Financial Freedom Sloth

achieving financial freedom one lazy step at a time

Category: frugal habits

Financing the new car

In a previous post I explained why we decided to buy a new car which is usually a big No No in FIRe circles. But not only did we buy a new car, we actually wanted it financed! Something that is an ever bigger NO NO in FIRe circles.

The reason for wanting to finance the new car was pretty simple: 0% interest rates! Yes, thanks to our current low intrest environment you can actually borrow at 0% to buy a car!

You see, I have also always been of the opinion one should only borrow for the purchase of a house (and even then keep your borrowing amount low). But the low intrest environment we are in has definitely changed that. If possible I would be financing everything I buy at 0%!

Buy now, pay later! Much later preferably!

Unfortunately you can not finance everything at 0%. But a new car, that was definitely possible!

As a side note, am I the only one that finds it very strange that 0% car loans exist but that mortgages are still between 1% and 2%? Surely a car loan must be more riskier than a mortgage. Houses, for one thing are rarely involved in total loss accidents.

Loan declined

Unfortunately borrowing for the car was not possible.

We have no idea why not. You see Renault does not actually provide the loan. They use Alphacredit. Which are, and I am choosing my words carefully here, a bunch of assholes. They are assholes because they refuse a credit and then do not tell you why. Apparently, by law, they only need to give you the sources they checked and that is it. In our case that was the National bank of Belgium which keeps a tab on all open loans a person has. You can check this database yourself and as expected we only have our mortgage there. Which is logical since we have never borrowed for anything else than that. We also pay that mortgage on time. I have spend a lot of very annoying phone calls to Alphacredit and got exactely nowhere. The customer support you get is very well trained in not giving you any more information than, ‘here is the list we checked and used to come to our decision about your loan’.

Even now, 8 months later, I still have no idea why the loan was refused. My net worth is around 350,000 euro, I am on track to save 10,000 euro this year (and that is just me, the loan would have been both on my name and the girlfirend) but apparently I am no good to loan 7,000 euro at a 0% rate …

via GIPHY

The only thing we can think of is that somwhere somehow there was a mix up with somebody else because when registering our information the garage owner said we appeared to have a file at the internal bank of Renault itself. Which isn’t logical as neither of us have ever bought a car from Renault. Or had any other dealings with Renault.

I have to admit I took this pretty personal. I mean finance is kinda ‘my thing’ and then being refused for a petty loan really, really annoyed the hell out of me. But after banging my head against that wall for a few weeks I decided it wasn’t worth the time and frustration so we just paid the car in cash. The whole ordeal did change my mind about the size of our emergency fund, it’s back to 10,000 euro now!

Still bummed I didn’t get the 0% loan though!

One thing I did notice that the sales person at the garage got really worried when she had to tell us the loan was refused. I got the impression that this wasn’t because the bad news she had to tell but more being worried that she would lose the sale … is a 11.000 euro purchase reall that big a problem for a lot of people? I mean, I would have preferred to spread it out over 3 years at that sweet, sweet 0% intrest rate but after my double bonus and holiday money (and not going on a holiday) my part of this purchase isn’t more than a one time blip in my excel overview. Are we FIRe people really that far from the norm?

Buying a new car

So back in December of last year I did mention that our car broke down. And with broke down, I really mean completely kaput! The radiator was leaking even after pouring 2 bottles of Wynn’s radiator stop-leak in it. On top of that it was leaking oil from 5 different places.

The old car

The car (an opel combo) was also around 13 years old and we had driven it for 230,000 km. Spending several thousand euro’s fixing it was definitely not worth it.

Although we did get somewhat attached to it over the years, it had served us well. We bought it second hand for 8,000 euro when it was 3 years old and only had 30,000 km so all in all we good good value for our money with that car. With the big storage capacity it offered we have really moved a lot of stuff with it over the years.

Needing a rental

The moment it broke down was less fortunate. It was just before the end of year holidays. Christmas and New year mean visiting our family all over the country which means driving a lot of km’s. So we rented a car for almost two weeks. In a way it was somewhat of a waste of money but we really needed a replacement car in short notice. We did chose the cheapest possible model. When we showed up at the car rental place that car was not available. Which got us a free upgrade to a brand new Opel Mokka: the fanciest car either us have ever driven!

