Thursday, September 1, 2022

July and August 2022 Updates: Travel, Inflation, Rent

In most of July and early August, I was taking advantage of my summer vacation to travel through Europe and the United States. Meanwhile, Europe's bad news kept piling up.

With power prices rising and the rivers drying up and a war and the currency falling in value, it's a worrying moment here. To put it mildly. I've been captivated by the potential for major disruptions to our lives and for the lives of millions of Europeans whose livelihoods rely on industries, which themselves rely on inputs such as natural gas and electricity, both of which have exploded in price.

What does Germany do if its major industries shut down? I don't know.

That said, even while vacationing within Europe, it all felt far away. Shops were open and happy to sell over-priced chocolates or locally made clothing. The wine and cheese in France were still excellent. Paris is still beautiful. The museums remain treasures. People were generally pleasant and happy to see us. My family who visited France loved it and some said they wanted to move there.

To be fair, when I visited the US, all of its problems felt far away too. American food is great. Everyone is nice in a way that feels increasingly foreign and yet increasingly welcome. I think "Maybe I should move back!" after I've touristed in the US, but when I speak to my younger family members about their jobs, the prospect seems less appealing.

All of them are in the rat race. All of them are working their butts off. All of them don't get enough vacation time. I didn't ask about health care, but I know what that's like. All of them are likely earning more than I do, but the price for that is enormous uncertainty and very little freedom with their time. Whenever I spoke about my job, I couldn't help but feel like I was bragging, even though I'm somewhat unhappy with my career and am considering other prospects.

But as soon as the words leave my lips, "Six weeks summer vacation.... yes, it's paid," I know I have something valuable that my working-age American family doesn't have. It's a tricky social minefield, and it's an inevitable topic of conversation because I just have so much free time in the summer. Meanwhile, my American loved ones balance seeing me with their work schedules.

We'll see though. If Germany can't manage its current troubles, it's possible that the system that supports me and my colleagues falls apart. That's unlikely, but it can't be ruled out.

Net Worth: Inflation and Stocks

Our net worth increased 7.46% in July ($123,947) and fell 2.01% in August ($121,453) in USD. In euros, it rose 9.45% in July (€121,160) and rose .44% in August (€121,697). Liquid net worth at the end of August stood at $89,890 and €90,070.

Image: Chart of our USD net worth over time. Notice the value of euro debt decreasing quickly.

The falling euro is scary. On the one hand, my euro wealth continues to rise because of my overwhelming reliance on dollar assets for my savings. On the other, I have received a large pay cut relative to the US, which I felt acutely whenever I paid for a restaurant bill in the US. Inflation in the US plus a falling euro equals pain for euro jobbers like me.

The upsides are that if there's an emergency over here, my USD cash has become more valuable in euros. Likewise, the value of my European debt has decreased significantly in dollar terms.

Stock Market

The stock market since June has been volatile. The S&P 500 rose in price in July to touch the 200 day moving average and has since fallen. My assumption is that it's in a downtrend, and so my IRA remains in a money market account. Ironically, my lack of action since February in the IRA has been the best trade of my life. The interest I earn in it has gone up over time even as the overall market continues trending downwards.

So far, despite the new downward price action, I don't feel any urge to make major portfolio changes.

My Evolving Rent Thoughts

I have to admit: I've been triggered by the rent increase we got in June. Until then, I'd never had a landlord increase their rent on me. And for him to do it then, just as all our economic realities were getting more precarious, felt especially grating.

I admit that this is irrational. He's also an investor, and investors want rising cash flows from their investments. I get it. But I don't like being a landlord's cash flow1, and so we've been looking at buying properties again. I still hate the upfront cost of buying something here, but man, I hate having my rent raised. So I'll keep looking.

For a few weeks there, I felt like I was in a rush to buy something. But that has subsided. I've calmed down. I'm still worried about a potential rent increase next year too, but I see that our requirements for a property are specific enough that I can't and shouldn't just buy any old thing.

Other Notes: Computer, Refund, €9 ticket

In July, we bought a new computer for my wife. Her's starting crashing, and since she relies on a stable computer for her work, we bought a new MacBook Air for her. We were going to pay for this from occupational cash flow, but amazingly we finally got the second federal stimulus payment in the form of our 2020 tax return refund. Plus interest! That more or less covered the cost, and it came at a perfect time.

That said, we're going to be financially tight for awhile here. She's making a major change in her business, and the short term effects are likely to be reduced cash flow in the short term with increased cash flow later since she'll be in greater control of her time and pricing. She's being bold, and I'm happy for her.

Finally, we will both miss Germany's €9 ticket, which allowed us both to travel throughout Germany for €18 total per month in June, July, and August. It's back to the old complicated expensive system here, and we'll mourn grievously.

That's all I have for this time around. Take care of yourselves and your families. Until next time.


  1. Especially for this landlord. I like our apartment and its location, but his management of this building leaves a lot to be desired, and we're currently fighting with him about our Nebenkosten. ↩︎

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