Here it is, my first Financial Freedom Progress Report (FFPR). These past two months have been awesome, but not financially. A lovely Christmas and New Year’s Eve with family and friends, skiing in France, buying the necessary skiing equipment, redecorating the room of my son, etc. It all piled up! As a result, the savings rate of December and January turned out much lower than I expected.
The enjoyable part of December and January!
December is always an expensive month. In The Netherlands we have 1st and 2nd Christmas Day. Because of this Christmas is twice as expensive as in, for example, the United States with only one Christmas Day. I don’t know who came up with the 2nd Christmas day, but probably the Dutch liked Christmas so much that they doubled the fun?!
On Christmas, friends and family came over at our place and we don’t want to be frugal at our guests’ expense. It resulted in a happy but rather expensive Christmas. New Year’s eve was fun and I tried some new Champagne, always a pleasure!
In The Netherlands everyone is allowed to buy and light up their fireworks themselves on New Year’s Eve. I am not a big fan of this as this turns Holland into some kind of war zone. Let alone the impact on the environment and the numerous eye and hand injuries.
But it’s always nice to enjoy the fireworks of our neighbors who seemed to have saved up the whole year to spend it on legal and illegal fireworks! My fingers itch every year to buy some fireworks as well, but frugality has won so far!
In January Mrs. Chipmunk came up with the idea to redecorate my son’s room. Being a man, of course I did not understand. But the Mrs. was really convinced that it needed to happen. Looking at the result, she probably was right. You know what they say, happy wife, happy life.
The Chipmunks are avid skiers/snowboarders. So every year we have a family outing to enjoy the snow for a week or so. Often in France. However, with two small kids we were already tired before we had even put on our skis, but that was all part of the fun. At least, that was what I told myself. Unfortunately, some gear was in need of replacement, adding to the already expensive months.
All in all, December and January were very enjoyable but not cheap. Let’s go into the details.
The impact on our Net Worth and Savings Rate.
Although money cannot express the effects of fun and joy, I will try anyway. The highlights of the past 2 months add to around €1,750.
- Redecorating my son’s room €450
- Christmas and New Year’s Eve €300
- Ski trip €1,000
Our savings rate in December and January was a meager 13-14%. I expected the savings rate to be around 20%. This shows that tracking your income and expenses will give you a true picture. A gut feeling you are living frugal or not very luxurious can be deceiving. I am confident that with no unforeseen expenses, we could hit a savings rate of about 25% in February.
On a positive note, our net worth increased in January with about 2.7% to around €121,000. Also, because of a €1,000 one-off. It may be a stretch, but we hope to reach €150,000 by the end of 2019.
Most of our net worth is in the form of bricks and mortar. Our home represents around €75,000 of our net worth. About €40,000 of the €75,000 is generating a tax free and risk-free return of 4.3%. I described a brief explanation about the mortgage structure in my 2019 goals. As a result, the majority of our home equity is generating a very decent return on a risk-adjusted basis.
Our personal investment portfolio
December has been a good month to buy stocks! With high volatility in the markets I couldn’t resist buying quality stocks at bargain prices. This lowered our savings account, but in my opinion it was worth it.
I bought all of these stocks in December. Mainly averaged down on Apple (ticker: AAPL) around Christmas. The revenue warning from Tim Cook, CEO of Apple, on January 2nd was not really a good start of 2019. But it was probably already priced in as the stock rebounded rather quickly. In a separate blog I will go into greater detail about the reasoning behind my investment portfolio.
The investment portfolio of our kids
We have been gradually building the investment portfolio of our kids. Slowly but steadily. Over time, our kids will be thrilled about our decision to invest for them on a monthly basis. This way we can help them get through college debt-free, maybe study a semester abroad, etc.
Summary of cash allocation
I funded the allocations to our personal investment portfolio and mortgage savings account from our (emergency) savings account. To get back to the level we feel comfortable with (about 10-12 months of living expenses), we will add to our savings account in the coming couple of months.
Key targets for February
Based on this FFPR, I have set a few targets for February:
- Hit a savings rate of 25%
- Increase net worth with 1.25%
- Invest €250 in our kids’ investment portfolio
- Invest €400 in our personal investment portfolio
- Deposit €450 in our mortgage savings account
- Deposit €750 in our savings account
Did you have any unexpected surprises the past month? Still on track to reach your financial goals?