How To Thrive on 20 m2

This will be my very first guest post done by Peter. 

Peter is the owner of the site ThrivingWillow.com

We met at a folk high school where I was a sailing student, while Peter was a teacher in kitesurfing. Since he was a teacher and I was a student, we didn’t speak that much. What we didn’t know was that Peter and I had the same interest in having a simple life and FIRE. But we first realized this after I was done at the school.

Luckily Peter wrote to me and told me he was reading the blog and he had started his own. One of the main reasons that I wanted to do a guest post with him, is because he has just finished his Tiny House project. Which is the perfect modern example of the “Walden” author Henry David Thoreau. He has just been broadcasted in danish television with his awesome project. 

The link will be at the bottom of the post. 

So without further ado, please welcome Peter!

Can you tell a little about yourself?

On an early family vacation, I was fascinated by a Norwegian bloke working as a diving instructor on the Canary Islands (a little jealous of you WannabeWalden). I remember looking back on the instructor steering the boat, crystal blue waters, 30 degrees, sun all around thinking: This guy is getting paid to do this every day, and why the hell isn’t everyone doing this? 

This memory has always been in the back of my mind and has led to a journey towards a lifestyle increasing freedom and maximizing the number of opportunities that could be pursued. 

Working in Denmark as a kitesurfing teacher daily is currently the goal and luckily an interest in Tiny Houses, living simplistically with low monthly costs, supports this dream-job and accompanies a below-average pay being in this industry.

The same approach has also led to a big interest and now life-changing path following the FIRE-style way and thoughts behind. Living below your means, valuing your time over material possessions, and being able to understand and believe that manageable investments in the present can become quite huge returns in the form of currency/time in the future. 

I’m currently investing as passively as possible in global index funds that happens automatically every month, rebalancing every 6 months, no matter what the monthly fluctuations have been following the statistically proven research that passive investors beat active investors in the long run. 

Investing passively also has the bonus that it makes sure you still have time for the valuable and fun things in life while working towards FIRE, as the investing part is not at all time-consuming. 

Where did you find inspiration for your Tiny House?

Researching different living options my wife and I came across several lifestyles such as vanlife, house hacking, renting small rooms but Tiny Houses especially caught our interest. 

While we were our 5-month backpacking honeymoon around SE-Asia (the ultimate taste of future FIRE-freedom!) we were looking for a way to maintain some of this lifestyle by increasing our flexibility and wiggle room uncertain of what and where we were going to end up working in the future.

Our interests lie outdoors, work, hobbies, living sustainably and we, therefore, haven’t had a burning wish for an average-sized house with the loan and maintenance that undoubtedly comes with it.

The inspiration came from the Tiny House movement in America which is especially ahead after the financial crisis of 2009 where the interest in downsizing became a necessity for many that lost all they owned in a short period. In the years following more and more saw the opportunities and positive aspects of living simply in a Tiny House. Whether less material clutter translates to better psychological wellbeing, I couldn’t say. But it’s an uplifting feeling having a clear and complete overview of everything you own. 

Why do you want to live in a Tiny House?

The main reasons for wanting to live in a Tiny House are flexibility, freedom, and space. 

At the age of 27, it’s hard to know for sure where in the country you’re going to settle down. Being able to move with under a week’s notice makes it possible to say YES! to sudden opportunities. Fewer strings attached and easier to change locations. 

Freedom in the sense of having that comfortable safety net knowing that you own your house in full. Think of how many situations have the pressure taken off them by not being affected or dependant on the monthly income arriving on the 1st. of the month. 

And thirdly concluding that we humans can adapt to many crazy situations. Think about it. Buy a 120-200m2 house? You are bound to fill that house up in no time with furniture, hobbies, projects, you name it. Build a Tiny house 20m2? You’ll fill it up yes, but you’ll have a natural maximum limit of space you can use. Instead of buying new ‘nice to have’s’ or ‘I use this once every 2 years’ there will hopefully be a larger interest in paying a little more for quality items that hopefully will last longer and maybe multifunctional, as there is room for less in your home. 

How much has the house cost you, and how much will it cost to live in it? 

