July and August 2022 Updates: Travel, Inflation, Rent

In most of July and early August, I was taking advantage of my summer vacation to travel through Europe and the United States. Meanwhile, Europe's bad news kept piling up.

With power prices rising and the rivers drying up and a war and the currency falling in value, it's a worrying moment here. To put it mildly. I've been captivated by the potential for major disruptions to our lives and for the lives of millions of Europeans whose livelihoods rely on industries, which themselves rely on inputs such as natural gas and electricity, both of which have exploded in price.

What does Germany do if its major industries shut down? I don't know.

That said, even while vacationing within Europe, it all felt far away. Shops were open and happy to sell over-priced chocolates or locally made clothing. The wine and cheese in France were still excellent. Paris is still beautiful. The museums remain treasures. People were generally pleasant and happy to see us. My family who visited France loved it and some said they wanted to move there.

To be fair, when I visited the US, all of its problems felt far away too. American food is great. Everyone is nice in a way that feels increasingly foreign and yet increasingly welcome. I think "Maybe I should move back!" after I've touristed in the US, but when I speak to my younger family members about their jobs, the prospect seems less appealing.

All of them are in the rat race. All of them are working their butts off. All of them don't get enough vacation time. I didn't ask about health care, but I know what that's like. All of them are likely earning more than I do, but the price for that is enormous uncertainty and very little freedom with their time. Whenever I spoke about my job, I couldn't help but feel like I was bragging, even though I'm somewhat unhappy with my career and am considering other prospects.

But as soon as the words leave my lips, "Six weeks summer vacation.... yes, it's paid," I know I have something valuable that my working-age American family doesn't have. It's a tricky social minefield, and it's an inevitable topic of conversation because I just have so much free time in the summer. Meanwhile, my American loved ones balance seeing me with their work schedules.

We'll see though. If Germany can't manage its current troubles, it's possible that the system that supports me and my colleagues falls apart. That's unlikely, but it can't be ruled out.

Net Worth: Inflation and Stocks

Our net worth increased 7.46% in July ($123,947) and fell 2.01% in August ($121,453) in USD. In euros, it rose 9.45% in July (€121,160) and rose .44% in August (€121,697). Liquid net worth at the end of August stood at $89,890 and €90,070.

Image: Chart of our USD net worth over time. Notice the value of euro debt decreasing quickly.

The falling euro is scary. On the one hand, my euro wealth continues to rise because of my overwhelming reliance on dollar assets for my savings. On the other, I have received a large pay cut relative to the US, which I felt acutely whenever I paid for a restaurant bill in the US. Inflation in the US plus a falling euro equals pain for euro jobbers like me.

The upsides are that if there's an emergency over here, my USD cash has become more valuable in euros. Likewise, the value of my European debt has decreased significantly in dollar terms.

Stock Market

The stock market since June has been volatile. The S&P 500 rose in price in July to touch the 200 day moving average and has since fallen. My assumption is that it's in a downtrend, and so my IRA remains in a money market account. Ironically, my lack of action since February in the IRA has been the best trade of my life. The interest I earn in it has gone up over time even as the overall market continues trending downwards.

So far, despite the new downward price action, I don't feel any urge to make major portfolio changes.

My Evolving Rent Thoughts

I have to admit: I've been triggered by the rent increase we got in June. Until then, I'd never had a landlord increase their rent on me. And for him to do it then, just as all our economic realities were getting more precarious, felt especially grating.

I admit that this is irrational. He's also an investor, and investors want rising cash flows from their investments. I get it. But I don't like being a landlord's cash flow¹, and so we've been looking at buying properties again. I still hate the upfront cost of buying something here, but man, I hate having my rent raised. So I'll keep looking.

For a few weeks there, I felt like I was in a rush to buy something. But that has subsided. I've calmed down. I'm still worried about a potential rent increase next year too, but I see that our requirements for a property are specific enough that I can't and shouldn't just buy any old thing.

Other Notes: Computer, Refund, €9 ticket

In July, we bought a new computer for my wife. Her's starting crashing, and since she relies on a stable computer for her work, we bought a new MacBook Air for her. We were going to pay for this from occupational cash flow, but amazingly we finally got the second federal stimulus payment in the form of our 2020 tax return refund. Plus interest! That more or less covered the cost, and it came at a perfect time.

That said, we're going to be financially tight for awhile here. She's making a major change in her business, and the short term effects are likely to be reduced cash flow in the short term with increased cash flow later since she'll be in greater control of her time and pricing. She's being bold, and I'm happy for her.

