Author Topic: Case study: another FIRE in Europe, at all possible?  (Read 3023 times)

Imma

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Case study: another FIRE in Europe, at all possible?
« on: July 20, 2017, 02:42:55 PM »
Can I ever FIRE and if so, what do I need to do to achieve it?

Life Situation: Cohabiting couple, 27 and 30 years old, no kids. I have suffered with chronic illness since I was 16 which means I'm unable to work full time. I have a Bachelor's degree in law, but to work in the law field you need to have a Master's degree. As parttime jobs in that field are rare, I decided not to pursue a Master's degree just yet. The cost for that would be about EUR 5000 and I probably will have to do a Master's degree at some point, as only having a Bachelor's degree is considered to be 'dropping out' of university. We keep our finances completely separate, so this concerns only me, but he has roughly the same income (but works many more hours a week to earn it) and the same spending pattern.

Gross Salary/Wages: About 1400 EUR / month for 20 hours a week. Monthly wage is 1212, I get one extra month's worth of salary in May and I make about one month's worth of paid overtime every year. I can physically work about 25 hours a week. My pay is low because I work parttime, but I'd make a pretty good living if I'd be able to work fulltime.   

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc. - whatever you have
This is the point. Our pension system is complicated. There are 3 pillars:
1. State pension. Right now about 750 EUR/month net each for a married couple. You need to have lived in this country for 50 years to qualify for it and so far we quality for full state pension at state pension age, which is 67 and 2 months right now. The thing is, we have an ageing population and I'm fairly sure that 40 years from now the government will not be able to afford it anymore. Also, our parents are early 60s now and I see they are struggling to continue to work and they're not even 67.

2. Company pension funds. This is how our parent's generation built up nice pensions, but many companies have stopped offering it. I have never worked anywhere that offered it, my partner has a very small amount of money somewhere from a job a long time ago. I'm not sure how much it is precisely, but I do know that in the occasion that he dies before his pension age, I'll get 100 EUR a year (yes, that's the correct amount) as a widow's pension.

3. IRA-type accounts. These are complicated in here. Pro:
1. The amount in these accounts is not liable for equity tax (1,3% tax on your equity above EUR 50.000 as a couple, your first house is exempt).
2. The amount in these accounts is exempt from any means-tested care. Think things like a nursing home or care at home, adaptations to your home etc. Considering my health, there's an above average chance I'll ever need this type of care.
3. Your contribution is tax deductable.
4. You can choose what you invest in (unlike a company pension fund, they decide for you)

Con:
1. You can only contribute a % of your income above EUR 15000 gross. As I only earn EUR 17000 gross, I can only contribute 1000 EUR a year. Still, at 40 years and a conservative 4%, that's 100.000 EUR.
2. You cannot access the money before government retirement age, which is currently 67.
3. You have to buy an annuity with the money. For EUR 100.000 you can buy a lifetime annuity of about EUR 4500 gross/year right now. Combined with my state pension, I'd have the same income as I have now, but I think it's pretty unlikely it still exists when I'm 67.
4. Considering my health, there's an above average chance that I'll not live as long as most people and that I'll be forced to quit working earlier. Right now, if I were to get disabled, my disabilty income would be EUR 925 but there have been lots of budget cuts to disability benefits over the last couple of years.

Other Ordinary Income: none

Taxes: From my regular monthly paycheck of EUR 1212, 117 EUR is deducted in income tax and contribution to social security and health care, so my take home pay is 1095 EUR. I get tax credits because I work even though I'm chronically ill.

Current expenses:

Take home pay: 1095
To joint account:  400 (partner also pays 400)
                          from this Mortgage 300, original sum 77900, now 74000, 28 years left at 2,2% interest
                                                                         30, water and taxes on water
                                                                         85, gas and electricity
                                                                         33, internet and cable tv. We don't watch tv, but it was cheaper than internet-
                                                                              only
                                                                         95, debt to the tax man. 0% interest, 5 months to go
                                                                         50, local taxes and garbage collection
                                                                         15, trade union membership
                                                                           6, netflix that we share with a relative
                                                                         10, home insurance
                                                                         30, liability and contents insurance. Expensive so it covers partner's music gear.
                                                                        140, food (staples). Any kind of fancy food goes from our own accounts.
                                                                       

Health care: 200 (I have a special savings account for these costs. This includes insurance at EUR 1200 a year, co-pay of 400 and EUR 800 a year in physical therapy)
Investments: 125 in index funds.
Public transport: 50 . We do not have a car and our relatives all live about 40-60km away.
Sewing class: 50 (includes materials). This is my main social activity outside of work and I'm not willing to give it up
Personal tax debt: 70  0% interest, 8 months left.
Savings: 100 . No specific purpose, but our house needs a lot of work and we're working on that slowly but steadily.
Spending: 100. From this: 8, mobile phone
                                                       10, life insurance for my partner. If he dies before 2045, I get 100.000 EUR

Also: clothing, hairdresser, eating out / take-away (we don't do that often) gifts, bike repairs.

My one month's extra salary in May and overtime money generally go into my savings account or towards an expensive purchase like new shoes.