We’re now almost finished after 5 months nonstop building and we’ve roughly spent 17.000usd so far including electrics- and water systems. All expenses are being noted, so a detailed overview of material costs can be produced when finished. The current costs are minus the off-grid systems. That’s the 2. Stage of the build.

Purchasing a ready-made Tiny House in Europe is anywhere between 45.000usd – 100.000usd so the chance of being able to build ourselves in the planning stages sparked an interest to see what it would cost in the end. 

We’ve never built any kind of building before (minor detail, jeez!) so a Tiny House seemed like a huge challenge. But we luckily came across a Tiny House builder that offered consultancy, tools, and a spot to build for a low monthly fee. A perfect offer for us. 

The hope and goal are being able to reduce the purchase price of a Tiny House significantly and lowering the monthly bills of a house for many years to come making it possible to increase our investments pumping the way towards FI. 

What is the one best advice you will give a person who would like to build one himself?

Once you’ve got a rough plan, investment is ready, you’ve got the time = Jump right in. Seriously. You can spend 1,2,3, years planning but you’ll never quite learn more until you’ve put the first screw in the first beam. 

And most important for the builders with absolutely zero experience like myself. Consider hiring a consultant to avoid costly and important mistakes. It may seem like a big expense, but using their contacts and experience saves you money that pays for the consultant him/herself.

A calming saying I’ve come across and love is: “Your first house/self-build is never going to end up quite as planned. You will always have materials, methods, or ideas on the way to improve for next time“.

The conclusion is, therefore, starting your house number 1! 

And for everyone thinking: ‘but I would like it to be close to perfect first time around, my Tiny House, as I’m only building one!’. Our Tiny House turned out much different than the plan at the beginning. But at the same time, it’s turned out so much better than expected with some of the coolest features that you’d never be able to plan. 

Go for it!

Is there a community where people can join and seek advice inspiration?

There are numerous Facebook groups where you’ll see America is heavily represented as they are so far ahead compared to Europe. This is perfect as many years of experience with tiny houses are out there to explore builds, constructions, designs, and layouts. Hopefully, the movement will spread as the popularity of downsizing grows.

My favorite source of inspiration is the Youtube Channel: Living Big in a Tiny House with 3,2 million followers that features Bryce Langston from NZ visiting and viewing Tiny Houses and just recently has done a Europe tour. 

Tiny houses are also a hot topic on Instagram and Pinterest for those more into those media for inspiration. 

For the Netflix user’s the series ‘Tiny House Nation’ is a great insight into a building process. 

Where can we find you?

The lifestyle- and financial aspects of a Tiny house towards FI will be shared on Thriving Willow. I’m currently working on interviewing and exploring European Tiny house enthusiasts!

A Danish national TV channel DR1 snatched up the build in the early stages and followed us the first 4 months and made a 30 min program about the process : See it here.

And final results you can find in the Facebook group ‘ Det Lille Potentiale’ / The Lille Potential. In Danish but can be Facebook translated easily if interested! 

20# My Monthly Financial Independence Update

The Quick Takeaways

This month savings rate: 90 %

% change since last month: 15,1 %

My Coast FIRE number: 5.107.000 DKK (751.000$) or 50.1 years of living expenses.

Simplifying My Portfolio

Whenever people ask me what they should invest in I just tell them:

“Buy a single world index fund. You don’t have to have more than one fund”. 

But at the same time I own three myself:

  1. Sparinvest Index Global Min. Risk
  2. Sparinvest DJSI 
  3. Sparinvest Index Emerging Markets

Proclaiming that I’m a minimalist, and still own three funds for no reason was hypocritical, so I have decided to give my portfolio a brush-up. Yesterday I sold all of my shares in Global Min. Risk and Emerging Markets. And in the future, I will only be buying the DJSI fund.

The DJSI fund “should” be a more environmentally one, so I prefer to stick with that fund. Even though index funds and environmental investing is not nearly as environmental as I would like it to be, I still think it is a step in the right direction.

