Hi dear readers, I miss you so much 🙂
June has been a very intense month for RIP family. A good month overall. I feel much better now compared to a month ago, when I wrote my previous update. I know, many of you would like to read more personal stuff, but since I’m still facing a delicate work situation I’d rather keep most of my thoughts to me until my situation gets resolved, which I think is happening sooner than expected. So please, be patient. There will be fireworks at the end.
On the “financial update” itself: I have mixed feelings about these posts. One one hand it’s my accountability tool and my “heartbeat” posting schedule. Posting the F.U. forces me to behave well financially (else I face public shame) and forces me to write even when I’m not in the mood to. I guess without this blog I’d be much less wealthy then I am, thanks to accountability. I owe you 100k at least 😀
Another positive aspect of posting a monthly update is that I keep track of what happens to me. Each 1st of the month I start a draft email where I add relevant information for the monthly update and send to myself at the end of the month. It’s a one pager monthly review. I like it and find it very useful.
Connected to the previous point, keeping track of what happens helped me facing market downturns from Brexit onward. The 2018 Q4 (October-December) 20% loss has been the worst so far. I think the total portfolio drawdown was in the range of 70-80k, mitigated by high savings. I must admit it was not easy to stomach, but the fact that I put my journalist hat on to document what happened and how I felt helped a lot. I forced myself to adhere to what I preach, i.e. keep greed and fear at bay, with good results.
And last, but not least, I think there’s some positive for you too. People like to compare my spending and my investment decisions to theirs. Plus I try to make it fun, which I think it’s well received.
On the “cons” side, it can be boring and not interesting for many of you. Sometimes it feels like a chore to me, especially when I have other topics I want to explore. And the FIRE metrics, the one I wanted to track closely and share the progresses publicly, they are becoming irrelevant now. Until I define what is FIRE for us, what’s our concrete plan, where we are going to live, what are our monthly real expenses and – more importantly – what I plan to do with my skills and my time, and the likelihood that I can generate money… until then, FIRE metrics are meaningless.
But I think the pros outweigh the cons, so I’ll keep writing my monthly updates, sorry if you’re getting bored 🙂
As a dear friend (and reader) suggested to me, it may be possible that the financial update would become a separate section of the blog in the near future, a static page continuously updated, while the blog remains more “meta”.
For now, as a minor format change, I try to make the updates shorter and less data intensive.
So… let’s get started!
Full Net Worth document is available as always on Google Drive.
Note: I had to disable comments on many of my spreadsheets. Apparently some people can’t help but spam any available surface. Sadly, it’s enough to have a handful of spammers to destroy a tool. I use comments on my spreadsheet as complementary information attached to the material I share. Sadly, Google docs doesn’t allow to only give permission to read comments. If I share a doc with commenting rights, everybody can read AND write comments. Google, here’s a feature request for you!
Yes, it was an awesome month! Mr Market reached all time high, and all my funds except IPRP (real estate Europe) gained between 4 and 6%. More on IPRP below 🙂
NW Delta is +51.9k EUR, all time high! NW Delta in USD is more than I value my flat in Milan. I could have given away my flat for free and still be above the water in June! More on my flat below. Spoiler: we’re there, I’m close to sell it!
NW in EUR crossed 1 Million, making us MillionEURs! The last comma! I expect this to not last, a financial crash might be behind the corner and I don’t think I’m going to keep earning like this for long. In USD and CHF we seem to be better positioned into the permanent millionaire status, even though anything could happen. I never said that words, you’re all witnesses 😉
Cash Flow – Income
Obviously Mr Market alone wouldn’t have been enough for such a spectacular month. This was a “fat month”, thanks to a huge stock vesting event, a 26.5k USD (gross) one.
Total estimated Net Income (after tax) is: 35.4k CHF.
Income streams breakdown:
- Salaries: 13.8k CHF (gross, pre-tax). A normal month. My base salary plus Mrs RIP unemployment benefit.
- Hooli Stocks: 26.5k USD (gross, pre-tax). A very nice month. In case I’m still around, next vesting event is in December, roughly same size of this one.
- Dividends: 1735 USD + 625 EUR (gross, pre-tax). Many ETFs I own distributed dividends this month. Some others will in July. Paid some US withholding tax, will get it back and pay Swiss taxes on it. Business as usual.
- Mr RIP Pillar 2 Contribution: 2652 CHF. As usual.