Assets:
Checking account: EUR         98 (I will get paid on the 31st)
Savings account one: EUR 2300 (emergency fund)
Savings account two: EUR     50 (health care, paid some large bills recently)
Joint savings account: EUR  325 (any money left over from joint bank account, we don't pay everything monthly) 50% ownership
Investments: EUR             1800 (in index funds, 75% stock and 25% bonds)
House: EUR                    79500 (purchase price 2 years ago, in current market about 83000-85000) 50% ownership           


Liabilities:
Mortgage: EUR              74000 (28 years left to go, 2,25% interest. Started at 77900, downpayment is uncommon in here. Our 2%
                                              down is actually considered good, most people borrow more than the house is worth. Shared with
                                              partner.
Student debt: EUR           5000 I will have to start paying this back in 2020, minimum amount will be EUR 45/month. As the interest
                                              is fixed until 2020 @ 0,01%, I'm not paying anything back until I have to.
Tax debt: EUR                   300 I will have to pay this back in August, will pay this from savings account 1.

Personal tax debt:              560 remaining, the one I pay 70/month for
Joint tax debt:                    475 remaining, the one we pay 95/month for 


Question: How do I FIRE asap? Is it at all possible? I don't really hate my job, but it takes a lot of my limited energy and I'd rather spend that on things I enjoy. I'm not really willing to cut back on the level of luxury we have now, unless there's an extremely good rational argument for that. For the first time in my life I have the feeling I'm financially comfortable and I'd like to keep it that way.

As for all the tax debts: income taxes are deducted from your monthly payments and when you earn more, you'll have a tax debt next year. I don't expect any big income increase in the next few years. I'm already earning quite a lot for what I do and it's hard to find a parttime highly skilled job. Most parttime jobs around here are low paid and low skilled. I'm currently working in an accounting department, but to really get on in that field, I'd need to get a degree in finance and a second Bachelor's degree would cost me about EUR 15000 that I'd have to take out student loans for. The other option would be a Master's degree in something like Tax law, which would cost me about EUR 5000. I'm not extremely interested in either field, but I've worked in finance for about 5 years now and I don't hate it.
« Last Edit: July 20, 2017, 03:38:46 PM by Imma »

PapaBear

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #1 on: July 20, 2017, 05:16:31 PM »
Just out of curiosity: Which EU country are we talking about? I'm asking because of the equity tax you have mentioned. I always thought that France is the only country left with a wealth tax. Or are you talking about a property tax?

Regarding your question:
I used the simple estimator promoted in this article: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
With your current savings rate of ~20% of your net salary, it would take you about ~37 years to retire (not accounting for your state pension or any current assets). Not so great. (see https://networthify.com/calculator/earlyretirement?income=13140&initialBalance=0&expenses=10440&annualPct=5&withdrawalRate=4)

However, after you are done paying back the tax debts and put the surplus towards your investment, your savings rate increases to ~31%, et voilá, it is just ~27 years to retirement. That sounds a bit better (https://networthify.com/calculator/earlyretirement?income=13140&initialBalance=0&expenses=9030&annualPct=5&withdrawalRate=4)

Please note that this is a very simplified answer, as it does not factor in your current assets, state pension, potential salary increases, taxes or any increases in your expenses or salary (I took your current take home salary as the base line and calculated your current savings rate based on that). On the other hand, the calculator shows the powerful impact of your savings rate on your retirement date. For a bit more detailed calculation including your current assets and your expected state pension, you can use http://www.firecalc.com/ or http://www.cfiresim.com/

Now regarding the how:
I guess the biggest issue for you is not the spending side, as your spending is already somewhat low (at least from my perspective, what is the average cost of living in your local area?). Thus, you would need to focus on the income side:
- Can you qualify further for a more skilled job that is within your requirements? What would be salaries for a part-time job with a masters degree?
- Is it possible for you to add a low-stress side gig that would bring in additional money?
- What about your partner? Any possibilities for drastic salary increases or side gigs there?

By the way: In your shoes, I would pause the investing for a few months and pad the emergency and healthcare fund a bit more. Given your condition and since you own real estate, a bit higher emergency cushion might be advisable. Think about a worst case scenario - e.g. you get a high medical bill and your heating system in your house breaks down at the same time - what would that do with your cash flow?
« Last Edit: July 20, 2017, 05:21:38 PM by PapaBear »

havregryn

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #2 on: July 21, 2017, 12:21:33 AM »
Also curious about the country.
Your insurance payment sounds high...it's 40€ a month total and that sounds insane to me regardless of what kind of equipment there is since we pay something like 25€ a month for a very comprehensive insurance in Luxembourg (so king of all expensive in the EU)

I don't understand the tax debt stuff, but does that mean that it is too optimistic to really assume that 1095 is your actual take home salary, i.e. is it reasonable to expect more tax corrections?

As said, you probably can't reduce your spending much, you would need to increase income.
If you live in a house, is it big enough to get a roommate?
Are you in a location where Airbnb could be a thing?

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #3 on: July 21, 2017, 12:36:51 AM »
Thanks for your replies! I'm in the Netherlands.

PapaBear: you are right, my emergency fund is on the low side. The reason for this is that we only get about 0,2% interest on in. My partner roughy has the same amount of money in his savings account and our investments can be sold off at any point, so the total amount of money that's directly available would be about EUR 6000. Once I've paid my 1200 EUR insurance premium I only have to pay for the first EUR 400 costs out of pocket. After that, my insurance pays everything, but not dental care or physical therapy. Since I have just paid my yearly physical therapy bill, the only thing health-wise that could happen is maybe an emergency dentist trip. That wouldn't generally be more expensive than EUR 250. Our heating system is still under warranty and the white good we own are second hand and we have no problem buying them second hand again. In case of major damage to our home, we have a good home insurance with only a EUR 250 deductible. Our roof is only about 5 years old. We don't have car. I do try to slowly add to the emergency fund as I'd like to have some more money in a directly available account, so that's where the EUR 100 / month goes.