There are some “pitfalls” in that fund compared to the Global Min. Risk:

  1. It contains Emerging Markets. Which will make it a bit more volatile.
  2. Their biggest stock position is Microsoft on about 12 % which is quite high for an Index fund.
  3. It “only” contains 194 stocks vs 314 in Global Min. Risk, which makes it less diversified.

It is some “pitfalls” that doesn’t keep me awake at night. So I’m willing to have all of my money in that single fund.

74 % Savings rate on Welfare

Besides being away sailing where I don’t earn any money. This is the worst financial situation I can be in.

Luckily I have been responsible and having income insurance (A-kasse), which will give me an income of 13.500 DKK (2000 $) after taxes.

And thanks to my Kakeibo Experiment I have managed to only spend around 3.500 DKK (500 $) the last month. The major reason why I can keep my spending that low, is that my sister lives in my apartment. So I don’t have any spending on rent. I either live on my dad’s farm on Møn or my girlfriend’s family farm on Langeland. Both places I pay my dues by doing some grocery shopping and cooking.

Why I managed to bunk my savings rate up to 90 % is because I have paid for some airplane tickets back from the Philippines, which got canceled so I got the money back. And why not just invest them? That’s what I did.

New Parameter In My Monthly Updates

As you probably can spot, I have given the “Monthly updates” a little brush-up. I didn’t like the “Passive Income” line on the chart, so I deleted it.

The new parameter is my Coast FIRE Nr, which is a quite powerful number. I have been doing a lot of thinking on that everyone I know who has “achieved” FIRE still do some money-earning activity. Not because they have to, but it is because it is nice to do something.

I can see myself as part-time something, working 15 hours/week, just because it is nice to do so. In general, I don’t believe that work is horrible, but it shouldn’t be the majority of our week.

But I do know that I might not be able to build and renovate houses till I’m 80 years old. And that is where the Coast FIRE number comes in.

If I never touched my portfolio I would have 50 years of spending when I turn 65 years old, if my portfolio grows with 7 %/year.

Which is way more than enough. 

I could have as little as 100.000 DKK (15.000$) in my portfolio and would probably still be fine when I’m 65 years old.

People often see Coast FIRE and Barista FIRE as a failed form of normal FIRE. But I don’t think that.

If I had about 1.000.000 DKK (150.000$) in my portfolio today, I would become a part of the 1 % wealthiest in Denmark when I’m 65, with a portfolio of +13.000.000 DKK (1.900.000$). Which is the equivalent of +130 years of my annual spending.

Why on earth would I need that kind of money?!

FIRE for me is that I know I can be happy without materialistic things and money. And if I know that my small portfolio got my back till the day I can’t lift my arms anymore, then I’m good.

Weekend Reads.

There is no reason to call it “Weekend Reads” since we all are home during the pandemic. But we should have lots of time to read and watch some inspirational stuff.

Here is what I have read and watched and found entertaining or educating. I hope you will enjoy it.

Walden, The Video Game!Budgets Are Sexy, by J. Money. A review of the video game “Walden”. A video game about a man who wanted us to live in nature. Seems weird. However, the blog is awesome. One of the best in my opinion. And hey, he gave me a shoutout. 😉

Ryan Holiday — How to Use Stoicism to Choose Alive Time Over Dead TimeThe Tim Ferriss Show, by Tim Ferriss. Author of the “4 Hour Work Week” invites one of my favourite authors Ryan Holiday to a chat. If you don’t know stoicism it is the perfect intro to it.

5 Ideas About Success, Financial Independence And The Simple Life That Will Make You ThinkRoute 2 FI. My Norwegian friend is has always a good article or two.

Firehub.eu. Just seeking for FIRE inspiration in Europe? This is the site to go.

My Kakeibo Experiment, Part 1

Measuring our finances is one of the best habits we can develop. 

And to be honest, I’m not very keen on it. Living in Asia for a couple of months is not necessarily that cheap. So when I couldn’t figure out where all of my money was going, I decided to start tracking it.

When I was on the boat in the Philippines I was listening to the audiobook of “Your Money Or Your Life” (for the third time). They suggest that you track every cent there is going in and out of your life. By doing so. You should be able to reduce your spending by a minimum of 20 % in three months.