Finally, we will both miss Germany's €9 ticket, which allowed us both to travel throughout Germany for €18 total per month in June, July, and August. It's back to the old complicated expensive system here, and we'll mourn grievously.

That's all I have for this time around. Take care of yourselves and your families. Until next time.

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1. Especially for this landlord. I like our apartment and its location, but his management of this building leaves a lot to be desired, and we're currently fighting with him about our Nebenkosten. ↩︎

Update June 2022: Bear Market, Options, Life in Germany

In June, our net worth fell by 5.93% in USD and 3.04% in EUR to $115,344 and €110,695 respectively. Liquid net worth was at $83,151/€79,800.

The Bear Market

The S&P 500 officially entered a bear market in June, but this has felt like a bear market to me for awhile. I was holding stocks like Netflix, Facebook, Amazon, Paypal, and Cloudflare from 2021 into 2022, and they're down much more than 20%. It's funny: I knew holding that stuff was really risky, but I couldn't see a way out. I didn't want to sell and pay taxes, so I just held and watched money evaporate. Dumb.

However, even when I did sell, I'd often buy shares in a different company that hadn't started falling yet but inevitably would. For example, if I sold Cloudflare or Square I'd put the money in Amazon. So there was this sense that there was nowhere to run: stay in the name and lose money or sell to buy something "safer" and still lose money.

The names in my individual stock portfolio have gotten progressively more boring. One advantage is that they aren't nearly as correlated, even though on the really bad days, they still all fall together. But at least it's not one big tech trade, which rises or falls based on how the world is viewing tech as a whole.

Painful as this has been, I have learned a lot:

• Be careful of correlations.
• Valuation eventually does matter.
• Paying taxes is better than a crash.

Lastly, this experience has convinced me that most of my money should be in a basket of diversified ETFs, where single stock risk won't wreck my day.

Options Trading

In June, I bought and sold my first options contracts. This is small potatoes, but I bought a call option and sold it the same day, and I'm holding on to a few puts on the overall stock market.

I've long wanted to be able to buy this kind of insurance on my portfolio, but I just didn't follow through with my broker. That said, because it's new, and because it's risky, I don't want to commit a lot of money to this. I remember on Reddit's /r/Wallstreetsbets when there were a few weeks of easy gains for the guys who bought weekly calls on SPY. Inevitably a bunch of other people followed and bet huge sums only to see their options expire worthless.

I recognize the risk that goes along with options trading, and I'll size accordingly.

Life in Germany Right Now

The other day, my wife and I along with a group of others assisted a Ukrainian family move in to a new home. They obviously don't know anyone, so organizations have sprung up to help house them. The family, like many such families coming to Germany, consisted of a mother and her children: the men tend to stay behind in Ukraine.

During this last week, the power company Uniper said that they might need financial assistance from the Bundesregierung due to rising gas prices in addition to lower gas flows from Russia. As I wrote in my last piece, we were asked by our local power company to pay more for our electricity due to the current price realities. When we first moved in, our electricity was around 24 cents per kWh vs. the 39 cents we're now paying. Electricity prices have always felt high here, but now every click of a light bulb or every drop of warm water feels consequential.

The whole situation is unsettling, and it's only summer now: few people use air conditioning here. What happens in the winter when we're all cranking up the heat? I don't know.

There are shortages too, though they're limited to specific items. For example, my employer told us to conserve paper due to a paper shortage. Canola oil in Germany is now basically a distant memory.

Weird as it may sound, I've begun asking myself what event would cause me to buy some plane tickets and bail on Germany. My usual trigger is something like the war expanding into other countries or hitting a NATO country.

I don't want to leave though. It's really a very pleasant country to live in. So let's hope for some kind of peaceful resolution to this violent madness.

Forecasting

My wife and I will be leaving this week to enjoy our summer vacations. We're going to France, so there's clearly still plenty of fun to be had in Europe, despite the present reminders of hardship. Afterwards I'll be flying to the US. I need to hug my family members and, ahem, log into my US accounts from the address I claim as my residence (haha).

And with a vacation comes expenses, but it also comes with my employer's summer bonus. So I've sent off a lot of money - for me - to the various savings account, and I think I've set aside enough for the two of us to enjoy ourselves. My wife also needs a new computer, so that will take a bite out of us.

Until next time, take care. Enjoy yourself in whatever way makes you happiest.

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.

Net Worth Update: June and July, 2020

In June, our liquid net worth¹ increased by 8.01% in USD and 5.7% in EUR to $68,000 and €60,606 respectively. In July, it increased 13.67% and 9.48% to $77,298 and €66,350 respectively.

