Hi RIP voyeurs,
Welcome to my regular monthly update on financial and personal life.
Let’s not hide behind a fake smile… October 2018 has been the worst financial month of my life so far.
I don’t know if you noticed, but the market dropped more or less by 10% this month. Which is normal, expected, healthy, antifragile for the human species. But still hurts when it happens.
I must say I’m fine though. I didn’t panic, didn’t stress, didn’t lose sleep. My mental training responded perfectly to a 10% loss 🙂
October has been very intense. Not only for the financial roller-coaster, but on personal level too: a stressful return to 100% position at work, BabyRIP demanding more resources (resources well spent, not much more though), grandparents visiting for more than half of the month, bureaucracy of various kind, theater rehearsals, and social life intensified by newborns within our close friends circle. I really had to invent time to work on my passions this month.
This monthly update is long and detailed. So many things that I wanted to share with you happened to me. I decided to split the update in 3 parts:
- Part 1: metrics and cash flow
- Part 2: investments and Mr Market (deconstruction of a shitty month)
- Part 3: Personal (parenting, blogging, lifelong learning, midlife crisis, health)
This is part 1, enjoy 🙂 ( <– this is a fake smile)
Let’s look at finances and metrics.
More details can be found in my Net Worth spreadsheet (embedded here).
Main Metrics
Net worth: EUR 858.8k, -16.1k / CHF 979.7k, -16.5k / USD 971.7k, -44.1k.
Millionaire no more!
Well, let’s try to see the glass half full: I get a chance of crossing the line once again 😀 this time maybe in CHF first, since the USD overtook the CHF.
Our Net Worth is at July 2018 level, which means that if the market stabilizes during next two months it will take the remainder of the year to climb back at the September peak. It’s kind of depressing, but I must admit it’s been journalistically fun to experience and document this month for blogging purposes 🙂
Yes, I need to thank you all my readers: having committed to write about my financial evolution made me eager to experience even a slow market drop over the entire month. Thank you 🙂
Anyway, the setback in EUR is ~16k, not dramatically bad. Must say that by October 30th it was -25k. Last day of the month the market strongly recovered (and first days of November recovered even more!). If measured in USD, the damage has been -45k since USD got stronger compared to both EUR and CHF. During the worst day of the month it was -60k.
Mind that the NW delta is the combined effect of both market fluctuations and savings. This -16k / -45k is the sum of both effects. Given that we saved a lot, the market component is much more horrible than its final visible effect.
Income: 11.8k CHF.
Worst month by income since I started blogging
Just my base salary and – on the very last day of the month – some “hundreds of CHF” from Mrs RIP’s unemployment insurance. Didn’t receive any documentation yet. We suspect it’s her September unemployment subsidy. She’s officially covered by unemployment benefits since last week of September, and the math seems right.
If this is true, that’s a great news! We thought Mrs RIP unemployment subsidy would have come after 3 months grace period since she didn’t lose her job, just quit.
A great news that compensates for a shitty one. She still didn’t receive any salary for August, her former bosses don’t want to pay her and we have an appointment with them for mid November. Should have met mid October but they postponed few times. I have a lot of arguments, and I’m going to fight for ~2k expected salary. I’m ready to bring this issue to the appropriate courts if they want to fight.
Maybe one day, when the dust has settled, I’ll tell you the whole story. It’s a sad and unfair one.
Money-wise, unemployment benefits starting 3 months earlier is at least three times more valuable than the eventual loss of partial August salary, but we’re much more upset for the loss than we’re happy for the win. Loss aversion, my friends. And grief, for injustice more than money.
Expenses: 4248 CHF.
Amazing month! And let me tell you that until October 30th we were below 4k! On last day of the month 2 health insurance bills landed on our bank account. Bills for pediatrician visits and medicines happened back in August. Plus the UPC Cablecom internet and TV provider charged on October 31st the November bill, charging twice twice this month.
Anyway, expense detail will follow.
Amazing month!
Savings: 7561 CHF.
Given low income month, this is not bad at all!
Sadly, thanks to crazy Mr Market, this money has been flushed down the toilet anyway.
