Reader Profile: RE

The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.

Next in the series is FMF reader RE. I sent him the standard questions and he answered them in one long narrative as follows:

Here is the story about myself and the financial things.

I just turned 40 this year and wanted to share some things I learned. People always seem to be amazed at how it's possible to live the way I live, that I look and feel so young, always do the things I do and that I have total freedom/peace in my head. This wasn't always the case.

As I live in the Netherlands, things may be a little different from the USA. I calculated € => $ and all amounts are after taxes. :). To compare, the average wage in the Netherlands is about 2600 US$. So, every number is in US$.

I graduated from university as a Bachelor of Engineering in 1999. Never had a debt because I worked at a bar when I wasn't at university. Fresh from school and amazed by this new thing called "the internet" I quickly found an IT job and bought a cheap house (700$/month).  After 2 years, I was pretty good at my work and I had a good salary (3600).

The jobs were okay. Sometimes a little boring but then, I never thought "wow, this is it!". I changed my employee 4 times in 5 years. Later you will understand why.

I lived cheap. Besides the nice but cheap house I bought, I had no idea where to spend my money. I loved hanging out with my friends and all things we loved were pretty much free. Cycling, skating, running, camping in nature, drinking wine in the park, photography, reading, cooking with friends, its all fun and free. Without even knowing, I saved over 40% of my income. I always bring food to the office, only eat out 2x a month with friends, just wear jeans and a t-shirt and use my bicycle to go to work or friends, I just live simple. I always thought: well, what makes me happier: $1000 for a TV or $1000 in free time? The answer was ALWAYS that last.

So, my mindset slowly started to change: most (working) people start to be different after university. I didn't want a car, large house, a career, babies, or a TV as they did. At work, people cared about things I was totally bored with. So, I missed the connection with 90% of them. I had the best people around me I could wish for as friends. And, these people were the opposite of the people I met in corporate life and slowly, I really started to be bored with them, their boring life, talking about tv and sports, careers, the way they all think and dress the same, the unethical things I encountered. And I also got bored with my work itself. It didn't mean anything to me any more. A 12 weeks trip to India and Nepal with my girlfriend made it clear: I don't belong in this place called office (or a 9-17 hours prison that pays).

This was after 6 years of work. So I made a plan: how to get my life/freedom back ASAP. After 4 years of work i already saved so much money (I didn't know what to do with it, except buying freedom), that I could pay for halve my house in cash. That's what I did. My plan was: stick here until you have enough money. I thought about switching jobs again, but I already did that too often and it wasn't going to change anything, so I mentally challenged myself to stick around. :)

My plan was to pay for the other 50% of the house and have a "buffer" of 3 years again. So, I wrote down all my expenses, and looked for a way to do this in just 2 years. My mortage was already really low because of the 50% payment, but other than that, there was no quick way to save more than 70% of my expenses. So, it would take me 4 years to reach that "goal". Noooo, that's far too long! But, freedom is my #1 priority, so it took me only 5 seconds and sold my car, I didn't use it much anyway, and there's good public transport here and I still have my motorcycle. Bam, the first 600$/month saved. Then it hit me: rent out the upper floor of my house. It's really large enough for 2 student rooms and the lower floor is more than enough for me. So, I did some reconstructing to make it 2 separate houses. It was great fun having these 15 years younger students in my place. After 2 1/2 years, I payed my house and had a buffer of 3 years. At a meeting at work, at the end I said. "Well, I have a thing to say. I'm bored with you, the work, and everything. I'm going to retire at 37! ". Yeah, the faces! :)

Financially, I never have to work again. These 2 rooms still pay for everything I need in life. And I still have this emergency buffer. I travelled and volunteered for a year after quitting my job.

I also quit with my girlfriend before this (we still lived apart) and found a new soulmate that lives with me now. I do some photography (20 hours/week) and work as a travel guide for 1-2 months a year. I also do every volunteering job I can find at home. I love the freedom, the free time, the people, this city, the traveling, this life. She writes and is creative. We both absolutely love traveling. When the autumn is nearing (that's now!) we always travel and 6 months later, we are back and enjoy springtime.

