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).
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.
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%: 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 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.
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)
- 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!