The puzzle is not too complex

Reaching financial independence is best looked at as a game, a puzzle. There are all these little pieces everywhere, and your job is to get them into the right place. Only then the picture will be completed, and you can rest assured that your odds for a safe and free life have reached a comfortable point without worries.

This puzzle may look different for everyone, but if summarized into a few short key points, it would probably look something like this:

  • Health
  • Job & career
  • Expenses
  • Family & friends
  • Emergencies
  • Savings
  • Investments
  • Home
  • Other

Each of these points can have several sub-points and sub-topics which require consideration, but overall I would say that this is probably what most of our lives are about. The order of the points is not chosen by accident. This is, in my opinion, where a higher amount of focus should be distributed, when you start planning your own path to FIRE.

Health always comes first. No matter what you want to do, or what you like to do, or what you plan to continue doing – if your health drops so will all your plans.

A successful career or at least a stable job comes right after that because as we know, you need money to generate more money. Good or bad, our world is designed around money and without it, nothing gets done. So, in the beginning, you simply need to do your part and join the rat race. Without inheritance, a serious portion of luck in a lottery or casino, or any other completely uncommon circumstances, there is simply no other way. It is worth noting though, that pushing your career straight up quickly is a powerful method to escape the rate race significantly earlier. Simple logic: The more money you will have to save and invest, the sooner you can call it quits.

Controlling your expenses is on par with a career as the most powerful tool to reach FIRE. It doesn’t matter how high your salary gets, if you waste all that money on things that don’t matter, then you will have nothing to invest. In fact, it is probably one of the most difficult things to learn for the majority of people. You read all the articles about credit card debt? Education loans? Mortgage payments? How much money people spend on eating out, transportation, travel, parties, etc.? That’s right. You need to have control over your spendings, otherwise, all your efforts will be for nothing. Personally, I recommend to embrace and learn about a minimalistic quality lifestyle. More on this another time.

Balance is important, and things are not fun if we have no one to share them with. The goal for any FIRE aspirant is to have more freedom – and more time. But this freedom and this time are best spent by sharing with someone. Family and friends are an important pillar stone to keep your sanity, staying down to earth and to start appreciating all the benefits that life has to offer. It’s easy to neglect those ties when you focus on your career and try to keep your spendings at bay, but make sure to never let them tear apart.

Being prepared for emergencies is a very basic risk-control measure. All your hard earned money and all your savings can be eradicated in a glimpse when a sudden accident or incident will require you to pull out cash from your accounts. Basic insurance and a reasonable emergency fund will ensure that you can sleep well at night.

Savings & investments are a diversified topic. As my readers know, I favor the stock market. However, there are tons of other options for how money can be saved and invested. No matter how and where you start, just make sure you do it regularly. Make sure you get regular interest or dividends paid out. And make sure to re-invest those, to let the 8th world wonder of compound interest do its magic.

Home is on my last spot, for a simple reason. Home is a flexible concept for me. We all have our dreams, plans, and goals, and choosing a home can play a crucial role in your life. Repeatedly. What do I mean by that? Well, in the beginning, it might make a lot of sense to chose your home for a place where you can maximize your savings. Low tax, plenty of affordable shopping options and neighbors who don’t care about what type of car you drive really have a strong influence on your daily expenses, your lifestyle, and ultimately on how quickly you will be able to grow your nest-egg. Later, you might think more about a comfortable lifestyle, move to a tropical paradise or get back closer with your family. For a FIRE aspirant, buying a home is seldom a good investment and rather a loose and flexible concept.

Putting these pieces together and understanding what you want, how you want it and where to put your focus is the first step to understand who you are, what you want and how a realistic plan to get there might look like. Why not start thinking about it today?

2019 – Drop the resolutions!

Yes, you read right. The new year started but we don’t do the resolution stuff. We start the year with serious targets.

Today is the 6th of January, so the 1st week is almost gone. This means that we have roughly another 51 weeks to meet our own, ambitious but still realistic expectations on 2019. What can be done in 51 weeks? Here are my targets:

