Goals 2020 – conclusions – Part 2 Networth

On my last post i’ve started to analyse our 2020 goals and how did they went. I’ve started with the savings rate goal of 30% that we had and that we have hit the 31% mark.

Back in February i did a post mentioning our 2020 goals and they could sum up to the following:

Financial

Savings rate at 30% – done (31%)
Increase networth in 10% – done (15%)
Starting a company and having revenue of at least 10k – 0€ in 2019, company not started
Find a new property to invest (Optional) – done

Non-Financial

Remodel the farm houses – we just had a small budget for some minor renovations in order for the main house to be usable. – not done
Maintenance primary house – not done

Focusing on networth + new property:

We have ended 2019 with a networth of 396 667,95 €. Even with solid 2 digit growths without any significant change i did some calculations:

Cash: Assuming a saving of 1.4k monthly which would mean ~30% savings rate. In line with our prior post and estimation.
Portfolio: 5% increase
P2P: 10% increase
PPR: 35% increase – due to mostly contributions i do every month plus my employeer matching.

So, back in February when i did the post what i considered was a 22k increase which would mean circa +5% and the following:

First Estimation

Since that seemed like a low number i decided to put our objective in 10%, or +39k with a total of 435k to challenge us to find creative ways to increase our networth just more than our monthly savings.

Than we had covid and our Portfolio took a hit of almost -7% in February and -5% in March.

You see 2 entries for 2020-03 since we’ve invested 5k on the 12th

This meant a stable and slightly decreased networth up to March. Since March, well…everything started to improve.

Our investment in the portfolio paid off and not only this we recover what we have lost but we managed to get a ROI of 7,5% and IRR of 6,5% (discounting the 5k invested in March) from our ending value of 2019.

Networth moments of the year:

What a ride!

Starting in April, adding to almost 600 € less expenses in that month we managed to save ~2k and our portfolio started going up resulting in 5k networth gain that month.

In June we got our 13th month payment (vacation) together with our tax refund and a portfolio +1k bump.

In September (winner) we managed to find a rental building for 355k – below market value of which the bank valued it at 414,5k. Excluding the aquisition costs ~19k we ended up increasing out networth by 37k. You can see more details here.

October we had some extraordinary expenses – arquitects and gardner to clean the new aquired property.

In November we got our 14th month payment (Christmas) of which we managed to save a huge chunk of it together with a portfolio +1k bump.

To end nicely in December i’ve gotten my anual company bonus which gave us another 2.6k bump.

Conclusions

Our networth managed to increase by 15%, bigger than the 10% projected for 2020 and it keeps growing! I wonder if for 2021 we will be able to go double digits again.

Goals 2020 – conclusions – Part 1 Savings rate

Financial

Savings rate at 30% – was 24% in 2019
Increase networth in 10% – we had increased 114% in 2019 due to our marriage
Starting a company and having revenue of at least 10k – 0€ in 2019, company not started
Find a new property to invest (Optional) – had nothing in sight just an idea of what could be an interesting investment

Non-Financial

Remodel the farm houses – we just had a small budget for some minor renovations in order for the main house to be usable.
Maintenance primary house

Lets go point by point:

Savings rate at 30%

For the sake of transparency i will be sharing our monthly expeditures within several categories and also our income. Be aware that i’m not including any investment gains since those are evaluated on the networth part (next item).

First thing to notice is our savings rate (1- (38047.15 / 55 368.02)) of 31%. Slightly above our target. 🙂

Expenses analysis

Lets drill down into the major categories.

Mortgage

Prior to buying our investment property our mortgage costs represented ~18% of our yearly expenses which is a good number and If we consider our income it would mean less, ~12%. This number will increase next year due to the simple fact that we have a renovation going on and we will use the line of credit forecasted which will mean more expenses and…of course, also adding to the income side.

Vacations

Second biggest expense we had this year was vacations. This year they didnt mean any fancy trip somewhere (we did go to Ireland for 2 weeks in February) but doing vacations in Portugal can still cost a big amount. We budgeted for 6k but ended but spending 5k. Next year i dont think we will spend this much again..