I think we're already living pretty frugally on the spending side, at least, everyone else thinks we're crazy which is a good sign.

We definitely have a wealth tax (vermogensrendementheffing) in the NL. For a couple, the first 50.000 EUR and your family home are exempt, but over that you pay 1,2%. Right now we don't have to pay it, but if you keep your investments in accessible accounts like I do, it's going to cost you a lot of money at some point in the future. We also have a property tax but that's hidden under "local taxes" as the amount of local tax you have to pay is a % of the value of your home.

I'm off to work now, will reply later to the other questions :)

 

havregryn

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #4 on: July 21, 2017, 01:04:34 AM »
Hm, if you're in the Netherlands and you say your boyfriend earns the same as you for many more hours, isn't he quite underpaid? That sounds really low for Netherlands even though I don't have any first hand experience of it.

Based on yours and some other posts I've read Netherlands sounds like a bit of an outlier compared to countries in the neighborhood, you guys seem to be paying way more for health insurance and education than the rest of us (also daycare I think for those who have kids). I wonder what do you get in return, do you pay a lot less tax lol? I mean, I lived in Austria, Sweden and Luxembourg and in none of these places do you pay for healthcare if you work or you are a dependent of someone who works, and you'd only need to pay money for a master degree if you wanted something special and fancy or from a private school.

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #5 on: July 21, 2017, 07:29:15 AM »
Yes, you're right, the last 10-15 years many costs have moved from the government to the individual tax payer. Taxation has gone down, but mostly for the highest incomes. From our gross income, about 5% gets deducted towards funding of the health care system, then you have to buy insurance from a private company (it's mandatory) that costs about EUR 1200 to 1500 a year and then you have to pay the first EUR 400 of health care costs out of pocket every year. On top of that, if you need any long term care, it's means-tested. You can claim a benefit towards health care costs if you can't afford it, but we don't qualify for that. The state sponsors one fulltime bachelor's and one master's degree (that means the tuition is capped at EUR 2000/year) but universities can charge whatever they want for second degrees or parttime programs.

To really get on in my career, I'd need three things: a Master's degree or a Bachelor's in my current field, being able to work 28-32 hours a week and a more steady resume. I have lots of gaps in my employment from the past when I'd be hospitalised or ill for long periods of time. I've been with my current employer for a year and I plan to stay another 2. Getting my energy levels up is the goal of all that physical therapy. The degree is something I'll need to do eventually. In this country, having the right degree is important. Having a law degree and work experience in another field isn't going to get you to the next level in your career, except maybe if you move up within the company. As I work for a small business, there's no 'up' for me in this company. I have looked into doing some tax / admin work on the side, but there's a lot of competition from people that do have the right qualificiations and rates are low. I think if I get the degree and can work the right amount of hours, I could certainly find a job that would pay about 2800 gross/fulltime (now 2425 gross/fulltime).

From next year, we are going to have a vegetable patch in our garden and maybe keep a few chickens. It might slightly lower the grocery bills, but it's mainly for enjoyment. I always wanted to be a farmer as that's how I was raised. I also barter some skills I have; I I file a few people's taxes in return for services from them, like house cleaning, and sometimes I repair clothing.

Boyfriend indeed doesn't earn a lot, it's slightly above minimum wage. He can do overtime sometimes as well. He's looking for another job, but as he doesn't have a degree it's quite difficult. He's a musician by trade and that's the most important thing for him. He'd rather live in a squat than do an office job (he's currently doing a technical job). Because he knows a lot of people in the music industry he can sometimes work at a festival for the weekend and earn something extra.

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #6 on: August 03, 2017, 10:36:38 AM »
Well, good news! I thought a major increase in income wasn't going to be likely any time soon, but apparantly I was wrong! As of August 1 I'll get a 10% raise, from €1212 gross/20 hours a week to €1330 and there's a chance of going up to €1515 next year. I'm also going to work more overtime the coming periods, so all in all I'm going to be making quite some extra money.

Now I only have to decide what to do with that extra money. I'm putting 125/month into index funds automatically every year, and I'm thinking of increasing that to 135/month, to keep up with the habit of saving 10% of my gross earnings for my retirement.

My emergency fund is now €2000 and I plan to have €3000 in it by the end of the year.

Sounds like a good plan, right?

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #7 on: November 17, 2017, 11:20:34 AM »
I'd like to get some new advice. Our situation has changed, we have paid off some debt, I got a raise. I want to get some more advice about saving up for retirement. Here's the new case study. I have deleted some things that are already mentioned in the first post, so it wouldn't be too long.

Life Situation: Cohabiting couple, 27 and 30 years old, no kids.We keep our finances completely separate, so this concerns only me, but he has roughly the same income (but works many more hours a week to earn it) and the same spending pattern.

Gross Salary/Wages: 1440 EUR / month for 20 hours a week. Monthly wage is 1334, I get one extra month's worth of salary in May and I make about one month's worth of paid overtime every year. I can physically work about 25 hours a week. My pay is low because I work parttime, but I'd make a pretty good living if I'd be able to work fulltime.   

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc. - whatever you have
  Our pension system is complicated. See first post.

