Our Financial Independence Journey: Monthly Update #28 (April 2019)

Monthly update 28

Friends,

It’s time for yet another monthly update as we are already a few days into May.

Personal life: What happened in April?

This month was a great month with lots of vacation being used in the sun.

My wife and I spent some time and money refurbishing a room in our apartment we have long wanted to do and thought it would be wise before the baby arrives (you’ll see the financial impact of that on this month’s savings rate).

I had some unused vacation I used over Easter, so half of the month was spent in the sun with high temperatures that arrived early in Copenhagen this year – and I was not that busy at work in the remaining weeks. People say it’s good with some decent time off before you get a baby, so I guess I can consider that done 🙂

Financials: How are we tracking on our FI goal?

Financially, April wasn’t the best month. While our net worth increased, our cash holdings went a bit down given the refurbishment of our house. You could potentially include that in real estate gains, but that would be too much speculation, so for now they only count as a negative.

In April, we managed to get a savings rate of 16%. This is well below our target of 50%, but I expect our savings rate to increase again in the coming months. Most larger purchases for our baby have been made and there are no big expenses on the horizon.

MoneyMow savings rate over time (%)

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Our combined take-home income was at 75,836 DKK (11,667 USD) and we managed to save 11,881 DKK (1,828 USD) resulting in the 16% savings rate excluding income from the blog.

Our net worth developed positively this month reaching yet another all-time high nearly reaching 2.5 DKKm in net worth. Despite decrease in cash, the growth in net worth was driven by stock, pension, crowdlending and cryptocurrency returns and real estate price increases.

Our total combined net worth is 2,494,633 DKK (383,790 USD), which is 2.0% higher than last month. Most of our assets are illiquid:

Liquid assets still make up 28% of our total assets with a value of 708,819 DKK (109,049 USD).

Illiquid assets still make up 72% of our total assets with a value of 1,785,813 DKK (274,741 USD).

Investment returns were positive and good for April except for bonds (the most boring investment in bull market times).

Real estate prices increased with 1.1%.

Pension increased with 1.1% (excl. employer contributions).

Stock indexes increased with 2.6% last month leading to a grand total of 13.8% this year until now excluding dividends. Pretty good start on 2019!

Bonds decreased with -0.2% (boooooring!).

Crowdlending increased with 1.0% continuing the nice and steady climb.

Cryptocurrencies increased for the third month in a row with 10.2%, however, still below the level I bought them at.

We progressed on all our three financial independence goals this month:

For the first goal, we are 49.2% (up from 47.7% last month) of the way towards having three years’ expenses in savings.

For the second and third goal, we are 33.6% (up from 32.7% last month) of the way towards reaching our optimistic financial independence goal and 8.6% (up from 8.4% last month) of the way towards reaching traditional financial independence.

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

After a large increase in traffic last month, this month remained more stable (at the new high level) with a slight decrease.

The metrics stayed high at:

  • Visitors: Number of visitors were 19,581 and declined with -5% compared to last month
  • Pageviews: Pageviews were 27,180 and declined with -3% compared to last month

In April, I also published my yearly study of the fastest growing personal finance blogs of 2019. I love making the study because I find so many cool blogs doing it – and it is also received well by the always supporting personal finance community.

I have decided not to publish blog income monthly in the future because of three reasons:

  1. Reporting income gives a wrong picture of how much profit I make from the blog. I currently only report income, but I also spend money on hosting, plugins, marketing, taxes etc., and I can’t make a full P&L each month to give a correct picture
  2. It takes too much time compiling the income data from different sources each month
  3. It is nearly the only question people ask me on email, and I would rather talk about FI(RE) than how to start a blog

However, I will still publish my blog income on a yearly basis to ensure transparency. I’ll also still donate 20% of my profit to charities and document the amount donated by the end of the year 🙂

Favorite posts of the month

My favorite posts of the month were:

  • Kathy at Baby Boomer Super Saver wrote a touching post about the hiddens costs of caring for a loved one. The post touched me deeply and is a topic (and risk for everyone) I had not considered previously.
  • Young FI Guy wrote a review of the “Playing With FIRE” movie that I’m super excited to watch myself. I’m looking forward to showing it to friends and family to inspire them. I have big expectations for that movie.
  • Mrs W at What Life Could Be wrote a post as an answer to SavingNinja’s monthly thought experiment about what to do when you retire. Being FI herself, I always love reading about the life on “the other side”.

That’s it for this month. Have a lovely May until we speak again!

