Networth

Networth Update – 10/2020 (October)

Welcome to the October Networth update! Bigger expenses! Investment renovation, 2nd wave of COVID and some housing extraordinary expenses.

Renovation

Renovation
Lets see if we can have that

After the signing of the deal we have booked an architecture firm to work on the project. In a first phase we tough that we would be having them just for taking accurate measurements of the place but we decided to book them for the entire process which will cost us 11k total.

I dont want to transform the article into a renovation deep dive but as you can imagine this is quite an important topic for us (and it helps me to lay the steps by writting it…)

The first 3 months will be for planning components:

a) Close the final solution – 1 month

b) What materials to use and a detailed list of tecnical designs and items to use – 2 months

c) Contractor selection and price comparison – Should be quick (we have already a contrator who helped to calculate the costs of the project and ideally we would continue with him since the prices are in line).

Their first estimate put the construction costs to 155k + taxes which is inline to the estimate we got from the contractor 155k vs 158k.

COVID19 – second wave (October)

COVID numbers PT October
Biggest number of infected people in one day – 4656.

Something that also started impacting our lives has been COVID’s second wave hitting Portugal and propelling our numbers to new maximums. This made restrictive measures to take place and we had to find innovative ways of being able to spend birthdays and events with our friends. For now we dont expect any impacts in our finances.

Unfortunetly this month we had several expenses which were even bigger than our income thus putting our savings rate to 0% this month. Expenses with the renovation will be increasing transforming cash into asset value (hopefully 🙂 ) and i’m not considering them in our operational monthly expenses since we have a separate account for this.

Our totals savings per month should now decrease with the new morgage from ~1200 € to about 500 € per month. Which means if we have an extra expense like a new huge bookshelf this will set us back for the month.

With this months 0% savings rate we have now a yearly savings rate of 35% which is still bigger than 30% we have put as our goal for 2020.

October Summary:

1) Extra expenses : 515 € bookshelf, 120 € for cleaning of the farm. Cleaning service costs for our apartment were also bigger since we have +1 week this month.

2) New house: Gardener + architecture signing contract = 2k.

3) Projects: No update here.

4) P2P world: Nothing new

Now, coming to our monthly networth…

Summary:

Our Networth value for September is 446 837.27€ (-2 214.19)

Assets:

Investment accounts

  • ETFs Portfolio: 28 552.41 € (+313.84)
  • Retirement Accounts (aka PPR): 15 431.07 € (26.01)
  • Certificates Deposit + Emergency Fund: 47 726.31 € ( 3 293.18
  • P2P Portfolio: 7 546.99 € ( – )
  • Total Investment accounts: 99 256.78 € ( -3 005.35)

Real Estate (Based on Market Values)

  • Primary Residency: 300 000 €
  • Farms: 70 000 €
  • Rental House: 414.500
  • Total Real Estate: 784 500€

Cars

  • Mr.Firecracker Car: 20 000 €
  • Mrs.Firecracker Car: 18 000 €
  • Scooter: 1 500 €
  • Total Cars: 39 500€ (=)

Total Assets: 923 256.78 € (-3 005.35)

Liabilities:

  • Primary Residency: 189 861.93 € (-348.74)
  • Rental House: 286 557.58 ( -442.42)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth

Networth Update – 09/2020 (September)

Welcome to the September Networth update! We bought a house! And we are getting closer to FI!

Awesome view from the balcony ! My phone did most of the work here.

The news are quite fresh, we signed the deal last week and the adventure is just starting. We now have the whole remodeling to do 🙂

This month we took 2 weeks vacation and came again to the beach house, i’m doing an online course and horse riding everyday while Mrs. Firecracker is lecturing remotely. Oh and we also try to enjoy our vacations ahah. Another great opportunity to grill some nice food.

Sorry Vegan friends.

We also had Mrs. Firecracker birthday this month and i’ve had some surprises lined up . Mostly we are trying to hangout with friends in open spaces still minding the COVID situation and we did some splurging in eating out. We had to celebrate the contract signing right?

