved another +20’173 CHF (+12’175 EUR, +13’103 USD) mainly due to our ridiculous saving rate above 80%. I can’t wait to see what would happen when both factors align 🙂

Major wins of August 2016:

• Minimal spendings. we can’t do better than that in this city, in this country. We were able to limit expenses even though we hosted friends, RIP Sr and started outsourcing part of cleaning duty to a cleaning lady…
• Nice Hooli stocks vesting.

Major losses of August 2016:

• Milan’s apartment is not rent out. First completely wasted month in 6 years.
• No daily trips, almost no dinner out (but I didn’t miss them that much!)
• We hired a cleaning lady for 25 CHF per hour, 4 hours every 2 weeks. Average 200 CHF per month. We both work too much and we don’t want to spend too much time on chores. A cost that can be easily cut when FIREd.

Other facts:

• Stock markets have been pretty flat in August but Swiss Franc dropped a little with respect both Euro and Dollar. This boosted my NW increase in CHF (but penalized growth in other currencies).

Incomes

Income for the month was 16’146 CHF (cell K51), an above average month due to a nicely sized Hooli stocks vesting. Income components are:

• ~9000 CHF my base net salary
• ~4000 CHF Hooli stocks vesting.
• ~2000 CHF my Swiss pension Pillar 2 contributions
• 1000 CHF MissRIP contribution to shared economy

I explained last month why I consider Pillar 2 contributions in my take home pay and how I and Miss RIP manage individual and shared economies. Nothing changed this month.

Total income in 2016 so far is 119’607 (cell P51).

Average is 14’950 per month. The average is expected to grow by end of the year due to more vesting coming in December and 13th month.

Forecast for the end of 2016 is still ~190K CHF. No surprises here.

No target set by end of year. As I previously said, I’ll try to set an income target for 2017 later this year.

Spendings

Total spending for the month was 3’190 CHF (cell K52). Amazing below average month! We were below 3K till last weekend of August, where we hosted a friend and had extra expenses. Anyway, I have been postponing some expenses to be able to end up below the 3K psychological threshold and I failed. Now I expect a more expensive September.

Here’s the detailed list of expenses (in CHF):

• 1440 – Flat rent (1300) and condo fees (140).
• 446 – Groceries. I tracked grocery this month. It’s higher than expected since I’ve been a week in Hooliland and I eat breakfasts and lunches at Hooli, but we had guests and cooked several times my very famous RIPpizza at home!
• 440 – Health Insurances (mine 213, Miss RIP’s one 229). I pay the very minimum here with the crappiest insurance company in Switzerland. Maybe in 2017 we’re raising this expense and switch to a better insurance.
• 200 – Tax declaration fees. Once per year I need to work out my taxes and I use an adviser here. I know I could do it on my own and probably I’ll do sooner or later. Due to last year’s Pillar 2 and 3 buy-ins I should get back 5366 CHF 🙂 I account for them in my NW at row 34. They’re not part of the cash flow though. If you take a closer look, you’ll see that in July (cell J34) I had a single entry of +5000 while in August (cell K34) I entered “+5366 -784”. First factor is tax return 2015, second negative factor is tax return 2014, which is negative since I didn’t do any tax saving action beside Pillar 3 buy in. Anyway, tax returns balances take 2 years to materialize so I expect next year to be billed 784 + interests while the year after I should get the 5366 + interests back. This month I actually got ~280 CHF back for tax return 2013! I don’t consider that as income so it’s not in the earning-spending-saving analysis.
• 118 – Utilities. Energy. Television, Internet, Phones.
• 113 – Local Transportation. Miss RIP monthly public transportation bill plus my occasional tickets (I bike in August) plus guests tickets.
• 106 – Train Tickets to Milan (both for me and Miss RIP, September trip). Maybe in future I should bill such expenses to the month when they are “consumed” instead of the month when they happen. Anyway, usually we do more in-advance tickets purchases that we did this month to save money (full price of our tickets would have been 204 CHF, saved almost 50%).
• 100 – Cleaning lady. That’s a new entry. Started end of the month. 100 CHF every other Friday. Actually in September there are 5 Fridays and 3 of them are “cleaning Fridays” so we’ll spend 300. Ouch. P.S. 25 CHF per hour is the barely minimum you can get here. Actually it’s pretty cheap, most of our friends pay 30 or even 35 per hour.
• 58 – dinner out (at a Theater festival). Nice experience thanks to the festival. The food was shitty and touristic. Next time I’d bring sandwiches from home and just buy a couple of beers at the festival.
• 54 – Dominion Empires + card sleeves (an expansion of a Boardgame I love). My monthly splurge. Love it!
• 40 – Swimming pool. Public swimming pools here are very cheap. 8 CHF per entrance but if you buy a card with 6 entrances you pay only for 5. So 40 CHF for 6 tickets. Less than 7 CHF per ticket. Actually we both got our yearly swimming pool card expired (240 CHF each) and we’re thinking if it’s worth to renew them.
• 30 – Gifts. Birthdays.
• 45 – not tracked. I guess mostly groceries though.

