Author Topic: Reader Case Study - Dutch penny pincher could use some feedback  (Read 8701 times)

Spruit

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Reader Case Study - Dutch penny pincher could use some feedback
« on: October 06, 2014, 03:02:50 PM »
Introduction
Hi there! I realise that the Dutch situation/numbers be deviate quite a bit from US standards, so resident Dutch or other European mustachians are very welcome to comment but please do not hesitate to give US opinions :) You´re a reasonable bunch of people who can hopefully offer me some perspective on finances and other life stuff. Honestly, I feel a bit anxious coming clean  with our situation (please don’t punch too hard) but I feel I need all the help I can get. Sorry in advance for any language issues, English is not my mother language. Also sorry if this story gets too long...

Background
Okay so here it goes. Boyfriend and I have been living together for several years. He works fulltime as a high school teacher, while I’ve been graduating and working on the side when possible. I’m currently looking for a job. We have a young dog and rent part of a farmhouse close to BF’s work (bike ride of 20 min. tops :)). We share joint expenses (rent, utilities, groceries etc.). In addition, we have personal accounts for things like clothes, hobbies, healthcare, “fun stuff” etc. From any income we make, a fixed part goes directly to the joint account and the rest is ours to spend/save as we see fit. Because of this arrangement, I can only give my personal numbers and our joint numbers, not all his numbers (which might be a bit different, BF is not quite the penny pincher I can be).

Now, the problem. Right around the time I graduated, BF got sick. Hospital admission ensued etc. etc. Thank god he turned out okay (and thank god for affordable health insurance in the Netherlands), but the whole process kind of knocked us off our feet. He is still recovering, mentally and physically. This means a fall in income of 31% while he’s recovering and working part time.

Finances worry me quite a bit. Before he got sick, we were doing okayish and he could save some of his income, we could make ends meet and save a bit on the joint account. Right now it is much harder to make ends meet on his salary alone while I am looking for a job, without depleting our savings. I really want to start some serious savings to be able to buy a house in the near future and to have choices regarding work hours etc.

Income: BF’s teaching salary. I am currently unemployed, but have a job in the pipeline starting end 2014, netting probably 1600 euros.
Recently I started exploring alternative incomes. I’ve started crafting and selling custom made accessories, have a few “orders” I’m working on. We also gain a little income selling poison dart frogs we breed ourselves as our hobby, average gain of 60 euros a month.

So:
my (expected) future income: 1600 (8% holliday money and “13th month” excluded)
BF income when healthy: 1550 euros, if still sick in 2015: 1300 euros (8% holliday money and “13th month” excluded)
Side income: 100 euros
Total monthly income 2014: 2000 euros, 2015: probably 2900

Current expenses:
Shared costs:
Rent: 700 euros
Utilities: 130 euros
Local taxes: 18 euros
Groceries: 180 euros (we cook mostly from scratch, eat vegetarian, started veggie gardening)
Pet related: 100 euros a month (saved each month to pay vet visits, bulk dog food purchase etc.)
TV/internet: 47 euros a month (cable and fast internet, tried discussing downgrading this… no succes (of yet))

Private costs:
Clothing: 40 euros (working on getting better at second hand stuff)
Hobbies and fun stuff: 23 (this includes occasional train tickets to visit friends, eating out etc.)
Health care: 725 euros (me) + 1061 (BF) (premium paid once per year to get 3% discount. Deductibles of resp. 800 and 360 euros are for our own account in case of medical expenses.

Expected ER expenses:
At this point, ER is not in our (near) future. Would love to get there, but let‘s start with making ends meet and save so we can generate a respectable down payment for a future house and lower our living expenses further. We plan to have kids in the future, so we hope to be able to work less when those arrive in a couple of years.

Assets:
29.000 euros in saved up student loan (provided by the government @0.81%) at my saving account @1,5% interest. I use this as my emergency fund. Started saving this loan to use as part of a down payment eventually, given the profitable interest difference.
10.000 euros sunk in BF’s card collection. BF is selling this right now, we don’t know the precise return of his “investment”, this is a guestimate. He doesn't know what he will do with this sum, probably put it on a 1.5% savings account untill it's time to use it for a down payment or other housing related costs.
6.000 saved by BF on his personal savings account @ 1.5%.

Liabilities:

38.000 in student loans on my account @0.81%. No payments for this yet (starting next year).
6.000 loan from my parents.
No mortgage, car loans etc. I don’t own a car, BF payed cash for his 2012 Hyundai i10 and is saving monthly to replace this in 10 years.