Our goals for 2020 seem to be very well on track, our savings rate is at ~37% (objective was 30%), our networth is at 449k (optimistic objective was 435k) and company revenue of 10k (currently at 700 €). The last one seems to be most challenging but i will keep pushing. You can always check our progress here.

September Summary:

1) Minor adjustment on the portfolio.

2) Saved 6% of our income only (213.53€ / 3493.38€). We had a spike in our Eating Out section.

3) New house: Huge networth increase. We have bought the house for 355k + Aquisition taxes (~19k) thus totalling ~375k. We will now be owing the bank 242k + 45k already given for the construction part. According to the bank the house is valued at 414.5k which is the value i will be putting prior to construction. This means +39,5k netwoth increase ! We have now hired the architects to start working on the project.

4) Projects. No update from the projects but i got paid 500 € for a keynote i gave last month.

5) P2P world: Nothing new

Now, coming to our monthly networth…

Summary:

Our Networth value for September is 449 051.46€ (+37 117.84)

Assets:

Investment accounts

  • ETFs Portfolio: 28 238.57 € (348.41)
  • Retirement Accounts (aka PPR): 15 457.08 € (4.61)
  • Certificates Deposit + Emergency Fund: 53 560.78 € ( 54 877.59
  • P2P Portfolio: 7 546.99 € ( – )
  • Total Investment accounts: 102 262.13 € ( -55 230.61)

Real Estate (Based on Market Values)

  • Primary Residency: 300 000 €
  • Farms: 70 000 €
  • Rental House: 414.500
  • Total Real Estate: 784 500€

Cars

  • Mr.Firecracker Car: 20 000 €
  • Mrs.Firecracker Car: 18 000 €
  • Scooter: 1 500 €
  • Total Cars: 39 500€ (=)

Total Assets: 926 262.13 € (+323 769.39)

Liabilities:

  • Primary Residency: 190 210.67 € (-348.45)
  • Rental House: 287 000 ( – )

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth

Networth Update – 08/2020 (August)

Welcome to the August Networth update! Networth increase of 1.5k with 2 weeks of vacation 🙂

I’ve been waiting a bit this month hoping i could announce the ownership of the house we signalled but its taking more time than we wanted. Anyhow i could also tell you about what we have been doing in August in the meantime!

We took 2 weeks off in August spending 1 week in an amazing 5* hotel in the east of Portugal next to the Spanish border and another week 1h north of Lisbon next to the beach.

We decided to take advantage of a 50% discount in the Hotel and visited several towns in a close range (~40km) and also did a full day in the Montargil lake with some fishing included. Pretty awesome.

We passed here on the first week (Marvão) – check it out

On the second week we wanted to keep the expediture on the low side so we decided to stay North of Lisbon in a small apartment Mrs. Fi

recracker family owns next to the beach. We have mostly cooked instead of eating out since we have a small space for grilling and also splurged in a few things like a 2h horse ride in “Serra da Archeira”.

Visitar | Torres Vedras na Primeira Linha | Rota Histórica das Linhas de  Torres
Some wind farms on the hill

Overall our vacations came to 2.1k which were a very nice value for 2 weeks. We will be taking 2 weeks again this month and staying in the same place. All the money we can save for support the reconstruction of the house.

Status on the House

On the hourse front a lot happened. The bank we were working requested for a signed document from us and the constructor saying they would deliver the 110k construction. Problem with this is that the budget we provided was an estimation and the constructor didnt want to commit to this values and deliverables. We were then presented with 3 options:

a) Change construction company

b) Only do the buying without the construction part

c) Try another bank

Options a) and c) seemed to far fetched for us. They would require a lot of time and we wanted to sign the contract in the second week of September. We were also not very positive that another construction company would commit without doing several visits to the house and that another bank would be able to lend us the money without this formal commitments. We wondered everything. How in the hell can anyone do a house credit with construction if the process is so freaking hard??

