Financial Freedom Sloth

achieving financial freedom one lazy step at a time

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Get yourself a will!

There is one thing I haven’t read a lot about in the financial freedom community. And it’s lack is a bit strange since it is about money and is probably the biggest wealth transfer you will ever handle. It is the need for a will. EVERYBODY should have a will. NOW!

Contemplating one’s own mortality might not be the most ‘fun’-activity to do but it is something that needs to be done. Personally I am hoping that when the time comes my consciousness can be transferred to a giant robot who will then go on to play a crucial role in the battle to save earth from aliens. But that doesn’t mean I have no need for a will!

A well thought out testament will not only lower the tax burden for those you chose to leave your earthly belongings but might also prevent fighting among them. In my own family it took three years to wrap up the last of the inheritance issues after the dead of the last grandparent!

DIY

The quickest and easiest way is to write one yourself. You can find examples all over the internet and if it is a simple and straightforward affair this might suffice.

Get a professional

But once property, an investment portfolio and such are added in the mix it might be best to employ the services of a notary. It is usually not that expensive (a couple of 100 euro) and they know what is possible within the law and how to best phrase it to avoid any discussion.

Since our politicians are contemplating a big change in Belgian succession law it might be best to wait until the new law is published before paying a notary. But this shouldn’t stop you from thinking this over and already writing your own testament. The better you are prepared before visiting the notary the cheaper his services will be.

Revise it every 5 – 10 years

We got ours the day we moved into our jointly bought house and officially registered at our community as living together. The one thing we forgot to take into account is what would happen when we both died at the same time. Since the girlfriend is my main beneficiary and we both live in the same house and often travel together that possibility definitely exists! (The girlfriend does not accept the giant robot scenario, even when I showed her it could be a cute robot, grr women!) If there is a realistic possibility that your main beneficiary can die at the same moment as you, you should write out this scenario also.

But it has been 7 years since we wrote our testament. Our assets have grown considerably and a new nephew has been born in that time. So a new testament will be drafted at the notary as soon as the law has been changed. We always considered this testament as ‘good enough for the next 5 years of our life’. Once you have a will it is best to revisit it every couple of years and see if changes are necessary. For small changes the do it yourself approach will suffice but for big changes a new visit to the notary might be best.

Have a talk

Another thing I would like to stress out is the need to talk. Like the old publicity of the KBC –rightfully-  claimed: talking works! Explain why you want certain things the way you want them. Your will should not contain any surprises for anybody! In the case of a will, a good surprise for somebody often means an unpleasant surprise for somebody else. Also try to avoid to ‘rule from beyond the grave’. Know your limitations! Trying to determine how somebody should use the money you gave him/her is a waste in futility and can cause problems in your family for decades to come. You are dead, stop wasting your time with these mortal issues and learn to play the harp or avoid the pitchfork 😉

 

Monthly expense report: June

June has come and gone already. Times sure flies when one is working! Second month of being back to work again and things are starting to fall into place.

Personal account:

Income: 2 037,74 euro

Expenses: 1 670,36 euro

Savings: 367,38 euro or 18%

Things are back to normal with a 1.200 euro contribution to the joint checking account to cover mortgage, electricity, gas and food. I did spend a bit more but I had maintenance done on the girlfriends electric bike I used for 10 months (I did do some maintenance myself but since we are thinking about selling it I wanted it in perfect condition). Then there was the road tax for the Vespa (61.5 euro, about one fourth of our car!), a modest restaurant visit in Leuven at 40 euro and my dad’s birthday. The swimming pool is costing me some money and I could lower this cost by getting a year subscription. No I pay 3 euro per visit, with subscription it would be around 2 euro. Main question is if I will keep it up for an entire year? I have a history of quitting things like this. I’ll make a decision after the summer.

I also made 300 USD in day trading profits but for the moment I leave them at my broker. When I transfer them to my checking account I will count them as income. I’ll keep them to smooth out any bumps in income when I take my two week holiday or make the transition from interim to fix contract (and from being paid weekly to being paid monthly).

The joint bank account

Income: 2 440,59 euro

Expenses: 2 128,91 euro

Savings: 311,68 euro

We each transferred 1 200 euro to the joint account and got a 40,59 refund form our electricity and gas provider. The month proved to be a bit expensive as we got the bill for the road tax for our car (231,13 euro) and our water bill which is only every three months (143 euro) and hopefully the last veterinary visit (another 79 euro).

