Saturday 12 July 2014

Owning your own time

Watch, 3 €, silicon,

Lately I have started to have strange thoughts which appeared due to that I was verbally assaulted by a neighbour for locking my bicycle on a location that blocked his safe exit from his apartment. What he said was not true but he obviously felt the need to complain on someone that day and I became the person in the focus.

The funny thing is... I go to work five days a week to earn money and to build up a sufficiently large stock portfolio so that I can live on the dividends one day. That day will be when I find working no longer entertaining enough no matter if I am 55 or 75 years old. I think that day will never come because I love to work and most likely I will keep working until I drop.

The complainypant (word borrowed from MMM) that assaulted me due to my bicycle do not hold a job. When I go to work the TV is running in that apartment and when I come home from work the TV is still running in that apartment and every now and then the guy is out smoking on the balcony so that he gets some fresh air.

The funny thing is that this guy probably live on social welfare here in Germany. His rent is around 400 € per month and when I calculate it then this guy will receive 930 € per month paid by German tax money. That means he receives 530 € per month to pay the electricity bill, smartphone, food, smokes etc. If I would have been him I would probably have been able to save 200-300 € per month from that money but why should anyone do that in that situation?

There seems to be two roads here in Europe. Road #1 is to spend 7 years of saving 75% of your income or 17 years if you are saving 50% of your income to build up sufficient capital to own your own time OR you can simply take road #2 (welfare) and directly start owning your own time.

Because that is how it is. This guy already owns his own time and with that amount of money even I would be able to live a very comfortable life in Berlin. Sure, I would never become rich but why would I want to become that for? To give inheritance to my potentially future children so that they can spend it on rubbish which frequently happens with inherited money anyway?

If one lives on the welfare in Germany then you are allowed to have a car up to the value of 7,500 €, a 140 m2 house to a value of 200,000 €, you are allowed a saving accounts (or even better would be to have dividend paying stocks) to a value of 9,750 €, and patch of land of 800 m2, a built up private pension insurance of 16,250 € and unlimited inherited antique objects but if the value of one object is too high you must sell it. So starting with some antique trading would be a good side business... Any money above what has been mentioned must be consumed before you will get the next pay check from the government.

If one takes this to the edge... why do people that wants to make an early retirement or wants to own their own time not go for road #2? Would MMM, J.D. Roth of Get Rich Slowly or Dividend Mantra start to collect their fortunes if they would have been living in one of the welfare states in Europe or would they simply have taken the second road to own their own time?

I am glad that they picked the first one and are writing about it but would they still have done that living in Europe? I mean MMM would still be able to take his bicycle to go shopping, he would still have been able to make construction work (and be paid under the table though), he would still be able to brew his own fruit punch & beer and send his kid to the public school close by because statistics anyway says if parents teach children to read and write they will learn no matter the school conditions and then going to a "bad" school will even increase your kids chances of having excellent grades. But... sure... that is statistics and are not based on emotions.

Is it so, that all the people living on welfare in different European countries are the clever ones and I am the stupid one for attempting to take road #1?

Is this food for thought or purely nonsense?


Anonymous said...

You have the answer already! You wrote that you love to work so that's what you will do instead of not working and you will be spending your own money and not be living on wellfare. I hated my job because my biggest goal in life is to be as healthy as possible and my well-paid job was ruining my health so I quit. Now I live on my own savings and despite the fact that others newer do work and lives out of tax-payers money, I don't care, For now, I just love my life as a job-free man.

Fredrik von Oberhausen said...

Congratulations! Iam very happy to hear people that have managed to accomplish the journey on road #1! And it pleases me even more to hear that you had the guts to stop working and to start focusing on living a healthy life instead!

I have read especially on on MMM that there are a lot of people that are scared to make that move and that feel forced to keep working even though they do not have to. Was that a problem for you?

And you are correct. i will not walk down road 2 but i find it fascinating that one could do that and end up with a similar time freedom but i am ure that emotionally the freedom feeling will be very different.

Dividend Life said...

Hi Fredrik,

This is a big topic in the US currently as it is slowly transitioning to more of a welfare state. Depending on your political views, this is either a good thing or a bad thing.

I spent a year unemployed in the UK after leaving university so I appreciate the need for welfare. But it's supposed to be a safety net, not a hammock to relax in.

It's more common now to complain, demand the latest gadget and blame everyone else for your troubles. The trouble with working hard to succeed is precisely that - it's hard, so why bother?

It's interesting to read about the limits in Germany. I paid a lot of taxes when I worked there but I didn't think abut where the money was going.

I'm with you though; I value my independence and I don't want to be relying on anyone for my future. It's how my parents raised me.

Best wishes!

Fredrik von Oberhausen said...

Hi DL,

the Romans had the concept of bread and circuses to sooth the population and to avoid revolts, thefts and crime in general. It worked.

Welfare serves the same function today and brings down the crime rate which makes it a necessity but the balancing towards too much is difficult especially if the politicians on the other side is trying to push the population to consume more to improve finances. An opinion i do not agree with.

Healthcare i find especially important because you need a healthy population that are able to perform work to get salaries to pay taxes for the services the state gives. To me obamacare was a must to bring in if a country wants to continue to call themselves developed. It is easy to see the tax costs on the salary slip but hard to accept or realise everything you receive for that money. If people would even once sit down and think about it and then think about how they would accomplish that on their own the price would be much higher.

You seem to have been around a lot DL. Have you been elsewhere living and working besides from in the UK, Germany and now the US?

Anonymous said...

No it was not a problem for me and it didn't scare me at all because my job really made my life suck. The only thing that really scared me was the thought of staying at my job. The thing that got me started was when I heard a speech where the speeker said that if you hate your job and you do it 9 hours per day year after year, you are eventually going to become a monster and this is going to effect not just yourself but others too. Maybe if I had a big expensive house full of kids and so on I would have giving it a couple days more before I had taken the decision but I would still have taken the exact same decision, better sooner than later!

Fredrik von Oberhausen said...

Well spoken! It is interesting how something as "small" as a spoken sentence at the right moment, to the right person can change a life forever.

My latest such moment was when I was reading The Intelligent Investor back in Christmas 2011 and it made me realise how easy investing can be and especially how important compound interest is.

I can no longer tell exactly which chapter that was in the book but that book was definitely my personal starting point. Afterwards I read many other books to try to figure out what type of investor I was and it made me hooked onto the contrarian approach but the very start was a sentence from Mr. Graham.

Chris Bailey said...

Amazing statistics you provide Fredrik. Amazing and deeply worrying given the materiality of the structural budget surpluses across Europe. The logical conclusion for anyone is that you must build independent wealth and take charge of your own financial situation and options. Your own website is a proud contributor to this.

Fredrik von Oberhausen said...

Thanks Chris!

Yes, one must do like you say and remain in charge. It is the only road to take!