Any german mustachians here?

[donvito]

Are there any mustachians from Germany around here? I discovered this blog and ERE and the whole community around it something like a year ago, and the idea of being financially independent seems quite appealing to me, but I'm still in the VERY early stages of saving for retirement (only started saving a year ago), so it would be interesting to hear from someone who is living in the same economy how they did it/are trying to do it.

Cheers

[flygirl]

I'm not German (or in Germany) but I'm also curious to hear this discussion, as I think I might like to early retire to Germany for at least a little while.

[germandude]

Yes i am, saving since 6-7 years and 4 years to go mathematically. :)
Discovered MMM mid 2012 and made big improvements since then.

[grantmeaname]

Woodpecker's in Germany... you may want to find him on the user list and give him a PM. He also writes a killer (English-language) blog, Good Day to Live.

[Phil]

Junior-Mustachian here, seriously saving for about half a year. I thought about asking the "germans here?" question a while ago since we're the largest non-english speaking readership of the MMM blog: http://www.seethestats.com/site/mrmoneymustache.com (bottom of page).

Good to see some fellow countrymen around ;)

[Woody]

Hi @all!
I'm also a German travelling the mustachian road. Nice to see that I'm not the only German enjoying MMM.
I'm about to get 40 this year and strive for retirement (or at least part-time retirement) within the next 10 years. Due to the serious illness of my wife it's hard to tell how life and our common earnings will develop, but these health problems give me a good motivation to reduce working time as soon as possible. I want to be able to spend as much time with her as possible.
For the "special" case of retirement in Germany my main uncertainty is the public health care system and its implications on the return on capital (dividends, ...). As far as I know during retirement (but not during your time as an employee paying to the social security system) 15% of the returns on capital must be paid to the public health care system. Are there any German retirees who can confirm this? Are there any good and legal ways to reduce/avoid this "little" fee? (A so called midi-job with >450€ salary/month might be a solution, or am I missing something?)

Best regards
Woody

(The Germans seem to love the 'Wood' in their nickname ;-)!)

[germandude]

You can choose to use private healthcare, but this is probably more expensive after 55 or 60.
I plan to switch back to the statutory health insurance (Gesetzliche Krankenversicherung)
when 54 or when children are coming. The advantage of the SHI/GK is that your whole family is
insured.
Perhaps its possible to create a company, insert some of your assets and then work
for your company for a low amount of money. But i don`t think its worth the hassle and you
have further costs for running the company.

[Woody]

Yes, germandude, creating an own company isn't worth the hassle. I would like to keep it as simple as possible.
To answer donvito's initial question how to reach financial independance in Germany, well, basically the same rules apply as in the US: work hard to get and keep a well paid job, live a frugal life by spending less than your earning and invest your money wisely. The first two aspects have been rather easy for me and my wife since we both have been raised in that way. Learning how to invest was the hardest part. But now we are on a good way and I am very confident FI will come true (sooner or later).
If any concrete questions remain open, feel free to ask.

[donvito]

Hey everyone,
nice to see that there are some fellow german mustachians around! :) Thanks @grantmeaname for pointing out woodpecker's blog; I didn't know it yet, but it looks awesome. Plus the fact that he is trying to retire early in the most expensive german city there is (munich) is giving me hope that it is indeed possible to achieve this goal.

@germandude, it would be interesting to know how much money you are trying to save and how you invest it to be able to withdraw a sufficient amount... like I said, I'm only at the beginning, right now I have a few thousand euros in a bank account (Tagesgeldkonto), but that pays only a little over 1% interest right now, so I need to find a better way to invest once the 'stash grows bigger. I'm thinking about maybe buying and renting out apartments, but for now, the first goal would be to buy my own apartment so I don't have to pay rent anymore :)

[germandude]

I have all my money in a permanent portfolio (25% gold,25% cash,25% stocks,25% bonds), infos how to set up an european PP can you find here: http://europeanpermanentportfolio.blogspot.be/p/permanent-portfolio.html.

I`m saving around 70-75% of my income, but i am self employed and not insured in the German Federal Pension Fund nor the German Health Insurance.
I can`t imagine how to save that amount while being a normal wage earner, where you have 50+% (taxes,social security) of deductions.

In my region prices of houses and apartments have skyrocketed the last 3-4 years, i am still renting because the yearly buy/rent ratio is above 25 which is much
too expensive in my eyes. You pay around 200.000€ for 85 mē which i can rent for 600 € per month.