That was my call.

When I asked the big old fellas Google on how I should do it, the answer was the following:

KAKEIBO. (Pronounced Kah-Keh-Boh)

What Is Kakeibo?

Kakeibo was invented by the first Japanese female journalist Motoko Hani, in 1904. I fell in love with Kakeibo because it is so simple. It is like a bullet journal for your finances.

How To Do It

Kakeibo suggests that you use a pen and paper to write down your finances. And I really like that. It makes every transaction more mindful. You have to put it down on a paper, with your own handwriting, which makes you think about that transaction more than if it showed up on an app.

What I do is that I have a note on my phone, and every time I buy something I write it down in the note. So when that list starts to creep up. I write them down in a notebook and delete them from the phone.

The Start of Every Month

The first thing you do when the month starts is to have a look at fixed income and expenses, and list them up.

It could look something like this: 

Income:

  • Work – 2.500 $
  • Sold my old PC – 200 $

Ongoing expenses:

  • Phone – 10 $
  • Internet – 20 $
  • Insurance – 200 $
  • Gym membership – 20 $

And so on.

During The Month

From there, I write every purchase down on my notebook on the phone. And when it creeps up, I transfer them to my notebook.

In the notebook, I also give the transactions a category.

The normal Kakeibo categories look like this: 

  1. Essentials
  2. Optional/Wants
  3. Unforeseen
  4. Cultural

I didn’t like the fourth category, and I think it belongs to the “Optional/Wants”, and I think there is a category missing for saving/investing. So I created my own categories.

Loui’s Kakeibo Categories:

  1. Essentials
  2. Optional/Wants
  3. Unforeseen
  4. Investing

From Hate to Enjoyment

I really hated starting on this project. I just didn’t feel like the idea of a habit that was so ongoing all of the time.

And at the start I hated it. Whenever I had made a purchase I thought it was super ignoring that I had to write it down. But as days went by, I kind of like the filled out notebook. I started to feel like I was in control. 

My March Month

March was a hectic month. I was in the Philippines about to go back on the boat I was sailing in November and December. But this time as a skipper. I started to get a bit bored where I was, so I decided to visit a friend from Copenhagen who was on a vacation in Bangkok.

All that was in the middle of this Corona pandemic. So there was a lot of talking back and forward on whether we should go home or not.

The numbers total numbers in March looks like this:

  1. Category = 5.713 DKK (836 $)
  2. Category = 7.889 DKK (1.155 $)
  3. Category = 558 DKK (81 $)
  4. Category = 0 DKK

Total 14.160* DKK (2074 $)

As you can see, category two is the biggest of them all. Which is the “Optional/Wants” category. This category is the one I would like to be zero each month. Whenever there is a dollar in that category it means that I have spoiled myself in some way. Which I most of the time doesn’t think is worth the money.

* This is ONLY my spending during the month. It does not include my apartment rent.

My Criteria for Success

I have promised myself to do it for at least three months, but I kind of like so much already that I can imagine myself doing it for the rest of my life. It is such a good feeling to know exactly where your money is going.

But I have made some statistics on how a typical spending day look for me. By doing that, I can easily set myself up for doing better the next month, because I know how many transactions I make in a day, what the average transaction is and how much I have spent on an average day.

The statistics look like this: 

Average Spending on a day = 456 DKK (68 $)

Average spending per transaction = 186 DKK (27 $)

Average transactions a day = 2.45

Then it should be super easy for me to make progress because I know if I can:

  • Make less than 2 transactions a day
  • Make the transactions less than 186 DKK (27 $)

I should be good to go!

Aprils Averages

Things are going great! I’m in the countryside on Langeland (Long Island), and the only spending I do is grocery shopping. That shopping can creep up too since I like to cook a nice dish AND make a pre-dinner whiskey sour. But it is still way less than the last month.

The averages so far looks like this:

Average daily spending = 73 DKK (11 $) – Improvement: 524 %

Average spending per transaction = 176 DKK (26 $) – Improvement: 7 %

Average transactions a day = 0.41 – Improvement: 519 %

Stay tuned, to see if I can keep up this great improvement.

