Reader Case Study: Working to FIRE in Finland

Jen and her husband Marc live on the west coast of Finland along with their two-year-old son. They recently bought their dream home near the sea and are enjoying their new lifestyle outside of the city. While Jen likes her job as a product champion engineer, she has aspirations to reach FIRE (financial independence, retire early). She’s also interested in pursuing a real estate portfolio, starting by renting out the cottage on their property via AirBnB. Jen would like our help determining how to approach real estate investing as well as when she and Marc might reach their FIRE number. Let’s travel to Finland today to delve in Jen and Marc’s questions!

What’s a Reader Case Study?

Case Studies address financial and life dilemmas that readers of Frugalwoods send to me requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight and feedback in the comment section.

For an example, check out the last case study. Case Studies are updated by participants (at the end of the post) several months after the Case is featured. Visit this page for links to all updated Case Studies.

The Goal Of Reader Case Studies

Marc and son at the beach

Reader Case Studies are intended to highlight a diverse range of financial situations, ages, ethnicities, geography, goals, careers, incomes, family compositions and more!

The Case Study series began in 2016 and, to date, there’ve been 62 Case Studies. I’ve featured folks with annual incomes ranging from $17k to $200k+ and net worths ranging from -$300k to $2.9M+.

I’ve featured single, married, partnered, divorced, child-filled and child-free households. I’ve featured gay, straight and trans people. I’ve featured men, women and non-binary folks. I’ve had cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, Spain, Finland and France.

I’ve featured people with PhDs and people with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.

The goal is diversity and only YOU can help me achieve that by emailing me your story! If you haven’t seen your circumstances reflected in a Case Study, I encourage you to apply to be a Case Study participant by emailing mrs@frugalwoods.com.

Reader Case Study Guidelines

I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn.

There’s no room for rudeness here–the goal is to create a supportive environment where we all acknowledge that we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.

A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.

With that I’ll let Jen, today’s Case Study subject, take it from here!

Jen’s Story

Forest in front of Jen & Marc’s house

Hi Frugalwoods and Frugalwoods nation! I have so looked forward to this and it has already been so much fun composing this article. I’m Jen, a 38-year old engineer living on the west coast of Finland. This little country of nearly six million inhabitants in northern Europe might be quite unknown to most Frugalwoods readers.

Finland is a welfare state and apparently we are the happiest people in the world (which we ourselves find a bit surprising!). It is by no means perfect, but on average it is really good. It’s a safe and secure environment in which to raise a child. Our little family consists of my hubby Marc (who turns 40 this year) and our 2-year old son. We are both bi-lingual in Finnish and Swedish and both languages are used at home. I found FIRE and minimalism back in 2017, which is also when I started investing on a larger scale.

Jen’s Career

Honeymoon Jen looking out on Florence

While I’m writing this, I am on vacation. I quit my job as a factory manager to go back to R&D, which is better suited for me. During the winter I was very tired and was actually thinking of trying to become self-employed. After some calculations, I concluded that such an endeavor would drastically push back my FIRE date and after testing it out, I realized I felt too alone. Instead I started searching for a sustainable job, somewhere that I’d be challenged but that wasn’t too stressful and where I’d have great colleagues.

The positive side of living in Finland is that companies usually offer a good work-life balance. On average people do not work overtime. The white-collar work week is 37.5 hours. On the back-side, the wages are nowhere close to what you guys in the US make. It is nevertheless enough to live a good life. I got a new job as a Product Champion, which will entail managing the features (functions) of a control system. As a social being, I love the possibility of having a job where I am required to interact with our stakeholders on a regular basis. Since work is such a big part of my life, it has to be technically interesting and stimulating for me.

Marc’s Career

Marc hiking in the Swiss Alps

Marc finished school a year ago and got a job as a software test engineer at a company making apps. He studied Industrial Management and is hoping to take the leap into that arena after getting some engineering work experience first. His current employment is not his dream job but the company has been good to him and he has great teammates.

He was fortunate to get a job while being newly graduated in the midst of the pandemic (in December). The rest of last year he was on parental leave taking care of our son. The two bonded on a deeper level during this period.

Childcare in Finland

Now that both of us parents work, our son goes to daycare three days a week. Childcare is provided, and regulated, by the state. In our county, the daycare fee is 216 €/month/3 days for us. The fee is calibrated on the parents’ income and we pay the maximum amount. Marc stays home 1 day a week and in my old job, I used to stay home one day.

As I transition into my new position, I will be working full time and his grandmother will take care of him one day a week. I have plans to maybe go back to a 4-day week sometime in the future. Here in Finland you have the lawful right to do so until your child starts third grade. And, a small allowance is paid by the state until your child turns three.

Hobbies

Marc and Jen’s new house

In whatever free time we have, I try to work out. Running has been a continuous partner for me throughout my life. I did figure skating before my pregnancy, let’s see if I get back to that. Marc enjoys computer games. A new pastime is exploring our new surroundings by bike and trail running for Jen. Just today we found a new playground and other interesting things in our widespread (geographically) village.

Jen and Marc’s Home

Last year we found our dream home situated next to the sea. This is a place for enjoying–hiking in the surrounding forests, swimming in the sea on the other side of the road, doing garden work and renovating the house.

Moving out of the city allowed us to give our son the luxury of exploring nature and having a slower-paced life. The neighbours are great and the community is unusually active. It is a true luxury having an extensive garden with fruit trees and berry bushes. We look forward to having a small kitchen garden. The yard also offers a huge potential for a change from office work. We have grand plans to build a small greenhouse, garage, swing set, etc etc. The possibilities are indeed endless. This summer will bring roof painting and fixing the terrace railing.

Here’s a list of repairs and upgrades we plan to do in the near-ish future:

Upcoming house costs Schedule Estimate
Painting roof

Rain gutters & window sills

New terrace railing

New washing machine

New fridge/freezer

New oven, stove & kitchen counter

New front & balcony doors (6 pieces!!!!)

Garage

Fireplace upgrade

Renovate upstairs bathroom

This summer

This summer

This summer

When it breaks down (from 2003)

When it breaks down (from 1995)

When it breaks down (from 1995)

 

1-6 years ( we won’t change all at one time)

In 2-10 years

In 2-5 years

In 3-5 years

1500-2000€

1000€

500€

800€

1000-2000€
1500-3000€

 

6000€

 

10000-50000€

4500€

10000-20000€

The AirBnB Potential

Snow-covered Future AirBnB

Our property also houses a small cottage that we have been renovating. Owning an AirBnB has long been a dream of mine and with this set-up, that will be quite easy to realize. The building can also double as my office. Doing the renovations has been a pleasant undertaking, in fact, it surprised me how much I am enjoying it! Let’s see what the next “commercial” project could be.

In any case, I am also looking forward to testing out my landlady abilities this summer. Rough calculations estimate that we could gross about 50€ per night. According to AirBnB I can gross around 500€/month in my area for a house this size, so let’s budget for 300€. We will be paying income tax on this income.

Jen and Marc’s Approach to Finances

Jen and Marc’s son

In a strict sense, we do not budget. We have separate finances and on payday, we both transfer money to our shared accounts for bills. As the main breadwinner I also transfer at least 400€ to our grocery and gas account, which usually isn’t enough. We then sometimes use our personal money to cover the rest. Investments are made at this time as well.

Marc’s savings rate has been low due to studies and parental leave. Now, he is hopefully getting back in the game. We have had a few cost-cutting projects through the years and our costs have decreased. Moving to a big house has increased costs. However, we always have money left in our private accounts when a new paycheck arrives.

Our FIRE journey also set me on the course of shopping for used things. I did not realize how good I have gotten at it. Looking around our house, most everything is used. Our kid is also free to play around as he wishes in his used clothes. This has drastically decreased our spending. We try to keep our grocery costs low, but fail every now and then.

My main goal currently is to not throw anything away. We try to create recipes around what we already have at home and I bring lunch to work most days. We are able to save for bigger purchases in advance and generally have stable finances. But we don’t budget and even though we have a hunch on how big our fixed expenses are, we do not know what the exact number is. Before now, that is 🙂

As for saving and investing, I started that journey relatively late. When I got my first real job at 28 I put a whopping 50€ a month into a special savings account for first time home buyers. It was 5 years later that we opened our first investment account, which is now 6 years ago. Even though we never overspent back in the day, we also didn’t have much left to save. Nowadays, it is another story and we invest a significant portion of our income.

Things That are Different in Finland

There are a few country-specific aspects I thought it good to mention.

Pensions

State pension excerpt

There are no 401K’s or similar tax-free retirement saving options here. We have a public (compulsory) pension system, which in itself is relatively good. However, we have a huge problem with an aging population. Too few new Finns are being born, which means that there is no one to pay for future generation’s pensions. The system is poor since a large part of pensions are paid directly from the current workforce’s paychecks to today’s pensioners. There is no way to opt out of this system. At right is an excerpt from the state pension provider.