Total spending for 2016 so far is 36’490 CHF (cell P52).

Average per month: 4’561 CHF. Still too much.

Forecast for End of year: 63’000 CHF. Actual math says 54.7K but we’ve expensive vacation plans I showed you last month.

Target for End of the Year: 60’000. Another couple of “cheap” months and we can make it. Last year we spent roughly 60K. I still can’t figure out why we are going to spend more this year.

Savings & Saving Rate

Total savings for August is 12’956 CHF (cell K53). Wow. Yearly savings so far are 83’116 (cell P53) and forecast for end of year is 125K. I don’t think we can do that with some big expenses coming in the following months.

Saving rate for August is 80.2% (cell K54). Well above the current 2016 saving rate of 69.5% (cell P54), very close to the platinum badge in Mustachian Post’s ranking of European bloggers saving rate indexes. Sadly, next months we’ll experience a substantial drop but in November/December thanks to Hooli stocks vesting and 13th month I still set my Target for End of the Year to 70%, even though forecast says 66%.

Net Worth

Net worth at the end of the month is 528’246 CHF or 481’126 EUR or 536’890 USD.

Delta for August 2016 is +20’173 CHF (+3.97%) or +12’175 EUR (+2.60%) or +13’103 USD (+2.50%).

Another amazing month where the NW grew more than the savings (in Swiss Francs). As you can see, in EUR or USD our NW grew less since the CHF lost something against the other two reference currencies.

The logo of this blog changed accordingly from

To:

With a jump of +1.2% in a month.

Let me remember you that the progress bar is tracking advancements toward the FU Number (well, not exactly: I still use a million Euro as 100%).

Net Worth cumulative 2016 Delta so far: +112’470 CHF (+27.05%) or +98’778 EUR (+25.83%) or +121’701 USD (+29.31%).

Forecast end of year 2016 Net Worth (CHF only): 584’500 CHF (+169K CHF, +40.58%).

Target for End of Year: last month I tried to be conservative but forecasts are getting better. Still I know I’ll be spending more in next months, so let’s play safe. The 1 Billion Italian Lira (516’456 EUR or 566’000 CHF) seems the right psychological target. Let’s try to join the three commas club!

Forecast for FIRE – 100%: February 2020. That’s less than 3.5 years from now. Well, this is just a stupid linear forecast. We’ll have more expenses in the future and maybe kids and who knows… We can’t keep up with 80% saving rate forever!

Target for FIRE – 100%: December 2020. Let’s be aggressive and cut 6 months respect the original plan of “retired in 5 years”. Surely the forecast doesn’t take into account increase in spending but it also doesn’t account for salary increase, promotions, Miss RIP individual economy, her eventual promotions… We can make it!

Next Steps

I had a cash replenishment plan last month (go take a look), and I’m sticking with it. I didn’t invest this month. I actually uninvested a little by selling Hooli stocks for 15’700 USD. I’m going to buy Euro to pay off my 9K Euro RIP Sr. apartment loan in October.

I’ve roughly 25K CHF in my checking account, 6K of which are reserved for November vacation. I said 10K previously and I still think we’re going to spend 10K but they’ll come out of shared economy. We have a reserve of 4K in our shared account and I plan on depositing 8K extra for the vacation. As explained last month, I’d tax myself 6K and Miss RIP 2K. So the impact on my personal economy is 6K.

I’d like to do Pillar 2 (and maybe 3) buy-ins of at least 25K total. Considering I’ll sell more Hooli stocks and save at least 5K per month on my personal account it means I can restart investing in a couple of months! Actually I could invest now and use the money that are coming in the future months for Pillar buy-ins, but I’d rather wait since market seems very high now (I know it doesn’t make any sense what I just said).

Anyway, before investing more I want to write down my IPS and diversificate more.

How was your August?