From Bad to Worse

When it comes to the pandemic, there are some good news and reasons to be hopeful. Several vaccines are either in their final development stage or about to get approved. Right on time for the end of the dreadful year of 2020. 2021 can only get better. Or can it?

We still have 5 weeks for 2020 to go, and no matter what happens until New Year’s Eve, this won’t be the end of the challenges. Challenges with the pandemic, and challenges with the economy. Production, distribution, and the re-opening of borders will take time. So will the recovery. And we are not talking about days or weeks. We are talking about months and years.

Why things might get worse

Markets tend to be optimistic, but corporations tend to be cruel – by perception. Despite the silver lining on the horizon, it is most likely that most companies will continue cutting costs, reducing payrolls, and doing whatever necessary not just to survive, but also to make-up for the lost revenue during the pandemic.

But not only that. Many companies see the current situation as an opportunity to push through decisions that may have not been possible without such a crisis.

Some of these decisions might be radical, and urgent. In fact, they might have been urgent for a while. Upgrades of IT systems. Reviews of procedures. Reorganizing teams and the abolishment of established structures. But there is also a downside to it, especially when it comes to the “reorganizing teams” part. People are and will continue losing jobs.

Same old or not?

Now don’t get me wrong. This is nothing new. Maximising revenues and minimising expenses is what every business does. That’s how you generate profits. This was the case before the pandemic. During the pandemic. And it will stay with us also after the pandemic. It’s simply how every business works.

So, while cutting expenses and especially payrolls is nothing new to us, the magnitude of the cuts in the current environment is immense. And many of these cuts are not just until this pandemic is over. Many of these lost jobs will disappear permanently.

I am working in hotels, and my industry is among the hardest hit by the pandemic. Many of my colleagues have lost their jobs. I personally had to cancel contracts with trusted contractors, shrink my teams to an absolute minimum level, and cut payrolls through unpaid leaves and other essential measures. It hurt. Almost everyone on my team was hand-picked by me since the opening of my hotel. But I had no choice. Still, some of my former colleagues are hoping to be able to return to their previous assignments once all this is over.

But this is where it gets tricky. Because when corporate number-crunchers tell you that things can be stream-lined, everyone is replaceable and that the balance sheets still don’t look good enough, then you might want to get creative in your response to minimize the damage.

Short-term requirements for a quick brush-up of the balance sheet might become costly in the long-run. As everybody “on the ground” knows well, some people are truly not replaceable, and with everything that’s happening we are loosing countless talents and professionals. Some of them possibly never to return to a business, that destroyed their dreams or didn’t get a grasp on the value that they brought to the workplace. Also, more than often, stream-lining procedures and getting “lean” can have just the opposite effect, creating processes that result in micro-management, bureaucracy, and slow response rates. In the hospitality sector in particular this can quickly lead to frustrations for the hotel teams and for hotel guests alike.

Things are not over for the service industry

The tough times are not over, and especially the service industry will continue to suffer. Hotels, bars, restaurants. People will vacation less abroad. Companies will continue keeping business travel at a minimum. Since so many people depleted their savings or borrowed money, they will eat out less and keep parties and events on the low.

As my readers know, I am managing a hotel. For the last 12 years in this industry I was never worried about my profession, and I never worried about my job (which includes finding a new one when I felt it was time to move on).

But this time it’s different. This is the first time that I am not confident in receiving the opportunity to extend my contract (which is due in May 2021). And it’s also the first time that I have doubts. In the case that it should not be renewed, finding an immediate new opportunity will be a serious challenge.

Many of my colleagues have already lost their jobs. Many of them are smarter and more experienced than I. It’s therefore only logical to assume that I might follow in their footsteps rather sooner than later.

One more reason to keep preaching financial independence, and the purpose of having multiple income streams. And practicing it.

The fastest way to get your first million

I like to keep my blog neat and simple. I like to write articles with text only, I seldom use pictures or videos. But every now and then I might encounter an interesting infographic that is worth sharing.

When it comes to the topic of money, the best place to find interesting graphics is in my humble opinion a website called Visual Capitalist. This is also the place where I encountered the following graphic:

infographic-time-to-first-million-dollarsNow the data for this graphic comes from a website that compares casinos. To be clear: I don’t endorse, recommend or promote anything that might be concerned with gambling in any way.

Having clarified that part, the data in this graphic is highly interesting. And kind of amazing. The vast majority of people who made it to the financial top gained their very first million in less than a decade from the moment of (really) trying. How did they do that? Mostly by setting up a business.

Having your own business

So evidently, the most effective way to gain financial independence is not real estate, stocks or gambling – but your own business.

