Financial Freedom Sloth

achieving financial freedom one lazy step at a time

Life after achieving financial freedom

When I think about my ideal life after achieving financial freedom and there is no longer a need to work full time I imagine it to be a lot like my student years.

I am old enough to have done my studies when Belgian universities still used a yearly system. I liked that yearly system!

The university years

From October until April you had classes, May was reserved for studying and preparing for the exams and June was exam month (about 3 exams a week, so plenty of time to get some extra studying done). If you passed all your exams you had a three-month summer holiday period. I always worked one of those three months so I had some extra spending money for the remaining 2 months and during the next university year.

I only had around 20 hours of courses a week during the October – April period which left plenty of time to hang out with friends, smoke some joints (hey, I was a student and the Netherlands were only about 30km away, what can I say?) and spend time with the girlfriend (nudge, nudge, wink, wink). I found most of my classes interesting so I did not mind going to them: overall I found those 7 months very, very agreeable.

All in all I had 3 months of ‘work’ (1 month of studying, one month of exams and 1 month of summer job), 7 months of doing interesting stuff part time (going to classes, keeping notes up to date, some tasks) and 2 months off doing absolutely nothing (well there was the girlfriend and the weed …). Yes, life was nice as a student.

Now due to the social security system we have in Belgium, quitting the system completely is not really the best (or easiest) to do. You would need a bigger stash (a lot bigger, around 600.000 euro for one person) and it would make some stuff more complex. Nevertheless, our social security system does leave quite some wiggle room. Enter plan A and plan B.

Lets start with plan B

Plan B would be to go the full unemployment route. Being full time unemployed, the Belgian government will send me money each month! The first year this would be a decent amount but then it would gradually decline to about 500 euro a month.

Now our government does not like giving money to its citizens. They very much prefer it to be the other way round. So I expect to be contacted by the government agencies to get my lazy ass back to work! 20 years of full time work is apparently not enough for the Belgian government although our elected representatives are eligible for a full –and rather big- pension after only 20 years of ‘service’ in our parliament. Talking to government agencies is not high on my to do list once I have reached financial freedom. Actually, it is low on my to do list now as well. However, going job hunting and sitting at a desk for 40 hours a week is not very high on that list either.

Therefore, I started looking for a sector with a low barrier to enter and that uses lots of temporary contracts. And preferably does not involve to much hard label. Enter the security sector! In Belgium you need a license for this. Getting the license involves a one month course, which is free for the unemployed, but once you have it, it is dead simple to find a job in this field. As a student, I have worked back stage at several festivals and shows. So the plan: unemployment until the agencies start contacting me, and then a three month security contract, preferably in the summer months so I can do the festival circuit in Belgium.

A year would then consist of:

  • 6 months of very relaxed living (more time with friends, more ahum ‘quality’ time with the girlfriend, learn a new skill – might be going back to university for three months and follow a few courses, slow travel)
  • 3 months for a project, which might involve ‘working’: profit or pay would not be the main objective here, more for the experience. If the project involves employment, I would of course skip the security gig below.
  • 3 month ‘summer job’ at the Belgian music festivals: paid work to get myself of the radar of our unemployment agencies

I also think that having a more busy 3 months during the year will let me appreciate the 6 to 9 lazy months during the rest of the year.

I could see myself spending 20 years of my life (until reaching the official retirement age) in the above regime.

How about plan A?

I am kind of working on plan A at the moment so we will see if I succeed or not. However, plan A would eventually involve working for 4 months and three weeks, getting paid 1.000 euro a month and not having to deal with any government agencies at all since I would still be employed.

A year would then consist of:

  • 5 months of working
  • 7 months very relaxed living during which I would then do a project. If the project turns out to be profitable or involve any wages, I could then ask for unpaid leave of absence at the ‘main job’ and reduce ‘working’ for the current or next year even more.

The fun thing of this approach is that it greatly reduces the size of your stash needed (reminder: the goals is to have 1.500 euro/month to live of). By working three to five months in a year a stash that normally would only sustain 1 person can then provide enough passive income for two persons (and avoid any hassle with government unemployment agencies as a bonus!)

plan B   Plan A  
3 months working 1500 euro/month 4500 12 months working 1000/month 12000
9 months unemployed 500/month 4500    
total income 9000 total income 12000
       
income necessary from stash 9000 income necessary from stash 6000
necessary stash size 225000 necessary stash size 150000

 

Since my current temporary job contract is done the end of this month I could launch plan B in February but my stash is only just above the amount necessary and we still need to do some renovations at our house (and in the next couple of years, we need to buy a new car as well). Those renovations will cost around 50.000 euro max so I do not have enough money yet. I also would prefer to have a steady paycheck while renovating the house. I would feel a lot better launching plan B only after these big expenses are behind me.