The car rental got us over the end of year festivities but since our new car was not available in stock we had to wait till early March for the delivery. Lucky for us family had a not often used second car which we could borrow.

Buying a new car

Conventional wisdom among the FIRE community is to not buy a new car. The reason for this is that a new car loses immediately 20% of it s value the moment you drive it from the car lot. Depreciation for a car is the highest the first couple of years. Conventional wisdom is to have somebody else absord that depreciation, buy the car when it is around 4 years old and then drive it until it falls apart. We did this with the Opel Combo and a purchase price of 8 000 euro + 2 000 exceptional maintenance costs for 10 years of use came around 1,000 euro depreciation per year.

Which brings us to the Dacia brand. Dacia is the budget brand of Renault. The cars are build with older technology (the passenger windows are not electric for example, there is no touchscreen to be found anywhere in the car) and they offer only a handfull of options in colour scheme and extra’s. The upside of al of this is that their cars are cheap. On their site they even advertise a starting Logan model (which is what we got) of 7 590 euro!

Do not get suckerd in by this! They are sneaky little bastards at Renault and I honestely doubt they ever sell the basic load out. It doesn’t even have a radio or fog lichts for that price! So ignoring the very basic set-up which only exists for advertising purposes you could still get a brand new car for less than 10,000 euro.

Except if you want a somewhat stronger engine like we wanted. Our family lives 100+ km from us which means using the highways to visit them which means we preferred a somewhat stronger engine. But Renault, being the sneaky little bastards they are decided that if you want the stronger engine you also have to take the full option package. So yes, we bought a new car with all the bells and whistles which even includes airco (first ever car with airco!).

The price for all of this: 11 226 euro. It does include free paint because promo conditions and a 500 euro reduction for are old car (which we were glad to get rid off) but also a 500 euro extra cost to install a towbar to pull our remorque (having a big garden and animals does mean we us our remorque frequent enough to justifiy this expense).

Amortization cost, or revisiting conventional wisdom

If we have use the car for 10 years and 200,000 km’s the amortisation per year will be slightely higher than our old car: 1,200 euro/year instead of the previous 1,000 euro/year. If we can use it 12 years and 240,000 km like our previous car we will be right back at the 1000 euro/year amortizing cost.

Conventional wisdom still apllies, even to Dacia. If you have the time to look around you can find Dacia cars of only a few years old and not to much milage which would push that amortisation below the 1,000 euro/year. But then you need to find a good second hand car! And there isn’t all that much on offer because Dacia seems to attracted buyers like us who buy the car with the full intention of driving it until it falls apart. Because of the low starting price of the car new that bigger amortisation in the beginning doesn’t even matter all that much. If I would have to stick a number on it I would guess you can save around 2,000 euro over 10 years by buying a good secondhand Dacia Logan as opposed to a new one. The extra 2,000 euro negates the luck you need in finding a good second hand car + gets us at the very least 4 years of completely worry free driving a brand new car.

Now, 2,000 euro is still a decend amount. Especially if you take into account a person will at least buy 6 cars during his life. If we had more time we would have probably took our time and looked around for a decent second hand car. But we didn’t have all that much time. Our old car was not safe anymore to drive and we had so much breaking down in December that we just didn’t want to deal with the hassle of looking for a decent second hand car. Honestely, those 4 years of worry free driving without a need to even go to the annual car inspection was really appealing back in December. And also, 11 226 euro for a brand new car, with airco and pull bar really isn’t expensive! So I am going to file this under frugal habits, even if it goes against the conventional FIRE wisdom and might cost 200 euro/year more than going second hand.

Reduce spending with cashback sites

I am very selfishly putting more effort in finding a new job closer by home. And also trying to do a bit more day trading (daddy needs a new PC!). So expect fewer posts at least until I no longer waste three hours per day going to Brussels and back.

So just a quick post about cashback sites. That are sites whom give you back e certain percentage of your purchase at affiliated web shops.