This is actually not surprising. As we know, it takes money to make more money. When you start from zero, the fastest and only way to get some cash-flow started is to work for it. You might start with a regular job, but we all know that when you work for a company, even though you might get good benefits and salaries, the majority of the profits that result from your and from your teams’ actual work goes to your employer. Obviously, this is not the case when you got your own business. As you take on all related business responsibilities, you also reap the full benefits and cash-in the entire generated profits from your operation.

Shouldn’t we all strive for our own business then?

IF having your own business is granting the fastest way to riches, then this would be the right question to ask. And for many having their own business, being their own boss, it is something worth striving for.

Not to me. I invest in stocks for a simple reason. I don’t want to have to work at all. I want to reach FIRE. For me, escaping the rat race is all about reducing the amount of responsibility on my shoulders and to free up my time. When you have a business, you always take on additional responsibility and you always have to keep exchanging your time for money. I want to have the freedom to decide whether I work or not. As a business owner, you don’t really have that choice without accepting sacrifices on your income.

Furthermore, having your own business may be the fastest way to riches, but it’s probably also the hardest one. Of course, there are different types of business and you need to consider whether you just want to earn enough to get through the day, or whether you want to build wealth. Your workload might be mild if you have a small, self-sufficient thing going on. But if you strive for that million on your account, then you will have to work really, and I mean really hard, on a scale that will surpass the amount of stress and responsibility of most regular employees out there.

So it comes down to what you really want. There are many ways and opportunities to escape the rat race. But there are only a few ways that will truly align with your own expectations. For most people who become successful with their own business, the target is not FIRE. They want to work, just on their own terms. If that is your target, great. If not, then you got to find another way.

Career Advise for FIRE aspirants

I like to write sometimes about my work. First, because it is an exciting job, and second, because there are countless lessons I gathered on my path to the top.

As some readers will already know, I am a General Manager in a hotel, currently in Thailand. Most recently I was able to secure a new contract, which will (hopefully) turn me into an Area General Manager being in charge of up to 5 hotels. While I am not the smartest and certainly not the best hotelier out there, I reached this stage in my life after working less than 8 years in the hotel industry.

I moved up in positions quickly, from carrying luggage in a Novotel in South Korea to become an area executive for one of the largest and most powerful business company (and family) in Thailand. Therefore, I think I can share some of my knowledge about how to get there with my readers. Bear in mind, this is my personal experience and it might contradict with many, if not most things you will hear from your parents, advisers or coaches.

But before I go ahead, let me tell you first why it matters and why it is important if you are on your path to FIRE.

Your career is the single, most powerful tool to reach FIRE

You can get rich with stocks. You can get rich with a business. You can get rich with a lottery. But for most, building up a successful career is the single, most important step to reach FIRE quickly.

As I mentioned in a previous article, your career is a very important asset. This is simply because the more money you earn, the more you can save and invest. It really makes a difference whether you put aside 100 EUR a month, or whether you are able to put 2000 EUR every month into your stock account without worrying of paying your bills.

This single reason should be motivation enough to pursue a quick and rewarding position. But this is easier said than done, so here some food for thought on how to make it happen:

Forget the term “work-life balance”

The myth of a happy life with a healthy balance between the amount of time you spend at your work and with private things is a major career-killer. If you want to make it to the top, you have no choice but to really put EVERYTHING into your job. This goes far beyond your job description, as you need to really try to understand as much as you can about every aspect not only of your job but of everything that is related to it. Knowledge is the key to success. The more you know, the better-informed decisions you will be able to make and the faster you will be able to take on more responsibilities. Learning requires a lot of time and you should be willing to devote yourself to it.

Embrace what others fear – responsibility and loneliness

In all the years I have experienced this countless times. Smart, great team players who would not advance in their careers because of the fear to take on more responsibility. The excuses are always the same: I am not smart enough yet, I don’t know how to do this or that, I am not sure if this is the right thing for me…

There were much smarter and better people around me when I got my promotions along the way, but the big difference between us was always that I couldn’t wait to take on larger roles and to rush into taking charge of things bigger than me. Most of the time, I even didn’t know exactly what I would have to do once I get the promotion or the new job description. I just knew that I want to do it and I was super-confident that there is nothing that I couldn’t learn.

There is a downside to it. It will make you feel lonely sometimes. Because what most regular people enjoy about their job is the camaraderie and the feeling of belonging to a group. However, the more you move up, the smaller your group is becoming and once you are on the top, you are indeed quite alone.

Sure, you can still have great relations with your teams, but there is no way around it: Your agenda, your perspective, and your responsibilities will always set limits and restraints. And sometimes you might be forced to do things that your teams and even you won’t like, but which are necessary to help your company move forward. When you keep moving to the top, you are forced to keep the big picture in mind and to do what it takes to help your company grow. This will more than often not align with the interest of someone in your team.

