The Cheesy Index? What the…


Privacy concerns prohibit us from posting our Net Worth. It is a very personal number and a personal choice not to inform the world about it. However, there is a very simply way to let all you voyeurs join in on our path to Financial Independence and Early Retirement (FIRE).

Thanks to a simple but brilliant comment made by my friend Amber Tree Leaves. We hereby present to you our own index: The Cheesy Index.

How it works

The Cheesy Index works as follows (it’s really, really simple actually):

We take all out assets (cash, stock, ETF’s, real estates, personal loans, crowed funding, car, art, etc.) and either take the actual value or assign a representative value. Then we added them all up. Next, we subtract any debt we may have (mortgage, loans, etc.). Voila, our Net Worth.

We take our calculated total value for our assets (i.e. target Net Worth) that we think we need to become financially independent.

The associated ratio (actual assets/target assets) is converted into a percentage and low and behold: the Cheesy Index (we know, it’s not rock science…)

All credits for the Cheesy Index (CI) go the Amber Tree Leaves, who graciously allowed us to steal his idea of an index.

The goal used to be to post monthly updates on the CI until we reach the magical goal of 100% complete. But now that we have a money pit, it might be more of a quarterly or yearly thing to provide an update. Plus, it’s going to take a whole lot longer!

Target Net Worth

The target networth is determined as follows:

We use the 4% rule / 4% net return to determine how much we (think we) need, then correct for taxes. Items such as cars (depreciating asset) and specific belongings are added to our total assets as contingency (i.e. we can always liquidate these assets to generate cash to overcome a temporary shortfall in cash flow, if this would occur. Or use to purchase additional income producing assets).

Historical Cheesy Index

Based on our finances over the years, we were able to calculate the historical Cheesy Index. With the plan to increase our assets we defined the target Cheesy Index. The result as of the end of 2021 is shown below. At that time we did not buy a money pit yet! Things were still looking good, if we would have been smart and bought a new family home for under €450.000, we would have remained FI. But we didn’t.

The historical Cheesy Index (2021)

So, as of 2022, where do we stand? With the increased funds we are putting into our money pit (and thus the reduction in income producing assets) and higher living expense (inflation and lifestyle inflation), we get this:

Cheesy Index including money pit – ouch!

In short, one decision (one we are happy with) set us back about 8-10 years in terms of our FIRE journey. Barista FIRE it will likely be!