We have been using ebuyclub for some months now (if we do not forget). It won’t be hundreds of euros we will be getting back this way (we just don’t spend enough on line for that). But every little thing helps. If you want to check it out, use code HNK2M6P at registration and we will get 5 euro and you three euro 😉

Qassa is another cashback site who has a few affiliated shops ebuyclub does not have. So we will try that platform the next time we shop at one of their sites.

And to make up for my lack of posts a little reading tip. Lackingambition is a no longer active blog (so it doesn’t show up in blogrolls a lot) who has some of the best posts on frugal living and the mustachian way of living I have ever read. Well worth going through his archives!

Let the beat control your body

If there is one area where the effects of digitization have been felt the most it is music. And for the most this has been a positive. New things have become possible and almost all music is now available everywhere at a zero to low cost. Especially for the more frugal inclined this has been a big change.

When I was younger portable music meant a Walkman with cassettes (later followed by the discman and cd’s). Getting a new album meant going to a shop and actually buying it. It took time, effort and money. The equivalent now would be to buy it online. The hour it took to go back and forth to the shop is now 2 minutes online and the cost has gone down. But does anybody still buy albums? The internet has given us so many new possibilities that music habits are fundamentally changing and can differ immensely from one person to another one.

Owning it

Sure, there is the ‘old school’ approach where you still own the music you listen to. Owning it now means it is some file on your computer and ‘carrying it with you’ is putting that file on your phone (although I still have a few friends who use a dedicated mp3 player). A hybrid approach is where you upload the songs you already own. Some use dropbox (or another cloud storage service for it) for this, but Google music lets you upload up to 5.000 of your own songs for free (without the need to use their paying streaming service). This can be handy for those who do not have enough memory on their phone (but be careful about data consumption in this case). Some go as far as running their own little network connected storage so they have control over it. Personally I am running Plex on a Synology NAS. But I have been thinking about tinkering with a raspberry Pi and turning one into an internet connected music server for the girlfriend. This is especially handy for people who have A LOT of music but for whom a NAS might be overkill.

Streaming it

This is still you owning the music. Owning music almost feels like an outdated concept nowadays. There are a ton of streaming services now who give you access to millions of songs for a monthly fee. For us frugal types there is the free version of Spotify. Youtube also contains millions of songs but that is not a very handy platform if you still look at music from an song – album point of view.

For me, Youtube is a lot better if you are interested in DJ sets and performances at festivals. Forget listening to a song or an album. Thanks to the internet you can now listen (and watch in the case of Youtube) your favorite artist perform at a concert/festival on the other side of the planet!

For this Soundcloud and mixcloud are veritable treasure troves where the discovery of one great DJ leads to discovering other DJ’s, which in turn leads to a gazillion hours of music to listen to.

Youtube, Soundcloud and Mixcloud are completely free at the moment. Even if there was a magical piece of software that is able to select only the music you love on these platforms, you probably would need several lifetimes to listen to it all.

The way the sloth

If a passive approach is more your style the internet has you covered to. Most radiostations can now be accessed via the internet. Personally I prefer TuneIn as they also provide a wide selection of ‘web-only’ radiostations. Put in a few hours searching for radio stations that cater to your own personal taste and voila, free music for the rest of your life with zero effort at zero cost. Sloths all over the world: rejoice!

Staying connected

For people who are mobile all the day or do not have access to free WIFi at work, the scarlett Hi5 abo gives you 5 gb for a 15 euro monthly subscription and Mobile Vikings now offers the possibility to make your own subscription type where 15 euro will get you 4 gb of data and 50 min calling time. For those thinking of switching over to mobile vikings, send me a message and I’ll be able to earn a 15 euro referral fee 😉

Getting creative post FIRE

In the future VR technology will create additional new possibilities where it will be possible to ‘attend’ festivals at the other side of the planet from your own couch (free or for a low fee probably). But personally, once I am post FIRE, I am a lot more interested in a private version of the Tomorrowland Unite approach. Tommorrowland Unite is where they live stream performances from Boom Belgium to stages in different countries. Which means that if you have a projector, a screen and some decent speakers you can replicate this in the comfort of your own home/garden (you can of course select your own festival off choice as long as they have a decent live stream going. Or if they post sets on line after the festival you can do it a week later, thanks to internet time is starting to be a little bit flexible). The girlfriend already has her hart set on Awakenings – the home edition) …. Get some friends and some quality beers and you can have the ‘festival’-experience at a much lower price and with a hell of a lot more comfort (no dixie toilets!). The older you get, the more you appreciate the comforts of home and in case the title of this post didn’t give it away, I am a child of the nineties …

But some of us old geezers might have a few good tricks up our sleeves …

Frugal living with camelot

Housing cost is one of my biggest expenses. Every month I pay 470 euro into our mortgage. And this is actually quite reasonable for what we are getting in return.