Specific Question(s):

As mentioned earlier, BF has a slightly different perspective on our finances than I do. Generally, I worry more about financial security and aim at saving for a rainy day. He is certainly financially responsible, but values expensive items more and regards his salary as something that he is free to spend as long as he makes no debt.
I see our situation as an emergency (debt alarm ringing), certainly if I do not succeed in securing a job very soon (the Dutch job market is challenging for recent graduates without elaborate work experience right now). He sees a slight dip that we will soon recover from, and when I find a job we can go back to “normal”. I really don’t want our spending to increase when I start a fulltime job (with substantial commute, arghh), but time will obviously be more sparse. If I secure a job, if not... things will get very tight with a 1300 euro salary to support us both. A lot of uncertainty regarding our income at this moment. Do you have any tips for avoiding costly pitfalls when making the transition into DINK working life? Do you see any possible optimization for our expenses?
Thanks for reading!

 


jennifers

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #1 on: October 06, 2014, 06:19:51 PM »
Your expenses look very reasonable to me so I don't have much to offer.  I think the side income would be the best area to work on in addition to selling the card collection.   

I'm curious  - How does health care work in the Netherlands?


RichMoose

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #2 on: October 06, 2014, 07:54:19 PM »
I'm currently going to a DINK situation myself. My wife just started working last month as a teacher after completing university the last four years. Best I can recommend is to keep your expenses low, watch your clothing and restaurant budget as these often go up for many people when they start working. Take advantage of the fantastic tweedehands kleding winkels on the Netherlands. My mom and oma bring home suitcases full of tweedehands clothes when they visit there because the quality is so good and the prices are great too. Is the local property market where you live expensive compared to rents? My family lives near Rotterdam they tend to have cheap rents compared to house purchase costs. You may be better off financially to continue renting and invest in ETF's instead.

basd

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #3 on: October 07, 2014, 12:20:55 AM »
I'm curious  - How does health care work in the Netherlands?
I could write a whole story here, but this article pretty much covers it all.

http://en.wikipedia.org/wiki/Healthcare_in_the_Netherlands

Mr FrugalNL

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #4 on: October 07, 2014, 12:25:21 AM »
Introduction
Hi there! I realise that the Dutch situation/numbers be deviate quite a bit from US standards, so resident Dutch or other European mustachians are very welcome to comment but please do not hesitate to give US opinions :) You´re a reasonable bunch of people who can hopefully offer me some perspective on finances and other life stuff. Honestly, I feel a bit anxious coming clean  with our situation (please don’t punch too hard) but I feel I need all the help I can get. Sorry in advance for any language issues, English is not my mother language. Also sorry if this story gets too long...

Hi there! Nice to see someone else from the Netherlands here. I've been reading the blog and forums for a while now and finally signed up to reply to your post. I'm a novice mustachian from Rotterdam.

Current expenses:
Shared costs:
Rent: 700 euros
Utilities: 130 euros
Local taxes: 18 euros
Groceries: 180 euros (we cook mostly from scratch, eat vegetarian, started veggie gardening)
Pet related: 100 euros a month (saved each month to pay vet visits, bulk dog food purchase etc.)
TV/internet: 47 euros a month (cable and fast internet, tried discussing downgrading this… no succes (of yet))

Your expenses seem very reasonable to me. Instead of getting rid of television entirely, you could consider jumping ship to a different provider. If you do it via breedbandwinkel.nl, you can get a €10 rebate. I'm currently paying €9.95/month for my internet connection via online.nl (got rid of my television and telephone subscription).

Private costs:
Clothing: 40 euros (working on getting better at second hand stuff)
Hobbies and fun stuff: 23 (this includes occasional train tickets to visit friends, eating out etc.)
Health care: 725 euros (me) + 1061 (BF) (premium paid once per year to get 3% discount. Deductibles of resp. 800 and 360 euros are for our own account in case of medical expenses.

Have you done the math yet to find out whether paying everything up front with a 3% discount costs you less than paying in monthly instalments? You might be surprised.

Assets:
29.000 euros in saved up student loan (provided by the government @0.81%) at my saving account @1,5% interest. I use this as my emergency fund. Started saving this loan to use as part of a down payment eventually, given the profitable interest difference.
10.000 euros sunk in BF’s card collection. BF is selling this right now, we don’t know the precise return of his “investment”, this is a guestimate. He doesn't know what he will do with this sum, probably put it on a 1.5% savings account untill it's time to use it for a down payment or other housing related costs.
6.000 saved by BF on his personal savings account @ 1.5%.

You're doing pretty well there. But why not use spaarinformatie.nl to find yourself a better savings account? You could get as much as 1.75% interest with KNAB (full disclosure: I have a savings account with NN for 'only' 1.65% interest). Better yet, why not get a 1-year time deposit for whatever part of the money you don't expect you'll need within the year? You could get a 1.98% interest rate with ICBC if you're not scared of giving your money to a Chinese bank that falls under Luxembourg's deposit insurance scheme or 1.95% interest with LeasePlanBank, which falls under the Dutch deposit insurance scheme.

Liabilities:
38.000 in student loans on my account @0.81%. No payments for this yet (starting next year).
6.000 loan from my parents.
No mortgage, car loans etc. I don’t own a car, BF payed cash for his 2012 Hyundai i10 and is saving monthly to replace this in 10 years.