  1. Improve on time management. As you all know, and as the sub-headline of this blog indicates it: It’s all not about money, it’s about time. Time is our most precious resource and it needs to be managed well. A day has 24 hours. After deducting those 6-7 hours that are necessary to re-charge our batteries, plenty of things can be achieved each and every single day, if we allocate the remaining time efficiently. I would rate myself rather poor on this skill so far, as I still spend way too much time with my phone, while I could allocate more time to this blog, to my side hustle, to stock analysis, and to my workout routine. I will start slowly by:
    • trying to leave work on time,
    • delete useless apps from my phone and
    • to schedule my workout routine a little earlier throughout the day (so far I was always exercising after 10 pm)
  2. Increase side hustle earning by 50%. Right now I am writing about 1 article a week on average. I will try to increase this to 6 articles a month to curb my side-hustle income and to have more cash available for investments.
  3. Increase my dividend income by at least 10%. That’s right. While this should be not a problem, I put it on my target list. Most of my stocks will increase the dividend throughout this year anywhere between 2% up to 25%. However, I can also increase my dividend output by buying more stocks of companies which I already owe and which had been dragged down throughout 2018. This will cost-average down the stock-price in my portfolio and thus increase my average yield on cost per stock.
  4. Prepare for a larger market crash by saving up enough cash to be equivalent of 50% of my current stock portfolio volume. That’s the biggest and most difficult one, because this would require me to really try to achieve my savings target of 40% of my total annual income. Not impossible, but a tough one.
  5. Find a new job and re-negotiate my base salary by at least +20%. As mentioned in the last post, it should be possible due to my current situation, but I will aim even significantly higher. With perks and benefits, the total value increase should be at around 35%.
  6. Take a break for 1 month in between jobs. Yes, I put this in my target list also. I need time to recover and re-charge after my current assignment. I have now worked almost 2 years with a 6-day workweek, spending on average roughly 65 hours a week in my hotel. This does not include my side-hustle activities, my family time and my exercise routines (which takes 1,5 hours per day). So yes, to ensure I get no heart-attack before time, taking a break for a month will be commendable.
  7. Visit Japan and/or Korea this year. Indeed, it is about time. I haven’t gone to Korea and Japan since 2012 which is a real shame. I know my parents want to see my daughter and want us to go to Europe, but Japan and Korea is the reason why I moved to Asia in the first place and I seriously need to visit this beautiful places once again. On top, I have promised my wife this trip for a very long time.
  8. Exercise routine annual target:
    • 36,500 push-ups (100 per day),
    • 18,250 burpees (50 per day or 150 every 3 days),
    • 18,250 squats (50 per day or 150 every 3 days),
    • 3,650 pull-ups (10 per day),
    • Fresh-up of all my martial arts / kata routines
  9. Actively teaching German and English to my 3 year old daughter for 30 min a day
  10. Actively involve my daughter in my exercise routine to practice with me. She already started to sit on my head when I do squats or push-ups and loves to hang on to me when I try to do pull-ups, but this can be fostered more

So yeah, many things to do and 51 weeks is actually a short time. The older we get, the more we realise how precious time is. Let’s make the most of it.

And no, you really don’t need 8 hours sleep. The day is just too short to spend 1/3 of it with doing nothing.

This year, I also intend to write more about individual stocks and my investments. So just to give a brief heads-up, here a list of stocks which will be discussed and possibly purchased sometime in 2019:

Monthly dividend paying stocks:

  • Gladstone Investment
  • Main Street Capital
  • Realty Income
  • Apple Hospitality

Regular Stocks:

  • Ares Capital
  • Cisco Systems
  • Starbucks
  • Microsoft
  • McDonalds
  • Coca Cola
  • Merck
  • Pfizer
  • Iron Mountain
  • Tesla
  • Bayer
  • BASF
  • Aumann
  • DÜRR
  • GlaxoSmithKline
  • Royal Dutch Shell (B)
  • Baozun
  • Alibaba
  • QQQ

ETF:

  • iShares MDAX UCITS ETF

Disclosure: Some of those stocks I already owe, some I had in my portfolio in the past but sold them with a profit and plan to buy again when prices drop.

So get ready for a furious, active and hopefully rewarding 2019!

What FIRE really means

Retiring Early and being financially independent may be a dream for many. But before you put too much romance into that thought, let me tell you something: It becomes a dream once it happens. But before that, it can get really tough.

Savings target

My plan is to retire with 45. That’s 6,5 years from now. A long time? Not at all. Let’s do some basic math:

6,5 years => 52 x 6,5 => 338 weeks.

IF you would look at your current situation right now, how much money could you save up every week? 20 Euros? 30? 50? 100? Even if you would save 100 Euros a week, after 338 weeks this would equal only 33,800 Euros. Hardly enough to retire on.

So my target is actually significantly higher, with a goal of saving approx. 500-700 Euros a week. For most people this may sound hard to manage or even to be complete madness. But yes, it CAN be pulled off. It’s just really, really hard.

Focus on your career

I work as a hotel manager and have a decent salary which contributes mainly to reach my target. However, becoming a hotel manager at the age of 36 while having started in the industry only when I was 29, was a pretty tough call. In order to get quick promotions and collect the necessary knowledge and experience, I managed during this short time-frame to work in Korea, Japan, China, Scotland, Germany and Thailand. When I took on a role, I learned as much as I could, and as soon as I noticed that there is something in my way of moving up the career ladder, I simply moved on. I didn’t care about where I go, what my initial salaries were and I had almost no personal life whatsoever.