There is a Chinese proverb: 高处不胜寒.
It says literally that “It’s cold at the top of a mountain”. It certainly is true for people in high positions. I would often sit alone during lunch or dinner while my teams would enjoy eating in groups at the canteen. Not that I couldn’t share the canteen food with them, but simply because I had so many things to think about and decisions to make, that I would often spend the time thinking about the right or wrong thing to do, even during the precious time that is supposed to be my lunch break.

It’s hard to balance. It’s hard to have a family who accepts you coming home late every single day, to never plan vacations and to move around the world whenever the next opportunity pops up. I am lucky enough to have a very understanding wife, but I know plenty of people who fail on that part. It’s a hard price to pay.

Don’t be scared to do mistakes – and find the right boss to coach you

When you take on more responsibilities quickly, mistakes are unavoidable. Actually, it really doesn’t matter whether your progress slowly or quickly. Mistakes will happen anyway. While you certainly should always try to keep the mistakes at a minimum level, the single most important thing is to learn from every mistake you do. You can try to do this on your own, but it’s much more efficient and will work more quickly if you have the right supervisor to teach you.

I had supervisors who would scream at me. Supervisors who wouldn’t say a word. And supervisors who were moody or simply idiots. I didn’t care about any of that, as long as I could learn anything from them. As long as the learning curve is going up, I would stick with this supervisor no matter what. But as soon as I would notice that a particular supervisor got nothing to teach me or wouldn’t make the effort to support me, I moved. One month of not learning something new can throw you back several months in your career progress, so just really make sure to keep on learning and to have the right people around you to help you grow.

Learn how to communicate and how to build trust

Whatever you know, whatever your skill is and whatever you can do, it won’t matter if you don’t get the chance to show it off, it won’t matter if you don’t get your team behind it and it won’t matter if you don’t learn how to present it to those who judge you on it.

Learning to speak, to listen, to present, to negotiate, to evaluate, to correct, to teach and to scold… it is probably the single most critical skill for any leader. Developing emotional intelligence, learning to read characters and being able to quickly adapt to any person that you encounter along the way is crucial to develop your career.

Because while you got to be used to be lonely sometimes, any business depends on other people. We build products and services with people, we work with other people and we sell our products and services to people. It’s all about people. A manager and/or leader who can’t communicate this properly will have a hard time being successful. And you need success to move up.

Forget this crap about manager/leader comparisons

There was a time when people would discuss the differences between managers and leaders. In most cases, managers were the bad guys and leaders were the good guys. I also used to do these comparisons to evaluate my bosses.

It’s all a bunch of crap.

Truth is, that you need to learn when you have to manage and when you have to lead. No matter your job, you will always have budget restraints, relations between employees and business partners to consider and of course responsibilities towards your business owners. You have to effectively manage the resources you receive to make the best out of it, and this includes the people who work for you.

So you go to take the lead when you get a chance for it, but you also need to manage when it’s required. There is no black and white here, it’s all a grey area and in most cases, it’s not about what you do but how you communicate it that will make the difference whether it’s perceived as a management or leadership decision.

Focus on your skills, not your dreams

I was once reading this quote:

“Who you are, who you want to be, and who you can be are 3 different things”. We all had a dream about who we want to be someday. We all have skills that we learned along the way. We all have weaknesses. And we all have the potential to learn new skills.

However, while I admire people who have no talent for a particular profession, but who nevertheless spend years to improve themselves to chase their dreams, from a FIRE-aspirant perspective it’s simply not the right thing to do.

It would be smarter instead to focus on skills and qualities about yourself which are among your key-strengths and to try to find a matching profession based on those skills. While your parents and teachers will preach you to find a job that you love, I say that you should find a job that you can become the best at. The love will come along together with the success that you will experience.

It’s a little bit like marriage. You don’t necessarily choose the most attractive partner you can find, but the one who you can’t imagine living without. That’s at least how I see it.

And I am not alone on this one. Marc Cuban i.e. is preaching the same, emphasizing that following your passions is simply a piece of bad advice, calling it one of the great lies of life.

Soooo… what now?

I have frankly tons of more things I would like to share but I will save it for another post. I know that some of these points might not match with many voices out there, but please don’t forget that this is specifically for people who would like to achieve FIRE as quickly as possible.

To reach FIRE quickly, you need to push up your career as far as you can so you can increase your income. This will enable you to increase your savings and investments, in ways that most people can’t imagine. Saving 40-50% of your income is just easy if your income is three or four (or more) times higher than the average Joe.

FIRE is not for everyone and there is no easy way to get there. Like with everything in life, to reach something as challenging as FIRE, you really need to work hard on it and sacrifice a few things you might hold dear. So the question is, how badly do you really want it?