So, some lessons learned:

• The same colleagues are still working "there". For 40 hours/week. This year, next year, in 20 years. Until they are 67, retire and are old. They missed everything.
• Stick with people you love. Do the things you love. Don't settle for less.
• Try to work hard the first years after school.
• Minimize your expenses. This makes you flexible, it saves the earth because of less waste and doesn't slow you down if you need changes.
• Throw out your TV. It brainwashes you into the boring people I met at work and people in general. Go meet people who are like you instead.
• Have a safety buffer of a few years. It's really good for your mindset and wellbeing to be independent from your work/boss.
• Work is not your identity.
• Volunteering is better than working.
• Experiences are better than "stuff".
• Don't worry about things you don't have control of.
• People who don't live according the norm are the people who are interesting.
• Don't be afraid. You have a good set of brains that will work it out whatever comes at you. Don't overplan.
• Travel early in life. See the world. See it for at least 6 months a year. Travel slowly and be amazed. Do it on a bicycle or a motorcycle. Couchsurf, stay somewhere for a few weeks.
• Quit "friendships"  that don't give you energy. Your colleagues are not your friends.
• You don't need a very high income to live free and semi-retire. A bit over average helps, but it's the mindset that's most important.

Some financial background information.

"Working life" (ONE PERSON)  

In/month:

• Total income: 4290
• Rent: 1170   
• Interest, stocks: 130
• Taxes: 290 

Total 5880 => 70560/year

Out/month:      

• Mortage (+50% payed): 325 
• Gas/water/Electr.: 225
• Medical insurance: 100
• Internet: 25
• House, repair, tax: 140
• Food: 175
• Motorcycle: 60
• Rest: 150
• Fun: 300

Out: 1500 * 12 = 18000

Yearly plus: 52500.    

"Semi-retired at 37" living together, total for 2 PERSONS:

In/month:

• Income: 650 (average, earned in 6 months/year)
• Rent: 1170
• Interest: 50
• Taxes: 300

Total 2200 * 12 = 26000

Out/month:

• Mortage: 0
• G/W/E: 170
• Medical insurances: 200
• Internet: 25
• House, repair, tax: 140
• Food: 300
• Motorcycle: 60
• Rest: 250
• Fun: 10.000 (6 months of traveling ;))

Out: 1140 *12 = 13700

Yearly plus: 1000-5000. Plus the 2 year buffer we have.

We don't really have a plan for the future. Maybe we rent the house in total when we are 50 and travel nonstop in a 4x4. Or rent it and buy something small just for us at the countryside. Everything is possible. :)

Comments

[Clarisse @MakeMoney Your Way]

I really do believe in this one "Quit "friendships" that don't give you energy. Your colleagues are not your friends." I have some of my friends that they are only good because they want something from me so I'm being wiser now.

[Luis]

Good job. How much coverage does your medical plan give you? What about property insurance? Sounds like you have more than enough funds to buy up and protect your lifestyle from derailment.

[KD]

I see taxes in the income coming in per month. Could you please explain what those are?

[billyjobob]

Nice post. Like you, I live a very simple life. The focus is on family, friends and fun.It's easy to save when you can do without some of the less important things.

[Limey Junior]

Great post! Really is true what you say about work.

[This guy in the posting :)]

Some answers for you people.

About the coverage: I pay €58.00 a month for full medical coverage. (with the maximum of 850€ own risk/year, this makes for a little cheaper insurance). I live in the Netherlands.
Property insurance: about €10/month. The house is taxed at €135.000.

The taxes/month with the income:
€ 50 for paying off my house in full.
€ 78 (each) government for paying for health insurance (our real income form work is really low, so we get the maximum each. You get progressively less and none if you have a normal income.