Healthcare

Currently the healthcare system is quite good, but big structural changes are coming. As mentioned, our aging population is a big burden. Anyhow, only our son has health insurance and even he could do without it. It is a convenience as it enables him to see private doctors more quickly. My employer also has employee healthcare, which gives access to some basic private health care services. We all have some congenital health issues and the public sector takes care of us quite cheaply. A specialist appointment is just 41€, including all procedures or tests that might be needed before the appointment. I predict we can live for the longterm without private insurance–it’s just an inconvenience.

University

Higher education is basically free in Finland and so we will not be saving any money for our son’s education. I studied for 7 years and never had any debt. I did work in the summers, but have nothing money-wise to show for that. I was a big spender back in the day! We have an investment account for the costs our son will incur in his teens (such as his driver’s license, which costs around 1800 €).

Taxes

Taxes are high in Finland. The taxation is progressive on income, but due to the marginal tax rates, some income bracket groups’ net income might in some instances decrease even though your incomes go up!

Unemployment and Sick Leave

We have quite a small buffer in cash. But unemployment in Finland is quite good. If I lost my job, I’d make about 70-80% of my salary for 500 days, which is higher due to payments to the unemployment fund. If I got really sick, the social insurance institution of Finland would pay some kind of sickness allowance. Prescription drugs cost a maximum of 580€ annually and after that, you pay 2,5 € per medicine package you buy. Hospital costs max out at 683€.

What feels most pressing right now? What brings you to submit a Case Study?

Jen & son going to the grocery store with kick sled

I found the minimalism and FIRE movement in 2017 and worked hard at getting started. I now feel a bit stuck and unmotivated. I think one reason for this is our lack of any concrete milestones. The only fuzzy goal we have is FIRE, which will not happen in the near future. I am also unsure what our FIRE number should be.

We don’t really budget either. I would also like to dip my toes into the pool of real estate, but am a bit afraid. As I’ve thought about what to write in my Case Study I’ve realized that I don’t really know what I would do for work if I retired early. What would I like to spend my days on when I have done the fun stuff, the projects and how would I replace my social life that a regular workplace provides? There doesn’t seem to be that big of a FIRE community in our neighborhood.

What’s the best part of your current lifestyle/routine?

We love the increased opportunities to spend time outside with our son. Every day after daycare we take his tricycle and head out to the shore. We still cannot believe we were so lucky to find a nice house right next to the water! Having nature right outside our door is great and last fall it was lovely to pick wild berries from our own yard. I have enjoyed having several renovation projects to dig my teeth into, and Marc has enjoyed participating in those, but a bit less. This winter we loved hiking on the ice as well and found a bunch of hiking paths in the forest. Marc enjoys teaching Alex new things (or at least everything there is to know about space 🙂 ) He is also the chef in the family and tries out new gourmet recipes as well as makes a Spaghetti Bolognese to die for! Together, we enjoy discussing politics, investments and pondering science/engineering topics.

The financial stability we have built up over the years maybe doesn’t elicit joy but provides a sense of stability and peace of mind.

What’s the worst part of your current lifestyle/routine?

Sales picture from Jen and Marc’s former apartment

Our former walking lifestyle was great! Moving away from the city center and bus routes has forced us to use our car more. We’re also unable to walk to wine bars and restaurants like we did before (before a child and COVID, that is).

I also wish I had more time and energy to exercise and work out (which would give me more energy, I know!). Even though we only work 80% we are very tired in the evenings when our son needs a lot of love and attention. Working life is hard and for me I would love to be more free and not so stuck to the 9-5 schedule. I’d like to have more time (and energy) to work on projects in our garden as well as projects around the house. There are so many projects I’d like to start that I feel like I don’t know where to start. As we work normal jobs, we are not free to take off on trips and such without rigorous planning.

Where Jen and Marc Want to be in 10 Years

Finances:

  • Our combined net worth should be at least 600k-800k euros
  • Jen would like to own several rentals and/or AirBnBs

Lifestyle:

  • Spring is in the air

    Jen would like to be close to Lean FIRE, possibly working only part time.

  • As a family, we would like to take mini-retirements during which we travel somewhere for longer periods of time, mainly during the dark and cold winters.
  • We would like to be more self-sufficient in terms of energy for our home. Our garden is providing us with some food (in the summer).
  • In general, we’d like to continue leading an active lifestyle with biking, hiking, skiing, etc.

Career:

  • Marc sees himself progressing towards a slightly more lucrative career with more responsibilities.
  • Jen sees herself either in a comfortable expert job, working part-time, or in an interesting director’s position working full-time and being near the end of her career.
  • We would increasingly like to complement our salaries with income from a real estate portfolio. We would like to buy apartments, row houses, or a cottage to rent out. Another alternative would be AirBnB-ing a cottage by the sea. To maximize profits we are aiming at purchasing fixer-uppers.

Jen and Marc’s Finances

Note: all amounts are listed in Euros (€). The Euro to US Dollar exchange rate as of today (July 16, 2021) is $1.18 to €1.

Income

Item Amount Notes
Jen’s income €3,124.00 Net salary with taxes, unemployment & pension fees already deducted. Includes 2 bonuses. Worked 80% for the beginning of the year, sick leave when about two months of income was at 70%. New net salary will be about 3600-3900 € / month + bonus depending on taxes.
Marc’s income €1,268.00 Income from parental leave, unemployment and now part time salary. New net salary will be about 1750 € / month + bonus depending on taxes. He works 80%.
Child benefit €94.00 All guardians in Finland and Sweden get this for children under 18
Monthly subtotal: €4,486.00
Annual total: €53,832.00

Mortgage Details

Item Outstanding loan balance Interest Rate Loan Period and Terms Equity Purchase price and year
Mortgage on primary residence €191,426 0.6% 25-year mortgage €87,574 $279k; purchased in 2020

Debts: €0

Assets

Item Amount Notes Interest/type of securities held Name of bank/brokerage
Jen’s investment accounts €55,115.00 After-tax investment account, stocks, ETFs and index funds Nordnet
Jen’s investment accounts €20,189.00 After-tax investment account Seligson
Jen’s pension account Sweden €10,000.00 Accessible at age 62 or later as monthly pension
Marc’s investment accounts €5,500.00 After-tax investment account, ETFs and index funds Nordnet
Jen’s savings account €3,573.68 This is my emergency fund Earns 0.75% interest Bank Norwegian
Marc’s bank account €3,000.00 Sparbanken
Marc’s cryptocurrency account €2,500.00 As you know, highly volatile so this might be totally different tomorrow 🙂 Coinbase
Jen’s bank account €2,308.00 Primary account for paychecks, etc.  0% interest
Joint bank account €1,775.00 Joint account for bills Sparbanken
Jen’s savings account €1,005.00 This is my emergency fund Earns 0.08% interest Sparbanken
Joint bank account €977.73 Joint account for food and gas S-banken
Co-op shares €400.00 Owning shares in 4 different co-op shops. They used to all make 5-20% interest. Now I mostly make interest on the one where we shop, eg. this year we got 5% interest + bonus on everything we shop. S-banken
5g of gold €229.45
Total: €106,572.86

Vehicles

Vehicle make, model, year Valued at Mileage Paid off?
Toyota Avensis 2009 €10,000 100,000 Yes, paid in cash. Did we mention that cars are super taxed thus super expensive in Finland.
Ford Focus 2007 €3,500 50,000 Yes
Total: €13,500