Planning for the last job – ever

Following up on my new years’ plans, I am now finalizing negotiations with my next employer. As my current work contract will expire by the end of April, I focused the last 2 months on trying to secure a new contract. Today, I succeeded.

While I couldn’t hit my self-imposed targets completely, the new job will bring some significant improvements and benefits to my career and to my private life. I will be in charge of a new hotel opening as a General Manager, with the expectation to grow into an Area General Manager role and in charge of a few more hotels within the contract duration of 2 years. By 2021, and if everything goes well, I might very well be in charge of up to 5 hotels across Thailand, and by 2023 there might be even a few more doors opening.

At the same time, I have also reached out to some of my colleagues from The Motley Fool in Singapore and Hong Kong. While I sure am getting busier, following up on my work with The Motley Fool Germany to analyze markets and stocks from the German, Swiss and Austrian area, I might soon start to also write about the stock market in Thailand. Yes, I am a workaholic.

All these efforts have one main goal in common: FIRE. Financial Independence Retire Early. This is the real reason why I am putting so much on my plate.

What makes this new job so exciting is that I am actually planning this to be my last job. My new contract will be for 2 years. It might get extended later on, and I actually have some further ideas and possible plans to continue of even up to 6 years with possible promotions along the way.

But it will be (hopefully) the last company and job that I will work for full-time. Whether it will be only 2 years as per the initial contract or even grow into 4 years or more. This will be my last full-time job and the last company I applied for a job with.

Working on full-blast for even just 2 more years and keeping up my high saving rate of over 40 %, will enable me to continue building up my passive income from stocks – to a level that my passive income will be able to cover all my regular daily expenses while still keeping on growing. I have calculated it 10 times through and the result is the same. Unless anything very unexpected happens, this next 2 years will be indeed enough to reach my target.

Light at the end of the tunnel

What this really means is that I am not just planning my next career move. I am planning for FIRE to kick in and to reach financial independence. I will be 41 years old by that time. What is even more staggering to me is that I only started to really put that much effort into the whole thing when I started my hotel career at the age of 29. This means that I will have reached my goal after only 12 years of truly hard work. I wish someone would have taught me some lessons about FIRE at school, then I might have reached FIRE probably around 10 years earlier on.

All the struggles, all the pushing myself to learn more, to work over-time and to trying to impress my supervisors, business partners, colleagues, all the hard work… will finally pay off…

Obviously, being a workaholic I don’t have any intention of truly calling it a day by then. My plan is then to turn my side-gig with The Motley Fool into a little more intensive exercise. I also think about going back to Germany for a short time, to certify myself as a financial advisor and to open up a small career and financial coaching business here in Thailand.

A million ideas, let’s see which one of them will become real in the end. The main point for me about FIRE is not to stop working in general, but about to be able doing things on my own terms.

There is a quote that money is power. It is. For me, it’s the power to regain control over your life, to reduce your dependency on others and to experience a form of freedom that most people in the world struggle their whole life for to find. I am now only 2 years away from it. 24 months. 104 weeks. I am really excited about it.

2018 in retrospect

So this is it. Tomorrow is Christmas, and only a week later we will already be saying “goodbye” to 2018 and “hello” to 2019. I will be working – a lot – over the next 10 days, so let me write my last words on this blog for 2018 today.

Obviously, since the blog is about personal finance, let’s start with that.

Personal Finance

I was not able to hit all my goals and targets for 2018, but some. The most important one is obviously my savings buildup. In 2018, I managed to save / invest 32,3% of my total income. A little bit better than 2017, when I saved 31,16%, but far away from my target of 40%.

Ambitions are good, but if setup too high, it can become frustrating to chase them. So for 2019 I will drop my target slightly and try to reach 35%. This should be manageable, because as of 1st Jan 2019, I will have no more monthly instalments for my car in my budget plan. That’s right. I paid down my car early (within 3 years) with several extra payments along the way. Thus, these payments will disappear from my monthly bills and shifted towards my savings plan.

In 2019 I might also skip vacations in Europe, which are a costly family event. This is not due to my savings plan though, but rather due to an anticipated job-change sometime around the middle of the year. So instead of 4 weeks in Europe, I might just do 2 weeks in Japan or Korea.

Either way, I was promising my wife vacations in Japan basically since the first day we met – 6 years ago, so yes, it might be the right time to get set this record straight.

In terms of stock investments, we have had a negative sentiment in 2018 and in 2019, the markets might very well crash. Therefore, for the first 6 months, I intend to collect cash and to get ready for the stock sell-off. When markets crash, there are usually plenty of great opportunities on hand, and I want to be ready for it. IF markets should drop by 40-50%, it means that I should have at least a quarter or better half of my currently invested amount available in cash – to cost average existing stocks and to add some new ones which will come as great bargains.

