My Breakfast Costs 45€ a Month

And That's Too Expensive

This month's income feels tight, and I've been staring at our budget trying to figure out where cuts can happen. We budget about 300€ monthly for groceries. Often, we overstep that by a few tens of euros or so, but a goal of 300€ has for years seemed acceptable.

But where is that money going? I had a rough idea of what I was eating and how much it cost, and it just didn't seem to me that we should be spending so much. But when I started doing the math, it became clear that small choices do add up to large-ish monthly sums.

Let's say I wanted to reduce our groceries to 250€ per month. In a 30-day month, that's 8.33€ total for both of us daily. My wife eats much less than I do, so let's say that I'm 2/3s of that cost, which gives me 5.5€ daily to work with.

Here's my current average breakfast:

• A can of sardines in oil
• Two whole wheat crackers to put the sardines on.
• A slice of gouda cheese
• An apple
• A handful of peanuts
• Two cups of coffee

I picked up the sardines habit after listening to Dom D'Agostino on the Tim Ferriss podcast for anyone wondering why someone would begin their day with sardines.

My insight while investigating my personal food costs is to ignore the 100g or price per kilogram and focus instead on the cost of my personal consumption habits. It's useless information to know that sardines cost x price per 100g when I always eat 125g without fail. With cheese, I want to know what it costs per slice of cheese stuffed into my mouth. Per cup of coffee. Per handful of raisins or nuts. Etc.

With that in mind, the costs break down as follows:

• 1 handful of nuts 0.10€
• 1 apple 0.25€
• 1 can of sardines 0.75€
• 1 slice of cheese 0.20€
• 3 cups of coffee 0.16€
• 2 crackers 0.05€
• TOTAL 1.51€
• 30-day Month Cost 45.19€
• Calories 633

You can see the challenge. It's perfectly reasonable to think that a breakfast that's as calorie dense as mine costs 1.51€. Compared to a meal in a restaurant, it's laudably cheap (especially the coffee). When it's added up over the month though, it adds up.

A common lunch of mine breaks down like this:

• 2 Eggs 0.24€

• 1 slice of cheese 0.20€

• 1 Apple 0.25€

• 2 Crackers 0.05€

• 1 Banana 0.20€

• 10 ml Olive Oil 0.05€

• 100g Frozen Mixed Vegetables 0.16€

• TOTAL 0.98€

• 30-day Month Cost 29.28€

• Calories: 562

This is definitely cheaper. I've considered replacing the morning sardines with eggs for this reason, but eggs come with potential risks that I probably don't want to tempt by eating four or five of them daily in perpetuity.

According to my MyFitnessPal estimate, I have another 1345 calories to eat before the day is done due to my activity level, and I have 3€ left to consume. So let's look at dinner.

Last night I had:

• Homemade Kombu Dashi .43€ (1 leaf of kombu)
• Quality Ramen Noodles .25€ (100 g of dry noodles)
• Half a block of tofu .46€
• A teaspoon of miso .08€
• A head of bok choy .44€

That's 1.68€, which brings our total up to 4.17€. So to round things out, let's look at snacks throughout the day.

• A protein shake made up of .70€ powder plus .19€ of soy milk
• A handful of peanuts .10€
• A coconut milk popsicle .80€
• A handful of raisins .09€
• An apple .25€

That equals 2.12€ for a total of 6.29€ during the day, above my goal cost of 5.5€. Total calories equal 2629 (I also ate some seaweed salad, which won't become a regular thing), which is also slightly higher than I was aiming for, but I did reach 153g of protein.

Lowering Food Costs: Penny Pinching vs. Transformational

What could be done to lower this cost? First, there's the penny pinching way, which looks for small savings rather than big changes. If I eat the exact same dinner, but dilute the kombu dashi broth to make it work over two days instead of one, that gets the total down to 6.07€. If I eat one popsicle every other day, that gets me down to 5.67€ and a 30-day monthly total of 170€.