Adding half of these savings to my own savings gets me a savings rate of 25,7%. I should continue to hover around this rate for the rest of the year. This means that working three weeks a month covers all of my spending and I can save the 4th weeks wages.

All in all this was what should be a typical month of earnings and savings.

More important than the savings rate (as all savings will be spend on home renovations eventually) for me is if I can indeed survive on a 1.500 euro a month budget AND enjoy it.

I always thought my spending was around 1.500 euro and these six months of using a budget did proof that. Average spending the first 6 months of 2017 was 1 576,46 euro. Pretty close for what was essentially a guess.

We did have the onetime tax refund of around 3.000 euro but we also had the onetime expense of buying a Vespa scooter.

In my first six months of expenses is also the holiday in September which I prepaid in full. And a few other onetime costs because we both have been re-examining our live, what makes us truly happy. And as a result we have been somewhat re-orienting our life. I also had some costs linked to looking for a new job. With those costs gone, no more other one-time expenses in view (well, I could use some accessories for the Vespa …) I should be able to get my spending down to 1.500 euro in the second half of the year.

Have I been enjoying the last 6 months? Hell yes!

There was the mini-retirement for three months, the Vespa and a rediscovery of lots of old school kick-ass trance classics.

Special circumstance investing – June update

Another month has passed. If you sell options this is a good thing because the more time elapsed = the more money in your pocket!

What did I do

I sold the UVXY puts! I bought 3 puts on 16 February this year. I bought them at 8 USD and sold at 8,82 USD on the 26th May
After all costs I made a 9,6% profit on 3 months and 10 days. In % this is impressive but in cold hard cash it is only 231 USD as liquidity is an issue with this product. I would love to be able to plow tens of thousands into this but with liquidity being low and bid ask spread being high I still have my doubts. But a guaranteed profit is hard for me to ignore so I’ll probably continue with it but perhaps in the girlfriends or parents portfolio so it annoys me less.

The ADM put I sold in May expired out of the money. This means I pocketed the 151 USD premium. A 0,75% return in 1 month is not that fantastic but it is on cash that I hold to unwind my leveraged construction if necessary. The leveraged construction should net me around 8% on my entire portfolio so this really is extra. And anyway, it’s a whole lot better than the 0,11% A YEAR people are getting on their savings account.
It actually is a bit better as that option only expired on 16 June and I already wrote a new put on ADM with expiry in July on the 6th May. So for 10 days the cash was pulling double duty, covering both the put with expiry 16th of May and the put with expiry in July. Premium was a little bit better and I should get 1.2% return but on a slightly longer time period : 1 month and 10 days. I am too lazy to calculate the annualized returns. If this one expires out of the money it will be another 238 USD in the bank account. We’ll see in July.

I actually really like my cash pulling double duty (the harder my money works, the less I need to work!) so on the 26th May I sold another 5 puts on ADM. This time with expiry in august. A little longer time period and a little higher premium again: 2.09% on less than 2 months. it will be another 418 USD I can once the put expires out of the money.
All puts have been written at strike 40 USD and I expect them all to expire worthless.
It also means I will probably do no trades in July. I might double up again after the July put has expired but probably only do that in august. It’s July, there are festivals and BBQ’s to attend!

Day trading a few times in June earned me another 300 USD.

So 450 USD in extra profits (and another 650 USD on their way) because I was not a complete sloth this month.

The girlfriends portfolio

I liked the put I sold on ADM so much I did the same one in my girlfriends portfolio. So another 5 puts sold on ADM with strike 40 and expiry in July. She too will be getting an extra 238 USD in premium.

I actually liked it so much I did it in my parents portfolio too. This is why the low liquidity of the UVXY puts annoys me so much. I want things that can scale. So that if I like something. If I am convinced of the attractiveness of an investment I can scale it up and not only put more of my money in it but also plow some money of the girlfriend and the parents in it. I am way too lazy to find 10 good investment opportunities in a year. Two or three is more than enough for me, but when I find those I want to be able to go big.