Maybe just a word about cost-averaging.… even the most optimistic stock-maniac (such as myself) needs to understand: When a stock drops by 50%, it will need to rise again by 100% just to be back at square 1. So if your stock drops by 50%, it might make sense to double down on it and to purchase the same or even a larger amount of the same stock at half price. This will reduce your average cost per share and your losses in % down to 25%. A loss of 25% can be recovered much faster than 50% and you will end up with higher profits – provided the stock comes back to the point where it was before the crash.

I don’t intend to sell any of my stocks. Most of my positions pay a solid dividend. In 2018, based on received payments and invested total amounts, my dividend income settled at 3,2%. It’s not a great number, but it’s only that low due to the constant additional cash that I poured into my account. For 2019, I expect the dividend income to increase to something around 4-6% and for 2020 to reach a range of anywhere between 5-8% returns. Once I reach double digits will be the point where I stop adding cash to the portfolio.

How is this achievable? Well, among a few other factors, it’s the power of dividend growth and the cost-averaging of some of my positions. Let’s take a look at the European energy giant E.On, which is one of my core holding positions. In 2018, the received dividend came down to only 2,32% after taxes. E.On paid a dividend of 0,30 Eur per share in 2018 and the withholding tax on dividends is roughly 26%. In 2019 however, the dividend will be raised to 0,43 Eur per share and for 2020 the expectation is around 0,60 Eur per share. That’s almost a 43% increase in the first year and a 100% increase over 2 years. Apple (another core position of mine) is expected to raise its dividend by at least 20% year on year, for many more years to come. Royal Dutch Shell returned to me only 2,7% on annual basis, but I purchased the shares just in June, so I missed the first 2 payments in the first half of the year, which I won’t miss in 2019. Thus the income will grow to a minimum of 5,4%, given the company will not cut or increase the dividend and of course provided that I don’t add more capital to it.

I have only 1 company in my portfolio that is not paying a dividend – and it is my biggest loss this year. My VOLTABOX shares are down 53%. However, since I don’t see any valid reason for the sell-off, I will probably add some more shares of this company to cost-average down and see how things play out in 2019.

Maybe another word of advise: During rough times, focusing on dividend paying stocks has proven to be a successful strategy to minimise risks.

Career

I have pretty much reached the first top of my career ladder and don’t expect any significant position-jumps over the next years. My target for 2019 is to switch jobs, to move to a larger hotel (I am a hotel manager) and to negotiate a salary increase of approx. 15-20%. This should be possible, as I am still within the lower salary-range within the standard frame for my profession.

My current hotel was my first assignment as a General Manager and I made a couple of mistakes when negotiating the contract. Obviously, I won’t repeat those mistakes, so the 15-20% salary increase is realistic.

Other

I will continue my side-hustle and keep writing for The Motley Fool Germany. Working with the team there since July 2018 was great fun and I learned a lot. I can actually imagine doing this for many more years to come, even after I retire early (the target is at the age of 45 – in 6,5 years from now).

During the last few months I have sent some money to my parents. We are fixing a small house in the countryside in Poland and are planning to open a small bed & breakfast. Nothing large, just 3-4 rooms, but there is great opportunity to support my parents about their retirement income from that. This is also the main reason why I couldn’t increase my own savings in that amount as I was originally planning to do. However, I believe that in the long-run it can turn out to be a very beneficial move for my entire family – so it’s absolutely worth it.

Merry Xmas and a successful New Year!

That’s it. Writing things down in a blog is my way of taking the time to structure some thoughts and to re-consider my approach for things to come. It’s a great exercise, and while you don’t need a blog for that, I urge and recommend you to do just that. Take some time, think about your goals and dreams, and make a plan out of it.

There is a quote, that might be politically not correct, but it doesn’t make it any less true:

“Nobody ever wrote down a plan to be broke, fat, lazy, or stupid. Those things are what happen when you don’t have a plan.” – by Larry Winget

And one more:

“A goal without a plan is just a wish.” – by Antoine de Saint-Exupéry

Take it as a constructive feedback and keep working on your plan.
It’s the only way to escape the rat race.

 

Disclaimer: I have all the stocks mentioned in this article.

Why a beautiful office matters

I have been working abroad, in developing countries, for a couple of years now. All the hotels I worked at were luxurious 5 star properties, and only my current hotel is in a slightly lower 4 star category. But almost all the hotels had (and still have) one thing in common. Their back-office areas tend to be disastrous.

As a matter of fact, this is valid not only for developing countries, but in general hotels tend to put a lower emphasise on their employee areas. While the situation is not super-bad in Europe, it certainly lacks behind the development of office cultures that young start-ups and established bigger players turned to in recent years.