Rent for most people is higher.

The tradition approach to lowering this cost is finding roommates so the fix costs can be split over more people. But in Belgium and Holland there is even a better way to do this.

Enter Camelot. Camelot is a company offering property protection by getting people to temporary live in the empty building. That building can be a house but also a factory or an empty office building (kitchen and bathroom are provided).

The downside is that you only get 1 weeks’ notice when you have to move. You also can’t do any changes to the building. So no real possibility to make it a home like you would be able to do with a long term rental. For people aiming for financial freedom this is off course more of a benefit than a downside as it eliminates any home improvement spending 😉

The set up often involves roommate. But since it sometimes involves really big buildings that roommate’s room can be quite a distance away from you room.

The upside is that your ‘rent’ is only 250 euro a month. And that this ‘temporary’ housing can sometimes be several years.

To be this is something perfect for a young person who is just starting to work and who wants to pile as much as possible into his stash right from the start. And who is also ok that he sometimes will need to move back in with his parents as there is no guarantee that the company will have an empty property available when it is time to move. The entire set up will not only keep your housing costs down but will force you to keep living as a student for a few extra years.

Frugal purchase – washing machine

I will never buy a new washing machine.

The above washing machine was bought for 200 euro and was around 2 years old (and yes, our utility room still needs some work, planned for 2020 as we need to save up enough money first). New it was a 800 euro machine. Although this was a very good find, our previous washing machine also only cost 200 euro (although for an older model and cheaper brand). That one lasted only three years but moving it several times and the dust of the home renovations probably caused it’s early death. But even then, 200 euro for 3 years use means that a new machine at 600 euro should last 9 years. Every month after the 3 years mark on this machine will be a win in my book.
Washing machines are perfect to buy used. It’s a big and heavy appliance everybody has. Which means that when two people move in together they have a spare. And because it is big and bulky and connecting it is a chore, people do not want to keep one as a spare. Something they might do with a microwave or a water cooker. We got the last one so cheap because the guy selling it was moving the next week and he didn’t want to lug it to his girlfriend’s place (which was up one floor) just to have to carry it down again when a buyer showed up there. Win for us!
Same goes for dryers off course.

I am a creature of two worlds

I was originally going to write a short post about the fact that I love outlet centers. Real outlet stores like D’store in Bierbeek which sells last year’s sports outfits at a very nice discount. I snagged the walking shoes below for 35 euro (50% off) and had I found a second pair in my size I would have gotten 75% off on that second pair! Shoes are a necessity of life and I love to get that at a low low price because it means I do not need a lot of money to provide for it for the rest of my life. If they last me 2 years of daily wear and I would need 2 different pairs to cover the different occasions in life, that would mean an annual financial burden of 40 euro a year x 25: 1000 euro stash and my feet are covered in early retirement!

So there I am, being all happy to have saved 35 euro on shoes. And then I come home and access my broker account and see my stash moving around a couple of 100 euro per minute. And it is strange.

Normally I ignore my stash. It’s there, I do not touch it and now and then I do a trade. But I am lazy so I do not do a lot of trades. Thus it is easy to ignore it. It is easy to ignore the day by day fluctuations if you do not see them. In my day to day life I am like anybody else. I have my -limited- resources and I try to cover my bills with it. It is in this day to day life that I am happy with a savings of 35 euro. Because in this life those savings matter. In my day to day life I am down to 900 euro in my accounts (we replaced our bathroom and kitchen a few months back and I just prepaid my holiday for September). And with a few renovations still necessary, I will need to continue to life within my – very narrow – limits for a few more years.