Saving rate: 64.0%.
Good, good. Well done, RIPs! When investments go south, focus on cash flow and saving rate 🙂
Saving rate for 2018 so far: 71.9%.
Perfect! This year will be all time record for our saving rate!
FI Metrics
FI%: 71.56% (-1.34%). Enough said.
FI Forecast Date: February 2021 (28 months left, +7 months compared to last month). Ouch, maybe I should change the forecasting model.
FI Coast Date: July 2028 (+7 months). Fluctuations get amplified.
Current Allowance: Year 30057 EUR (-562) – Month 2505 EUR (-47) – Day 82.35 EUR (-1.54). This month we lost a coffee a day (in Italy).
Current Withdrawal Rate: 4.89% (+0.09%). Awesome, a metric that went up… the wrong one!
Years of Ideal expenses accumulated: 20.4 (-0.4). Bad.
Success Rate at Current WR, based on cFIREsim, 40 years horizon, 75%/25% split (other options default): 62.96% (-2.78%). Not bad, still more than 60% chance of success.
Swiss FI%: 54.72% (-0.02%). This metric didn’t lose much. That’s because our Swiss FU Number got lowered by 30k thanks to reduced spending, which reduced spending needs projections. I can’t emphasize enough how much more important it is to “spend less” than “earn more”.
Swiss FI Forecast Date: January 2024 (63 months left, +15 compared to last month). Ouch. That’s because projected growth is slowing down.
Income Streams
Income streams breakdown:
- Mr RIP base salary (gross): 11243 CHF. This month I got an extra 100 CHF (gross) as partial reimbursement for personal development (training with BabyRIP). Yes, at Hooli we get (partially) reimbursed personal development training like First aid for Kids and Baby Swim 🙂
- Mr RIP Pension Pillar 2 contributions (gross): 2590 CHF. 500 Mandatory portion, 2090 extra mandatory. Same every month.
- Mrs RIP (September?) unemployment subsidy (gross): 611 CHF. Peanuts, but thanks.
Migros Blue Coupons: 125 CHF. Remember all my multiplier coupons optimization during Mrs RIP new laptop purchase? Yeah, blue coupons everywhere! This is exactly like cash, since we go to Migros every month. I consider blue coupons as income, and expenses paid with blue coupons still full expenses. In “Other – CHF” (row 41 of my NW doc) I keep track of not used yet coupons 🙂- Blog income (gross?): 100 USD. Whaat? Is this true? Is this blog generating money? Yes! I received my first Interactive Brokers referral bonus! Now, I wasn’t expecting this, let me explain why: IB referral bonuses in Europe are paid once someone who has been referred spent 333 USD in fees. At that point I get 100 USD. That could only happen twice for a single referral, and it has to happen within a year since the referral opened the account. I wasn’t expecting to receive a fee though. Spending 333/666 USD in a year on IB is not “common”. I’ve spent less than that this year, and it includes ~200 CHF spent in April, during a huge investing refactoring. I know there are several RIPpers who joined IB thanks to my referral (even though I can’t see how many), but I sincerely hope nobody spent 333 USD in fees unless we have a fellow multimillionaire mustachian that moves a lot of money. If that’s the case, good for you bro! My hope is that the 333 USD in fees necessary to generate 100 USD referral bonus are cumulative among all the referrals. If that’s the case, good for everybody! Few words on the ethics of referrals: I’m always suspicious of high referral percentage. This IB referral program offers 30% (100 USD bonus, 333 USD fees) of their earnings back to the referrer. It’s a lot, it looks inefficient. They could lower their fees by 30% instead and we would all be happier. I don’t know how they can keep fees so low and still offer 30% of their earnings to referrer. It’s a yellow flag, dear IB. Anyway, since I like IB, use it a lot, would recommend it to everybody… I thought that joining their referral program would have been a win win scenario for me, you, and IB. So actually a win-win-win scenario 🙂
- Coop Gift Card: 20 CHF. Migros Cumulus points automatically generate blue coupons every two months. Converting Coop Superpunkte in actual cash requires an active step on your side: you should ask for gift cards in exchange of your Superpunkte to the cashier at your local grocery store. Maybe online too, didn’t check yet. In both cases (Coop and Migros) it’s a 1% cashback conversion: 500 CHF spent becomes 5 CHF bonus. In both cases, points multipliers work nicely. Both also have credit cards that earn you extra points. I only use the Cumulus one. Anyway, I converted 2000 Superpunkte into 20 CHF gift card 🙂
Negative income streams, i.e. expected taxes:
- Expected Income Taxes (23%): 2727 CHF.