[donvito]

I've never heard of a permanent portfolio before, but it sounds interesting. Definitely something to keep in mind.

You're right, it is difficult saving when you're a normal worker... currently 43% of my income goes to taxes, health insurance, social security etc... I managed to save 26% of my take-home-pay last year, which was the first year I made a conscious effort to save some money; this year I'm aiming at 40% or more. Right now I'm at 51%, which is not too bad, but still a far cry from your 70-75%. But since I'm only at the start of my professional career (I'm an engineer), I don't worry too much about it, because my salary will go up in the next years and if I manage to escape lifestyle inflation (and invest wisely), I should be on my way to retiring in my 40s (I'm 30 now). Being able to retire at 40 would be the dream of course, but so many things can happen until then that I have no way of knowing whether this is doable or completely out of reach. Right now I'm concentrating on saving as much as possible and slowly learning about ways to invest the money, and then I'll see what happens.

Prices of apartments have gone up here too, but there are still a few deals now and then, like foreclosures or apartments which have not been modernized in 20 years or more. But for now I will keep my rental apartment, too.

[Kriegsspiel]

Heeey, another permanent portfolio guy here.  I lived in Schweinfurt and Bamberg when I was in the military, I believe woodpecker is from Bamberg too.  Apartment prices in Germany are no joke...

[germandude]

I tried stockpicking and markettiming with elliottwave analysis around 6 years, but in the end i only managed to get around 2,6% per year with the same volatility as the stock market in general. After 2011 i decided to give up on that and find something easy and realiable. The permanent portfolio is perfect in my eyes for retirement saving, because you never have to worry about buying at the top or what the future brings. And its tax friendly, which is very important when investing in germany. Gains in gold are tax free when holding it longer than 1 year (but only physical), and you have low dividends/interest payments which are taxed with 25% only above 800€ as single or 1600€ as couple per year.

[why2kie]

Hello German Mustachians,

originally I'm not a german, but I live in Germany since 9 years, and now maybe I do and thing like a german :). I live in Karlsruhe at this moment. I've started my first job one and a half year ago, after I finished my study (without taking a debt, but I did student's job and saved money for the next exam preparation months). In April I found this MMM's blog and I'm glad that I'm not alone. Since, I know many people will waste much money after getting the first job. Thus, in Germany it is difficult to find a mustachian friend, especially in my age group.

Since I read this blog, I read and learn about stock market, about investment and bought my first ETF.

Recently there is the second article about MMM in spiegel.de (an opinion of a german journalist):
http://www.spiegel.de/wirtschaft/service/vorruhestand-wie-viel-geld-braeuchte-man-um-mit-30-in-rente-zu-gehen-a-904138.html

For me the financial independent is really a gift (maybe I can get it or maybe not), moreover, the value to live frugal and not to be the slave of material goods are the essential elements that inspire me to live a good live and like MMM's blog.

[Christof]

Surprisingly reactions seem to be pretty universal. I would have expected that German reactions are a tad more negative than US reactions, but so far the comments are much in line what you read in English sites: What about inflation, the risk, he's not really retired due to a side business, you need at least a million, how would one be able to save that much, you can't trust shares, nor government bonds, houses are way to expensive we I live, what if every one would live like this, he's exploiting poor workers, yadda yadda yadda...

I'd rather worry that Spiegel Online published a second article about MMM within a week. That's national mainstream media. Topics covered in mainstream media are either rare events or an indication of a bubble... I surely hope its the former and just my cognitive bias that makes me notice more articles on ETFs, dividends, etc.

[why2kie]

Hi Christof,

indeed, for the first time I read an MMM article, I was also sceptic if his methods can be applied to me. However, after I read more different articles, also from another blogs and investment, at least it makes sence. Furthermore, like what I wrote before, the essential value is not about having 1M or calculating every cent of your activity, but being frugal and not to be a slave of money or material.

If you don't trust shares and goverment bonds of your country where you live, that how can you expect an economic grow or improvement in your country? Of course, worse things or collapse can happen, but the market will recover soon or later. It is also a mindset to be a rational optimist or sceptic. By buying low cost global ETF, you invest your money with low risk. Otherwise you have a better idea to share?

I do also think what if many people buying ETF instead of several stocks. What I believe (opinion of an economic newbie): if every one would do like MMM, we would have a better world and a stable economy, since there would be less speculator.