And then I access my broker account. 90% of my stash is in 1 stock: Berkshire Hathaway class B shares. For a grand total of 1500 of them. If that price moves by 1 USD, it makes a difference of 1.500 USD right there. But a movement of 1 USD  on a stock price of 166 USD. That’s a movement of 0.6%. It is going to move more than that! Actually, I have a leveraged position that makes movements even worse! My stash went up 30.000 USD in something like 2 months. Then it went down by 20.000 USD in one month. Hell, my leveraged position costs me 43 USD in interest EACH AND EVERY day (do not worry, the position earns around 90 USD per day also, so I am making a profit on it).

All this is easy to ignore when I do not see it. But as mentioned before, I am again doing a little bit of day trading again. Not only do I now see the stash (and it’s fluctuations) on a daily basis. The day trading actually makes matters even worse. Just today I have bought 100 CfD’s on Google 6 times and sold them (and made a small profit each and every time: yeah me!). I have bought and sold for 558.000 USD in Google stock!

So day to day life: 900 euro in the bank and really happy when I make a 35 euro savings on shoes.

My investment life: daily fluctuations of 1.000’s of euro’s in the stash, bought and sold more than half a million USD in Google stock in half a day!

Like I said, a creature of two worlds.

I have to say it is weird. But it must be weird for all mustaschians. I read blogs of people living on 50.000 a year but where the stash sometimes moves 100.000 USD in a month because their stash is over 2 million. It is this strange spa-gate between big stash and frugal living all of us will need to learn to handle. Ignoring the stash usually works. So time to get back to work where a 100 euro still equals a full day of work and not some small movement in the google stock price (even if I would love to be behind my screen when it crosses the 1.000 USD mark for the first time!).

Changing credit card

Up until now I had a classic Visa card which cost me 18 euro per year. Since most of my on line shopping and all of my off line purchases are being paid with my regular bank card this card was more of an extra security measure in case something was wrong with the main bank card. Or when travelling abroad and the Visa card was the only card that was accepted/worked. It is always good to have an extra card with you!

Streetlife

A little real life example will illustrate this. A few years ago a friend of mine went to the USA for work and since the EUR was strong back then I asked her to bring me back a digital camera. Since I had known her for years and trusted her completely I gave her my visa card and code. She said this was unnecessary but I did not want the hassle of having to calculate the exchange rate when paying her back in euro’s and this way everything was nice and easy for the both of us. A week later I received a call. She needed to stay a few days longer and since she also had to bring back a few Iphones (for persons who had not given her their credit card) and there was also a security deposit blocked by the hotel. She was now at her limit on both her own cards! Could she please use my card to pay for the extra nights? Sleeping on the streets of New York avoided, by having my extra credit card with her!

Money, money, money!

So yes, an extra card never hurts. But 18 euro a year just was is too much for this feature. I used to have a free one with Keytrade (before I shut that broker account down and when I went to work for the big bank I also shut down my Argenta account) and my fiancée still has a free one at Argenta. But I wanted to do better than free and preferably find a card with some cash back possibility.

pile of credit cards

I landed on the Extra world MasterCard via Beobank: a 5 euro per year cost and a cash back of a 100 euro a year. A far cry from or the credit card hacks in the USA but 95 euro for switching to another card and using that one while grocery shopping? I’ll take it!!

Slashing the 18 euro of recurring costs reduces the seize of my stash need by 450 euro!

The 100 euro of cash back even adds a further reduction of 2500 euro! So almost 3.000 euro reduction in the seize of my stash!

Travel hacking

And then FOB wrote about the Flying Blue-American Express card. Finally available in the Netherlands and the best available choice for some travel hacking! So I checked if it was available in Belgium as well. Beobank had it, but nowhere do they mention it being free for the first year. And I wanted a cheaper card, not a more expensive one!

There is a nice little overview here of available travel hacking cards in Belgium. Nothing as good as the deal FOB got.

Why do the Dutch get better conditions than us Belgians? Not faire!

I looked and looked but cannot find a similar deal as the Dutch. Did I miss something, anybody found a better cash back credit card in Belgium (with no or low annual costs)? My application for the Beobank one has not yet been send so if there is something better out there, let me know!

