Our Financial Independence Journey: Monthly Update #26 (February 2019)

FI Journey Update 26

Friends,

After the shortest month of the year, it’s now March and it is time for a monthly update from February.

Let’s do this!

Personal life: What happened in February?

Our mini-retirement is now over and we are back at work. Taking those months off work was one of the best things we have done in a long time. There’s nothing like doing exactly what you want to do every single day.

We have had days of sleeping, days of being active and days of reading books from morning to evening. Even though I also like having more structure to my life, we have become even more certain that pursuing financial independence is the right thing for us. It gives us the flexibility to do what we want when we want it.

The contrast between a mini-retirement and being back at work is insane – it’s two different worlds – but it is amazing how fast you get used to both of them.

We are now counting the last few months before we’ll get to meet our baby later this year. My wife will be on maternity leave for nearly a year and I’ll have some months too. At the same time, I am becoming more and more certain I want to work less when we become parents. This will obviously influence my life positively, but perhaps our finances a bit negatively. We’ll see ๐Ÿ™‚

Financials: How are we tracking on our FI goal?

February was a great month in terms of our finances. We managed to get back on track with savings and had decent investment returns.

In February, we managed to get a savings rate of 49%. This is close to our minimum target of 50%, and I’m pretty confident we can keep this up in the months to come.

MoneyMow savings rate over time (%)

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Our combined take-home income was 75,836 DKK (11,667 USD) and we managed to save 37,405 DKK (5,755 USD) resulting in the 49% savings rate excluding income from the blog.

Given we worked a lot, we had relatively few expenses for food and we didn’t do too many expensive things in the weekends.

Our net worth developed negatively this month since the real estate prices in our area is going down (our apartment decreased 110,000 DKK (16,923 USD) in value this past month). I expect the value of our apartment to increase in the long run, but for now the effect is negative causing an overall decrease in our net worth.

Our total net worth decreased -2.0% in February only because the market value of our apartment fell. Liquid assets (stocks, cash etc.) actually increased 7.8% last month, but was kept down by decrease illiquid assets (real estate).

Our total combined net worth is 2,340,638 DKK (360,098 USD), which is 2.0% lower than last month. Most of our assets are illiquid:

Liquid assets now make up 28% of our total assets with a value of 649,646 DKK (99,946 USD).

Illiquid assets now make up 72% of our total assets with a value of 1,690,991 DKK (260,153 USD).

Investments had another good month in February

Real estateย prices decreased with -7.0%.

Pension increased with 4.0% (excl. employer contributions) due to a good month for the stock market.

Stock indexes increased with 2.4% last month continuing a few months of good returns.

Bonds increased with 0.2% just like last month.

Crowdlending increased with 0.7% – it was not 1% this month since I added a chunk of money that is slowly being invested, so there’s a bit of money drag.

Cryptocurrenciesย increased for the first time in nearly a year with 26.1%. I’m not getting my hopes up for crypto anytime soon though.

As you know, we are pursuing three financial independence goals and all goals have increased this month:

For the first goal, we are 45.1% (up from 41.8% last month) of the way towards having three years’ expenses in savings.

For the second and third goal, we are 31.1% (up from 30.0% last month) of the way towards reaching our optimistic financial independence goal and 8.0% (up from 7.7% last month) of the way towards reaching traditional financial independence.

Blogging: How did income and key metrics develop on MoneyMow?

Again this month, the blog has been growing and I continue to be amazed by all the people visiting the site ๐Ÿ™‚

The metrics developed really well:

  • Visitors: Number of visitors were 10,983 and grew with 27% compared to last month
  • Page views: Page views were 16,953 and grew with 10% compared to last month
  • Income:ย Income from sponsors, affiliate and AdSense was 8,188 DKK (1,260 USD), which is a new record

I’m super thrilled that people are visiting my site and it is possible to make a little extra income on the blog. Thanks for making it possible!

