Net Worth Update: December 2019 and Year End Review

Our net worth increased in December to $59,577 and €53,624, which is a one month change of 4.36% and 3.61% respectively. That's due to my bonus, the infusion of money from a relative to subsidize my wife's music lessons, and the stock market's performance.

For the year over year view, compared to December 2018, our net worth has increased by 60.95% in USD and 65% in EUR. That's an increase of $22,562.

That's not bad, but a lot of it was dumb luck. Compared to the 2019 budget I wrote at the beginning of the year, our spending was higher in nearly every single category than planned, and our saving was lower in both categories than was planned. I wish there were an obvious reason other than just unrealistic expectations, but that's the heart of it.

Percentages

With our total savings of €7,959, we had a savings rate of 13.79%. If we were total newbs at saving starting with nothing, that would imply we'd have 51 years before retirement (according to the famous "The Shockingly Simply Math Behind Early Retirement").

So where did our money go? The top category is "Rent" at 17.78%. Since bundled into the "Rent" are several utilities, it on its own does not seem too egregious. It's not ERE-level, but I'm actually pleased at how low it is. With my regular pay-raises and Germany's strong renter protections, it should trend downward as a percent over time.

The second largest line-item is "Dentist" at 13.01%. As I mentioned often, I had some major dental work done this year, and although I expect some assistance from several sources, only one of them came through before year-end (seen in the graph as "Refunds").

After that are the "BLOW" categories. Combined, they're 12.79%. This is spontaneous money and is something of an allowance for me and my wife. I estimated that we'd need €2,400 each for the year, but in reality, we each spent around €3700.

What lies within those "BLOW" numbers? It contains our hobbies, our restaurant visits with friends, our clothing, some travel, some entertainment, some toys, and so on. It's a big category. I wish I could say that I knew how to restrain spending within it, but it's tricky. Ultimately, we know inside ourselves that we can afford certain things, so we buy them.

Under those large categories are other medium sized expense groups. "Groceries" at 6.9%, "Health Insurance" at 5.68%, "Household" at 5.19%, "Travel" at 2.41% and "Telephone" at 2.36% are the largest. Groceries have proven difficult to cut. There's not much to be done about the "Health Insurance" cost. "Household" was inflated because we bought a sofa and an iPad for my wife when her computer died. It's something of a wildcard in 2020 because I'm not sure when my computer might kick it, but until it does, I'm going to assume that this category will be lower in 2020. "Telephone" was inflated due to my iPhone purchase at the beginning of the year, which I won't repeat in 2020 absent one of us losing or killing a phone.

And "Travel" basically means plane and train tickets for vacations. It's a separate category from our commuting categories (which are so small as to be essentially meaningless). Like everything else, I planned an amount, and we spent more than I planned for. I will just plan for more this year.

Stock Performance

Since our savings rate was so low, the gains came mostly from the performance of the stock market. In December, 2018, there was something of a bear market, so my numbers were depressed. As I wrote then:

Since the majority of whatever wealth we have is in the form of stocks, we were hit hard by the sell-off in equities. Anyone paying attention to the markets this past month would have seen the kind of fast paced elevator down that market pundits have been scaring us about for years. Our savings rate didn't spare us from the damage.

But in 2019, stocks did amazingly well. My collection as a group did very well, in fact, and the turnarounds by some have been shocking. I have some very good winners, and I'm pleased with the names in the portfolio right now.

That said, I did make some mistakes. In general, my mistakes have tended to be selling too early, rather than too late. Some names I took losses on for no good reason, and with others I took profits too early and missed out even higher highs.

Simply abiding a portfolio is hard, and although I'm getting better at it, there's no guarantee that I won't futz around again with negative results.

2020 Expectations

Obviously, I have no control over the stock market, so there's no guarantee that our net worth number will be higher next year than now. But I can control our savings rate.

The biggest change will be the absence of dental costs. I'll go in for a cleaning and all that, but the big procedures are behind me for the time being. If I save that, it will result in a near doubling of our 2019 savings rate. If we cut down our "BLOW" costs, then maybe we can get even more saved.

A wildcard is the parent I mentioned in "My Baby Boomer Parent is Poor". My family has reached an inflection point there, and I wonder if 2020 is the first year I'll have to help. I hope not, but it's not outside the realm of possibility.

My wife and I have no large expenses planned for 2020. Maybe a computer, but I'm not going to rush it until it becomes absolutely necessary. We'll do some travel. We have no large-scale furniture purchases planned. My hobbies don't require any new large purchases.

So this year, I'm hoping to save over €10,000 and hopefully closer to €12-€13,000, which would be a 23% savings rate. That feels doable and maybe even beatable.

Here's wishing you and your loved ones a happy and prosperous 2020.

Net Worth Update: November 2019

Our net worth increased 3.56% in USD and 4.03% in EUR to $57,087 and €51.756 respectively.

This was a surprisingly good result considering some large expenses. Once again, the stock market performed well. Our taxable brokerage account -- excluding deposited money -- climbed about 5% during the month. The IRAs climbed 3%.

On the expenses front, I finally got the bill for the dental work, and it was as quoted and expensive. Thankfully my health insurance chipped in their part quickly after I'd paid the bill in full, which cut down the cost by a third. I still have some other expected reimbursement sources that will hopefully chip in during the next month.

Our groceries budget was again really high. We had a Thanksgiving feast with some American friends, and we chipped in on some of the costs. But I doubt that was the whole story, and I hope this isn't a new normal.

December Outlook

On the income side, I'll receive my Christmas bonus from work, which adds up to 1/3 of a full month's pay. We also expect to receive the money from my wife's relative who helps subsidize my wife's music lessons. I realize how lucky we are for that.