[germandude]

Why do people always think about what happens when all people do it the mustachian way?
That will never happen! But most people discard the idea to become mustachian for themselfs after they answer that question because the answer will allways be "it can not work".

[why2kie]

Hi all,

I would like to ask if there is any interest to organize a meetup in Germany? It shall not be a huge one, just like a "Stammtischabend-Abend" where we can know each other and share something.
It may not easy to find a location and prefereable time, but I would like to try.

[Villanelle]

I'm an American, temporarily living in Germany, so I don't know know if I count, but I thought I'd check in on the roll call!

[Woody]

Well Jacky, if the time to travel is short enough, I would join a meeting. So, south-west Germany would be great :-).

Best regards,
Woody

[MrGeldfuchs]

Hi,

I'm a german mustachian who has written a book about money. It's available at Amazon Germany and Amazon USA

http://www.amazon.de/einfachste-k%C3%BCrzeste-Geld-Ratgeber-Welt-ebook/dp/B00CDZUMQC/ref=sr_1_1?ie=UTF8&qid=1372602482&sr=8-1&keywords=mr+geldfuchs

http://www.amazon.com/einfachste-k%C3%BCrzeste-Geld-Ratgeber-German-Edition/dp/3848247615/ref=sr_1_1?ie=UTF8&qid=1372602344&sr=8-1&keywords=mr+geldfuchs

Reviews are welcome ; )

I do know 2 German Blogs which deal with financial independence and I know both writers read Mr Money Moustache.

http://finanziell-umdenken.blogspot.de/

http://finanzielle-freiheit-dividende-blog.de/

[donvito]

Hi everyone,

a meetup would be great, I would definitely be interested! The only problem is going to be to find a location... where do you guys live? I'm in Nürnberg, and I don't have a car, so I'm kind of limited to places where I can get to by train in a reasonable time... so cities like München, Stuttgart, Würzburg, Frankfurt etc. would be doable. Maybe we can find a place in the middle where everyone has to drive to, so everyone's unhappy ;)

Also, thank you MrGeldfuchs for pointing out those two blogs; I didn't know them yet, but they look very interesting! So does your book... I will definitely have a look at it in the near future!

Greetings,
DonVito

[Woody]

Well, Stuttgart or Karlsruhe would be fine for me as well. Maybe Karlsruhe would be a bit easier for those from the rather northern part of Germany due to the nice Rhine-train connection Cologne-Basel.

DonVito, if you're looking for good German finance blogs I would like to point you to
http://der-privatanleger.de/ and
http://zendepot.de/
as well, which are not so much into the dividend topic but also in passive indexing.

[why2kie]

Hi Villanelle,
well I'm also not German and I live in Karlsruhe. Where do you live?

Hi Woody, do you live in Stuttgart or Karlsruhe?

Where do you prefer to go donvito? Stuttgart or Karlsruhe?

Those who want to join please tell us where you want to meet?

[Woody]

I live quite near to Karlsruhe. So, Jacky, we could meet rather easily.

[why2kie]

That's good Woody. I've just sent you a message.

For all,
I just created a Doodle to vote a location, based on the current feedback. If somebody want to suggest another place, please inform me.
Here is the link: http://doodle.com/a9nz5q2parpap5hg

[donvito]

Hey guys,

sorry for the delayed response, I was away over the weekend.

First of all, thanks Jacky for taking on the job of organizing the meetup!

I'd actually prefer Stuttgart since it takes more than three hours for me to get to Karlsruhe (one way!), and it costs a fortune if I don't book the train weeks in advance. But if the meetup takes place in Karlsruhe, I will try and find a way to get there, maybe mitfahrgelegenheit or something like that.

[AugsburgMustache]

A warm greeting to all the fellow German Mustachians! I am from Augsburg and would love to meet up with some of you. Karlsruhe is a bit far away for mustachian travel habits in the savings phase of the retirement plan, ha :-)

But I think the community will grow and we will be able to host a meet up in Augsburg or Munich.

Here is a little bit about myself:

I found out about The Way of the Mustache about a month ago and since then read through almost all the articles. Very inspiring! It was a real eye opener for me. I always thought to myself that there had to be another way than working for 40+ years of your life. The answer was quite obvious once I read through some of the articles of MMM and I have to admit I felt a bit dumb not noticing it by myself. I am 26 now and living in southern Germany (Augsburg for this who know it).