Plan A will take some time to get off the ground. Since it would at the very least involve 2 to 3 years of working full time before I could reduce the work time to less than 5 months/year this is something I can lay the groundwork for now! During those years of full time work at a decent wage, the stash can grow bigger and I can finish renovating our house.

With some luck, I will land that full time job in February and have it evolve into plan A after 4 years. Fingers crossed, as I apparently suck very much at this whole ‘interviewing for a job’ process.

In 4 years’ time, the stash should be big enough that the girlfriend would also be able to reduce her work time to half AND even continue to grow (be it very slowly). A few more years later, she might choose a modified version of plan B for herself and me remaining in plan A, further reducing the time she needs to work.

If you are interested in the gritty details of plan A and B, I will combine this post + my financial freedom in Belgium post into one big presentation I will give at the next Belgian Dutch blog meeting in Antwerp on 4 February. The meet up is organized by cheezy finance and Amber tree leaves. I will probably post most of the presentation on line afterwards but not everything. And a few other bloggers will also give a presentation.

11 Comments

  1. Intresting calculation & scenario’s. I would be eager to see the presentation, although I won’t be able to make it to the FIREd meeting… (work). Anyways would be nice to see it sometime!

    • finan112_wp

      January 20, 2017 at 8:26 am

      It is a shame you will not be there. Because somebody who starts with 100.000 euro INVESTED, saving and investing an extra 10.000 euro each year and getting an average investment return of 7% during those years should be ready for plan B in 8 years. That’s 8 years of working full time and then only working three months a year for the rest of your life. (Actually, since after 8 years of full time work your stash will be bigger than my minimum calculated = the stash will continue to grow so about 18 years later you could stop working completely: that’s 12.5 years you would have worked in total, you have just spread them out over 26 years). Starting with only 10.000 euro’s invested adds 6 years of full time work to it. Finding short cuts or loopholes in a system is apparently my most defining personality trait…

      I might need somebody to practice my presentation on ….

      • I hope there comes another meet-up during spring sometime. It sounds like an attractive way to retire soon. Looks like you’ve gotten a pretty useful personality trait 😉 I love loopholes in the system 😀 If I can help with your presentation, let me know (but before sunday, then I’m gone for 2 weeks)

        • finan112_wp

          January 20, 2017 at 2:52 pm

          Before Sunday is not going to happen, I’ll be spending saturday morning trying to get plan A rolling …
          And about the personality trait, meh, when younger I prided myself on it very much. Now, I have this little voice in my head sometimes telling me all I did with my life was being lazy and taking short cuts to everything. Perhaps it’s my mid-life crisis talking… On the other hand, I am trying to work another little loophole so I can lay the foundation for plan B without having to pay 1.600 euro for the ‘bewakingsattest’ necessary to work in the security sector… And I have to admit, I love looking at all the angles and trying to figure out how to work it all to my advantage!

          Screw social acceptance: I am financialfreedomsloth and I take shortcuts!! I could climb the highest mountain and let out a mighty battle cry. But since I am too lazy I’ll just take a nice nap in my comfy sofa, hear me snore!!

          • Allright no problem! Efficiency is underrated, so guess it’s just a mid-life crisis cry 😉 Everyone has to do it the way he feels comfortable with. I sometimes wanna hit myself for often choosing difficult paths.

  2. Sloth,

    Interesting read!

    Once again I feel like I should point out that you should not count on the unemployment benefits to boost your income.

    First, you’re not being financially independent. You still rely on someone else’s good will and money to make it through the month.

    Second, it’s akin to stealing. Unemployment benefits were not designed for what you’re trying to achieve: “Om werkloosheidsuitkeringen te kunnen genieten moet u wegens omstandigheden onafhankelijk van uw wil zonder arbeid en zonder loon zijn.” You have to be unemployed not of your own volition, which you are.