- Expected Deferred Taxes on Pillar 2 withdrawals (6%): 155 CHF.
Expenses
Very good month, even though we hosted both my mother for 5 days (and paid for her flights to Rome, and a dinner out), and Mrs’s mother for 10 days (and paid her tickets to/from Milan, plus local transportation and so on)
Expenses breakdown:
- Housing & Utilities: 2028 CHF. Some uncommon expenses like 250 EUR condo fees for Italian apartment, double UPC charge (99×2 CHF), 150 CHF cleaning lady (but skipped 2 weeks, thanks to grandmas at work).
- Health & Sport: 878 CHF. 701 insurance premiums, 177 CHF pediatrician and medicines.
- Groceries: 510 CHF. A regular month. 278 CHF Migros, 224 CHF Coop and some pennies in Denner and Spar.
- Travel: 213 CHF. I consider travel also incoming grandparents’ visits. Grandma’s visiting and “helping” with Baby RIP costed us 213 CHF.
- Transport: 205 CHF. 116 CHF car sharing usages with Mobility (a heavy usage and 2 minor usages), and 86 CHF local transportation for both of us. I still bike to work, but had to occasionally take a bus. So far, Mrs RIP’s experiment with daily ticket instead of monthly pass is positive. Let’s see how it will evolve during next months. 26 CHF of local transport should be reimbursed by unemployment insurances, since she bought ticket to attend a mandatory training.
- Restaurants and Eating Out: 184 CHF. Essentially a single dinner out with friends visiting from Germany and few expenses at bars and cafes.
- Leisure: 100 CHF. Mrs RIP cash withdrawal. No, I don’t have leisure expenses. I’m a machine 😀
- Baby: 63 CHF. A couple of book, some diapers, some baby food… but I admit that there are other “baby” expenses in our grocery shopping that I didn’t want to itemize. It’s a full time job, guys! Anyway, another month of Baby RIP bringing money at home instead of costing us a dime! In your face, Mr babies-cost-a-lot!
- Fees: 34 CHF. IB forex and trading fees, this month I’ve invested more than usual. More on this in part 2 😉
- Gifts: 33 CHF. Too many babies in our circle of friends.
- Clothing: 0 CHF. Wow, not even a t-shirt!
A cheap month, with ~500 CHF of unnecessary expenses and some unfortunate accounting events. Very good!
That’s the end of October Update part 1, next part will be about investing and market performance.
Have a nice day!
Hey RIP,
Well done, even given the bad month in the market.
Did you take money out of the 2nd pillar? Can you share what for?
Looking forward to the next parts 🙂
Hi Giff,
no, I didn’t take money out of the second pillar.
Maybe you confused that with 3rd pillar.
Row 24 (“CH – Mr – Pillar 3A”) shows ~36k less.
I didn’t take Pillar 3A out though, I simply invested all of it into PostFinance Pension75 (row 18).
I was referring to this line you wrote:
“Expected Deferred Taxes on Pillar 2 withdrawals (6%): 155 CHF.”
That’s expected, since sooner or later I’m going to take money out. I already account for expected taxes on Tax Deferred Accounts on a monthly basis.
Massive post, very detailed, well done Mr RIP! Impressive to see you guys killing it. And yes, the market going south hit us all, also for me October wasn’t the best month…
And we’re just sitting here, staring at a 7-8% dip as if it were the end of the world… Prepare for a -30% or a -50% sooner or later.
I’m old enough to remember both the DotCom Bubble of 2000-2002 and the Financial Crisis of 2008-2009.