Write Me!

I’m eager to help you out on your minimalism and financial independence journey! Write me and tell me about how you are doing, or what problems you may have.

E-mail: Loui@wannabewalden.com

Telephone: +4571792322

Minimalism and Quarantine. Weekend Reads

Being back in Denmark isn’t that bad at all. The weather is super awesome, and I’m on the countryside on an island called Langeland (I call it Long Island).

There is a lot time to read and binge watch inspiring movies.

Here are some handpicked articles and videos I have enjoyed the last couple of days I would like to share with you.

Articles and Videos

25 Things to Do with Your Family While Stuck at HomeBecoming Minimalist, by Joshua Becker. One of the most awesome minimalist bloggers. He has written a profound article about what to do with your family in this funny time.

No, You Didn’t Just Lose Half Of Your Retirement SavingsMr Money Mustache, by Pete Adeney. The godfather of the FIRE movement has written a good article on why have lost any money in the recent stock market crash.

How To Live A Mortgage Free LifeThriving Willow, by Peter. Tiny house builder, Peter. Has an older post how to live a mortgage free life. He is about to write a guest article here on Wannabe Walden. So stay tuned.

Index Funds The MovieIFA. IFA is an Index Fund provider and have made a 12 step movie series. But if you are a nerd like me, you can watch the entire thing in their documentary.

19# My Monthly Financial Independence Update

The Quick Takeaways

This month savings rate: 0 %

Yearly Passive Income (5 % withdrawal with taxes): 14.300 DKK (1900 $)

% change since last month: – 15 %

Back In Denmark (On Welfare)

Mini retirements in South East Asia and a pandemic doesn’t go hand in hand.

We were working on the boat, doing some repairs on it in Carmen – Philippines. There were supposed to come 8 new guests on board, and everybody did arrive in the Philippines. But 6 of them decided to go home immediately.

So we were me and my first maid, and two guests. We told them that we couldn’t promise them anything. Because we didn’t know how the situation would unfold.

We were optimistic in the beginning, but as days went by. Everything started slowly to close down. It got harder and harder to get a lift into town. And one day they have decided that no one with white skin could leave the harbor. All of the marine traffic was banned as well, so we couldn’t even leave the harbor by boat if we wanted to.

So we were stuck in there. The bar was still open, so I didn’t miss anything. We could still order nice affordable food, and whatever we had a desire to drink was there. So no panic.

About 10 days in this pandemic we decided that it might be smart to go home. We had no idea if the whole country we shut down, and what would that mean to our situation.

We booked not one, but two flights that got canceled.

I wasn’t until the ministry of foreign affairs sent a flight to the Philippines that we could come home.

So right now I have spent more than 2000 $ on flights that got canceled, which I’m going to try to get refunded.

When Shit Hits the Fan

This situation is probably as bad as it can get from my point of view. Which is not even so bad. 

I’m back here in Denmark. My flat is still rented out. So I don’t have any spending on an apartment. I will receive about 18.000 DKK/month (2650 $) on welfare (Dagpenge) before taxes, which will net in about 12.000 DKK/month (1800 $).

I can save and invest 50 % of that since my spending only will be determined by my eating and transport.

Even in the shittiest situation, I can be, I’m still able to continue my FIRE journey.

Second Month With Double Digit Drop

This is the second month with a double-digit drop.

Last month I was down 10 %, and this month I’m down 15 %.

I have kind of looked forward to a bear market to see how I would react to one. Because I have always thought that I didn’t really care. Actually, I think I would enjoy a bear market, so I could buy more stocks on sale.

Which is right.

I couldn’t care less that the market is down. The only thing that frustrates me, is that I don’t have more cash laying around to buy a good chunk of cheap shares.

But with the welfare, I should be able to buy some.

Kakeibo Experiment

The other day I read “Your Money or Your Life” for the second time (It is a really good book).

And they suggest that you track every cent you spent for at least three months in a row. By doing that you should be able to reduce your spending by 20 % or more.

If we do so, we are then able to look at the previous month’s spending. And ask our self if we got the joy out of that spending or not.