First of all, relax. Your hair is not on fire. If you could borrow any more money at 0.81% interest then you certainly should, because you're making a tidy profit by just letting it sit in a savings account. You might want to consider putting some of that money in stocks and bonds once you feel sufficiently secure financially. You might find this blog by another Dutch mustachian handy when you're learning about investing.

What are the repayment conditions of the loan from your parents? You have enough money to repay it and probably should if the interest is higher than what you're getting on your bank accounts.

Specific Question(s):
As mentioned earlier, BF has a slightly different perspective on our finances than I do. Generally, I worry more about financial security and aim at saving for a rainy day. He is certainly financially responsible, but values expensive items more and regards his salary as something that he is free to spend as long as he makes no debt.
I see our situation as an emergency (debt alarm ringing), certainly if I do not succeed in securing a job very soon (the Dutch job market is challenging for recent graduates without elaborate work experience right now). He sees a slight dip that we will soon recover from, and when I find a job we can go back to “normal”. I really don’t want our spending to increase when I start a fulltime job (with substantial commute, arghh), but time will obviously be more sparse. If I secure a job, if not... things will get very tight with a 1300 euro salary to support us both. A lot of uncertainty regarding our income at this moment. Do you have any tips for avoiding costly pitfalls when making the transition into DINK working life? Do you see any possible optimization for our expenses?
Thanks for reading!

Your different views on finances are a bigger problem than your student loan debt. I'd work on finding a compromise between both your views. Your boyfriend's no profligate spender from what you've said, so you will surely be able to work something out. It doesn't have to happen overnight either. Good luck! This reply would have been longer but I've got to run!

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #5 on: October 07, 2014, 12:43:35 AM »
Regarding health care: in NL part of health care costs are included in tax (elderly housing, mental institutions etc.) and part is private insurance. Each year the conditions (min. deductible, what is or isn't covered) for the "basic insurance" are given by the government. Insurance companies all offer the more or less same basic insurance. Additional insurance for e.g. travel vaccinations, more physiotherapy etc. is possible, of course for a higher premium. Lower income groups receive a subsidy to alleviate the premium costs. It is approximately the monthly costs of the basic insurance with max. deductible.
As I'm still young and healthy, I've maximized my deductible and only have basic insurance. Therefore, health care insurance is nearly free for me right now :)
Edit: my fellow Dutchman already beat me to it. Learned some stuff from that wiki link as well.

The DINK trap of restaurants is not as common here, going out to eat is considered luxury and a bit decadent for every week. However, getting take out on the way home might be seductive. Thankfully (haha) we are both vegetarian and lactose intolerant, not such a common combination here so not much options when eating out.
Will look into a good tweedehandswinkel. It seems to be hit or miss with those and since I live pretty rural (for Dutch context anyway), their density is not that high.

With regard to housing: the mortgage interest is tax deductible (might change though) and capital from 23K onward is taxed at 1,2%. Bit silly, but that's how owning might be more advantageous than renting long term. For 700 euros a month in pure mortgage interest and maintenance, we could live in a pretty decent house. The bubble is not fully deflated here yet, so we hope to save and buy when prices are a bit lower.
 The possibilities of installing solar panels and invest in decent isolation also are limited while renting. We both are rather risk averse and aren't comfortable with investing a very large sum yet. Investing in lowering housing costs is something that seems a good alternative.
« Last Edit: October 07, 2014, 12:52:23 AM by Suzie P »

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #6 on: October 07, 2014, 01:26:55 AM »
Hi MrFrugalNL! My family lives in/near Rotterdam, I "emigrated" to rural Brabant. Quite a change of scenes like you can imagine. I miss easy access to the "toko" and Afrikaander market, but boy is it dark and quiet here at night, vegggies and fruit out of my back yard and I can run around naked in my living room with no curtains if I feel like it :P

Regarding the cable: one downside of living rural - less cable providers. BF wants to keep his fast cable internet (he's an avid gamer), so unfortunately switching is not possible (at least: I looked in to it and haven't found a way yet). I'm intrigued with the 3% discount math... Can you elucidate a bit? Do you mean investing the difference or??
With regards to the saving interests: you're right, its just that I'm with a "green" bank now and hesitant to save with a bonus-giving, wapon-investing "common" bank (yeah I'm hippy like that). However, I realize I am shooting myself in the foot  here a bit. Will definitely look into deposits. I read Econowisers blog as well, and it has given me some food for thought. I feel weird investing money that isn't "mine" (the loan from the state). I know I have to pay it back eventually, and I'm just anxious that if the stock market collapses or whatever it will vaporize. Okay typing this, I realize I'm a bit of a scaredy cat. Did I mention I am pretty risk averse?

Thanks for calming me a bit regarding our liabilities. BF says that to me all the time, but I guess I'm just pretty insecure about money. Very grateful for my insights while still studying, that allowed me to max. my student loan and save it up. I really wonder why my peers wouldn't. BF states that he didn't because "debt doesn't feel nice", amen to that! I unfortunately had to borrow a bit anyway, so that threshold seemed smaller for me. Now really glad I did that as it gives me options. I like options :)
The money borrowed from my parent is loaned to my against 0%. I actually feel guilty about it a bit, as they are not rich by any means, but they insist that I keep it untill my financial situation stabilizes. I'm very grateful for that.