As mentioned, I expect to receive additional reimbursement for the dental work. It won't cover the whole cost, but it will be enough that the total cost will have been significantly brought down.

We'll have to pay our estimated taxes in December, and that will be a large hit. My wife, due to a US trip, will have worked less in November, which will lower her December income.

We also need to buy my wife a new computer since hers finally died. I'll need to write a separate post about that since that previous computer gave us excellent value over its life.

Net Worth Update: October, 2019

Our numbers increased to $55,126 and €49,753, which is a month over month rise by 5.97% and 4.44% respectively.

This was almost entirely due to the performance of the stock market. If you follow the market at all, you know that the S&P 500 hit new all-time highs in October, and that momentum brought my collection of individual names along for the ride. I'm finally back in the black, and I'm curious if it will actually stick this time or not.

We saved just under €1500 of our income, which amounts to a 34% savings rate (of the money that comes into our tax account). We overspent in October though, so that's going to cut into the amount I can save in November.

We also bought a plane ticket for my wife to visit her family in the USA. Ticket prices were reasonable, and she wants to support a family member who's going through a tough time.

Improved Groceries Spending?

Although I'd hoped we could keep our grocery bill down, we ultimately spent much more than budgeted this month. I'm still a bit confused about the result.

Part of the challenge is that I've joined a gym and am working out a lot. I need to eat more because of this, and at first, I was trying to do it with cheap bulk options like lentils, onions, oatmeal, frozen peas, etc., but my digestive system just couldn't handle it. I've eaten plenty of high fibre foods in my life, and the amount of discomfort I experienced eating these less expensive options was confusing.

I'm still trying to eat mostly cheap foods, but there's no escaping that I'm eating more of everything, and that has a cost. On the other side of the ledger, my alcohol consumption has dropped significantly, which is a major savings.

First Credit Card Product Change

I followed through with a product change from the Citi ThankYou Premier after the annual fee hit my statement. I tried asking for a retention bonus, but the bank had nothing for me, so I product changed to the Rewards+ card and got the fee refunded. We'll get to keep the accumulated points, so I'll be on the lookout for a chance to use them at some point.

Before I switched the card, I did the math, and it didn't make any sense to have two cards with annual fees. I couldn't spend enough to accumulate enough points to justify the fees on two different cards. Part of the challenge is that so much stuff in Germany still can't be paid for with a credit card. Because bank transfers are so easy here, credit cards haven't found a toe hold in all sorts of markets that would otherwise be an option for us to spend on.

November Outlook

My wife should be getting some novel payments this month from some additional work she did. I got some extra money from some extra work that I did, so money inflow isn't a problem.

That said, trips to the USA always cost something, and the family member in distress might also need some help financially. That's an unexpected turn, but we'll try to help if we can.

Aaaaaand the shoe will eventually drop on some dental costs. I'm not sure why it's taking so long though.

Until next time.

Relationships are Wealth

I'll keep this one short: it's important to develop your relationships with other people, even if it means spending your money. Relationships are wealth.

Getting a bunch of money feels like scoring a bunch of points in a video game. Like, good job. But if you do it by increasingly strangling your life and sacrificing your relationships, then what's the point? Good relationships can't be bought, and they can't be easily found either.

Anyway, I'm feeling lonely tonight. Saturday was net worth calculation day, and so while I was feeling lonely, I was staring at my newly increased net worth in the spreadsheet. And I felt like a fool.

Net Worth Update: September, 2019

Our net worth fell by .58% in USD and rose 1.05% in EUR to $52,020 and €47,638, respectively, in September.

The Factors Were:

The stock market did relatively well enough to recover from the summer doldrums. Since updating our net worth, that's changed due to continued political and economic upheaval, but I won't focus on that today.

The euro continued to slide against the dollar. That led to the funny down-USD up-EUR change. I don't know what to think about it exactly. As the dollar gets stronger, buying dollars and buying dollar-based securities feels increasingly risky. Do we assume now that the dollar will remain strong forever? Even for ten years? If I were an American, I'd be trying to take advantage, but since I earn euros, the strong dollar feels really risky.

A big bill came due for dental work, which hit our normal cash savings account. Another bill will be coming later this month or early next month, so that will be an additional headwind, but it should be the last large bill like that for... a long time? I honestly don't know.

We sent off our quarterly estimated tax payment. That really takes a bite out of what we can reasonably save in a month.

After following through with some paperwork while in the US, I received some money that my last state of residence had been holding for about a decade. I have no idea why they had that money, but after checking my information on Missing Money.com, I found that they had several hundred dollars from a bank under my name. It required a notary's signature, which required my presence in the US, but the process was otherwise painless.

So how does October look? The stock market so far looks like junk. I'd be happy for the lower prices if I didn't manage to buy new shares directly before every single big plunge (we're talking sometimes minutes before). My timing is astounding.

I tried to follow through on some of the cost reductions I outlined in My Breakfast Costs 45€ a Month, but we still went over our budget a little in September. I think, however, that our October grocery spending should be lower.

Finally, my wife worked a lot in September, so we believe her earnings will be higher compared to August.

My Breakfast Costs 45€ a Month

And That's Too Expensive

This month's income feels tight, and I've been staring at our budget trying to figure out where cuts can happen. We budget about 300€ monthly for groceries. Often, we overstep that by a few tens of euros or so, but a goal of 300€ has for years seemed acceptable.

But where is that money going? I had a rough idea of what I was eating and how much it cost, and it just didn't seem to me that we should be spending so much. But when I started doing the math, it became clear that small choices do add up to large-ish monthly sums.

Let's say I wanted to reduce our groceries to 250€ per month. In a 30-day month, that's 8.33€ total for both of us daily. My wife eats much less than I do, so let's say that I'm 2/3s of that cost, which gives me 5.5€ daily to work with.