- Expected Income taxes: -9266 CHF. According to my 22% average tax bracket estimation.
- Expected Lump sum Tax on Pillar 2: -159 CHF. According to my 6% lump sum tax estimation. Maybe I should raise this one.
- Gift to BabyRIP: 50 EUR. From a family member.
A note on the huge June NW Delta and Income: in the past I used to account for pro-rated expected income as “virtual”, like not-vested-yet stocks and yearly bonuses. In that case the “rich” months were not special in terms of expected NW Delta compared to the “poor” months. Starting in 2019 I don’t account for pro-rated compensations anymore, since I don’t know if I’ll get them (the only exception is the pro-rated 13th month, since that’s guaranteed in any case). That means that cashflow-rich months impact the NW Delta more than they used to be in my spreadsheet in the past. I know, it should be the norm… but I don’t like spikes in my metrics due to arbitrary paying dates. The yearly bonus reflects a yearly effort and should affect each month proportionally, I think. Why am I not pro-rating stocks and bonuses anymore? Because I get the bonus by end of January 2020 and next huge stock vesting by end of December 2019 if and only if I will still be a Hooli employee on these dates… and I’m not sure I’ll still be around.
Cash Flow – Expenses
Total Expenses: 6966 CHF.
It’s been an expensive month, mainly thanks to vacation planning and advances for scheduled vacations. That 2.8k CHF in category Travel is a punch in the stomach – and just the tip of the iceberg, we’re going to travel a lot!
Some travel highlights:
- 874 CHF – Abruzzo in August. We’re going for two weeks in Abruzzo, an Italian region in the east coast, the Adriatic sea. The expense amount you see is just for the flights (in August…) and a lodging reservation advance. Another 2-3k is expected here. It’s not a kind of vacation I’d do regularly, but we wanted to join a couple of very close friends and they only have availability in August – like many Italians. It’s a super expensive vacation and I also expect it to be barely acceptable in terms of quality and crowdedness.
- 640 CHF – Black Forest (twice) in May-June. At the end of May / beginning of June I had a personal retreat in Black Forest (Germany) alone, to think and write. Future, midlife crisis, decision making etc. It was very fruitful and I took many important decisions (will share in future). I picked a crappy room on Airbnb and a train from Switzerland. I spent 6 days in Tuttlingen, walking along the Donau river and relaxing in TuWass, their SPA. Amazing time alone, I really needed it. Then I wanted to show my new magic place to my family and brought Mrs and Baby there a couple of weeks later, in mid June. We stayed for a weekend and had great time together. 640 CHF is the total cost of both vacations. Totally worth it!
- 524 CHF – Croatia in July. We wanted to take 10 days for the three of us and head to the beach. This is just the price of the flights from Switzerland in July. I know, it’s expensive, but flights from/to Switzerland are f***ing expensive all the time, and 10 hours of train/car with a baby is not an option. While I write this post (July 8th) we’re 99% sure we won’t go to Croatia and lose the flights money. But that’s for a good reason: I’m 99% close to sell my Milan’s Apartment in Mid July. one of the potential buyers got a delicate mortgage approval and we should Carpe Diem and not postpone the sale date, sadly right in the middle of our planned vacation. It means canceling our vacation, which hurts, but there’s no rose without a thorn they say.
- 433 CHF – Milan. Mrs and Baby went to Milan for few days and – as always – spent money on relatively cheaper items and services compared to Switzerland, like getting a haircut and buying clothes. I didn’t itemize their expenses, everything went into “travel”. A thing I might change in the future.
- 313 CHF – Relatives. Mrs’ mother and my father came visiting us (not at the same time) for few days in June. We paid them transportation costs and maybe a dinner out. I consider these expenses as travel.
Excluding travel, the other expenses worth mentioning are Italian housing taxes (348 CHF, I hope it’s the last time), groceries (<700 CHF) and not much more. Excluding travel and Italian housing taxes (getting rid soon) this would have been a cheap/standard/below-4k month.
Cash Flow – Savings
Total Savings for the month: 28.4k CHF. Veeery good.
Saving rate for the month: 80.3%.
Saving rate so far in 2019: 76.3%.
The green pac-man is reassuring 🙂
Another month where I didn’t work on my “I should review my metrics” TODO item.