I started my professional life about 2 years ago after finishing my business degree. No debts going out of university thanks to the low tuition in Germany and working throughout my college years. The salary of my first job was decent enough to afford a very unmustachian sports car and since I was living in hotels due to the job, my other expenses were quite low. But the car sucked most of the spare money out of my account. It is baffling to me how I didn’t notice what was going wrong at that point.

Changed jobs last year with a nice raise of almost 25% and I thought to myself “that shiny car is now even more affordable since I earn more” and I started eating out with friends a lot, since I didn’t have to travel during the weeks anymore. Spending most of my take-home pay on useless crap, I lived on and thought about the next 40 years of my life. Working 5 days a week for another 2000 weeks? Getting up, work, get home, eat, sleep, rinse and repeat? That didn’t sound quite right to me. Thankfully, MMM opened my eyes for the alternative route.

Anyways, I turned around my spending habits and started to think like a mustachian. I recognize the patterns that would have kept me working my whole life everyday now. Decided to sell the expensive sports car about a week after that and sold it just last week. Since I noticed the true money-sucking nature of that fine piece of machinery it felt more like a burden than a privilege to own that thing. It really felt like a heavy weight was lifted from my shoulders once the contract with the new buyer was signed and I held the cash in my hand. I still feel a little sad from time to time when I see similar sports cars on the road. But I just remind myself that those things will keep me in the office for countless years instead of enjoying life and nature as a free person. As you can see, my transformation to a true mustachian isn’t at all complete.  But recognizing my habits helps a huge deal in controlling my the urges until it becomes second nature to be frugal and not be aroused by shiny metal curves and screaming engines.
Additionally, I drastically cut down my eating out spending. I can already feel that my urge to buy new gadgets gets less every day. My old thinking "I have the cash for it, I'll just buy it" now seems ridiculous to me.

I was fortunate enough that I was brought up by two fairly frugal parents (except for the obsession with sports cars of my Dad, which I unfortunately inherited) so I have no debt. I started to save aggressively now and I am currently at a 50% savings rate from my take-home pay. Right now I can’t make the bike-for-car exchange since I am working 50 miles from home. Moving closer to work is not an option right now, since my girlfriend is currently in the process of finishing her PhD in the city we live in. After that is finished, we will both look for jobs in the same town. But rest assured, the commuting car is a 9 year old reliable diesel car that consumes about 4,7l/100km (58.81 mpg for our imperialistic friends) and so far requires minimum maintenance. It’s not the perfect situation for early retirement but in a couple of years this issue should be resolved.

I am currently in the process of convincing my (soon-to-be) fiancée to jump on the same train and the goal is a 70-75% savings rate. But I think I will need one or two raises in salary to achieve this. The taxes in Germany make it hard to achieve high savings rates, but the healthcare system allows for cheaper insurance once I quit my job.

I am also looking into real estate investments but the market is ridiculous right now. Apartment prices are at about 27 times the yearly rent in Augsburg (where I live). I am guessing that in the next 5-7 years the prices will drop significantly. Interest rates will go up (I mean, they can’t go down any further) and most buyers here only fix their rates for 10 years. Since this enormous bull market lasted for about 5-8 years now, this 10 year fixing of interest rates will be gone in a couple of years for most owners. When interest rates go up, some of them won’t be able to pay their mortgages and the selling pressure will correct the prices. Or so I hope…until then, my investments will be purely equity/bond mixes.

Thanks for reading and I am looking forward to some great discussions with mustachians around the world!

[Linette]

Hallihallo!

Another German here, currently living in Taipei. Well I was frugal all my life (well kind of) although I am still obsessed with Hello Kitty stuff. Shame on me, I mean I just turned 30.
I am not retired yet but I saved enough money to make a trip around the world. Started 15 months ago and still on the road. "Arbeitslos und Spass dabei"
I can hardly work while travelling but my money can. Although it is quite difficult to invest efficiently in Germany. (Interests on savings accounts: 0.5% is a joke) At least what I've found out until now.
I read so much about Vanguard, stocks, bonds and shares but still I don't get the hang of it, at least in Germany.
Do you guys know a good onlinebroker or onlinebank with little fees? Like comdirect or so? The Vanguard-JP Morgan Ireland thing is a little bit complicated. Cannot fax from my Taiwanese hostel.  I thought about buying smoe ETFs and as soon as I get a little bit more relaxed about investing put some more money in bonds and shares.
Well and hopefully finding a good job to make some cash!!! I want to become a landlord. Sounds better in English than in German. =o)
Greetings from Asia

[Christof]

OnVista is inexpensive... If you keep a certain amount of money in their cash account, you can make a corresponding number of free purchases each month. For 2000 Euros, you get two free trades. Like most online brokers everything else costs extra, though, like getting tickets for shareholder meetings, anything involving paper, and the like. Should you open an account, use qipu.de to get 50 Euro cashback. The biggest obstacle for you will be the ID check that is required for opening any bank account. You can only do this when you are back in Germany.

