This is a bit of a bonus post and something that I don’t do often. Actually, I’ve never done this before! Today a quick book review: financial freedom, conversations with people how don’t have to work anymore.

Book Review: Financial Freedom

For those people who know me, I don’t read books. I’m too much a millennial with focusing issues. I can read articles and short pieces (blog posts included), but I get bored when I read a book. I don’t seem to be able to sit still long enough to focus. Going to University was a challenge from this perspective :-).

So to be brutally honest, I did not completely read this book either, but I did read several of the chapters and scanned through most of the rest (all 122 pages of it).

Book Review - Financial Freedom

Book Review – Financial Freedom: conversations with people who don’t have to work anymore

The book consists of two “parts”. The first half is related to some of the practical and emotional aspects of FIRE. Including the more philosophical questions of the drivers behind FIRE. It’s definitely NOT a self-help book in “how to get invest to get to FIRE”. However, it does provide the basics in terms of savings and investing.

The second part of the book is showcasing several different interviews with people who are FIRE. How they got there, why they did it and how they are doing. Due to the variety it’s really quite interesting. I’ve actually enjoyed this part of the book the most. It’s been inspiring and given some nice insights into others that are bit ahead of us in terms of this “I don’t need to work anymore” thing.

Where and how much?

More details about the author (Gisela Enders) and the book can be found here:

http://www.financial-free.eu/?lang=en

On this page you can also find the link to where you can order the book. But please pay attention, the book should be available for the reduced price of €2.99 (regular price is €14.99) between November 24 – 26, 2017.

The book was translated into English for free and all the proceeds of the English version of the book will be donated to a children’s home in Romania. That’s a clear win-win if you ask me!

 

Full disclaimer: I don’t get AHY money or other rewards/reimbursements for this and nor do I want any. This really just has been a “pay if forward” effort.

 

How do Ethics and FIRE mingle? This appears to be a topic that a lot of people struggle with, at least that is the feedback that we received after the last Meetup in Eindhoven. For the next meet up we will likely add a discussion on this topic. This development also caused us to rethink various question(s). What do we think and why? How does it affect our investment decisions? Today we look at Part 2.

Ethics and FIRE

For sake of clarity I’d split the Ethics and FIRE discussion into two main components:

  • Ethics of FIRE itself (i.e. “living off the system”, while paying relatively little taxes and social security premiums), as discussed earlier this week; and,
  • Investment ethics (e.g. investment in oil, weapons, energy, real estate, cigarettes, etc.).

Today I’ll focus on the second part: Ethics of Investments.

The Ethics of Investments

This one is bound to really stir up some opinions 🙂 Please don’t hold back! Let’s have a look at a few of the industries/sectors and discuss, shall we?

Cigarettes

Stating the obvious here: smoking is really bad for you, period. But it is one’s own decision to start smoking, so is to quit smoking. It’s a personal responsibility. From a health perspective I don’t mind that it is discouraged via taxation. Heck, if it was me the taxes would go way up, or better abolish smoking by law. There are simply no positives about smoking.

Ethics of Investments - Cigarettes

Ethics of Investments – Cigarettes

That being said, investing in cigarette companies appears to be very lucrative. Companies such as Phillip Morris have proved to be a very good investment decision over the past decades. They are great dividend stocks. But would buying it be unethical? Would you stimulate smoking by owning shares in a company that produces cigarettes? I personally don’t believe so. Yet we don’t invest into this sector either. I don’t want my money to facilitate a habit that is so disgusting. Perhaps we are loosing some ROI and diversification in the process, but we are OK with this.

Weapons

I’m going to group small guns and all the way to army weapon systems into one sector here for sake of convenience. Contrary to cigarettes (where you make the choice), it’s the government that has the biggest impact on this industry (or lack thereof due to influential lobbying).

Ethics of Investments - Weapons

Ethics of Investments – Weapons

It’s an industry that is driven only in a small part by private consumers, the majority of the buyers are governments (especially on the “commercial” side of things). In short, my wallet does have little to no impact on this sector (but my voting rights may!).

This is also why we don’t own any shares in companies that produce weapons. It’s the only way to have an impact (if any). Again, we will lack some diversification and yield as a result. But that is a trade-off that we happily live with. At least our money is not used to destroy each other.

Energy

Again, for sake of convenience, I’m going to combine both oil & gas and utility companies together. Both are sectors that concern energy production, distribution and usage. Whether this be for your car, your holiday flights or the heating of your house.

As noted earlier, I don’t think I have much impact as an investor. But I do have a “major” impact as a consumer. When I use less fuel, electricity or gas, I directly affect the core business of these companies. If I actively purchase “green” energy, companies will see new business opportunities and modify their business models to capture this “new” market. Prices go down and we have a global win-win.

Ethics and Investments - Oil & Gas

Ethics and Investments – Oil & Gas Source: http://www.ampcapital.com.au/site-assets/articles/market-watch/2014/august/natural-gas-extraction-whats-the-fracking-problem

Furthermore, these companies operate under environmental licenses (or lack thereof) issued by governments. So if I really want to have an impact, my voting should do the trick. By voting green parties you could have some impact on legislation, which in return could affect how these companies do their business.

Mining

For mining companies the same applies as for the Energy sector. By consuming less “stuff”, you need fewer resources, this less demand on products thus fewer unethical practices. You vote with you wallet! Same as with the energy industry, governments and legislation (and verifying that legislation is followed!) also have a direct major impact. If you want change, you have to vote.