Like I said, I like cash working hard so I was contemplating of also writing a second put for august on ADM when the price of AB Inbev dropped below a 100 euro. I like AB inbev at the 100 euro mark a lot! So I did double up in the girlfriends portfolio but with a 2 puts on AB Inbev. Went for a longer time period: expiry December 2017. It will be a 7,7% return in under 6 months. Not exactly UVXY put territory but close. And scalable and liquid. In cash terms it means a 1546 euro premium for the girlfriend.

It also means that if AB Inbev doesn’t move a lot at opening on monday I can do the same in the parents portfolio as well (I forgot to take the log in codes with me to work, sorry dad!).

 

How I keep up with the news

Well that is simple. I don’t really. I have got the log in from a friend for the gopress database and once a week I catch up with De Tijd (the Belgian financial newspaper). Reading it with a delay reduces the time necessary to be caught up significantely. Because, when you read a weeks old newspaper you quickly realize how much is utter drivel not worth your time to read at all.

I am not alone in this. Mr money moustasche has a great post about it. He calls it the low information diet. The magazine Humo had an article about it a few weeks back. My parents still have a subscription on it. They keep them and when I visit I take a bunch of them with me. The girlfriend reads them. Since there is always one lying about at the toilet I might leaf through it when I didn’t remember to bring my smartphone with me.

The reason I do this is not to save money but purely to improve my quality of life.

The news is hardly news anymore. It is a lot of speculation about what might happen or what might be the consequences of what just happened combined with a lot of opinions about what happened, or why it happened. At best, reading this is just a waste of time. At worst it will annoy you and sour your mood for a few hours or even a few days (some Belgian politicians have developed an unique talent to deliver in 5 second soundbites such complete and utter ridiculous proposals that any sane person needs a week to just barely regain some of his mental capabilities).

Since the news hardly contains any worthwhile information. It wastes a lot of my time with other stuff that is not news and in most cases delivered information that had no impact on my life or I couldn’t change even when it does impact my life (short of leading an armed revolt to topple the EU leadership and found the Republic of the Sloth, all hail the sloth!). And on top of that it annoyed me more often than not! So I stopped reading newspapers, magazines, watching the news …

This doesn’t mean I do not read or get new information. But now this is on my terms and for subjects I find interesting or will improve my life. Informative sites or blogs about finance and technology mostly. Some fun things on boredpanda or a fun/absurd thread on reddit. Basically I want to either be informed or entertained and the internet can provide both of these in spades at no cost. The classic media offers very little of either and then has the guts to charge money for it! One wonders why they are in trouble …

It’s personal

Last Saturday was the third meet up of belgian/dutch people who strive for financial freedom.

It was the second I attended (missed Antwerp due to illness) and very glad I could make it. Always great to meet like mined people. contrary to my girlfriend some of those attending do not fall asleep when I am talking about options!

I also gave a presentation. I’ll make it available to download here.

Financial freedom in Belgium2

It is part a condensation and part an elaboration of ideas and numbers in these three posts on my blog:

The really short version is that instead of aiming for full financial freedom I only aim for partial financial freedom. Some work will still be necessary. My practical side limited that work to the tax free amount of 7.400 euro since that is the easiest money to earn by working. My stash will cover the remaining 12.000 euro I am going to need to live a full year.

What I did not do fully elaborate on is the reasons why I chose this path.

Some are practical:

  • it’s more tax efficient, swapping work that is taxed at 50% for work that is taxed at 0%

some are personal:

  • my age, I will already be 47 when I achieve this for both me and my partner; achieving full financial freedom would take 7 more years. I would then be 54!

But the main reason is that for me this whole financial freedom is about happiness. Trying to live life on your own terms. Having the freedom to pursue personal interests and projects.

When working full time I simply do not have enough time to do this. Hell, I should do a lot more sport to get my weight down and my general fitness up. But that would mean almost no time to relax in the evening. And I like relaxing in the evening!

But working only 3 months a year or 1.5 days a week will give me the time I need. Not only to do more sports but also to pursue my interest and passions. Having even more free time than those 9 months will not add a lot more happiness to my life. But getting those 9 months years earlier than the in the fully financial freedom scenario will.

The way I see it, is that financial freedom should not cover everything. It should only cover the basics. For the rest you can still work, put in some effort. With some luck, you might even be able to earn some money pursuing your passion thus eliminating the need to work for an employer completely.