Here's my current average breakfast:

• A can of sardines in oil
• Two whole wheat crackers to put the sardines on.
• A slice of gouda cheese
• An apple
• A handful of peanuts
• Two cups of coffee

I picked up the sardines habit after listening to Dom D'Agostino on the Tim Ferriss podcast for anyone wondering why someone would begin their day with sardines.

My insight while investigating my personal food costs is to ignore the 100g or price per kilogram and focus instead on the cost of my personal consumption habits. It's useless information to know that sardines cost x price per 100g when I always eat 125g without fail. With cheese, I want to know what it costs per slice of cheese stuffed into my mouth. Per cup of coffee. Per handful of raisins or nuts. Etc.

With that in mind, the costs break down as follows:

• 1 handful of nuts 0.10€
• 1 apple 0.25€
• 1 can of sardines 0.75€
• 1 slice of cheese 0.20€
• 3 cups of coffee 0.16€
• 2 crackers 0.05€
• TOTAL 1.51€
• 30-day Month Cost 45.19€
• Calories 633

You can see the challenge. It's perfectly reasonable to think that a breakfast that's as calorie dense as mine costs 1.51€. Compared to a meal in a restaurant, it's laudably cheap (especially the coffee). When it's added up over the month though, it adds up.

A common lunch of mine breaks down like this:

• 2 Eggs 0.24€

• 1 slice of cheese 0.20€

• 1 Apple 0.25€

• 2 Crackers 0.05€

• 1 Banana 0.20€

• 10 ml Olive Oil 0.05€

• 100g Frozen Mixed Vegetables 0.16€

• TOTAL 0.98€

• 30-day Month Cost 29.28€

• Calories: 562

This is definitely cheaper. I've considered replacing the morning sardines with eggs for this reason, but eggs come with potential risks that I probably don't want to tempt by eating four or five of them daily in perpetuity.

According to my MyFitnessPal estimate, I have another 1345 calories to eat before the day is done due to my activity level, and I have 3€ left to consume. So let's look at dinner.

Last night I had:

• Homemade Kombu Dashi .43€ (1 leaf of kombu)
• Quality Ramen Noodles .25€ (100 g of dry noodles)
• Half a block of tofu .46€
• A teaspoon of miso .08€
• A head of bok choy .44€

That's 1.68€, which brings our total up to 4.17€. So to round things out, let's look at snacks throughout the day.

• A protein shake made up of .70€ powder plus .19€ of soy milk
• A handful of peanuts .10€
• A coconut milk popsicle .80€
• A handful of raisins .09€
• An apple .25€

That equals 2.12€ for a total of 6.29€ during the day, above my goal cost of 5.5€. Total calories equal 2629 (I also ate some seaweed salad, which won't become a regular thing), which is also slightly higher than I was aiming for, but I did reach 153g of protein.

Lowering Food Costs: Penny Pinching vs. Transformational

What could be done to lower this cost? First, there's the penny pinching way, which looks for small savings rather than big changes. If I eat the exact same dinner, but dilute the kombu dashi broth to make it work over two days instead of one, that gets the total down to 6.07€. If I eat one popsicle every other day, that gets me down to 5.67€ and a 30-day monthly total of 170€.

And if I want to change the very nature of my food costs, I could be like Jacob at Early Retirement Extreme and sub that entire dinner and even lunch for a red lentils and rice dish, which drastically changes the cost. My local Indian and Sri Lankan-style Asian market sells a 2 kg bag of red lentils for 2.29€! My local discount grocery store sells rice at 1.18€ per kilo. Combine the two for a complete protein, and eat much more cheaply.

If I had oatmeal for breakfast sans sardines, I'd drastically lower my breakfast costs. A bag of raw oatmeal is around .70€. If I get ten meals from it (.07€) plus a banana (.20€) and 50 ml of soy milk (.05€) plus my requisite 3 cups of coffee (.16€), I'd have a breakfast that costs .48€ daily and 14.4€ over the month.

As I said, transformational.

Net Worth Update: August, 2019

Our net worth increased to $52,326 and €47,141, representing a growth of 1.7% and 1.98% respectively month over month.

Investment Volatility

I hadn't expected a positive return this month because of the trade war and subsequent market sell offs. It hurt our numbers, but that's the life for anyone holding risk assets.

I'm getting pretty good and dealing with the volatility. The past year or so has really opened my eyes to what the markets can do as a whole and what can happen to individual stocks. Some of my positions have really gotten hurt the past month, but I don't see any reason to sell them, so I'll just sit tight and consider what they'll look like in ten or more years.

Larger Income

The big reason our number was up was because I got paid a bunch of extra money for some extra work I did, and my wife worked through the summer rather than travel to the US with me. When we take our trips abroad, we have to not only reckon with the costs of the trip itself but the opportunity costs associated with her missing work. Things slow down in the summer here, but they don't grind to a halt, so she can still earn decent money.

Vacation Costs

The difference in vacation costs this year vs. last year were enormous. The flights were paid for with Citi ThankYou points and some taxes and fees, and then I spent a few hundred bucks while there. Everything we did that was sort of fancy was paid for by family, and had they not wanted those things, I could have done without. The goal of these trips to connect with them rather than have a fancy vacation. I'd be just as happy sitting in their living rooms as on a boat or beach.

I didn't pay for housing, because they housed me. I never paid for a hotel and was welcomed into family homes for the duration. I try to be a good house guest, and they're happy to have me, but that could change if their circumstances change.

It will be hard to ever switch back to the vacation style where my wife and I travel together for several weeks to various corners of the US. We're already planning a targeted trip for her to see her family directly that will require probably no hotels or rental cars or long drives since I won't be there. And if she does that, and if some family visits me, then maybe we can avoid a trip to the US next summer.