We definitly felt we were out of our league and prepared to go for option b) and leave the construction part to a later stage. We didnt want to forfeit the 35.5k we have already given as a signal. But this would also create problems in the long run. We had to be able to finance the construction anyhow.

But…sometimes you strike luck. A contact i had been pushing aside that negotiates credits with banks showed confidence he could help us. Since we have a strong track record in many banks and a solid income i’d never considered to be in this situation..

Thankfully thanks to this contact we were able to get the credit fastly pre-approved, got another budget for the construction (194k with VAT), did the evaluation for this other bank and got approved 174.9k for construction releasing 45k on the signature. Option c) turned out to be viable! As i’m writting this we are waiting to be contacted to schedule the notary and the ownership agreement.

August Summary:

1) Portfolio swings, now up, another month down..

2) Saved 27% of our income (1073.54€ / 3890.25€). Since we budget for vacations we can continue to save up despite of the value spent in vacations.

3) Projects. Currently with 2 side projects but with very little news since my last post.

Project A – Consulting project for a major telecom player. Progress: It was decided to move forward with a showroom project which we will be billing (me and my partner) 2k for this.

Project B – I’m doing IT consultancy for a digital agency and we are still waiting for the furniture company to sign the official start of the project.

4) P2P world.

45.1) Wisefund – Nothing new. Some comms from Wisefund but no interest or principal returned yet.

4.2) Mintos – Nothing new…some people claim that interest is being paid but unfortunetly i have a lot still on hold in Monego and nothing got paid..

4.3) Monethera – still same. Nothing new.

5) New House: Adjusting the math with the significant increase on the needed repairs. (110k -> 174.9k)

Projected income:

  • Attic – 500 €
  • Ground floor (2xbed) – 800 €
  • Basement left – 600 € (larger area)
  • Basement right – 600 € (larger area)
  • Sub-basement right – 700 € (has a private part of the garden)

Total: 3 200 € (Gross)

The costs we will have are:

  • Mortgage -1000.06 € (all costs included)
  • Anual tax – 12.5 € (150 / 12)
  • Rent income tax – 896 € (3.200 x 28%)

Total: 1 291.44 € (instead of the former 1 425.7 € )

We still have some factors that might influence this like apartment occupancy (good rule of thumb is 80% calculation) and emergency nest for repairs. Even in this case we will have 5 years warranty on the construction.

We will also hire an architect which will oversee the construction, help to choose the best materials, maximize potential and plan for selling one (or more) of the fractions if we want to.

Now, coming to our monthly networth…

Summary:

Our Networth value for August is 411 933.62€ (+1 556.86)

Assets:

Investment accounts

  • ETFs Portfolio: 28 586.98 € (+709.17)
  • Retirement Accounts (aka PPR): 15 461.69 € (+808.76)
  • Certificates Deposit + Emergency Fund: 105 897.08 € ( 311.09
  • P2P Portfolio: 7 546.99 € (+ 1.85)
  • Total Investment accounts: 157 492.74 € ( +1 208.69)

Real Estate (Based on Market Values)

  • Primary Residency: 300 000 €
  • Farms: 70 000 €
  • Rental investment: 35.500 (signal given for the preliminary contract)
  • Total Real Estate: 405 500€

Cars

  • Mr.Firecracker Car: 20 000 €
  • Mrs.Firecracker Car: 18 000 €
  • Scooter: 1 500 €
  • Total Cars: 39 500€ (=)

Total Assets: 602 492.74 € (+1 208.69)

Liabilities:

  • Primary Residency: 190 559.12 € (-348.17)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth

Networth Update – 07/2020 (July)

Welcome to the July Networth update! Networth increase of 1.6k, returning to normal!

On July we had awesome weather here in Lisbon and we started slowly to go for drinks in the afternoon with friends and relatives.

