Monthly Cheesy Index

The September 2017 Cheesy Index was such a great thing to calculate! This as we already hit the yearly target, and we are only in October!

September 2017 Cheesy Index

Thanks to the low expenses for September and good investment income streams, the Cheesy Index continued its march to new heights! The September 2017 Cheesy Index increased to 65.0%, our target value for the whole of 2017! We are now very curious to see where this year is going to bring us, but it looks to be very good. Unless Mr Market gets very, very angry….

Here are the stats:

September 2017 Cheesy Index

September 2017 Cheesy Index

Cheesy Index Forecast

The forecast for the Cheesy Index is rather good. All units are rented, we are expecting a 13th month payment for Mrs CF and a new sign-on bonus for Mr CF (contract extension). This will help us bring in more money and increase our net worth. How far are we going to get this year? I’m not sure, but it would not surprise me if we actually hit 66% or higher. This is assuming that the market stays high until the end of the year. But only time will tell.

On a different note, the net cashflow from our Real Estate and our dividends for the first 9 months of this year adds up to ~€19.500 (before taxes!). This is about €14.000 for the RE and €5.500. Our “core” expenses YTD (this excludes daycare, but includes holidays) were around €18.000 (which is below our FI target of €18.750). This would mean we would have been FI for the last 9 months! Kind of cool, but as shown above in graph, which does include taxes, we still have a bit more to go. But it is promissing!

How were the developments in your net worth or “index” for September (or October, if you are quick with calculating your finances)?

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Monthly Cheesy Index

The August 2017 Cheesy Index provided yet another positive month, but the (Dutch) stock market fluctuations did make a small dent. We did have a very good savings ratedividend income and rental income, which helped us increase our net worth in August.

August 2017 Cheesy Index

Considering the low expenses and good investment income, the Cheesy Index continued to increase to new heights! The August 2017 Cheesy Index increased to 63.6%. We are still aiming for 65% by the end of the year, which we are confident we will reach. We are anticipating to breach the 64% barrier in September, subject to stock market fluctuations, of course.

August 2017 Cheesy Index

August 2017 Cheesy Index

Cheesy Index Forecast

We actually got Mrs. CF’s final tax assessment back for 2015. This means we can finally also book this tax return into our net worth. I’m quite happy with this considering I’ve been manually correcting the net worth (and this Cheesy Index) for the last year and a bit. We had initially received too much and were required to pay about half of the amount back.

The error came from misinterpretation when filling out the paper tax forms. Why the paper version? Because it was the year we got back from our international adventures, you cannot file digitally for those years….. What was the final tax return? Around €1550! That’s a lot of money, so we are happy with this corrected assessment.

More good news for the future Cheesy Index is the return of overpaid money for utilities. We received about €896 back last week. Pardon?! How much, I hear you ask. Too much! The main reason is that we moved last year. The previous owners had just installed solar panels and that extra savings had not been include in the energy consumption for this address. In short, our energy supplier expected a high use and thus gave us a high monthly payment to start with.

In reality we used much less than the previous owners and the solar panels provided quite a bit of energy too. So in the last year we had dropped the monthly payment twice (by about a third!), as we noticed we did not use as much. Still, we got a massive amount. Won’t happen again this year!

 

How were the developments in your net worth or “index” for August?

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Monthly Cheesy Index

The July 2017 Cheesy Index had yet another (very) positive month due to the reasonable savings rate and the good dividend income and rental income. We really cannot complain on the progress at all. Even the exchange rates stayed relatively stable, which helped too!

July 2017 Cheesy Index

As you can see below, we can report yet another increase in the Cheesy Index to new heights! We are now at the 63.4% mark. We are still aiming for 65% by the end of the year, but it would be great if we could reach 66.6%. This would mean we are 2/3rd done on our journey to FIRE. Kind of a nice milestone, but unless a miracle comes along, I doubt this will happen.

July 2017 Cheesy Index

July 2017 Cheesy Index

Cheesy Index Breakdown

In case you are wondering what is included in the Cheesy Index and how the wealth is broken down, let’s have a look.

We have divided our wealth into three categories (for more details, see here):

  • Income producing assets (stocks, real estate, etc.)
  • Non-income producing assets (cash, “valuable” posessions)
  • Depreciating assets (i.e. the car)

This looks as follows:

2017 Asset Allocations

2017 Asset Allocations

The growth in non-income assets is due to the increase in cash reserves we have to buy more real estate (or shares/ETF, subject to whichever comes first).