I have seen a lot of people on the moustache forums falling prey to the ‘one more year’ syndrome. People with a big stash who still keep working ‘one more year’ because they are afraid the stash will not cover every imaginable future cost. Planning to do some work eliminates this fear. Then your buffer is not an ever larger stash but just working a bit more when unexpected costs appear. For instance: my calculations use the tax free amount of 7.400 euro a year. But due to my mortgage deduction I can actually earn 9.600 euro tax free a year. That 2.000 euro I can earn extra every year would mean 50.000 in stash I do not need to earn before ‘pulling the plug’.

A lot of people on the forums also earn money once ‘retired’. Just look at Mr. money moustaches wife making enough with her Etsy shop to cover both their basic spending. Off course this income was not predictable. But the fact that you will have SOME income is predictable. Even if you do not yet know how you will earn that income. Mr. money moustache had his carpentry skills to fall back to if some additional income was necessary.

In Belgium 7.400 euro is the easiest money you can earn. Since this will only take around 3 months to earn and thus leaves me plenty of time to pursue my own interest it is the basis for my calculations.

This basis will probably be different for everybody. Just like not everybody will plan on spending only 18.000 a year. some will be ok with only 6 months of not having to work, others will want to spend 24.000 euro a year (or more). That is what makes it personal finance. But do take some future income into account in your calculations. If done right you will still be relative young when the basics are covered by the stash. You will want to do SOMETHING. Wasting extra years at a job you do not like or postponing projects, passions until the stash is big enough to cover every imaginable and even unimaginable future expense is in my book foolish. The alternative: to plan some work after ‘retirement’ is a lot better since it will allow you to pull the plug on the full time job years earlier and will give you the flexibility to handle unexpected costs if those should ever arise.

Why I do not like money

It might come as a big surprise from somebody aiming for financial freedom and being a very active investor for the last 17 years of my life but I do not like money.

A lot of money gets you nowhere

Now money is a pretty nifty human invention and excellent as a medium for exchange. Very practical indeed. But as a store of value it is useless. Amassing a lot of money will get you nowhere.
The reason is pretty simple. The value of our money is the future strength of the underlying economy (or at least this is the case since we have abandoned the gold standard). This why the euro, usd is worth something and the Zimbabwe dollar or Venezuelan bolivar not. Those last two countries barely have an economy left with no future change expected. As a consequence the value of their currency has evaporated.

Having your currency backed by the whole of your economy is not a bad thing (it is a hell of a lot better than it being backed by gold) but the thing is that it is by default backed by your ENTIRE economy. All of the great companies in your country, but also all of the bad, money losing companies. And a huge amount of non-profit (either by design, or involuntary) entities. Which means that if amassing a lot of money is your goal you are going to remain squarely in the middle of the pack. I do not do packs very well.

What I like is to own shares in excellent international companies, preferably with a big moat so they will remain an excellent company for a long time and with pricing power. Pricing power means that inflation is something you do not need to worry about. And international so that even if the government of your country thinks that a Venezuela or Zimbabwe policy is something worth following, the company will be fine.

Simply put, if you were a Venezuelan who had little to no bolivar but instead had your wealth in shares of Coca-Cola, life would still be good (due to rampant crime you would probably have moved some years ago, but at least you would have had the means to do so).

Even simpler put: money is the equivalent of a photo of a beautiful woman. It’s the woman you should be chasing, not the photo. I mean, Draghi is printing 60 billion new photo’s every month. But he is creating 0 excellent companies … have a guess what is going to happen with the value of that excellent company?

That is why I am fully invested at all times. It is why I do not own any bonds and will never own any. It is also why I want to amass as much shares as possible. And it will be with great pain when I will need to extract some cash from them when I stop working. The two years of cash I will hold when pulling the plug is solely due to the volatility that is unavoidable when you have a system based on fiat money.