    Third, I think that what you’re trying to achieve is impossible anyway, see table 1 here: http://www.rva.be/nl/documentatie/infoblad/t31

    The above logic is the exact reason why people in Belgium dislike the government and think people who receive any type of benefit are lazy and try to play the system so they don’t have to work. And they’re right: taxpayers feel like you are trying to steal from them; and I can’t really blame them.

    I have a lot of respect for your goals and even your ingenuity, but both plans displayed above do not belong in a financial independence road book or any other road book for that matter. It’s a morally corrupt strategy and as you can see from the link above it’s also made impossible to a large extent by the legislator.

    Food for thought! I’m looking forward to your thoughts on the matter.

    Best wishes,
    NMW

    • finan112_wp

      January 22, 2017 at 5:35 pm

      Nomorewaffles, you seem to have a difficult time to wrap your head around this so you should really come to the meet up so we can discuss this in person. it has been ages since I had a decent discussion with a challenging opponent! You can be Sherlock Holmes and I’ll play the part of Moriarty!!

      But in short. Can it be done? Off course it can. Your link says that in order to qualify for unemployment you need to have worked a certain time before you can apply (which you have since you needed to build up your stash) and you have to be fired. This last point is really not that hard, believe me. Companies go through restructures all the time. Having somebody who doesn’t mind being fired at that time is a godsend for a company then! Or you can just ask to be fired. My girlfriend once engineered her quitting her job as she wanted to change fields and needed the unemployment to be able to go back to study and get the necessary diploma. Trust me, this is not an issue. There can be a very big difference on how it happened in reality and how it appears on paper. If your current employer is not willing to do it you can always line up a temp job for six months and quit yourself. The temp job? Well, the security field is used to working with temporary contracts ….

      Should you do it? A.k.a. is it a morally corrupt strategie? Well, one could discuss morality for a long, long time (counterpoint is: what are you doing in a full time, decent paying job if you no longer need the money, you are keeping somebody in unemployment while not even needing the money!).

      But if you look at the numbers, you actually will still pay more to the government than you get.

      You get 9 months of 500 euro net unemployment benefits (4500), 3 x 700 for the health insurance thingy your unemployment takes care of for you (2 100) thus a grand total of 6.600 euro.
      You pay, let’s say 3 x 750 euro taxes while working (2 250), 3 900 euro dividend tax on your total dividend of 13 000 and 1 800 BTW if we use an average BTW tax of 15% on 12 000 euro spend during the year. This leaves out quite some extra taxes and accijnsen on a plenitude of things you will pay but it will give you a minimum of 7.950 euro paid to the government. That is 1.350 euro for the government.

      You see somebody without a stash and unemployed does cost the government money but somebody with a big enough stash to keep his income high enough will actually pay enough taxes to completely off set what he receives from the government. And this is even not taking into account the massive amount of money he will have paid in taxes WHILE building his stash (I will have paid a minimum of 400.000 euro’s during the 20 years I will have worked). This is even valid all the way into pension. Working only 20 years will greatly reduce the pension you are entitled to but since you have a big stash even in pension you will probably pay more to the government than you receive (via dividend tax and BTW). By building the stash and then implement my strategy the government actually gets a lot of money from you during 20 years and then it is more or less break even, you do not cost the government anything for the rest of your live. As you know, one of the big problems our government is facing is the huge pension obligations they have. I am just trying to help 😉

  3. Hello, just discovered your blog and I think I’ll spend a lot of time on it.

    Don’t agree with some of your ideas about milking the system over all, but it is good to know such options exist. 🙂

    i don’t speak Dutch. Will the meet up be in Dutch? If it will be in English by chance can I get more info about it please?

    • finan112_wp

      January 24, 2017 at 4:12 pm

      Hello and thanks for liking the blog. But I do not understand all the comments about ‘milking’ the system. The USA blogs are full with posts about 401k optimilization, roth conversions and such. The goal of these is also to lower your tax bill. One could even argue that living frugal is in part about lowering the tax bill as part of your savings is NOT having to pay the 21% VAT that is applicable in Belgium. Buying second hand stuff is not only cheaper because it is second hand but also because no VAT tax is being paid. Financial freedom or early retirement can never be achieved without some kind of tax efficiency strategy. Hell, gocurrycracker just posted an article about using an off shore shell company to avoid paying taxes! http://www.gocurrycracker.com/never-pay-taxes-again-overseas-corp/

      About the meet up I think it is best to contact amber tree leaves or cheesy finance as they are the organisers.

Leave a Reply