A most frugal purchase

If you look at my expenses in December you will have noticed that food is my second largest expense.

We could trim this some more by shopping more at Aldi and Lidl (and me snacking less at work!). But this whole financial freedom journey isn’t only about getting a big enough stash as quickly as possible. It is also to try to improve the quality of our life.

Part of that is eating healthier (and losing weight). Reaching financial freedom as a burnt out, overweight husk of a man with no hobbies does not appeal to me.

So I want to:

  • lower my food bill
  • improve the quality of food we eat
  • spend less time cooking on average

Luckily there exists an appliance that makes all of the above possible.

It’s called a chest fridge!

Waste less money, less time and eat better with this new magical contraption!

It will lower our food bill since we will now be able to buy in bulk, which often gets you a nice discount. I will also profit more from temporary promotions. We already do this for non perishable goods (toothpaste, shower gel, shampoo) and stock up on these items when they are 10% or 20% off.  Thanks to the chest freezer we will be able to do the same for food as well!

Especially our meat will be better quality as we will now be able to participate with sites like share a cow. This way we get our meat directly from the farmer and are sure of the quality!

We will also spend less time cooking since we will be able to do batch cooking. Cooking 4 portions does not take twice the time it does to cook 2 portions. So now we will cook more portions. Freeze them and thus save time at a future date.

The frugalwoods just posted a very timely article about eating healthy for less and they seem to be completely in love with their chest freezer!

The chest freezer is also a good example of cheap not being frugal. There was a cheaper, slightly large model available. And I almost pulled the trigger on that one. it was a savings of 100 euro!. And then I looked at the energy efficiency. Our final pick is 40 euro a year cheaper in use than the cheaper model. A 100 euro expense that results in a 40% annual savings? You can sign me up for that type of return every day! We did wait until January to buy it as January is the traditional sales promotion period in Belgium. We off course did compare prices on various sites to find this model. Even buying brand new and not going for the cheapest model, you can still be frugal about it 😉

So tip of the day from this sloth: check the energy efficiency of your freezer and fridge and compare it to the newer models. The energy efficiency really improved over the last years. It might be that the most frugal option is be to buy a brand new A+++ model to replace your old energy hog as it will make up for its purchase price in a few years.

Cutting your own hair: Running the numbers

In one of his earlier post Mr Money moustache sang the virtues cutting your own hair with the help of a hair trimmer or multigroom kit. Here in Belgium, we usually use the French word tondeuse which does have a nicer ring to it than grooming kit.

ceci n’est pas une tondeuse

Now he makes the bold claim of it saving over 30.000 usd but actually never runs the numbers in detail. If you do that, it is easy to see why he was so excited over such a simple device and an equally simple change in one’s habits.

Going to a barbershop every month would set me back about 300 euro a year.

Paying for this means, I need to amass a stash of 300 x 25 = 7.500 euro.
Replacing it by a device that costs around 50 euro eliminates this need completely! Right of the bat, I have just made a size-able reduction in the amount I need to retire!
However, it gets even better! Factoring 10 euro a year to replace the tondeuse every 5 years I only need a stash of 250 euro to pay for it. Buying it, means that even in the first year I can make a big enough savings to pay for a replacement for the rest of my life! Yeah, that is indeed something to be excited over! I know of very few other things that are such a powerful help in achieving financial freedom. It is unfortunate that this does not scale to other parts of life. If this were possible to do for food, transport, housing, clothes and such everybody would be able to retire after only one year of working!
It off course does not stop with the reduction of 7.250 euro in necessary stash.
If we say you need to work about 20 years in Belgium this will also add another 5.700 euro in savings (19 x 300 if we do not count the first year, as those savings will finance the purchase of a new grooming kit for all eternity).
Savings you can invest and accumulate over the years. So that one time purchase of 50 euro has a value of at least 12.950 euro, not counting any investment gains you will make on your savings…
It might be basics for the more frugally inclined people but with those kind of numbers I found it justified to bring this powerful financial freedom tool one’s more to the forefront! Want to retire early? Cut your own hair! Small things do add up over time.