My current hotel is probably the worst in those terms that I ever worked at. Constantly broken and clogged toilets, holes in walls, water-leaks whenever it rains, hell, I even got electrocuted by our copy-machine as it was not properly earthed. Luckily it was a low voltage. The canteen has plastic chairs, aluminium cutlery, and broken tables. It’s full of mosquitos that will fall upon me as soon as I take a seat. Not an amazing experience for an area that is regularly plagued by dengue fever. For the first few months, it was difficult to have paper towels and soap in all team toilets present at all times and you might guess it, there was not even one plant or picture anywhere in plain sight.

While during my first year here I tried to fix as many of those issues as possible, and was partly successful, for the majority of the problems I found only little understanding from the hotel owners, and surprisingly, not much appreciation from my employees as well. While this kind of experiences can be frustrating, I am trying to not get discouraged and fight for a better office culture.

A managers office is his home

It really is. I spend 6 days a week in my office and tend to be there from 8:30 am until 7:30 pm. I spend more time in my office than I spend with my family. I spend more time talking to my employees than I talk to my daughter, my wife, my parents and my best friends – combined. I stare at my laptop and work on excel sheets, websites, social media, guest requests, corporate systems, restaurant menus, budgets, cocktail recipes, event preparations, staff evaluations and permanent requests from hotel owners. I talk with suppliers, have normal meetings, skype meetings, webinars and got to visit occasional events to keep myself informed about the market and upcoming challenges that the world is constantly throwing at us from every corner of the world.

Doing all this and spending so much time at work, it really matters how you feel in your office. It is not your second home. You just have to admit to yourself that your office is your first home.

A new office culture

Just a few months back in July, I went back to Europe to visit my parents, and as I am planning to stop the rat race in a very foreseeable future (just reading the previous paragraph is actually giving me an energy blast to really keep working on my plan), I have visited a few co-working spaces in Berlin.

Why did I do that? Well, frankly, I am pretty sure that I can’t stop working. I love to work and I love to be kept busy. I love to meet people and I love to try to do my part to help improve this world for someone else a little bit every day. I am just pretty sure that I don’t want to do it with such a work-load as I am having now. Thus, escaping the rate race will mean for me to work on my own terms, far less and most probably on a freelance basis. But more on this another time.

So, I visited this co-working offices – and I was truly amazed. Beautiful offices with open plan spaces that looked rather like brushed up Starbucks shops than an office. Then, there were also neat and smart modular offices for small teams or individuals, fully equipped with everything one would need to get things done. And on top of that, they were all kept in warm earth-tones, in beautiful locations around parks or with amazing city views. To top the cake with a cherry, all the offices had free soft-drinks, coffee, daily fresh fruits, some were pet friendly, had showers for people who like to jogg or come on a bicycle to work AND many were accessible 24/7. Free high speed wi-fi, electric sockets with international plugs and electric / power protection were obviously standard.

That’s when it occurred to me. People are tired of ugly offices, and yes, I am not alone out there.

Spread the word

So, why am I writing all this? I would really like to encourage all the employees out there to spread the word. Don’t accept ugly offices. Don’t accept broken toilets and water leaks. Don’t accept lacks of hygiene, health and safety. I am going to leave my hotel in 7 months from now, as my contract is about to expire, and I will keep trying to fix and improve more of this until the last day. But it’s important that people really talk about this. Only then business owners and managers, such as myself, will receive not only the pressure but also the support that is necessary to drive change.

The whole world is talking about the next big disruption. Well, I don’t need a disruption. I just want a nice office.

FIRE – It’s about time, not money

Financial. Independence. Retire. Early.
F.I.R.E.

If you are interested in financial freedom, sooner rather than later you will stumble upon this term. While reaching financial independence and being able to retire early is not a new concept, it seems that these days it got plenty of steam, and there certainly is a very good reason for it. Probably more than one.

One of the main reasons I could think of would probably be the ever-increasing lack of job security, and the increased amount of options to travel and to explore the world.

Job security is becoming a relict of the past

As far back as I can remember, I was being told that to make a career one has to be flexible, adaptable and independent. While I got no problem with this and actually very much embrace the idea, one needs to realize that with more flexibility, we are also talking about more freelance jobs and short-term contracts. The traditional life-long assignment with one company has not become a rarity just yet, but it is becoming less common.

Don’t get me wrong, I don’t want to blame the industry or politics for this though. Frankly, I couldn’t imagine and wouldn’t even want to work for the same company all my life. Even 4 or 5 years would feel like an eternity to me. I rather believe that this is pretty much a reciprocal alignment of interests from both, the modern employee and employer’s side.

Working in hotels, I usually receive a contract for 1 or 2 years for each property. It happened only once, that I received an unlimited contract as a manager, but in most cases, it’s a limited offer. It’s a common standard in international hospitality so I don’t spend too many thoughts on this, but for most of my friends, family, and colleagues from my home area of Germany, there is not much understanding why anyone would agree to work on terms like this.