Turning Stuff into Money

I sold a camera this month, and although I enjoyed the camera and will miss using it, the money hitting my hand in return for it felt good.

We have several things that I really need to get onto Facebook Marketplace and Ebay Kleinanzeigen. I was shocked how easy it was, and these services reminded me of Craigslist minus all the weird stuff.

I also sold an old iPad while in the US to Gazelle. I should have done it years ago as it only netted me ~ $26. But, hey, that was money I didn't have before, and now I don't have a device just collecting dust and mental space.

September Forecast

I bet we're going to lose money this next month. I have an enormous dentist bill to pay, and we didn't earn a ton of money last month. We also have a giant tax pre-payment to make, so there you go.

But the market could spike, and if we restrain our spending, then it could all be a miraculous wash.

My Baby Boomer Parent is Poor

I have a ticking time bomb in my family, and it’s ticking in the background of every financial and life decision I make.

Namely, I have a baby boomer parent who has absolutely nothing saved for retirement. In fact, they're loaded with debt. That includes student loans and who knows what else. I don't have a full picture of how bad the situation is, but I don't really need it. It's bad.

And I don't know what to do about it. I keep hoping for some miracle to arrive to salvage the situation, but that's looking increasingly unlikely. The last set of potential miracles have to do with inheritances from a very elderly relative, but even then it's a long shot, and whatever inheritance there is might not cover them for any more than a decade or so.

The trouble with relying on inheritances is that they can vanish quickly due to medical costs. A person may have assets, and then suddenly they don’t any more due to the high costs of end-of-life care. Additionally, my parent has proven that they aren't especially good with money, and I don't exactly see why that would change with an inheritance.

The most likely solution is that my sibling and I will have to subsidize this parent. We're both working and earning decent middle class incomes. But adding in another recurring expense isn't something I'm relishing exactly, and it will absolutely jeopardize other life goals that I/we have.

We're Probably Not Alone in This

I think there are a lot of us millennials who are facing similar realities. It's funny: there's a lot of worry about how it's hard for young people to afford housing in modern America, but it's also true for those entering retirement age without any real assets or income streams. If you got into a home in the 70's or 80's and held onto it, you're probably sitting pretty, but if you didn't or uprooted yourself as my family often did, you might be facing serious hardship to afford housing.

Add in the fact that we millennials are behind other generations in terms of wealth due to various factors, and a poor parent becomes another financial stressor.

Potential Strife in the Family

But it is more than financial. It’s a relationship stressor. It’s the kind of thing that leads to resentment.

For example, I don't think my parent could stay where they currently live because it's just too expensive. But then where to go? And who gets to decide? And what if they refuse? And the parent lives near my sibling now, but after a move they’d have to be substantially further away due to COL issues. I don’t want them to feel banished in any way, but how can we afford the current location? It's an overwhelming series of questions, frankly, and none of the answers are likely to make anyone happy.

Naturally, this is also a potential recipe for marital strife. If one spouse wants to subsidize their parent, but the other doesn't, then who wins in that scenario? Or does everyone lose? Luckily for us (ha ha) we each have one parent who will likely be in a similar situation.

Because we're abroad, we're spared in some sense from the immediacy of the challenge, but we're also limited in the help we can offer. I can't just run over and repair something or move something. I do a fair amount of tech support over chat or FaceTime, when I could more easily just fix those problems myself were I there in person.

This naturally puts a lot of pressure on my sibling back home, and I recognize how unfair it is. However, because of my strange career, I'd be less financially helpful if I dropped everything and moved back. When I followed my current career, I couldn’t see the future and plot just how little the parent's financial situation would improve. Had I, I might have done something different. I love this person. I do not want them to suffer.

Self Sacrifice Within Limits

With that I have to say: I still have my life to live, and I don't want the latter half of my life primarily dictated by subsidizing a parent.

To sum up, this is one of those known/unknowns in my life. How bad will this be, and when will the hammer fall? I could find out any day now.

Please forgive my vague pronouns. I'm trying to maintain anonymity for myself and everyone around me while discussing this stuff, so I try to be as precise as possible about the situation and as vague as possible about the identities.

Net Worth Update: July, 2019

Our net worth in July rose 7.3% and 9.73% to $51,451 and €46,228 respectively. We cracked $50k for the time being.

The big drivers behind this upward move were my summer bonus and the stock market. With the bonus, we were able to pay for our tax advisor as well as immigration fees from cash flow rather than dipping into savings, while still having a positive savings rate. I also earned some extra money from some extra side work.

Meanwhile, the stock market really went on a tear. Some of my laggard positions started to recover, and some of the German stocks finally had some small rebounds. I'm finally at an overall unrealized gain in the portfolio, which is reassuring.

Trip to U.S.A.

I'm currently in America, and although I'm trying to be judicious, I'm spending more money than I wish I were. Part of it is just social: if friends and family want to do something fun together, it's hard to say no when I only have limited time with them. To be honest, I don't really want to say no, and I don't want them to feel like they need to support me while here.

More surprising: America is really expensive. I'm always shocked by this, but Germany has maintained lower prices pretty well, so everything feels like a price shock when I come back. Beer, for example, is priced absurdly high relative to Germany. I find food in general more expensive. I'm sure there are some areas where there's a less of a difference or even a slight tilt towards lower prices in America, but so far on this trip, I'm getting killed by the high prices.

I'm not looking forward to updating the budget spreadsheet when I get more time for that. But I am having fun, and I'm glad I made the trip.

2018 American Tax Return Sent

This is a post where I have to emphasize: none of this is advice. It's documenting my decisions and experiences, but you should do your own research and/or speak to professionals before taking any actions regarding tax decisions.