When you breakdown the income producing assets, you will have:

  • Real Estate
  • Dividend Shares
  • ETF’s/Index Funds
  • Crowdfunding

This breakdown looks as follows:

2017 Income Asset Allocation

2017 Income Asset Allocation

As you can see, the crowdfunding is slowly being phased out. The ETF/Index fund portion of the porfolio is slowly growing. The dividend portion is fluctuating a lot as the majority of shares are Canadian. Real Estate covers the majority of the portfolio. The latter is hopefully to increase over the coming months if we manage to find something reasonably priced. Time will tell!

Long Weekend Holiday

We are off to a long weekend away with family and will be back next week. I plan to really relax and ignore the blog for the most (there might be a tweet on occasion). It will therefore take a bit longer than usual for me to reply to any of your comments, so my apologies in advance! Hope you have a great (long?) weekend too.

 

Did your net worth or “index” also grew in July? Did you also see a nice increase?

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After a good month in terms of savings rate and dividend income, the June 2017 Cheesy Index was also bound to be positive. And it was 🙂

June 2017 Cheesy Index

We are still waiting for the final tax assessment of Mrs CF for 2015 (Mr CF already received his tax return). We will be getting some money back, but are not sure how much. However, we did get an initial deposit that was incorrect. In short, we still expect to have to pay back a portion of this money. The Cheesy Index is corrected every monthly for the entire amount that we received to date. We will keep doing this until such time we have a final assessment and can confirm the actual tax return.

What does have to do with the June 2017 Cheesy Index? Not much, but I noticed that the May 2017 Cheesy Index was wrong as I had not subtracted this amount. In short, the May 2017 Cheesy Index was a slight over estimate. In reality we had actually seen our first decline in the Cheesy Index in a long time. All caused by exchange rate fluctuations.

Now the good news, exchange rates helped out, so did certain investments, our regular income and as a “bonus” the 2016 tax return. We can therefore report another increase in the Cheesy Index to new heights! We are almost hitting the 63% mark and are very nicely on track to hit our 2017 target of 65%.

June 2017 Cheesy Index

June 2017 Cheesy Index

 

 

Did your net worth or “index” also grew in June?

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It is that time of the month again, the time to present to you the May 2017 Cheesy Index! Let see how we did this month in increasing the ration between our net worth and our FIRE target number (which is under 7 figures in case you are wondering).

May 2017 Cheesy Index

We were pretty much at a stand still for May. We are up to 61.6%, that’s just 0.2% for the month. This is partially driven by the low savings rate and the exchange rates really hurt this month too. That being said, despite all these “setbacks”, we still moved ahead! Should be happy with that. There will be a time when we won’t see another increase, guess this is a nice mellow trial in “disappointing” results. Will have to get used to it at some point.

May 2017 Cheesy Index

May 2017 Cheesy Index

Exchange Rates Again

So, the pain continues.  The exchange rate was CAD 1.516 by the end of May. Compare that to CAD 1.49 by the end of April and even CAD 1.42 by the end of March. That is now an almost 7% change in the wrong direction. But such is life and there will be more fluctuations to come.

On the other hand (I’m the glass half full type of guy), our net worth expressed in USD actually did increase by about 6% since March. Not that this is helping us in any way, but it’s fun to think about it 🙂

How was your May? Did your net worth or index grow too. Hope it was more than ours 🙂

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Monthly Cheesy Index

It’s time for that magic number, the one that shows how close we are to FI (sort off). It is time to present to you the April 2017 Cheesy Index!

April 2017 Cheesy Index

We had another increase this month, but it was rather modest considering the various good incomes in April. We are up to 61.4%, that’s just 0.4% for the month. However, we are still very much on track to hit our 65% target before the year is over (and hopefully sooner).

The usual contributors for the increase in the Cheesy Index are the real estate, dividend income and our pretty solid savings rate (i.e. the money we did not spend). But this month we also received the second payment of the 2015 Canadian Tax return (for Mrs. CF this time around). For all this money coming in, why such a modest increase in the cheesy index? Two words: exchange rates!

April 2017 Cheesy Index

April 2017 Cheesy Index

Exchange Rates

What we have been dreading (and expecting) has finally happened. We were hit massively by the CAD/EUR exchange rate in April. Where the exchange rate was a nice CAD 1.42 by the end of March, it changed to 1.49 by the end of April. That is an almost 5% change, in the wrong direction! Ouch.