Other Ordinary Income: none

Taxes: From my regular monthly paycheck of EUR 1334, 128 EUR is deducted in income tax and contribution to social security and health care, so my take home pay is 1206 EUR. I get tax credits because I work even though I'm chronically ill.

Current expenses:

Take home pay: 1206
To joint account:  350 (partner also pays 350)
                          from this                  Mortgage 300, original sum 77900, now 74000, 28 years left at 2,2% interest
                                                                         30, water and taxes on water
                                                                         70, gas and electricity
                                                                         33, internet and cable tv. We don't watch tv, but it was cheaper than internet-
                                                                              only
                                                                         50, local taxes and garbage collection
                                                                         15, trade union membership
                                                                           6, netflix that we share with a relative
                                                                         10, home insurance
                                                                         30, liability and contents insurance. Expensive so it covers partner's music gear.
                                                                        155, food (staples). Any kind of fancy food goes from our own accounts.
                                                                       
Health care:       200 (I have a special savings account for these costs. This includes insurance at EUR 1200 a year and co-pay of 400. I no longer need physical therapy so from January I will probably only transfer 150 to this account, provided my premium doesn't rise)
Investments:      155 in index funds.
Public transport:   50 . We do not have a car and our relatives all live about 40-60km away.
Sewing class:       50 (includes materials). This is my main social activity outside of work and I'm not willing to give it up
Personal tax debt: 70  0% interest, 5 months left.
Savings:             200 . No specific purpose, but our house needs a lot of work and we're working on that slowly but steadily.
Spending:          130. From this:  8, mobile phone
                                               10, life insurance for my partner. If he dies before 2045, I get 100.000 EUR
Also: clothing, hairdresser, eating out / take-away (we don't do that often) gifts, bike repairs. I have increased my spending slightly because I had to replace a lot of clothing at roughly the same time and we also took a short trip.

Assets:
Checking account: EUR           5 (Will get paid soon)
Savings account one: EUR  1500 (emergency fund)
Savings account two: EUR  1000 (health care, 1200 insurance premium due 1 Jan)
Joint savings account: EUR  525 (any money left over from joint bank account, we don't pay everything monthly) 50% ownership
Investments: EUR             2500 (in index funds, 75% stock and 25% bonds)
House: EUR                    85000 (purchase price 2 years ago 79500 ) 50% ownership           
Loan to partner: EUR         5000 (completely forgot about this last time ... tied up in the house, 0% interest, he's not actually paying it back right now, but he would have to if we split up)

Liabilities:
Mortgage: EUR              74000 (28 years left to go, 2,25% interest. Started at 77900, downpayment is uncommon in here. Our 2%
                                              down is actually considered good, most people borrow more than the house is worth. Shared with
                                              partner.
Student debt: EUR           5000 I will have to start paying this back in 2020, minimum amount will be EUR 45/month. As the interest
                                              is fixed until 2020 @ 0,01%, I'm not paying anything back until I have to.


Personal tax debt:              240 remaining, the one I pay 70/month for

Question:

We have paid off some debts recently, did work on the house and I got a raise. Our financial situation is now a little better than this summer. Once my personal text debt is paid off in a few months and my montly health care costs are hopefully lower, I'll have 140 EUR left over. I'm considering the options I have now.

The first thing I'm considering is putting money in a tax deferred investment account (401k-ish account). Normally, I am allowed to contribute something between 800 and 1000 EUR / year. It's not much. However, for this tax year due to all kinds of circumstances I'm allowed to contribute EUR 1800. That's a one off thing, it's back to 800-1000 next year. I don't have to put that money into this account right now, I can do this until 31 December 2023. You can see the pro's and con's of this tax deferred retirement investment scheme in the first post. For me, I'm not sure if I should put this money in the tax deferred account right now or wait for a few years. The only way I can get that kind of money right now is out of my after-tax investments (it's possible to take after-tax money and invest it pre-tax, you can claim the difference back when you file your income tax). This seems like a no-brainer, but as I don't have a large emergency fund, it does mean that I'm a lot less flexible with my money. If I need money urgently, I can just sell my after-tax investments, but the money in my tax deferred retirement account is tied up there for decades.

I'm also considering paying off my mortgage early. My s/o is very interested in this, he seems to be a bit scared of investing. Paying off a mortgage is probably better than having your money sit in a 0,05% interest savings account, but at an interest rate of 2,2% it's not really that interesting from an investment point of view. The upside of this is that our mortgage term will be shorter and that means our bils will get lower in the very long run, allowing us to potentially work less hours.

I am also adding some money to my emergency fund from my next wage. I like to keep it at EUR 2000 and I want to have EUR 3000 in it this time next year. We had to dip into the emergency fund for necessary home maintenance - we have bought a fixer-upper and are slowly renovating it.

Another option, that I mentioned before, but don't really like, is to spend money on a Master's degree in Tax law starting from September next year. I'm not looking forward to that, because I didn't enjoy my Bachelor's that much. I chose my major rationally, but I don't love it. Spending my time delving deeper into something I don't love isn't something I'd enjoy that much. I'm also not 100% sure about career perspective, although I'm pretty sure it's worth the EUR 5000 investment. As I can't work fulltime due to health reasons, all the interesting academic-level jobs are off limits for me. I work for a small company right now where they need an expert but not fulltime, and without career possibilities except a yearly pay-rise. I'd need to find a similar position but with more career opportunities. I'm sure I'd find a position like that, but not necessarily one that would pay as well as the average Tax law expert earns at a big accountancy firm.
« Last Edit: November 17, 2017, 11:24:29 AM by Imma »

Hirondelle

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #8 on: November 18, 2017, 09:23:31 AM »
Hi Imma! Seems like you're doing a pretty neat job keeping expenses low. Great that you got a raise. 10% is a lot! How does it affect your savings rate atm?