Anyway, last 2 weeks (early November) have been amazing, most of the losses have been recovered
It seems these times require nerves of steel from all investors. Kudos to all of you out there, not sure how would it affect me, knowing that you are in for the long term is one thing and handling your actual emotions is a different one.
You made me curious about the following parts and even the story of your wife’s’ salary. We were in a similar situation back then and finally, it also had to be solved by me. Shame on them. Do I feel right from the tone of your writing that it is not just about the money?
“It’s not about money… it’s about sending a message.” – /The Joker/
Yeah, the salary thing is the “first world problem” version of immigrants discrimination 🙂
Hey RIP
I love your blog and end of october I waited for your october net worth post. Try to see the mini crash as a reminder. I mean in the last 2-3 year the market was amazing. For people who aim to retire in the near future this could be a test and a reminder that the market can also drop down and you have to keep calm. And probably its a (last) opportunity to buy cheap before you will retire. So keep calm and do your thing. On the other hand its very likely that in your next november net worth post you will write about FI numbers going up.
I noticed, you pay 99,- for upc. We reduced last year our 99,- bill to 59,- and now we changed to salt fiber where we got 10Gbit/sek for 39.95 (only if your mobile abo is also salt, otherwise 49,-). Maybe its worth a check. I also wrote about it in my blog.
Looking forward for part II and III 🙂
mini crashes are the norm and they are expected every year, so nothing horrible happened 🙂
It just hurts when it your turn, that’s why many don’t want to invest in stocks even though the ups are bigger than the downs.
with UPC we pay 99 CHF/Mo which includes cable costs (39 CHF that you probably pay in your condo fees). We’re paying 99 for the offer that is now priced at 109, i.e. a HAPPY HOME 200.
Hm i think last year the cable costs were deleted. So i could pay 59,- instead of 99,-. Before i changed I payed for the cable costs separately (not included in condo). Now when I changed to salt i asked about that and they said i dont have to pay for cable cost no more.
Luckily november is almost compensating the losses in october.
Dear Mr RIP
Long-time reader here. I very much like your spreadsheet! It has inspired me a lot to do my own spreadsheet & calculations.
I have a question about your definition of “gross”. When you say base salary (gross), do you really mean gross (without AHV/IV etc. deductions)? So actually what you get is 7% less?
Or do you mean “net” income, but you call it gross because you still have to pay taxes from it?
In my spreadsheet I only use net values (i.e. what actually lands in my bank account).
Another thing: where is your employer´s 2nd pillar match? In my case, the employer matches the mandatory part of the 2nd pillar contribution. I count this as income. Don’t you?
Looking forward to your answers!
Best, Sasha
Hi Sasha, welcome to retire in progress 🙂
Yeah, I probably defined how I account for each entry in my Net Worth and Cash Flow but they are lost back into early posts.
I consider my salary “gross”, which is exactly what I get after Pension contributions (Pillar 1 and 2) and unemployment insurance contribution.
That “gross” amount is exactly what Hooli wires to my bank account. on that amount I need to pay taxes. I have a C Permit, I don’t pay tax at sources. That’s why I also have a “expected income tax” entry in the cash flow section of my NW sheet. Is that clear now?
Pillar 2 already includes employer match. It’s 2590 CHF/Mo. I pay 1295 CHF/Mo and my employer the other 1295. Our plan let us choose between 3 contribution levels. I could lower my contribution to almost half of that and still get the full potential match from Hooli. I chose to contribute the maximum.
Hey Mr Rip
Thanks for the interesting breakdown! Can you explain what the CHF 2590 2nd Pillar contributions are? I thought BVG is only a minor percentage, how is it so much in your case and what’s the thought process behind it?
Thanks!
2590.40 CHF/Mo are my Pillar 2 contribution (BVG) plus my employer match.
My portion is 1295.20 CHF/Mo, Hooli portion is the remaining 1295.20 CHF/Mo.
1295.20 comes out of 8.5% of (salary + expected 15% bonus).