In short, the value of Canadian shares nosedived this month (expressed in EUR), which had a significant impact on our overal net worth and thus the Cheesy Index. Still surprised we actually did not see a drop in the Cheesy Index. On the positive side, the total value of the Canadian shares actually rose from the end of March to the end of April (due to dividends and capital gains). This obviously buffered some of the exchange rate effect.

Other good news is that it does not matter (yet), as we will now withdraw this money for quite some time. We will therefore see many more ups and downs going forward. However, we are kind of hoping the oil price (and/or other commodities) will increase again, which usually lifts the value of the CAD vs. its counter parts. This will allow us to shift the tax return money to Europe, so we have more money to invest here.

Why not invest in Canada, I hear you ask? We have no more ability to add the funds tax efficiently into the RRSP account. Nor do we have a “normal” investment account in Canada either (and opening one from a distance is hard/impossible). In short, the funds need to be transferred to the Netherlands at some point in time. Just no sure when (I know, we should not try to time this!).

How was your April? Did you also record an increase in your net worth of investment index?

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It is that time of the month when all income is in, all numbers are added and we can now officially present to you the March 2017 Cheesy Index!

March 2017 Cheesy Index

This month we are very pleased to report yet another increase, and it is even bigger one than last month! We are up to 61%, that’s 1.5% for the month, an absolutely ridiculous MOM increase! We are now actually on track to hit the original 65% target already halfway this year. Unless there is a catastrophic market meltdown (wrong pun with North Korea at the moment…), we have a good chance to really get ahead this year.

Besides the usually contributors like the real estate, dividend income and our good savings rate, there is another reason why we shot up again this month. We finally (almost 9 month later than planned) got our Canadian taxes back from 2015! Well at least a portion of it….

March 2017 Cheesy Index

March 2017 Cheesy Index

Canadian Taxes

We still worked a few months in Canada for part of 2015, before emigrating back to the Netherlands. Once we had sold our house, we maxed out the RRSP room available. An RRSP is a Registered Retirement Savings Plan. It’s the Canadian version of a tax sheltered/tax deferred investment account, which we manage ourselves. We both have an account and we keep the majority of our dividend stock here.

When we maxed out the contributions to these accounts, we also created a rather large tax refund for ourselves. However, due to the move and the requirement for special (paper!) forms it took a bit longer to get a tax return. When we did, the refunded amounts did not match with what we had in mind. So we called the CRA (Canadian Revenue Agency) to find out why.

Apparently we had not correctly filled out parts of the tax return, so eligible deductions were not accepted. Keep in mind that these special tax returns (non-resident) are far from easy and can only be done manually (we also did one for the Netherlands for the same year, again with issues). Mrs CF together with the CRA figured out what updates where required. We submitted the updates late last year.

And behold, we are now getting back what we had originally anticipated. The payment for Mr CF came in March. Another one for Mrs CF has already arrived too, but will not show up in the Cheesy Index until next month. So there will be another massive job next month too. We are a bunch of happy campers at the moment.

How did our net worth/index develop in March? Did you also receive a surprise income, bonus or tax return?

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it’s time for cheese again, it is time for The Cheesy Index!

February 2017 Cheesy Index

This month we are very pleased to report another increase (starting to get “boring” eh?). We are up to 59.5%, that’s 1.3% for the month, an insane MOM increase! In this pace we will hit our target for 2017 already somewhere halfway the year. This cannot be right? Funny thing is, we even saw a bit of a drop at the end of February, which kind of recovered in early march again. Our month-end wealth was therefore actually a bit lower than during the surrounding days. Interesting thing is that this happened at the end of January too (and if I recall correctly, I’ve seen this happy a few times in 2016 as well). Not sure why? Any ideas as to month end market/currency fluctuations? Have not done an in depth analysis, but I’m starting to notice a trend. Perhaps I’m just tired from Miss CF being ill last week and I’m now seeing/remembering things that do not exist. It happened before 😉

February 2017 Cheesy Index

Echanges Rates – Part two

As to the exchange rates comment from last month, it looks like we have hit a new “bottom” for now. Based on our month-end numbers we have seen a slow and steady Euro weakening since early 2016. But exchange rates seem to have stabilized somewhat (i.e. exchange rates of the last two months were very similar), which also means less paper gains for February. This means that growth in the Cheesy Index for February is more “organic” (actual investment gains). Which is good, don’t really want to see “artificial” wealth gains, that would disappear during the next currency fluctuations.