[Old Limey]

I have met quite a few young men like yourself. They were travel guides on most of the very exciting, enjoyable and memorable treks that I went on in my younger days, such as:

"The Andes, the Incas, & the Amazon"
"Around Annapurna"
"Everest Base Camp & Mt. Mera"
"The Okavango Delta in Botswana"
"Climbing Mt. Rainier, Mt. Baker, and Glacier Peak in Washington state"
"Climbing the Sacred Peaks in China"
"Annapurna & Dhaulagiri villages"

However these are expensive trips and it wouldn't have been possible to do them without having a pretty good income as an engineer along with 5 weeks vacation/year. My wife also came with me on two of them.

I believe our way of experiencing what the world has to offer was right for us since we also wanted to have children, live in a beautiful home, and have a life that would satisfy us throughout. We are now 79 and 80 so the adventurous phase is long gone. There was also an intermediate phase where our vacations were more conventional such as guided tours and river trips in Europe, China & Russia. However the bottom line for us is that a great life from beginning to end takes a lot of money. Both of us also received a lot of satisfaction from our work, mine as an aerospace engineer, and my wife as a teacher. We also visited our homeland of England a few times since emigrating to the New World at the age of 22.

[Old Limey]

Your life is very unconventional and would have never been desirable to me and my wife. We have travelled all over the world but our trips were limited to a maximum of 5 weeks/year because of our lifestyle.

It certainly takes different strokes for different folks.

We are nearing the end of a great life at ages 79 and 80 but wouldn't change a thing. We raised 3 children, both had very enjoyable and satisfying occupations, my wife as a teacher, me as an aerospace engineer. We left England at 22 and now live in Silicon Valley in California.

We're in the Golden years of retirement and enjoying life a lot even though we gave up travelling in 2010 because my wife's mobility has been affected by having two hip replacements and arthritis. No matter what your plans may be when you're young, your body sometimes changes them for you as you may find out decades from now.

[Sarah]

Sounds great. Of course, only possible because (in addition to frugality) health care expenses are minimal (due to the dreaded socialized health care), retirement is provided for (government again!), and the rest of the social safety net stands. Just a thought for those of you who don't understand why some of us think it'd be better if we had these arrangements in the U.S. This guy could have, for instance, decided, if he'd wanted to, to start his own business without worrying about whether he'd lose his health care...

[Old Limey]

Sarah
There are many pros & cons of socialized healthcare. England went to it very soon after WWII when the Labor government came into power. The big problem was that the healthcare system then became very overloaded and the waiting time to see specialists and to receive expensive tests became extremely long. My own mother had to wait about a year with a lot of pain before she saw a specialist and had X-rays and by the time the diagnosis was made they found very large kidney stones which greatly shortened her life. My experience of the US healthcare system has been just the opposite I can't say enough good things about it, however we have always had excellent healthcare through my employer and still both receive it even though I retired from Lockheed Martin in 1992. It also helps that we live in Silicon Valley and are in a healthcare plan that is associated with Stanford University. Once you are old enough for Medicare it's amazing how little it costs for everything including hospital stays, specialists, tests, and expensive precriptions. In our case they have made a lot of money on me but paid out a huge amount of money in my wife's case, but that's the way insurance is meant to work - the very healthy help pay for the very sick.

[Old Limey]

Sarah
I should have also mentioned that in the British system there is no charge or monthly fee for any healthcare services, even for tourists - it's all paid for by the government. Sounds good! The problem however is TAXES. There is a Value Added Tax of 20% on everything you buy except food and children's clothing and the income tax rates vary between 10% and 50% depending upon your income. Our system is far better in my opinion.

[Sarah]

I have lived in England, OL. Actually the NHS is "no fee at point of service"--that doesn't mean they won't come after ineligible patients (such as foreign nationals who don't meet certain requirements) for payment afterwards.

Also I have received very good health care in the US. But that was a result of very good insurance from a very well-paid job. I see many people who don't have that luxury who are left suffering. I would rather we all paid more taxes and all got taken care of.