Do you ever think about how unlikely it is that you have ended up right here, right now?
It is not always easy to cut down your costs and save money when you have routines that you have had for years, perhaps since you were a child. However, these small routines are sometimes where you will find the easiest ways to cut down on your spending and save money. This month I have done 5 things that has cut down my costs significantly.
3 things I have done to cut down my costs and save money over 200 dollar this month!
- I have biked everywhere. I normally bike every now and then but this month I have made a point of bringing the bike with me all the time. Great exercise!!!
- Mr Viking and I have dutifully implemented the One Simle Purchase Rule
- White month! As the Viking I am, I tend to drink alcohol every now and then, and Mr Viking and I very much enjoy a glass of red after a long day of work. Cut off alcohol completely this month and noticed two things: a) I am saving more money than I thought! A good bottle of wine pays up to ca 20 USD so lets say we have saved at least 40 bucks on this. b) My skin looks great! I want to continue with this.
These are things that has made me save in total more than 200 USD.
In one year this is adding up to 2400 dollars. Insane. Tips: Write down right now what you would do if you were given 2400 dollars out of the blue right now. Keep this as a motivational note.
It is not on par with MrMoneyMustache but everyone has to start somewhere and these are definitely three tips that anyone can follow. If you try it one single month, you will still save a lot of money.
Purpose of TheFireViking – track Financial Independence goal
My purpose with starting this blog was to find a place to write down my thoughts and strategies concerning me and my boyfriend’s goal to become financially independent within the next decade, not setting strict blog goals. As I started writing I realized there were a whole community of people out here doing the same thing. An awesome community, may I add. This has led me to put more and more time into this blog and my interactions with the community around it, up to the point where I now want to clearly define this as a sub-project to the overarching goal of financial independence.
Fireviking now gets its own blog goals, hooray!
How many readers does a blog have after one month? Will I try to make money on my blog?
I am not yet ready to venture into the whole business of affiliate links, advertisements on the site and so on, but I do want to start setting some goals for myself on here nonetheless (if it is not already blatantly obvious, I am incisively competitive, and goal-setting is one of my favorite things).
The children of TheFireViking.com has sprung out onto Twitter, Instagram and to some extent, Pinterest (seriously struggling with this though) and I want to set monthly goals for all of these to track their progress.
When Fireviking is 4 weeks old, the following are my goals:
Blog views: 1000
Twitter followers: 100
Instagram followers: 100
Is this realistic? Or am I putting under-achieving goals here? I am realizing that these numbers probably grow a bit exponentially in the beginning but have no idea of how much, so didn’t really account for that.
How did your blog develop in the first month when you started?
My Strategy to financial independence
If you read my last post you know how much I was able to save from my last salary. The next implied question then naturally becomes; what do I do with that money in order for it to grow me some financial independence? This post will talk about what i do with the money that I invest into the Leprechaun , i.e. my investment strategy to Financial Independence.
Four easy steps —
Get an income stream, and preferably more than one. You can never save money if you don’t get any money, so this is the most crucial step, even if the actual salary is not that important. I get my salary each month.
I have a set saving goal each month, lets call it X . This sum I need to invest. The biggest mistake you can make is leaving that money passively deprecating itself due to inflation and potential taxes. Long term investments can be put into high-risk funds and stocks without it being that much historical risk associated to it. The market has historically always gone up, even if it regularly will take a stroll downwards into a recession. Note here that I talk about the whole market and not individual stocks and funds. Stocks tank all the time, which is why it will generally be a higher risk for you to invest your money in one individual stock, than in a larger index.
I invest 80% of X in different index funds. Of these 80%, around 40% are branch-specific, quite risky and narrow indexes while the remaining 60% are large global index funds.
I am looking to leave my riskier branch-specific investments where they are but from now on start putting the whole 80%-chunk into global index funds. Mainly because I am still convinced he recessions is near and not sure which market it will hit first. The remaining 20% I place in stocks of different kinds, mostly larger companies with a good track record of raising their dividends shares each year. I will probably continue to buys socks for a few more months but then slowly shift this chunk over more and more to the global index funds as well. I will explain this more in step 3.
Have a set percentage to play with. This is where my 20% that I buy stocks for each month comes into play. I really like investing in stocks, and reweighing, shifting and shorting my way around the markets. This is not a very good thing if you are looking for a solid investment plan. This is why I have capped my allowance of my savings I can play with to 20%. I will decrease this percentage in the next few months. This as I don’t have enough time to become the next Gordon Gekko and index funds has historically almost always beat individual strategies in the long term anyway.
