Februari 2018: results are in!

We’ve had a crazy Februari, which is why I’m so late with the report this month. More will follow next months with (hopefully) better timings!

So let’s dive right into it. As I said Februari 2018 was tough. We had a ton of work! To keep my 2018 goal of a global 50% savings rate proves a hard goal to meet. Mrs MF and I started doing these ‘little surprises’ for each other. While amazingly sweet, these always come with a little cost, and little amounts quickly become big amounts.

So February has been mostly about balance, and I think that’s also a bit of the essence to reaching FI for us. Saving your ass off gets you where you want to be quickly, but when there’s someone you share your life with, things become more complicated whether you want it or not.

Mrs MF and I have a busy life, we’re working 6 days out of 7. So free time is precious, doing something passive is very tempting at that moment! Like watching TV or something…but thankgod we don’t own a TV nor cable 🙂 The previous month, we decided to ‘do’ things more often. We’ve put ourselves on a tight budget, so ‘cheap and awesome’ things here we came!

We went drinking a glass of wine in our favourite wine bar.
(if you’re ever in Ghent, be sure to check out ONA!)
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It truly is an amazing experience for any wine-lover, unique and little known wines at your disposal. And if I’m honest; they’ve received quite a portion of my budget over the last two years 😀

The weather was terribly cold in Belgium with temperatures dropping to -10 degrees Celsius! Those are the times I miss my car to commute to work. But I warm myself to the fact that not having a car saves us a LOT of money!

Budget

Generally, we kept to our budgets quite well. So my savings rate for the month Februari is quite good at 41% saved. We went a bit overboard with the wine and bought a plant for our house, so i spent more than double of my ‘fun’ budget of 100 euro.
(oh yeah we went on a ‘mindfulness’ class too, quite the experience)

If i can get it over 50% and keep it there, I’ll meet my 2018 goal!
I’ll be honest that i’m not sure we’ll get there, we’ve booked our tickets for two big trips we’ve been planning for years so that’ll take quite the pinch out of our emergency savings. We’ve been saving diligently for over two years so a real vacation was long overdue in our opinion.

Net worth

My net worth dipped slightly due to the recent dip in the stock-market. For now we seem to be on a good track again, but the future remains to be seen. I’ve decided to remain in my positions for now. The long term is all that matters.

My crypto assets have bled quite extensively since December. While everybody’s selling i’m slowly adding coins to my collection! I’ve decided to invest my money every week while ignoring all the FUD (Fear, Uncertainty and Doubt) that’s being spread. Let’s hope I’m right in the long term. 🙂

2018-02-08 13.37.47

Alright that’s about it, no other news! If you have any questions: to the comment section!

 

How we cut 40% on our expenses!

When we started our FI-journey, saving money was (and still is) priority number ONE.

We love seeing our costs go lower and lower each month, freeing up more cash to put to investments or just building our emergency budget.

We discovered new ways of saving money on various aspects of our lives. (Did you know drinking tapwater instead of bottled water can save you up to €400 yearly?)

When FI was just a vague concept for us, we looked into the typical money-saving tips you find everywhere on the internet such as; eat out less, shop discounts at the groceriestore, start biking more instead of resorting to your car and so on,…

We had the feeling these were good to start with, but didn’t go far enough. What’s the use of biking to work once a week if you’re still paying for your car that’s sitting idle on the driveway? Why shop discounts if the advantage is marginal?

We knew we had to think further if we were going to tackle this FI thing head-on and not just save €50 more a month. (Which would make our FI journey longer than life itself)

So we tackled the big guns first; rent, car, utilities and groceries. Our house in the suburbs was nearing the end of contract and we wanted to move closer to the city again, just for convenience.

The city is expensive yo! Our rent was 650 a month, the new house we set our eyes on was 780 a month. That alone would be an increase of 20%! We were planning on downscaling, not upscaling our costs!

So we worked out a radical plan.

The house we were renting had an extra room, so we looked for a roommate! Having a roommate cut our housingcosts by a third, instead of the full 780 a month, we now pay €520 a month. That’s 33% LESS than before while getting all the benefits of living in a city.