On Friday, June 14, I stuck the wad of papers comprising our U.S. 2018 tax return into a large envelope and mailed it off. My wife and I have to do this process every year, and it’s one of the pleasures of an American living abroad.

Since the US taxes people based on citizenship rather than residency, Americans living abroad are required to file every year with the IRS regardless of whether they owe anything or not. More often than not, those Americans owe nothing year after year, and the process feels completely unnecessary. It ends up being a lot of paper work to say, “Hi there, I still live abroad and pay taxes abroad, and therefore, I shouldn’t have to pay anything back in the US.”

In our circumstances, we have to take the following steps to file without problem:

Buy TurboTax

I’ve been using them for years, and the product works. It nevertheless feels silly to have to shell out any money for this every year when I neither pay nor get paid once the filing is done.

Gather the Information

Even though we exclude our income from taxation using the Foreign Earned Income Exclusion (FEIE), we nevertheless have to document it with as much precision as possible. I print out the bank deposits each of us receive and create a spreadsheet listing the pre-tax sum we earn followed by the USDEUR conversion afterwards on that day to get a total USD total.

Since we also take the Foreign Housing Exclusion, I add up those sums as well with the appropriate conversions.

Since we have stock investments, I print out our brokerage forms as well as auto-import the transactions into TurboTax via the broker itself. That’s very handy. But without any earned income, it’s very hard to actually realize enough income from investments to warrant any taxes being paid.

Apply for the Form D/USA 101

The US has a Social Security agreement with Germany saying a lot of things, but most importantly for us, it says that self-employed people who pay into the Rentenversicherung system here don’t have to pay self-employment taxes back in the US.

This is one of those things that might be confusing if you’ve never been self-employed. When you’re self-employed in the US, you have to pay the full amount of Social Security and Medicare taxes, while employees have to only pay half while the employer pays the other half. Only if you reach a certain threshold of income do you have to concern yourself with the actual income tax.

When you exclude income on the tax return, you’re excluding it from income taxes. But you’re not excluding it from self-employment taxes. That’s a different process, and it involves getting documentation from the resident country saying that you’re in their system. That document in Germany is the Vordruck D/USA 101.

We apply for this in January for my wife, and we get the form typically a month and a half later. It’s a simple form saying what her job is and the dates the form covers and that she’s paying into the German system.

But we have to include it, otherwise we’d be expected to pay self-employment taxes on her income. Instead of filling out the Schedule SE, we just add a statement on one of the lines of the 1040.

Automatic Extension

Because we live abroad and are out of the country on the normal filing date, we’re entitled to an automatic two month extension to file. One doesn’t need to apply for this, and instead you have to write a statement requesting it when filing. I write this out in a word processor, and we both sign it.

Pack it Up and Ship it Off

Then we stick all this paperwork in an envelope and send it off to Texas. Because of the paperwork, E-filing is not an option.

And in the end, TurboTax says something like “Wow, you’re neither getting any money back, nor do you have to send any. How strange.” Yes. Welcome to the world of US tax filing for US expats.

Possible Future Headaches

Some things we might have to worry about in the future but haven’t so far:

• Declaring foreign accounts worth more than $10,000. So far none of our German accounts have reached that threshold, so we’ve been spared.
• Declaring foreign assets.
• Using the Foreign Tax Credit. I’ve considered using it to contribute to an IRA (a different post in and of itself), but it so far hasn’t made enough sense. For example, if I decline the Foreign Earned Income Exclusion, I’d use the Foreign Tax Credit to avoid paying US taxes. But you’re locked into that choice for five years, so I’ve always just used the FEIE. This will definitely become a challenge when I’m paying German taxes on dividends and capital gains, however.
• Complicated income or asset sales. For example, if I ever did any serious side work as a freelancer, I’d have to figure out how to file that in the US. It’s never really been clear how to do that. Likewise, if we ever bought and sold a house for a profit, I’m concerned how that’d be handled.

Net Worth Update: June, 2019

In June, our net worth increased in USD 1.81% to $47,921 and in EUR 0.29% to 42.110€.

The big factors in the move this month were as follows:

• Good stock market performance. Although, in my personal portfolio, we haven't totally recovered from the May drop, the performance plus our savings were strong enough to offset some big expenses.
• We saved around 20% of our cash flow, split between the Tagesgeld account (normal savings) and the brokerage. I'm using the term "cash flow", because I get paid in post-tax money, and my wife gets paid pre-tax money. I could try to include my pre-tax withholdings.... but nah. I'll start in 2020 when I update my budget spreadsheet. Cash flow it is.
• We made a big payment to the German government for estimated taxes.
• I made a large purchase of a used item for a hobby that I'm hoping to turn into a side income stream. That was around €1.200. I have some things that I hope to sell in the next couple of months to help offset the purchase.

Year-Over-Year Tells Its Own Story

It's funny, that is a very small looking percentage change, but I also track the year over year numbers (YOY), and those show just how steady growth over time can lead to big changes. From one year ago, our net worth is up 51.61% and 55.21% from $31,608 USD and €27.132 EUR, respectively. This is after a series of (in USD) smaller changes of 9.77%, 3.61%, -1.62%, 1.98%, 5.24%, -2.49%, 17.49%, 7.58%, 1.31%, 3.73%, -4.26%, and this latest 1.81%.

That's one reason I write these updates. I'm doing this anonymously, and it's not to brag or show off that I have some saved money. Instead it's to document how small changes over time lead to big changes that are counter-intuitive.

Over this last year, compounding had almost nothing to do with the YOY change. At my level of wealth, savings is the biggest factor in terms of wealth growth. My actual stock market returns are basically zilch over the last year. I'm hoping that changes, but my activities regarding saving should be biased towards a) earning more and b) saving more vs. c) earning higher returns.