[Rafaello]

Hi all,

just wanted to say "hi" - I, too, am from Germany. Been here (at MMM) for some time, but after consuming all blog entries and all comments, I have now moved on to the forums :-) .

My wife and I have been "ok" frugal for all our lives (although not as much as we would have been, had this blog existed 7 years ago ;-) ). It really helps to be raised in a family where there is not too much money (and with 4 children, both parents and kids, and one income, the need to be careful with money was "built-in").

Now, at the age of 33, things are a bit harder to keep up with our own two children (aged 4 years, and 6 months). But we still have between 40% and 50% of our annual net income go into savings.

Funny enough, I, too, am a software engineer (like so many others here seem to be). Altough I do more of project management these days - but the occasional line of code still is a sirenīs call.

We live in the south-western part of Germany (between Heidelberg and Karlsruhe). Not the cheapest region, but there are well-paying jobs, and living cheaper is easily possible (like in: our house was bought for less than 50% of what most colleagues pay for theirs).

Admittedly, we have gadgets (2 older iPhones, 1 iPad), and two cars for job reasons (although we consider dropping one) so there is still a lot to learn to become true mustachians, I guess....

So, all you German mustachians out there - looking forward to interacting with you :-)

Cheers,
Rafaello

[Rafaello]

oh, and btw: did I miss out on the German Mustachians Meeting? Or is this still a plan?
I saw quite a few comment that they are from around Karlsruhe - which I would be able to make nicely.

[lifetimeguy]

Hi, another German here (from Hamburg / way up north), very interested in sharing knowledge about investments, frugality, financial math. Math is complicated here since we have so many 'socialized' systems, starting at healthcare, retirement stuff etc.

I can't even bring myself to utter the words "early retirement" since your life path seems so predetermined in Germany/Europe - you have more choices in America since you can opt out of systems or you don't even have them.

Now that I know about Mustachianism, I see more clearly. Many thoughts and doubts I had over the last 10 years (I'm in my thirties) now have names to them - e.g. 'Tiny Details Exaggeration Syndrome', which I have seen and wondered about, unable to put it in MMM's precise words.

If we find a couple of people to share thoughts about Mustachianism, we could meet up somewhere, I don't mind traveling to do it!

[AugsburgMustache]

Math is complicated here since we have so many 'socialized' systems, starting at healthcare, retirement stuff etc.

I can't even bring myself to utter the words "early retirement" since your life path seems so predetermined in Germany/Europe - you have more choices in America since you can opt out of systems or you don't even have them.

My thoughts exactly.

What are your thoughts on things like Riester in the context of early retirement? It is subsidized through tax deferrability but only accessible from the age of 65 right? Does anybody know what happens when you finally quit working at, let's say, 40, with your state health care? Do you have to pay the minimum amount, like a student, or do you have to keep on paying the same amount you paid before?

I hope somebody can put some light to those issues, since I haven't been able to determine the exact answers. Maybe there are some early retired Germans in the forums?

[lifetimeguy]

Math is complicated here since we have so many 'socialized' systems, starting at healthcare, retirement stuff etc.

I can't even bring myself to utter the words "early retirement" since your life path seems so predetermined in Germany/Europe - you have more choices in America since you can opt out of systems or you don't even have them.

My thoughts exactly.

What are your thoughts on things like Riester in the context of early retirement? It is subsidized through tax deferrability but only accessible from the age of 65 right? Does anybody know what happens when you finally quit working at, let's say, 40, with your state health care? Do you have to pay the minimum amount, like a student, or do you have to keep on paying the same amount you paid before?

I hope somebody can put some light to those issues, since I haven't been able to determine the exact answers. Maybe there are some early retired Germans in the forums?