Also very grateful that BF and I are very open to each other about financial matters. He has given me his blessing for dissecting his personal expenses to look for any improvements. We are both deliberate and pretty rational people, but our priorities are sometimes different. I just don't care about "stuff" (camper vans, camera's, kites, gadgets, musical instruments). Booking 100 bucks to my saving account gives me more joy than buying a gadget. We come from different nests and it shows sometimes, but nothing we can't work out together, though.

Captain and Mrs Slow

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #7 on: October 07, 2014, 01:29:35 AM »
One thought but would getting married make much of a difference? It seems odd but in very liberal Europe common in law relationships, for the most part are not legally recognized. This can lead to some very strange situations. For example in Germany married couples with kids pay substantially less taxes than non marrieds with kids. Or famously the author of the Dragon Books died and his long time spouse got nothing.


Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #8 on: October 07, 2014, 01:38:35 AM »
We are looking in to finally getting a "living together contract" (samenlevingscontract), after 5 years of living together, to be able to file taxes jointly. Feels silly get a contract that says you live together after all this time. Costly too, but with me having no substantial income this year it makes quite a difference in tax deductions apparently.
The thing is, marriage seems so old fashioned in the way it deals with divorce. If it's over, it should be over IMHO. No need for alimony to one another for 12 years after separating, that just doesn't seem fair to us. However, since kids are something we both want, it might be the most practical way to organize things in the future. I'm more pragmatic in that regard than BF and you need two to marry of course.
« Last Edit: October 07, 2014, 02:05:13 AM by Suzie P »

Valean

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #9 on: October 07, 2014, 11:27:15 AM »
Hi, Dutch Mustachian here. It is indeed almost always good to be able to file jointly - by creatively moving deductions around you can save a pretty penny. Whether you are married or not does not necessarily matter for alimony. Municipalities love forcing ex-partners to pay alimony to avoid one person ending up on welfare.  That said, getting married for tax reasons is probably not a good idea :).


Also, if you are not married, there are some potential (legal) roadbumps when it comes to taking care of the children - nothing groundbreaking but from a practical standpoint, being married makes sense when one has children.

As for your budget: If I'm correct, you can offset your asset tax with your student loan so you don't pay that, correct? As for the general budget, it seems extremely frugal (I would have a hard time living on so little money, but then I love buying good food). There might be 30 a month in getting Internet only and ditching cable and 30 or so in getting the dog food online, but that won't make a huge difference.

On the bigger ticket items, I can think of three things:
1) You save at 1.5%. That is quite abysmal. Yes, you collect on the carry with your student loans, but a 1.5% return on investment is not a lot. I would suggest investing at least half in stocks/bonds
2) As an alternative: In rural Brabant, the housing market has not recovered yet. You can buy a very nice house for not very much money, and you have the downpayment. With interest rates what they are, you stand to save hundreds of euros.
3) Utilities seems a bit high - is your place poorly insulated?

Mr FrugalNL

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #10 on: October 07, 2014, 11:42:35 AM »
Hi MrFrugalNL! My family lives in/near Rotterdam, I "emigrated" to rural Brabant. Quite a change of scenes like you can imagine. I miss easy access to the "toko" and Afrikaander market, but boy is it dark and quiet here at night, vegggies and fruit out of my back yard and I can run around naked in my living room with no curtains if I feel like it :P

Rural Brabant?! You might as well have moved to the other side of the planet! ;)

Regarding the cable: one downside of living rural - less cable providers. BF wants to keep his fast cable internet (he's an avid gamer), so unfortunately switching is not possible (at least: I looked in to it and haven't found a way yet). I'm intrigued with the 3% discount math... Can you elucidate a bit? Do you mean investing the difference or??

Yes, I meant investing the difference. My guesstimate of the returns was way off though, so never mind. I used to be able to recoup the administrative fee for monthly payment of my tuition fees (and then some) by simply putting the money in a savings account.

With regards to the saving interests: you're right, its just that I'm with a "green" bank now and hesitant to save with a bonus-giving, wapon-investing "common" bank (yeah I'm hippy like that). However, I realize I am shooting myself in the foot  here a bit. Will definitely look into deposits. I read Econowisers blog as well, and it has given me some food for thought. I feel weird investing money that isn't "mine" (the loan from the state). I know I have to pay it back eventually, and I'm just anxious that if the stock market collapses or whatever it will vaporize. Okay typing this, I realize I'm a bit of a scaredy cat. Did I mention I am pretty risk averse?

A clean conscience could be worth a 0.25% difference in interest rates, I suppose, though personally I still prefer my higher interest account.