To be exact, the hotel was my life. I didn’t celebrate my birthday with any of my friends back home for several years. I didn’t celebrate Christmas or New Years back at home, because this is mostly a super busy time in any hotel around the world and you just don’t get off for that. I had no time for a family and even regular relationships were mostly annoying because they would just slow me down and require me to compromise on my career choices. My luggage was (and mostly still is) a 7 kg carry-on plus my laptop bag and a couple of suits. I hate to check-in luggage. My point here is: You got to really push yourself to get this career that will help you in building up your savings and investments.

Save a lot and use your savings to invest – aggressively

In the last 3 years I started to invest in stocks on a larger scale. Basically, when I got salary, I would send 50-60% of it to my stock account right away, and leave just enough on my cash account to get through the month. While I have a high position and a high salary by now, I really hate spending money for things that simply don’t matter. And believe me, from my point of view, there are not many things that would matter.

I don’t collect stuff, I don’t believe in buying presents or gifts. I get headaches when I enter a shopping mall and stay there for longer than 20 minutes and most of my clothes are being worn until they literally fall apart. I upgrade my phone and my laptop once every 5 years (yes, it should be Apple products, other brands just won’t survive long enough), I don’t sign any contracts that would involve monthly payments. Netflix is currently the only exception.

Don’t compromise your savings, get a side-hustle if you need more cash

But most and of all, I focus on work. When I get short on cash, I don’t withdraw any money from my stock account. I go to http://www.upwork.com and find a quick side-hustle to earn a few quick Euros to cover the expenses that suddenly came up. If I can’t collect the money quickly enough, I will put it on my credit card, collect the points and pay it off immediately as soon as I can collect my side-hustle reward.

Credit cards can be tricky but also useful. Living now in Thailand for a while, I can honestly say that during the last 3 years I never paid for a movie ticket. I got enough credit card points to go in every week (if I wanted to) without spending a dime. This is mainly, because I put almost any of the necessary expenses that I have on my card – and pay it back as soon as my points come in. Avoid delays, because credit card interest can seriously jeopardise your finances, but collecting credit card points is a great way to improve the value of your spendings.

For the last 6 months, I have filled my weekends (and some nights) with writing articles for The Motley Fool GmbH (German subsidiary). Regular writing on the side helps me a lot to keep up with my goal and additionally, it helps me to stay up to date on financial topics and stock research for any future investments.

It can get really tough

Sure, my wife complains sometimes about not having enough time for the family. My hotel job covers me for 6 days a week (yes, only 1 day off per week) and I usually spend roughly 60 hours in the hotel – every week. Researching stocks and writing about them adds at least another 20 hours on top of it. So I am now at roughly 80 hours per week. Hell, that’s a lot. Seriously, it is.

BUT the way I see it, in 6,5 years from now I will have plenty of time for everything – until I die. That may be shorter than I think. Or significantly longer. Who knows. But I don’t buy the “living for the moment” mantra when it comes to finance. Yes, I may die a year after reaching my goal, but the much higher probability is that I will be around for another 40-50 years after that.

Isn’t it a better choice to be optimistic about your life expectation and to look forward to it, with the confidence of being financially independent? I think so. I believe so. And that’s why FIRE is for me.

If you can’t motivate yourself to INVEST your time, and to dedicate your attitude and career approach to this goal, then FIRE will be seriously hard to pull off. And probably remain just a dream.

Retiring in Thailand…

… or in any other place with a low cost of living, low taxes, and a solid infrastructure.

I have been in Thailand now for 8 years. Originally the plan was to work here only for a year and then to move back to Korea, China or Japan. However, things seldom turn out as planned and usually something happens that requires us to adjust. For me, the career opportunities in Thailand kept just popping up and there was simply no reason to go anywhere else.

Having lived and worked here for a while, I often get asked about the idea of retiring in Thailand and I would say that by now, I probably wouldn’t think of retiring anywhere else.