And if I want to change the very nature of my food costs, I could be like Jacob at Early Retirement Extreme and sub that entire dinner and even lunch for a red lentils and rice dish, which drastically changes the cost. My local Indian and Sri Lankan-style Asian market sells a 2 kg bag of red lentils for 2.29€! My local discount grocery store sells rice at 1.18€ per kilo. Combine the two for a complete protein, and eat much more cheaply.

If I had oatmeal for breakfast sans sardines, I'd drastically lower my breakfast costs. A bag of raw oatmeal is around .70€. If I get ten meals from it (.07€) plus a banana (.20€) and 50 ml of soy milk (.05€) plus my requisite 3 cups of coffee (.16€), I'd have a breakfast that costs .48€ daily and 14.4€ over the month.

As I said, transformational.

Net Worth Update: August, 2019

Our net worth increased to $52,326 and €47,141, representing a growth of 1.7% and 1.98% respectively month over month.

Investment Volatility

I hadn't expected a positive return this month because of the trade war and subsequent market sell offs. It hurt our numbers, but that's the life for anyone holding risk assets.

I'm getting pretty good and dealing with the volatility. The past year or so has really opened my eyes to what the markets can do as a whole and what can happen to individual stocks. Some of my positions have really gotten hurt the past month, but I don't see any reason to sell them, so I'll just sit tight and consider what they'll look like in ten or more years.

Larger Income

The big reason our number was up was because I got paid a bunch of extra money for some extra work I did, and my wife worked through the summer rather than travel to the US with me. When we take our trips abroad, we have to not only reckon with the costs of the trip itself but the opportunity costs associated with her missing work. Things slow down in the summer here, but they don't grind to a halt, so she can still earn decent money.

Vacation Costs

The difference in vacation costs this year vs. last year were enormous. The flights were paid for with Citi ThankYou points and some taxes and fees, and then I spent a few hundred bucks while there. Everything we did that was sort of fancy was paid for by family, and had they not wanted those things, I could have done without. The goal of these trips to connect with them rather than have a fancy vacation. I'd be just as happy sitting in their living rooms as on a boat or beach.

I didn't pay for housing, because they housed me. I never paid for a hotel and was welcomed into family homes for the duration. I try to be a good house guest, and they're happy to have me, but that could change if their circumstances change.

It will be hard to ever switch back to the vacation style where my wife and I travel together for several weeks to various corners of the US. We're already planning a targeted trip for her to see her family directly that will require probably no hotels or rental cars or long drives since I won't be there. And if she does that, and if some family visits me, then maybe we can avoid a trip to the US next summer.

Turning Stuff into Money

I sold a camera this month, and although I enjoyed the camera and will miss using it, the money hitting my hand in return for it felt good.

We have several things that I really need to get onto Facebook Marketplace and Ebay Kleinanzeigen. I was shocked how easy it was, and these services reminded me of Craigslist minus all the weird stuff.

I also sold an old iPad while in the US to Gazelle. I should have done it years ago as it only netted me ~ $26. But, hey, that was money I didn't have before, and now I don't have a device just collecting dust and mental space.

September Forecast

I bet we're going to lose money this next month. I have an enormous dentist bill to pay, and we didn't earn a ton of money last month. We also have a giant tax pre-payment to make, so there you go.

But the market could spike, and if we restrain our spending, then it could all be a miraculous wash.

My Baby Boomer Parent is Poor

I have a ticking time bomb in my family, and it’s ticking in the background of every financial and life decision I make.

Namely, I have a baby boomer parent who has absolutely nothing saved for retirement. In fact, they're loaded with debt. That includes student loans and who knows what else. I don't have a full picture of how bad the situation is, but I don't really need it. It's bad.

And I don't know what to do about it. I keep hoping for some miracle to arrive to salvage the situation, but that's looking increasingly unlikely. The last set of potential miracles have to do with inheritances from a very elderly relative, but even then it's a long shot, and whatever inheritance there is might not cover them for any more than a decade or so.

