What a nice month. A very large increase compared to June (net worth: 1,891.46€). But you know what? This is the craziest month for me since starting to write those net worth reports. Every week I had an unexpected emergency case where I needed to put money aside that was planned to be used for something else.
So actually, when I made my first calculations a few days ago, I was expecting just a very small increase. I was expecting an increase of maybe 1,000.00€ (yeah sounds odd to call this a ‘small’ increase). But I ended up with more than 5k!
I think it was that large because I still devote a lot of money to my freelancing checking account for my next income tax payment (11k in September). That should be roughly 3-4k that are directly gone in two months. However, still a very nice surprise.
So without further ado, let’s dive in.
My total net worth
Note: All Dollar values are calculated with Googles exchange rate from Euro to Dollar on the 2nd August 2018! I prefer EUR over Dollar as it’s easier to compare my performance without a dependency on the recent exchange rates. The monthly changes in dollars are not calculated from the last month but from the exchange of the EUR values.
My total net worth for this month is 7,379.52€ ($8,556.19)! [Change: +5,488.06€ ($6,363.13)]
First, let me give you an overview of my different accounts:
- Checking account: 726.96€ ($842.87) [Change: -686.64€ ($796.13)]
- Freelance checking account: 17,769.23€ ($20,602.54) [Change: +4,280.47€ ($4,962.99)]
- Freelancing savings account: 0.30€ ($0.35) [Change: 0€ ($0)]
- Savings account:
- Emergency fund: 1,426.55€ ($1,654.01) [Change: +250.00€ ($289.86)]
- Car savings: 655.39€ ($759.89) [Change: +350.00€ ($405.81)]
- Working equipment savings: 450.51€ ($522.34) [Change: +50.00€ ($57.97) ]
- Wedding savings: 1,315.34€ ($1,525.07) [Change: +50.00€ ($57.97)]
- Vacation savings: 500.78€ ($580.63) [Change: +100.00€ ($115.95)]
- Depot account (investing [DGI]): 2,975.17€ ($3,449.56) [Change: +350.44€ ($406.32)]
- Investing cash account [DGI]: 35.37€ ($41.01) [Change: +29.15€ ($33.80)]
- Depot account (investing [DGI USA]: 2,593.92€ ($3,007.52) [Change: +413.02€ ($478.88)]
- Car loan: 21,070.00€ ($24,429.62) [Change: -301.00€ ($348.99)]
The market went up a little and therefore my investment accounts received a nice increase. I have also added stocks for 600€ and received some dividends. I contributed my normal rate to the savings accounts. The emergency fund was one exception as I’ve already told you there were a lot of emergencies. Anyway, I still added 250€ to it and paid for the rest with my spending money. I also put a little bit more into my car savings, so I can make my first extra payment for my car loan in August.
Takeaway #1: This month I’ve read a German financial literacy book and the author stated that you should never have ‘bad debts’. Bad debts are those, which are not taken to create more income/cash flow/money with it. Therefore, taking a loan for a rental property that increases your monthly cash flow by 60€ (after all costs) is good debt. If you have existing loans like me, try to get rid of them ASAP.
Net worth detail: Income
Overall income: 10,562.45€ ($12,246.64) [Change: +10,257.45€ ($11,893.01)]
In more detail my income looks like this:
- Freelancing salary: 10,537.45€ ($12,217.65) [Change: +10,537.45€ ($12,217.65)]
- The contribution of Mrs. Budget to our rent: 0.00€ ($0) [Change: -350.00€ ($405.81)]
- Refund traffic speeding ticket: 25.00€ ($28.99) [Change: +25.00€ ($28.99)]
This month, I received another payment from my current freelancing project. Now, I have already earned more money in 2018 than a normal developer with my skills and experiences in Germany earns in a whole year. I’m also working from home 90% of the time! Insane! In August, I will go on holidays until mid-September. I got another extension of the project and I’m now booked until 2 weeks after my holidays. Now I will try to find a follow-up project for October. But still, this project was perfect to start a freelancing gig. 8 months of high income while working at home and taking most of the important tasks and making most of the important decisions of the development team.
Mrs. Budget has already transferred the money for our rent to my account. However, she received her paycheck a little later this month so I will just get the money in August.
Great news! Do you remember how I complained last month about the speeding ticket as I usually drive very reasonable? It seems like a person there is reading my blog as I received a refund from them! I expect that there was some issue with the measuring system. I’m very happy about that.