A little side note about the gold standard

A lot of people do not like money because it is fiat money backed by nothing tangible like gold. They think a return to the gold standard would solve most of our problems.
It would solve one problem: volatility (and even then, volatility also happened when the gold standard was in place, countries too can be stupid in the capital creation department). Because the value of your money is backed by the future strength of your economy as a whole and this future strength is uncertain you do get some volatility in the value of your money. Most of the time this volatility is pretty low (since it is the whole of the economy) but in times of crisis this volatility will experience a big uptick. It is then that the proponents of the gold standard (or goldbugs) make their appearance.
Unfortunately, it would create a lot of other problems (like a lower growth but also a lot lower progress and innovation of society as a whole). You see, it is a good thing that we have fiat money. It is a very good thing that there are institutions (mostly banks) that can create new money based on nothing more than a future repayment promise. Without this a wealthy elite would most definitely control the world and the return they would demand for investing in a smart idea or business opportunity would be a hell of a lot higher than the current interest rates. If they would want to invest at all …. Since they are already very rich, backing a young ambitious person is not a very attractive proposition (it just creates more competition for a limited amount of capital), the exception being off course if the young ambitious person is family (or willing to marry into the family). Though luck for all those smart people not born in the right family….

As a society you will advance a hell of a lot faster when there are several commercial entities capable of backing future aspirations of smart, young ambitious people by ‘creating’ the necessary capital. The downside is volatility and financial crisis now and then. The root cause of these is that to much money is created which does not create an equal or bigger value than the capital employed. For instance the dot com crisis. Here too much capital was poured into companies who failed to achieve the necessary cash flow to justify all of the capital they had consumed. Or the 2008 financial crisis, where the promise for future repayments on mortgage loans turned out to be a whole lot lower than anticipated. The 2008 financial crisis was big enough to have an impact on the whole economy, so it had an impact on the tax revenue of countries. Which then actually translated in a second crisis. A sovereign debt crisis: countries who had borrowed too much and whose future repayment capacity was not big enough to service all their debt. Greece, Spain, Portugal, Italy (France, Belgium) … The thing is, a crisis that is limited to the private sector is pretty easy to solve: you let a whole lot of companies go bankrupt. Investors loose the capital they so foolishly deployed and the world can continue turning. Applying the same recipe to countries as a whole is a lot more painful. So you lower interest, you prolong the duration of the loans and you start printing a whole lot of extra money to replace the money that is now tied up in non-performing loans to countries that will never be able to repay that debt. This way, you can pretend that the money is not actually lost. The net result of this is that everybody who holds that money (euro’s in this case) will, in some way, absorb some of the losses of those non-performing loans. No idea if a better solution exists, but it does make me want to have as little as possible money and as much as possible shares in excellent companies.

Why I do not like dividends

Since the dutch-belgian meet-up is upon us tomorrow I thought it a good time to throw a stick in the chicken coop (this is actually a litteral translation of the dutch saying: ‘een knuppel in een hoenderhok gooien’, the English equivalent would be ‘to stir the pot’).

You see, contrary to a lot of other finance bloggers I do not like dividends. I would even go as far as to say I hate dividends and have been trying to avoid them as best as possible for my entire investing time.

There are two reasons for this. The first is taxes.

The taxman cometh

Tax on dividends in Belgium is currently 30% and if you happen to own foreign shares you will most probably be taxed twice: once in the country where the company has it’s headquarter and once more in Belgium! So for me dividends of Royal dutch shell will be taxed 15% in the Netherlands (that is after I fill in some paperwork to lower it! Ugh, paperwork!) and then what is left will be taxed at 30% in Belgium! So a dividend of 100 euro gross will end up being only 59,5 euro by the time it hits my account. That is a 40% total tax level. I prefer my companies to keep this money and invest it themselves thus avoiding all this tax nonsense

Laziness

The second reason is laziness. Finding good companies at an attractive price is not easy. Shortly after the 2008 – 2009 financial crisis you had your pick of top quality companies at bargain prices. But over the years prices have risen. Once more, you need to look at a lot of coal to find a diamond. That is a lot of work. And my name is not financialfreedomSLOTH because I like working! I find it much more pleasant if the company I invest in would do this in my place. They are usually a lot better placed to do it.

– By doing this they avoid taxes. As said above: if Royal Dutch shell pays a dividend I could only have 59,5 euro after taxes to invest. Which means their rate of return can be lower than mine and still produce the same value for me!