The biggest factor in both months was the stock market. Like anyone who held positions similar to the overall market, we experienced terrific growth. It is counterintuitive that in such a moment, with as much economic hardship as exists, that the stock market should be on such a tear. I honestly don't know exactly what it is that the market sees, and I won't pretend to. I listen to a lot of stock market talk, and some experts claim that this is a bubble that's likely to pop at any moment, while others say otherwise. It's pointless to try and act on this chatter. I know what my time horizon is, and I hold.

Cash is King (Sometimes)

One thing I haven't been doing, however, is buying. Our savings the past few months has gone exclusively to cash. That's not a stock market timing call but rather a series of tactical moves given the relative uncertainty of the moment. I know that we have certain large expenses in the future, but I don't know what my wife's income will be, and it's hard to guess it more than a few weeks out. Therefore, I've been preemptively saving to knock out those costs whenever they arise, in order to prevent having to scramble to pay for them from that month's cashflow. You might be thinking, "Well, duh, that's the way savings works," and you'd be right. But our situation has changed enough that we have to do this for stuff that we could previously just pay for out of cashflow.

That means saving early for tax preparation costs, estimated taxes, and large purchases. We've also been continually adding to our emergency fund. An emergency fund is basically early saving for known recurring expenses in addition to surprises, after all. One unsettling aspect of this pandemic is that my industry has been especially hard hit, and my seemingly secure job doesn't feel as secure anymore.

A couple of large cash infusions also buoyed these months' changes. In June, we deposited the stimulus check that was sent out. US expats who file their taxes were also eligible, and we were happy for the money. Secondly, my employer paid me early for August, and without any message from them, I truly don't know what that was about (new employee clicked the wrong button on the bank website maybe? I've done it).

And on top of that, because most of our cash is in the euro, the recent upward spike of the euro's value has made that lump more valuable in USD.

Vacation?

Although it's summer vacation time in Germany, we have decided to stay home. And by home, I mean our apartment in Germany. We contemplated some trips, but hotel prices in Germany weren't low enough to really make it worth our while. Outside of Germany, some prices are incredible, but we quickly wrote off getting in a plane or bus or long distance train, especially since those prices also aren't all that great.

I will say, the FOMO is real. The weather's also not been very summer-like, so it's been kind of lonely and dark. We've used the time to take care of some home improvement projects, and I've been using FaceTime more often to get in touch with American family.

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1. This includes: bank accounts, investments (excluding German private pension but including US IRAs), credit cards, rewards programs valued at 1¢ per point, cash, installment plans and any other debts. ↩︎

Net Worth Update: March 2019

Our net worth increased by 1.31% to $47,396. In euros it was up 2.34% to 42,037€.

We had some expenses that were unavoidable. We had to pay our quarterly taxes in Germany, and we had to buy some new glasses for my wife. She also took a vacation to the U.S. that cost a bit of money.

The stock market was a big tease this month. In the final weeks, our portfolio experiences wild volatility. One day jumped a lot, and then the next fell a lot. Nothing to be done about it. The market feels very sensitive right now, and I wish I could say that I can resist it, but on big down days it's hard not to feel personally stung. That's especially true if the weather is bad, which it often is in Germany.

I'm noticing a trend in our early year savings rate. Usually, in the first few months of the year, there are a bunch of expenses and adjustments that eat into our ability to save. The German social security and health insurance adjust, and we have to make our new - usually - elevated tax payments.

Lastly, whatever costs for vacations and things like that tend to cluster around this time of year as we make final decisions about what we want to do with our free time in the summer.

We're going to continue having to make big spending decisions over the next few months, so I'm expecting our savings rate to be depressed for a bit. I have gotten some extra work at my job, which will help elevate my earnings, so I'm hoping that can offset some of our savings inefficiency.

CC Award Update

We got the award.

In an earlier post, I expressed some reservations about these big awards and the minimum spend required to achieve them. I still feel that, and my wife still feels that. We did drastically reduce our planned expenses. We don't like feeling incentivized to make big purchases.

But I still wanted the award for reasons I'll explain later, so I found a method of manufactured spending to make it work. There aren't many available to us Americans abroad, but there are some, and I took advantage.

The manufactured spend did cost something as a percentage of the spend, so it wasn't free. Basically, it's a cost for the accumulation of these points. I think it's better than buying a bunch of expensive stuff totaling $4000.