The trouble with relying on inheritances is that they can vanish quickly due to medical costs. A person may have assets, and then suddenly they don’t any more due to the high costs of end-of-life care. Additionally, my parent has proven that they aren't especially good with money, and I don't exactly see why that would change with an inheritance.

The most likely solution is that my sibling and I will have to subsidize this parent. We're both working and earning decent middle class incomes. But adding in another recurring expense isn't something I'm relishing exactly, and it will absolutely jeopardize other life goals that I/we have.

We're Probably Not Alone in This

I think there are a lot of us millennials who are facing similar realities. It's funny: there's a lot of worry about how it's hard for young people to afford housing in modern America, but it's also true for those entering retirement age without any real assets or income streams. If you got into a home in the 70's or 80's and held onto it, you're probably sitting pretty, but if you didn't or uprooted yourself as my family often did, you might be facing serious hardship to afford housing.

Add in the fact that we millennials are behind other generations in terms of wealth due to various factors, and a poor parent becomes another financial stressor.

Potential Strife in the Family

But it is more than financial. It’s a relationship stressor. It’s the kind of thing that leads to resentment.

For example, I don't think my parent could stay where they currently live because it's just too expensive. But then where to go? And who gets to decide? And what if they refuse? And the parent lives near my sibling now, but after a move they’d have to be substantially further away due to COL issues. I don’t want them to feel banished in any way, but how can we afford the current location? It's an overwhelming series of questions, frankly, and none of the answers are likely to make anyone happy.

Naturally, this is also a potential recipe for marital strife. If one spouse wants to subsidize their parent, but the other doesn't, then who wins in that scenario? Or does everyone lose? Luckily for us (ha ha) we each have one parent who will likely be in a similar situation.

Because we're abroad, we're spared in some sense from the immediacy of the challenge, but we're also limited in the help we can offer. I can't just run over and repair something or move something. I do a fair amount of tech support over chat or FaceTime, when I could more easily just fix those problems myself were I there in person.

This naturally puts a lot of pressure on my sibling back home, and I recognize how unfair it is. However, because of my strange career, I'd be less financially helpful if I dropped everything and moved back. When I followed my current career, I couldn’t see the future and plot just how little the parent's financial situation would improve. Had I, I might have done something different. I love this person. I do not want them to suffer.

Self Sacrifice Within Limits

With that I have to say: I still have my life to live, and I don't want the latter half of my life primarily dictated by subsidizing a parent.

To sum up, this is one of those known/unknowns in my life. How bad will this be, and when will the hammer fall? I could find out any day now.

Please forgive my vague pronouns. I'm trying to maintain anonymity for myself and everyone around me while discussing this stuff, so I try to be as precise as possible about the situation and as vague as possible about the identities.

Net Worth Update: July, 2019

Our net worth in July rose 7.3% and 9.73% to $51,451 and €46,228 respectively. We cracked $50k for the time being.

The big drivers behind this upward move were my summer bonus and the stock market. With the bonus, we were able to pay for our tax advisor as well as immigration fees from cash flow rather than dipping into savings, while still having a positive savings rate. I also earned some extra money from some extra side work.

Meanwhile, the stock market really went on a tear. Some of my laggard positions started to recover, and some of the German stocks finally had some small rebounds. I'm finally at an overall unrealized gain in the portfolio, which is reassuring.

Trip to U.S.A.

I'm currently in America, and although I'm trying to be judicious, I'm spending more money than I wish I were. Part of it is just social: if friends and family want to do something fun together, it's hard to say no when I only have limited time with them. To be honest, I don't really want to say no, and I don't want them to feel like they need to support me while here.

More surprising: America is really expensive. I'm always shocked by this, but Germany has maintained lower prices pretty well, so everything feels like a price shock when I come back. Beer, for example, is priced absurdly high relative to Germany. I find food in general more expensive. I'm sure there are some areas where there's a less of a difference or even a slight tilt towards lower prices in America, but so far on this trip, I'm getting killed by the high prices.

