So, how did it come to this?
For as long as I can remember, I’ve always been frugal with my money.
As a kid, I never got an allowance (most of my friends did). I never needed it. Somehow, I just always had money in my pocket (figuratively speaking – they were in a bank account). I’d get money for my birthdays (from aunts and uncles etc.). I’d get some cash from my grandparents to buy an ice cream.
Somehow, I always managed to keep the money AND get an ice cream. My grandmother still tell me those stories on a regular basis. “You’d always keep that money, and still get your sugars”. It’s a gift, apparently.
As I see it, there are two types of people:
- 1. The spenders
- 2. The savers
I’m a saver. I can’t turn it off (I’ve often wished that I could!). It’s somehow embedded in my bones. Nobody in my family understands why, as we’re not a frugal family (in general). We’re in no way extravagant either – we’re just not frugal. My parents didn’t have a lot of money when I was growing up, but I don’t have any complaints. We’d go camping a lot for vacations, and we’d always drive a beat-up old car. But, I had a happy childhood.
I used to travel a lot with my grandparents. They are retired now, and they always complain that they don’t have any money (they do OK). They live in a rented apartment, and they live off of their public pension (which is not a lot, but it’s enough to get by on, if you have fairly low living expenses, which they do). They used to have a summer house that we’d visit a lot. I loved it. The simple life.
Little did I know that I myself would come to own a summer house one day. Well, I co-owned it. With my wife. – And the bank…
So, we’ve established so far that I’m a saver, I had a happy childhood and I have (had) a fondness for the simple life.
In my early teens I started working the odd jobs here and there. I met a girl when I was 17 (she was 23). I had always planned to stay at home with my parents, til I got my college degree (because I liked living at home. – And it was cheap!). But, the girl had an apartment in the city. The allure of the city and the “free life” persuaded me to leave my parents house, and move in with my girlfriend. She had a full-time job. I was still in school, studying to become an engineer. She made 4 times the money that I did, and yet she would always run out of money at the end of the month. I would always (still) have money in my pocket (figuratively speaking – they were in a bank account). Now you might think that I’m cheap. I’m not. I’m frugal. There’s a difference 😉
Anyway, we lived together for about 5 years til we got tired of each other, and eventually broke up. I moved back in with my parents for a few months , before an old school buddy of mine threw me a bone. He had a 3 room apartment (2 bedrooms) and he was looking for a roommate. By that time, I had landed my first full-time job as an IT guy at a software company. I had worked part-time as an IT guy during my final years of my engineering degree, so my savings were already starting to build up. My new roommate was still studying, so money was tight for him. We split our living expenses 50/50 (we cooked simple meals every night). We would go shopping once a month to fill the freezer with cheap produce and meat.
I had a car that I had “inherited” from my parents. By inherited, I mean I had borrowed it, and just never returned it 😛 I think I was supposed to sell it, as they had bought a newer one. It wasn’t worth much, but I loved that car. It was a silver VW Golf II, with a sun-roof and central locking. It was fancy! (Remember we used to drive really beat-up old cars, so having a car with central-locking was really something!).
At that time, I would save about 50% of my salary every month. My living expenses were so low, and I really liked living with my friend. We’d have parties every weekend, and hang out with friends from dusk til dawn (when we were not working).
We lived together for about a year. And then, disaster hit. I met a new girl. The bachelor-pad life was over.
We met at work, and we moved in together shortly after we started dating. We had known each-other for a while, before we started dating, so it was natural for things to progress a little faster than usual. She lived in a rented apartment in the most expensive part of the city. It all went downhill from there (SUSPENSEFUL MUSIC PLAYING).
I’m just kidding. The girl that I met at work is now my wife, and we’ve been together for 11 years now (married for 6 years). Time flies, when you’re having fun 🙂
But really, by all intents and purposes, meeting a new girl is usually a disaster. Financially that is.
My new girl had expensive taste (don’t they all?). Right before we started dating, she had her credit cards replaced with a debit card. It was the only way she could control her spending (her own words!). Oh my. Was I in for a treat!?
Goodbye to the trusty (at that point it wasn’t really that trusty!) old VW Golf II, enter the new BMW 1-series (it was a lease). We moved into an even fancier apartment (it wasn’t really fancy, but it was in the fancy part of town, so it was fairly expensive, compared to the bachelor pad).
After 2 years in the fancy apartment, we decided to buy a small house. Luckily, my former roommate and I had dabbled a little bit in stocks. Most of my nest egg was therefore safely tucked away. Well, safely might be an exaggeration in this case. We moved into the fancy apartment in the spring of 2008…
We all remember what happened, in the fall of 2008, right? The REAL disaster hit. The (real) financial disaster that is. Lehman Brothers went bottom up, and the rest is history (as they say). The stock markets bottomed out too. My nest egg took a hard hit (I actually don’t remember how bad a hit, but I think I lost about 25%). However, I still managed to scrape together enough money to make a down payment on the house, which we bought in early 2010 (I had to cash in the majority of my stocks though). The down payment was 5% of the price, which is pretty standard in Denmark.