I’m transitioning toward a “build the life you want, then save for it” approach instead of “suffer, save a shit-ton of money, then you’ll be free“. Anyway, I’m a number nerd so I still want to keep track of my progresses toward big goals. According to the spreadsheet we’re 84.90% FI (assuming 3.5k EUR initial gross withdrawals and a 3.5% SWR). Fun. But meaningless. But fun.
The sheet says 12 months to go 🙂
Swiss metrics are less optimistic, even without considering the inevitable growth of our future expenses.
I recently added a graph to my spreadsheet that gives meaning to these seemingly meaningless numbers. Take a look:
Here you can see current expenses in CHF (blue), ideal expenses in CHF (orange, going down over time because in the spreadsheet they’re expressed in EUR), what we could afford to withdraw each month according to our SWR (red). The closer the red line gets to the other two, the closer we get to FI 🙂
Financial Facts more or less in chronological order
Final calculation for Staat und gemeindesteuern (city and cantonal taxes) arrived mid June, and it was how I expected, i.e. better than expected! Got 10.3k CHF back instead of the planned 8.9k. They didn’t tax virtual dividends on some of my accumulating ETFs. Well, thank you so much Switzerland!
Pillar 3A for me: I deposited the 2019 jackpot of 6826 CHF on my PostFinance Pillar 3A account. Didn’t buy any Pillar 3 fund, just keeping it in cash. My Pillar 3A with PostFinance totals to 51.2k CHF (7 years of maximum contribution). current breakdown is 14.4k cash and 36.8k invested in Pension75. Mrs RIP Pillar 3A is 15.2k CHF, all invested in Pension75. Total size of our Pillar 3As is north of 65k CHF. Maybe it’s time to pick a better provider like VIAC?
I would also like to deposit some money into Mrs RIP Pillar 3A for 2019. I will do it in July once we clarified if her tax advantage cap is the regular one for employed people (6826 CHF) or 20% of her salary (max 34k CHF), like self employed people. At the time of writing (July 8th) I called her unemployment insurance and clarified that her limit is 20% of her salary because she doesn’t have a Pensionskasse (Pillar 2). Will deposit 20% of Mrs RIP’s January-June unemployment contributions in mid July.
Needless to say that today I would put as much as I can into tax advantage accounts: we earn a lot, are into 30+% marginal tax bracket, and may leave Switzerland relatively soon (thus getting contributions back soon). Things may change if our income would drop (it will) and we’d decide to live in Switzerland for the foreseeable future. In that case pension contributions would no more be high priority.
Dividends! End of quarter dividends started flowing into my IB account 🙂
VYM, VYMI, IPRP, and WING announced and paid dividends in June.
On VYM and VYMI (high yield stocks US & International) I paid the usual US withholding tax:
Total withholding tax paid in 2019 so far is 480 USD, I expect to reach 1k by end of year and I also expect to get it back by filing taxes for calendar year 2019. Let’s do some math. I will file 2019 taxes in summer 2020. Give them a couple of years to react, that means I’ll get my money back in… 2022? I expect my spreadsheet to have more rows for handling taxes than other assets 😀
IPRP (real estate Europe) and WING (High Yield Corporate Bond) are Ireland domiciled, so I have no control over eventual withholding taxes on each involved state.
VOO and VB (US stocks large and small cap) also announced dividends at the end of the month. For both ETFs Dividend-Ex date happened in June but payment date will happen in early July. I accounted for dividends in June as “others” and they’ll appear in July cash flow (but no impact on NW growth next month).
About IPRP, it seems to be inversely correlated with my other investments, which is nice:
And guess who sold 236 shares at 42.345 (10k EUR) at the end of May and forgot to tell about it in last month update? Yep, the good old Mr RIP, the market timer 😀
Rationale behind is that I moved REIT inside stocks ideal Asset Allocation and reduced its weight. And it was the only ETF in the green in May. Needed to sell.
About selling, I was also overallocated in European Large Cap, so I sold 101 MEUD stocks at 156.95 (15.7k EUR) in June.
I’m selling and not buying much. I’m accumulating cash due to uncertainty in my near future and maybe as a subconscious effort to time next market crisis. I’m holding more than 90k EUR cash/other/taxes.
Speaking about taxes, I did a stupid thing and missed Italian property taxes deadline (June 16th) by 5 days. I hope they won’t come and torture me. Or worse, fine me for billions Euros. There’s no such thing as “low enough expectations” for Italian stupidity and bureaucratic complexity.