July Expectations

This will be an expensive month:

• We paid our tax advisor for two separate items.
• We paid the government to reapply for our work visas. It's surprisingly expensive.
• I'm taking a trip to the U.S. later in the month. I'll do what I can, but it will cost money.
• I might have some random bits of income coming in from small gigs. We'll see.
• My wife is working fewer hours because of the usual summer slow down.
• We are expecting a tax refund (!!!), but we won't get that until August most likely.

Net Worth Update: May, 2019

Our net worth dropped to $47,070 by 4.26% and in EUR by 4.69% to 41,990€ in the month of May.

Apparently, I own all the stocks that are effected by the ongoing trade conflicts with China, Germany and Mexico, and I was duly punished for it. Eventually, I assume there will be a resolution, but it's not fun while it's happening. But my hope of reaching 50k will be put of for some time now.

Stock Price Kill Switch

A phenomenon I've also noticed in the last year is this: some stocks seem to almost have a kill switch, where someone somewhere declares the trade done, and the stock sells off sharply and consistently over the course of a month or so. It's wild when this happens, and I've seen this happen multiple times in the past year. Eventually, the stock hits some value and then sits there, but the decisiveness and steadiness of the selloff suggests that it's computers somewhere making the decision. It just doesn't look like the actions of a human being, and there was no obvious news event that prompted the move.

Here's one example:

And here's another, possibly still in sell off mode:

Why not sell these myself? So far, they haven't violated my sell rules, so I'll just hold them, and hope that in the fullness of time, their purchase will have been worth it.

As I said in previous entries in this series, our savings rate is going to be reduced for a while. So while global securities are experiencing a downturn, I'm left out from buying at the lower prices in any meaningful amounts.

Tracking Cash-Flow with Sankey Diagrams

There's been a trend on the subreddit Data is Beautiful to display one's monthly cash flow as a Sankey diagram. There were a few days last week where the whole sub was covered in these cash-flow diagrams from different locations, and it was enlightening.

The Sankey visualization helps show the transformation of inputs into outputs, and so it's a terrific way to see how income transforms into expenses. You can build your own here:

SankeyMATIC

I did my first draft of one. It's not for my monthly spending but everything we've spent so far this year:

I'll have to update it once the year is over, and maybe I'll average things out to figure out some kind of monthly flow. As it is, we face expected but one-off large expenses at various points in the year, so I tend to think of them as yearly expenses, and that doesn't jive with a monthly cash flow chart.

A few easy takeaways:

• The "Other Spending" category holds a lot of stuff, but the main sub-categories within it have drastically different weights. Thankfully, the "Household" (those one-off expenses that my wife and I agree to purchase, such as furniture) and "Dentist" categories should substantially drop after this year. As long as we don't spend that money elsewhere that is...
• The smaller expenses are really very small. Compared to the rent, the "Gym" expense is peanuts. I think we should be careful with smaller expenses, but it really does help visualize just how important getting the big things right really is.
• The BLOW categories are surprisingly large. They also contain a lot of different kinds of expenses, and I'm half tempted to break BLOW down into subcategories just to see where that money is going. BLOW, if you'll recall, is sort of our allowances to ourselves to spend on whatever without needing permission from the other spouse. Restaurant bills fall under BLOW, which is why they're not broken out.
• Not having a car saves us a lot. I'd love to lower our "Transportation" costs even further, but, man, this is so much better than when I was driving around in the USA.
• On my next draft, I'll need to add in my automatic withholdings from my paycheck. I'd like to see how that adds up. As is, you're seeing Job 1 as post withholding, and Job 2 as pre-tax. The "German Taxes" and "Rentenversicherung" are only for our estimated tax pre-payments and my wife's payments to the social security system since she's freelance.

Net Worth Update and Prognosis: April, 2019

Our net worth rose in April 3.73% in USD and 4.80% in EUR to $49,164 and 44,054€ respectively.

I saved some money into our Tagesgeld Konto (the German equivalent of a basic savings account) and to the brokerage, but it was not a great savings month. Instead, most of the gains came from the stock market. It was just a really good month for many of my stocks.

It would be nice if we could cross the $50k threshold by the end of May, but that's very dependent on the market since May and the next few months won't be inspiring on the savings front. In fact, I expect that our savings might go negative to pay for some upcoming things. Our estimated tax payment will hit next month, and this year we'll once again be going to a Steuerberater for our German taxes. The one upside is that I expect to not owe any taxes this year once the filing is done.

I'm also going to be paying for a bunch of dental work over the next few months. Some of that will be reimbursed by various insurances, but it will still cost a fair amount up front and in total and I don't know how quickly the reimbursement will take. We'll need to draw on saved up cash to pay for that. Our bank would be happy to lend us the money using what's called Dispogeld (if you overdraft your checking account/Girokonto, they lend you the money), but I'd prefer not to. The spread between what you get from the savings accounts in Germany vs. the interest you pay on Dispogeld is laughably wide. The Dispogeld costs 10.45% per annum, and it accumulates on day 1 and is payable at the end of the month, while the Tagesgeld gets 0.03% and pays out once at the end of the year. It's bizarrely lop-sided.

De-Identifying With Your Profession

I've been questioning my sense of identity recently, and the foundation for that questioning was thrown in sharp relief this weekend. A lot of my personal self-worth is tied up in my job and my relative position within the job, and I've had some recent experiences that show me just how unhealthy that is.

Basically, if I had a good day, my ego would get puffed up with an inflated sense of self-worth. If I had a bad day (whether it was my fault or not) I'd feel bad about myself and wonder where I went wrong and what I could do to get back in the good graces of anyone who seemed anything less than 100% thrilled with me. This would seep into the rest of my life.

This last weekend drove the point home. I got a phone call that reinforced my importance to the company. A phone call a few hours later left me in despair. I have the same job today that I had on Friday, but over the weekend I went through an emotional boom and bust cycle.