Net worth detail: Expenses
Overall expenses: 5,083.64€ ($5,894.23) [Change: +466.70€ ($541.12)]
In more detail my expenses look like this:
- ATM money: 154.90€ ($179.60) [Change: +34.90€ ($40.46)]
- Rent: 630.00€ ($730.45) [Change: 0€ ($0)]
- Mobile phone contract: 104.15€ ($120.76) [Change: +1.96€ ($2.27)]
- Insurance: 854.38€ ($990.61) [Change: +275.41€ ($319.32)]
- Spotify subscription: 9.99€ ($11.58) [Change: 0€ ($0)]
- Credit card payments: 122.04€ ($141.50) [Change: -87.36€ ($101.29)]
- Amazon: 59.89€ ($69.44) [Change: +19.93€ ($23.11)]
- Taxes: 1,676.78€ ($1,944.14) [Change: -191.57€ ($222.12)]
- Miscellaneous: 1,471.51€ ($1,689.91) [Change: +403.74€ ($468.12)]
Note: I know that there is an issue with that data. I’ve changed my tracking to another sheet and probably did a mistake. So I either have missed 8€ somewhere or didn’t add it correctly last month. It’s only a small inaccuracy, so let’s ignore that.
Seems like a terrible month but actually it wasn’t really my fault. There were many emergencies and unexpected costs but I also had some purchases that were 100% not needed but I don’t regret any of these. Let’s start with those. You may have heard about it that last month was the soccer world championship. I’m a German guy, so it was sad for me. But I’m also a big supporter of the nations of Mrs. Budget (Croatia & Serbia). As soon as Serbia and Germany were eliminated I became the biggest supporter of Croatia and we had Croatian flags at both back car windows and on the side mirrors.
After they reached the final I really, really wanted to have a Croatian dress. Well, in that case, it was sad that there are many Croatians in south Germany. Therefore, I had to pay a premium price of 140€. However, I would do that again without thinking about it. So that’s fine for me.
Let’s look at those emergencies, I had to change my health insurance earlier this year because of my new freelancing business. However, I received medicine for hyposensitization after the change (I needed to switch the health insurance retroactive). I was expecting a payment of 20€ and ended up with a bill of 274€!!! Next was the car insurance that wanted the whole payment for the next 6 month. We needed to replace one pillow. The fees for the German TV channels (those are mandatory even if you don’t watch TV like I do) had to be paid for the last 6 months as they didn’t start to charge my account before. Lastly, we had a payment for the gas and water that was a little bit too early (normally it’s charged on the 1st of each month).
However, on the other hand, it feels like all those things won’t come up later so I will have an easier year from now on.
Net worth detail: Loans
Overall expenses: 21,070.00€ ($24,429.62) [Change: -301.00€ ($348.99)]
In more detail my expenses look like this:
- Car loan: 21,070.00€ ($24,429.62) [Change: -301.00€ ($348.99)]
I did my second normal payment. The bank offered me to make another 70(!!!) payments with 301€. I will instead pay the loan off in 2019. I will do my first extra payment in August and as soon as my emergency fund is filled, I will go hard on that. My goal is to get rid of it ASAP and directly after that start with real estate investing as a second asset class. Right now, I will probably not get a (good) loan as my business is less than 3 years old which is mostly a requirement of the German banks to get such a loan. But when the rest of my finances are incredibly good and my freelancing business continues to work that well, I think 1 or 2 years should also be fine. I will find a way to get this to work.
Takeaway #2: I’ve also read the CASHFLOW QUADRANT of Robert Kiyosaki this month. He said two great things regarding debt. 1. ‘If you take on large debt, make sure someone else is paying for it’. 2. ‘If you take on debt and risk, you should be paid’.
The latter was targeting ‘investments’ that take monthly money out of your pocket. I think a good real estate investment should generate a positive monthly cash flow from day 1.
Net worth detail: Investments
My investments look like this right now.
- Dividends received: 30.11€ ($34.91) [Change: +24.27€ ($28.14)]
- Portfolio value: 5,604.46€ ($6,498.09) [Change: +827.96€ ($959.98)]
- For simplicity, I have removed the cash accounts and taxes paid. I usually spend all my investing money on stocks so this number doesn’t really add value. Same for the taxes as those are different in different countries.
I’ve added two great new companies and also a new sector (telecommunications) to my portfolio. I have reached also a nice milestone. My portfolio worth moved to 5k. I decided a few months ago that this value is not so important for me as I mainly look for cash flow. Therefore, the dividends that I will receive over the next 12 months (annual forwarded dividend) is more relevant. However, it’s still nice to see the progress I’m making.