Base salary = 159000
Expected bonus = 23850
Total insured salary = 182850
8.5% of insured salary = 15542.25
monthly = 15542.25/12 ~= 1295.20
I could have chosen a minor contribution for my portion: 4.5% or 6.5%. I chose to increase my contribution to the max (and I’m going to buy in 12k in November) because I immediately save ~25% Tax on this amount and I assume I’m going to get this money back in few years.
Hey,
(I’m a colleague of yours. I wonder if you could contact me at my work address.)
I just found your blog today and already I’m a huge fan. I live in a similar situation, wife and baby, living near ZRH. I just counted how much we spent in Migros+Coop in October and the result was 1600 CHF. I almost couldn’t believe my eyes. How on earth do you manage to spend only 500? Seriously. I try to eat a lot in the office but still. I know my wife can go a bit crazy with baby stuff but most of this spending is just food. Wow.
Also, I’ve been ramping up on the investing stuff lately as well. And I had a jaw-dropping moment recently. While S&P grew around 10% annually on average in the past few years, Hooli was growing at a whopping 25%. I understand the need for diversification and all that, however being a Hooli employee should make us more optimistic and confident about its stocks. I’m a much richer person today because so far I was just accumulating the free stocks and didn’t really bother with portfolio building and such. And now that makes me nervous about selling these stocks and building an ETF portfolio. What are your thoughts on that?
Cheers
Thanks Joco, welcome to my blog!
yes, on average we spend 400-600 CHF on groceries. And we’re not surviving only on MBudget and Prix Garantie 🙂
We do our best to shop once per week and buy things on discount, use coupons and so on. We don’t feel like we’re doing any particular sacrifice here. 90% of the time food is a commodity. Ok, my Italian DNA is rebelling now.
On holding Hooli stocks: of course in retrospective it would have been better for me to have hold. Stock price went 4x in my 6 years at Hooli (coincidence? I don’t think so :D), but this is a terrible idea. We’re talking of a single stock. It can easily drop 50% tomorrow (it lost almost 20% from peak in October). holding a single stock is risky. Holding a single stock that in case of failure brings with it your job is exponentially more risky.
I’m on autosale now and I’m ok with it. I reinvest the money on other ETFs. In the end, if Hooli instead of giving you stocks gave you extra money, would you have bought Hooli stocks? If you would have done it anyway, why exactly the amount you’re vesting right now? Why not more? why not less? What a coincidence Hooli gives you each month\ the exact value you wanted to invest in Hooli stocks 🙂
But I guess we’ll continue the discussion at Hooli, sent you a message 😉
We also spent on average less than 500 on groceries (for a couple). No crazy optimizations.
Anyway, 500 CHF is usually considered a good month for my family. It’s not the standard. Here’s a graph of grocery spending (and eating out, which is usually negatively correlated with grocery) over the first 11 months of 2018
Da fuck happened in April? i should look at the graphs more frequently 😮
Hey Joco (Are U Hungarian? – I have a friend whos called Joco)
You are not alone with such a high spending on groceries. I think most of the swiss households spend more than 1’000,-.
We are in a similar Situation. We have a baby and the mother of my wife lives temporary with us. We have 2 cats and Im on a high Protein diet, so I buy a lot of meat. Ist very expensive in Switzerland. Therefore our spendings on groceries including eating out are about 1500,-. I was also impressed, when I saw that MR RIP and also other swiss Bloggers spend about 500,-.
Now my aim is to cut down spendings to 1300,- with limitating eating out and avoid unnecessairy spendings (mostly on candy). Im already preparing my meals at home and buy mostly (not all) Prix and Budget products. Most of them are from the same Producers. For example Bell is producing Prix Garantie ham.
It’s not easy to cut spendings, because you have to evaluate your Habits and Analyse what to eat whats healthy and cheap but I Keep trying.
You can exchange Coop points for cash voucher using the app. Quite convenient. The app also has lots of coupons (which is annoying, but, yeah…).
I don’t use the apps (Migros & Coop), so I still handle paper coupons. I’m lazy 🙂
I assume the functionality you mentioned is the same I can obtain at the cashier, isn’t it? I’m talking about converting Superpunkte into gift cards (actual money)