It was a cheap house (cheap is relevant I guess – to some people, it might have been an expensive house). But it was modest, and so was the property taxes – which to me was very important. It still is – make a note of this, people! The price of the house is not important in the long run. – It’s the property taxes that you should be worried about!
Since we both had (fairly) well-paying jobs, we were able to build up an equity in the house fairly quickly. After 3 years, we had paid off about 30% of our house loan. We now had 2 cars however (my wife was working far away from where we lived – and I was just being my lazy old self. I always used to bike everywhere when I was young – but that was before I got complacent). We ate sushi weekly, went on several vacations a year and basically just enjoyed life. Then, another disaster hit!
We decided to get married. We spent the equivalent of a down payment on the house, on our wedding. Looking back, it might have been a little extravagant. But, we would do it again in a heartbeat! It was awesome!
Then came the honeymoon. The most extravagant vacation we had ever been on (we went to the Maldives). It was awesome! I discovered my love for mango’s on this trip (among other things). They’re awesome!
Then came the kid! (It’s getting late – let me wrap this up!).
Then the wife decided that we should buy a summer house. I was onboard after a few weeks of thinking it through. But, since the good old days of camping with my parents, I had developed quite the taste for “luxury vacations”, so I didn’t just want to buy any old shack. – I wanted a summer house with a view of the ocean (or some water, at least).
Looking back, I still don’t understand how I’d been able to accumulate enough cash, to make another down payment on another house. But somehow, I managed (I always have money in my pocket, remember?). So while having extravagant habits, I had still managed to tuck away a few bucks!
Because the house market had been recovering since 2010, and it was now 2015, we suddenly had quite the equity in our house. The value of our house had risen by 30% in those 5 years that we had lived there. So, we re-mortgaged our house, and bought a summer house (with a view).
In Denmark, you can only mortgage 60% of a summer house (back then it was 60%, now it’s 75%). I put a down payment of about 15% on the summer house. The remaining 15% we got from the re-mortgaging of our house, which was now mortgaged at about 70% (still). At that time, my pockets did not have a whole lot of cash in them! I now had 2 cars, 2 cats, 2 houses and 2 ladies in the house (the kid, remember?). But, I was still making good money, and the interest was so low (still is) that the inflation alone was eating away at our debt.
Even though all of this happened fairly recently, I can’t really remember a lot of the financial details from those days. Ever since the kid came to be, everything is a little hazy! 😛 Kids will do that to you! (The best financial advice I can give you now, is DO NOT have kids!). I guess I must have run everything on the routine. Being frugal is in my bones, remember?
At this point in time, my wife had regained her credit cards! Yeah! During all these years, something amazing had happened. She had somehow become financially aware. Go figure! These days, it is HER telling ME to be frugal. Can you believe it?
Anyway, my luck would quickly run out (again). After owning the summer house for only 2 years (and loving it btw!), my wife proclaimed that she wanted a bigger house. An old house. In the countryside. With a thatched roof.
Shoot me, why don’t you? Are you kidding me with this? An old house with a thatched roof is potentially financial suicide!
Guess what? We now live in a house from the 1800s with a thatched roof. In the countryside. And I’m still alive 😉
You know what they say: Happy wife, happy life!
Now (stick with me, we’re nearly there!), this new (old) house of ours was TWICE (yes) the price of our old house. We sold the smaller house, and bought the bigger one, and still managed to keep the summer house (for a while). The equity that had accumulated in our old house, was just enough to cover the down payment on the new house, of 20% (the mortgage owners in Denmark will know that the 20% is a magic limit to have access to cheap funding for the remaining 80% – but more about that in another afsnit).
During this transaction we almost hit a debt:income ratio of 5:1! The thumb rule here in Denmark is 4:1, max. So my bank guy was semi-happy during all of this. Somehow, I think he knew about my magic pockets (that somehow always filled with money eventually), otherwise he would have never allowed us to buy such an expensive house…
Anyway, loving the life in the new house. However, having two houses with two big gardens, two cats, two cars and two ladies is one something too many.
We decided (after moving in to the new house) that we would have to sell the summer house. Financially it was do-able, but time-wise we just couldn’t look after two (big) properties. While we loved being in the summer house, we also loved being in the new house.
As luck would have it (again), the summer house market had also started to pick up (it took a really hard hit after the 2008 downturn). We bought the summer house in 2015, and sold it again in the summer of 2018. It was great while it lasted! I got my down payment back. In fact, I got it back twice. It had doubled in 3 years. When it comes to real estate investments, timing is everything (not necessarily actually, put for the purpose of this story, lets say that it is!).
So, after selling the summer house, I once again found myself with money in my pockets.
And thus, this new adventure begins!
If you haven’t already read “The Plan”, you should go check it out!