– They also have economy of scale. Finding a good company to invest in takes a lot of work. But once you have found a good investment opportunity investing 2.000 euro, 200.000 euro or 2.000.000 euro does not take a lot of extra effort. (There is sometimes a little bit of effort to avoid influencing price and illiquid stock can put a limit on the amount that you can invest but this is easy to avoid by only looking at companies of a certain size).

– Private equity investments are also possible for them.

– They have the best knowledge of their own sector. If market size is too big to acquire additional companies within their sector they can always look at their suppliers and clients. Here again they have an information knowledge advantage.

It is the reason I like holding companies and within them absolutely love Berkshire Hathaway!

Other stock I like mostly for option plays. Buy it by writing a put, then sell it with some capital gains by writing a call. All of which is tax free in Belgium! Dividends are then something that sometimes happen by accident (like the time I held Coca-Cola shares just when they happened to pay out a dividend, doh!).

Profitable minority

I know I am in a very small minority with this (and I might change my approach once I achieve financial freedom). But it has been a profitable viewpoint up until this point.

A small anecdote on how being too focused on dividends may cost you money. Years and years ago I noticed that the price of Artwork systems (a small, local software company) would fluctuate. It would go higher when the dividend was near and then reach a low point about 6 months later. This was because it was a very small stock, nobody followed it and liquidity dried up. But the swing in stock prices was more (almost 2x more) than the dividend paid. And liquidity near the dividend date was also higher! So I accumulated a position in the down months. Sometimes being the only one in the market, my bid price became the market price. Ooh, fun times! And then when the dividend approached and liquidity returned I sold it all before the dividend was paid (let somebody else pay those taxes!).

Since the general assembly was in the same city I lived in at the time I even went to it and explained why I would prefer them to keep the dividend and use their profits to turn Artwork systems into a holding company! This was against my direct financial interest but my long term wish to be as lazy as possible won over my wish for short term profits. I mean, all that buying and selling (sometimes 5 or 6 trades In a single year, in a single stock!) was very tiring 😉

The president of the board explained to me (in a somewhat belittling tone) they had no interest becoming a holding and the other shareholders almost skinned me alive (how did I dare to threaten their sweet dividends!!). The next year I visited again, kept my mouth shut and just got very drunk on the excellent champagne they provided for their shareholders. Even smuggled one bottle outside under my coat (there can be other advantages to being a shareholders). It was one of a very few times I was truly and completely drunk!

A year later my very profitable strategy came to an end as artwork systems was bought by Esko, which was at the time owned by Axcel A/S a Danish private equity investment company. This private equity firm used the profits of Artwork systems to build out their graphics group and then sold the complete group to Danaher, which is for all intense and purpose a holding company …

Through all of this, the president of the board stayed on …

Danaher is a public company and pays a dividend. Perhaps I should go and try to explain my viewpoint again? Does anybody know what quality of champagne they serve?

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.

Special circumstance investing – May update

Not a lot happened.

The UVX put is still not sold. Mainly because I just do not feel like logging into my computer when I get home after work (and my broker’s site is blocked at work). But I now am clearly in profit on this position so it will definitely go in June. Profit will be around 10% which is not bad for 4 months. Still not sure if I will do this again or not in the future for the same reasons I mentioned last month.

What did I do?

Like I said, not a lot.

The ABI put expired worthless. So the premium off 786,40 euro is now completely profit and in the pocket. I must repeat I really love my broker as he lets you trade on margin. My previous brokers insisted on having full coverage when writing puts and although I agree with this on principle it always annoyed me when I had to buy back a worthless position before being able to write new puts. just for this reason I would now always choose a broker which allows leverage. At my previous broker I would have need to buy back the ABI position at a cost of 20 euro (and a fee) before I could enter into a new position. Now I could just let the ABI put on the books until expiry thus not having to spend the 20 euro on something I knew was worthless and avoid another trading fee. It is not only that you avoid small costs but also that you gain a lot of flexibility. And having flexibility can mean big profits sometimes.

Also, it’s less work to do. Which lets me be lazy, always a big win in my book!

I am in profit on the UVXY put I bought. I am in profit on the ADM put I sold and I am in profit on the leveraged construction. Life is good.

