Monthly Update: Our First Personal Finance Journey Update

Monthly Update January

FV: Based on current return rates

As we move forward in our goal to build a 1,000,000 euro investment portfolio, we want to share our monthly updates and lessons learned on this journey. In this first update, we’ll dive into our income details, investments and real estate purchase.

Current Financial Overview

Current month vs Prior month

This month, we reported a steady income of 535 euros, based on a six-month average calculation. This method allows us to take a more balanced view of our financial progress, accounting for any fluctuations in earnings. It’s worth noting that extra income—such as dividends or sporadic earnings—impact the income figure in the given month a bit less because of the six-month average. This helps us focus on steady, predictable income rather than one-off earnings, giving us a clearer, long-term picture of our financial health.

Return rates (Current month vs Prior month)

However, we’re currently operating at 97.6% of our projected budget. We’re a bit behind schedule, but this is not surprising as we expected to fall short in the months before the rental income from our newly purchased property begins to roll in. We’re aiming to get back on track as we enter the coming months, particularly once the rent from our new Hungarian apartment starts flowing in.

Real Estate Investment: Apartment Purchase in Hungary

In December, we decided to purchase an apartment in Hungary. Located in the city center of a smaller city, this investment is expected to help grow our portfolio in the long term. Over the past month, we focused on making the apartment tenant-ready by painting and furnishing the space. Well we tried to paint ourselves, but noticed very very fast that nobody would be happy with the results. Luckily we found somebody who could help us.

This rental income will help improve our cash flow and is expected to increase in the coming two years, particularly as we pay down the loan.

Financial Focus: Loan Repayment & Renovation Preparation

Looking ahead, our primary financial goals will focus on repaying the loan for the new apartment and preparing for the renovation of our Budapest apartment. Paying off the loan quickly will allow us to increase the profitability of the rental property, as we anticipate higher rental rates in the coming years. The sooner the loan is repaid, the more we’ll be able to invest elsewhere—pushing us closer to our 1,000,000 euro portfolio goal.

Additionally, we’re setting aside resources for the renovation of our Budapest apartment. While it’s still early in the planning process, we know that improving the value of this property could yield significant returns, either through rental income or a potential sale.

Calculations: Determine the "equity"

Even though we both have a background as auditors we don't actually calculate our equity for our F.I.R.E plan the same way as a company would do. We currently don't consider our the equity of our own house as part of the portfolio as we see the house currently as assets that is not generating income (and probably never will because when we will sell it, it will mostly be put in new stones to live in).

Also we don't re-evaluate the rental properties we have, mainly because it is irrelevant for us, we will most likely not sell them, and we are more focused on the income side of it.

This will make it "harder" to reach the one million, because in theory the rental properties could increase in value a lot and we would reach that amount very fast. That is why we are focused on a lower number like 1 million, because that amount in pure accounting equity would be too low for us to start Barista fire in 15 years (considering inflation etc.)

In the coming years we will probably adjust the plan, the goals and the method of calculating, but for now this is the plan and we will stick to it :)

Let's us know what you think in the comments! :)