The reliance on a profession is a terrible base for self-identity, because professions are so subject to the influence of others' whims. Since I'm not my own boss, the decisions my immediate bosses make about my life have an incredible effect. But those decisions are based on factors almost totally, like 98%, out of my control. If I base my self-worth on those decisions, I'm only setting myself up for disappointment.

But I think we're all more or less under that delusion. Our economic value to the world is encouraged as a form of self-identification. We get it as kids with the question, "What do you want to be when you grow up?" and we see it in TV shows and movies when a job is the focal point of the hero's story. A lot of hobbies are essentially jobs in disguise, and a lot of creative encouragement and artist celebration is essentially just job celebration. "Look how important they are. You want to be important too, right?" or "Your current job might not fulfill you but maybe this other one over here will, so you'd better get cracking."

Which is not to say there's no joy in jobs or any kind of job stand-ins. It's the self-identification that's risky. And the sheer fact of the collective effort at this form of self-identification should give us pause. Why so much effort?

One reason I save money is to further distance myself from my profession and to emotionally insulate myself. I want to be able to walk away should someone ever truly emotionally destructive appear at my job.

But should I ever really reach some kind of financial independence where I could leave my job, I'll have to go through a final de-identification, because, despite everything, I do identify with my job and my profession. The day I leave it will be a very strange day. After all, I moved across the Atlantic ocean for it, and that fact certainly means I'm more vulnerable to major identity disruption by disturbances to my professional life.

But I've left parts of myself in the past before, and I'll have to do it again. We all will at some point.

This is the part where I should offer an alternative for healthy self-identification, but I can't. Any external base of self-identification also opens you up to disappointment and forced reappraisal. Some kind of internal mental work has to be done over time, but what shape that takes is individual.

Net Worth Update: March 2019

Our net worth increased by 1.31% to $47,396. In euros it was up 2.34% to 42,037€.

We had some expenses that were unavoidable. We had to pay our quarterly taxes in Germany, and we had to buy some new glasses for my wife. She also took a vacation to the U.S. that cost a bit of money.

The stock market was a big tease this month. In the final weeks, our portfolio experiences wild volatility. One day jumped a lot, and then the next fell a lot. Nothing to be done about it. The market feels very sensitive right now, and I wish I could say that I can resist it, but on big down days it's hard not to feel personally stung. That's especially true if the weather is bad, which it often is in Germany.

I'm noticing a trend in our early year savings rate. Usually, in the first few months of the year, there are a bunch of expenses and adjustments that eat into our ability to save. The German social security and health insurance adjust, and we have to make our new - usually - elevated tax payments.

Lastly, whatever costs for vacations and things like that tend to cluster around this time of year as we make final decisions about what we want to do with our free time in the summer.

We're going to continue having to make big spending decisions over the next few months, so I'm expecting our savings rate to be depressed for a bit. I have gotten some extra work at my job, which will help elevate my earnings, so I'm hoping that can offset some of our savings inefficiency.

Net Worth Update: February 2019

Our net worth increased in February by 7.6% to $46,785 and by 7.77% to €41,075.

That's a surprisingly good result when I consider how little savings I really did. Remember, last month, we had to buy some expensive stuff that would be paid for with the money from this month and March. So I was expecting a basically flat value from January to February.

The main factor was the performance of the stock market, whose rising tide lifted all long boats, including mine. Although I'm still at an un-realized loss, it's a much smaller loss than before. The turn-around from Christmas to now is wild, and it's hard to know what to think.

I also achieved the spending requirement for a mid-tier credit card, and I received the point bonus for it. I value the points at 1¢ a piece, so that provided part of the boost.

I also stuck €500 into our savings account in Germany. We have some upcoming expenses of varying values - and not a small amount of uncertainty what those values will ultimately be - so having some extra cash on hand is always a good idea.

Out of Levers at my Current Job

I've hit a kind of mental stumbling block recently. I've run out of levers to pull at my job.

What I mean by "levers": when I look at my budget, I see places where I can focus to save more. By making a choice over here, I can cut our grocery bill. By doing x I can cut the electricity bill. If x then y. Onwards and onwards.

With a career, there are similar levers to pull. I can network. I can work harder or smarter. I can simply be better at a given task.

When thinking about levers, the basic concept is that with the effort, one should expect to see some result, and the result should ideally scale with the effort at a minimum.

At my job, I earn a salary and then additional money from some extra work that sometimes comes my way. I don't get to decide when I get this work, and the value that I get monetarily is highly variable. But I get this work because I'm reliable and have given a lot of effort when I've been given the opportunities to do it. In this case it's "if x then maaaaaybe y".

This December, I earned the most money from this extra work that I may ever earn from it from one assignment. And it was exhausting. My wife says that when I began, my stress level jumped up, and it didn't come down for months. I put so much effort and personal pride on the line for this extra work, and there's no moving up from here. I know what kind of additional extra work I'll get this next year, and it's not like I'll be rewarded with more pay as a consequence of my previous efforts. I got the money, and now it's on to the next thing, and the next thing doesn't reflect the previous effort I've given at all.

I find this incredibly frustrating, and I don't know what to do about it. On the one hand, I could change jobs, but due to the homogenization and unionization of this particular industry in Germany, it is unlikely that the situation will be meaningfully different elsewhere. Most likely, I'd just find myself in the same or worse situation. At the very least, at this job, I get the extra work, but I've gotten to this point after years of credibility building.

Starting elsewhere, I'd be beginning all over.

Not to mention, moving is expensive. I'd need a guaranteed upgrade to make it worth it. But again: the homogenization in the industry makes that unlikely. Where I am now has a funny balance of decent pay and relatively low cost of living. I could try for the same job in one of the larger German cities, but the COL would jump.