Day trading grinded to a halt due to work. 1 May I was home due to it being an official holiday in Belgium and I made 95 USD with day trading that day. Then I started working and I only did one more day trade on 16 may. Made 20 USD, exited the trade because my head was not into it and that was it for the month. The girlfriend is going to a music festival in Portugal this week (yes I know, the decadence!) so I hope to get some day trading in on those days. Best laid plans and all of that ..

The girlfriends portfolio

Well, since I did almost nothing in my own portfolio you can guess what I did in the girlfriends portfolio: zero, zip, nothing. She should have received her dividend (around 2.000 euro) from her main position in May, still need to check that! I guess this is the best passive income you can have: just pocketing the dividend and the only thing you need to do is transfer the dividend or re-invest it.

The girlfriend got her current portfolio seven years ago. When we bought our current home together she sold her house in Ghent. She made a very nice profit on that sale but I decided we should borrow 100% of the purchase price of our new house. Part of her profit she wanted to use for renovations (with me putting up the same amount in cash for renovations) on the house but I decided she needed to invest a big part of it as well. She wanted dividends so ended up with a good stock (but not my first choice). After almost 7 years this position is now close to double the original worth (including dividends)! The downside of this was that for the next 7 years all our savings have been going to the house renovations (and we are still not finished). The alternative would have been to not do the investment and use all the money for renovations. And then start saving up to build a stash (in her case, or me to rebuild the stash). Well, after almost 7 years I can say that the profits on her stash are bigger than anything she would have been able to save! And I was a lot less active in her stash than I was in mine (so the difference for me would have been even bigger but not so easy to calculate). The only downside is that we are now still not finished renovating and that for a few years we were living on a construction side (although last year, with the kitchen and bathroom renovation, was the hardest). It just proves there is profit in being able to handle discomfort.

Monthly expense report: May

Things start to smooth out again. One full month off working again under the belt. Interim at the moment and the weekly payments are a bit annoying for the budgeting (there is some  delay). But this should sort itself out over time. And I still have around 2.000 euro in day trading profits to smooth things out.

Personal account:

Income: 2 090,59 euro
Expenses: 1 145,99 euro
Savings: 944,60 euro or 45,2%

Since my contract started on 2 may (1 may being an official holiday) I got 52.86 euro of unemployment. This will be the last payment and as of next week I will be officially full time employed in the eyes of the government.
Day trading was almost non existing as I just do not feel like it after work. Just did it one evening for a grand total of 20 USD! More on that in my special circumstance investing post.
The high savings rate is because payments to the joint bank account were low: only 750 euro this month so the last of the big tax refund is used up. I did spend 60 euro to go swimming, 58 euro on a really, really heavy duty lock for the Vespa (using the to go the train station now and do not want it to get stolen. The lock will probably survive me and any of your grandchildren as it is top quality) and 20 euro on a diet/eath healthy eating book as I am feeling motivated to tackle my weight. The girlfriend is going to a music festival in Portugal this week so dieting will start after that (I really need to do a health post). All other spending was pretty normal.

The joint bank account

Income: 1 500 euro

Expenses: 2 344 euro

Savings: – 844 euro

As stated above, we only contributed 750 euro each so the last of the big tax refund was used up in May. As of next month contributions will return to their normal 1.100 a 1.200 euro level.

Expenses are pretty normal. We did get our water bill which lands only every three months (143 euro), there was the vet visit for our cat and the insurance for the Vespa. 93 euro for a full year of insurance is pretty cheap. So I had no financial reason whatsoever to drive around on the Vespa uninsured for almost 2 months, just me being lazy …

Anyway, subtracting my half of this overspending in the joint bank account form my savings and I end up with a savings rate of 25%. Not bad!

This is also the first month I could transfer money from my checking account to my savings account. Victory! You see, I used to feel comfortable having 2.000 euro in my checking account and 10.000 euro in the savings account. I managed to keep those numbers for most of our home renovations and then we did the kitchen and bathroom renovation last year and when all was said and done I was left with only 300 euro in cash on my checking account and 0 on the savings account (talk about being asset rich and cash poor). I was close to transferring something to the savings account when I decided to buy the Vespa. So I am glad I could transfer 500 euro this month and that I am back around the 2.000 euro mark on the checking account! I would like to get to 5.000 euro on the savings account (mainly because our car is old) and then we start renovating again …

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