I'm not looking forward to updating the budget spreadsheet when I get more time for that. But I am having fun, and I'm glad I made the trip.

2018 American Tax Return Sent

This is a post where I have to emphasize: none of this is advice. It's documenting my decisions and experiences, but you should do your own research and/or speak to professionals before taking any actions regarding tax decisions.

On Friday, June 14, I stuck the wad of papers comprising our U.S. 2018 tax return into a large envelope and mailed it off. My wife and I have to do this process every year, and it’s one of the pleasures of an American living abroad.

Since the US taxes people based on citizenship rather than residency, Americans living abroad are required to file every year with the IRS regardless of whether they owe anything or not. More often than not, those Americans owe nothing year after year, and the process feels completely unnecessary. It ends up being a lot of paper work to say, “Hi there, I still live abroad and pay taxes abroad, and therefore, I shouldn’t have to pay anything back in the US.”

In our circumstances, we have to take the following steps to file without problem:

Buy TurboTax

I’ve been using them for years, and the product works. It nevertheless feels silly to have to shell out any money for this every year when I neither pay nor get paid once the filing is done.

Gather the Information

Even though we exclude our income from taxation using the Foreign Earned Income Exclusion (FEIE), we nevertheless have to document it with as much precision as possible. I print out the bank deposits each of us receive and create a spreadsheet listing the pre-tax sum we earn followed by the USDEUR conversion afterwards on that day to get a total USD total.

Since we also take the Foreign Housing Exclusion, I add up those sums as well with the appropriate conversions.

Since we have stock investments, I print out our brokerage forms as well as auto-import the transactions into TurboTax via the broker itself. That’s very handy. But without any earned income, it’s very hard to actually realize enough income from investments to warrant any taxes being paid.

Apply for the Form D/USA 101

The US has a Social Security agreement with Germany saying a lot of things, but most importantly for us, it says that self-employed people who pay into the Rentenversicherung system here don’t have to pay self-employment taxes back in the US.

This is one of those things that might be confusing if you’ve never been self-employed. When you’re self-employed in the US, you have to pay the full amount of Social Security and Medicare taxes, while employees have to only pay half while the employer pays the other half. Only if you reach a certain threshold of income do you have to concern yourself with the actual income tax.

When you exclude income on the tax return, you’re excluding it from income taxes. But you’re not excluding it from self-employment taxes. That’s a different process, and it involves getting documentation from the resident country saying that you’re in their system. That document in Germany is the Vordruck D/USA 101.

We apply for this in January for my wife, and we get the form typically a month and a half later. It’s a simple form saying what her job is and the dates the form covers and that she’s paying into the German system.

But we have to include it, otherwise we’d be expected to pay self-employment taxes on her income. Instead of filling out the Schedule SE, we just add a statement on one of the lines of the 1040.

Automatic Extension

Because we live abroad and are out of the country on the normal filing date, we’re entitled to an automatic two month extension to file. One doesn’t need to apply for this, and instead you have to write a statement requesting it when filing. I write this out in a word processor, and we both sign it.

Pack it Up and Ship it Off

Then we stick all this paperwork in an envelope and send it off to Texas. Because of the paperwork, E-filing is not an option.

And in the end, TurboTax says something like “Wow, you’re neither getting any money back, nor do you have to send any. How strange.” Yes. Welcome to the world of US tax filing for US expats.

Possible Future Headaches

Some things we might have to worry about in the future but haven’t so far:

• Declaring foreign accounts worth more than $10,000. So far none of our German accounts have reached that threshold, so we’ve been spared.
• Declaring foreign assets.
• Using the Foreign Tax Credit. I’ve considered using it to contribute to an IRA (a different post in and of itself), but it so far hasn’t made enough sense. For example, if I decline the Foreign Earned Income Exclusion, I’d use the Foreign Tax Credit to avoid paying US taxes. But you’re locked into that choice for five years, so I’ve always just used the FEIE. This will definitely become a challenge when I’m paying German taxes on dividends and capital gains, however.
• Complicated income or asset sales. For example, if I ever did any serious side work as a freelancer, I’d have to figure out how to file that in the US. It’s never really been clear how to do that. Likewise, if we ever bought and sold a house for a profit, I’m concerned how that’d be handled.