If not, we can minimize our spending, and be able to invest more to claim our freedom.

And that’s where I stumbled into Kakeibo. A simple and old Japanese way of tracking your spending. The next blogpost will be about my Kakeibo experiment in the previous month.

I will continue for three months, and see if I’m able to reduce my spending.

Are You On Top Of Your Finances?

If your answer is no, write me mail and tell me your story.

I answer every mail I get.

Feel free to write if you just want to say hello too.

You can reach me on the following mail:

Loui@Wannabewalden.com

My Kakeibo Experiment, Part Two

If you read the headline and think: “What the f*** is Kakeibo?!”

Then go and read Part One first. It has been amazing how big of an impact it has done to my finances that I started to take note of every cent. Even though there is a big difference in living in Asia, and couch surfing in Denmark. I’m still convinced that this single habit is the best to stay on top of your finances.

The Categories

To summarize. I have four categories that give to my expenses.

  1. Essentials
  2. Optional/Wants
  3. Unforeseen
  4. Investing

The Spending

In April I had the following spending in the four categories:

Category 1 = 1.552 DKK (231 $)

Category 2 = 899 DKK (134 $)

Category 3 = 450 DKK (67 $)

Category 4 = 0 DKK

Total spending = 2.901 DKK (432 $)

The Averages

Average amount pr. transaction = 161 DKK (24 $)

Average amount pr. day = 96.7 DKK (14 $)

Average transaction/day = 0,6

The Comparison

CatApril 2020March 2020% Improv.
15.7131.552268
27.889899778
355845024
4000
AveragesApril 2020March 2020% Improv.
Amount pr. trans18616116
Amount pr. day45697370
Transactions/day2,450,6308

Couch Surfing and Cooking

It seems like it is way cheaper to cook for people to borrow their couch. That is what I have been doing the last month. Visiting family and friends in every corner of the country, and just showing up with a bag of food (and beer) and do some cooking.

Category 2 is the one that I would like to keep as low as possible. Preferably 0. But a 778 % improvement is a quantum leap!

And a 370 % improvement on my “Amount pr. day” isn’t that shabby either. 

Tomorrow I will do 13 days of sailing in Denmark with two of my friends. And I think that will have an impact on this project.

Blog Sponsor

A fellow danish money blogger is this post sponsor. His name is John, and he writes in danish about hands-on money-saving tips and other money/finance related stuff at vilebo.dk

18# My Monthly Financial Independence Update

The Quick Takeaways

This month savings rate: 0 %

Yearly Passive Income (5 % withdrawal with taxes): 14.300 DKK (2100 $)

% change since last month: – 10 %

Where Did My Cash Go?!

The stock market is down.

It is the biggest monthly drop in my portfolio EVER!

When that being said. I have sold shares and spent 8400 $ (54.000 DKK) since I started my mini-retirement in April 2019. (I have spent more money than that, but that “Income” is from my portfolio)

Which is an awesome thing for you guys who are still buying up shares. But not for me who is in a mini-retirement, and sort of dependent on cashing out some shares to get by.

I enjoy selling shares that were almost 40 % more expensive than I bought it.

It meant I got 40 cents for every dollar I invested. Not bad. But now it is more like I get 28 cents for every dollar. Which is still not bad, but it does hurt a bit more to sell a share now.

I still have a good amount of cash, but they might not be sufficient for the next 6 months.

Back In The Philippines

Two days ago arrived back in the Philippines.

What should have been a week in France, ended up being 14 days instead. The boat that I’m going to sail with. Has kept postponing when they are going to leave Indonesia because of bad weather.

That meant I could spend some more days in France. I’m looking forward to the next six months of adventure. But being away from the girl I visited in France is tough. We are not going to see each other for the next six months. It is far from ideal to miss a person that much when I was supposed to have the time of my life.

I’m trying to tell my self that it is possible to miss a person back in Europe, and still have the time of my life here in Asia. But I would lie if I say it doesn’t take a good amount of internal convincing.

I just guess it is a sailor’s life.

Making a FREE Online Course

I have decided to make a free online course on how to reach Coast FIRE in three years or less.