Let's create a specific "Riester" topic tonight or tomorrow. Actually have to get some work done. ;)

In short, Riester sucks extremely badly for my situation, even if you don't do the mistake (that 90% of people do) of choosing a costly financial product (e.g. Bausparvertrag) behind the Riester contract.

Reasons: 1. Not married, 2. No kids, 3. Due to decent salary, I would have to contribute the maximum amount to get the "free money", which brings down the return far below anything you'll compare to it.

[Christof]

Does anybody know what happens when you finally quit working at, let's say, 40, with your state health care? Do you have to pay the minimum amount, like a student, or do you have to keep on paying the same amount you paid before?

That depends on what you do in retirement and whether you have a partner. If you are not employed, you become a voluntarily insured person. Monthly payments are determined by your overall income including dividends, income from your own business, etc. As a proof you have to send in your tax statement which means you must submit a tax declaration every year. There's a limit of how much of your income counts. Currently the minimum is 898.33 Euros, the maximum is 3937.50 Euros. If you are self-employed or have any sort of business, the minimum is higher. Of that income you have to pay 15.5% per month.

You could switch to private insurance. This, however, is a once in a lifetime step. After you switched to private insurance, you can only switch back until the age of 55 and only while you are employed. You only have two weeks to make the decision, after that you will remain in the public system.

[AugsburgMustache]

That depends on what you do in retirement and whether you have a partner. If you are not employed, you become a voluntarily insured person. Monthly payments are determined by your overall income including dividends, income from your own business, etc. As a proof you have to send in your tax statement which means you must submit a tax declaration every year. There's a limit of how much of your income counts. Currently the minimum is 898.33 Euros, the maximum is 3937.50 Euros. If you are self-employed or have any sort of business, the minimum is higher. Of that income you have to pay 15.5% per month.

Very interesting, thanks. So the maximum I would have to pay is 630€ (Damn that sounds high :-) ). Right now, my employer is covering half of my HC costs, that would not be the case if I would stop working. Makes sense, thanks for clearing that up. But my decreased income in early retirment will keep the costs at bay and the possibility of a wife and some kids (that will be insured for free) make this the most cost effective option.

You could switch to private insurance. This, however, is a once in a lifetime step. After you switched to private insurance, you can only switch back until the age of 55 and only while you are employed. You only have two weeks to make the decision, after that you will remain in the public system.

I knew that already. For now I am of the opinion that private insurance is nothing I want. I barely need medical attention right now, which would make private insurance very cheap. On the other hand that also means that I do not feel the disadvantages of a public insurance (doctor appointments etc.). But the unpredictability of insurance costs in the future and the fact that you have to pay for every single family member in the private insurance just doen't look all that attractive to me.

So, in light of that, would you agree that an aspiring early retiree should be in favor of the public healt care insurance?

[Woody]

oh, and btw: did I miss out on the German Mustachians Meeting? Or is this still a plan?
I saw quite a few comment that they are from around Karlsruhe - which I would be able to make nicely.

No, you didn't miss it. Jacky and me are going to meet on July 30th quite near to Karlsruhe. If anybody else wants to join, just drop me a message and I can provide you the details. Hopefully there will be more German mustachian meetups as well.
@Rafaello: I'll drop you a message.

(The funny thing about the meeting with Jacky is, that we might actually know each other, since we are working for the same company (1000+ employees) and take the same train. Damn, it's a small world!)

[Christof]

So the maximum I would have to pay is 630€ (Damn that sounds high :-) ). Right now, my employer is covering half of my HC costs, that would not be the case if I would stop working. Makes sense, thanks for clearing that up. But my decreased income in early retirment will keep the costs at bay and the possibility of a wife and some kids (that will be insured for free) make this the most cost effective option.

Yes, 630€ would be the maximum for you. If you wife is employed, she has her own insurance (partly paid by her employer). If she's retired, as well, your combined income is considered when calculating insurance rates.

There are options to reduce this amount should you need to. The obvious one is proving that you have less income than the maximum of 3900 Euros. You could also get employed with a wage that is above the minimum wage of 450 Euro. To retain work schedule flexibility, you could found your own company with a few friends and employ yourself. There are a couple of rules to follow. For instance, you must make a profit, have to file for the company, need a lawyer for setting up the company, must not be a majority owner, etc.

So, in light of that, would you agree that an aspiring early retiree should be in favor of the public healt care insurance?