Sure, there is something to be said that you don’t wan to support companies that are knowingly not adhering to environmental and ethical standards and policies. Some of this misconduct finds it’s way out in the open via the main stream media. In that case you can make the decision not to invest into that specific company.

In short, we invest in the mining (and energy and utility) sectors, we have no (major) ethical issues with it as we do try to affect their business model via different routes. We do try to select companies that have a reasonable track record from an environmental stand point.

Ethics and Investments - Oilsands Mining

Ethics and Investments – Oilsands Mining

Airlines

We actually own shares in airlines. It was part of a diversification strategy to include this sector as well. However, the airline industry is one of the most heavily subsidized industries on the planet (after the agricultural sector). Which makes sense once you realize that a flight within Europe can be cheaper than driving with your car. With “normal” economics that should never be possible. This is obviously driving major growth in this sector (and associated sectors like tourism and trade). The downside is a significant environmental impact, considering flying is the most polluting form of transport.

Ethics and Investments - Airlines

Ethics and Investments – Airlines
Source: https://www.westjet.com/en-ca/about-us/fleet/767-aircraft

Is it therefore unethical to invest into this industry? In my opinion it is not. Ultimately the responsibility of whether to fly lies with you. You might be able to drive, bus, train, boat, cycle or even walk to your holiday destination. It might not go as fast, but it is often a possibility (notable exception is if you need to cross the big ponds, a boat will take a while). Same with business meetings, a telecon might work just as well.

If the government starts to get real on conservation and sustainability, the subsidies will be reduced and the sector might become less profitable. By that time we will have moved away from this investment sector and deploy the cash elsewhere. In the mean time, we try to limit our travel by air and offset some of the damage where possible.

Real Estate

Ethics of Investment - Real Estate

Ethics of Investment – Real Estate

As you are likely aware we are real estate investors. Is this ethical? I would say yes, assuming you are sticking to applicable laws and regulations. In fact we are providing housing solutions to people that need a temporary place to live (before buying their own or moving in with someone else).

We do make a good profit at the end of the day on these investments. But we also accept the risk and obligations that come with this investment form. The latter is the reason why we also think this is an ethical investment, it’s not a free for all. It’s also a voluntary decision by the tenant to sign the binding contract to use your (living/working) space.

Agricultural

There are obviously many more industries that have ethical aspects to it. The agricultural sector also springs to mind, specifically the livestock production. When ranking environmentally damaging industries, this one comes in close to the top. Especially when combining the effects of methane, CO2, air & water & soil pollution, antibiotics and animal cruelty.

But as mentioned before, we as consumers have the biggest impact. Just eat less or no meat and you will be doing yourself and mother nature a big favor. But is investing in this industry unethical? I would again say no, but there is one company we will never invest in, which is Monsanto. Their way of lobbying and doing business (treatment of (organic) farmers) is just too unethical for my taste.

Ethics and Investments - Lifestock Agriculture

Ethics and Investments – Life stock Agriculture
Source: https://summitcountyvoice.com/2011/07/20/study-pinpoints-greenhouse-gas-emissions-from-livestock/

Pharmaceutical/Medical

Another interesting sector is the pharmaceutical industry (in combination with the medical profession). I would love to make it my personal mission to spend little to no money here by living healthy. There are obviously many products they provide that are either convenient (think painkillers, cold medication, etc.) or very useful (cancer treatments, medical equipment, vaccinations, etc.).

However, the pharmaceutical lobby is very powerful and has a major impact on government politics (and doctors!). They are very good at selling their products. To be brutally honest, they don’t benefit from a healthy population! It’s actually best for them to just have you be slightly ill (read chronically ill) so they can keep selling your medication (think diabetes type 2, high blood pressure, blood thinners, cholesterol lowering, etc.). Simple fact is that you can get avoid or eliminate most of these with dietary changes (it takes an hour, but it’s worth watching this video).

It’s not uncommon for the pharmaceutical industry to produce research (highly recommend watching this video, very good) that confirms the “need” for their products. This is obviously far from ethical behavior! Unfortunately, the only way to control this industry is by government regulation, which is nearly non-existing due to strong lobbying. A catch 22….

Discussion and Conclusions

As mentioned in the previous post, ethics will mean a different thing to everyone, which makes for interesting discussions and decisions. Same as “personal” finance, ethics is very much personal too. Ultimately you have to do what feels right to you. That being said, it might not be such a bad thing to also look at how your decisions impact others, directly and indirectly.

I believe it is the governments responsibility to limit sectors that have a negative impact on humanity and stimulate sectors that have a positive impact. I also believe that we as consumers can have a far larger impact with our wallets than with our investments. By not buying certain products, or buying less of them, we affect the business models of many companies. Thereby we stimulate change in certain sectors.

That being said, you as a shareholder have “some” impact on a company. You have voting rights. But considering most people and institutions invest to make money, very few will use their right to make businesses noticeably more sustainable or force them to change their core business model. But it does occasionally happen (think Shell).

Personally, I rather keep voting with my wallet and change our investment strategy depending on how businesses are doing, rather than what they are doing (with a few notable exceptions). It is also key to make sure your investments make good yields or capital gains, especially is you want to become and remain FI. Finding the right investments that combine this trait, but still adhere to your ethics can be a challenge indeed.

 

What’s your strategy to combine ethics with investing?