We were happy with the extra amount we saved because of this, but boy were we on a roll now!

We started questioning our car, did we actually need it? When we moved to the new house, we started counting the times we actually needed our car. The result? Living in the city brought another benefit along; we used the car 2 times a month! We did everything on foot or with a bike so we could very well do without it.

The car took up a large portion of our budget for a long time. Gas, insurance, upkeep and maintenance aren’t cheap!

So we sold it and took on the experiment of doung everything with public transport, bike or on foot. We even got ourselves a little bike-trailer to go to the store! We’re half a year in, and so far, so good.

Our costs went down almost immediatly, instead of spending around €300 a month, we freed up €300 to invest! Another major win!

We won almost €600 on two big components of our household, areas that are often taken for granted or overlooked when thinking about ‘spending less’.

We went even further, we went shopping for the cheapest gas and electricity supplier out there and found a fixed-uear contract that saves us almost €400 a year. I’m a bit of a freak on these things, so i started tracking our gas usage every month to see when we were spending the most and how we could cut back on our bills.

We did the logical things; changing our old lightbulbs by LED versions, optimizing our boiler settings,… but we were still spending a lot of money on gas and electricity…

So we did the thing millennials are best in; thinking outside the box!

We looked at exactly how we used our heating and our water. One of the most striking discoveries was that we both liked to wash our hands with hot water!

(We have a boiler that activates itself once you activate warm water in the house.)

We asked ourselves; would it make a difference if we washed our hands with cold water instead of warm water?

Time for a test! We spent the next month paying attention to use cold water when we washed our hands. The result? We spent 15% less on our gas!

We were astonished by the big result such a small insignificant change could have. It means we spend €120 less on our utilities bill a year!

Making big and small changes is part of the journey towards Financial Independence. We’re still looking for possibilities to cut back on costs and save money. But at the meantime we still want to be able to enjoy life.

That’s why we focussed our attention on the big three: housing/utilities/transport. If you’re able to cut back significantly on those costs, you can ease up about spending €6 on a double espresso once a week.

Quality of life has always been important to us, so cutting back on those major costs and thinking outside the box freed up almost half of our original household budget. Meanwhile we still allow ourselves the pleasures of everyday life and we love every moment of it.

Of course, cutting back even more frees up even more money for investments and savings, but do you really want to spend your days counting pennies untill the next paycheck comes around?

We made a budget for every expense in our household and try to stick to it, but having a budget doesn’t have to mean depriving yourself from every joy in life.

Remember; you can have anything, just not everything!

How to millennial

At 6, I wanted to be a firefighter.

At 12, I wanted to become a doctor.

At 16, I just wanted to quit school already.

At 20, I didn’t know what to do with my life but i knew i needed an education.

At 24, I graduated from said education with the most useless degree one could get: Art and Graphic Design.

Why? Because i liked drawing so much i thought i could easily make it into a successfull career. (Lol)

It was 2012 and the economy was stuck in the worst recession since decades. Needless to say i didn’t find a job ANYWHERE.

Sounds familiar?

Burn your degree

We’re Millennials, born in a innovative era, the world is changing faster than ever before. Still we’re being told we can face that challenging world the old-fashioned way.

The millennial generation is one of the few generations subjected to so many profound changes in such a short time. We started highschool barely having cellphones (nokia 3310…anyone?) and while doing homework on a typewriter. To graduating college on an ipad and stories about people dropping out of college and becoming millionaires.

Given recent developments in AI and technical advancement there are no signs these changes are slowing down, they’re just getting started.

The truth is that various certainties like ‘work hard and get a good degree’ and ‘hard work will get you anywhere’ just don’t seem right any longer, it just doesn’t cut it in today’s world.

But then what? What do you do? Just dig a hole in the ground and wait for it to blow over?

“if you just work hard and get a good degree/scholarship, it will all work out for you” -my dad

Me, Myself and I

I sent out resume after resume, but never recieved a call. I just wanted what everyone of us wanted; freedom to do what I want (and a car), why was that so hard?