Only thing I can think of that could save you money might be the transportation costs. I don't know how often and from where to where you travel, but as a fellow Dutch I'm a HUGE fan of the 'NS groepstickets'. Maybe you already use them, but EUR 7 for any round trip within the country is often already worth it for very short trips.
If your partner refuses investing, it might be worth it to push him a bit to pay you the loan back. 5000 assuming 4% return is costing you 200/year by him having it on the savings account versus you investing it. Plus compounding for every year he doesn't pay you back (I wouldn't make a very big thing out of it tho).

Regarding the pension fund; I'd say just wait until you feel safe with your emergency fund. If you can contribute until 2023 I wouldn't rush doing it now.
Company pension funds?: Are you sure they're not common anymore? Everywhere I worked so far had a fund like this - even my stupid temp agency jobs that I worked during college.

Regarding career/education: What do you think you'd want in this case. You say you wouldn't like to do the masters, but it would be worth the investment. How long would it take before it pays off? How much higher would your salary be? Are there any other fields you'd be interested in that you could do parttime? Like, there's a massive lack of teachers and you can get paid education for certain fields in which the shortages are worst - especially math. Or try to teach yourself some coding or follow a course, many(international) work from home opportunities. I have no clue about your personal interests and physical abilities, but these are some of the opportunities I keep an eye on myself.
« Last Edit: November 18, 2017, 09:25:54 AM by Hirondelle »

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #9 on: November 18, 2017, 03:46:47 PM »
Hi Imma! Seems like you're doing a pretty neat job keeping expenses low. Great that you got a raise. 10% is a lot! How does it affect your savings rate atm?

Only thing I can think of that could save you money might be the transportation costs. I don't know how often and from where to where you travel, but as a fellow Dutch I'm a HUGE fan of the 'NS groepstickets'. Maybe you already use them, but EUR 7 for any round trip within the country is often already worth it for very short trips.
If your partner refuses investing, it might be worth it to push him a bit to pay you the loan back. 5000 assuming 4% return is costing you 200/year by him having it on the savings account versus you investing it. Plus compounding for every year he doesn't pay you back (I wouldn't make a very big thing out of it tho).

Regarding the pension fund; I'd say just wait until you feel safe with your emergency fund. If you can contribute until 2023 I wouldn't rush doing it now.
Company pension funds?: Are you sure they're not common anymore? Everywhere I worked so far had a fund like this - even my stupid temp agency jobs that I worked during college.

Regarding career/education: What do you think you'd want in this case. You say you wouldn't like to do the masters, but it would be worth the investment. How long would it take before it pays off? How much higher would your salary be? Are there any other fields you'd be interested in that you could do parttime? Like, there's a massive lack of teachers and you can get paid education for certain fields in which the shortages are worst - especially math. Or try to teach yourself some coding or follow a course, many(international) work from home opportunities. I have no clue about your personal interests and physical abilities, but these are some of the opportunities I keep an eye on myself.

Thanks for your reply :)

I got the raise a few months ago and so far, the money has gone straight to home renovations and paying off the tax debt, together with some money from the emergency fund. I did increase my investment rate a little bit by (€30) but now my costs are getting lower the first thing I'm going to do is build up my emergency fund to 2000 and then to 3000. After that, I'm not so sure.

I think the travel costs are already at a bare minimum, but I'll look into the group tickets. I buy a day ticket for the bus every week to visit my elderly grandma (€6) and that's about half the budget. The other half is train costs - we live in a city in the south, my side of the family lives an hour one way, his side of the family an hour the other way. I get 40% off when we travel together and for long distance trips I try to buy day tickets in advance. As we don't own a car, I don't think €50 is too bad.

As for the company pension funds: I haven't worked anywhere that offered one since my temping days at college. I had 3 years worth of retirement payments in the temp fund at some point, but I changed my job and when your contribution is below a certain threshold (I think around €600) they pay you back once you quit your job, so now I have none. The very small pension my boyfriend has is slightly over the threshold, as a result of 7 years in a similar job starting when he was a teenager. I'm not exactly sure how common pension funds are nowadays, but most people I know seem to work in companies that don't offer them. But our friends are mostly in tech or art and often in small businesses. I think it's a lot more common in more traditional fields like education and insurance/banking or something. It would be a huge plus for me in a future new job.

The career thing is something I struggle with. I don't hate my job, but going to work in the morning doesn't really make me happy. I haven't had that feeling in any job I've had ever so I'm not sure if finding a different position would make that better. Funny enough, I have considered teaching in the past. I took some extra classes for fun when I was studying for my bachelor's degree (the "reward" history classes when I passed the "boring" law classes) and I know it's possible for me to enter an education schakelprogramma and do a master's degree in history and get a teaching qualification. This would be a lot more fun than tax law, but also a lot less lucrative. Teaching, even parttime, is a much more demanding job and you don't get paid as well. I think I'd also be able to get into economics / m&o with my background, but none of these subjects have shortages. I'm not 100% sure how this would work out health-wise either. I don't have a disability or anything, but I do have a chronic illness that limits my energy. I work 20 hours in an office job right now, I'm trying to transition to 25. If I'd be able to get to 28 or 32, that would open up a lot of possibilities in the job market, but I'm not sure yet if that's realistic. I want to try that out in my current, permanent job. I don't want to apply for a 32-hours job just to find out I can't do it.