How do Ethics and FIRE mingle? This appears to be a topic that a lot of people struggle with, at least that is the feedback that we received after the last Meetup in Eindhoven. For the next meet up we will likely add a discussion on this topic. This development also caused us to rethink various question(s). What do we think and why? How does it affect our investment decisions? This poat could easily turninto an PhD thesis, so I’m going to try to keep it limited 🙂 Or better, a two post series! Today we start with part 1, will do part 2 later this week.

Ethics and FIRE

For sake of clarity I’m going to split the Ethics and FIRE discussion into two main components:

  • Ethics of FIRE itself (i.e. “living off the system”, while paying relatively little taxes and social security premiums); and,
  • Investment ethics (e.g. investment in oil, weapons, energy, real estate, cigarettes, etc.).

Today we look at Part 1: Ethics and FIRE.

The Ethics of FIRE

I have mentioned once to a colleague that I was planning to become Financially Independent and Retire Early (FIRE). Her first response was that it was unethical because I would not longer pay any taxes (funny note, most people first ask “how” to become FIRE).

Now, for the Netherlands this is far from true, as we are taxed on an assumed ROI of our wealth (the latter is defined as “assets minus liabilities” in tax Box 3). It is however true that we will be paying a lot less taxes and no more social security premiums when we stop working when we are FI. Obviously, we will continue paying taxes on our properties and fees for local water management and for garbage removal.

However, we recon that our overall tax burden (including social premiums) would drop by about a factor 7-8 once we are FIRE-d. But we will still be using public roads, the medical system, police and fire services, and perhaps even qualify for certain benefits and/or subsidies (albeit very few).

Taxation

Taxation

Ethics Discussion

This begs the question is this ethical? Paying less into the system, but still using it (both directly and indirectly). From a pure social perspective, it is not. However, we would have a lot of time to volunteer (and will likely do so). Albeit this does not directly mean anything in financial terms for the government. It does have a positive social and perhaps even economic impact. Would it offset the loss in taxes, I’m not sure, but it does make me feel better.

Does it feel selfish to FIRE? To a degree is does. Is it going to stop us, eh, nope. By the time we reach FIRE we would have worked about 40-50% of our “normal” working life. Due to our above average education and associated income, we pay well above average amounts of taxes. Does this make it right, probably not, but it does make it feel more acceptable.

Plus, we will continue to pay taxes, as mentioned earlier, on our investments. This amount will likely be more than some people pay with little to no income (ignoring people on benefits here too). There is the caveat that we are not contributing to the social system (we would not pay social premiums when FIRE), but are not allowed to use the system either (due to our wealth), with the exception of old age security (AOW) and the medical system.

Conclusions

Ethics will mean a different thing to everyone, which makes for interesting discussions and decisions. Same as “personal” finance, ethics is very much personal too. Ultimately you have to do what feels right to you. That being said, it might not be such a bad thing to also look at how your decisions impact others, directly and indirectly.

Is striving and becoming FIRE ethical? Depending on your opinions, country where you live, the local tax system and what you are going to be doing once you are FI, the answer may be different. There certainly is a selfish component to becoming FI and RE, but to say it is unethical is a bit much for my taste. As long as you stick to the rules of the system, “legally” there is nothing “wrong” with becoming FIRE.

 

What’s your strategy to combine ethics and FIRE?

We have a reader question for your for today. We are doing pretty good on the savings rate side of things at the moment, but that is about to change next year. We are planning for a 9 week holiday in 2018. The plan is to go road tripping through southern Europe. But this also means 2 months of unpaid leave for Mr. CF. Mrs. CF is going to have 2 months of paid leave instead of her cash bonus (sweet deal!). In short, the savings rate is going to be far from stellar in 2018. Furthermore, Mr. CF is likely to also quite his job in the second half of 2018 (about a 1 year delay). We therefore have the following Reader Question: Shall we do a Christmas Holiday Trip?

A Christmas Holiday Trip?

We could just ignore all our dilemmas and just splurge on our third vacation of 2017. But that’s not us. Here are our dilemmas:

  1. We are off work over the holiday season (mandatory paid time off). We will be off from Friday December 22, 2017 until January 1, 2018; a nice 11 days without having to lift a finger. It would only cost a bit of money to actually travel and spent Christmas somewhere warm for a change;
  2. If we do, how much money would be reasonable for this trip?
  3. If we want to go somewhere warm, we would need to fly. This obviously has a big environmental impact, should be pay some extra and compensate our emissions?
  4. Where do we want to go? Considering Miss CF is not good at sitting still, we want to keep the travel time limited. This pretty much limits our options to places like Portugal, Spain, Greece, Italy, Egypt, Morocco and perhaps even Dubai.
Reader Question - Spain

Reader Question – Spain
Source: https://www.clickstay.com/blog/6-reasons-for-a-friends-holiday-to-spain

Dilemma 1 & 2: Money

Simple fact is that we still have some budget for this year to travel, despite our 2 earlier holidays to Belgium and Germany. MoneyIf we don’t use the available budget, the savings rate just goes up further and we have more breathing room in 2018 for the long road trip. It would basically provide a buffer for next year. Can we miss the money, sure. But would it help us next year, absolutely!

How much money do we have available? Ideally we would want to limit the costs to about €1000 for the 3 of us for 6-7 days (so about €150/day). This might be tough (if even possible?) and won’t be very luxurious, but that fine with us. If we would go “fancy” we could stretch this to €1500.

