Financially Independent Vikings never fare solo

One thing has surprised me since I ventured out into the public space and started blogging about my journey to FIRE, -a life to become financially independent.. First of all, how many of us there are, once you start looking. I very much believed this was not something many people did, this being talking sharing saving hustling our way towards a life of freedom and (in my case) dividends. It gladdens me a lot to see how there are so many of us, and more to it, – of there is not only a sheer number of individuals operating in silos on their way to a common goal, no no no, there is so much sharing and support and so much of a community. 

So this post goes out to all of you fellow FIRE bloggers, thank your for having paved the way for us that are coming after, than you for creating this community, and last, thank each and every one of you for welcoming me in with open arms.

See my first blog post which immediately got way more attention than intended!!

Cheers,

F

What not to do — Lessons learned from a viking

How to not become financially independent

I have to admit something. Although I first started investing in stocks and funds about 7 years ago, between 2014-2016 I virtually put zero new savings into my investment platform. I have been utterly convinced that the financial crisis is just around the corner, and this time I would not let myself be fooled; I would wait it in, and bam! Invest at the very lowest and be able to happily cash out just a few years after once the market recovered and being one step closer to financial independence. This is a – What not to do! Trust in the strategy and start investing your savings now; the market will always bounce back.

Obviously my plan wasn’t quite as naive as it sounds, but my conviction of the closely coming recession still made me passively putting my money on a pile for ca 2 years. Bad, bad, bad idea.

Financial Independence - what not to do
What did I do that stopped me from excelling towards Financial Independence? Find out how I am now on track to Financial Independence and economical freedom in 7 years. #FIRE #Freedom #Independence

You remember my bragging about the Swedish student loan interest rate at 0,34% in the last post? Well, this happens at a time where the most exciting account interest rate you will find is something like 0,9%. So, add some administrative fees, discount for inflation and hereyougo, -you end up loosing money on this deal anyway.

What I started to do?

About a year ago, which coincided with a big raise I got, I started seeding out this saved-on-a-wasted-pile money on funds and stocks. I didn’t dare to make my FIRE Calculations at the time (not wanting to realize how much I had lost leaving the money uninvested for 2 years). Now, I have finally come to terms with myself and started to sort this out. On track again. Will hopefully get time to post a complete breakdown of my finances this weekend so I can show you what my plan looks like. Look at my plan and The Leprechaun that will never die.  It reveals the truth of the exponential growth related to finance.
Stay tuned!

 

Student Debt

Current student debt: 42909 USD

Yes, I live in a country where university is free. Yes, considering my student debt this number is a bit frightening. Tuition is free, but you have to cover housing, food, transportation etc. meanwhile the government offers wonderful student loans to a very, very reasonable interest rate. 

Interest rate

At this point I could have paid off my debt a while back instead of investing that money. However, the interest rate for all government funded student loans is currently at 0,34%. This means that it is actually better to keep your earned money and invest in the stock-market instead to pay the interest rate of by the dividends; while paying the minimum amount back to the government.

student debt and get Financial Independence!

Every cent of our debt is currently invested in a high-yielding index fund, regenerating its value over and over. If you are interested in our approach; check out my blog postThe Leprechaun that will never die.

This is one of the reasons I love comparing financial strategies across countries. In other countries it would have been daunting to just leave this debt be while having enough funds to pay it off, whereas here, it is definitely better to keep this debt invested for as long as I can. Check out the comparison of the different student debts between US and the rest of the World; CollegeCosts. I am staying in debt and moving our money around in a few quite branch specific index funds, and I am also happily paying in the 0,34% along with the circa 100 bucks a month I am required to pay back.

What is it like where you are from?

By Month!

Annual Income vs Monthly Income - Financial Indepedence

Annual Income can be read anywhere and in any blog related to Financial Independence. In Sweden, you never talk about salary as an annual income. There is no such thing as a person asking you how much you make, and you respond with ze totales of what you have brought in that year. In the Viking part of the world, we speak of ze money and ze salary in terms of what you get a month.

Annual income vs Monthly Income

If you are negotiating salary, you will speak about this as your monthly income. You get a raise? Monthly percentage, for sure. Even paid vacation days can be measured in months. My past Swedish boss asked me “what month I was taking off” last summer, implicitly asking if I would be gone for June or July. Terrifying experience for the project team I was working with in London at the time as the 1 month off didn’t resonate that well with the plans (I took July, if you are interested).