I think that with a tax law degree, I'd be able to find a job that would pay 3000-3250 gross/month fulltime while I earn about 2650 gross/fulltime now but that's just a vague estimate. I'm not sure about future raises in my current job, that is dependent on the market, but if I'd get another big raise I'd be close to that already, without taking another degree.

gaja

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #10 on: November 18, 2017, 04:18:50 PM »
How set are you on staying in the Netherlands? Based on you healthcare costs, it sounds like it could make long term economic sense to look at the neighboring countries. How much would healthcare cost you in Belgium? And could you get work there speaking Dutch? Do you have enough French, German, or English to be able to work (or live) in countries where those are the main languages?
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Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #11 on: November 19, 2017, 02:43:27 AM »
As long as my elderly grandma is alive, I'm not going to move more than one hour of travelling away from her. She's like a second mother to me and I visit her every single week. As she's well into her 80s, even though she's still very healthy and living independently now, I expect I'll need to visit her more often in the future to help her. Belgium and Germany would be less than an hour away if I bought a car, and we have seriously considered both countries before we bought this house because property is cheaper there, but we decided against it.

Health care costs would be much higher in Belgium and my German is not good enough to move there anytime soon. My partner is also tied down to this country because of his music career, so if we'd move further away from where he's working, it would involve lots of driving around for him (I think we'd probably need two cars in that situation).  I'm sure that otherwise we'd easily be able to settle in Belgium.

I'd have to improve my German very much to be able to have an academic level job there, but we are seriously considering to RE in Germany when the time comes. We'd be able to buy a property with a lot more land for only a little bit more than the price of our current home. My mother (one of the few close relatives we have) lives very close to Germany so if by then we'd need to take care of her, we'd be in the right area.

I'm a farmer's daughter and I'd love to get back to a more rural life. Maybe that's also why I'm not looking forward to spend more time in education: having a desk job was never my plan. Had I been healthy, I would have chosen an active, outdoors type of job. As you can see, being close to the few family members we have is very important to me. I want to be able to provide the type of care they need. There aren't many other relatives they can rely on and I'd never move to the other side of Europe to make a little bit more money if it would involve leaving elderly relatives behind.

gaja

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #12 on: November 19, 2017, 01:51:42 PM »
How would the German healthcare costs compare to the ones you have now? If they are better, it sounds like a good reason for spending some time and money on language classes. Maybe also get some classes on EU laws regarding economy, taxes, and maybe project economy? People who are able to manage EU level project funding (Interreg, H2020, etc) are always in demand, and the knowledge is transferrable between different countries, since the projects are international. Wouldn't you be allowed to attend a German university for free, even if you have spent the Dutch bachelor money? Or is that money meant for living expenses, and not for tuition? I have a couple of friends who went to university in Germany. Their German was only decent before they left Norway, but it got very good very fast.

I have plenty of musicians in the family, and don't understand why that career should keep anyone tied to a location? Even the people I know who are trained in traditional folk music, or sing in a local dialect, end up travelling all over the world.
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Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #13 on: November 19, 2017, 02:48:25 PM »

I have plenty of musicians in the family, and don't understand why that career should keep anyone tied to a location? Even the people I know who are trained in traditional folk music, or sing in a local dialect, end up travelling all over the world.

It is when you're committed to a long-term project or band located in a certain area and you've invested lots of time, money and effort in it. When something like that ends, you can of course move - last time we moved to a different area was when a long-term cooperation based in a certain town ended - but you can't move far away and still keep up with those commitments. He's already spending a lot of time on the road and away from home for long periods of time, moving too far away from where the project is based would only increase his time away. On top of all the travelling he'd have a long commute to where they're based.

I'm not really sure if a move to Germany before retirement makes sense. We'd be able to buy a much bigger property for about the same price as our current small place, which is why it's interesting for retirement, but wages are much lower in Germany. Even if health care costs would be maybe €50 lower a month, all the costs we'd have to move there, and then to likely take a pay cut, would probably not make sense financially.  Our travel costs would massively increase (we'd need two cars, because there's little public transport) and while I do think that I qualify to study in Germany very cheaply, if I were to quit my job I'd have no income. I don't think that's the quickest road to FIRE.

My estimate for the costs of a Master's degree is based on the tuition the university closest to my home charges and a bit extra for books and travel. I would try to spread the classes over 3 semesters instead of the usual 2 so I would be able to keep my current job. As I don't have stash to live from, any further education would have to be combined with a job.

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #14 on: November 30, 2017, 09:18:09 AM »
Hi Imma,

I'm interested to read this, especially as I'm following your progress in the race to 10k thread.  Firstly, you should be incredibly proud of what you're doing.  In the face of a chronic illness, most people would wallow in self pity.  However you've accepted the cards you've been dealt with and you're pursuing FIRE non the less.  It really is impressive!

Unfortunately, to reach FIRE more quickly you need to either earn more money, or spend less.  In terms of your costs, there genuinely isn't much wiggle room.  I think you're living a frugal enough life style. 