What would you do?

Dilemma 3: Emissions Compensation

This dilemma ultimately revolves around money again. As compensation of emission from flying can be done by simply spending some more money. The costs of compensation for 3 people flying to Lisbon (Portugal) from Amsterdam, in Economy, would just be about €12 via Greenseats and €24 via Treesforall. Not really shocking amounts! Should be a no brainer, really, to compensate about 2-3t of CO2 from flying.

Reader Question - Emissions Compensation

Reader Question – Emissions Compensation
Source: https://lu.myclimate.org/private-clients/

 

What do you think, any other options/alternatives?

Dilemma 4: Locations!

Now this is a dilemma and a challenge all at the same time! Ideally we want to fly from Amsterdam, Rotterdam or Eindhoven. Those are places we can get to quick quickly via public transport or by cab. We could move out further to Dusseldorf or Brussels, but that would take away precious time travelling without seeing anything, but might have a potential for lower costs.

Let’s assume we limit the costs for travel and accommodation to about €800 and leave about €400 for food, attractions and trips. Based on a quick search we did, Dubai seems to be out of the question (too expensive). Portugal and Spain are good options but we might need to book flights ourselves in combo with AirBnB.

So far I was not able to find deals that fitted the financial criteria. Perhaps I’m aiming too high (or low) for a holiday during a school holiday and the Christmas season? We are also opting to see if you can purchase a last-minute within 1-3 days of travelling, never done something like it before. Could be cool! It also does not fix the destination until the “the last minute”.

Reader Question - Dubai

Reader Question – Dubai
Source: https://www.viatorcom.nl/nl/7381/tours/Dubai/Helicopter-Flight-in-Dubai/d828-6267HELIDUBAI

 

So, our beloved readers, pitch in some ideas! Would love some feedback and ideas. Do keep in mind that we would like to go to a place that is relatively warm and (preferably) dry. Have had enough grey and wet weather for now…..

Good morning (or whatever time of the day you are reading this), we got a pretty juicy October 2017 Dividend Update!

Monthly Dividend Update

It was a bit of a wild month. We had been eyeing several Real Estate opportunities for a while. To be able to know with certainty how much money we would have, we decided to liquidate a portion of the Dutch dividend shares. We sold shares that made a bit of a profit, including ABN, RDSA and BOS. In case of RDSA, we should have kept them a little longer as they skyrocketed the last few weeks. But hindsight is 20-20 and we did not know if the opportunity would materialize quickly! Unfortunately it didn’t, but that’s ok. You win some, you loose some, at least we still have the cash ready to be deployed.

We will likely also sell the UN and AH shares too and transfer into other (higher yielding) cash-flow investments. Once that cash-flow is ongoing, we will like start to re-invest into dividend shares and/or index funds. The jury is still out on this one, it also depends on what the market is doing.

We continued to DRIP as many shares as possible (no fees and some share price discounts!). These include the usual monthly dividend payers such as (and a few quarterly payers too such as BNS, AQN, AGU and GS):

  • AAR.UN (REIT);
  • CJR.B (Communication Services);
  • CIX (Finance);
  • DRG.UN (REIT);
  • LIQ.UN (Consumer Staples);
  • SJR.B (Communication Services);
  • HR.UN (REIT); and,
  • PLZ.UN (REIT).

Don’t forget to check out the community updates at the Dividend Diplomats and Easy Dividend.

October Dividends

All the dividend deposits received into the bank accounts (correct for exchange rates) sum up to a total dividend income of almost €730. This is an increase of about 33.9% compared to last year. This is mainly driven by a special dividend from GS (a Canadian financial institution for high net worth individuals). This added a whopping €181 to the total dividend. We very much approve!

The stats for last month:

October 2017 Dividend Update - Dividend Income

October 2017 Dividend Update – Dividend Income

The graph below is showing the yearly dividend totals for 2015 and 2016, and a year-to-date dividend total for 2017. Yes, we beat our income from 2016, with two more months to go!

October 2017 Dividend Update - Yearly Dividend Overview

October 2017 Dividend Update – Yearly Dividend Overview

The “Dutch” dividend income (AH, ABN, BOS, UNA and RDSA) are all after taxes (15%). The rest are held in RRSP’s and are not taxed (we will pay withholding tax when we withdraw from the account, but the dividends are not taxed themselves).

Dividend Stock Overview

Our dividend portfolio now contains 43 companies with a total of 11.472 shares (up 1.575 shares from a year ago).

It looks like this:

October 2017 Dividend Update - Dividend Overview

October 2017 Dividend Update – Dividend Overview

Big note here as I was not able to record all stock values around month end. The above is a snap shot with the majority of the share values as per close of business on October 16.

Dividend Sector Breakdown

When you breakdown the previously shown dividend stock overview by sector, it looks as follows:

October 2017 Dividend Update - Sector Allocation

October 2017 Dividend Update – Sector Allocation

 

How was your October dividend income, any good surprises for you too?

And we are back to “just above normal” with out October 2017 Savings Rate. After the unreal savings rate of September, we were bound to get off our new record high. But we did surprisingly better than I thought. So let’s look at the month of October form a household finances perspective.

