Bloggers on FIRE – Finanzglück
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.
Please briefly introduce yourself to FIREhub.eu readers
Hi there, I am Nico. Born and raised in northern Germany, I travelled the world for a bit before I settled in Frankfurt a couple of years ago.
I am 40 years old, happily married with two kids (3 & 5) who keep me busy, beside my day job in finance and blogging. But without them the blog would not exist, because Finanzglück is about family and finance – having kids should not stop you from reaching FI. In fact, it is the best reason to free up some extra time.
What is your backstory?
I actually still recall the day that changed my life. On 3 rd June, 2013, I was lying on the couch in my London flat, being bored. The next day I had to go on a business trip, and I was looking for good excuses not to start preparing for it.
The options were to either watch another episode on TV or browse the Internet – both not very tempting. I went for the web and ended up with an article about this strange Canadian guy living in the US who retired at 30. Like for so many others, it was MrMoneyMoustache who paved the way for my life today.
To cut a long story short – I read every article on his blog and built a spreadsheet projecting my cash-flows over the next years. After a few weeks I finally realized: Shit, this could actually work! Reaching FI by the age of 45 was possible.
That was six years ago. Many things have changed but becoming FI at 45, despite having a family, is still well within my reach.
Why do you want to reach Financial Independence?
I don’t need to repeat the usual answers like being able to finally own my time, be free to do whatever I want, and so on.
More interesting is how my view on FI has changed over time.
Initially I calculated how much money I would need in order to be able to live off my passive income. Once I reached that day, I would quit my day-job and conquer the world.
Today I think differently – for three reasons:
- How realistic is it that I will never earn any money even when I am FI? Whatever I will do, there will still be income generated. The required FIRE amount I calculated was therefore too high. I may be able to quit well before I initially thought.
- I actually still like my day job very much. I just spend too much time there.
- My kids are young. It is such a lovely period in their lives and I want to share more time with them now, and not in five years.
Over the last months I therefore realised that I need a change in my strategy. I am still working out the details, but it will likely be some kind of part time working arrangement – still with the target of being able to quit entirely in a few years if I want to
How much is your “enough”?
We live a pretty normal family life – house in the suburbs, with a car and a few holidays a year. The Frankfurt area is rather expensive (for German standards) but our lifestyle is modest. Once the mortgages are paid off, I reckon we need to cover around 2,500 – 3,000 Euros in monthly lifestyle costs. That is the target amount, roughly.
Where are you on the road to Financial Independence?
So far so good! Even after going part time soon (maybe only working 3 days a week in my day-job) I should still be able to get there in my mid-forties. Which is in five years.
What do you want to do with your life once you reach Financial Independence?
With kids it is never going to be boring. There won’t be any crazy changes. We still plan to stay in the area because we enjoy our lifestyle here. I will start concentrating more on Finanzglück.
Apart from that, I have a few fitness related goals I want to achieve. Once a year, the Iron Man competition runs straight through my neighbourhood. It would be a shame not to be part of it one day, wouldn’t it?
But how it will all work out in detail I will need to figure out once I get there. Maybe starting the exact planning a year or so before. My experience tells me: It is going to be different from what I would plan today anyway.
What is your strategy for reaching Financial Independence?
In 2011, after being frustrated with my stock market investments, I bought two flats in Berlin (Prenzlauer Berg). In retrospect, it was a good time to buy there. In total, including transaction costs, both flats combined cost me around 150,000 Euros at the time. There is still some debt on the flats that will be paid off by the rental income in a few years.
We also bought a house in 2014 – more expensive, and with more debt to be paid off. That mortgage should be gone in five years.
In parallel, we feed our ETF-Portfolio (just three ETFs) every few months with a few thousand Euros in investments. We have been doing that for quite a few years now, and a healthy six figure amount has accumulated.
So once I reach age 45, our family will be debt free. That is the only strict financial target I am following.
Assuming I quit my job then, we would have a monthly income that should roughly look like this:
● 1,000 Euros in rental income (after costs).
● 500-1,000 Euros in dividends/gains from my ETFs.
● 1,000 Euros from Finanzglück or another side gig that I would do (probably much more).
● Around 400 Euros “Kindergeld” – a financial support all parents in Germany get to raise their kids.
● And finally, my wife also enjoys working and will likely continue to work in a part time job or something else (let’s assume that is another 1,000 Euros).
So there should be around 4,000 Euros of income per month. That is more than sufficient to cover our lifestyle (keeping in mind that we will live in a paid-off home). I may therefore decide not to work on a side gig for a few months/years or for the family to go travelling for six weeks during the summer vacation period.
My focus is not on the magic amount I need to accumulate in order to reach FIRE, but rather on earning the required cash flow from multiple sources.
What will be your financial strategy after reaching FI?
Nothing spectacular. We will just go on and keep on investing in our ETF portfolio with whatever is left after lifestyle costs. The game changer is not having to pay down debt any longer in a few years.
What was your biggest financial mistake?
Buying a private pension scheme product (“fondsgebundene Rentenversicherung”) from an insurance company while I was still a student. I was naïve (and stupid) enough not to look into this for a long time. Finally, after having paid my roughly 100 Euros per month into it for nine full years, I checked the balance accumulated until then. It was just 3,000 Euros. That was the moment I discovered being ripped off. And the worst: it was all completely legal. (You can find the full story including the costs breakdown here (in German.)
What advice would you give to your younger self?
Read more books to self-educate myself. Especially on personal finance topics I should have spent more time earlier in my life. I might well be FIRE by now if hadn’t spent that much money while I was younger and had started investing earlier.
On the flipside, spending a fair share of my income on travelling and cold lager in pubs around the world was not the worst decision.
What’s your wildest dream?
Are we still talking finance?
What is your favourite just-for-fun activity that brings you joy?
It may sound boring, but just playing with my kids is what brings me most joy. It is incredible how much happiness my two kids brought to my life.