I would be lying if i said it didn’t hurt or that it all went smoothly. Being an adult all of the sudden is hard! It came to me that my education didn’t -in ANY way- prepare me for the world I was shot into. I was educated in a field that barely even existed at the time I graduated.

Eventually i found myself a job doing nightshifts in a Customer Service Callcenter making barely minimum wage. Horrendous workinghours, stressfull, teamleaders on speed (no, really…), colleagues stuck in the same routine for YEARS…and the CUSTOMERS! Don’t get me started…and the list goes on and on.

If you’re currently working in a callcenter and you’re happy where you are, you’re awesome! You guys get me discounts every year! I can imagine there are callcenters where one can work happily ever after, unfortunately i had a completely different experience at the time.

For me, it took a year or two to realise that life wasn’t for me. I had enough. So i started to do what everyone does: updating my resume and writing letters to possible employers. I wrote more than 50 letters without ONE invitation for an interview.

Little did i know that in the two years i worked in Customer Service, the Graphic Design industry changed so much that i had less to offer than everyone fresh out of college. For example: I was the last year to graduate without coding lessons… and nowerdays, you need to be able to code.

Well i was completely stuck, my degree didn’t get me anywhere while it should’ve been my ticket to a good career! …Right? It felt as if i was condoned to a life in Customer Service forever. I was mad at everyone back then, especially the ones I loved most dearly.

So I just quit from one day to the other.

Needless to say: what followed was a rollercoaster from freelance gigs to part-time jobs with a detour at unemployed and a pitstop on welfare. It wasn’t pretty to be honest but it would be unfair if I were to leave my SO out of the equation. She really stood up to the test and provided some much needed emotional and financial stability, I’m still extremely grateful for all she did!

I manned up eventually, took some friends in high-earning positions out for a coffee to see how they got there and fast-forward 3 months later: I started working in the Financial sector and I’m working there still.

So what can you take from this?

  • Understand nobody is the same, everybody developed in their own way and pace. Don’t try to keep up with the Joneses.
  • Your fancy and costly degree doesn’t dictate your life, you can re-invent yourself at will.
  • Understand that EVERYBODY is looking for a place in this world, it’s no shame you haven’t found yours.
  • You have a network already, use them and hear out their story, we all like to share successes over a coffee.
  • Ready more books, a simple book about the basics of human psychology landed me a 25% raise!
  • Dare to question yourself and your truths.
  • Learn how to write a good resume and cover letter

I’ll cover more on these topics later on, if i can give you one last piece of advice it’s that Change. Will. Take. Time., don’t expect things to change overnight.

 

Life is a long-ass marathon, not a sprint.

 

 

2017 was a good year.

I’m a little late to the party, but i’ve finally found a moment to gather all my data from 2017 to see how i did financially. So let’s dive right in!

But why?

For me, 2017 was the year i got really serious about finding Financial Freedom.
Being able to put my hard-earned money to work seemed awesome at the time, and honestly? It still excites me today!

We’re all stuck in a rat-race, we’re always late, hurrying and scrubbing from one place to another. Deadlines at work, social obligations, kids soccer practice, cooking, cleaning,..
We spend so much time running and yet we never arrive. There’s always a ‘next’ or ‘later’.

Financial Independence represents ‘a way out’ of the rat-race for me. It enables me to spend time where and how i wish to spend it. Whether it’s at work, sitting at home reading a book, it doesn’t matter as long as it’s intentional. I choose to be there. I want to be able to experience that kind of freedom as early as possible.

If you will live like nobody else, later you can live like nobody else.

-Dave Ramsey

Financial Independance is no sprint, it’s a marathon.
Long term planning is key. Mindblowing 20% Stock market corrections as occurred in ’08 dwarf in face of a 20 to 40 year timespan. If you can think about the long-term picture (the reeeeaaaally long term picture) you’ll come out on top.

And now the numbers!

So how did i do this last 12 months?

Well first of all i had a few setbacks. Me and my SO moved to another town setting us back quite a bit. And the new place had to be decorated of-course!

We started 2017 with a savings rate of 24%, went down as far as 11% in September (the month we moved) and back up to even 60% in November! I had a 80% rate in March, when I sold my excessive stuff (like my second Macbook and iPad) and added it to my ‘extra’ income for that month.