Food (Supermarket & Restaurants)

Third biggest expense is food related. Between restaurants and supermarket we spent almost 19% on both or an average of 580 € monthly. On the restaurant part we usually go out about 4 times per week (16 times per month) but since we are staying home more this means lunches, dinners, coffee with friends, etc. This is also related with Mrs.Firecracker going out with her friends and vice-versa which is also mentaly healthly for both of us. Oh and since sushi is not getting any cheaper ~50 € per meal we are going there about once per month.

Good extras this year

Car Insurance – We renegotiated one of our car insurance saving ~40€ per month. This is something similar to life or property insurance which you should keep an eye. Contas Poupança, a blog from a famous news reporter had the most views last year with his article on “saving on your auto insurance”. Check it out here (PT only).

Telecom – Even though i have sold the rental apartment back in 2019 our telecom contract there was valid until June which meant paying for something that we couldnt use..this is a very stupid rule. The only cenario they consider enabling you to cancel the contract is if you go abroad. So, I’ve made a report on the regulatory entity which resulted in nothing but i guess they are to busy doing…erhm…stuff.

Funny part is that in our primary residence (where we use cable as well) we have the same provider so we couldnt transfer the contract. Conclusion, this meant a saving of 30€ per month after June and a slight increase in October with +5 € since we subscribed HBO.

Crazy expenses i wouldnt notice if i didnt do this post

We spent 570 € in tolls and parking meters! This is mostly for tools since our parents live on the south side of Lisbon and for crossing back to Lisbon we need to pay 1.65 €.

Btw, the bridge was built in 1966 and the toll was introduced to pay for its building and maintenance. Starting in 1995 and finalizing in 2000 when the governments (more than one) decided to build the new bridge “Ponte Vasco da Gama” they accepted a heavy investment from the then company running the toll system “Lusoponte”, adding to the nice shady deals of the 90’s you end up with a toll system that goes 100% into a private company and the state needing to pay for the maintenance of the bridge. 2y ago this was about 20M….Unfortunetly only in Portuguese but you can translate the following article in case you are interested.

Everytime we also travelled during our vacation, tolls is something you can find (very often!!) in Portugal, specially in the north. Here is a nice post explaining how our toll system works.

That was a lot!

Woah ! I didnt expect to write so much about our living expenses but i guess its a good exercise to analyse them and try to see where we could improve! Anything in particular that you are doing differently ? Or that we could improve? Let us know 🙂

Networth Update – 12/2020 (December)

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Welcome to the December Networth update! Last one of the year 2020. i will be doing another post on how we matched our 2020 Goals so I will be focusing as usual on how our month went.

December

Yup..we kinda left several routine check-ups to the last month

Fear not! We are both healthy 🙂 We just some had some high extra expenses this month due to some routine exams and consultations. Since they happened last in the month we havent got any reeimbursment yet. I’ve also went 2 times to osteopathy consultations and that alone were 100€. Yeah..i’m not doing so many sports has i should and that reflects in some ocasional back pain.

We also got my anual bonus with an extra company bonus this month which is always great.

Mrs.Firecracker enrolled into a course and the first year tuition is ~700€. We took advantage of paying the whole value and getting a 10% discount.

How about the rest?

Christmas was nice! Except for the fact that we couldnt join all our family members due to COVID, nonetheless we still managed to pass the 24th dinner with my parents and 25th with Mrs.Firecrackers. Our nephews got to enjoy opening gifts many times and so did we. This year i’ve given to my family a list of books that i’ve have ordered (7/8 books) and they could donate whatever they felt like. They all managed to get funded and i received them all as a christmas gift.

Another Reno round

There are now some threads regarding the new building we bought.

1- Construction: We had a meeting with the architects and finalized the “final version” and the “possible version”. They will now discuss the budget with the contractor and see if that is still inline with the first estimation we got. We need to keep a leash on the 150k threshold.

2- Tax gains “Mais-valias”: Here is the tricky part. I’ve now contacted a fiscal laywer to help us figure this one out..so apparently since in our contract we didn’t state exactly that our capital was coming from the sale of the house i’ve done in the past, the Portuguese IRS considers that between the money we put in – 136k – each of us gave 50% of it. Which is not the case…we are trying to see if we can get to put that small sentence there…not sure if this is possible.