Onwards,
Carl

8 comments

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8 comments

T June 3, 2019 - 22:54

Hello Carl
Great blog, thanks for sharing your journey! I just stumbled across your page and haven’t (yet) read every single entry so my apologies if I am missing a vital part that would answer my question. Your about page lists 6 years to retirement. What are the underlying assumptions you take for this? Looking at the stats above, it looks like an average of 30 percent savings rate (congrats!); however that savings rate would suggest a much longer time to FI. Or are you assuming the optimistic scenario above with a 7 percent withdrawal rate? Am I understanding the above scenarios right that you assume that real estate has 15 percent annual appreciation? If yes, is this not somewhat high? I am asking so detailed since our numbers/progress to FI match up quite closely and I live in “nearby” Netherlands. Yet, I have a very different timeline to FI in mind (also my portfolio differs as it is mostly in diversified equity).

Thanks again for sharing!

Reply
Carl Jensen June 8, 2019 - 09:13

Hi T,

Thanks a lot for your great questions 🙂

I am assuming ~6 years to retirement due to a 7% withdrawal rate (and I also expect a higher savings rate in the future). It’s important for me to say that I’m not too focused on exactly when I will retire as long as I have a goal. To be honest, I might already do it in a couple of years and make what I need with side hustles. Many people underestimate that they will also make money when they retire from all sorts of things they cannot envision now, and this makes them retire later rather than sooner. I will rather take some chances and if I can’t make a single cent in passive income or a side hustle I really enjoy when I retire, then I guess I gotta go back to working a while longer. However, I doubt that will be the case 🙂

I’m not expecting a 15% annual appreciation – I’m just expecting to be able to realize 15% of my apartment’s value when we move to something smaller/less expensive in the future (i.e. it will become cash instead of bricks).

Hope this makes sense!

All the best,
Carl

Reply
T June 8, 2019 - 13:13

Thank you for the response Carl! I now see where the difference comes from (and super clear on the 15 percent realization of the house equity when downsizing). I would personally find the 7 percent withdrawal rate a bit high for my taste, but yeah, generating another source of income would of course push that rate down. Just keep in mind that flexibility (spending less or having a side hustle) runs into some limits too, particularly when it occurs with a sequence of bad returns early on. Our friend ERN has extensively written about it, as I’m sure you are aware of. Particularly, parts 23-25 of his “treatise” on SWR comes to mind:
https://earlyretirementnow.com/2018/02/07/the-ultimate-guide-to-safe-withdrawal-rates-part-23-flexibility/
Greetings from NL, T

Reply
Carl Jensen June 9, 2019 - 20:34

I know the 7% is a bit high, and I understand why people feel that way, but I will rather risk depleting part of my net worth to “retire” earlier. I really like ERN’s work and has also read about sequence of return risk. If I end up “retiring” just before a market crash, I guess I will just have to go back to work and work a bit more until things look better. I don’t want to plan for never having to work or earn a single cent again, because I know that will never happen once I reach FI – and it will postpone FI substantially doing so 🙂

Reply
Piggy May 21, 2019 - 14:46

Great overview! I would strongly suggest to borrow from friends or family, if you can, baby stuff. I regret having bought so many things that last so little time and it is a great way to save some cash (plus having less stuff around the house eheh)

Reply
Carl Jensen May 21, 2019 - 17:58

Great idea! We haven’t been so good at doing that yet, but we should do that. We have, however, been good at buying second-hand things (most at 50% off or more) that we plan to sell second-hand again afterwards 🙂

Reply
Baby Boomer Super May 4, 2019 - 04:35

Thanks for the shout out! It is good to be prepared for the unexpected, and hopefully you won’t have to endure a health crisis or unexpected expenses. Having a solid financial plan is one way to put your mind at ease. Sounds like you are doing great, keep striving to reach your goals and I’m sure you’ll succeed!

It was interesting to read your “About” page and the high effective tax rate in Copenhagen – we were there last year and our Airbnb host told us the same story. He said he was very happy with all the services available to him despite the high taxes, though.

Reply
Carl Jensen May 4, 2019 - 14:07

Thanks for commenting, Kathy! I believe you are right that a solid financial plan can at least help to put your mind more at ease even though it of course isn’t everything.

Cool you visited Copenhagen! Yes, I enjoy paying my taxes every month because of the same reasons. I wouldn’t have had the opportunities in life I have had without it 🙂 However, the welfare state of course also has its flaws, but I would still prefer it to other systems.

Reply

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