Expenses

Item Amount Notes
Costs for buying house €975.00 One time costs. Taxes, home inspection etc.
Food and household supplies €752.00 Includes household supplies, hygiene articles (e.g.diapers) etc-
Mortgage €502.00 The low sum is due to the move last year, we lived mortgage-free July-October. New mortgage is now 722,2€/month.
Costs for selling apartment €470.00 One time costs. Realtor, lawyer, home inspection etc.
Renovations & furnishings €352.50 New house, small renovations & some new-to-us furniture. This will be drastically lower next year
Utilities – Electricity €179.67 This will go up as we lived in an apartment until June. In the winter the worst month was 360€. We have a fireplace we can fix up to relieve some of the cost. Firewood is free for us. Our main fireplace would cost 4200 euros to retrofit a casette that enables the fireplace to actually heat the house.
Gas for cars €159.00 Gas is a lot more expensive in Finland. Hopefully we can reduce this cost, my new job is 50% closer to home + I will be allowed to work from home part of the week post-pandemic. I can bike and Alex can also be biked to daycare.
Clothes and shoes €113.00 For whole family, most are bought second hand. Some new clothes for post pregnant Jen.
Insurance €108.00 Home, Alex’s health, 2 x car & accident insurance
Alcohol €105.00 Yikes, this is a lot. Includes nice wines and speciality beers. Alcohol is notoriously expensive in Finland, a big part of the price is tax. Alcohol beverages containing more that 5,5% of alcohol can only be purchased in stores appropriately named Alko 🙂
Child care €92.90 Started in October. The real monthly cost is 216€
Restaurant & Café €76.00 Lower than pre-baby and pandemic. We probably will increase this as we love eating out and experiencing good food
Tools for home €59.00 New tools mainly for yard/garden. Most tools have been found from my parents as they have several of everything 🙂 As this is one time investments these will go down
Medications €56.00 Meds for Jen’s chronic illness, vitamins etc. Some is reimbursed by insurance.
Housing association fee €54.00 Has been 0 since July 2020.
Home Electronics €52.00 Mainly new speakers, plus new cabling etc. for new house.
E-cigarette  – Marc €49.00 No comment
Gifts €39.00 All gifts for family and friends. Am trying to be creative here, but there is only so much time
Car tax €38.00 Yearly car tax for two cars.
Trade union fee – Jen €37.00 Unemployment fund fee + trade union fee. This could be lowered as I don’t use may of the trade union services. But they do a lot of good.
Misc. €34.00 Marc’s Visa CC bill. Probably contains e-cigarette purchases, computer games etc. He doesn’t know 🙂
Alex’s stuff €33.00 Toys and other things a small kid needs
Healthcare (Hospital fees and massages) €26.00 Hospital visits for all of us. Some is reimbursed by insurance. Alex has a congenital illness.
Garbage collection €25.00 The actual cost will be 30 €/month. Waste bins are emptied every 2 weeks. If we would bring all our plastic to the recycling the waste bins could be emptied every 4 weeks. Includes a new waste bin.
Utilities €17.00 Emptying sewage, chimney sweep
Haircuts & color €17.00 One hair cut + color for Jen + 2 haircuts for Marc. MIL gave us 100€ gift cards each for Christmas, which we are going through.
Property tax €16.00 For Q4/2020. Monthly cost from 2021: 42 €
Charity €14.00 Kiva and a local charity. I’d like to increase this but am yet to find something effective and meaningful.
Vacation €14.00 Rented a cottage for two night last summer with friends. We ate at the cottage food part is included in the Food category. Also went to Zoo, which I could pay with Health money from work.
Water €12.92 All water including drinking water
Streaming – Netflix and e-books €12.00 0 right now. Got a 6 month free streaming service as office Christmas gift
Bike reparation €11.00 Keeping the 2 bikes rolling
High speed Internet €10.00 Finland is the promise land for cheap internet!
Marc’s phone bill €10.00 As cheap as they come
Jen’s blog €9.00 Fun project that makes no money
Unemployment fund membership fee  – Marc €7.00 Marc has shopped around and this is the cheapest one. The unemployment benefit is as high as with the other options.
Yoga & memberships €5.00 Pre-pandemic fees.
Jen’s phone bill + mobile phone €0.00 Work benefit, I pay about 5 €/month in income taxes.
Monthly subtotal: €4,541.98
Annual total: €54,503.76

Credit Card Strategy

Card Name Rewards Type? Bank/card company
Visa credit/debit card None Nets
Debit card Cash-back S-pankki

Jen and Marc’s Questions for You:

1) Do you have tips/examples on how to divide the journey to FIRE? Having an end-goal of FIRE in 12-15 years seems so daunting.

2) Looking at our budget, do you have any tips for how we can save more money? We don’t have time for small details. The savings have to be worthwhile.

3) I’d like to be financially independent, however as many folks do, I’d still like to dedicate some of my time to some kind of work. How should we go about calculating our FIRE number? Are those of you who have a mortgage including that in the annual expenses for calculating the number? This cost will disappear at some point.

4) We will have some kind of pension (but I’m not holding my breath there). How do we add that into our FIRE calculations, if at all?

5) I feel that entering the real estate market is a bit scary. What are good first and then later steps for preparing and actually entering that marketplace?

6) To the AirBnB owners out there – what are your tips for managing one? Do you have any specific lessons learned or tricks of the trade to share?

Liz Frugalwoods’ Recommendations

Jen and Marc sound like so much fun! They’ve managed to buy their dream home, start their family, and create a lifestyle they enjoy–all without going into debt. Hooray and cheers to that! In many ways, my advice to them today centers around continuing to do what they’re already doing: increase incomes, decrease expenses, look for ways to augment and diversify their investments and enjoy life! I’ll be addressing Jen’s questions out of order, but only because that’s how my brain was working today…

Jen’s Question #2: Looking at our budget, do you have any tips for how we can save more money? We don’t have time for small details. The savings have to be worthwhile.

Sanding kitchen doors in the spring sun

This is a somewhat challenging time for Jen and Marc to do a Case Study because: they recently bought a new home, their expenses are in flux and they’re both transitioning their levels of employment and income.

When everything is in flux–both income and expenses–it’s difficult to make projections. However, the good news is that Jen and Marc now have the Case Study framework to utilize as their circumstances settle out.

Here’s what I suggest they do:

Track Expenses

  • Track their expenses closely every month, using whatever system works best for them. I use and recommend the free service from Personal Capital, if that’s your jam (affiliate link).
  • In the course of tracking their expenses, they need to remove the previous one-time expenses, such as the fees for purchasing their home, etc. The goal is to get a realistic, holistic view of how much they spend on an annual basis.
  • Tracking by month is a start, but the truly informative data points come from annual tracking.
  • Jen notes that the “savings have to be worthwhile” and I agree! However, it’s also true that one’s budget is typically made up of a bunch of smaller expenses. Most of Jen and Marc’s expenses are less than €100, but they add up to quite a lot in the end. Sometimes you can get away with a few magic bullet expense cuts, but more often, it’s the accumulation of lots of smaller expenses that get you to a higher savings rate.

Determine Income

  • Once their new incomes come through, with taxes and other deductions, record these totals.
  • This information, along with a clear expense list, will help Jen and Marc determine how much money they have to work with every month.

Jen’s Question #1: Do you have tips/examples on how to divide the journey to FIRE? Having an end-goal of FIRE in 12-15 years seems so daunting.

In many ways, Jen and Marc are already doing the three things I always advise:

  1. Find ways to make life meaningful and enjoyable on the journey
  2. Dive into extensive research on what your post-FIRE life will look like
  3. Develop a clear sense of what you’re retiring TO, not just what you’re retiring FROM

Marc fishing in a nearby lake

In my experience and opinion, successful FIRE has two components: the finances and the plan. You can’t work towards FIRE with ONLY the goal of quitting your job. You can’t work towards FIRE with only a dollar amount goal in mind. Because one day you’ll reach that number, you’ll quit your job and…. then what? You’ll still be the same person. Knowing what you’re retiring TO is just as crucial an element of a FIRE plan as the financials.

I sense some uncertainty in Jen’s aspirations and I want to point out that it’s perfectly fine to FI and not RE. In other words, you can reach financial independence and choose to continue working–either full-time or part-time or on seasonal, hybrid projects. There’s no FIRE police who will come remove you from your job once you hit your number ;). What FIRE does provide are options and freedom. FIRE frees you up to choose how to spend your two most valuable resources: your money and your time.

Jen’s Question #3: How should we go about calculating our FIRE number? Are those of you who have a mortgage including that in the annual expenses for calculating the number? This cost will disappear at some point.

Picking blueberries a few years ago

So this question will be, in part, calibrated on what Jen and Marc’s income and expenses settle out to be. Without knowing their actual savings rate (or their actual spending), it’s tough to calculate this number. However, those two variables are easily identified. Once they’ve solved for those two factors, there are a number of online calculators Jen and Marc can use to arrive at a sustainable FIRE number. Here are two resources that’ll be helpful to Jen and Marc (and anyone interested in pursuing FIRE):

#1: Early Retirement Now’s detailed, well-researched series of posts titled The Ultimate Guide to Safe Withdrawal Rates.

#2: Engaging Data’s “Rich, Dead or Broke?” calculator, which I’ve gotta say, is pretty much the best name ever for a calculator. Jen and Marc can input their numbers, play around with the variables, and get a pretty good sense of how much money they’ll need to last them for a long and happy early retirement.

To Jen’s mortgage question, as long as they’re still paying it off, it’s still a real expense. Once it’s paid off, they can remove it from their monthly balance sheet. But as long as you’re still paying it off, it counts.

Jen’s Questions #5 & 6: Real Estate Investing + the AirBnB

I think Jen is spot on that real estate investing IS indeed scary. But, she and Marc have a fantastic, ready-made investment: the cottage on their property. Since they already own this thing, I think their instinct to rent it out is perfect. If it were me, I would focus on getting this property up and running. Rent it out, manage tenant transitions, clean in between guests, manage maintence and repairs and… see how it goes!