In the first line of this article, I already brought up some crucial points, but let me put a small list together for you for a more detailed overview:

  • Low cost of living: A small house with 3 bedrooms, 2 bathrooms, a garden, garage, fully furnished with gardener service, water, electricity will cost you approx THB 25.000 a month in Phuket, Pattaya or even less in Chiang Mai. That’s 650 EUR.
  • Low taxes: Planning on retiring on my stock account(s), I might benefit in Thailand from a low 10% tax on dividends and no tax on profits from capital gains.
  • Safety: I almost always felt and still feel safe here. Surely you got to use your common sense, study a little bit about your area where not go by night and avoid picking fights with locals or with tourists, but then you will have no need to worry about almost anything. One point that you might want to keep in mind is that free speech is limited here, so spilling out your political views or pursuing certain legal matters might not always be a smart move.
  • Medical support: Private hospitals offer excellent medical support throughout Thailand and a private insurance that will cover you in almost any serious situation will cost you THB 30.000 a year. That’s 750 EUR. Simple medical services usually need to be paid by yourself, but those costs are truly negligible, with a regular doctor visit usually not costing more than 1500-2000 THB – including medication. That’s roughly 40-55 EUR. Also, just so you know, it never happened that I needed to wait longer than 15 minutes for a doctor to be available for me, even if I came without an appointment.
  • Infrastructure: Excellent road conditions, stable water, and electric supply, fast internet, and no issues whatsoever with buying anything you want or need offer great convenience across the country.
  • Culture: Friendly and helpful people. Of course one should always be careful whom to trust, but you won’t find another country where it’s so easy to talk and get along with people like in Thailand.
  • Food: Thai food is excellent, but you can find here anything that you like. Asian food is very affordable, imported goods, especially from Europe, tends to be expensive. Cheese is a true luxury here and so is good wine, but if you want to keep saving, then street food will be your favorite place to hang out at. You can literally fill your stomach with sticky rice, sweet pork and fried chicken for 60-80 THB a meal. Approx. 1,5-2 EUR.
  • Language: For me, Thai is quite difficult as I am not very good with hitting the tones. Similar to the Chinese language, it requires a lot of practice and while the grammar is rather simple, speaking is a challenge. However, I believe that the majority of people can learn it quicker than I. My brain is geared more towards Korean (which I speak fairly good) and Japanese. Chinese and Thai is just not my thing… however, to get back to the topic, you get along with a mix of Thai and English pretty well. Thai + English = TENGLISH. Grab a few Thai words so you can pinpoint or emphasize what you want to say, combine it with English and in most cases, you will be good to go.
  • Weather: Chose your region wisely and you will enjoy great weather. Thailand is actually quite big and has many different regions. For retirement, I am planning to move up to the north where it’s not that hot and the rainy season not that long. You will mostly enjoy a lot of sunshine (we got here more sunny days a year than Italy) and temperatures that do not require to have any jackets in the closet – all year long.

These are the most important things that come up to my mind for now. If you would like to know more details on anything, just leave me a comment and I will add more to the list.

Of course, there are also downsides. As we like to say, the grass is always greener on the other side, Thailand has some specific issues that might require some adjustments in attitude and expectations:

  • General lack of law enforcement: In 8 years, I have never seen the police pulling crazy drivers or damaged cars over or enforcing the law when it comes to disputes. You can rely on the police when things get serious, but for anything that is not life-threatening, the police will usually let the involved parties clarify the issue among themselves and try to net get involved.
  • General lack of rules and regulations: Again, as long as there is no serious danger to anyone else, people can pretty much do here what they want. While you get a great sense of freedom, it can also create some frustrations along the way. For example, if your neighbor plays loud music every day until 3 am, there is literally nothing you can do and no one who would have any right to stop your neighbor from doing it.
  • Dangerous traffic: Thailand has the 2nd highest rate of fatal road accidents in the world. Cars are not monitored for damage by the police, plenty of people on the road have none or expired driving licenses, there is no effective road patrol by the police anywhere in the entire country and the worst of all is the huge amount of damaged motorbikes and scooters on the road. When driving in the late evening or night, you have to really seriously watch out all the time for scooters that appear out of nowhere on the road, without any lights and the people sitting on them with dark clothes and without any safety helmets. In the 8 years that I spent in Thailand, I have seen more people dying than anywhere I have been before, and most of those people were involved in car or motorbike accidents.
  • Mosquitos, insects, and wildlife: This is probably the most annoying part of all. You can’t get out from bed without something biting you. Mosquitos are literally everywhere, so are ants and all kinds of other insects. While you do get used to it, it never goes away. You can learn to live with it, but you will surely never embrace it. Other things to keep in mind are basic protection measures against snakes, scorpions, commodores, geckos, and plenty of other animals that are strolling around everywhere. The geckos, in particular, are quite annoying, as they tend to crawl in everything and everywhere. So if you are living here, make sure to always lock up and close off all your food properly. You don’t want to pour your cereals into a bowl in the morning and watch a gecko jumping off out the box.
  • Stray dogs and cats: I could have put this one into the point above, but it’s such a big problem that I think that it deserves to be listed separately. Thailand has a huge problem with stray dogs and cats. Since pet ownership is not regulated and most people don’t want to spend money on animal care, most of the pets here are neither sterilized nor castrated and tend to multiply rather quickly. Unfortunately, most of those pets end up on the streets. It’s not only sad, but it’s also a little dangerous. They tend to run in front of cars and motorbikes, stroll in the dark in search of food and of course also spreading diseases. Just a few months ago there was a quite big rabies outbreak all across the country. This is something that most of us didn’t hear about for many years in Europe.