Net Worth Update: June, 2019

In June, our net worth increased in USD 1.81% to $47,921 and in EUR 0.29% to 42.110€.

The big factors in the move this month were as follows:

• Good stock market performance. Although, in my personal portfolio, we haven't totally recovered from the May drop, the performance plus our savings were strong enough to offset some big expenses.
• We saved around 20% of our cash flow, split between the Tagesgeld account (normal savings) and the brokerage. I'm using the term "cash flow", because I get paid in post-tax money, and my wife gets paid pre-tax money. I could try to include my pre-tax withholdings.... but nah. I'll start in 2020 when I update my budget spreadsheet. Cash flow it is.
• We made a big payment to the German government for estimated taxes.
• I made a large purchase of a used item for a hobby that I'm hoping to turn into a side income stream. That was around €1.200. I have some things that I hope to sell in the next couple of months to help offset the purchase.

Year-Over-Year Tells Its Own Story

It's funny, that is a very small looking percentage change, but I also track the year over year numbers (YOY), and those show just how steady growth over time can lead to big changes. From one year ago, our net worth is up 51.61% and 55.21% from $31,608 USD and €27.132 EUR, respectively. This is after a series of (in USD) smaller changes of 9.77%, 3.61%, -1.62%, 1.98%, 5.24%, -2.49%, 17.49%, 7.58%, 1.31%, 3.73%, -4.26%, and this latest 1.81%.

That's one reason I write these updates. I'm doing this anonymously, and it's not to brag or show off that I have some saved money. Instead it's to document how small changes over time lead to big changes that are counter-intuitive.

Over this last year, compounding had almost nothing to do with the YOY change. At my level of wealth, savings is the biggest factor in terms of wealth growth. My actual stock market returns are basically zilch over the last year. I'm hoping that changes, but my activities regarding saving should be biased towards a) earning more and b) saving more vs. c) earning higher returns.

July Expectations

This will be an expensive month:

• We paid our tax advisor for two separate items.
• We paid the government to reapply for our work visas. It's surprisingly expensive.
• I'm taking a trip to the U.S. later in the month. I'll do what I can, but it will cost money.
• I might have some random bits of income coming in from small gigs. We'll see.
• My wife is working fewer hours because of the usual summer slow down.
• We are expecting a tax refund (!!!), but we won't get that until August most likely.

Net Worth Update: May, 2019

Our net worth dropped to $47,070 by 4.26% and in EUR by 4.69% to 41,990€ in the month of May.

Apparently, I own all the stocks that are effected by the ongoing trade conflicts with China, Germany and Mexico, and I was duly punished for it. Eventually, I assume there will be a resolution, but it's not fun while it's happening. But my hope of reaching 50k will be put of for some time now.

Stock Price Kill Switch

A phenomenon I've also noticed in the last year is this: some stocks seem to almost have a kill switch, where someone somewhere declares the trade done, and the stock sells off sharply and consistently over the course of a month or so. It's wild when this happens, and I've seen this happen multiple times in the past year. Eventually, the stock hits some value and then sits there, but the decisiveness and steadiness of the selloff suggests that it's computers somewhere making the decision. It just doesn't look like the actions of a human being, and there was no obvious news event that prompted the move.

Here's one example:

And here's another, possibly still in sell off mode:

Why not sell these myself? So far, they haven't violated my sell rules, so I'll just hold them, and hope that in the fullness of time, their purchase will have been worth it.

As I said in previous entries in this series, our savings rate is going to be reduced for a while. So while global securities are experiencing a downturn, I'm left out from buying at the lower prices in any meaningful amounts.