When the time has come for me to have enough capital for the Leprechaun to become immortal (i.e. enough for me to live off its returns indefinitely) I will sell off the funds and buy high-dividend stocks for these so that I am set up for a monthly income.
Thanks for all the positive feedback from my last post as well!
Ok! It is time for my first monthly income expense report and you guys will see the crushing numbers behind the machinery. I have converted them to USD, and will add explanations for the different posts (you will see that they in some ways differ from a person living in the U.K for example. My monthly income is ca 8200 (USD). After taxes, I get out ca 5k. This is a good salary for someone my age in Scandinavia, but as you can see, a lot of it ends up in the tax bucket. If you wonder why I am taking my monthly income expense report by months please take a look at my Nordic debunking of By Month!.
Monthly Income Expense Report November:
+ Income after tax: 5000 USD (Salary)
Mortgage (incl. interest rate): 900 (we are paying it off as fast as we can)
Student loan: 100 USD
Phone bill: 24 USD
House insurance: 20 USD
Travel: 378 USD
Transportation: 30 USD
Blog setup: 95 USD
Gym: 40 USD
Food, Groceries: 220 USD
The couch: 200 USD
Shopping: 50 USD
Net savings: 2900 USD
Goals for next month:
Other income streams than just my salary! (It looks horrible just having one single income stream and so many lines of expenses. Many of these posts are things I should be able to cut down on, especially since Mr Viking has a similar setup with his budget.
Looking at this we clearly could see the need for either cutting some of our expenses or creating some other source income. This can be done by several steps:
Right now we looked at our expense and unfortunately saw that travel was a big monthly expense which we now will try to cut by travelling at low-priced periods, as well as to try to minimize the cost while travelling. Before we were not really aware of the amount spent when aboard, but when seeing it clear with a monthly income expense report. You get the information straight!
For all my readers, try to get your expenses on paper as clear as day. It is the only way to start keeping the money in check.
This is the first time displaying my monthly income expense report inspired by Michelles business income!!! Thank youuuu
Does Sweden have any tax friendly ways of saving money like the 401Ks or the RRSPs (the US and Canadian versions of this)?
We both do and we don’t 🙂 . In Sweden, there is a retirement-scheme that employers can choose to contribute to. It will not be subject to income tax until the day you as an employee retire and are able to access this fund (at which point you pay normal income tax on it, up to 57% marginal tax).
However I, as an employee, have no way of choosing whether to contribute to this or not. It is not considered a part of my gross salary put into a pension/401k-fund. Rather looked upon as an income you will never see and that is not counted towards you salary the way you would normally measure it. A good comparison would be with your employer paying for your health care in the US; you don’t consider it income, but rather a benefit. The same way this is considered a future benefit and not real, accessible money.
A big reason for this is that you have no right to touch this fund until you are around 61 (this could vary with a few years) and you can also not choose freely where to invest it but need to go via the broker your employer choose.
So, what do I do?
If I want to have the right to use my money before ~61 I have no other option than to pay the hefty income tax (I am not bringing up the HUGE benefits you do get from the state from living in a country like this here, that will be another post. Bear in mind that I have still chosen to live in Sweden and its crazy income taxes – there are things weighing up the apparent downside).
In addition to the income tax, there is also going to be a capital gains tax that will be added to any profit I make from the financial markets (yes, even keeping them in a savings account). This tax is currently 30% and quite tricky to declare each year when you file your tax report.
That doesn’t sound very good, what do now dear fire viking?
Don’t fear! There is always a solution to tax friendly ways of saving money. See my blog post My first monthly income and expense report! to see how much you can save.
There is something called an “Investment Savings Account” that all banks are obliged to offer their customers. If you trade or save under this specific account, there is no 30% capital gains tax on your profits. Instead a proxy value of the full amount you have had in this account will be taxed to a much lower tax rate. Fluctuates depending on how much you had on the account at given points in time.
The downside with this account is that you pay taxes no matter if you make profit or not. Upside is that the taxation amount is very low.
Google “Investeringssparkonto” and you will see the exact calculation of this. Or just trust me when I say it is definitely the way to go if you want to invest your money from an account in Sweden.
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!!
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.
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.
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.
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.
*FIRE = Financially Independent Retire Early