So, to sum it up, if you are flexible enough to adjust to a more “free” and less regulated type of life, can adapt to the food and sometimes close one eye to all those things that are different from “home”, then you can enjoy a very comfortable retirement in Thailand with a frankly pretty low living cost of something around 80.000 THB per month for 2 persons. That’s 2000 EUR a month or 24.000 EUR a year. This is a pretty good deal.

Following the 4% rule, you would need to save up 600.000 EUR to be able to retire here at the above mentioned annual cost basis. A significantly lower number compared to Europe or the US, where you would need to double that amount to reach a comparable lifestyle.

So yes, I think retiring in Thailand is a great idea.

What to do all day – when you retire early?

One of the big and probably most important questions one should spend some time on, is to think about your plans, goals and ideas for the day after your last day at work. This is not only true for people who plan to retire early, but also for everyone else.

If you work until your 65, or 67 or… well, depending on the retirement age in your home country, waking up in the morning and having nothing on schedule might become a depressing experience. While many of us tend to complain about our jobs, the countless office hours and “wasted” time that we would rather spend doing something else, the truth is that for most people, going to work every day has also some more or less obvious benefits.

  • It gives us a purpose, a reason to wake up in the morning and something to look forward to – every day
  • Social interactions with colleagues, clients, business partners keep us challenged, entertained and in general feeling of being a part of this world
  • Routines that make our daily actions predictable and accountable also give us a sense of security and confidence

When these things disappear, we might not miss them immediately, but over time they may contribute to a degradation of our happiness. Without a reason to wake up, to take care of ourselves, without those tiny daily routines in our lives and without social interactions, sooner or later we might start questioning life itself.

Things get more tricky when you retire early

If you are planning to retire early, let’s say in your 40s or 50s, these questions become even more urgent. Chances are, that you still have another 40 or 50 years to go, and without some proper plans and things to work on, you might actually not appreciate the decision to have left the work-force early.

Sure, I know, there are plenty of easy things that come up to our minds about things that can be done: Waking up late (for those solid 9 hours sleep every night), enjoying long breakfasts and slow coffees, hitting the gym or going for a run to the park, calling up a friend for lunch, playing some video games or watching a movie, helping your kid with homework and going out for a beer at your local pub when the sun goes down. Days are actually way too short.

But when you retire early, you might quickly find out that you are kind of on your own with everything. Your friends might not have the time for lunch or a beer to spend with you, hell, they might actually even resent you for having retired early. The park gets boring after a while, the gym won’t feel like a real purpose to follow and those long breakfasts and slow coffees will start feeling increasingly like a waste of time, rather than truly enjoyable moments.

We need a purpose in our lives

So what to do? I hate to tell you, but you most probably will need to find another job. I am not talking about the employee situation that as a FIRE follower you are currently planning to escape from, but as humans, we just need something to keep us entertained, challenged and something to strive for.

You might start a blog, a small online business, or a consultancy to help others reach what you have accomplished. You might open a small coffee shop, learn a completely new skill like cooking or gardening. You might pursue the things that you wanted to do when you were significantly younger, like back-packing through the mountains of a foreign country, learning a new language or just get that motorbike and plan a 1-year-road-trip.

No matter what you decide for, it should have some consistency and last for a while. Escaping the rat race doesn’t mean becoming a couch potato. It is rather the greatest opportunity of all: To pursue new challenges without the need to worry about financials.

My plans

So, if things go well, I believe that I might be able to hit the escape button in 7 years from now. What are my plans then?

  • I plan to learn barista skills and do some part-time work at a Starbucks or Costa Coffee
  • I will train for the marathon and possibly for an iron man competition
  • I might go back to Europe for a while and subscribe to university for a Spanish and Russian language course
  • I plan to cross the mountains in Korea in the Jeolla-Nam province with a backpack
  • I plan to spend some time in Kyushu and specifically in the hot spring region of Beppu in Japan
  • I will do a road trip through the US that might take half a year to finish
  • I will master those 2000 Chinese characters that are also required for Japanese writing skills
  • I will keep blogging and might eventually try to develop this into a small online business
  • I am planning to do a certification as a financial advisor in Germany and might start an online consultancy business (so I can do it from wherever I am in the world at any time)
  • I will continue writing as a freelancer for The Motley Fool Germany
  • I will take a photography course and start working on my Instagram for some better quality pics
  • I seriously need to get better at calisthenics and plan to increase my work-out time from currently 45 min a day to about 2 hours

I probably won’t be able to follow up on all these things. Certainly not at the same time, and some of these points might prove to be not the right choice OR my priorities might shift due to unforeseeable events.