As for your aversion to risk, I could tell. ;) Be aware that, if you're investing in a broadly diversified index fund (whether it's exchange traded or not), you are very unlikely to lose all your money. Take the FTSE all-world index, for example, which consists of around 2,700 companies last I checked. For you to lose all your money, every single company in the index would have to go bankrupt. An event that does that would make the Great Depression and both World wars look like a picnic. How would you feel about putting around 12% of your borrowed money into stocks and 8% into bonds? That could get you used to the idea. Your loan from the government is a long-term obligation; the long-term returns of stocks are so much higher than the interest you're paying on the loan that things would have to go very badly indeed for you to end up in trouble. Also, even assuming you lose all the money, wouldn't your salary be sufficient to pay the loan back?

Have you read the stock series by jlcollinsnh yet? I found it very helpful. The more you understand, the less there is to fear.

Thanks for calming me a bit regarding our liabilities. BF says that to me all the time, but I guess I'm just pretty insecure about money. Very grateful for my insights while still studying, that allowed me to max. my student loan and save it up. I really wonder why my peers wouldn't. BF states that he didn't because "debt doesn't feel nice", amen to that! I unfortunately had to borrow a bit anyway, so that threshold seemed smaller for me. Now really glad I did that as it gives me options. I like options :)
The money borrowed from my parent is loaned to my against 0%. I actually feel guilty about it a bit, as they are not rich by any means, but they insist that I keep it untill my financial situation stabilizes. I'm very grateful for that.

I think you were wise to take out the student loan. And very nice of your parents to loan you the money on those terms! The tax authorities might consider a loan under those terms a gift, however, in which case you might be liable to pay 'schenkbelasting'! See here.

Also very grateful that BF and I are very open to each other about financial matters. He has given me his blessing for dissecting his personal expenses to look for any improvements. We are both deliberate and pretty rational people, but our priorities are sometimes different. I just don't care about "stuff" (camper vans, camera's, kites, gadgets, musical instruments). Booking 100 bucks to my saving account gives me more joy than buying a gadget. We come from different nests and it shows sometimes, but nothing we can't work out together, though.

Sounds like you'll be able to find some sort of middle ground. Excellent!

One thought but would getting married make much of a difference? It seems odd but in very liberal Europe common in law relationships, for the most part are not legally recognized. This can lead to some very strange situations. For example in Germany married couples with kids pay substantially less taxes than non marrieds with kids. Or famously the author of the Dragon Books died and his long time spouse got nothing.

This is a very good point, actually. A cohabitation contract would seriously improve your position if (God forbid) either of your dies. It is my understanding that, in the absence of a cohabitation contract/will that provides otherwise, or a registered partnership/marriage, the surviving partner inherits NOTHING and the deceased partner's immediate relatives inherit EVERYTHING. Also, many pensions don't pay out surviving dependants' benefits to the surviving partner in the absence of a legal document of some sort.

To become partners for tax purposes you need either a registered partnership or a marriage (source). If either of you is a romantic and doesn't want to 'get married for the money', you could enter into a registered partnership and get your tax benefits without any of the emotional baggage of a marriage. A marriage or registered partnership, unlike a cohabitation contract, does mean your partner may be entitled to alimony in the event of a break-up. This is not the case for a cohabitation contract.

You can find much more information about the differences between a marriage, registered partnership and cohabitation contract online, but here's an article to get you started.

As for your budget: If I'm correct, you can offset your asset tax with your student loan so you don't pay that, correct?

That's right. You basically deduct your liabilities from your assets like so.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #11 on: October 07, 2014, 03:09:02 PM »
Municipalities love forcing ex-partners to pay alimony to avoid one person ending up on welfare.  That said, getting married for tax reasons is probably not a good idea :).

Woa, really? I already hate the fact BF is forced to pay for me being unemployed because we live together, but we are not allowed to file taxes jointly. But this... how hypocrite! Not marrying is not because we don't love each other though, it is thee institution of marriage that doesn't seem to fit us. However, I am willing to reconsider my principles if it improves our possition. BF on the otherhand is more of an idealist and kind of strongheaded sometimes. Still love him though, married or not ;)
Maybe he can be dissuade to getting a registered partnership or a prenup of sorts. We'll see.

Quote
As for your budget: If I'm correct, you can offset your asset tax with your student loan so you don't pay that, correct? As for the general budget, it seems extremely frugal (I would have a hard time living on so little money, but then I love buying good food). There might be 30 a month in getting Internet only and ditching cable and 30 or so in getting the dog food online, but that won't make a huge difference.
Thanks :) Good to know we are on the right track regarding expenses. I maintain a vegetable garden, we eat vegetarian and cook 90% made from scratch, so that might explain the low groceries costs. Unfortunately, our hairy friend is pretty big, young and very active. So even though I buy dogfood in bulk online, it adds up. Also, she is our first dog so we bought some items that will hopefully last a dog life (bike trailer, leash, crate etc.). On contrary, when I start working full time and BF goes back to working more hours, dog walking service for the afternoon seems pretty inevitable. 9 euros a day, 4 days a week equals 162 euro a month. A doubling of doggy expenses, outch...the things we do for dogs...