I decided to make it because I think many people will benefit from getting educated on how “little money” can secure your future.

Special young people, who going to choose which education they should do. And maybe go down a route because of the money and “prestige”.

You can reach Coast FIRE in three years or less, with any formal education here in Denmark. And this course will prove it.

It will be short. It will be basic. But it will be efficient as f### !

How LITTLE Money Do We Need In Order To Become Financial Independent?

25 Times Your Annual Spending is A Lot of Money

Let’s be honest. If you are reading this as 20 something years old, and you have just started to make some money. GOOD FOR YOU! You are better off than many other people.

But not everybody is that lucky. Some might just get all these “FIRE information” when they are 30, 40 well maybe even 50+ years old.

Nobody told them they could do what they REALLY wanted if they just saved and invested some money.

BUT! Even if you are stoked about the idea of chasing FIRE, and you are 25 years old. If you are a diligent saver and save 60 % of your income. It will still take you 12 years of working, saving and investing. (7 % annual return)

If you start when you are 25 years old, it means that you will be 37 years old when you have reached your goal of 25 times your annual spending.

That is not bad at all.

But you would still have wasted a lot of time being at a soul-sucking job you don’t like.

Psssst… My Little Secret You Can’t Tell Anyone

I got several new friends by being a part of this FIRE community. And many of them are super badass. The ones that are probably the coolest are the following:

Jacob Lund Fisker

Pernille Wahlgren 

Pete Adeney (Don’t know him personally)

They do differ a bit from each other.

When you meet Pernille she seems to have a very normal/glamorous life with expensive vacations with the entire family. And Jacob is a bit more extreme and is spending less than 10.000 $/year with no kids. Pete Adeney has one kid, he does own a couple of cars but prefers to bike around.

But the thing they have in common is that they have all reached financial independence by having a normal job.

Said in another way. They all have more than 25 times their annual spending saved and invested.

But they have another thing in common. 

And here is my “secret”. 

Not any of them touches the principal of their portfolio. 

Yep, that’s right.

All of them have some sort of new business or job, that covers their expenses. None of them uses the money they have in the portfolio. It is more like a nice cushion if they didn’t feel like making an income.

But FIRE is not about not working. It is about doing stuff you like more, and you decide how many hours you feel like doing it.

So why should you save up 25 times (or more) of your annual spending? To “retire”, but never touch that principal.

Why don’t we just save up 2-5 times our annual spending? Do a bit of work, which is nice. Go for a couple of mini-retirements. And let compound interest do the rest of the work?

Do We Even Need 25 Times Our Annual Spending?

“How much money you would like to retire with??”

It is often the question we hear when we talk about personal finance. But it is the wrong angle to ask the question.

How LITTLE money can we retire with is the right way to ask that question.

The “25 times-your-annual-spending-rule” is based on the thought that we never want to run out of money. And why is that?

What if the day we hit the graveyard, that will be the same day that our accounts are empty. If that is the case. We could change our goal.

The average danish person is going to be 81 years old. 

So if we want to hit the graveyard with no money. AND we don’t want to have an income from when we are 65 years old. (Which is almost impossible because we have the public retirement funds)

That means we only need to have 16 times our annual spending saved and invested. Because we have only have 16 more years to live.

Even with 16 times our annual spending, and a conservative allocation of 50 % bonds and 50 % global stocks (because we are old and worried about stock market crashes). You only have a 5 % chance of running out of money.*

At the bottom 10th percentile you still end up on the graveyard with 2 times your annual spending to your name.*

And we are more than likely to end up with MORE money than when we started our retirement as 65 years old.

You can have as little as 10 times your annual spending in a 100 % global stock portfolio and STILL only have a 45 % chance of running out of money.

And remember the goal was to have an empty account when we were about to die.

Early Retirement 2.0

So how LITTLE money do we need to retire early?

This graph will show you how much you need to have saved and invested to hit 16 times your annual spending at age 65.

The assumptions are the following:

  • We spend 25.000 $/year (175.000 DKK) (That is what Pete Adeney is spending, which is not too extreme.)
  • We invest in a 100 % global stock portfolio

Or we can put it another way.