Praia do Pego (Carvalhal) - ATUALIZADO 2020 O que saber antes de ...
Pretty much the beach we usually go

We also have some great news since after several months of search (and negotiation!!) we can finally announce that we will be buying a house! And not really any house i believe its fair to consider it a small building since we will 5 fractions to let! I will explain more down below.

Talking about good news i also gave my first Keynote speach in an executive program in a major known Portuguese university. Not only was it fun to share what i do, meet other executives from other companies (always good to increase network) and get paid for that !

July Summary:

1) Portfolio swings, coming back to values close to may (-1,89%) .

2) Saved 32% of our income (1347.37€ / 4181.13€). A little bit higher due to Mrs.Firecracker extra work this month.

3) Projects. If you recall my last post i explained 5 3 side projects i was working on besides my regular job. I will be giving an update on those from time to time since this could have a big impact into our financial progress.

Project A Implementing a solution end-to-end for health (video, triage, IOT and analystics). Progress: I’ve quit from the partnership. Me and several other partners didnt think our product was good enought to apply for the RFP. Nonetheless, one of the partners holding the most needed technological piece decided to go alone. All i can wish is good luck!

Project B with 1 partner doing a market analysis for implementing new player in the European market for the mobility + energy area. Progress: No news here. And i’m expectant to hear any news soon…

Project C – Consulting project for a major telecom player. Progress: We had a sit-down with the responsibles from the project and told them we need to act since the market is moving. They decided to ask us for a proposal to implement a showroom into their offices around september and we will comply. Here i expect to gain around 2.5k for a small project.

The domotics project was delivered to the customer and was submitted for financing here we wait for the results!

Project D – Since the beginning of this month i’ve decided to (similar to project C) do consultancy for other companies. I’ve partnered with a marketing agency that for now has brought different opportunities (and also, lets say…different working methods 🙂 ). Nevertheless, we managed to land a project with a furniture company and we should sign the deal end of August. This will be a 24 month contract that will net me ~22k. Monthly it will mean ~1.2k, just for one customer!

4) P2P world.

45.1) Wisefund – Nothing new. Some comms from Wisefund but no interest or principal returned yet.

4.2) Mintos – Nothing new…some people claim that interest is being paid but unfortunetly i have a lot still on hold in Monego and nothing got paid..

4.3) Monethera – still same. Nothing new.

5) New House: Finally! So this will be a 220 m2 house with 4 floors (Sub basement, basement, ground floor and attic). It also has a nice garden with around 100m2. All of this in the center of Lisbon and close to 3 major universities (2m driving). Sweet.

So how will this turn out?

This will be an aquisition & construction process. We are all set with the aquisition but the construction part will be a first for us. specially when it comes to credit for this process. We are king of struggling since the bank asks for many details that we will need to adapt only after the construction is very close to start..

Does it make sense financially?

Yes! We have 2 ways to measure this. Value & income.

For value we can calculate how much the house is worth and how much it will appreciate during the years to come. As they say you make money on the buy not on the sell. Despite the value metric since we are not going to fully finance the deal we need to account for funding expenses and what to actually do with the asset. This is where income comes to play. With income we calculate how much we could monetize the asset (rents, etc) minus costs (Morgage, repairs, taxes, etc).

Value

The house will cost us 374k (355k selling price + 19k buying expenses). We will take a credit of 242k for the aquisition and 110k for the construction. We need to do major remodeling otherwise we wouldn’t of course catch this awesome price!

In Total this will cost us 374k+110k (we are considering constrution to be fully financed) = 484k.

Despite the worth of the asset (location, facilities, degradation, etc) income can also influence the value, since the logic is the bigger money generator the most valuable the asset is.

In this case a building / house with 5 independent apartments (and another potentially with 20-35m2), namely 4×1 Bedroom apartment and 1×2 Bedroom apartment, newly refurbished, with river view, 100m2 garden in a decent Lisbon municipality neighborhood minimum price would be 700k.