This actually brings us to an interesting topic, hedging. At this stage we don’t hedge our investments, simply because we are in the accumulation phase. But when we will reach the withdrawal stage, steady cash-flow is a lot more critical. Perhaps we have to start looking at hedging or making bond reserves to withdraw from during large exchange rate fluctuations?

How did you do February? Another record high for you too, let us know!

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it’s time to talk about cheese: The Cheesy Index! These updates are so much fun to make, grabbing all the financials from all asset groups and seeing where we are on the path to FI.

January 2017 Cheesy Index

We ended 2016 with a record high 57.4% on the Cheesy Index. This was primarily due to a good stockmarket and lot’s of income in the last two months of 2016 (had very good savings rates too).

This month we are happy to report another increase! We are up to 58.2%, that’s 0.8% for the month. If we multiply that with 12, we should be able to add 9.6% to the Cheesy Index this year. If that were true, we would easily reach our target of 65% by the end of the year!

But it’s only January and we have not seen a market correction in quite some time. We are therefore very curious to see what will happen when a correction happens. Talking to other (non) bloggers about 2 weeks ago in Antwerp, the feeling appears to be horrible and you cannot really prepare (we have not lived through a correction that hit us financially). That does not boost well…

Exchange Rates

We correct our net worth (and therefore indirectly the Cheesy Index) for currencies. Each month we record the exchange rates at midnight of the last day of the month. These rates are used to calculate everything from wealth to dividends. We have been rather lucky in the last year as exchange rates have favoured our wealth number. But this cannot continue indefinitely. We are therefore anticipating a correction and therefore lower Cheesy Index growth rates this year. We still hope to reach our 2017 target, but we are mindful that the stockmarket and currency market need to be in our favour to make that happen. Our only benefit is our real estate, which does not fluctute as much. Time will tell!

How did you do financially in January? Did you also reach a record high?

 

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December 2016 Cheesy Index

If you have been reading our posts on the December 2016 savings rate, real estate and dividends, it probably is not a surprise that also the Cheesy Index had a good month/year. With lots of extra income in December, favourable exchange rates and solid passive income streams, the Cheesy Index was propelled to a record high in December last year.

As you can see below, the index hit a solid 57.4%. Considering we started the year with 47.5% (note that we did have a correction in the Cheesy Index to account for a more favourable taxation than anticipated), this means we went up a staggering 9.9%. To put this in perspective, at this rate it would take us only 10 years in total to become FI. That is seriously quick! Albeit not ExtremeEarlyRetirement.com quick….

Cheesy Index History and Forecast

But let’s not get ahead of ourselves here. There were many factors, including exchange rates and market conditions, that could still negatively affect our Cheesy Index in 2017 and therefore our ability to become FI. That being said, our portfolio is primarily driving by passive income and cash-flow. Fluctuations in the Cheesy Index don’t necessarily have an impact on our ability to become FI.

For 2017, we have a new target set based on our re-forecasted progress curve to become FI. As you can see below, the target for year end 2017 is 64.4%, or a 7% increase of the Cheesy Index compared to the close of 2016. We might underestimate the progress, but  you never know if we actually will get this long awaited market correction in 2017 and what other events may occur this year. We are currently scheduled to become FI somewhere in 2023. That is about 1.5 years ahead of the original planning we calculated back in 2014, when we got started on the whole FIRE thing.

Do you also have an index or net worth figure that you target? If so, how well did you do in 2016? What is your forecast new number for 2017? In any case, best of luck!

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November was amazing for the Cheesy Index as it rose to a record 55.5%. So far this year, the Cheesy Index went up 8%. I’m speechless, that is really good progress. But why? For November it was mainly due to Mr. Trump (did not see that one coming), more favourable exchange rates and two pay checks for Mr. CF (due to the 4 week pay periods).

With another good month anticipated for December (“13th month” payment for Mrs. CF, no major expenses anticipated, sign on bonus coming in due to the career switch), we might actually get close to the 58% mark. That would be seriously amazing if that were to happen. More to follow in 2017!

We hope you had as much benefit from Mr. Market as we did! How was your month, did you also increase your net worth by quite a bit? Let us know!

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As noted in September, the Cheesy Index got a bit of an overhaul to accommodate new knowledge about Dutch taxes. Because of this new information, we appeared to have signifcantly underestimated our Cheesy Index. Fortunately, nothing new this month, so we continue the slow but steady increase going forward. The Cheesy Index up to October 2016 is estimated at 53.9%.