Savings Rate Update

Savings Rate Update

October Finances

October was a very good month. Here is a short financial overview:

  • We received our regular incomes this month, the expense claim up to September was also recieved. We also received the quarterly childcare benefits (~€200). Still, the October income was slightly below the YTD average monthly income;
  • The crowdfunding income was back to normal with €207 in deposits (combined interest and principle);
  • Living and healthcare catogery was about €737 in total. This includes costs for mortgage interest, home insurance, healthcare premiums, utilities and home maintenance. November will be expensive as we have roof improvement work planned (totalling €1200); 
  • The transport costs were about average with €295 spent;
  • Grocery costs were again well above normal this month with a total of about €405. This included some shopping from the holiday in Germany that was booked in October;
  • The kid category is now at the “new” normal with about €570, which is primarily after school care (4 days per week) and some randon items for Miss CF;
  • Travel and Leisure was about €115. This included costs for a hotel we used on the last day of our holiday and a few outings for the remainder of the month; and,
  • The other category was about €260. This was very high due to a €95 restaurant bill (which was so worth it after 4 years of not going out to dinner with the two of us). Other expenses include a gym membership, some cash purchases and shoe repairs.

October 2017 Savings Rate 

The savings rate for October was a very good 68.2%. The year-to-date savings rate is now up to 63,6%. We are not going to make platinum for 2017, but we remain solidly in the badass gold saver catergory. 

Here are the stats:

October 2017 Savings Rate - Overview

October 2017 Savings Rate – Overview

If you breakdown our expenses for the month, the distribution looks like this:

October 2017 Savings Rate - Expenses

October 2017 Savings Rate – Expenses

 

Did you also have a great October? If you did, what made it a success? If not, what went wrong?

It was a rather successful Eindhoven BENL Meetup, if I may say so myself. We had a total of 38 people (and one little person) join last Saturday to talk money and FIRE for the day. As with every event we have organized in the past, we walk away with lots of things to discuss and review. So many new ideas!

Eindhoven BENL Meetup

The group that met was quite diverse (as per usual), both in terms of bloggers and non-bloggers. Some people are FIRE already, other have no desire to become FIRE at all. This makes for great discussions and the ability to explore other viewpoints. We really enjoy this part of the event; random discussions with complete (internet) strangers and new friends.

That being said, we always try to make a program that is diverse in nature. However, due to time restrictions and the difficulty of finding presenters, this is always a challenge. The event in Eindhoven was this time geared towards the investing side of things with presentations on Cryctocurrencies and investing in Holdings (I’m in the process to see if we can make guest posts about the two presentations).

We also hosted the loverly Mr and Mrs W from Whatlifecouldbe. They are already FIRE and are actively working on a European version of the “Rockstar Finance” site: FIREhub.eu.

They also presented and provided information about a European FIRE event that they organize: FIWE. The next one is schedule for the summary of 2018. For more details, see the FIWE link above.

BENL FIRE Meetup Eindhoven

Many Cheese-heads at the BENL FIRE Meetup in Eindhoven

Other Bloggers

Obviously some of the bloggers make a short write up of these meetups, below is a summary of a few of them (mainly in Dutch!) from the Eindhoven edition last weekend:

http://geld-is-tijd.blogspot.nl/2017/11/de-ethiek-van-fire.html

EindhovenCon – FIRE meetup (2)

BENL Meetup Eindhoven

Next Time?

Of course we are going to continue with organizing these events. It is very rewarding and fun. The next event will likely be in February or March of 2018 in Leuven, Belgium. Those that attended the last few events will get an invite to propose their favorite days, from which we will select the final date (or dates, if we make this a weekend long event).

BENL Meetup Leuven Belgium

BENL Meetup Leuven Belgium
Source: http://www.art7d.be/belLeuv1.html

We are obviously already looking for new presentations and discussion topics. Some already proposed include:

  • Preferred Shares
  • Permaculture
  • The ethics of investing
  • Investment loans
  • Estate planning and inheritance
  • Financial Planners, are they worth a visit?

If you have a topic you are interested in, please let us know. If you want to present a topic yourself, you are encouraged to let us know too.

Amber Tree Leaves and us will keep you posted on the developments for the 5th BENL meetup.

 

It is again time for the Real Estate Report – October 2017 edition. Still keeping the posts sort to limit the impact on my arm, but it is going rather well at the moment.

Real Estate Report – October 2017

Rental Income

Our rental income for October now well above the €3.000 mark due to some new developments. We have given out a €15.000 loan to another couple of Real Estate investors. They have used this loan to purchase more property. We get 6% interest on this investment loan, which is paid monthly. In return for this high interest rate the lenders have gotten a flexible repayment plan. Both parties are happy with the end result!

We also did have one unit rented for 1,5 days less due to the now tenant moving. Never knew the property manager could bill the new tenant for half a day! But hey, it works for us (half a day more than expected).

The monthly income overview is provided below:

Real Estate Update - October 2017 Income

Real Estate Update – October 2017 Income

Rental Expenses

The expense for October were high, mainly due to the massive property management costs. These are caused by the new tenant moving in. Expenses are one month rent + 21% sales tax. That hurts, but it’s still worth it for us as we did not have to lift a finger and we get a more favourable tax regiment.

Other costs are the usual mortgage, loan and insurance premiums. No maintenance required this month.

The expenses for the month are as follows:

Real Estate Update - October 2017 Expenses

Real Estate Update – October 2017 Expenses

Real Estate Report – Overview

We made a total of almost €1.425 in net rental income for the month of October (before taxes).  The net cash-flow will come in at around €1.000. Our total YTD net rental income for 2017 is now about €19.043 (before taxes), the associated net cashflow is around €15.000.

