Update: July 2021, Back in the USA

Our net worth increased in July to $107,189 and €90,838, which is a month over month rise of 4.81% and 6.05% respectively.

This is a surprising result for me, because I'm in the USA, and I'm spending money. The trip has been more expensive than I originally expected (though there was always an inner voice telling me to expect it), and the stock market sort of bailed me out. If you owned US stocks in July, you were likely rewarded. At least up until that last week.

Stocks Reporting Earnings

Some of my largest holdings reported earnings in July: Ally Financial, Apple, Alphabet, Charter, Amazon, Facebook, Paypal, and T-Mobile all reported earnings, and the news was generally good. These companies are continuing to grow, and their future prospects are strong.

That doesn't mean that the corresponding stocks were rewarded immediately for that growth. While Ally, Alphabet, and Charter rose following their announcements, Apple, Facebook, Paypal and, especially, Amazon fell in price. Those falls happened in the days after I recorded our net worth change, so they're not reflected in the above totals, but suffice it to say, they were meaningful. Amazon fell a little over 7% in one day, and since that's my largest taxable holding, it was a meaningful drop.

These drops and rises though are just noise though. They are meaningless for long-term success. And getting mad at the market for punishing strong companies' stocks is like shouting at the wind (which I've done at my more pathetic moments). We all see the comments on Twitter and Seeking Alpha that go something like, "Company x just announced a huge beat, and the stock is down 5%? How does that make any sense?"

Maybe it makes sense, and maybe it doesn't. Maybe the company is overvalued, or maybe large holders are taking profits. It's all a guessing game, and it's pointless to try and justify or deride every market move.

I write this, and I have to admit that only in the past year and a half have I been able to actually remain calm during these kinds of drops. My first stupid sale from a drop was Booking Holdings back in the fall of 2017. That kind of sudden reversal was terrifying for me, especially after the easy rise up the market had in 2017. From there to now, I've experienced a real maturation of my response to these movements.

The United States After a 2 Year Absence

I'm currently in the US after being absent from it for two years due to the pandemic. It's been eye opening. The country feels alive and dynamic in a way that I miss from Germany. Germany is solid, and it's treated me very well, but I've never regarded it as an exciting place. The US is exciting. It feels like stuff is happening, like deals are being done, like boundaries are being pushed, like money is bounding forth from all the dynamism.

I like this feeling. It's seductive.

At the same time, there's the dark side. I turn on the TV, and there are the drug ads. CBS Morning has a segment called "Bill of the Month", which highlighted a man with two separate insurance plans who still owed $150,000 after an accident that left him in an out-of-network hospital. I see that a pill that I take daily costs many multiples more than what I pay in Germany, even for a generic! Lots of peers my age are living with crippling student loans and few job prospects if they didn't choose the hot career of the moment.

And during my time here, I kept having to sequester myself from my family to continue working on the Streamlined Filing Procedure. I believe that once it's all done, I won't owe any money, and the IRS won't come after me. But I won't be entirely sure until the statute of limitations is up.

I've lost so much time and energy to this process in a period when I wanted to focus on my family. Since the IRS has to decide - somewhat arbitrarily - whether my actions were willful or not, I had to just hustle to get this done. I wanted to finish it before I left Germany, but I couldn't do it, and the whole thing kept underlining how absurd it is.

For example, I make some self-employment income on the side in Germany. In Germany, there's some threshold you have to cross before they start taxing you on that income, which means I've never been taxed on it even though I always declare it in my German tax return. In the US, that threshold is MUCH lower, and so during this process I essentially had to create a set of P&L books just for my US tax return. I also did the same for my wife's small business.

It's all crazy. Now I have to worry that the IRS is going to bother me about some write off for this tiny small business that I have in a foreign country where the foreign country itself doesn't even consider me worth taxing! These write-offs are to avoid social security, but they know I live in Germany, which has a Totalization Agreement with the US about Social Security, but to actually get out of paying SS in the US, I have to fulfill some additional paperwork that for some reason the German Rentenversicherung doesn't want to provide me (naturally, they just don't respond to my requests for it).

I just don't get why my home country is this way.

Suffice it to say, I have mixed feelings about America right now. It feels like a vibrant place full of opportunity, but it's also loaded with traps and harassment for its citizens.

Let's also not forget that the US is being hit by another wave of the coronavirus primarily because of vaccine hesitancy. To say I'm disappointed in many of my countrymen and women is an understatement. I have several family members who are ill with it, and I hope they pull through.