Right now there's little difference between the two systems. However, the tendencies in politics favor a unified health insurance system. The pure size of public health insurance (Techniker Krankenkasse has as many customers as all private insurer combined) is already resulting in public insurances to pay significantly less than private insurers across the whole health care market from hospitals to pharmacies.

[Woody]

Monthly payments are determined by your overall income including dividends, income from your own business, etc. As a proof you have to send in your tax statement which means you must submit a tax declaration every year. There's a limit of how much of your income counts. Currently the minimum is 898.33 Euros, the maximum is 3937.50 Euros. If you are self-employed or have any sort of business, the minimum is higher. Of that income you have to pay 15.5% per month.

Christof, thanks a lot for these helpful hints. Do you have any practical experiences?
* How is the initial payment determined? I mean, when I'll start my "financial independance" my income will most likely be much less than before while I was working.
* Since I intent to live mostly from my investments (investment funds, bonds, Festgeld, Tagesgeld) how does the health insurance company determine the capital gains? What exactly is relevant? Only the gains like interrest, dividends and stock price gains? If I sell the invested capital, there are no gains and it is therefore not relevant for health insurance, right?!

Maybe somebody could also comment on the income tax which has to be paid on capital gains:
My understanding is that I'll have to pay either income tax or Abgeltungssteuer on the capital gains. It depends on the height of my income tax rate, whether I have to pay  income tax or Abgeltungssteuer. The lower rate must be paid. Is this correct?

[Christof]

Do you have any practical experiences?

Unfortunately not. I'm still working... in the health care sector doing software development.

* How is the initial payment determined? I mean, when I'll start my "financial independance" my income will most likely be much less than before while I was working.

You sent in your tax statement. If your income changes significantly, you can ask the Finanzamt to change the amount of advance tax payments (Steuervorauszahlungsbescheid). This requires you to prove your expected annual income.

Insurances have like other providers to reevaluate what you paid. If you paid less than your income would demand, you have to pay extra, if you paid more, you get credit. The relevant law is §240 SGB V. Here's a pretty detailed explanation that is easier to understand than the law itself:

http://www.bkk.de/arbeitgeber/neu-lexikon-sv-und-steuerrecht/?tx_bkklexikon_pi1%5Bbkkl-sub1%5D=0000004%3A263129_bv&tx_bkklexikon_pi1%5Bbkkl-sub2%5D=0000005%3A263129_bv&tx_bkklexikon_pi1%5Bbkkl-item%5D=159194

* Since I intent to live mostly from my investments (investment funds, bonds, Festgeld, Tagesgeld) how does the health insurance company determine the capital gains? What exactly is relevant? Only the gains like interrest, dividends and stock price gains? If I sell the invested capital, there are no gains and it is therefore not relevant for health insurance, right?!

The BKK link has a document with a 17 page list that contains every possible type of income and how it's relevant. The basic idea is to evaluate your economic capabilities and charge according to what you can pay. This means every type of income is relevant, although you can cancel losses with gains to a certain extent.

My understanding is that I'll have to pay either income tax or Abgeltungssteuer on the capital gains. It depends on the height of my income tax rate, whether I have to pay  income tax or Abgeltungssteuer. The lower rate must be paid. Is this correct?

You have to pay capital gain tax initially for any amount that exceeds your Freibetrag. These payments need to be listed in your yearly tax filing (Anlage KAP) together with a bank issued tax statement. If capital gain tax exceeds your income tax, you get back the part you paid too much. You never have to pay more than income tax level, but it might take up to two years before you get back your money.

This is described in §32d Abs 6 EStG (http://www.gesetze-im-internet.de/estg/__32d.html)

[Woody]

Do you have any practical experiences?

Unfortunately not. I'm still working... in the health care sector doing software development.

Great news. This field is somehow not very easy and therefore it's nice to know that an expert is around.
Thanks a lot for your detailed explanations and the provided links and documents.

Today I read an interesting article in the Finanztest magazine (August 2013) about "early retirement" with around 62. Well that's not what I consider "early" ;-).
I was a bit astonished that I would not have to pay any health insurance contributions for capital gains when I enter the KVdR (Krankenversicherung der Rentner). Is that really true? Or what am I missing here?

[Christof]

Yes, retirement income is treated the same as a low income job above 450 Euros. You stop being voluntarily insured and only pay fees based on your work income.