Without wanting to sounds rude, I think your significant other needs to re-evaluate his stance.  I know he enjoys being a musician, but IMO he needs to consider your long term future first.  If he isn't willing to either suppliment his wages with more highly paid 'part time work' I don't know how he will ever retire?  There are plenty of side gigs he could do (Uber, deliveroo, gardening, dog walking, bar work etc) and if he reduced the time he spent in the music industry he'd bring home more money (without fully jumping out of the industry he loves).  I'd argue he should make more sacrifices to help the two of you.  He seems quite stubborn if he refuses to seek higher paid work and is also reluctant to invest?  (Please don't think I'm being offensive, I'm just giving you my honest opinion from what I've read).

You're a native Dutch speaker, who has good English.  Surely there is part time work proof reading English companies material in Holland?  I'd also go for the degree.  Depending on the interest rate of the loans, you could be increasing your earning potential massively.  Consider it as a medium risk investment.  If it pays off, you could be FI significantly sooner than if you continue at your current rate.


Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #15 on: November 30, 2017, 01:27:06 PM »
Thanks for your reply! I'm Dutch, I appreciate blunt people ;-) .

I know you're right. There's very little wiggle room, although there's a lot more wiggle room then there used to be. There is no magic tric to suddenly get rich. I think the Master's is probably unavoidable for the future, as much as I hate the idea.

I wouldn't really say my fiance is stubborn, but he's a no-compromise kind of person. He knows his priorities and his first priority is music. He's always made that clear. As we have separate finances, it wouldn't actually make a huge difference to my situation if he would earn more, but it's a fact that he earns very little while being away 80-100 hours a week easily. Especially the last couple of months have been insane. The only upside is that his work often involves getting free food and drinks, and with him away from home the grocery and electricity bills are fairly low. He also gets most of his clothes for free. I know he's extremely talented and very good at what he does. It's not like he's singing in pubs for free beer and tips, he's doing quite well in his career. There's just very little money to earn in music. You get paid for playing gigs and the amount of money you get for a single gig might sound like a lot, but the outgoings are huge as well.

We're both from poor families and we've never really had any money. While I have always had the drive to better myself - not necessarily to get rich, but to be financially comfortable at some point - he's never had that. He has only ever wanted to be a musician. He has a lot of skills, but not the type of skills that make money. He's a very social guy, he can get along with everyone from elderly ladies to homeless junkies, he's very smart, he speaks many different languages, he's spent half of life twiddling with electrical equipment so he's good with that stuff too. But he's a blue collar guy through and through. While he's extremely intelligent, he's not going to work in an office ever. I knew that when we got together. I can't force him to become something he's not.

He's a very hard worker and he's prepared to take on any kind of work, but he's never made a two-digit hourly wage. He's been a musician with a side job for 15 years now and he's happy this way. That's going to be his future. He'd happily live in a squat if he had to. We live in a terraced home on a not-too-bad housing estate now, and he never in a million years thought he'd be able to afford this kind of luxury living.

FIRE is my thing and absolutely not his. He's completely content with this life, he's going to work as long as he physically can. If his music career completely fails he'll happily work as a delivery guy or a bus driver. He knows I feel a very deep longing to live in a more rural location and when I'm moving to the countryside (I hope to be able to do that somewhere between the age of 40-50, even though I probably won't be fully FIRE'd then) I know he'll follow me there even though the location is less than ideal for him. He'll find a way to make ends meet somehow. I hope he doesn't sound like a selfish guy, because he really isn't. We are two adults who have a very deep loving relationship, but we have very different lives. I will hopefully at some point FIRE and potter around in my apron in the garden of my cottage, he will continue to work basically forever. That's the reality of things.

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #16 on: December 01, 2017, 05:15:25 PM »
Another Dutch person here, and in advance I'll apologize for being blunt. ;)

Realistically I think you'll just have to work till you are 67 (or ~71 by that time) if nothing changes in your situation. Especially since you don't have a pension, income after the pension age will just be 'AOW' which isn't much and it's likely you'll want some additional income that you will have to save for in advance. 150 EUR per month in index funds isn't that much and if your health situation would change for the worse and you wouldn't be able to contribute each month anymore this will never grow into a large sum of money.

This was the pessimistic part, now I'll get to the positive part. ;)

I think everyone can agree there are not much costs to cut on your spending. (moving to Germany or Belgium won't matter a huge deal on the spending part I would guess.) That just means you'll have to focus on your income to increase the difference between the amount that's coming into and going out of your bank account each month. And the larger that difference is, the more you can save, et cetera.

If you can find the time and energy to get your masters I think that's a no-brainer. 5000 Euros might sound like a lot of money now, but you'll earn it back in no time by the extra possibilities you'll have on the job market. And over a working period of 20 or 30 years or even longer the extra income will be many multiples of 5000 euros.

It just really sucks that you have this chronic illness but it's great to see that you are focussing on what is possible. I'm not familiar in any way with this type of diseases and how work affects your energy levels, but I can imagine some tasks will drain a lot more of your energy than others. Is it a possibility to focus yourself more on the tasks that you can perform that don't cost you a lot of energy? Or check with your employer if they can give you some flexibility on this part? If the employer can't give you this flexibility, is it possible to find some 'low-energy', but skilled side-jobs that you can schedule on your own terms? You mentioned filing taxes, if you could do this for a few small companies as a freelancer I think you'd have quite some freedom in scheduling your work and it would be possible to earn a couple thousand euros extra per year.