Fun trick: next time you happen upon a Scandinavian, ask them about the annual cost/price/income of anything . Than you watch their eyes roll back as they are trying to multiply whatever number they are thinking of with 12. They will desperately be trying to keep their Scandinavian cool and not admitting it is terribly confusing (as they will also try to convert it to a standard currency like USD or EURO, taking whatever number thy are getting x108). Try try try! it will be fun!

If you are interested in why I am talking about financial independence related to the nordics or any country with high tax. See my first blog The Viking journey has started – 7 years to Financial Independence in why I am seeing the need for it.

/Fredrika

The Leprechaun that will never die.

The journey for financial independence and the naming of a pile of money

If our yearly costs and taxes (capital, property tax etc.) is defined as X then X = The sum we need yielded as dividends each year. This is really the definition of financial independence.

For whatever reason we decided to name this pile of money, and for even more unclear reasons we decided to name it The Leprechaun. This is not from some weird fantasy or fairy tale, we just named it out of the blue. This is because we need some named-entity to name the adventure. As having a certain amount of money in an bank account is an end-goal, but the journey and the challenge that comes with it. Just imagining the opportunities when becoming financially independent is scary as well as the choices we have to make their is also part of it.

So, the Leprechaun need to have an expected dividends yield totaling our combined costs and taxes. 

On average, Swedish stocks will return about 4% of share value in dividends each year, so it is fairly realistic to assume the Leprechaun will need to be X/0,04 (plus some semi-horrific tax calculations on top of this). For you whom have already created this leprechaun of joy, why not start living the financial freedom and put the money in some of the companies listed as Swedish companies with best dividends.

This way, the growth of the portfolio (sorry, the Leprechaun) will be able to match/outgrow that of the expected inflation, creating a Leprechaun that will never die, as I triumphantly pointed out after having finished our excel spreadsheet with our strategy on.

This strategy in itself is fairly standard as posted Financial Independence: My investment strategy in 4 easy steps. There is absolutely nothing in it that I would assume not almost every FIRE-advocate follows. The main differentiator for us is that there are quite a few implications related to taxation in here (as well as the benefits of a welfare state and never having to pay for health instance for instance). I will dig in to our specific financials in the posts to come.

/Freddie

The core

I am fortunate enough to have a well-but-not-insane-paying job, where I also know at about which rate my salary will increase each year. This makes it fairly simple to calculate expected income, apart from any bonuses, airbnb-income and other more fluctuating income streams. My boyfriend has a bit more difficulties estimating this due to the nature of his work, but we are both able to give a rough estimate of where we will be in a few years from now.

For a brief (very, very brief) period of time in my life a few years ago I was interviewing for a bunch of consulting firms (no questions asked), where they all basically gave the same type of back-of-the-envelope questions for you to guesstimate your way around. What irritated me the most with the advise that everyone insisted on giving me while prepping for these was that they all boiled down to the exact same thing:

Take the revenue minus the cost. Which in itself implies that most of these questions ask about the same thing, namely profit. It irritated me not because it was wrong or misguided to bring it up, but because it seems like this should be the most straightforward thing for anyone to memorize in their sleep how to solve. Anyone doing enough practice will ace them Nonetheless, ranting over this aside, this little formula turns out to be the very core around what our FIRE*-calculation is built upon.  More on this in the next post.

/Freddie

 

*FIRE = Financially Independent Retire Early

How did it all start?

I will break up the story of how I ended up here in a few different parts.

How did I get here?

As I have mentioned earlier, I am a Scandinavian born and bred, and so is my boyfriend. Who luckily agreed to venture out on this adventure along with me. I can’t emphasize enough how important it is to have the aligned partner priorities as you do if you are planning to become financially independent.

You are either with someone who agrees with you on the plan and is equally committed to it, or you should be single and do this alone. It will be very difficult otherwise. But I would love to hear from someone who tried this and succeeded with a partner that is was not fully committed to the cause, so feel free to challenge me on this if you hear from anyone that tells you the opposite.

Partner priorities is about caring

At a brief point in my early life before venturing into Software Engineering I wanted to work with investment management. The concept of financial markets intrigued me, and as I read up on the subject it continued to speak to me. It couldn’t just work, putting in money, and then just having it grow by itself without doing anything, and with no catch?. At this point in time I was still in high school and all of a sudden it was 2009 and the financial crisis happened. Without lingering on to this subject for too long (I just need to once again advocate for the champion country of Iceland who literally heaved themselves up from bankruptcy in the worst financial crisis we have seen in modern times!! So little credit is given to them for this and I have always found it so strange). Maybe that is why we named our pile of gold (money) more to that in The Leprechaun that will never die.