Real Estate Update - October 2017 Overview

Real Estate Update – October 2017 Overview

Real Estate Report – Forecast

We have just decided last night to not go for the 4-plex. Too many risks with the exit strategy and financing. Also still no confirmation on the renovations quote either (contractors are super busy right now, really annoying). We still might low-ball with an offer on the property, just to see what happens. Not expecting much.

On the other hand, we have been approved to become private money lenders via a real estate loan platform. The idea is that one party provides a loan to another party to finance (or re-finance) Real Estate. In return you get the first lien right (eerste hypotheek recht), all arranged via a notary public, and one heck of a interest rate (5.5-6.0% net per annum). These investment are for commercial use or to rent out as an investment property only. Personal use of the property is not permitted. 

What is the catch? The lender is allowed to repay as much as he/she likes at any time. In the worst case you get you money back within a year or two. This does not seem to happen in most cases, but it still happens. Minimum investments are €100.000 and a maximum of €500.000. I’ll write a more detailed post about this in the future. However, instead of buying overprices property right now, we are seriously considering expanding to this super passive RE investment opportunity. It almost even beats out the final overall net return on investment (after taxes) for the 4-plex! But with virtually no risks or efforts, very appealing.  

 

How is are you doing with your real estate ideas and leads?

The next BENL Meetup is scheduled for coming Saturday November 4 in Eindhoven. We have had a few last minute cancellations and therefore have a few more spots available. If you still want to join, please leave us a comment! This will be a first come, first serve opportunity so don’t wait too long. We max out at 40 people for this event (due to the FIRE code, how ironic!), so that’s a lot of opinions, ideas and knowledge in one room!

BENL FIRE Meetups - Financial Fun Since 2016

BENL FIRE Meetups – Financial Fun Since 2016

BENL Meetup – Eindhoven Edition – Final Call!

We will be having quite a internaltional group of people again, with folks coming all they way from Romania! It will be an all-day program with lots or interactions, discussions, fun, food and finance. It’s a great way to have an informal discussion on everyting finance, FIRE and personal situations without being looked as if you are nuts.

If you want an impression of what it’s like, check this post.

 

BENL Meetup

BENL Meetup – Eindhoven Edition!

The selected venue is in “downtown” Eindhoven and really easily accessible by public transport. Parking in not too bad, especially not if you don’t mind a short walk. More details will be provided to those that register!

What are we planning?

The program is now available and looks as follows:

  • 10:00-11:00 Doors open and general introductions;
  • 11:00-12:30 Financial speed dating (will make a couple of groups and have people rotate in 5 min sessions to get to know each other);
  • 12:30-14:00 Lunch (Brown Bag);
  • 14:00-17:00 Presentations and discussions. Topics include a new European “Rockstar Finance” site, Crypto Currencies, investing in holdings and FIWE;
  • 17:00-18:30 Drinks and chats;
  • 18:30-19:00 Cleanup of venue & exit; and,
  • 19:00-?? Restaurant/Bars

Hope to see you soon!

Cheers.

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)?

Quick look at the September 2017 Dividend Update, which was good as you can imagine as many companies pay in September.

Monthly Dividend Update

Not much to report, no purchases or selling this month. We continue to DRIP as many shares as possible (no fees and some share price discounts!). These include the usual monthly dividend payers such as (and a few quarterly payers too such as RDS.A and UN):

  • AAR.UN (REIT);
  • CJR.B (Communication Services);
  • CIX (Finance);
  • DRG.UN (REIT);
  • LIQ.UN (Consumer Staples);
  • SJR.B (Communication Services);
  • HR.UN (REIT); and,
  • PLZ.UN (REIT).

Don’t forget to check out the community updates at the Dividend Diplomats and Easy Dividend.

September Dividends

All the dividend deposits received into the bank accounts (correct for exchange rates) sum up to a total dividend income of almost €842. This is an increase of about 46.3% compared to last year. This is mainly driven by having a position in ABN and way more RDS.A shares this year. So it’s not a very representative increase.

The stats:

September 2017 Dividend Update - Dividend Income

September 2017 Dividend Update – Dividend Income

The graph below is showing the yearly dividend totals for 2015 and 2016, and a year-to-date dividend total for 2017. We are so close to matching last year’s dividend income!

The “Dutch” dividend income (AH, ABN, BOS, UNA and RDSA) are all after taxes (15%). The rest are held in RRSP’s and are not taxed (we will pay withholding tax when we withdraw from the account, but the dividends are not taxed themselves).

September 2017 Dividend Update - Yearly Dividend Overview

September 2017 Dividend Update – Yearly Dividend Overview

 

Dividend Stock Overview

Our dividend portfolio still contains 46 companies with a total of 12.198 shares and looks like this (up 2.301 shares from a year ago):

September 2017 Dividend Update - Dividend Overview

September 2017 Dividend Update – Dividend Overview

Big note here as I was not able to record all stock values around month end. The above is a snap shot with the majority of the share values as per close of business on October 16.

Dividend Sector Breakdown

When you breakdown the previously shown dividend stock overview by sector, it looks as follows:

September 2017 Dividend Update - Sector Allocation

September 2017 Dividend Update – Sector Allocation

 

How was your September dividend income, were you happy too?

