Our Financial Independence Journey: Monthly Update #43 (July 2020)

Hi friends,

Boy, I am late with the monthly update this month. I don’t think I have ever been nearly half-way through the month without an update, but I promise you there’s a good reason for it.

Personal life: What happened in July?

July was an exceptionally busy month for us.

Even though it was busy, we did have time to relax and spend time with our daughter enjoying somewhat decent weather.

The breaking news is that we decided to offer our apartment to the market without having a new place to move into. We did this because it’s a sellers market at the moment with a historically low supply of apartments. We offered it at what I would call a “significant premium” compared to our expectations and what I have estimated our real estate to be worth on this blog.

Guess what happened? In a matter of days, we had sold the apartment without any reduction in the price! Now, it might sound like we should have put it out at an even higher price, but trust me, we should not have been more greedy.

This has a significant impact on our lives and our finances. Our apartment was not just more worth than expected, the proceeds we get from the sale are tax-free.ย  As you will discover, our net worth increased a whole lot in just one month.

What happens next? We don’t know yet, but we are looking for a house that will accommodate our family.

Finances: How are we tracking on our FI goal?

This month was decent in terms of savings rate, but our growth in net worth was through the roof.

Two months ago, we crossed the 3.000.000 DKK (460.000 USD) mark, but now we are closer to crossing the 4.000.000 DKK (615.000 USD) mark.

We ended up with a savings rate of 32%, which is just below our 12-month average savings rate of 41%. I know we wanted to be more frugal in July, but our holiday simply ruined that plan.

Our combined take-home income was at 81,663 DKK (12,563 USD). We managed to save 26,206 DKK (4,032 USD) resulting in the 32% savings rate.

Our net worth increased by… wait for it… 19% this month (!!) adding nearly 600,000 DKK (92,300 USD) to our net worth in a single month. We will, obviously, not go bonkers and spend the money mindlessly, but rather invest (some of it) in a new house.

Our total combined net worth at the end of this month is 3,697,583 DKK (568,859 USD).

28% of our assets are now liquid, which is lower than before because of the real estate increase.

Let’s take a look at our investments.

Most of our investments had a decent month with the exception of real estate that had an extraordinary month.

Stocks indexes increased by 0.9% still cruising above pre-corona levels.

Pension investments decreased by -0.6%.

Our real estate net worth increased by 32.6%.ย I knew I had done my estimations conservatively, but they might have been too conservative – even when accounting for the extraordinary seller’s market at the moment.

Crowdlending increased by 0.8%. Nice and steady.

Lastly, cryptocurrencies increased by 52%ย after years of being relatively stable. This means I am probably back at the levels I invested in. If they increase more, I will most likely sell them and use the money elsewhere.

All our three financial independence goals increased this month:

  1. Three years’ expenses in liquid savings: 73.2% (up from 72.5% last month)
  2. Optimistic FI goal: 50.3% (up from 46.9%)
  3. Traditional FI goal: 12.9% (up from 12.0%)

This month we crossed the half-way point to our optimistic FI goal meaning we could reach it within the next 3-5 years if we proceed as we do at the moment.

Blogging: How did key metrics develop on MoneyMow?

MoneyMow is relatively stable at the moment, and I don’t expect it to be otherwise when my activity levels are below normal. There have been too many things happening the past few months and other projects I am working on to keep posting frequently. I won’t give up on the blog, but only post when I feel like it.

The metrics on the blog last month were:

  • Visitors: Number of visitors was 4,509, and decreased by 13% compared to last month
  • Page views: Page views were 6,287 and decreased by 12% compared to last month

Thanks for reading all the way to here.

See you in a couple of weeks ๐Ÿ™‚




Nick August 18, 2020 - 20:02

Well done!
How much did you actually make on the sale, if you subtract taxes, fees and other ownership expenses? I was surprised to learn that it had cost me quite a prettty penny to live in our old House. It had appreciated 700.000 in 7 years – but we had put about 300.000 into it, with taxes and renovations etc. Still a decent profit though!
I agree that compared to all the other taxes that we have on pretty much everything, not having a tax on appreciation (minus expenses) seems a bit odd!

Looking forward to hearing more about your next move ๐Ÿ˜‰

Carl Jensen August 20, 2020 - 12:29

Hi Nick,

Thanks! We made roughly 800.000 DKK after tax even after subtracting all of that. Prices in Copenhagen have been crazy.

Yes, now the politicians are starting to talk about higher taxes on stocks (argh) when there are other obvious taxes that they don’t dare touching like inheritance tax or real estate appreciation taxes.

Looking forward to sharing it ๐Ÿ˜‰

Mikael August 14, 2020 - 10:35

Congrats Carl!! Exciting news – Now you really have the chance to make some choices to set yourself for FIRE. The interest rates are low, but the housing market has boomed as well – Are you moving far away from the city?

Carl Jensen August 15, 2020 - 12:14

Thanks! Good question, Mikael. Iโ€™m not sure we are ready for a big move far away from the city (yet), so I donโ€™t expect our housing expenses to go drastically down, but hopefully a new potential house could also increase in value like our previous apartments (even though I never expect real estate to increase in value as part of our planning). I donโ€™t think we will live in the new place for the rest of our lives, so it will be our next move that is even more defining ๐Ÿ™‚

Johan August 16, 2020 - 10:52

Congrats on selling the apartment. I’ll be really curious to see how much you put back into a new house and how you structure the loan. The Danish tax system is so broken wrt. housing. I’m happy for you, but it just seems so wrong that this income is tax free. I think incentives really need to shift towards rewarding work more and house speculation less.

Carl Jensen August 16, 2020 - 20:50

Thanks, Johan! I agree with you, it seems crazy to be able to make this kind of money from a house without really doing anything value-creating when it would take years from a job. However, I am not sure what the right solution is. I read this Leader in The Economist at one point arguing in favor of higher land-value taxes instead of stamp taxes: https://www.economist.com/leaders/2018/11/24/the-case-for-scrapping-stamp-duty. This could still cause gains when selling your house, but then you would still pay taxes while owning the house (and if taxes were to be raised, it would be factored into the price too). I think the good solution is much more complicated though and I don’t have a clue what should be done ๐Ÿ™‚


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