Bloggers on FIRE – Financial Independence Rocks
In our Bloggers on FIRE series, we interview European FI bloggers to find out what makes them tick. Our aim is to build up a “who’s who” directory for the European FI blogging world. We hope you enjoy the series and discover some new blogs to follow. You can find a full list of our Bloggers on FIRE interviews here.
Click here for the German version of this interview.
Please briefly introduce yourself to FIREhub.eu readers
Hi there, my name is Katrin and I’m 52 years old. My husband and I live in Hamburg, Germany, and we have a grown-up son. I quit the corporate world right before my 49th birthday and now work on projects of my own choice.
What’s your backstory?
I never planned this, but after doing a traineeship in a media agency my career took off pretty quickly, and I held a row of high-powered jobs in advertising and marketing. For almost all of the 21 years I worked in paid employment I really loved what I did – lots of new business pitches, building up departments from scratch, working with a diverse range of teams and clients in different countries.
I started my traineeship in 1994, and was very fortunate to be right in the middle of things when the commercial part of the internet was being developed. Working within an international agency network, I had the opportunity to take on positions in Helsinki and Paris, where our son was born. As is totally common in France but not so much in Germany even 20 years later, I continued working full-time after coming back to Hamburg (so did my husband).
My – or our – path to FI wasn’t much of a strategic project to start with at all. We did decide on buying an apartment rather than renting when I moved back from Paris to Hamburg – after looking at a row of apartments to rent, we had the impression that we’d get a better value for our money when buying. We did buy small, though. A 63 sqm, 1.5 bedroom apartment, eventually going for a townhouse in a less central part of Hamburg three years later when we needed to house an au-pair.
The apartment provided the foundation for some more rental real estate investing later. But I only got on top of our finances in our mid-thirties. We realized that we might not be able to work in our jobs until traditional retirement age, as people of the age group 50plus became rarer and rarer sightings in advertising and marketing. So we wanted to be in a position in our fifties where we didn’t have to rely on a steady income from paid employment anymore, but could make do with free-lancing if necessary.
That’s why from 2004 on, I started reading more about personal investment topics, but – unfortunately – never stumbled upon any of the early FIRE-blogs. In fact, I only discovered the community after I quit working. We still did very okay due to both of us earning good salaries (not investment banker style or anything similar, advertising doesn’t pay that well). But we could have made much smarter investment choices had I known earlier what I know now.
Why did you want to reach Financial Independence?
As you can see from my last answer, our decision to save and invest for later rather than spending it all now was fueled by concerns about job security in the beginning. Not about voluntarily quitting. But that changed in 2013.
My job at the time involved a weekly commute between our home in Hamburg and my work place in Cologne. Which hadn’t bothered me much for years, although it certainly didn’t enhance our quality of non-work life. But this aspect came much more into focus when I wasn’t as satisfied with my role anymore.
On top of that I was starting to get REALLY tired of all the bullshit bingo in the advertising industry and the corporate politics and never-ending cycle of restructuring in our organization. I was also getting physically tired and couldn’t bring myself to get enthusiastic about a potential job change either. Maybe most of all, I missed being able to open a book without falling asleep after three pages, and having enough energy to explore new things – which had always fed back positively into my work life, too.
So there was quite some “FI(RE) from” involved here (I have some issues with the “retired” part, that’s why I put it in parentheses) – but my main driver was to become financially independent enough to lead a happy life, whether it involved work I got paid for or not. In the short term I wanted to have enough F***-You-Money to be able to take off one whole year to see whether I would find a position that interested me enough to go back into full-time employment, and to bridge the gap until we could pay off the remaining loans on our rentals in case I didn’t.
How much is your “enough”?
My “enough” is surprisingly small these days, more below. But while my husband continues to enjoy his job – they have a great agency culture – we still want to be in the secure position I lined out above. Future health care costs are a big unknown – we’re privately insured – and I expect them to continue to rise faster than the general inflation. That’s the main reason I’m planning with a pretty wide margin.
Ideally we won’t have to sell principal before we’re at an age where we might not be so hot on dealing with renters anymore. It will be helpful that, as of age 67, we should be receiving a solid monthly base income from Germany’s statutory pension scheme to which we’ve been contributing throughout our careers.
Where are you on the road to Financial Independence?
I consider us technically FI going by the common definitions in the community, i.e. the 4%-rule or 25x expenses. In fact, it’s turned out I could cover all my current costs with rental income and dividends. Our home is paid off, so we live rent-free. My spending has gone down a lot: I have time to shop for groceries and enjoy cooking at home. My car is 22 years old and I use it rarely, mostly I walk and bike. I’m not frequenting one of the city’s top hair salons anymore, but the local hairdresser’s (fun fact: to my real surprise they actually do an even better job). No more smart clothes for work, shoe-shopping sprees or week-end trips to compensate my job stress. Also, with our son grown up, there are no more child-related costs.
Since my husband still works we’re in the fortunate position that we can continue to re-invest the cash-flow. Were I on my own and had to live off “my” half of our investments, I would have probably transferred from the private to the universal health care system when I quit my last job. This would have brought down the premium considerably, my single highest monthly expenditure (by far).
What do you do all day now you’re FI?
I walk or bicycle with our dog, read, write posts for my blog, learn Italian, cook, watch online classes on subjects that interest me (history and philosophy for example), meet family and friends, volunteer my time. People are sometimes worried they might get bored if they lack the workplace structure. If you have a lot of interests, I don’t think that should become a problem.
Nevertheless I noticed that living solely off “passive” income doesn’t come with positive aspects only for me: There still is work involved – I do all of our financial planning and investing as well as our taxes, and take care of the administrative stuff around our rentals. But the “pay” for this doesn’t feel as directly connected to the effort I put in as it used to when I was still employed.
This is something I only started noticing recently, and I haven’t thought through the implications yet. I seem to be missing a sense of achievement that I cannot compensate as fully with successes in other areas – say getting more proficient in Italian for example – as I originally believed. Most people will rightfully consider this a luxury problem. I only mention it as I suspect other early retirees from high-powered jobs might be affected similarly.
What was your strategy for reaching Financial Independence?
Living below our means, paying off our home in 9 years, and not upsizing anymore afterwards (despite me being constantly tempted); investing in rental real estate, mutual funds/ETFs, savings plans for whole life insurance and annuities, contributing to the statutory pension system.
What is your financial strategy after reaching FI?
Living off rental cash-flow, dividends, whole life insurance, annuities, plus state pension from age 67.
What was your biggest financial mistake?
Investing in whole life insurance, annuity products, some dot.com-disasters and front-loaded mutual funds rather than getting smart about ETF investing straight away (OMG, this sounds amazingly stupid in hindsight. May I be allowed to say that things have become a lot easier now, with all the information available on the internet ;-)?).
What advice would you give to your younger self?
Understand the power of compounding and start investing early. And: relax, you don’t have to be perfect, you’ll be alright…
What’s your wildest dream?
I can’t say that I have any unfulfilled dreams at this point – I don’t have a bucket list, either. That’s probably because I already had the opportunity to do and experience so many interesting things, live in different countries, travel, learn new stuff.
But I hope I will continue coming up with new ideas I want to explore. Starting a business, getting a Masters degree, writing a book… I’m always inspired by people like late German chancellor Helmut Schmidt or fashion industry icons Iris Apfel and Karl Lagerfeld, who keep doing their own thing right up into old age – they’re my heroes.
What’s your favourite just-for-fun activity that brings you joy?
Having a drawn-out week-end brunch or dinner with friends at our big wooden dining table over tapas, bread, and wine, with chilled music, the right mix of light and meaningful conversation, and lots of laughter.