Savings Rate Update

I’m going to keep the posts short in the coming while to continue my reduction in RSI symptoms. That being said, our September 2017 Savings Rate was insane, despite our Holiday in Germany!

September Finances

September was a great month, both financially as well as personally  (the holiday helped big time). Here is a short financial overview of the month:

  • We received our regular incomes this month. Mrs CF’s large expense claim was delayed to October, so overall income from labour was slightly lower than normal;
  • We finally received Mrs CF’s 2015 tax return! Glad to have this sorted and the extra almost €1600 was a very nice to have;
  • The crowdfunding income was a whopping €515 in deposits (combined interest and principle), which is way above normal. This is due to a repayment of a one year loan + interest;
  • Living and healthcare was uhm, negative this month (i.e. we “got money” instead of paying). Main reason is the repayment of surplus paid money for gas and electricity for the last year (got almost €900, despite having lowered payments twice last year). The repayment combined with low expense led to a expense of €-314 this month; 
  • The transport costs were well above average with just under €300 spent. But this was purely due to the holiday travels;
  • Grocery costs were also above normal this month with a total of about €400. Also the result of the luxury holiday shopping;
  • The kid category was very low this month due to the switch to going to school and after school care. We also to a bit too much reimbursement from the government, this will be corrected for October. Total costs were under €200;
  • Travel and Leisure was only about €110. The main costs were covered last month and some will fall into October. Costs for fuel and food have been covered above; and,
  • The other category was about €125. This was mainly expense for a gift, workout costs and some minor random expenses.

September 2017 Savings Rate 

The savings rate for September was an insane 90,0% (no this is not a calculation error!). The year-to-date savings rate is now up to 63,0%. We are now solidly in the badass gold saver catergory. 

Here are the stats:

September 2017 Savings Rate - Overview

September 2017 Savings Rate – Overview

If you breakdown our expenses for the month, the distribution looks like this:

September 2017 Savings Rate - Expenses

September 2017 Savings Rate – Expenses

Please note the negative percentage for living and healthcare, this is caused by the major return for G/W/E. Won’t happen again 😉

 

How did you do in September? Any unusual numbers for you too?

Still taking it easy on the blogging, the RSI is not gone but has reduced a bit. To slowly start I’m going to catch up on September with the a short post: Real Estate Report – September 2017.

Real Estate Report – September 2017

Rental Income

Our rental income for September is again above the €3.000 mark. Nothing special to report here.

The monthly income overview is provided below:

Real Estate Update - September 2017 Income

Real Estate Update – September 2017 Income

Rental Expenses

The costs for the month of september where the mortgage, personal loan and property management fees. However, we also paid to have the outside wall of one unit treated for a moisture issue (moisture was creeping up within the wall from the foundation). Only paint work remaining now on the inside, which will be one in December when the wall has dried out.

The expenses for the month are as follows:

Real Estate Update - September 2017 Expenses

Real Estate Update – September 2017 Expenses

Real Estate Report – Overview

We made a total of almost €1.945 in net rental income for the month of September (before taxes).  The net cash-flow will come in at around €1.550. Our total YTD net rental income for 2017 is now about €17.689 (before taxes), the associated net cashflow is around €14.000. The would cover about 75% of our core expenses during our FI. Not bad, but taxes will drop this percentage a bit.

Real Estate Update - September 2017 Overview

Real Estate Update – September 2017 Overview

Real Estate Report – Forecast

We have made an appointment for April 2018 to have the outside fixed up for two units. Price will be €5.000 for the stucco and €500 for the preparation works, followed by an certain amount of cost for paint work. In short, we will be about €6.000-6.500 out of pocket next year for this project. After which those units should need very little going forward as they are completely renovated at that point (inside and out).

Still looking around to find new investments. We are awaiting a quote for renovation works for a potential future four-plex. If that is reasonable, we might put in an offer on the property. Alternatively, we might give out a investment loan to another RE investor to purchase a property. For this investment loan we have an appointement later this week.

How is your real estate adventure going?

It already seems like ages ago, but it was only 3 weeks since we were celebrating our holiday in Germany. It was yet another “holiday on a budget”, similar to the one we did in Belgium earlier this year. This was somewhat intentional, as we are well aware that little Miss CF does not need much to be happy. Actually, it makes her happy just to get attention, we don’t need to travel far or fancy to have a great time. She also does not like to sit in a car very long, so we are currently limiting our holidays within about 4 hours drive from where we live.

There is definitely a win-win here, great holidays, little travel and a limited budget impact.

Holiday in Germany

Germany is a great country to visit. It has lots of culture, great food and drinks and enough entertainment to make every one happy. We tried to balance the cultural side with some activities and fun things for Miss CF. Seems like we managed it again. Below is a random collection of some of the things we have seen and done.

Bad-Arolsen

Holiday in Germany: Bad-Arolsen City Centre

Holiday in Germany: Bad-Arolsen City Centre

Holiday in Germany: Schloss Arolsen

Holiday in Germany: Schloss Arolsen

Willingen and Area

Willingen lies about 15km Northeast of Winterberg, a popular ski resort. Willing has it’s own ski area too. Artificial snow is made from the water in this lake:

Holiday in Germany: Viewpoint

Holiday in Germany: Viewpoint

Holiday in Germany: Appartment View

Holiday in Germany: Appartment View

Kleve and Area

Kleve is a town just across the border with Nijmegen and has a pretty castle on the hill and a nice town centre.