Why do it at all though? The basic calculation in my head was something like this: we are going to travel to the United States again at some point in the next two years, so therefore it's worth spending a little, to save much more later. The return is pretty good in this case (around $70 spent to save between $600-$1000 later). Even if I later eat the annual fee, the return is decent.

The reality is that we're going to visit family in the US at some point. It's important to both of us, and despite any savings goals we have, it's not worth sacrificing relationships or missing seeing child relatives grow up. Next summer we'll suffice with FaceTime, but the next year we'll almost certainly be heading back.

Or we'll help relatives who aren't as financially well off come visit us. It is much cheaper for us to pay to fly someone here, than for both of us to fly to the US and find accommodation and transportation.

Will we do this again? Maybe. I'm looking at other card award possibilities, but the trouble with manufactured spending is that it's kind of skirting the rules. I prefer to draw as little attention to myself as possible regarding my American financial accounts, and manufactured spending can open me up to closer inspection. I might do this with another similar card and then focus on things like hotel cards that provide free nights automatically. Since hotel costs were a high proportion of our last visit, cutting down on that would be worthwhile.

Or maybe I won't. I could just continue to add points to this card that I have and otherwise use normal German payment methods to get by. Germany doesn't have the same glut of strategies that the US has, but it has a few, and those might be enough to both satisfy the points accumulating itch and to keep things simple.

Churning Isn't Worth it for Us

After talking with my wife, we're going to back off on the card churning/travel-hacking thing. When we spoke, she was totally in alignment with me and expressed similar concerns that I mention below.

Sometimes you have to just admit that something isn't worth it. We're trying to build a deep savings habit. Habits take time and effort, and credit card rewards disrupt the savings habit.

Encouraged Spending

I found myself looking for things to spend money on. If I'd ever had a thought floating in my mind soup about something I'd like to buy, I began telling myself that I'd planned buying it all along. Now was indeed the time to do it since we had the new card. That way I could get to the end of the process and say, "We only spent money we meant to," even though it probably wasn't true.

I want to think about ways of saving money rather than spending money, and I don't want to think that spending comes with big rewards. 

Expensive Thinking

I found myself angling for more expensive solutions than I'd otherwise accept in order to meet the minimum spend. Every purchase was anchored to the number $4000. I reserved a hotel for a lot more money than I would if I'd purchased it with my normal credit card. I looked at brand new high-end products when used or otherwise less expensive items would meet our needs.

Luxury Dependence

These high end credit cards are trying to get us used to the idea of luxury, and luxury is a weakness. Airport lounges, high-end hotels, first-class airplane tickets, speedy security checks, elite status, and metal cards are all nice, but they clearly want the card user to become accustomed and dependent on these niceties.

I don't want to feel like I'm entitled to that stuff. One day these cards might not be so generous with their perks, but the luxury dependance would likely remain. And then you're trapped. 

Points Aren't True Assets

Points are kind of like assets, but not really. The issuing company can change the rules whenever they want. The airlines can jack up their fuel surcharges. The points accumulate no income, and their value doesn't appreciate with time. As far as I can tell, there are no laws protecting you as a points holder.

If we spend a bunch of money now to get the bonus within the next month, we'd be spending today's money in order to save money potentially about a year from now. That's putting lot of faith that the points will be worth something then, and it's a lot of faith that the money that I could have saved today couldn't have been used in a better way. 

Stress

It was causing me stress, and that sucks. I don't want to resent my wife if she didn't put some spend on the card. I don't want my afternoon ruined if the card machine at the grocery store doesn't work. I don't want to call American banks more often than I usually have do, which for the past few years has been never. And I hated the buyer's remorse that came with buying expensive stuff.

I've always prided myself on avoiding unnecessary stress traps, and this project was becoming one. 

The moment where this really hit me is when I did our monthly net worth calculation, and I saw that it had dropped in a month where our stock performance beat the market. Additionally, I knew that it would continue to drop as we fulfilled the minimum spend over the next two months. Meanwhile, there were great deals in the stock market if only I could get some cash in to buy them. But no cash was coming. 

We got a couple awards from less ambitious cards, and maybe I'll do some of those in the future. But for the bigger cards, we just don't spend the kind of money that justifies trying to churn them. And to spend that money means forgoing buying real assets now that could be worth much more than the credit card points are next year. 

Anyway, that's my thinking. I'll write more about rewards and stuff, but for now, they're nice but not worth sacrificing real saving for. 

Credit Card Award Beginner

Over the summer, while making several US trips, I managed to score a few credit card awards. These were the easy to achieve kind: spend $500 in three months and get back around $150.