Quote
On the bigger ticket items, I can think of three things:
1) You save at 1.5%. That is quite abysmal. Yes, you collect on the carry with your student loans, but a 1.5% return on investment is not a lot. I would suggest investing at least half in stocks/bonds
2) As an alternative: In rural Brabant, the housing market has not recovered yet. You can buy a very nice house for not very much money, and you have the downpayment. With interest rates what they are, you stand to save hundreds of euros.
3) Utilities seems a bit high - is your place poorly insulated?
1) Definitly agree I should get over my "do not invest/gamble with borrowed money"-dogma. However, life long drilling is not erased quickly. Will start with MrFrugalNL's suggestion: reading up on investing for Europeans, start directly with some deposits and than start investing approximately 20% of the borrowed sum we I get over myself ;)
2) Yep, this is the plan for now. I am looking around at real estate in the area to get a feel for the market. We are not in a rush to buy, when we do we plan to live there for the rest of our lives. First, we'll see how are incomes develop in the coming months and we are not decided yet how much contruction work we can handle (in other words: how "finished" the house must be for us).
3) They are high, I noticed as well. There are a few explanations I can think of:
- Poor insulation. Our living room windows were really drafty and thin glassed (as in: billowing curtains, never comfy). Fortunately, they have been replaced this summer. Also, the central heating boiler was a very old inefficient model that had issues for months. It broke this year and was replaced with a high efficiency type now :). Still, this place has moist issues that undoubtedly influence heating efficiency and also prevent me from linedrying in wet winters :( As the moist is due to poor wall construction in this old house, I don't see any way to fix this without breaking the bank.
- Being home a lot. As mentioned, BF has been sick for most of 2014, spends many hours gaming online and this will cost quite some kWh I guess. I'm also home a lot, do batch cooking / conserving. Could be this uses up some additional gas.
- Frogs. We breed poison dart frogs, housed in lighted and mildly heated terraria. A lot of kWh there, but we keep track of this and they are profitable (by a margin) so they can stay to earn their keep :)
However, I didn't come here to give excuses, so from now on I will take a closer look to our current usage of utilities. Hopefully we will get this down.

Thanks for sparring with me guys, I really appreciate it!

Valean

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #12 on: October 07, 2014, 03:46:13 PM »
Quote
BF on the otherhand is more of an idealist and kind of strongheaded sometimes. Still love him though, married or not ;)
Maybe he can be dissuade to getting a registered partnership or a prenup of sorts. We'll see.
Just so you know: a standard geregistreerd partnerschap is effectively the same as a marriage, with the exception of when kids are involved. I understand people use it for ceremonial reasons, but it always seemed somewhat useless to me. Also, prenups do not help one iota against alimony.

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Definitly agree I should get over my "do not invest/gamble with borrowed money"-dogma. However, life long drilling is not erased quickly.
The risk angle is important. However, you have 2 reasons why this is not very risky:
  • You only invest part of the money
  • You have a very long time to pay it back, and you don't even have to if you don't have enough income
This is a huge difference with buying stocks on margin.
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I'm also home a lot, do batch cooking / conserving. Could be this uses up some additional gas.
Cooking requires 3% of the gas use in an average Dutch home. It's almost certainly the insulation or the frogs.

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However, I didn't come here to give excuses, so from now on I will take a closer look to our current usage of utilities.
Well, it seems that mostly, you are paying 700 euros plus another say 50 in utilities on a not so nice place. Now, I do understand buying has upfront costs. Also, you will be in a much better position to buy when you both have jobs.

To give a bit of perspective: I paid 800 euros a month for a rental rathole in Osdorp (a ghetto) in Amsterdam, 70 sq m. I then bought a 200+ square meter villa in Amstelveen. I pay 1400 a month, but 400 of that is downpayment on the mortgage. When I refinance in 2 years, I will be paying less than for the apartment. And, it appears the place has already appreciated by about 50 K. Of course a real Mustachian would have bought a much smaller house, but my wife does not have whiskers so that was out the window. Plus, I genuinely believe that this house, given location etc. will appreciate considerably. BTW, I pay 85 a month in utilities for the place - less than the rathole. New build houses are very energy-efficient.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #13 on: October 07, 2014, 04:17:56 PM »
Not much wrong with our place at the moment. Windows are replaced, new central heating is installed, roof is isolated pretty well. Moist is the biggest downside right now. It annoys the heck out of me in winter, but we are no way near ghetto living in this house. Upsides are the location, outside space (garden and shed are used pretty intensively) and flexibility that renting offers at this stage in our lives.
Possible problem is getting spoiled: we like living outside in the country so much that it would be sad to get used to living in town without peace and quiet, substantial garden and with neighbours bugging us. The houses outside of town are often farms or converted farmhomes with substantial amount of land and thus not in our league, even with two jobs to put up for a mortgage. However, prices of such houses are still declining. So, we keep on looking until something affordable might come along in the coming years while hopefully adding to our stache and figuring out what it is we want exactly in the meantime.