But the point is that you should seriously think about this, brainstorm, gather ideas and just make sure that you really have something to look forward to every day. Something to keep yourself active, entertained, challenged and social.

Escaping the rat race is not about money, it’s about time. We have only one life and the time we have should be spent wisely. This becomes even more true when we stop worrying about money and receive the opportunity to actually really spend the time we have on ourselves only.

Is a house an asset?

When you start planning your financial future, let’s say around the age of 25-35, one key factor to it, is to understand the difference between the 2 crucial elements that will determine whether your plan makes sense – or whether it doesn’t. You need to understand what are assets and what are liabilities.

The idea behind it is simple. You want to invest your money in assets. And you want to reduce the amount of your liabilities. Only this way you will start creating a cash-surplus as a result from your investments.

While it may sound simple, definitions of what an asset is, and what should be categorised as a liability, can differ and very much depend on your personal point of view. One such controversial topic is an investment in a house or a condo. How would you categorise it? Is it an asset or is it a liability?

Does it create cash or costs?

The topic is so controversial, because the idea of having your own house is not only being sold as a way to save money on rent in the future ahead, but also as the ultimate guide to your personal freedom. Having your own house, you are free to do what you want, when you want and how you want it. On top of that, a house gains in value over time. Right?

Well, it’s not that easy.

First of all, let me say straight ahead that I consider a house to be a liability. My top 12 reasoning points behind it are:

  1. Unless rented out, a house or condo doesn’t generate cash
  2. If rented out, it creates additional work and responsibilities
  3. The potential increase in value is very dependent on many factors that you cannot control
  4. If not regularly taken care of, a house or condo is actually dropping in value
  5. Repairs & maintenance, insurance, taxes – it adds up over the years and can actually end up costing a small fortune
  6. Depending on the country you live in, the amount of building policies and regulations can be ridiculous and you absolutely cannot do what you want, when you want it and how you want it
  7. If you don’t rent it out and use it by yourself, then you are bound to the place
  8. If you rent it out, there are tons of legal pitfalls if you get in disputes with your tenants
  9. Even if it gains value over time, selling a house is not a simple and straightforward task
  10. A house is not creating passive income, as you need to constantly devote time, effort and money to maintain it
  11. Having your own house may urge you to spend more money on decorations, furniture, etc., all the things that you want to have in your house even though they are not really necessary, thus deducting your available cash for other investments
  12. Paying a mortgage is not investing. It’s the opposite.

I am sure that pro-house advocates can find their own reasons and counter a few of these points, but certainly not all. Also, I admit that there is some romantic sentiment to the idea of just having your own place to be and as we all know just too well, feelings and sentiments can out-weight logic on occasion.

As for my logic, it is very simple: Assets should generate cash. If an investment doesn’t generate cash, it’s not an asset.

I used to have a different point of view on this topic until I read the book “Rich Dad, Poor Dad” by Robert Kiyosaki. You can find more details on it in my “Good Reads” section. The book has quite a poor title and I don’t think that it’s particularly well written. I am also not even sure, whether the story told is true or not. But it has a few eye-openers in it, and the definition of assets and liabilities is one of them.

Assets generate cash.
Liabilities cost cash.

That’s as simple as it gets.

The Vagabond Theory

As you can see at the top and just underneath of my blog title, this blog is the beginning of a larger scheme that I will start referring to sometime in the future. The life of a modern vagabond. I have been traveling now for almost 11 years, changing cities, countries and continents every 1-2 years on average. Therefore, I have a natural desire of investing in assets that do not bind me to a place.

While my career path is certainly not a typical one, I believe that our world is developing into a, work-wise, world without the ancient boundaries of borders. Now more than ever, planning a successful career requires us to be flexible, to travel and to constantly adjust to new challenges.

In my opinion, not only is this hard to do if you devote a large part of your pay-check to a house somewhere that you think you want to live in, in let’s say about 20-30 years from now. Also, you should be prepared to expect, that this one place that you admired so much in your child- or even young adulthood, might look very different to you once you left it for a couple of years, and returned to it at some later point in the future. There are just so many great places in this world, why focus on just one so early in your life?

On top of that, there is such a thing that I call the “vagabond dilemma“. It describes the feeling that once you start traveling and the longer you travel, the harder it gets to consider settling down.