It all comes down to security, or does it?

Of course, the main idea behind the thinking of my family, friends, and colleagues is about the job and pension security. While schools and universities are preaching independence and flexibility, parents and politics are trying to push us into “stable” careers where you don’t need to worry about growing old – and receiving a sustainable and handy pension. This might be less common in the US, but it is pretty much the idea on which Europe has been built on.

I am traveling for a long time now, and my personal attitude was to always put freedom ahead of security. I hated the over-regulated German system and always wanted to get out of it. So, talking about security was always just some annoying concept to me. Being young, educated and in a booming industry, I was feeling like I could take on the world and handle everything by myself, while having much more fun, traveling and exploring the world along the way.

But things change, and you surely start to think differently when you turn 35 and got a family to support. For me, something happened around that time, when my daughter was born.

If you got no kids, you won’t be able to understand the fundamental change in your attitude that just comes naturally shortly after your kid is born. Your thoughts and priorities will slowly start to shift, towards wanting to make sure that you can care not only for yourself but also for your loved ones – no matter what. You might be a master in survival, but your significant other and your little ones might be much more vulnerable and you might start taking this into account at some point.

Many people start then to think about security for their family. As for my case, while security is a part of it, my worries shifted not towards security, but even more towards freedom. Freedom for myself, for my wife and for my daughter.

It’s all about time and what we do with it

I mentioned it over and over again and I will not get tired of repeating it: A successful career is the single, most important piece of the puzzle that you need to work on to reach your target of financial independence as early on as possible. The logic is simple: The more you earn, the more you can save, invest and the earlier you can start living off your investments and your savings.

A successful career has also plenty of other benefits, namely opportunities to gather experience and to face challenges in areas which you might not be able to have access to as a regular rank & file employee. Every experience helps us to develop further, to learn more and to understand the world, people and everything around it a little better. Therefore, I absolutely think that one should aim high and try to move up the career ranks quickly and with a high motivation to learn and to develop.

But having said all that, there is really no reason to do it for all your life. Especially when you have a family, spending 60-70 hours a week in an office becomes less and less desirable. You want to have more time, and you want to have the freedom to use this time the way that it will benefit you and your family the most.

Now here is the single most important realization about any job:

To work means to trade time for money. Your time is limited. Money is not.

You can only have more time if you have sufficient money to support yourself. If you don’t have money, you need to trade your time for money. You need to work. The more you have to work, the less time you have for anything else.

It’s simple, but yet only a few people truly recognize the significance of this logic.

Thus, the ultimate goal is actually not really about money. It’s about time. It’s about the freedom not to need to trade your time for money. This means that we have to use our careers, our income, and our skills to invest in assets and to set up businesses, that will allow us, step by step, to reduce the amount of time that we would normally need to trade for money.

Once we reach the point that we don’t need to trade time for money anymore, then FIRE becomes a reality. Or, whatever you would prefer to call it.

On a final note

There is one more thing that I will dedicate a separate post later on, but that I would like to shortly bring up today. If you truly understood the point above, then you will also realize another fact. Since your time is limited – on a daily basis – there is also a limit on how much you can earn by trading your time for money – on a daily basis.

Think about this: Let’s say you are a barber. It doesn’t matter how good you are and how much you charge for a hair-cut, there is a time limit as to how many haircuts you can perform per day. Meaning, there is a limit to how much you can earn.

Becoming independent also means that you remove this natural barrier, by focusing on money earning methods that are scalable. Meaning: They have no time limit attached to them and can produce higher results, without trading in additional time.

This might sound a little bit more complicated, but I will get on this topic in detail at another time soon.

It can get lonely at the top

One day, I was sitting alone at one of my restaurants in the hotel and having lunch. It was a beautiful day: We had a very solid hotel occupancy of 85%, the sun was shining, the ocean was calm, a fresh breeze was swirling through the entire garden and pool area and I had not a single complaint from any guest.

So, I was having lunch and thinking about the next beverage promotion that we should introduce in 1 or 2 weeks when one of our regular guests approached me. He was actually just passing by, picking up a cocktail from the bar, but when he saw me, sitting there alone diving deep in thoughts, he came closer and said: “It can get lonely at the top, isn’t it?”.

It can indeed.

Over the last 10 years, I have pushed myself to get to the point that I can be in charge of a hotel and take on the responsibility that comes with it. As a rank & file employee, I was always full of ideas and dreams of how I would like to put my stamp on the business I work at. I was learning, studying and gathering ideas and doing online-courses how to improve all kinds of procedures. How we could manage guest expectations better, how to improve our workplace, which IT solutions offer the best benefits, what facilities can help us and our guest to have the best possible stay. Design & architecture related topics, food styling and decorations, … the list is endless.