Even considering that Portugal had the 4th largest GDP drop in the European Union – see here – i would have to say that for 700k you will not find a 100m2 garden for comparable buildings and this makes all the diference in Lisbon center.

Income

There were several simulations we did and already accounting for COVID19 rents impact. Currently we are also within a rental “moratory” which means since 1st April 2020 and until September (we will see if this wont be extended) several new rules come to enforcement:

  1. Financial support for tenants and guarantors of students who have no income from work and who, due to their loss of income, are unable to pay the rent. These tenants can access an interest-free loan granted by the IHRU to pay the rent due. The amount of this loan is equal to the difference between the monthly rent due and the amount resulting from applying a maximum effort rate of 35% to the household’s income. In no case shall the household’s remaining disposable income be lower than the social support index (IAS).
  2. Impossibility of cancelling rental contracts due to non-payment of rent during the state of emergency and provision for a special period for the payment of rent due for households with a significant drop in income. These tenants are required to pay the outstanding rent during the following twelve months in monthly instalments (not less than one twelfth of the amount due), paid together with the rent for each month. The landlord can only terminate the agreement if at the end of those twelve months the debt has not been paid in the prescribed manner. If during this period the tenant wishes to terminate the lease, he or she is obliged to make immediate payment of the unpaid rent.
  3. An indemnity for late payment of rent (in normal circumstances, equal to 20% of what is due) cannot be claimed in the event of late payment of rents in accordance with this scheme. Landlords on low incomes who have proven to have a significant loss of income due to non-payment of rents under this bill and whose tenants do not use a loan from IHRU, I.P. to pay the rent may apply to IHRU, I.P. for an interest-free loan to offset the amount of the monthly rent due but not paid.

See more details here.

What does it mean for us?

Well..its means rents will adjust to the crisis as always and we need to be carefull to not rent to someone who might take adantage of this moratory. If the moratory will indeed be extended and our construction ends before that. We plan it will take around 3 months. Summing up, this will mean a 1 bedroom ~50m2 (not refurbished) that would be rented by 600-700 € might likely drop to 550 €. A 2 Bedroom that would go for 900-1000 € might likely drop to 750-850 €.

As stated previously we have other factors in our favor like the garden and the fact that the whole thing is brand new, but we like to be conservative on this and by our calculations income would be as follows:

  • Attic – 500 €
  • Ground floor (2xbed) – 800 €
  • Basement left – 600 € (larger area)
  • Basement right – 600 € (larger area)
  • Sub-basement right – 700 € (has a private part of the garden)
  • Sub-basement left – 500 € (potential)

Total: 3 200 € (Gross) – not counting the potential one!

The costs we will have are:

  • Mortgage – 865.80 € (with insurance already)
  • Anual tax – 12.5 € (150 / 12)
  • Rent income tax – 896 € (3.200 x 28%)

Total: 1 425.7 €

We still have some factors that might influence this like apartment occupancy (good rule of thumb is 80% calculation) and emergency nest for repairs. Even in this case we will have 5 years warranty on the construction.

Bottom line: ~ 17k net income per year. Taking in account we spent 135k of our savings its almost 12.5% return. Not bad 😀

What does it mean for our FI?

If you recall one of my first posts about our 2 milestones for FI we set our first objective in 1.600 € monthly and the second at 2.000 € monthly. With this deal we are very close to hitting our first milestone (even without moving to the countryside). AND! If we can use the potential other apartment our monthly income goes to 1786 € (3700 – 1036 – 12.5 – 865.8 ).