The ultimate freedom of housing

Ultimately, it comes down to your character, lifestyle and expectations. If you are devoted to a career, travel the world and are looking for the ultimate freedom, buying a house is probably not a smart move. A modern vagabond is certainly better advised to put his cash in stocks, bonds and other easily convertible and accessible assets that come with less restrictions, require less time and less attention to take care of.

Just last week, I had a thought, that to reach ultimate freedom, it would probably make even perfect sense to me to live permanently in a hotel. If you travel around Asia and plenty of places in Europe, you can easily find beautiful 4 and 5 star hotels that will cost you not more than a 100 EUR per night. This adds up to roughly 3000 EUR a month and it might sound like a lot at first, but if you really think about it: This price will include a daily, sumptuous breakfast for 2, a gym that you can mostly use 24 hours and usually also comes with a sauna and a pool. You might have access to a club lounge which you can use for working remotely and which usually also includes unlimited coffees, soft drinks, even beers, wines and often light canapé dinners. You get a housekeeping service for your room on a daily basis and, finally, you don’t need to buy anything on equipment. If anything gets broken, the hotel will fix it. Some hotels are already catering to working nomads by providing dedicated contracts with fixed rates for a specified period of time, that may offer even better rates and additional perks.

Surely, this is not something that would appeal to everyone, but it is an interesting idea and I am not dismissing it as a future perspective. If you love freedom and want independence, this is pretty much the definition of independent living. The best part of it: Your housing doesn’t consume any of your time. You have every minute of the day, every day, dedicated to only those things that you truly want to do.

If you have your own place, this is probably one of the biggest trade offs of all. There is always something that needs to be done in a house. From small things like fixing light-bulbs to larger projects like repairing showers, toilets or rooftops.

Doing your own thing

Now, there is also some positive sentiment to taking care of your own house, and let’s face it, life is not all only about money. Spending some time on a veranda or a roof and just fixing your own stuff has some positive sentiment to it and it may probably even offer some mental health benefits.

I mean, it’s probably kind of calming and relaxing knowing that you just take care of your stuff. You can feel relatively safe there, since nobody can kick you out (as long as you pay your taxes and paid back the mortgage) and if you got children, you might have some pleasure in knowing that this is something that you can leave with your kids once you’re gone. If they want it. If not, they can still sell it.

That’s also worth something.

Paying a mortgage is not investing

My last point, is also my point no. 12 in the above list. We are talking about investments, but paying a mortgage has nothing to do with investing. It’s figuratively the opposite.

Taking a loan from the bank and paying it back for a long part of your life, is not a desired target. The first years, most of your money is not even going into paying back the debt, but the largest part is going into paying back interest that is being calculated and charged in advance. So usually, the first years of paying back are not even reducing your debt.

Investments should grow and generate cash while appreciate in value. This is just not the case for most house and/or condo buyers.

Disclosure: I am not a financial advisor and these articles do not represent a recommendation for financial decisions. Please do your own due diligence and invest upon your own conclusions, considering your personal preferences and risk tolerance.

What to do today?

The world is full of great, smart and amazing people, who have or had the gift to understand and connect some of the dots that happened in their lives, and to turn them into truly powerful statements. Some of these statements turned out to be true not only for them but also for others. Thus, when people read or heard those statements, they connected them to their lives and if helpful, spread them further in the hope and with the purpose to give guidance to others. This is my definition of how quotes become popular.

I like reading quotes and have my own collection of some which I consider more useful than others. Most recently, I stumbled upon this one:

“What you do today can improve all of your tomorrows.” – by Ralph Marston

Such a short sentence, and yet, such a powerful message.

Having an idea or dream is usually the first step for all of us to find a purpose. And yet, while one would imagine that all of us require a purpose and would, therefore, do their best to follow up on their dreams and wishes, the truth is that most people do not find the strength, courage or conviction to be actually able to do what they like.

Too often we find constraints and barriers that seem too hard to overcome and sometimes, things require sacrifices that we are not willing to make. But no matter what your personal reasons may be, without even taking the first step in the right direction, you will certainly never see your dreams become true.

Everything starts with a plan

The first step to reach any goal is to have a plan. Putting some structure into your idea, formulating what you want and how it should look like will give you the guidance you need to establish long- and short-term goals that may lead to your success.

While this blog is all about finance, this applies to any target one would want to set up for oneself. As another accurate quote says:

“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.” – Larry Winget.

In financial matters, this plan is called a budget.

Knowing and understanding how much money comes into your account and how much is gone by the end of every week, month and year are crucial to help you to regain control over your financial situation.

Don’t wait for this. Sit down, take a paper and a pencil and start writing. Be honest with yourself. If you can’t, ask someone to assist you. And after you have done that, start thinking which areas require changes to help you to have a better tomorrow and to reach financial independence.

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.