In summary: I've run out of levers at this job. I don't think I can push harder and make more money from it. There has to be some kind of paradigm shift to resolve this inner turmoil of mine. Some ideas:

• Drastically reduce spending. Go total LeanFIRE on our current circumstances.
• Find a side hustle. That's currently hard for me because I'm on a visa, and starting side businesses in Germany requires entering into the bureaucracy. This will be a better possibility once I get the German equivalent of a green card and get my permanent residency.
• Change careers. Not sure what that would be, and I'm not sure if I'd want to do it in Germany.
• Enter into a similar career within the same industry that might lead to better future opportunities. It's very risky in this particular industry.
• Take it easy and enjoy the work/life balance I have and be more cautious on how much personal stake I take in my job.

Some comments about the second and last points. I have a colleague - also an immigrant to Germany - who does his job but who has officially refused to take any of the extra work. Instead, he's built up a portfolio of rental properties that he owns and manages.

It's obvious that those properties are what he really cares about professionally-speaking, but he puts in his time at our employer and keeps his personal investment low. Meanwhile, he puts in back-breaking work on the properties. Those levers make sense and justify the effort: make an improvement on one area, and he can raise the rent or sell the property for more later. If x then y.

I used to resent him for his lackadaisical attitude towards the job we share, but maybe he has the right idea. Or at least, there's part of his strategy that I should adapt and adopt. Namely, I should back myself out of so much personal investment in the job. They aren't going to meaningfully reward me for anything beyond a certain point, and I need to find that point and live there.

And I need to develop something on the side. I don't know if rental property is that thing, since the American tax consequences might be awful (sigh), but I need to explore.

Finally Got Denied a Bank Account

We applied to a different bank, and we were denied. The only plausible reason I can think of is that it's because we're Americans. We'd been lucky since moving here, since until this denial, we'd never been denied much of anything.

I guess we should count ourselves lucky that our current bank accepted us at all (even if they are now jacking up their fees). The FATCA continues to complicate the lives of those of us living abroad.

January 2019 Net Worth Update

Since December 26, our net worth rose 17.5% to $43,488. In EUR it rose 17.3% to €38,114. Here's what lead to that result.

In December, I received an elevated payment from my employer due to some extra work I did. This essentially doubled my salary for the month. This money went various places:

• I paid off a medical bill that I'd been paying monthly. I'm hoping to reap a tax deduction from it.
• I bought some stocks.
• We bought a new iPhone when my wife's five and a half year old phone died after a tragic meeting with some water.
• We bought some furniture.
• We bought a coffee maker.

Now, you'll notice not all of this is savings. Sometimes it feels right to spend money. I'm not Early Retirement Extreme. But there's some logic here.

Telephone use is broadly tax deductible in Germany. I'll be able to deduct the cost of this phone over the next three years. Meanwhile, I'm hoping to keep it in our household for at least six or seven. This is one of those areas where we're willing to occasionally spend some money, so we did. The only thing I regret is that I made the purchase using an American credit card when the exchange rate made the euro unusually strong against the dollar, and it's unlikely to reach that rate again before I have to pay the card off.

As for the furniture, this particular upgrade was something we'd contemplated for several years. It wasn't excessively extravagant, but it was unusually expensive for us. I think we're done though with any other major home upgrades for a while, so I don't foresee any other such purchases in our immediate future.

The coffee maker will undoubtedly save us electricity (already shown in my electricity tracking spreadsheet), and it wasn't all that expensive. We'd been making coffee using a pour over method that required water heated on the stovetop. Once poured, the coffee would cool down quickly. The new maker uses less power to heat the water to begin with and then delivers the coffee into a thermally insulated carafe. The coffee is still warm in the late afternoon, meaning less coffee needs to be made in a day, thus saving electricity and grounds.

Note: it's funny what cultures are willing to spend money on. Coffee making in Germany, and likely in Europe as a whole, is an activity where people will spend hundreds of euros on a coffee maker. Some friends of mine have a coffee maker that's just under €1000. Ours was around €55. But the idea of convenient instant coffee is very pervasive here, and if you're not into instant coffee, then that often means a push button machine that takes coffee pods or grinds the beans on demand and coughs up a single cup of coffee.

Stocks did well this month, which boosted our numbers much more than our savings alone did. I don't know what to think of the stock market right now, so it's entirely possible that when I write this update for February, we'll have suffered another major drawdown. The last year has taught me to not get used to up days too much, because they reverse abruptly.

Forecast for the next few months: since I bought everything on credit cards, I'll be paying those off from our cash flows in February and March. That will impact those months' savings rates, but the cards will be fully paid off on time, and since this is a new awards credit card, we should see the bonus hit in February.

There are also some bureaucratic costs that we'll unfortunately have to pay because our tax statement from the government is taking so long to get back to us. It's easy to wander into those when you're a foreigner living abroad and don't entirely understand the system.

Opportunity and Worry

Big market falls like what happened in December feel like great security buying opportunities. And they are. In my backtests, the difference in performance was stark if you bought right before a crash or well into one (buying in 2007 vs. early 2009 for example).

But here's the catch: you have to be able to survive a bear market and hold your positions. I'm not referencing margin calls or panic induced selling.

No, I mean getting fired from your job and selling just to pay the bills. Recessions are high risk for employees. A recession will happen again, and unemployment will shoot upwards. Absent an MMT-style jobs guarantee, unemployment doesn't stay low forever:

I am unlikely to lose my job in the case of a recession, but that doesn't mean it's guaranteed that I won't. Therefore, one set of thoughts I'm balancing is my desire to buy all these cheap securities while questioning whether I have enough cash sitting around to deal with any unexpected surprises. Every working person will have to balance it for themselves and their own situation.