There's a small catch, though. You need to determine the duration between your very first job (when you got the social security card) and the day of you retirement. From the day in the middle of this period until the day of official retirement (62 or later) you need to be a paying member of public health insurance for at least 90% of the time. It doesn't matter if you were insured as part of your job, voluntarily or as a family member. If you fail this test, you are voluntarily insured and capital gains matter again. Usually that is only an issue if you switch to private insurance, lived abroad for many years or immigrated to Germany.

The second catch is that not only retirement payments are being considered, but also retirement-like payments (if you receive payments as a widow, for instance) and any income as an employee.

The third catch is that if you work as an independent for more than 17 hours a week during retirement, you are voluntarily insured again and have to pay insurance based on total income including capital gain. So no construction side gigs like MMM does after retirement started. Jobs with less than 17 hours are considered to be side jobs that do not count toward relevant income.

One caveat, though: This is all based on today's laws. There have already been discussions to include capital gains for all members when calculating the relevant income. If we should ever get a unified health insurance system, that's very likely to be one of the key changes.

[Woody]

One caveat, though: This is all based on today's laws. There have already been discussions to include capital gains for all members when calculating the relevant income. If we should ever get a unified health insurance system, that's very likely to be one of the key changes.

Sure. Changes are very likely till the time I might consider my start of a FI, but it's good to understand the current options. Your explanations (together with some online research) were really helpful. Thanks again.

[Hadilly]

Hi everyone,
I apologize for changing the subject, but I wondered if I could get a bit of advice on bicycles. We are relocating to Germany for three months. It looks like it will be about $1000 to bring all of our bikes for our family of five (two adults and our 2,4, and 6 year olds) with us and back via Lufthansa. Do you think it would be better to find some secondhand bikes there? Do you think it will be difficult to find good second hand children's bikes? I'm going to check with my husband's institution to see if they have any bikes we could use, but thought I would try to get the mustachian take as well.

Thank you. I'm excited for our trip!

[donvito]

Hi Hadilly,

It depends on what you're looking for. If you have some expensive high-end bikes and want to find something similar here, that's not going to be cheap even on the used market; if you're just looking for 'ok' bikes to drive around the city, then I don't think finding second hand bikes in Germany is going to be a problem at all; especially if you're moving to a major city. There are usually second-hand bike shops or auctions where you can get used bikes, and you can also try online sites such as

http://www.quoka.de
http://www.alles.de
http://kleinanzeigen.ebay.de/anzeigen/

I just did a quick search for "Kinderfahrrad" in my city and found more than a hundred ads in the price range from 30 - 100 Euro, so I think you should be good ;)

Hope that helps; if you have any further questions about life in Germany, feel free to ask!

[viverl]

Hey ihr!

I am a new Mustachian from Hannover! I only saw one other Nordlicht from Hamburg in this thread, are the southeners more money savy than the northerners? ;)

I am fairly new to all things financial, I am 26 and working my first year after graduating as a biologist. My family has always been poor. After the first months of finally earning real money for the first time and spending all of it, I started to think about money.
My parents are from the GDR/DDR and they never learned to think like "Wessis", they don't understand the westerns ways of finance and thus I was never taught to be independent.

I hope by learning from MMM and his German followers I can really be independent someday

[lifetimeguy]

Northern Germany is poorer and has no such illusions as retiring early. ;)
Welcome, viverl!
I'm thrilled to have discovered MMM. Let's try to gather information about applying MMM principles in Germany and becoming badasses!

[Christof]

Actually, I'm from the Hamburg area, as well.

[why2kie]

I'm so glad knowing that several frugal people come and join in this thread.

Since this thread is placed under the topic "meetups and social events", I'm still motivated to organize our first meetups for this year.
Therefore I created a new doodle to vote a meetups date: http://doodle.com/a2g2cdt9hrnpx2rd. At this moment I suggested the date during this summer, because we don't want to delay or cancel a meetup due to bad weather.
As you can read in my previous post, the doodle link for the location can be found here: http://doodle.com/a9nz5q2parpap5hg
I think Frankfurt may be the optimal place if we want to gather all the northerners and southeners :) We can set up the meetup after we collect at least 6 persons. Otherwise, we wait for next year, or if we cannot not collect enough people, then a facebook group may an alternative as virtual meetups. However, I can imagine that not all german frugal mustachians have an facebook acount :)
Regarding the meeting place, I think "Jugendherberge" or a small seminar room is more appropriate rather than in a cafe. Feel free to write your ideas.

Thanks.