Back @ Home

Vacation is over and I am back to Thailand from Europe with plenty of interesting impressions.

One, most pressing to me, was my impression from Germany, and specifically Berlin. I walked through literally half of the city and let me just say this: There is no refugee issue in Berlin. The city is not more or less international than in the past, with all the accompanying benefits and issues. Again, not more and not less than in the 18 years I spent there up until 2009. If you grew up in the city, then you hardly notice any difference.

Same goes for Hamburg, even though I lived there only for a couple of months.

Second thing, Poland is catching up and becoming a great place to be. I visited 2 cities: Wroclaw and Krakow. Both were extremely impressive and way beyond what I remember from my childhood. Well, to complete the picture: It was 2 cities and 1 village. And all of them looked great.

Only one strange thing: People in Poland are still not very familiar with foreigners. There was a funny incident when my family and I went to a children’s playground in Krakow. At some point, 2 kids came up to my wife just staring at her. My wife (she is Thai) asked them in English if there is anything she can help them with, but they were just giggling and ran away when their parents called them. The parents apologized and just mentioned that they never saw an Asian at the playground… You see Asians in Poland as tourists, but not many actually living there and visiting a park or a playground for children. My wife felt slightly uncomfortable at times, but not too often and overall we had a great stay there.

I am traveling for studies and work since 2007. Every year or two, I change the city, the country, and sometimes the continent. The notion that despite the internet, TV and the ever-increasing migration trends worldwide, people would still feel surprised to see someone from another country… it kind of really hit me. We all have still a long way to go…

Well… things do get better.

Retirement woes – Reality is catching up

I am currently on vacation and enjoying some quiet time with my family & friends in Germany and Poland. Last week, my moms best friend came by, we had a cup of tea and overall a great time as she had the pleasure to get to know my little daughter for the first time.

My mom is 62 years old, her friend is of the same age. As usually at some point, topics diverted towards the small pains in life. Recent doctor visits, some gentle gossip about who passed away within their circle of friends and neighbors – and their expectations towards retirement.

Obviously, especially the last part caught my attention and I got to say that I was truly shocked to learn about what my parents’ generation is expecting to receive once they go the step and retire at legal age.

My parents (and their friend) had simple lives, with regular jobs and learned, studied, worked basically without any breaks since they finished universities. They hardly took vacations and are true masters in frugal living. And yet, they won’t even receive 20.000 EUR a year COMBINED after turning 65. That’s less than 10.000 EUR per person per year and even less than 850 EUR a month per person.

How far do you get with this kind of money?

Not very far. Not only do they have to pay more to cover medical expenses than in the past, but inflation also forced them to get creative and increase their frugal living efforts to a point that I think even them couldn’t imagine in the past.

A cappuccino costs 3 EUR. A pizza around 8 EUR. A pack of 1 kg of fresh strawberries is 6,50 EUR. Oh yes, and the rent for a 2-bedroom apartment is now about 1000 EUR a month in Berlin. So after paying rent, utilities and medical, they will hardly be able to afford 1 cappuccino a day for 2 persons.

That’s rough.

Is this the norm? Probably not. But it’s not an exception. And the new generation of AirBnB hosts, UBER and Lyft drivers and working vagabonds who live by blogging or social media activities need to truly understand the significance of what can and ultimately will happen if one doesn’t start early to work on his/her finances and prepare for retirement.

I hate to break the news but there is simply no way around investments!

We all get old, there is no way around. We all will get to a point that we can’t or don’t want to blog, to drive a car or to share our apartment or house with someone else. Be it for the lack of mental or physical capability or in general for security & safety reasons. We all will get wrinkles and lose our Instagram followers to a 6-packed yoga pro who is traveling the world while we may be fighting with the stairs in our house or condo.

So how are you going to push up your rent, at least to a point that this 1 cappuccino a day won’t hurt you?

  • Saving accounts? Offer not enough even to balance inflation.
  • Government bonds? That’s a zero game at this point.
  • Renting out a house or a condo? Might be an option but you still got to take care of it to ensure payments keep coming. And the older buildings get, the more issues you will have which will bring down your margins and require you to keep a constant eye on it.
  • Buying a house for your personal use? It will reduce your costs but it won’t pay any bills.

There is simply no way around it. Investing needs to be a part of your retirement strategy.

People who are not familiar with investing in the stock market, often argue that they don’t consider the stock market to be safe. They consider it to be risky. But they have to realize: We are already at a very high risk. And for some, it’s almost too late.

This is a topic that should be taught in schools, it’s significance can’t be emphasized enough. In the meantime, a retirement crisis is looming on the not too distant horizon and it may very well become what will trigger the next crash or even a major financial crisis. Let me be an oracle on this one.