Additionally, they also exclude taxes and banking fees from the capital we put in and only consider the cost of the property minus what we got financed, in this case 355k-242k = 113k. This amounts to almost 23k! Yes of course thats not a cost. Why would it be? Its cheap change right? I need to keep pragmatic while dealing with the IRS…thats how they get you, if you get emotional it wont help..

Savings Rate

On the savings rate part we managed to save ~26% of our income which is lower than usual and could definitly be improved. Something to do after the rental building is finished. For 2021 i antecipate a lower savings rate as stated in previous updates since our investment building is currently not generating any income.

December Summary:

1) Extra expenses : 700 € the course, 200€ above our eating out budget and 400€ more on health expenses.

2) Projects: So i’ve finally got the payment from the invoice i’ve given back in July (YEY!!!) The hardest 200€ i’ve ever waited…guess being an entrepreneur will have a lot of this…I’ve also gotten +500 € from a keynote i gave in an university in December.

Now, coming to our monthly networth…

Summary:

Our Networth value for December is 456 587.61€ (+2 599.40)

Assets:

Investment accounts

ETFs Portfolio: 30 315.94 € (+383.94)
Retirement Accounts (aka PPR): 16 961.03 € (+612.23)
Certificates Deposit + Emergency Fund: 52 599.28 € (+ 811.13)
P2P Portfolio: 7 546.99 € ( – )
Total Investment accounts: 107 423.24 € ( +1 807.30)

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: 931 423.24 € (+1 807.30)

Liabilities:

Primary Residency: 189 163.60 € (-349.21)
Rental House: 285 672.03 ( -442.89)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth Update – 11/2020 (November)

November

14th Paycheck – welcome! In Portugal our anual salary is divided in 14th installments.

Usually June and November are extra income months since we have our 13th (vacation) and 14th (christmas) paycheck months. Its a strange thing here in Portugal to have that separated but i figure it was for some time the only way to make some people account for extraordinary expenses and it was just easier to make it mandatory from a “bonus” in former times. I found this nice website with all info if you are curious.

How about the rest?

This was a soft month. Not much happening since we have now mandatory curfew after 1pm on weekends and at 11pm on weekdays. Nonetheless, we were able to go twice for brunch. As law abiding citizens we adapt :). Crossing between municipalities is also restricted to certain days but i was able to drive to our farm and get some oranges to the whole family.

Reno short update

In the renovation side we got several proposals from the architects which lay down different scenarios for each apartament. Its just the first step. We have now given an overall direction and we saw that some of our concerns (with contructions not legalized) are much lower. This happens because whatever was built in the Lisbon municipality prior to 1950 is considered legal! Lucky us…

We liked a lot some of proposals that consider more light to come in and to take advantage of the view adding to some nice terraces!

Savings Rate

On the saving rate part we managed to save ~43% of our income, considering that we are already including some christmas gifts. This means that we are able to offset last months 0% and slightly increase our annual savings rate to a whopping 36,25%. yey!

A nice scenario is that if we remove the christmas gifts and also the extra paycheck this would mean this month we would be saving ~500€, in line with my estimations but lets have that confirmed next month. Anyhow the conclusion would be that those 500€ means slashing our savings rate in half to ~15% per month instead of the 30%. I will save some of this conclusions for the next year planning.

November Summary:

1) Extra expenses : 504 € in gifts, 2 family birthdays and christmas gifts (the most expensive ones). There should be some other expenses more in the next month. We are still far from the 25th.

2) Projects: Waiting for the payment on 2 invoices (200€ from July and 2.000€ from October).

Now, coming to our monthly networth…

Summary:

Our Networth value for November is 453 988.21€ (+7 150.94)

Assets:

Investment accounts

ETFs Portfolio: 29 932.00 € (+1379.59)
Retirement Accounts (aka PPR): 16 348.80 € (+917.73)
Certificates Deposit + Emergency Fund: 51 788.15 € (+ 4 061.84)
P2P Portfolio: 7 546.99 € ( – )
Total Investment accounts: 105 615.94 € ( +6 359.16)

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: 929 615.94 € (+6 359.16)

Liabilities:

Primary Residency: 189 512.81 € (-349.12)
Rental House: 286 114.92 ( -442.66)

Our Networth drilldown looks like this:

You can follow our Networth status always here

Networth Update – 10/2020 (October)

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

Renovation

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