Schermafbeelding 2018-02-04 om 18.08.54(I’m a sucker for graphs)

Averaged annually, my Savings-rate hovered around 41%, that nearly half of my take-home pay i was able to save! In actual numbers this means i bumped up my savings this year with 12700 euro (15800 USD)

i didn’t just put it on a savings account, but invested the year through making the most out of the dollar-cost average principle. It’s basically investing every month with what you can spare, let the magic of compound interest do the rest!

Investments

I’ve also made a wrap-up of my investments’ performance in 2017.
My current portfolio consists of the following positions.

Alphabet
Apple
ATOS
Rolls Royce
Royal Dutch Shell
UCB

Crude Oil Index EFT
Vanguard S&P 500 EFT

As you might notice, it’s 100% stocks and 0% bonds, this because I work in the financial world and can spend my days trading stocks for clients as well as my own.
I would NOT advise you to invest 100% in stocks if your plan is to take in positions and never look at them again. A good rule of thumbs is to take your age (for example 40) and have that percentage in low-volatile options as bonds or options alike. For me, that would be 27% bonds and 73% Stocks.

If you’re planning on really diving into the wondrous world of stocks; go all for it but invest only in what you know.

A few of these pay dividends every year and i’m planning on pumping more in those positions such as Shell and Rolls Royce and reinvest the dividends every time. It’s a great way to expand your income sources!

Averaged I’ve closed the year with a return (pre-tax) of 75% which made my net-worth go over 10K for the first time in my life.

I’ve also had quite some success with Crypto currency.
I invested 4000 euro in the ‘Big 3’ (Bitcoin, Ethereum and Litecoin in March 2017, and made a pact with myself to let it sit for 12 months. The deadline is looming on the horizon but the returns have been off the charts for 2017.

Because of this, i closed 2017 with almost 50% of my net worth allocated in Crypto, which is WAY above my risk tolerance. i’ll be adjusting soon.

Net Worth

No talk about closing a year without looking at your Net Worth!
It’s a simple equation; Assets – liabilities (loans,…) = Net Worth.
If you were to sell everything you own, what amount of cash would be in your hands?

I often hear people including their house worth, illiquid assets such as artworks and more in their calculations. But in my own calculations I keep non-liquid assets such as computers or my house out of the equation, nice and simple.

So if i look at my Net Worth, the spike caused by my Crypto assets is immediately visible. While many disagree with Cryptocurrency, being liked to criminality and said to have no ‘real value’ I’d like to offer my two cents; I do believe it can have a place in an investment strategy albeit at a very very high risk. (it really is the wild west out there)

 

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2016 was a dull year because i listened to the advice everybody got; save 10% of your income. i also never heard about FIRE back then 🙂

So that pretty much rounds it up for now!
What were your financial WINS for 2017?
let me know in the comment section, i love to hear from you 🙂

Disclaimer: this post is purely informative, not intended as advice nor investment guidelines.

Now where did all that money go?

Ever asked yourself this exact question?
Well this post is going to turn your broke ass around, so sit down because I’m going to rant about something really sexy and popular: Budgeting.

As i said in my previous post, keeping track of your expenses is vital for financial health.
Do i practice what i preach? Well off course!
I’m a HUGE believer in keeping tabs on your expenses, And what better feeling to have than to see that you just saved about 50% of your income that month?

Well…FUCK

Money is a curious commodity. It makes us do weird things and it influences us more than we’d like to admit. We don’t want to part with our hard-earned cash so badly it’s even hardwired in our brains. Still you end up broke every month. Why? Where did it all go?

Well to illustrate that I’m going to tell you a little story about a man two years ago that just started working a full-time job: Yours truly.
You can laugh, but I was there every month: broke and living on ramen noodles the week before my next pay-check. I worked in a bank talking about being responsible with money and iIwas the most irresponsible person when it came to my own finances.

I had NO CLUE where my money was going, really. I fucking spent like there was no tomorrow. New glasses? -Heck yeah! Hey my washing machine makes weird sounds? -Throw it out and buy a new one!