I’d do this for at least a year before making the decision to buy additional properties. Managing rentals isn’t for everyone and it’s not “passive” income. In fact, it can be pretty active and pretty expensive. That said, it can be lucrative and an excellent diversification for an investment portfolio. This year-long trial period will allow Jen to determine her actual revenue (after expenses) and give her a feel for the work of real estate management.

Jen’s Question #4: We will have some kind of pension (but I’m not holding my breath there). How do we add that into our FIRE calculations, if at all?

Sunset at the beach in the middle of the winter

Unfortunately, I am supremely unqualified to answer this question. Their old-age retirement hinges on their state pension and I don’t know enough about Finnish politics to make an assessment here.

I think the good news is that Jen and Marc have other savings and investments, although no employer-sponsored tax-advantaged retirement accounts, like I’m used to dealing with here in the US.

I wish I could offer something concrete here, but we’re well outside of my knowledge base. I suggest Jen explore this question with Finnish FIRE groups online–I have to imagine someone has done an analysis of this country-specific question.

Summary:

  1. Begin tracking expenses and build up a year’s worth of data.
  2. Determine their new take-home salaries.
  3. From those two data points, figure out how much they can save and invest each month.
  4. Proceed with the plan to rent out the cottage on AirBnB. Gather data on expenses, revenue and whether or not they like managing a rental.
  5. After a year or so of renting out their cottage, make a determination about investing in additional rental properties.
  6. Research the viability of Finland’s pension system and whether or not they’ll need to self-insure their old-age retirement.
  7. Play around with the FIRE calculators I listed above to help deepen their understanding of how much they’ll need to save in order to safely retire early.
  8. Develop a clear roadmap of what they’re retiring TO after they reach financial independence.
  9. Enjoy the journey and keep us posted!!

Ok Frugalwoods nation, what advice would you give to Jen? We’ll both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) your brief story and we’ll talk.

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66 Responses

  1. Rachel says:

    I don’t think I have any specific recommendations. I just wanted to let you know how supremely jealous I am of your current lifestyle and all the benefits and amenities you enjoy in Finland. I literally started to tear up and cry reading about how Alex was able to take such a long paternity leave to care for your child. My family would kill to have that as an option to us. And the ability to work a 4 day week until your child is in third grade? That is AMAZING! You said that you are surprised that Finnish people have the highest happiness index, but what you have described in your post is a life of contentment. Please don’t interpret this as saying that you have no problems or no unhappiness. I am simply envious of the beautiful life you have created. Good luck on all your goals and dreams and aspirations!

    • Katie says:

      I was thinking the exact same thing while I was reading. I’m sure there are things in your life that you would like to change, and the unpredictability of pensions in Finland sounds stressful. From an American parent’s perspective though, I really envy the support that your country gives to families. Your life sounds so lovely! Best of luck in pursuing your future goals.

      • Jen says:

        Thanks Katie, yes the problem with the pensions are the low nativity. We have an aging population that us working people have to fund. Let’s hope the negative nativity trend is about to change! Anyhow, I am better off than many of my likes as I do save and invest more than most people. We do enjoy the possibility to stay home with our babies. Most my friends are think I started working very early, when my son was 8 months. Usually moms go back to work, at the earliest, when the child turns 1 years old. It was also wonderful that my husband got to stay home for 10 months as well. The bond between father and son sure changed to something so much closer due to this time together. Thanks for you comments!

        • Leslie says:

          I hope the lower birth rates to not change. The world is overpopulated as it is, and the climate crisis can be blamed partially on the population! That said, many countries are in this fix of meeting obligations of older folks (who already met their own obligations to generation before).
          Governments are going to have to get smarter and perhaps more creative — and perhaps tighten their belts in other ways (such as the US and military spending).
          Anyway, perhaps frugal folks can help governments figure out how to balance the budgets in coming years.

          • That seems unlikely as citizens are promised and demand more and more from government and become incensed at talk of reductions. Keep in mind that in the US the largest spending by government is on benefits for senior citizens and just like Finland, fewer and fewer workers are funding the promised benefits.

          • Jen says:

            Yes, overpopulation is a huge problem. And even though I believe everyone of us needs to do as much as we can to help decelerate climate change, Finland is a tiny player and if we have a few hundred people more or less won’t impact global warming. Governments will definitely have their work cut out in implementing correct changes to stop climate change. If they listened to us frugal people they could definitely learn a thing or two!

    • Jen says:

      Thank you so much for the kind words. I am very appreciative of what the wellfare state provides, all in all it is worth the high the high taxes we pay 🙂 And as you say, there is no perfect system. However the Finnish one has served me well and as a new mother I really see what a great security (& quality of life) the wellfare state provides 😊

      • Caroline says:

        The thing that really struck me so hard (*so hard*) was how, though your taxes are indeed very high, no question, what you ”get” is… unimaginable for us in a tinpot banana republic (South Africa, yes, it really is… bad). I just love the notion that when you pay in, you actually tangibly get services and education and various other things for your money, and that you have every right to it, that every child has the right to education, good education, right up to tertiary. No one needs to go hungry because of ”no money”.

        Obviously there are down sides and things that need upgrading, changing and adjusting. I realise your winters are long, cold and dark, and that nowhere is perfect, nor perfectly run, but my envy at the moment is high!

        I might have missed it totally but are there any ideas for another child at any point? That would presumably delay retirement a bit, if not quite a lot, but either way, you and your family are seriously doing well and have my real admiration for working towards a meaningful, happy, productive life. I’d say try out the Air B n B with the property you have, and if it works out, grow very slowly and organically. Being a landlord is quite stressful, or it can be, and some people absolutely thrive on it, but others actually hate it, no way to know till you try!

        I loved reading about your life in Finland and the real details of how ”normal” people live and healthcare, work, education etcetera works. Fascinating.

    • Dana says:

      I am in the same boat. I’ve long been a fan of the Scandinavian countries, and your social policies are a major reason why. It seems attainable for most people to live comfortably, with critical things like education, childcare, healthcare, employment protection, and retirement made affordable and provided for all people. I know it is not perfect anywhere, and we have some big issues looming over us in every society, however – you seem to have wonderful priorities and live a very admirable lifestyle.

      The only tangible recommendation I have may seem contrary to your FIRE goals, but you mention being really tired, managing a chronic illness, and also wanting more energy to spend quality time with your son, exercise, fill up your own tank, etc. With your career, role as a mom, and passion for building out your homestead and AirBnB comes a lot of extra projects, without much downtime / margin to recover.

      Perhaps taking an evening off during the week with no extra projects, or one “unscheduled” weekend a month could help restore your energy, and also give some mental space to feel your way forward in your many future goals. You sound incredibly driven, creative, and hard working, but also like you may be burning the candle at both ends, given all that’s on your plate. 🙂

      I hope this does not come across as judgmental – you’re extremely inspiring, and I simply wanted to point out something that is not often discussed, but I think overlooked in modern society. Sometimes we simply need time and space to decompress.

      Wishing you and your family the very best, Jen.

      • Jen says:

        Hi Dana,
        You could not be more correct and you are not judgmental at all! I seem to have the hardest time nowadays prioritizing myself. I really need to exercise and meditate more, this should actually be my main focus for the fall! Thanks your input!

  2. I loved reading Jen and Marc’s story. For a frame of reference, I am British and living in the USA for 11 years. I am 46 with an 8 year old and the breadwinner. My approach to FI changed from my late thirties to early forties. I had a couple of very fit and healthy friends go through cancer treatment and their experiences were radically different based on their financial position. Even in a country with strong social welfare not having to worry about finances, going back to work, taking care of your kids and focusing on healing makes a big difference. My FI strategy changed from one of acquiring assets to cash flow so that if challenging things come up (sick kid, sick me) they are easier to deal with or if opportunities present themselves (my kid is passionate about something expensive! or I am!) that we have the funds to realize those adventures. Most of my assets are in real estate. It is scary at first! You have a great start with your airbnb. Go for it, get it up and running and if you love it do some more! I focus on covering different bills ….first it was car insurance payment, then groceries, then mortgage payment etc. I am close to having most of my bills covered and am now working on other living costs. There are unknowns in pensions (look to Greece ……they pushed their pension age out) and as you point out that is unguaranteed money. Working on your own guaranteed cash and treating everything else as a bonus maybe a good head space to get into. You are doing great at cutting expenses. This continues to be a journey for me……..I keep learning different areas to cut that do not impact my joy. It sounds like you are already in this headspace which is awesome. I would focus on growing income and savings. Loved hearing your story. Good luck and keep Frugalwoods updated. Kate PS your home and setting look incredible!!!!

  3. Jen says:

    Thanks so much for these wise words! This is a great perspective on my “situation” and there are some common points in our stories! You are probably spot on with prioroties changing with a child coming along. Ours is still pretty cheap 🤑 but I have a feeling that will change as he grows older 🤣. And when that day comes we want to be able to provide the possibility of hobbies and trips. You also right about the pensions, which means I need more money to retire. But I just have to face that fact move forward ( even though pur pension system is a lot more stable compared to the Greek one ). Thanks again !