With these two things I think it's easily possible to earn 500+ euros extra per month, if you add all of that to your savings you will get there! :)

Imma

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #17 on: December 02, 2017, 08:58:23 AM »
Thanks for your reply :)

I don't think FIRE is completely impossible on my current level of investing, but it will take some time. I think I'd be able to FIRE around AOW-age. With a stash of 300k I'd be able to withdraw my current income for the rest of my life without running out of money, and by then we won't have a mortgage. Any kind of pension or AOW would just be an added bonus. Sadly, I don't think I'll be able to work until 67 or whenever my generation will get to retire so this FIRE sceneario is just a very-best-case scenario. This also assumes I'll actually live long enough to enjoy retirement.

Right now I know I'll get Wajong when I'm too ill to work, but on Jan 1 the government will quietly lower Wajong again ( by €75 this time) and this is just one of many quiet budget cuts to health care and social security during the last 10 years. My illness now costs me twice as much as it did 10 years ago. I know I might never reach FIRE, but taking care of myself as well as I can financially is absolutely a need and not just a want. I know I can't rely on the government to provide anything when I'm too ill to work eventually. So I'm just doing the best I can and any kind of money I'd be able to claim from the state is just an unexpected windfall. My realistic future scenario is that I'll probably not be able to work very much after the age of 50 (which is 23 years from now) and if I'd reach the age of 70 I'd be extremely happy with that. Somewhere between the ages of 40 and 50 we're planning to retire to the countryside. But that's still an educated guess.

Regarding the Master's, I know there's no way around doing this eventually, but I'm not completely sure if it would actually improve my chances on the job market. It would not only cost a lot of money (thanks to new rules you can now get a low interest student loan as an adult, which is what I'd do) but it would be a huge commitment in terms of energy. It will be a very tough period.

Right now I earn 2650 gross/fulltime, and I know that's on the high side for the kind of job I do. I know in other companies 2500 gross/fulltime is about the max for this kind of job. Unofficially, because I'm overqualified for this job ( I have a university bachelor's degree in law) and I'm the most educated employee in the small business I work for, I am a sort of right hand person / general advisor for the director as well. I still get yearly raises right now, but I'd be surprised if my boss would be willing to go over 3000 gross/fulltime. This unofficial part of my job also makes my job less boring, I get to use my brain. This part of the job sounds like a good career path for the future, except that you just don't find those kind of jobs for 20/hours a week. The same goes for the more specialist tax jobs that I'd qualify for with a master's degree. Until my health allows me to work more than a small parttime job, I'm afraid I'm just going to be a very overqualified finance administrator.

Working freelance in this business is something I have considered in the past and currently I don't think that with my experience / formal degrees I'd be able to make as much money as I do in my current job, so it doesn't make sense right now. In this line of work, formal qualifications are very important. A side hustle isn't really possible now because my job drains all my energy. In the future with the master's degree under my belt, I'd be able to charge a lot more and working freelance is maybe the only real career option in the tax field. So this is definitely something I am considering for the future (say, 5 years from now).

Dagobert

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #18 on: December 03, 2017, 04:20:51 PM »
Are you certain that with your income you don't qualify for the subsidy for healthcare (zorgtoeslag)?
With your partner it may not be much, but after mortage deductions etc it still could be a few hunderd euro's a year (taxfree). Just apply with a income of 40.000 a year so you don't get any monthly payments (or debt/repayments because you received to much), but a lump sump ammount after you file your taxes if you qualify.

Is your partner registered as an entrepeneur? With the hours you mention the 1225 hour a year minimum for the tax advantages (MKB winstvrijstelling, startersaftrek, zelfstandigenaftrek, etc) could be lucrative. For the VAT you could use the Kleine Ondernemers Regeling. 

Good luck. I hope you have the energy to work a few hours a week more, that would make the most impact on your fire date.
Firing in the Netherlands is a struggle, due to lower wages then in America, and higher taxes. But it's possible. Just save and enjoy the effects of time on compound interest. If you have a bit more emergyfund and in to investing, i suggest Meesman.nl for the indexfunds (possible with a minimum of 100 a month). 

Edit: check your WOZ value of your home against the mortgage. A lower riskpremium could apply. Paying of a few thousand euro's lowered the interest on the rest of my debt by half a %, without any further cost. A nice monthly saving / return on investment.
« Last Edit: December 03, 2017, 04:25:54 PM by Dagobert »

Hirondelle

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #19 on: December 09, 2017, 07:54:07 AM »
Are you certain that with your income you don't qualify for the subsidy for healthcare (zorgtoeslag)?
With your partner it may not be much, but after mortage deductions etc it still could be a few hunderd euro's a year (taxfree). Just apply with a income of 40.000 a year so you don't get any monthly payments (or debt/repayments because you received to much), but a lump sump ammount after you file your taxes if you qualify.
I think this might apply to you. If you file jointly (with 'toeslagpartner') you can get zorgtoeslag if your gross income is below € 35.996. If you file as a single person the maximum gross income that allows for zorgtoeslag is € 28.720, so if the latter is the case you could get quite a lot.

Spruit

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Re: Case study: another FIRE in Europe, at all possible?
« Reply #20 on: Today at 04:51:41 AM »
Hi from the NL as well.
It's hard to get ahead if your energy is so limited. I think it's wise not to persue a career in education, as there really are few jobs for history or social science teachers and the burnout rate is pretty high in the sector. If you enjoy educating kids maybe tutoring on the side is an idea? It is pretty flexible and low-stress.
I must say your houding costs are excellent!
Yay, out of debt... now, GROW!
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