Sidenote over, – financial crisis happened, and I remember how I over and over told myself ( told myself and no one else because oddly there were no girls in my high school who shared this interest or cared the least bit about the subject. Clearly I was one of the cool kids when I grew up, if that is not blatantly obvious) how vicious it was taht this crisis happened now, when I was too young to have any money whatsoever to invest in, and it was so obvious that the market had completely tanked and it was the golden time for heaving in money.

Whether this would have been a good strategy or not, I recall this as evidence for how the subject of financial investments have always interested me.

I have continuously been investing money since I got my first post-uni-actually-paying job at the age of 24. And yes, in Scandi we are a bit later with university and all that. Time is taked to travel the world before we enroll and if for no other reason it intrigues us why not more people have a longing taste for the freedom associated with these past years. It might be tied to the nature of partner priorities, where the priorities might differ between relationships. Naturally, the next time I am able to roam freely like this it will be under a completely different context. It is nonetheless very interesting that this idea of a life independent of a time-consuming job has not grasped more peoples interest over here.

Oh well, it may as well start now.

But why? It’s not like it is that simple?

questions-2110967_960_720

 

But it really is.

My definition of Financial Independence is the following: I want to be able to have essentially the same expenses as I have now, and live in the same manner as I do now, without having to work. That is really the definition financial independence.

That being said, who knows what I will feel like doing on the day I reach this goal, I might continue working with the same thing I do now, for the simple reason that it keeps me challenged and I learn new things. But it will be an incredible relief to know that I am not guided by some unconscious pull toward survival that tweaks me into believing I am content where I am simply because I know it is the safest route to a continued income-stream = comfortable life I currently lead. I will be able to do exactly whatever I want to, whenever I want to. This is the biggest pull for independence for me.

 

I talk about this in my blog post The core.

Cheers,

FV

How will this happen?

Financial Independence can mean many things, – and it is a term that is easily floated around in relation to people like Silicon Valleyers that just sold their mediocre app to Microsoft and cashed in 8-digit-something in return, or obscure venture capitalist firms that happens get it right and cash in in the big bucks, right before the ship sails for everyone else. See But why? It’s not like it is that simple?

 

financial freedom

In the later years, Financial Independence is assumed to be something you will stumble upon with sheer luck. You happened to hit the right thing,right before everyone else did. This is true wether you are investing in companies, or building them. And if you like me, live in a country with very heavy taxation, will have to hand over this independence to the state right away in form of taxation, being left with some bones of the originally earned wealth to gnaw on.

This is not true.

It is possible for anyone to save up enough wealth and live on the returns of them, even in a tax heavy country like Sweden. This blog will be a living testament to how that can be done.

/FV

The Viking journey has started – 7 years to Financial Independence

I am a 27-year old Scandinavian with a carefully crafted plan to become financially independent and retire before the age of 35, see the popular blog post The Leprechaun that will never die. As I am currently living in one of the heaviest taxed countries in the world (Sweden), I choose to see this as an additional challenge. After some research I have discovered that there is actually a name for us enthusiastic fools, FIRE. Financially Independent Retire Early, and therefore name myself as the Fire Viking. Disregarding the semi-pretentious sound of this I do find it successfully covering the goal of my plan, so I’ll stick with it.

fire viking

What am I doing on this blog?

I have found that there is a substantial lack of Scandinavians (Europeans even) out there with financial independence as a sound goal. Sure, the subject will be dabbled over a late night glass of wine, but never concretized and purposefully lived after as a set goal, the way I am aiming to do. Most blogs about the subject are Canadian or American. I believe my strategy to reach financial independence will not differ substantially from any North Americans, but perhaps the reasoning behind will and this is why I have decided to shed some light and insight to my journey.

In addition to above, Scandinavia is also home to the most coherent well-fare states in the world, and thus subject to some heavy taxation. This is not something that will have a major impact of my strategy, and I don’t see very much delay in the time it will take me to save up enough capital to retire, compared to if I would would be doing the same journey from North America. More on this subject to come. Feel free to ask any questions about being a Fire Viking!

Cheers,

FV