  4. Kelley says:

    I loved reading about your life in Finland! With regards to your pension, we here in the U.S. feel shaky about our Social Security System as well. Most folks I know getting fairly close to retirement (I’m 56) have grown up wondering if we will still have our benefits around after we retire. Most people I know don’t even factor it in and save through our own retirement/savings accounts. If we do receive our benefits, we will consider it a bonus.

    • Jen says:

      Thanks,I’m glad you enjoyed my story 🙂 The biggest problem with the Finnish pension system is that our nativity is exceptionally low, so there is continuously less people paying for the previous bigger generations :(. Corona has at least temporarily changed that trend increasing nativity, let’s hope it continues like this. The system itself is quite robust.

  5. Julia says:

    I absolutely fell in love with your beautiful country when I visited Helsinki a few years ago!

    • Jen says:

      Nice to hear! You’re always welcome back. I have also enjoyed the US many times and hope to be able to travel there again soon 🙂

  6. Cara says:

    Hi- I have a suggestion for a goal, though it is a relatively small one. Your cars are old enough that you could start setting aside a fund to replace them. And, of course, consider what you’d be replacing them with. I know the Avensis comes in a hybrid version, but you don’t mention if that’s what you have. My last two cars have been used hybrids, on purpose, for the ecological and financial benefits, but also because I live in Ireland- so, as in Finland, all the cars are imported and petrol is about $5 a gallon. My car is a 2011, so I’m thinking about our next car as well, and hoping to buy electric next time. I don’t know what the situation is in Finland, but in Ireland you need to pay an electrician to survey your house to ensure it can charge an electric vehicle safely, before the charging apparatus can be installed by the government’s electricity board. If your house it older, your wiring may need upgrading first (also out of your pocket). If you are already considering updating the energy infrastructure in your house, you might want to consider how you would accommodate an electric car. Definitely a project that requires planning and funding. Good luck.

    • Jen says:

      Hi Cara, Thank you for you thoughtful comments! We do indeed drive an Avensis 🙂 And I love our old dented baby 😀 To be 100% truthful we have no plan for our current car park. I’d love to replace our current cars with something more ecological. As I changed jobs, I am not so reliant on car and we could almost manage having only one car. We both work from home and will be able to work from home at least part time also after corona. We will probably drive the current cars until they drive no more and then maybe go electrical. I am planning on buying an electrical bike to use for my commute as well. It will anyway be a good idea to have a sinking fund for a new (to us) car. As for the electrical connections I have not heard about what requirements there are on home-owners. I will look into that as well, as our electrics will have to be replaced within 5 years this is a great point you bring up. Greetings to lovely Ireland, I actually did Irish dancing in the past and loved it so much! I love Irland so much, a visit is new well over due!

  7. Noel says:

    So cool that you live right next to the water. What a wonderful place to raise kids!
    Paying of mortgage was one of the most freeing experiences ever!
    Let us know when you get the AirBnB up and running.
    Perhaps you could start retirement funds in Finland.

    • Jen says:

      We also think it is cool to live near the water, just bought a SUP board and can walk with it to the beach. Paying off the mortgage would be a great feeling, but on the other hand our total interest is 0,6% at the moment. Investments of most kinds seems to pay a lot more.
      We are so close with being ready with the AirBnB, I laid the last floorboard today 🙂 Hopefully I can list it within the end of the month, so looking forward to that.
      The retirement funds we have are the pension funds regulated by the government. It would be nice to be able to have more freedom in how my retirement money is invested. We pay quite a lot of money into them.
      All the best to you!

  8. Wendy says:

    Jen and Marcs new house and property look absolutely gorgeous! I am jealous of so much beautiful nature surrounding their home. Here in the states the things you already have are what we are fighting for.Long paternity/maternity leave which is paid,4 day work weeks,free healthcare etc. Nothing is ever perfect though and I understand that. My advice would be to get that cottage rented out and use the money to pay down your mortgage and boost your investing. With no mortgage you are free to purchase more rentals, work less, invest more etc. Your options open up.

    • Jen says:

      Thank you, the property is our little baby, but nice to hear that you like it too! We surely hope that the US will go in the direction of more free time to spend with loved ones. What joy is there to have a lot of money, if there is no time to enjoy it! The AirBnB is for sure has the best potential for earning some extra money and also gives us the possibility to accelerate the schedule for buying our first separate rental. Let’s hope our son let’s us put up the skirting boards tomorrow 🙂 After that I think the cottage is ready for photos!!! Being mortgage-free would indeed be tempting, but at the moment that big mortgage doesn’t bother me that much. If/when interest rates rise, it will however be another story and we will throw more money on it. However, if we bought a rental, in a year or so (as Mrs Frugalwoods suggested) I would not like to have a big loan on that. Here in Finland we any way have to have a quite big down payment, 25% when buying a primary home. Thanks for taking the time to give some advice!

  9. Karianne says:

    Just here to say Hi from a 4th generation Finnish-American 🙂 There aren’t a lot of people of Finnish heritage in the U.S., so it’s always fun to hear from native Finns!

    • Jen says:

      Hi to you too! Yes, we are a small nation. I do have several relatives that emigrated to the US/Canadian border areas in the past though 🙂 When I lived in the US my aunt used to get this Finnish-American newspaper, and readers seems to be located far from each other. Terveisiä Suomesta / Greetings from Finland!

  10. Brittany says:

    Loved this case study!!! I can relate to many aspects of this. I am also very into frugality and minimalism, but don’t really have specific FIRE plans and don’t necessarily care to retire early… sometimes I wonder why I spend so much time reading FIRE blogs, haha. I think what appeals to me about it is the intentionality. A lot of advice around FIRE involves knowing your goals and what you are working towards, but I also think you can be motivated by the benefits and options that a frugal/minimalist lifestyle brings right now even if your long-term goals aren’t clear. What works for my husband and I, when we discovered FI/minimalism and started being more frugal and intentional, we started having monthly money date nights. We used personal capital to track our expenses, and at the end of each month we would make something special to eat and review our expenses and talk about it- no judgement, just talk through the expenses and whether in retrospect they seemed worth it. It was shocking in the beginning how mindless some of our spending was, like we would see several hundred dollars in the restaurant category and not even be able to remember how we had spent it all until we looked at the individual transactions. Then we would talk about whether we saw any expenses we could cut. If we weren’t sure we’d experiment, try going a month or so without whatever we were thinking about cutting. Month by month we whittled away at our expenses and became a lot more mindful about what we buy- you think about purchases differently when you know you’re going to have to face them at the end of the month, haha. Now we’re kind of on autopilot so instead of going line by line through expenses every month we have a few money date nights a year and we tend to talk about things like what to do with bonuses or what large expenses we have coming up or big things we want (like home renovations, travel). We never budgeted- we’ve tried before and that just doesn’t work well for us. But going through that process – tracking expenses, meeting regularly to review, and experimenting with cutting expenses just to see how it went – got us to a point where we feel like our spending is really optimized for our life. We’ll reach the FI goal eventually, but in the meantime we don’t feel deprived since we know what we are spending and why. And we have a lot of security and options because we’re spending well below our means.

    • Jen says:

      Brittany, it sound like you and your husband have a great and fun system set up! You are right that minimalism and frugality in itself brings me meaning and joy. It feels so good to buy used things and try to be ecological generally. The fact that I am more frugal has made my current life better, as money matters don’t stress me out as they used to. After doing a lot of thinking I think my goal is to continue working. But what I want is to choose my working hours (reduce them) as well as being able to do work that won’t necessarily be as lucrative as now. I do know budgeting is so important, and we should track every expense. Let’s see if this could be a start for that. Your story sure inspires me to do that!

  11. Kiwi Trace says:

    Kia ora from NZ, we are a similar size to Finland, we are also a welfare state but unfortunately don’t share your happiness level but it’s aspirational for us:). My 2 c worth on your questions:
    1. Yes stage one is research, read widely and find different blogs / books. My favs are frugal woods, our next life and your money or your life. Stage two is changing your behaviours – all of them and goal setting! Stage three is the grind but really important part of enacting your plan but enjoying your life while you do so. Stage four is the self actualisation piece if your post FI life.

    2. Little changes add up, frugal woods month long Uber frugal challenge is hands down the best way to create awareness and change. It’s only a month:)

    3. Liz gave great advice, you need to know what your now income and expenditure are on an annual basis. Then you can do the standard 25* that number to get an indication of your fire number. During stage three you will refine this.

    4. Our next life has a great way of putting the layers in. Have a read of their book work optional.

    5. We were keen on real estate too… not so much after the experience of being a rental owner particularly to students. We now concentrate on passive investments through growth funds – they don’t call us asking about changing a lightbulb, break things, cause enormous damage! Do your rental market research very carefully and target a market that you are comfortable renting to and make sure you know all the costs, budget for maintenance and people breaking things and all the taxes, if its costing you money per month to top up the expenses then it is not an investment.

