2017 Financial Independence Goals ($482,266 +$94,434 or +24%).

2017 Financial Independence Goals ($482,266 +$94,434 or +24%).

Financial goals.

- Accumulate $10 K a year, with $4k of them towards long term house maintenance – Partially complete.  We did not manage to save $4K towards the house maintenance, instead invested it during the year.

- Portfolio – go 0% cash for savings as of end 2016.  Generate $10K in dividends. Portfolio to be $430 K by end of the year – Complete.  There has been a change, as with going to Vanguard it reinvests all dividends automatically.

- Develop additional income source in full, potential reward about $2,000 a year – Not achieved, although some measurable progress made.

Blog:

- Regular monthly updates – Achieved.

- To cover 6 themes on financial independence. Two of them : mortgage, 30 year forecast scenario – Not achieved, covered only four:  “Transfer to low cost investment”, “Loft insulation and energy cost”, “Zero based approach”, “Mortgage”.

- Publish easy tracker for the long-term portfolio performance- Not achieved.

 

Educational:

- Create list of books to read - 12 books is minimum - Not achieved.

- Read the books – Partially achieved.

- Publish the books reviews Not achieved.

Family Budget:

- Stay under 110%  of 2016 budget. Increase is due to additional cost of commuting -  Not achieved. Previous year budget exceeded by 26%.  We spent too much money on the house, that we should have. 

December 2017 update ($482,266 +$10,073 or +2%)

↑ Emerging Markets Stock Index Fund is up by 2.6 % or +$3,318

↑US 500 Stock Index Fund is up by 1.4% or $1,574

↑ Global Small Cap Index is up by 0.8% or $873

↑EUR is up to USD by 2% or $4,243 for my portfolio.

Grand total additions:  $10,073

Mortgage or rent

One of the point of attraction while buying a property is that you are "freezing" the cost and if it goes up in the future, you reap all the rewards.

What is missing from the evaluation that your interest rate on the principle will go up to compensate for it.  This is particularly the case for western europe, where most of the mortgages are it either variable rate, with fixed rate mortgage are 5 year maximum.

Lets look at an example buying vs. renting a house.  

House price - $475,000, down payment is $150,000  interest rate is 2,7%, mortgage is for 20 years.

	Renting	Owning (Mortgage)
Monthly payment	-1,650	-1,750
Annual payment	-19,800	-21,000
1 year interest*	10,500	- 8,700
Principal paid	0	12,300
House up keep	0	-3,000
Insurance	-150	-1,000
Mortgage application		200**
Total	-9,450	-12,900

November 2017 update ($472,192 +$446 or +0%)

↑ US 500 Stock Index Fund is up by 3% or $3,216

↑ Global Small Cap Index is up by 2.2% or $2,372

Grand total additions:  $5,588

↓ Emerging Markets Stock Index Fund is down by 2.1 % or -$2,757

↓ Eurozone Stock Index Fund is down by 1.9 % or -$2,386

Grand total losses: $5,143

October 2017 update ($471,746 +$13,306 or +3%)

↑ Emerging Markets Stock Index Fund is up by 4.9 % or $6,368

↑ Eurozone Stock Index Fund is up by 2.4% or $2,914

↑ US 500 Stock Index Fund is up by 2.2% or $2,423

↑ Global Small Cap Index is down by 1.5% or $1,600

Grand total additions:  $13,306

Zero based approach to life

I developed number of time and money consuming habits, commitments and routines. Working from a starting point of zero I could change my life from a clean sheet of paper and a "Zero-based" approach. Zero-based approach to financial independence helps to reduce amount of time and money through rationalisation of every routine and habit that become part of new life.

This review exercise helps to make it clear (visible) and understand behind what I do, to sharpen the focus. Zero-based approach to financial independence requires courage and be ruthless to your existing habits and commitments.

How can it help:

- Does your current habits and commitments exceed amount of time and money you need?

- Do your routines litter your life with non-value added and wasteful tasks?

- Are your life commitments accurate and consistent with what you want to achieve (your goals and desires)?

Family budget 2017

This is 9^th year we are keeping our family budget formally, recording every expense and trying to make sense of it all at the end of the year.

 Overall: Almost in every category we exceeded our budget from previous year, but also from 6 year average almost in every category. Inflation (officially reported as 3% last year but with british pound collapsing 20% to US dollar feels more. Additionally, looking at energy prices – over 25% increase from 2011).