We have been looking at the projected income, expenses and other items (including Mr. Market potentially not liking Mr. Trump for the remainder of the year), but we might still be able to hit 55% by the end of the year. But we do need Mr. Market to not do any really crazy stuff. Fingers crossed on that one 😉

201610-ci

Did you also see your overall portfolio increase in October? We sure hope you did!

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As already hinted on a couple of times, the Cheesy Index got a bit of an overhaul in September due to the post of this article and associated comments from you readers. We found that we had not incorporated the tax benefit called the “heffingskorting” correctly into our FI/Cheesy Index calculations. An updated assessment showed that we needed a solid €83K less Net Worth in order to become FI. That is great news, as it turns out that we just crossed the 50% mark! Seriously good news in our ears, as you can well imagine.

We also updated the yearly Cheesy Index as can be seen here. With this increased piece of knowledge about the heffingskorting, we realized what we could shift our FI date forward by about 18 months! Nice, eh? Based on the various assumptions and ROI’s, we should be ready to FI by about mid 2024. To continue with the good news run, we are now only 0.2% from the Cheesy Index target for 2016. There is a good chance that we will beat our forecast this year (assuming Mr. Market does not do anything crazy).

The Cheesy Index up to September 2016 is estimated at 53.1%.

201609-ci

How was your month of September, did you see your porfolio increase? Did you get closer to FI? Let us know!

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The Cheesy Index made a remarkable recovery in August. This was primarily due to the amazing Savings Rate that we were able to obtain, for details see here. But also due to a very happy Mr. Market.

However, we discovered two things this week and both have a major impact on the Cheesy Index. The main reason is as follows, thanks to a post by Financieel Vrij, (sorry in Dutch only) we discovered that we overestimated the amount of taxes that we have to pay during FI. This to the amount of up to €4500 per year, as we were of the impression that the general tax break did not apply to Box 3 income (details to follows in a later post). Apparently, it does and will provide us with a massive tax savings. The result is that our previously calculated target net worth, can be significantly lowered (by as much as €100.000 or more!).

Furthermore, we are in the process of a property swap from our company to us personally. The lawyer (aka the “Notaris”) actually pointed us in the direction of a tax law that also applies to real estate which is held personally and declared in Box 3 . The good thing here is that the value of the property, when used as a rental, is assigned a lower value for taxation. How much lower actually depends on the assessment value (or “WOZ” value as determined by the local municipality) and the yearly rental income. We found that for us it can be lower by as much as 15 to 38%. Why is this a good thing? Because our wealth tax in Box 3 is based on this corrected property value (and not the actual market value), which will result in lower overall taxes.

In short, we have over estimated our taxes now and during FI. We therefore have to redo some calculations, update our new target net worth and associated Cheesy Index. Expect a higher Cheesy Index next month!

The Cheesy Index up to August 2016 is as follows (still a solid, albeit significantly under estimated, 48.1% complete):

201608-ci

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The Cheesy Index took a hit in July, just as expected. The main reason is the costs for the closing of the home purchase. This caused the total cost of the house to become more than the assessed value of the property. No surprise here. And, as shown in the post on the July Saving Rates, we had several expenses in July that affected the Cheesy Index as well (as in, we did not add as much to the portfolio as we normally do in a month).

The Cheesy Index up to July 2016 is as follows (still a solid 47% complete):

201607 CI

A bit more detail on how our assets have developed over time in 2016 can be seen in the two graphs below. The first one provides the distribution of the income, non-income and depreciated assets. The first category includes all real estate, stocks, index funds and loans. The non-income assets include the house (the portion we are living in), cash and some valuable personal possessions (art/jukebox). The depreciating asset is our car. Side note, the asset allocation does not include debt or debt corrections (i.e. the mortgage).

There is clearly an uptick in non-income assets in July, but this can be explained by the fact that we now own a house again, which obviously currently does not generate any cashflow (its an expense so to say). However, if we were to move, we would rent it out and make it into an income asset (it’s a non-activated income asset).

2016-08 Asset Allocation

In the second graph provided below, you can see the more detailed distribution of the above income asset columns above. Again, you see an uptick in real estate, which is because we added 3 rentable units to our portfolio. As a result the percentage of the other groups fell, despite small additions to some of these group (dividend stocks, crown funding and index funds) in July.

2016-08 Income Asset Allocation

How is your FI number doing, and your portfolio? Let us know!

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