Favorite posts of the month

My favorite posts of the month were:

  • EarlyRetirementNow wrote a great piece on why you cannot use a “yield shield” to defend against sequencing risk. If you like detailed, fact-based posts on investments and safe withdrawal rates, you should read the full SWR series ๐Ÿ™‚
  • MyMoneyBlog wrote a post on why money can’t buy you more time. It is scary to see statistics on what your chances are of dying in the next 20 years. It was a great reminder for me to focus as much on living life to the fullest while we are here, and not only struggle to reach a certain FI number
  • Abandoned Cubicle wrote a post about why getting promoted can complicate your early retirement plans. I can really relate to this, as I am in the exact same situation with my work. There’s many good reasons to leave, but also many good reasons to stay after getting promoted!

That’s it for February. I hope you are going to have an amazing March!

Onwards,
Carl

16 comments

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16 comments

Peter March 26, 2019 - 15:17

Hi

Interesting blog. I noticed your target is based on a SWR of 4% (which is pre capital gains tax). I assume your monthly expense is post tax? This would impact the target number significantly with the current 27/42% taxation in DK. This of course assumes your future passive earnings will be in the form of capital gains, that it will be in DK, and that the tax regime will remain unchanged.

Reply
Carl Jensen March 26, 2019 - 17:09

Hi Peter,

Great question. Yes, I use a 4% SWR and my yearly expenses are of course post tax.

In general, you can make this calculation hyper-complex with many details in a long spreadsheet (e.g. inflation, capital gain taxes, expected returns and so on). I like to use 4% because the explanation is simple and widely used as one of my goals, but it could be adjusted in a million ways. For me, it becomes much easier to calculate the right amounts of withdrawal when you get closer to retirement, there’s too many uncertainties until then. I would rather go for the 4% for now and then adjust the number as I close in on FI instead and withdrawing becomes more realistic. If I had to account for taxes of 27-42%, I would have to adjust my FI number upwards by 10-15% (assuming 5% return p.a. over the next 10 years on a fixed base).

In my financial independence calculator I calculate my number based on returns after tax and inflation.

Reply
Lars March 20, 2019 - 22:15

Thanks for a great read. How do you create the graphics. Care to share the spreadsheet for inspiration?

Reply
Carl Jensen March 21, 2019 - 09:23

Thanks, Lars! I use a plug-in for Excel called Think-cell and create a waterfall graph. It is unfortunately quite expensive, but I’m sure there’s good alternatives out there (PowerPoint can also create a waterfall chart, but it is not as flexible). Creating a shareable spreadsheet is on my to do list!

Looking forward to following your journey ๐Ÿ™‚

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Lars Olesen March 21, 2019 - 09:33

Maybe I should have been a little more clear ๐Ÿ™‚ Is it the same plugin which creates your “Net Worth Overview” (I like the division in illiquid and liquid assets – and how you have both the returns and share of total assets in the bottom), “Financial independence goal assumptions” and “Total net worth”? And are you just putting in the numbers manually in the spreadsheet to create each graph? – or was it created with some manual effort. But anyhow, nice that it is in your pipeline to share at some point.

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Carl Jensen March 21, 2019 - 09:56

Yes, it’s the same plugin for all the graphs. I have a spreadsheet from where I copy the data into Think-cell in PowerPoint to create the graph (a bit of manual effort, but nothing too demanding) ๐Ÿ™‚

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Brian March 7, 2019 - 13:59

Long time reader here.Great update and happy that you managed such a high saving rate this month.
I am really interested in how you manage and maintain your financial overview each month. Is it done by Excel?
It would be awesome if you were able to share a template ๐Ÿ™‚

Reply
Carl Jensen March 7, 2019 - 21:42

Hi Brian,

Thanks for following – and yes, I’m also quite excited about the savings rate this month. Yes, I track it in a spreadsheet that is rather detailed, and it is actually a great idea to share it. I have quite a few initiatives in the pipeline for MoneyMow, but I’ll definitely place it in line with the others. Thanks for the suggestion ๐Ÿ™‚

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Johan March 6, 2019 - 22:33

Welcome back to work ๐Ÿ™‚ And yes like Nick says your income is impressive, congrats. Are you still following the same investment strategy? I was wondering what you think about the new ‘aktiesparekonto’, is it something you use?