Valean

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #14 on: October 08, 2014, 04:55:46 AM »
No, 700 rents a nice place in rural Brabant for sure. I grew up in the area - seeing how much more expensive life in the capital was was quite the shock. BTW, being a teacher outside of the big cities is a smart move. Salaries are the same across the country. Cost of living is not.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #15 on: October 09, 2014, 04:20:23 PM »
Looked into my utilities today and found out some interesting stuff. Good news: we're getting back 300 euros after switching providers this September. And thats just the correction from may to september. Obviously the previous company overestimated our monthly usage. So actually the monthly energy costs are quite a bit lower than listed in the first post :-)
Secondly, I found out the waterbill consists mostly of local taxes. So our actual water usage is about ten euros a month in stead of thirty. Hopefully this will make it easier to compare our usage to others, even though it doesn't change our water spending directly, unfortunately.
Thankfully it was dry today, so I didn't have to run the dryer and now have much nicer smelling clothes. Little bit of electricity saved. Small things add up, right?

jnc

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #16 on: October 14, 2014, 07:09:28 AM »
Yeah the calculations for the energy consumption are pretty complicated. My landlord initially told me we went over by more than 500 euros for the year but it turns out he had initially omitted taking into account a certain tax rebate thing, so make sure you check your bill carefully.

Getting 300 euros sounds. I think we ended up owing 300 euros! But hey we just moved from California to the Netherlands and are quite the wusses in terms of cold weather :)

Great to stumble upon your thread.

former player

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #17 on: October 14, 2014, 07:53:04 AM »
I've nothing to add on your financial situation, but did want to say that a side-hustle in poison-dart frogs is the most awesome thing I think I've read here.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #18 on: October 15, 2014, 05:28:42 PM »
The energy bill probably ended up with a 300 bonus because the winter months are not included. I imagine heating costs in winter are spread out over the payments throughout the year. And this summer and fall have been pretty hot sometimes, so we were able (and obligated) to turn the frogs' lights and heating off often, and we don't do AC.

Can't say the frogs will make us rich anytime soon, but they certainly outperform the dog by a long way - financially speaking :-)

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #19 on: October 16, 2014, 04:08:38 AM »
Oh my. I'm so sad and yet so stoked today!
I went on a third job interview earlier this week for the aforementioned position, and it turned out that while the company is enthousiastic about me, I'm afraid I'm all but enthousiastic about the job :( Sure, the paycheck would be very welcome but I'm not ready to put in 40+ hour weeks on a regular basis and this seemed to be what was asked for. I know, in the US 50 hour weeks are considered relatively normal, but to be honest I think it would break me. I would have a 1+ hour commute each day (just getting home), then come home, eat, sleep, repeat. I feel so sad about that, I cannot honestly tell myself this is a good development, even with more money coming in. So, that saddens me.
On the other hand:
Woa, a position offered itself that is right in my alley (is that even a way of saying in English?): I can bike to work, flexibel hours that are great when combining dog walking with BF and I'd absolutely love this job and have the right experience for it! So... I wrote and send my resume, and am now crossing my fingers like hell. Man, I so want this job. The other one just gets bleaker and bleaker in comparison.
Sure, way less hours (15 vs. 40+), so way less income (more like 600-700 euros vs 1600). But: more job satisfaction, less stress, more free time, ability to keep expenses low and we can give doggy the attention and exercize she deserves ourselves. So I'm so thankful for having a cash cushing that allows me to follow my heart (even though my anxious head keeps nagging that I should not give up a "solid" job opportunity because its no fun). Hoping it turns out okay. Please hope with me ;)

Kronkl

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #20 on: October 16, 2014, 04:25:53 AM »
Perhaps you can start a Journal? I would suggest you follow your heart and go for the long-term job you like, instead of the short-term job that burns you out but pays more.

LennStar

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #21 on: October 16, 2014, 04:45:57 AM »
I also think the biggest problem is the difference in MM behavior.

For the sake of argument I will smooth the numbers:

You both earn 1600
= 3200
monthly living expenses 1200

that means you both put in 600€ every month, leaving you with 1000€ free each. Very nice.
You could just put 3/4 of it into an account and after half a year show your BF the difference ;) Perhaps that will open his eyes.


However from your description I highly suggest you get the "small" job if you can get it. You dont HAVE to take the other one, and a job you hate and have to drive to one hour is nothing you should do. You could aim for very early FIRE with that job, but why not delay FIRE for 10 more years and be happy instead ;) FIRE is about doing what you want. If you can get that while earning money, its not so bad :D

In the second case I wuld suggest you put your money together in % of income,

So roughly he has to put 850 in the shared account and you 350.
That leaves you with decidedly less personal money then him. Can you save the same amount as him? Then you have a point for sying "if I can do that, you can do more!"