Holiday in Germany: Castle in Kleve

Holiday in Germany: Castle in Kleve

Holiday in Germany: Peaceful River

Holiday in Germany: Peaceful River

A bit further east you can find Schloss Moyland, it has a museum for modern art inside (which we did not visit) and a very pretty garden that you can walk (fees €2pp).

Holiday in Germany: Art?

Holiday in Germany: Art?

Holiday in Germany: Schloss Moyland

Holiday in Germany: Schloss Moyland

Irrland

If you have kids, and you want a cheap but very fun day, check our Irrland (no affiliate link!) in Germany (just across the border near Venlo). Entrance fee is just €6.50pp and you have 300.000m2 (!) of play areas to choose from and around 1000 BBQ spots. it’s hugh! Snacks and drinks are also very affordable in the single euro range (albeit we brought our own of course….).

Holiday in Germany: Irrland

Holiday in Germany: Irrland

Holiday in Germany: Irrland

Holiday in Germany: Irrland (Awesome Slides!)

The Finances

We had a great time, even on a relaively small budget. Let’s have a quick look at the numbers:

  • Days away: 9 (8 nights);
  • AirBnB first two nights: €43.5 (this was dirt cheap, but surprisingly comfortable);
  • Accomodation next 5 nights: €292.5 (Appartment with it’s on indoor pool);
  • Accomodation final night: €76 (Hotel near Maastricht);
  • Food: €144.5 (primarily from de Lidl and REWE; also includes some beers as gifts for family);
  • Gas: €85.5; and,
  • Cash/Entrance Fees/General: €70.

Total cost for the holiday: €712. Not bad, we generally aim to be below €100 per day for the 3 of us combined. Considering the fun we had, it was money very well spent!

Just as a heads up, you don’t see thos total amount in the upcoming savings rate post. Here we remove the fees for gas and food, as they are reported under Transportation and Groceries. Some expenses will also be coming in the October overview too.

 

How was your last holiday, or where are you going next? Let us know!

A recent post by Divnomics about her job switch got me thinking, how is the FIRE journey affecting my job? Vice versa it is quite good, the job is definitely helping the journey to FIRE! But the FIRE journey has really affected how I value my job and my motivation for one. Todays post is then also about the FIRE Journey and the Job.

FIRE Journey and the Job

Divnomics notes in her post that she felt no longer challenge in her job, which meant to her the she’s not growing in her position. The best solution would be to jump ship and swim to a new one. This she has been able to do, congrats!

The problem with me is that I didn’t particularly like my jobs I’ve been having in the past few years. Make that the last 4-5 years actually. The problem started in 2012 when I had landed a dream job and enjoyed that for about a year. The problem with that job was that it had an expiry date. Once completed I had to return to doing things I was good at, but could no longer find satisfaction at.

The 5-year plan - Work

FIRE Journey and the Job
Source: https://www.linkedin.com/pulse/should-i-work-free-well-duh-martin-aleta-curry

Job Switches

What I look for in a job is the ability to have an impact, the ability to control how things are being executed. Despite promises this never materialized in the past years. I therefore switched jobs about 3 times since that pinnacle year and position, unfortunately never able to find something similar. The last job switch was into a new field of expertise, which was nice, but it starting to loose it’s appeal too. I’m bored quickly, annoying habit really.

Fortunately Mrs. CF is still liking her work, and would not mind doing it a bit longer. This really helps in the form of having some financial/emotional stability in the household. It also provides the opportunity to do new things, which are still in the works but delayed until we sort out our investments first. For this I still need a job…..sigh.

Not really liking your job is a problem, it actually caused (amongst others) our search for freedom and triggered the journey to FIRE. But it also affects your motivation and work ethics…..

Work Ethics

To be brutally honest, my current work ethics are horrible. I get my job done and do so within the required deadlines, but I cringe at the level of quality I generate and the energy I put into my work. Strangely enough it appears to be sufficient as I just got offered an contract extension! Apparently I have mastered the 80-20 rule, as I seem to be able to get “80%” of my work done (which is valued at 100%) in “20%” of the time. This seems to do the trick for now.

However, I don’t like that I’m not motived and not performing at the top of my abilities, it feels wrong. It feels like I don’t deserve the massive paycheck I get every 4 weeks. I don’t mind having to work a few more years until we reach FIRE, but I would like to do so with a sense of satisfaction. Just not sure how I will be able to do so.

Perhaps, as noted in the 5 year plan, I should pull the plug as quickly as I can. The problem is the financing for new Real Estate opportunities. For this I do need my current job just a little while longer. It really is a catch 22 to which I don’t seem to be able to find the correct answer (read find the right opportunity). Until I do, I’ve decided to keep the job, slaving my time away and thinking about the next holiday.

Are you back?

No, not quite, the above has been bothering me and on a date night earlier this week we have extensively discussed this topic. Just needed to write this down to set my mind straight. By the way, I forgot how expensive going to dinner is in the Netherlands. We went to a decent restaurant for date night (first time in about 3 years!) and walked out with our bellies full and being €95 lighter. So much for being frugal 😉 Strangely though, it was really worth it! We had a great time and very good discussions.

However, I have not done any financial reconciliations, tracking of dividend or rental income. Not in detail anyways. We are, as always, also still looking at new Real Estate and hope to know more by late next week. Updates are definitely to come, just not sure when.

How about you, how does the interface between FIRE and jobs affect you?