    6. Our Air B&B goes well as a longer term let. You might be just a weekender or holidays place. Know what works in your market. Definitely charge a cleaning fee and be very clear on what you are and aren’t in your listing. See if there is a local air B and B face group group, have a look at others listings in your area or a like area and start small. Good luck:)

    All the very best on your journey.

    Trace

    • Jen says:

      I have heard a lot of good things about NZ, though. Your beautiful country is on the top of our bucket list for places to go! It would be a nice place to spend a mini retirement in.
      It feels like I have done a lot of research, but I kinda jumped over the part where I really, really thought about my goals. I just right into the cutting costs and trying to increase my incomes. Thus, now is the time to really think about that by researching and trying out different things.
      Yes the FI number is really hard to figure out at the moment when we have so many special costs due to buying the house.We, of course will have to factor in all future renovations & reparations as recurrent costs as well.

      Thanks so much for all your advice, especially the on about the real estate and the blog Our next life, that one I have not visited that one yet!

  12. LongTIme Frugal says:

    We have what I deem welfare states in the US and trust me, I’d never lump Finland in with them as all benefit, not just the rich.
    Working FT with a child isn’t easy (and isn’t any easier with two), even if you telecommute. BUT I will say as the child gets older, you’ll not be quite as tired.
    I do think you need to focus on saving more money – the US has SS but even back when I first started working (44 years ago), I never counted on social security, much less a pension. I’ve never had the desire re: FIRE – I love what I do for a living. But we’ve always lived below our means which pays off in the long run.
    Even if you can’t heat your home exclusively with wood, it will save you money (and is a relaxing warmth).

    • Jen says:

      Thank you for the encouraging words! It already feels a bit better with the tiredness, so I am hopeful that next winter won’t be as bad as the last one. I will for sure focus on saving more to increase my investment portfolio. The numbers look worse than they actually are due to the acquisition of the house. I save and invest around 30-50% of my income on a monthly basis. So the pension will be a bonus, I will any way not be eligible for the pension until I am 66 years old, and that date might be pushed back even more. It has been pushed back several times already!

  13. Alysta says:

    So interesting to read about living in another country! Fitting exercise in can be hard with work and young kids. I try to either 1) do 2 things at once – talk with friends or family by phone while walking or exercise and watch tv, 2) incorporate spending time with my kids while doing something active. For example, I’ve been swimming laps while my younger daughter is taking swim lessons this past week. I used to walk with my kids in their strollers a lot or bike with a kid carrier. As they got older and could play on their own, I’d walk laps around the playground. Since I also own property by the sea, I would look at how climate change may affect your area with sea level rise or flooding like is happening in parts of Europe given how close it seems you live to the water. I am envious of a quick walk to SUP though! It will be a great exercise to do with your son when he’s a little older.

    • Jen says:

      Yes, it would probably be a good idea to take a dance class at the same time when I plan taking my son to a toddler dance class. They usually offer suitable classes for moms at the same time! When Alex was born I used to go out on long walks with the stroller, however, when he turned one he decided he was done with sitting in the stroller. I can’t keep him in that thing for more than a few minutes 😀 That doesn’t mean we cannot figure something else out. He actually does still enjoy riding the bike with me, I will make it a priority to bike to the grocery store with him on a regular basis.
      As for climate change I have no direct worries. If something major would happen I guess it would more go into the category of freak accident, or it will be some new climate change phenomenon we still don’t know about. It is actually safer to live close to the sea compared to a river here. There are many rivers that regularly flood. Due to the tectonic uplift (a think mass of ice pushed our land far under the sea lever during the ice ages) the score line moves farther and farther away each year ( 0.4 inches where I live). It is however not a bad idea to research what could happen here. And climate change is changing so many parameters we didn’t have to take into account before.
      Thanks for the motivating words!

  14. Kirsty says:

    Hi I’m also in Ireland and am working towards FI. I hope to be in a position where work is optional by age 54.

    I find the US fire blogs are great for inspiration but the actual numbers are very different due to taxes on investment in Ireland. I dont know the specifics in Finland but I’m guessing you also have high tax on investment returns. In order to do us style fire of 4% drawdown, the 4% would need to be twice my annual expenses to pay for the taxes, in order to have true FÍRE using the US plan.
    So instead I have a spreadsheet where I add up all my income for the future until retirement (retirement age is an input I can change), my state pension when I am eligible (assuming rules do not change currently I am eligible age 68), all my mortgage payments until it is paid off, all my childcare costs until kids will no longer jedx childcare, and finally all my other expenses excluding mortgage and childcare (I use my 2019 expenditure for that as I was happy with my level of lifestyle that year). I also include the current value of all my savings and investments except my primary residence. I ignore inflation salary raises and investment growth, so I am basically assuming they will cancel each other out (which is a conservative assumption). And I then adjust the retirement age until assets equals expenses. I haven’t fully accounted for taxes in retirement yet but will include that properly. Once a year I update all the figures. Last time I did it my retirement age was 54.

    This means that I am essentially planning to die with zero except my house, but in a welfare state that is not as risky a proposition as in the US, so i am OK with that.

    • Kirsty says:

      Sorry I also ignore taxes on investment, so I am basically assuming investment growth will cover the taxes and inflation but nothing more than that.

      Also sorry for all the typos!

    • Jen says:

      Hi Kirsty!

      As we are both living in EU countries our situations are a lot more comparable compared to the US. I have learned so much from the US FIRE blogs and am forever grateful for that! But, as you say, we don’t have 401k’s and many other US specific things that we don’t have. The taxes on invested funds are at the moment 30%, and I am expecting to pay between 30-40% taxes on that income once I retire and transfer over to living on dividends and divestments. Yes, I will have to factor in the mortgage as an expense, as it will be payed off when I am 63, if I continue paying it off as now. Thanks for sharing your way of doing this!

  15. Mike says:

    Move south is the key. Our expenses in Spain are quite a lot less than Finland. ‘Empty Spain’, like Extremadura province is particularly cheap — although more people are moving there as they can work from home. I pay EUR40 for a 15litre wine box here. Doesn’t last long though!!

    • Jen says:

      Hola Mike, yes Spain is so cheap! I couldn’t believe the prices of going out while visiting Bilbao. If it were only up to the financial side of things I would be there in a jiffy 🙂 But I want to be close to family, so I’ll have to bite the sour (expensive) apple and live in this expensive country.

  16. J says:

    From your story it sounds like Finland has a defined benefit pension scheme.
    Is there any opportunity to invest in what I would call an accumulation fund or a defined contribution fund with favourable tax benefits in Finland? Or the only tax favourable superannuation/retirement schemes in Finland are defined benefit?
    I think everyone’s FIRE number is a deeply personal decision based on how much they want to live on. I know folk who are happy to live on approximately $12,500 euro pa, up to folk who want to live on approximately $62,000 euro pa. Based on their desired lifestyle people expect to reach financial independence at different times in their lives. Like you, I quite enjoy my job so I’m more interested in reaching financial independence early, but then retiring late.
    In Australia a lot of FIRE folk invest in ETFs either through managed funds or the share market in preference to property. Property has some leverage benefits, but it can be hard work to manage, as alluded too by other commentators.

    • Jen says:

      Hi J,
      I guess I have such a hard time figuring out my FIRE number since so many factors are moving at the moment. I have no idea on what our “normal” annual costs are living in this big house.
      There is no such tax deferred funds available in Finland. There are so called Pension funds/insurances one can invest taxed income in, but they are really expensive and I really see no reason to invest in them. The best option is to invest my taxed euros in ETF and index funds. As of last year there is also an investment account type where each person can insert up to 50000 euros and buy stocks. The dividends can be reinvested taxfree, you only pay taxes once you take out that money. I cannot transfer my current portfolio there without selling it, transferring the cash and reinvesting it. So, that is not favorable. I haven’t bought anything in this new Stock account as I am mostly buying ETFs and index funds at the moment. I really think our little cottage is a great opportunity to test out real estate investing/management without going all in. If it is not for me I’ll just use the cottage as my office 🙂 Thanks for your thoughts and advice!

  17. Tim says:

    Just a correction – marginal taxes simply don’t work the way described, but it’s a very common misconception. If your tax rate increases when you move up into the next tax bracket, it only applies to the amount over that bracket threshold, not your entire income. Therefore, it’s mathematically impossible to lose net income as one’s gross income increases.

    That’s the way it works in Canada, anyway, yet I’ve run into so many people who had this misunderstanding.

    • Tim says:

      I should note that adding in other programs/benefits can change that, but it’s usually a pretty weird quirk. For example, the combination of low-income tax credits, progressive income tax, federal child benefits, etc in my province creates a situation when if you go from say (can’t recall the exact income amount), $38k income with 2 kids to $39k, you lose out on $200 net. But then it corrects itself when you hit $40k.