I was a perfect example of how media expects our generation to be; Consumerists.
I threw my hard earned cash away on stuff.
Did I need that stuff? Well maybe or maybe not, but for sure it didn’t make me happier.

One night, my bankaccount went below zero. I was in debt for the first time in my life and it didn’t even start yet! It was my wake up call.

That night i started listing up all my expenses of the last six months, the result?
More than 10 000 euro gone. (12 000 in Freedom Units for my American readers)
I was disgusted with myself, where did it all go? I could’ve done so much with that amount of money!

So here’s the list and the expenses on it, or as i like to call it; My money destinations:

  • Housing – 450 euro
  • Utilities + TV – 150 euro
  • Food – 600 euro
  • Clothing – 200 euro
  • Magazine Subscriptions – 25 euro
  • Fitness – 20 euro
  • Healthcare – 10 euro
  • Going out/Other – 150 euro

Not so bad actually eh? Not in relative numbers no.
Let’s look at it in percentages; My top 3 then looks like this:

  • Housing – 28%
  • Utilities + TV – 10%
  • Food – 37%

Right there, i spent about 75% of my total income.
Well, for me it meant ALL MY MONEY OUT THE DOOR.
My money went everywhere and refused to stay inside my pockets.

Starting the Budgetgame

I knew i had to turn this around, this was a downright unhealthy situation. I couldn’t afford anything because there was never any money left at the end of every month. Let alone the stress I experienced because of that!

So, insert a budget.
I started looking at every expense; Do I need it? Do I want it? Can I live without it?

Fast forward a few months: I cancelled my TV subscription (never used it because I was always working), I cancelled my magazine subscriptions, stopped shopping, looked at cheaper stores to shop for food (hellooooo Aldi!) and much more.

All of a sudden i was able to start saving for the first time in over a year!
What an awesome feeling!

But tracking your expenses is hard work, at least for us Europeans out there.
There are no really awesome budget apps out there like Mint that you can link to your bankaccount so i did (and still do) it all myself in Excel.

This way you get your own life’s financial data, how awesome is that??

Start now, don’t wait ’till next week

If you don’t start now, you will never. Next week is an excuse you make to yourself to stop taking responsibility. I had my wake up call, now t’s time for you to have yours.

Even if it’s just on a piece of paper: Start. That. Budget. Going.
It’ll work wonders and gives insight where you don’t have any right now or are just guessing away. How much do you owe on that loan? Can you get a better percentage? Start calling your provider, what can they do for you? The options are endless.

Once you know where your money is going you can start figuring out if it’s all really worth it.

 

Using a budget gives you a head-start, YOU know where YOUR money is going.
Unless any unforeseen event happens, you know how your month’s going to unfold money-wise. How’s that for some mental peace?

 

5 easy steps to save $10 000

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Boom.

The money question, who doesn’t want to have that amount?
Imagine what you could do with 10 000 bucks…or don’t because you’re a responsible person and you would invest it in stocks or your pension investments. 🙂

See, the trick with working towards large amounts of money, is that they also require sacrifice of some kind. There’s always something you have to be willing to give up in order to achieve it. So here are my 5 steps to get you going!

1: Set a goal

The first goal i set for myself was 10 000 Euro (around 12 000 USD)
At the time, that was astronomically high, i’ve NEVER had more than a few hundreds in my entire life! How was i going to do that?!

Well, turns out that just determining a goal was actually a big help, it helps channel your focus towards something positive in the long term. The goal you put for yourself has to be high enough to challenge you, but also achievable enough so you don’t have to economically suffocate yourself in order to make it.

2: Keep track of your progress

Ok, awesome, you’ve got your goal. So now what?
Just carry on as usual while hoping that number magically appears in your bankaccount? I don’t think you’d be reading this if it was that easy.

The only thing you should be worrying about is what Paula from Affordanything.com likes to call ‘The gap’. It refers to the space between your income and your expenses.

The wider the gap (the less expenses and the higher your income) the sooner you’ll reach your goal, simple right?

Your main effort should be focussed on widening that gap.
How, you ask? Well by looking at your expenses with a looking glass.
Do you need a TV subscription of several hundreds of dollars? Could you find an alternative? Maybe a bit less eating out? Dig deep and be honest with yourself.