But what I never really did, was to spend a thought on, what it actually means to be at a top position.

It turns out, that I really underestimated the pressure that comes with it. While I got the chance to put many of my ideas and thoughts into practice, the job of a hotel General Manager is actually frighteningly time-consuming. And the largest chunk of my time, I am actually not spending with guests or hotel improvements. The biggest part of it is the team management.

It is truly fascinating, how tables turn once you move up into management. Suddenly you are not the one questioning a single guy at the top, but instead, you have 150 other persons questioning you. Observing you. Interpreting every word, eye-blink and every move of you. It took me a while to learn how to handle the pressure and also, I had to change my behavior. Truth is, it doesn’t matter who you are, if you want to take responsibility for and lead others, you have to learn how to serve them, while at the same time pushing your agenda. People will only believe in you if you believe also in them.

And this brings me to the recent break-down of Teslas CEO Elon Musk. 

I am certainly in no position to judge or even to start to begin to imagine, what kind of huge pressure he took on when taking care simultaneously of Tesla, SpaceX, The Boring Company and his AI venture. I am not a billionaire (not even close) and I don’t have 25.000 employees and billions of dollars from investors to be pressured by. But I think I am in a position to give a single advice:

Elon, get some sleep. Do some exercise. Take a vacation.
And learn to delegate.

Being alone at the top is a choice, not a given. The way we treat our colleagues, business partners and investors is what defines us and our business. The problems will never get less. The days will never get longer. Micro-management is not a healthy habit for any company and never works out well in the long run for anybody involved.

If you trust your team and find a supportive left and right hand to help you through thick and thin, then you can have a sit at a nice restaurant, enjoy the breeze, watch your guest/clients enjoying their time with your product and/or service. And when someone approaches you and says that it’s lonely at the top, you can smile back and respond:

“It’s a beautiful day”.

DISCLOSURE: I have no shares of Tesla.

Career Planning

It can’t be emphasized enough: Developing your career is still the best and most promising way to secure your financial future.

We all know the mantra that parents, banks and insurance agencies try to feed us: Start saving early and utilize the power of compound interest to your advantage. The sooner you start saving even small amounts, the sooner you will reach your target.

Theoretically, it makes sense and it is probably one (out of many) ways to start your journey. But I am not a big fan of it. Let me explain.

The first time when I opened a mutual fund saving account I was just 20 years old. The bank convinced me at that time that saving 50 EUR a month would make me rich by the time I retire and the numbers seemed to support it:

  • 50 EUR x 12 = 600 EUR per year.
  • Considering 45 years, that’s a down payment of 27.000 EUR.
  • With compounding interest and re-investments of all generated profits at an average market return of 8% a year, this would indeed translate into solid 250.000 EUR when I reach the age of 65.

A lot of money. Only problem: As a student 50 EUR was already a lot of money to me and I wasn’t always able to come up with it. It didn’t take long and after a year I canceled the account as I was forced to make a downpayment for a student apartment and I simply didn’t have enough cash on hand.

Looking at the calculation at that time from today’s point of view, I see things a little differently.

  • Saving 600 EUR per year would equal 3.000 EUR after 5 years and with a friendly market return of 8%, it would have generated a profit of 801,56 EUR. My account would, therefore, have a value of 3.801,56 EUR.

Here is the catch: As an employee in a managerial role, I could probably save up the same amount every 1 or 2 months.

So instead of living as a student on the brink of extinction for 5 years, it makes so much more sense to me to try to push up my career the best I can and to get to a salary level that will make up for those 5 years in as little as a month. Is it possible? Absolutely and in fact, I did just that, and it worked. In my first 3 years as a manager, I saved and invested more than I would be able to collect in 22 years of my original investment plan with the 50 EUR a month mutual fund.

I admit, not everyone can do this and the stock market has been very friendly for a long time. Also having a solid, permanent income is only one side of the coin. Another important point that has an effect on our ability to save and invest is the lifestyle we chose. I prefer a minimalistic lifestyle and buy only things that I truly need. During this 3 years, I traveled around in Asia as a hotel manager and all my possessions were in a carry-on with 7kg of weight. This increased to 12 kg after some time, but despite having a family now (which requires some adjustments to my strategy and consideration for my family’s needs), I am trying to stick to the same basic idea that allowed me to pursue my target of financial independence in the first place: Appreciation for simple life and maintaining a low cost of living.

Having a solid income and keeping your living expenses low is the perfect formula to ensure that you become financially independent in a much shorter period of time.

Don’t punish yourself when you are young, but don’t get lazy as you get older. Work on your career, try to increase your income and remain humble with spending. There is no reason to wait until 65 to be able to follow your dreams. Doing the right things at the right time, chances are that you can reach your target much earlier.