      • Jen says:

        Yes, a known misconception. Marginal taxes (for income tax) work exactly like that in general in Finland. For capital gains and dividends this system is not in place though. Then we pay around 30-34% in taxes progressively, this is taxed differently than income for regular work. I have no idea if we have any such exceptions, I think there might be some tax bracket that is extra unfavorable 🙂

        Reference (All in Finnish, but the green graph depict the marginal tax percentage and the blue the progressive tax percentage compared to income in euro) : https://www.veronmaksajat.fi/luvut/Laskelmat/Palkansaajan-veroprosentit/#bea61847

  18. Patrick says:

    1) Figure out the numbers for Coast FIRE, lean FIRE etc. The gap between those two might still be big but it’s a start to make milestones. Otherwise I would recommend to use 100k milestones. As you already made it to the first one, every following will be much quicker to achieve 🙂
    2) Food budget seems to be high comparing to countries like Germany. Are just the basic stuff more expensive or do you buy processed and lifestyle products?
    3) Just find out how much money you expect to earn then and reduce the monthly amount you need by that. Mortgage can be excluded (but not saving money for home repairs!) if you expect it to be paid by the time you retire, otherwise not. So it really depends on when you plan to retire.
    4) You already wrote that you think the system is unstable. You need to ask yourself if you expect to get some money from the system in 2060 or not. It’s a personal preference. When you want to include it, you can reduce the amount you need to have each money again. I can link a spreadsheet I made for this kind of calculation if you want.

    • Jen says:

      Hi Patrick,
      1) I will do this for sure, why hadn’t I thought of this before
      2) Basically all food is more expensive in Finland than in most orther European countries. Even Swiss groceey stores are cheaper than ours. We try to eat basic food most of the time I we both bring our leftovers to work. Observe that this is not just food but all house hold things we need. We do splurge on some nicer foods for the weekend. Especially now during Corona when we haven’t visited so many restaurants.
      3)That has Kinda been my thinking
      4) I know we will get something, but I fear they will push back the date when I get access to that money. So, I will not be adding that income to my FI-calculations.
      I’d love that Excel, thank you for offering it!

  19. Amy says:

    Jen,
    It looks like there are many things you like about your life at present, so that’s a win to begin! As you look ahead to the potential of rental income, consider doing what we did. We have a few rental properties, and we began with purchasing a modest duplex. Our theory was that there will always be those of modest means who need a rental home, and if we have two tenants contributing to our expenses, we can hopefully NEVER be without some funds, via rental payments, towards our mortgage. We quickly got so that one rent covered the mortgage, so we could double up without any additional funds from us. Doing this allowed us to build equity quickly, and we used an equity line on the first property to fund the downpayment of the second. We became rental owners about 15 years ago, and I just made the final payment on the fourth of our four buildings. I don’t know if duplexes are even an option for you in Finland, but thought it might be worth a look for you. I wish you well as you consider your options!

    • Jen says:

      Amy, this is a great point of view. I have not thought about acquiring a duplex. They are not ubiquitous, but duplexes definitely exist. Developing that idea might be converting a suitable single family home to a duplex. I’ll just have to continue researching the market.
      Have you ever had problems with your tenants? How do you choose them, do you have some specific process to weed out bad tenants?
      Thanks for sharing your long experience in the field!

    • Noreen says:

      Piggybacking on Amy’s comment here – I agree, a duplex (or 2-family) is a fabulous way to build equity on a fast track. We are only 4 years in on our first property, but glad to hear that 15 years in, you are sitting pretty! We’ve noticed a dramatic increase in our saving power due to less costly living expenses.

      Jen, I think your AirBNB idea is delightfully similar – particularly if you direct the funds wisely, which it seems you will. Having your rental cottage on your property is a great way of getting hands-on landlady experience (as Mrs. Frugalwoods notes, it’s not necessarily passive!) and you’ll really see if you enjoy it or not.

      As for tenants, it’s great when they pay and terrible when they don’t. Vetting them carefully is the most important thing you could do for yourself. We’ve turned people down (not enough income, pets, smoking not allowed on our property) and have learned it’s imperative to trust your gut. Amy, what do you think?

      • Jen says:

        Yes, I should think that the AirBnB would make sense financially as the cottage did not increase the price of the property significantly, but if we do a good job we could get a very good ROI on our invested money (the renovation). Thanks for the thoughts on vetting!

  20. Dana says:

    Jen – Would love if once your lovely Airbnb is up and running to comment here with a link. Finland is on my bucket list, and perhaps others after seeing your beautiful photos. All the best!

    • Jen says:

      Hi Dana, I can do this and I got other’s requesting this as well 🙂 My anonymity will be history after that, but I that’s ok 🙂 It warms my heart that our little AirBnB is attracting some attention! Finland definitely has its beauty and if you love nature (and tranquility) it is a very nice place to visit. Everything isn’t super beautiful and the end of fall is a time I don’t recommend coming here, it’s gray, brown and rainy! (As my German friend’s 10-year old put it when they visited in late October one year “Finland is really ugly and boring” 😀
      Finland welcomes you with open arms!

  21. She bean says:

    Checking in from Texas, USA and wanted to offer that as someone who is now 100% globally remote, my partner and I are planning on using Airbnb next year (cov-id willing) to slowly travel through Scandinavia, Europe, and Asia. Airbnb is also doing research (I work in tech and this has come through the grapevine) on better understanding host’s perspectives on longer term stays. We’ve been doing it in smaller spurts of month-long rentals in the US, and it’s been great! I highly recommend offering a competitive monthly discount (it’s what we search for since we know we’ll upkeep the space and no turnover) and market rate for daily / weekend rates. As previous Airbnb hosts, we were the “cheapest option in the nicest neighborhood” and loved the longer term guests who saved us from cleaning and the other responsibilities of hosting. Our friends in tech are also contemplating similar avenues (many of us have been doing month-long rentals for years now on Airbnb) so there’s absolutely a market out there and growing for remote folks, who are not tied down to an apartment lease or mortgage. Most important on the list – excellent wifi (ability to get on video chats), Instant Pot or tiny kitchen (doesn’t need to be fancy), pickup and drop-off to the house if there’s no public transit (just on arrival and departure), and access by agreement to washer/dryer. After living in cities all this time, we’ve been enjoying the longer term stays in quieter places (our favorite so far has been a horse farm right outside Prague), and our friends have also been inspired to “live differently”. Wishing you and your family all the best.

    • Jen says:

      Thanks so much for this perspective. This was so interesting to read! We have most things set up to be able to offer month-long stays. The only thing is that we would have to let the guests come into our house. We will only have a hotplate for two saucepans and a microwave of course.

  22. Sue says:

    Hi from England. I recently retired early. Im 58. My husband retired at 63 a few years ago. Dont worry about what you will do with yourself when you do retire. Im sure your time will be filled.
    When I started planning much nearer to the time I wrote lists of things I would like to do. I thought about things Ioved to do when I was a child and as a young women. Before I knew it I had a long list. So the things I do now aside from babysit and see my elderly mother every day. I do lots of gardening. Leaning heavily towards permaculture. As does my husband. I knit alot. Cook everything from scratch. Walk the dog. Cycle. Go to yoga and swim. We love camping. We also live frugaly and sustainably. We dont needs heaps of money and we are perfectly content with what we have.
    We did make sure that all major maintenance jobs were done prior to retirement and we bought a new to us car. So we do feel well set up.
    So just know that you will have lots of creative things to do when the time comes and enjoy your time. Good luck

    • Jen says:

      Thank you for those reassuring words, maybe I could stress a bit less about that 😊 Any way my first goal is just FI when I’ll be able to work with projects that do not have to make that much money. It sounds like you have been able to create a very nice & balanced life in retirement !

  23. Hannah says:

    Great case study, Jen! My husband is a Finn and we’re currently on vacation in Finland! The nature is amazing, the country is so peaceful and quality of life is too. Amazing that you’re able to work 80% and have an interesting job where you can actually leave the office after a 7.5 hour day 😃 As a mom with two young kids I can only dream about this!