In August, I might have bit off more than I can chew. I went for one of the big mid-tier cards that offer you a bunch of points for $4000 spend in three months. It has no foreign transaction fees, so I can stick a lot of our local transactions on the card. That's no problem.

But despite some lofty goals, I'm finding it hard to spend the money. First, there's a lag between being approved for the card and its arrival abroad. In that time, some spending has to happen just to eat, so that spend doesn't count towards the reward, though the clock had started ticking on the 90 days.

Second, there are few good options for manufactured spend in Germany. Those Visa cards you can load up in the U.S. don't really exist in the same way here. There's no Plastiq, so rent and a bunch of other bills happen directly from our normal bank account.

One of the rules I set for this project was to not spend extraneous money that we otherwise would not have spent. One the one hand, we haven't gone out and bought a bunch of crazy extra stuff. No new computers or cell phones.

The stuff we planned to buy that would have helped us cross the spending threshold keep getting cheaper the longer we plan. For example, we planned to put a bunch of next summer's U.S. trip on the card, but we determined that a trip would be too expensive, so we chucked that. We planned on buying a nice couch, but even with the reward, we find couches too expensive and keep finding acceptable couches at lower price points. We are taking a brief vacation on one of my long weekends, but with low-cost airlines in Europe, it just wasn't that expensive. And we planned on doing some nice-ish things for the apartment, but short of a full kitchen overhaul, we can't stand spending the money.

And some of the more outlandish ideas, such as buying a new iPhone, get snuffed out mentally before they have much gestation time.

On the other hand, we wouldn't have done even this amount of spending without the card, so it's encouraged us to open our wallets more than we otherwise would have. The couch we have is an eyesore, but it's functional. The apartment improvements could have waited. The small trip could have been even smaller.

I've been forced to update how we budget, which adds complication. It's much harder now to get a big picture idea of how well we're managing money since a budgeted item happens this month but the actual paying for it happens next month or later. I've developed some new systems, but what used to be simple is now more complex, and I believe complexity makes overspending more likely.

I keep coming back to one thing: the reward is worth between $600-$1000 depending on how well it's used. But if you don't spend any money at all, then such a reward pales in comparison to the value saved.

I've been going back to some of my favorite sources for financial inspiration, and some of my spending ideas feel more suspect. For example, I thought of front-loading our mobile prepaid amounts for the next year. But now I'm wondering if I even really need a mobile phone. I have some internet services that I use. I could prepay them... or I could cancel them and just keep the money.

I'm not certain if I'll do any of those things, but I'm considering it. So there's a kind of mental battle between my desire to try churning out of curiosity, my default frugal side, my radical frugal side that wants to move into a studio apartment and sell our furniture and use the library's internet, a certain amount of sunk cost fallacy lurking in the background, and my desire for the stuff we're going to buy.

I know an American family here that churns U.S. credit cards successfully, but I have no idea what their budget looks like, and I believe that they have willing helpers in the US who spend on the card on their behalf. I'm not so trusting as to give any of my family my credit card, so that avenue is not open to us.

At the very least, I doubt I'll do this again any time soon no matter how it turns out. It really doesn't appear practical for us.

Budgeting and Decisions

Yesterday, my wife and I came to a conclusion: we will not be doing a big U.S. visit in 2019. I got super stressed about this decision while we were making it, but the decision became much easier after doing three things:

• Adding up the costs of the last big trip taken a few months ago. 
• Looking at our budget for the next few months. 
• Talking about the decision with each other. 

The numbers don't lie. The last trip was really expensive. Although there are areas where we could cut costs and optimize, the next one would likely also be expensive in unavoidable ways, and combined with some other upcoming costs and upcoming financial uncertainties (cough cough taxes) it meant we'd be opening ourselves up to too much financial risk. Additionally, even if the uncertainties went our way, another trip would set us back on our longer term financial goals. 

So we had to bail on the idea. I sent out the messages to the relatives. Sorry. No big trip this year. I'd feel guilty, except that I know the numbers and how unrealistic it is to expect to do this every year. 

This is one reason why we should set financial goals, track our spending and budget future spending. At numerous points in my life, major decisions were made much clearer when the budget spit out its numbers. Rather than just a vague unease with a purchase or choice, the numbers show us why we are uneasy. They show us how the unwritten budget math in our minds is most likely lying and presenting an overly rosy view of things. Nearly any major decision can be reinforced or rejected by checking the budget. 

But we have to make one and follow it. It's hard, but it's worth it.