The day after I paid my property taxes my Italian realtor told me: “one of the desperate offers for my flat has been approved for mortgage, we should be able to sell the flat next month“! That’s great news! I try to keep my expectations low since things can go wrong at each step and the machine is full of broken cogs, but at the time of writing this post (July 9th) it seems I’m really REALLY going to sell that shitty apartment!
Time to celebrate!
Some Personal facts & Blog & Midlife Crisis
Ok, let’s add some personal update too, but don’t expect the full story here for now 🙂
I’m on sick leave. Burnout. Since forever – it seems to me. The likelihood I’d be back to work at Hooli after my sick leave ends is low.
At the end of June I went to my doctor and told him:
“I feel better, much more relaxed 🙂 but I still can’t function normally in front of a source file, a compiler and an editor. It feels like these things are so distant from me. I shiver at the idea of having to spend dozens of hours to find which code to cut&paste to patch undocumented code written by someone who left the company and other stuff like that… But as I said, I feel much better now. What if I just quit? 🙂”
He suddenly replied:
“No no no you MUST recover! if you quit now, you are not ready to get a new job… Then what you’d do? So let’s do this: take another month off and try to resurrect your passion for software engineering! Write some code, I don’t know… Else the only option is to quit and get unemployment benefits…”
Well… it starts to feel like cheating, but there’s some truth in his words. Maybe he’s right. But I don’t know, I think I need a real break from software engineering. I also have a Smithereens interview scheduled in October, but I don’t know if it makes sense. I’m still burnt out and I probably want to try new roads, like writing/blogging/financial advising/tutoring/whatevering. Anyway, I don’t want to add much more to this for now. I’m happily taking another month off. In the end, I asked for a three months unpaid sabbatical few months ago, who am I to reject money for the same thing after they declined my request at Hooli?
As I told my doctor, I feel much better now. June has been a very good month from so many angles, and I need to thank those who took time to help me. I’ve met friends, readers, friends who read my blog, colleagues, colleagues who read my blog, colleagues who are also friends who also read my blog and any combination of the above. Many of you reached me out and wanted to help. It seemed like a reverse group therapy session, where I was the sole patient and had many therapists helping me 🙂 I took notes and I’m going to publish a couple of “meetings” in the future. I had one of the most fruitful sessions with the blogger behind KM Finanzen, whom asked profound questions and dug very deep into my situation. Thank you so much! Another one I had with one of my former managers at Hooli, which is also a reader of my blog and a dear friend. He’s the best manager I ever had (I know you’re reading!) and helped me getting promoted back in 2015. He reached me out and we had an hour long video call. I’m going to publish some of the key take aways from that call soon-ish too. Thank you all, sincerely!
In mid June I also hosted my father, which I pictured many times as my frugality hero, and reviewed my situation with him. He’s more risk averse than me, and he lived in an era where people worked for the same company for their entire life. We had deep and meaningful conversation on the meaning of life, work, family, future, death and so on.
Maybe it’s just the weather. I enjoyed this sunny month off with my family in Switzerland (and in Germany), hit the water each day (river, lake, swimming pool, SPA), witnessed first steps of Baby RIP and many more volatile moments, which helped me making decisions.
I feel much better.
But I didn’t blog, I had to focus on other things.
But now I’m ready to kick your financial asse(t)s again!
About blogging… as I said I almost didn’t blog at all. I found some time to write an expert roundup for debt.com and I apologize with The Poor Swiss for not having found time for his. Sorry friend, keep up the good work, your blog is awesome!
But I miss you, my readers, as I said at the beginning of this post… it feels like “disappearing from the internet” after few months of low presence. I met many of you in June, and you helped me a lot, but I miss being helpful. I’m not used to “take”, I prefer to “give”. One of the most fulfilling days in June has been meeting a colleague/reader who proudly showed me how he copied my NW spreadsheet and adapted it to his own situation. He wrote his IPS, started tracking his expenses, his assets, and finally heading somewhere. He thanked me. He didn’t know how much his family was spending and where the money was flowing to. He now achieved first step in the financial freedom ladder: financial intelligence. Awesome! This is the impact I want to have (but I want it on a larger scale)! Knowing my situation, this colleague/reader is doing his best to keep me at Hooli, suggesting potential team/role changes. I really appreciate that. That’s the power of reciprocity, networking.
That’s all for now.
More will come.
I hope you enjoyed my personal updates!
That’s all for June 🙂