I love your net-worth breakdown figure, very nicely put together.

Reply
Carl Jensen March 7, 2019 - 21:38

Thanks, Johan. I’m happy to hear you like the graph! Actually, no, I have changed my investment strategy slightly and I’m going to make a post about that in a few weeks ๐Ÿ™‚ I’m not using the ‘aktiesparekonto’ since the amount of 50,000 is too low to make a real difference and for now I’m not really a fan of ‘lagerbeskatning’ for my index stocks. I would consider it if I wanted very high-risk stock investments that might increase a lot in value (e.g. biotech stocks) and if I had a large enough net worth invested, but I have my fair share of high-risk investments already. If the limit increases in the future, I might consider it more seriously ๐Ÿ™‚

Reply
Mike March 5, 2019 - 07:19

Hi Carl, I have been reading your blog for the last year and your monthly break down is one of the best I have come across. Do you intend to stay in your home after FI? With the risk of large scale maintenance being required the longer you stay in a house I have been debating renting after FI to fix costs. It would be interesting to know your thoughts.

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Carl Jensen March 7, 2019 - 21:34

Thanks, Mike! I happy to hear you are following my blog and you like my break-down. I actually intend to say in a home that I own after FI (we set some money aside for maintenance in our budget, so it doesn’t come as a surprise), but we might move to a slightly cheaper location. Historically, it’s been quite a good deal to own your house (even with the risk of maintenance) due to high returns on real estate in the living areas we are considering. That being said, there might be other good reasons to choose to rent rather than own, but I’m not sure maintenance alone can be the reason.

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Loui Lam March 3, 2019 - 23:43

Impressive blog stats! I must say..

I wouldn’t worry to much about your home value, but I don’t think you do either.

Always great to read your monthly updates. ๐Ÿ™‚

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Carl Jensen March 4, 2019 - 22:44

Thanks a lot, Loui! I’m also quite happy with the progress. I guess it is somehow related to blogging also being a volume game with many posts for organic traffic.

I’m not too worried about our home value (yet), and I am quite confident it will increase in the future ๐Ÿ™‚

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Nick @ TotalBalance.blog March 3, 2019 - 19:56

Welcome back to the cold north! (Isn’t it lovely?…)

I continue to be amazed at your combined income…I consider myself well-paid, and my wife is above average too. But a net income of 75.000dkk is pretty damn sweet, if you ask me ๐Ÿ˜› We net about 55.000dkk.

I’m sorry to hear about your apartment value – although I’m glad to see that you’re actually experiencing what we’ve been expecting for a while now. I follow a few other FIRE people with CPH real estate, and they still claim (believe) that their equity is going up every month…I’m happy that you appear to be more realistic. Where do you get your data from, though?…

I hope you’re able to stay in good spirit, after all ๐Ÿ˜‰ You’ve got an interesting summer ahead of you for sure! ๐Ÿ˜›

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Carl Jensen March 3, 2019 - 22:28

Yes, cold Denmark never disappoints – although Spring has come early this year ๐Ÿ™‚

You are right our salaries are quite high at the moment, but our hourly wages are probably lower than yours if you work normal hours. I hope I’ll be able to sustain it in other positions with fewer hours in the future, but I’m not sure it’s possible.

You are right people are a bit blind to real estate prices going down in CPH. I use http://www.bolighed.dk, they update the estimates very often and I find them quite accurate in CPH compared to what apartments actually sell for in our area at the moment.

People keep telling me I have an interesting time ahead of me, so there must be something about it ๐Ÿ˜‰

Reply

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