August Forecast

On the day that I left Germany, the third of the three stimulus payments arrived in our Postfach. However, I was out the door already, and so my wife has been sitting tight on that check. We also received our long-awaited German tax refund at the end of July. Both of those will contribute meaningfully to month over month changes in my August update.

My wife's work is also picking up. We'll see how long that lasts (since Germans are hardly free from this vaccine hesitancy madness), but for now some extra income is very welcome.

As for expenses, I expect to pay for our American and German tax preparers. I do not resent either of them personally since they've both been very good for us, but I do resent this system I've found myself in.

Until next time, stay healthy and look out for your loved ones.

June 2021 Update

On June 26, when I took the monthly measurement, our net worth had risen in the prior month by 1.74% in USD and 3.87% in EUR to $102,269 and €85,653 respectively. Year over year, that's a 50.4% and 41.33% rise in USD and EUR respectively.

We've essentially returned to where we were in May with slight changes to the overall relationships between various accounts. As I wrote in earlier updates, we haven't been able to actually save much in the past few months, so the gyrations of our stock portfolios have been entirely of their own volition.

Stock Shenanigans

Now, I enabled this volatility a bit by selling and buying some things, but there wasn't really much of a period where any of the proceeds of those sales sat in cash.

May provided one of those confounding periods that I wish I were better at predicting. After I sold some stocks, I purchased different shares. When the first stocks fell, I felt vindicated. When the newly purchased shares also fell, I felt like a fool. My instinct to sell had been right, but my rush to buy was not, and much of the frustration I felt in the past two months could have been reduced had I sat on my hands a bit longer and allowed volatility to help me out and make me feel like a genius trader.

That said, in the long run, it won't matter. I can barely remember the various agonies I've experienced since buying my first shares. Eventually this small irritation in May and June will fade like those others I've forgotten in the past. It's all the more reason to avoid making large blunders that make these periods unforgettable.

The one thing that might have been such a blunder was my sale of Cloudflare. This is not a stock tip. Following the sale, I experienced serious regret and a nagging sense that I had made a long-term blunder. I even dreamed about it. After analyzing the company to a greater extent than I did when I first bought the shares in 2019 on a whim, I've decided to average back into it. Make of that what you will. My other sales haven't distressed me, so this will be a good gauge of my instincts as the years play out.

Taxes

We had to move some money out of savings and into the hands of the German federal government by paying our estimated taxes. If we're overpaying, we probably won't see that money again until the end of 2021 with the lag times between receiving the necessary paperwork, the tax preparer's time, and the pace of the German Finanzamt.

In America, I found doing taxes to be kind of fun and easy. I studiously learned the rules as best I could and filed on time every year. When I moved abroad, I knew I needed to file a US return as well, which I've always done.

But taxes have become a drag and a source of dread. Almost none of that feeling has come from paying taxes, but instead it's the vast quantities of paperwork and organization we're required to maintain along with the conflicting rules of two countries that drive me to anxiety and occasional despair.

It appears I've missed something in all my US filings, and now we're going through the IRS' Streamlined Procedure because the risks posed by the outlandish penalties are too high to ignore. Namely, I misunderstood the FBAR (IRS Report of Foreign Bank and Financial Accounts) and how some of my arrangements in Germany might, repeat, might have been reportable. No one can say with certainty whether they are or not, but because the potential penalties are so extreme, and because I'm already in the IRS system, I can't ignore them.

So now we're paying a firm to help us, and in the days before I fly to America to re-establish my relationships with my blood relatives, I'm reassembling three years of data to prove to the IRS country that we don't owe taxes and that we weren't trying to hide money from them. Along the way, I'm learning the other small ways in which U.S. expats are screwed by the US' tax system and it's hard not to feel like our country hates us. Charlie Munger exhorts people to never feel sorry for themselves ("I know self-pity is stupid"), and I try to keep that in mind to keep plunging forward in this task, but that sense of injustice and unfairness grates like sand in my shoes.

June Outlook

We will have to pay the aforementioned tax preparer in June, and I will likely have elevated spending while in the US. Otherwise, I'm hoping for not too many surprises. Because I received my summer bonus, I had some extra money to save, which I've done. Should we receive any of the various stimulus checks from the US or the mythical refund for our overpaid 2019 German taxes, we'll have a boost.

Happy Independence Day to any American readers, and I wish you health and happiness. Until next time.