How many times our annual spending do we need according to our age, to hit 16 times our annual spending at age 65.

So if you read this at 40 years old. And you would like to spend 15.000 $/year when you are 65 years old.

You are going to be perfectly fine if you have 51.000 $ saved and invested.

From that point, you can just earn what you are spending. Which is probably something you can earn by working part-time or work for a couple of months each year.

Or!

Just continue working, stashing up way more cash than you would ever need.

At the moment I have about 75.000 $ (520.000 DKK) invested, which is about 4-5 times my annual spending. If I just leave that money till I’m 65 years old they will probably compound* into something like 640.000 $ (4.400.000 DKK). (After inflation)

Which is more like 36 times my annual spending.

In that case, I will be 65 years old, but I have money for the next 36 years, without relying on interest there is more than inflation.

So take it easy!

You probably have way more money in your portfolio than you need to!

*www.portfoliovisualizer.com

Got Questions? Write Me!

I would always like to hear from you.

No matter what you have to say!

Write me at:

Loui@wannabewalden.com

17# My Monthly Financial Independence Update

The Quick Takeaways

This month savings rate: 0 %

Passive Yearly Income (5 % withdrawal with taxes): 16.900 DKK (2500 $)

% change since last month: + 0,4 %

So What The F#ck Happen This Month?

  • Stock Market went up, networth went down
  • Going to France
  • Train, eat, sleep and repeat

Spending, spending and more spending

We all know the this simple equation for wealth building:

Spending < Earnings

It is simpelt. But very effective.

I’m doing the direct opposite at the moment. Having no income at all, and spending a ton of money. In many years I have known where my money went. But the last month. I feel like I have spent about a 1000 $, when I have spend closer to 3000 $.

And because of that. I’m going to track my spending. I know many people who has tracked their spending. I have done that myself. But it has been done automatically with apps that uses your bank transactions.

But I don’t feel like you get emotionally attached to that transaction, the same way as if you do it manually.

So that’s where I found the Kakeibo method (pronounced Kah-Keh-Boh). Long story short. Is a simple money management where you write spending and earnings in hand.

I will make a complete blogpost about it someday. So I won’t cover the topic to much now.

“Je Vais A Paris!!!”

In best google translate style.

I’m going to France! And it is not completely random that I have chosen France. The thing that shouldn’t happen, did happen.

When I was back in Denmark, and preparing myself for my mini retirement. One of the biggest bullet points on my “Not-To-Do-List”. Was NOT to fell in love with a girl. And that went perfect back in Denmark.

But then I went away for the first part of my mini retirement. Which was two months in Indonesia on the boat (Orbit) as a skipper trainee. These two months was super awesome.

I got to:

  • To know the boat quiet good (Thanks to Mathias, the current skipper).
  • Get four new diving licenses and become a PADI Divemaster.
  • Get the experience of being on a yacht for two months.

But another thing happen as well.

There was this girl. And without going into to much details. Let’s just say I can’t stop thinking about her. Guess what?! She is currently doing an exchange period with her studies in medicin in……… (Drum roll please)

France.

So I have decided to spent 1500+ $ on a ten day trip to Paris and Lyon.

I think the money is going to be well spent.

Cebu Is Gooooood

My days are looking pretty much the same everyday.

They look something like this:

  • Sleep as long as I can. Do some writing/reading/meditating or anything else productive. I might watch too much YouTube though.
  • 1 PM – First Jiu Jitsu training session
  • 4 PM – Eating (Doing OMAD at the moment)
  • 8 PM – Second Jiu Jitsu Training

I love having nice and quiet days. And I think it is the most perfect way I can prepare myself for the six months I’m going to be at sea.

I will be leaving for France the 13/2, and come back here to Cebu the 24/2.

A picture of some of the guys from Patos Jiu Jitsu here in Cebu.

I’m really bad at taking pictures. (Working on that habit)

But for some reason I manage to do an instagram story or two. So if you want some footage of my (currently) mini retirement.

Go and follow me on instagram:

@LouiLam