Dividend-wise, I had my second best month so far! Two companies paid me, one is a monthly dividend payer and the other one was my first dividend growth stock purchase at all. Both have increased their dividend this year which is even juicier. Very slowly it starts snowballing. However, the real compounding effect will kick in a few years from now. Patience is a very important thing for an investor. So let’s continue to build our money-making machine.
Note: I won’t tell you what companies exactly I’ve purchased. The reason is, that I don’t want to influence any person to buy a company that I buy. Your circumstances are maybe totally different and a good buy at that time could be bad now. I also think that I am far from being an expert and I don’t want you to judge and buy a company because of my opinion. Anyway, I will add guides on how to pick successful DGI companies soon. For now, check out this post to learn more about the strategy.
Net worth detail: Financial goals of 2018
Let’s compare my financial goals of 2018 with my situation in July:
Note: For simplicity, I have cut my financial goals a little. I tend to write them down as whole sentences following the SMART principle. If you want to know what’s that about, make sure to check this post.
The net worth made a huge jump towards 30k. However, there are still the following things that will push me back:
- An estimated 22k income taxes payment.
- A new MacBook Pro to work with.
- Holidays (a few weeks in August/September and in December)
Actually, as a self-employed, I won’t pay the full price for the Mac as my taxes are reduced when I have costs. However, I really need this device, therefore, I also have no choice. I plan to take some money out of my freelance checking account as soon as I have all the money for my income taxes and can afford it. The income taxes will hit me hard in September and December (11k each). Even if I’m doing great for the rest of the year, I will probably not reach my goal. However, my new minimum goal is having 5k at the end of the year, which will also help me to start my real estate investing career soon.
0.46€ are missing for the second goal. With that said, I will soon make more than 20€ on average per month through dividends. That’s great for a someone who is just investing with that strategy for a few months. However, my goals are set high and I that’s why I will push even harder on that for the rest of the year and try to reach 360€ in annual forwarded dividends.
My emergency fund received just half of its usual payments this month. However, next month I will double it and therefore, add a bonus of 250€ overall. Still, a long way to go. However, it’s likely that we get some money back from the utility payments we do monthly. If that’s a larger sum, I may be able to achieve it.
Takeaway #3: Try to use smaller timeframes for your goals. Tim Ferriss, for example, uses 3-month goals as they are easier to estimate and you are more flexible with those. It’s okay to have long-term goals, just break them down for a shorter timeframe.
What do I expect the next month(s) to be?
Blogwise, this was a terrible month. I haven’t published a single post since my last net worth report. I want to be honest. It felt great. I was less stressed and able to work on a private software project as well as reading two finance books. I will probably continue to do so until I got the feeling I have more experience in that stuff.
Actually, I want to cover more topics about making money as most personal finance bloggers are focused on spending less and reducing your standard of living. Don’t get me wrong, I think that’s the first step. Live below your means. But at some point in time you need to say ‘Okay, I’m good enough at spending less. What’s next?’. In my opinion, you should then start to increase your income and finally extending your means. That’s what I want to teach in the future, but that’s also what I need to learn myself first.
Moneywise, I will read 3 more books about real estate investing and get my finances to the point where every bank would love to give me a loan for an investment. The real investment will take place in a year or two. No hurry, you got to take steps one-by-one. I think that this is going to be an amazing time. I want to start with an apartment but soon buy my first multi-unit house. Meanwhile, I will continue to increase my stock portfolio and finally reach financial independence. Okay, all of that is not for the next month. But you should know where the whole thing is going to.
Takeaways from this month:
#1: This month I’ve read a German financial literacy book and the author stated that you should never have ‘bad debts’. Bad debts are those, which are not taken to create more income/cash flow/money with it. Therefore, taking a loan for a rental property that increases your monthly cash flow by 60€ (after all costs) is good debt. If you have existing loans like me, try to get rid of them ASAP.
#2: I’ve also read the CASHFLOW QUADRANT of Robert Kiyosaki this month. He said two great things regarding debt. 1. ‘If you take on large debt, make sure someone else is paying for it’. 2. ‘If you take on debt and risk, you should be paid’.
#3: Try to use smaller timeframes for your goals. Tim Ferriss, for example, uses 3-month goals as they are easier to estimate and you are more flexible with those. It’s okay to have long-term goals, just break them down for a shorter timeframe.
So how was your net worth behaving in the last month? Let me know by leaving a comment in the comment section below.