Now, coming to our monthly networth…

Summary:

Our Networth value for April is 410 376.76€ (+1 672.56)

Assets:

Investment accounts

  • ETFs Portfolio: 27 877.81 € (-538.06)
  • Retirement Accounts (aka PPR): 14 652.93 € (+466.06)
  • Certificates Deposit + Emergency Fund: 101 202.47 € (34 105.28
  • P2P Portfolio: 7 545.14 € (+ 1.96)
  • Total Investment accounts: 156 284.05 € ( –34 175.32)

Real Estate (Based on Market Values)

  • Primary Residency: 300 000 €
  • Farms: 70 000 €
  • Rental investment: 35.500 (signal given for the preliminary contract)
  • Total Real Estate: 405 500€

Cars

  • Mr.Firecracker Car: 20 000 €
  • Mrs.Firecracker Car: 18 000 €
  • Scooter: 1 500 €
  • Total Cars: 39 500€ (=)

Total Assets: 601 284.05 € (+1 324.68)

Liabilities:

  • Primary Residency: 190 907.29 € (-347.88)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth

Networth Update – 06/2020 (June)

Welcome to the June Networth update! Networth increase of 6.8k, hummm nice progress!

June was an overall good month! We had our first wedding aniversary ! yeyy

Anniversary Gifts: Best Wedding/Marriage Anniversary Gifts Online ...

We have also started to see again some friends in local caffes with outside tables and proper care.

This was the month of receiving our vacation paychecks and our tax return. We also learned that our major Portuguese airline is in trouble and the state will bail them out witch means “Grandkids, be prepared to pay for this..”.

We are still looking for any good real estate deal since all forecasts point to a GDP crash of 10% in Portugal. Usually in crisis thats when the best deals are made.

June Summary:

1) Portfolio went up significantly (6%) . Lots of swings but going in the upright way!

2) Saved 74% of our income (7042.22€ / 9479.31€). Best month ever!

3) Projects. If you recall my last post i explained 5 3 side projects i was working on besides my regular job. I will be giving an update on those from time to time since this could have a big impact into our financial progress.

Project A – Implementing a solution end-to-end for health (video, triage, IOT and analystics). Progress: We should soon receive a RFP for our project. We have decided to do some POCs for free to get trackion on the solutions and also since one of the requirements of any RFP is usually number of customers.

Project B – with 1 partner doing a market analysis for implementing new player in the European market for the mobility + energy area. Progress: Project on hold until the Customer representatives come to Lisbon. Planned for September.

Project C – Consulting project for a major telecom player. Progress: First lead still in decision. Another 2 leads on the pipeline.

In the meantime i’ve decided to pick up another project about IoT and Domotics for a Rural turism in the north of Portugal. This was a speedy proposal since we (me and the partner that invited me) did it in 2 days. Lets see how it turns out! Some really nice solutions which if they make sense – and i will know this while implementing – they could potentialy be applied in the farm 🙂

4) IRS: Finally! We got 2 380,26 € as a tax refund.

5) P2P world.

5.1) Wisefund – New projects announced and according to the website interest replayment should start in the end of July.

5.2) Mintos – Nothing new…some people claim that interest is being paid but unfortunetly i have a lot still on hold in Monego and nothing got paid..

5.3) Monethera – still same. Nothing new.

5.4) Robo.cash – Full exit.

Now, coming to our monthly networth…

Summary:

Our Networth value for April is 408 704.20€ ( 6 795,87)

Assets:

Investment accounts

  • ETFs Portfolio: 28 415.87 € (+1 073.95)
  • Retirement Accounts (aka PPR): 14 186.87 € (+246.40)
  • Certificates Deposit + Emergency Fund: 140 313.45 € (+5 127.06
  • P2P Portfolio: 7 543.18 € (+ 0.86)
  • Total Investment accounts: 190 459.37 € ( +6 448.27)

Real Estate (Based on Market Values)

  • Primary Residency: 300 000 €
  • Farms: 70 000 €
  • Total Real Estate: 370 000€

Cars

  • Mr.Firecracker Car: 20 000 €
  • Mrs.Firecracker Car: 18 000 €
  • Scooter: 1 500 €
  • Total Cars: 39 500€ (=)

Total Assets: 599 959.37 € (+6 448.27)

Liabilities:

  • Primary Residency: 191 255.17 € (-347.60)

Our Networth drilldown looks like this:

You can follow our Networth status always here