I would suggest getting a side gig. Dog walking? You do it anyway. Any neighbors who would give you a 5€ for walking their dogs? Like someone who works the first type of job? ;) If you find 2 of them you could get 300€ extra each month!
And of course that money would be put into index funds.



RichMoose

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #22 on: October 16, 2014, 09:05:03 AM »
right in my alley (is that even a way of saying in English?)

Right up my alley. :)

Best luck, I hope you get that new position! You can always focus on your hobbies and side businesses with the extra time. Dog walking for neighbours would be great as long as you are not too rural.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #23 on: October 16, 2014, 09:55:39 AM »
No idea how to remove these posts to a journal, but I will make one. More appropriate place to ramble :P
Quick update: got a call about the fun-job 10 min. after sending in my cover letter and resume. I was the very last applicant and they squeezed me in this afternoon. We had a very nice conversation, it seems like a perfect workplace so I'm still stoked. I'll hear from them tomorrow. Yay!

Kronkl

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #24 on: October 20, 2014, 12:56:00 AM »
And, how did it work out?

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #25 on: October 20, 2014, 02:07:25 PM »
Forgot to post a link to my journal, doh...
Here it is:
http://forum.mrmoneymustache.com/journals/dutch-penny-pinching-the-journal/
But, I got the part time job and took that job with both hands. So now I have all the time to figure out how to develop our "income quilt" further.
Going in later this week to discuss practical issues like ehm salary and stuff. I'll look into freelance options and investing to gather aditional income.
« Last Edit: October 20, 2014, 02:11:44 PM by Suzie P »

LennStar

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #26 on: October 20, 2014, 03:58:00 PM »
You could try the hydroponics from current article on the website ^^

If you are interested look for my comment, I wrote about somthing in Berlin; these people surely know where to look in the Netherlands if you want to do something like this and need help.

Mr FrugalNL

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #27 on: October 21, 2014, 01:32:13 PM »
Forgot to post a link to my journal, doh...
Here it is:
http://forum.mrmoneymustache.com/journals/dutch-penny-pinching-the-journal/
But, I got the part time job and took that job with both hands. So now I have all the time to figure out how to develop our "income quilt" further.
Going in later this week to discuss practical issues like ehm salary and stuff. I'll look into freelance options and investing to gather aditional income.

Congratulations! Remember not to take the first offer they give you. It might be a bit scary now, but you'll thank yourself for years to come.

Spruit

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #28 on: October 21, 2014, 11:45:59 PM »
I know you are right about being assertive about salary. It is certainly scary though, I'm wondering how I will bring it up. I don't want to just walk out of there, but I'd be surprised if they immediately have a counter offer ready. The freelance gig I do now is in the same field, so it seems wise to bring along my hourly rate conditions for that. I have some trouble knowing if it is fair to ask more. The tasks for the job will overlap a bit with what I do now,  but the most tasks are slightly different. 

Mr FrugalNL

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Re: Reader Case Study - Dutch penny pincher could use some feedback
« Reply #29 on: October 22, 2014, 10:23:50 AM »
The first offer they give you is unlikely to be the very highest they're willing to pay you. Just something to bear in mind. The reason most companies don't immediately give you a take-it-or-leave-it offer is that they expect most applicants to negotiate and want to have a little wiggle room for that eventuality. If they offer you a nice round number, ask yourself if they might have made the same offer to an applicant exactly a year ago. If the answer is yes, then adding a little extra to compensate for inflation wouldn't be at all unreasonable, would it?

It would help if you could find out how much is usual for a person with your experience before the meeting. Your freelance gig should be a useful starting point, and there are several Dutch salary-comparison websites out there. If you have any acquaintances working in the same field whom you'd feel comfortable asking, that would be useful too. You can then use that information to evaluate how fair the offer they make you is, and how much more you could realistically ask for.

If a higher starting salary is out of the question, you could ask about secondary employment conditions like vacation days, travel expenses, flexible working hours or an education budget. Such perks have a price too, but it is less obvious and therefore more easily negotiable. Whatever you do, don't sign anything on the spot. No good applicant was ever disqualified from a good offer for asking to sleep on it one night.

Good luck out there!

Full disclosure: This is coming from someone who regretted not negotiating the first salary offer of his career.

EDIT:
It is certainly scary though, I'm wondering how I will bring it up. I don't want to just walk out of there, but I'd be surprised if they immediately have a counter offer ready.

It certainly is scary, but you'll be glad you've done it once the negotiations are over. A strategy that might work for you would be to go to the interview, hear what they have to say, take notes so you have every detail in writing, ask any questions you may have, express enthusiasm about the job in general, then ask if you can take the employment contract home to sleep on it one night and consult your spouse. This gives you the time to do just those two things and then send them an e-mail the next day to ask if they could possibly change condition ABC for reason XYZ. For example, the absence of a company pension scheme would be a reason to ask for a higher salary because you will have to pay for your pension out of your own pocket.
« Last Edit: October 22, 2014, 10:37:19 AM by Mr FrugalNL »