3: Use a budget

Hurray! Budgets!
Spending money is natural for us, it almost seems like that’s what society wants us to do.
Just turn on the TV and there are literally 50 ads screaming for your attention to buy their amazing product that will ‘change your life’.

But honestly, is there ever a product that truly ‘changes’ our life for the better? I certainly thought my second Macbook would change my life, now i was able to work faster!
But after a few months, the excitement from the purchase went away and life went back to normal. (I never worked noticeably faster though…)

Living on a budget isn’t necessarily ‘fun’, but it does the trick amazingly well!
Start by tracking your expenses for a month or two. Where does your money go? Are there certain areas that you can downsize or cut completely?

Coming to terms with your own expenses like that can be shocking, it certainly was for me. But be brave and face the fact that you’re spending more than 100 bucks on espresso’s every month! (Guilty)

To help you start your budget, i’ve prepared an elaborate excel file for you to track everything. Just drop me a line at millennial-fire@hotmail.com to receive it!

4: Automate what you can

If you can’t see it, you can’t spend it.
From your budget you should be able to tell how much you need every month to cover the bills and how much you can save.

Pay yourself first, pay your bills and groceries with what’s left and stick to your budget!

By automating as much as you can, you can relax because now your bills are on auto-pay, your savings are automated and if no unforeseen-able event takes place; you’re set to achieve your goal!

5: Start Investing

Awesome, you’ve done everything right and your gap is widening, well done!
So you’re well on your way towards your goal, but can you speed it up?

Investing your hard earned cash into stocks/bonds/Funds/FTE’s/… gives you a higher interest rate than an online savings account, but with greater profit comes greater risks.

more on that in later posts!

Conclusion

Starting to save and face your expenses can be hard, i know that first-hand. But it’s a small sacrifice to get to that awesome goal in your future, your futur self will thank you!

I know this article is just a global set-out. I will explore the different subjects later on and link back to them here.

So now it’s your turn! What do you find hard to incorperate in your saving-habits? What’s that one splurge you can’t go without? How did you start saving?

Tell me all about it in the comments!

Igniting the FIRE

I’m going to be honest with you: I’ve never been the money-saving type of guy.
Money was just a way to get more stuff and things i liked.
what-organs-do-humans-not-need.jpg

I started working after school-hours when i was sixteen because i wanted a scooter.
(which was awesome by the way)

After i got it, i felt awesome, finally something i bought with my own money! YAY!.
It felt so great, i wanted to experience that shot of dopamine again and again.
-Insert buying frenzy here-

It took 10 full years to realise that buying stuff wasn’t making me really happy.
Buying things was the only way to feel ‘happy’ and content. Don’t get me wrong, i’m not a pessimist nor depressed. But every time i bought something, it gave a little ‘extra’.

Scientists have actually determined a link between ‘buying’ things and dopamine, the drug-like hormone that triggers ‘happiness’ in our brain. Read more on it here.

Our whole Consumerism-economy is based on this  principle of buying = happiness.
Be sure to check out the documentary ‘minimalism’ on Netflix, it’s awesome!

Now don’t gt me wrong, i like buying things just like everybody else. But it has to be intentional, i need to need it.

I can almost hear you say; “But Mr MF, i really need the latest iPhone!”, let me ask you; how many hours do you need to work to save up the money for that phone? Not just your take-home pay, but your actual money that you can save every month?

Secondly; could your current phone hang on for another year? Why do you really want it? Would it provide real value to your life? Or do you just ‘want’ it?

Thirdly; if you buy that phone, what are you giving up in return? I’ve seen multiple people in my office giving up their pension saving plans to buy consumer items that would provide short-term value. Effectively prolonging their working time by years.

If you -after reading that and thinking about it- don’t want to buy that iPhone anymore, you’ve just resisted one of the most hard-wired concepts in our brain: impulse.

That’s what Financial Independence is about for me; resisting the impulse to buy stuff I don’t really need. Live intentionally and look for real value in my assets.

Stay tuned, more awesome bits are coming!