    Several thoughts from your case study: 1) your heating costs are really high – are there other ways you can adapt/retrofit your home that will generate a positive ROI? 2) great idea with the rental! Was wondering – do you have a family cottage you go to for 4 weeks in the summer like many Finns? If so, could you rent out your home during some or all of this time? Sounds like it’s in a brilliant location for tourists. 3) could you put the rental business income under your partner so the marginal tax rate is lower? 4) it sounds like the Finnish tax system is quite clear/straight forward but would it make sense to talk to a tax accountant especially when setting up a side business to make sure you’re managing your investing and tax planning efficiently? 5) tax on dividends is lower that any other tax in Finland (25.5% I think). Can you design a portfolio that is more heavily weighted in dividend generating ETFs? 6) Would you consider a family adventure for a couple of years later on in Switzerland or Norway for example where incomes are much higher? This might supercharge your savings and capital gains in Switzerland are tax free. 7) this is little but with a large property and berry bushes, fruit trees, and garden your food expenses might be a bit lower in the summer. 8) your car expenses seem pretty low but would you be able to manage with just one car? 9) does it make sense to pay down your mortgage when the interest rate is below inflation and way below what you could make in the markets, even after tax? 10) if you got into real estate, other than for generating passive income, I’d be a bit worried about the housing market. We’ve read that the housing prices have been dropping in most places other than the greater Helsinki area and that the shrinking birth rate, super low immigration is exacerbating this. Might be better off with a financial portfolio. 11) taxes are so high, on investment income as well, that I can’t help but think that the best approach would be to FI and then scale back on work and just do part-time stuff that makes you happy instead of a full break from work and living on investment income. Could you set yourselves up over the next decade with skills that would allow you to do your own thing/work part-time?
    Most important I think is that you guys have designed a beautiful life for yourselves that is well balanced, healthy and allows you to enjoy this precious time with your family!!! Hopefully this takes the pressure off of wanting to FIRE quickly! 🤗 Wish you all the best on your journey!

    • Jen says:

      Hannah, Nice to hear that also you have a Finnish connection! You probably understand my situation quite well then. And thanks for taking so much time to think through my questions and comment!
      1) Yup, very high heating costs. However, it is both heating and electricity to the house and the cottage. And we had a cold and long winter this year. Still it would be nice to decrease them even more, we already have an air-source heat pump (air heating water that circulates in our house). This is better and more efficient compared to the old oil-heater this house was built with. We know that one problem are the doors, that are not tight enough, and as you can see this item is planned to be done in the near future. Geothermal heating is a bit better than our current system but all the drilling and new apparatus would cost somewhere in the region of 20k-30k. The ROI is not that high, the electrical bill will go down, but not that much that we see this as a viable option.
      2) We are like the only people in coastal Finland that don’t have a family cottage 😀 This house is now like our cottage as we live right by the sea.
      3) This is a good point. We need to look into what the most favorable set-up is. We might even start a business for this. 4) Yes! We have a family friend that is an accountant and I think she has the same kind of set up already. 5) Yes, it is 25.5% in practice for sums under 30 000e (annually). If I purchase Finnish stocks and have a specific new investment account type I do not have to pay any taxes on the dividends if I re-invest them. It is only when I take the money out that I have to pay the capital gains. 6) At the moment we are not looking into living abroad, or anywhere else than where we live. And the much higher living expenses would eat into the profits of living there. Both countries are beautiful and nice to live in though 🙂 7) Yes, that is still a small but 🙂 Maybe next year I will have time to sow more things. Hopefully our apple trees will give us apple juice for the whole year. And we do not buy frozen berries from the grocery store in the winter(soo expensive!) 8) No, but in Finland there is a minimum share of how little you can amortize and we are at that level. However, it is possible to ask the bank to only pay the interest for a while, I do not know if one needs a reason for that. We have not thought of that. Our loan payments would go down to like 100 euros a month by doing that! 10) There is a risk for that for sure. Where I live though the prices have been stagnant for around 6-7 years and now they have started rising again. Renting out a summer house could be a good alternative to mitigate this risk, as that demand probably won’t disappear. Especially if one has a nice one, and I like home improvements of interiors 🙂 However, we are not in the market to buy anything now exactly. Let’s see how I feel about land-ladying next year when I have more experience. 11) This is a good point. As I have been writing this case study and participated in it a thought of starting to work part time next fall has come up. Even though we have high taxes though, working 80% would net 700-800 euro less per month. That is a significant pay cut. I know we can make it work easily though. At the moment it is nice that both of us make the most we ever have. We’ll continue with that for a while. And my husband is going back to 100% next year.
      Thanks again for all your comments!

  24. Alysia says:

    I just want to mention that most Americans don’t make much money. You seem to think your income is significantly less but you’re making more than most college educated Americans in normal paying fields (not tech or other high paying fields). Plus you have much lower healthcare and education costs.

    • Jen says:

      Alysia, You are absolutely correct. I am just looking at this from the point of a tech person. I have already had a pretty long an successful career and I make a lot more than most people (also very happy with my pay!), also in tech. But my point was just that if I worked in the US I would probably be making double or triple from what I am making now. However, at the moment I want to live here, not in the US 🙂 If we look at people making minimum wage, they are (probably) better off here and fewer people risk loosing it all. Each system have their perks but for me it is more important to have safety and security than the super-high wages you can get in America. Maybe this did not come through in my text as I wanted to. So in life I am actually content, but would still want to reach FI sooner than later.

  25. Ashley says:

    Jen –

    Congrats on your journey and accomplishments so far! My comments relate specifically to starting a STR. We closed on our family cabin Feb 2020 (!!) and started renting it Sept 2020 for an additional income stream.

    My advice is to keep it simple. Use one platform to start, well-meaning friends advised us to advertise on Airbnb, VRBO, etc. But the truth is you only need one person or family to rent out your cottage each week/weekend – not everybody. We only use Airbnb and have sufficient bookings.

    When determining price I highly recommend looking into airDNA to see nightly rates for similar properties in your area. Airbnb has a “smart” price tool that initially set our nightly rate super low due to lack of rental history. After two months we increased our nightly rate to be aligned with airDNA data and now the Airbnb algorithm has caught up! We now book for double what Airbnb initially recommended.

    Since you are near water, make sure you have appropriate insurance on your home.

    The most important thing is to have a spotless cottage. It’s great that you can flip and manage yourself as it’s in your own backyard! Guests expect a sparkling clean place and will reward you with a 5-star review and super host status.

    Start with your cottage, keep it simple, and as Liz said, see how it goes the next 6-12 months and expand from there! Best of luck to you and your family 🙂

    • Jen says:

      Thank you Ashely, We actually finished the cottage this Tuesday! I put it online Wednesday night and today Saturday we are getting our first guests, I am actually waiting for them right now. It is nice to hear that one platform is enough. And it looks like that as we got our second booking for later this month yesterday too. I have not heard about airDNA, I¨ll have to check out if they have data for Finland as well. We also noticed that the AirBnB price suggestions were really low! The first renter is staying 4 night and the second 2. So, our prices,that were higher than AirBnBs suggestion.
      Yes, we¨ll try to start simple and build on what we have.
      Thanks for you input!

  26. Victoria says:

    I don’t have a lot of investments, but I have an employer pension. I’m not doing a lot of concrete things to build up those pots yet, but I think it might be an idea to exclude state pension from your calculations for FIRE. That way the state pension is a bonus for fun things, so you’re not in danger if state pension age is moved considerably. My mum (we’re in the UK) has a tiny employer pension and tiny state pension. She has a life she’s enjoying but being dependent mostly on state pension is hard.

    I have a chronic illness too, and you may want to consider whether you will be able to work the hours you think as you get older. Will health mean you can only work xx hours a week, will expenses go up, will you need to change the property (wet room not bath), or pay higher travel costs (can’t physically manage times for cheap flights, can’t travel economy)? Same true for your son and his health issues. Boring and frustrating, but my health needs currently cost around a third of my net salary each month, even with basically free standard healthcare. I struggle seeing people investing more than me percentage wise, as I could send a good chunk into a private pension if I weren’t ill!
    Best wishes

    • Jen says:

      Victoria, Yes, I have decided to exclude the pension from my FIRE calculations as I am eligible at the earliest at about 67. And I wont be working that long!
      I am doing unusually well with my illness, if one compares to others that have it. I know that stress worsens it. Fortunately, I do not think we need to do any special arrangements in our house nor for travel. Our son is fine and if the condition worsens he will need surgery and should be fine if that goes well. I know there is always the risk that one of us would get so ill we could not work, but I see that risk as being as big as for anyone else. And this is a case I cannot plan any more for. If that day comes, we will have to deal with it and change our lives.

  27. Larkki says:

    Nice to see a fellow Finnish frugal woods reader here 🙂 I recognize many of your thoughts from a few years ago. I had always been conscious of my spending, but when I discovered the FIRE concept in 2016, it was eye-opening. Initially I didn’t have a plan for post-fire, it felt dauntingly far away and I had not properly started in real estate yet. But since then things have started to clear up for me.

    I’ve realized that just looking at the FIRE number and minimizing savings rate does not lead to the right kind of life for me in the near term. We have a 3 year old daughter, we’re still living frugally, but are now more focused on building the investments and planning the future. I’m not planning to go to zero income post-fire and completely disconnect from the workplace social environment, but instead do freelance projects which can be intense for a few months but then have possibilities to have long holidays in between. As you know us Finns have a long 2,5 months school holiday, so I’m planning to be able to keep that as holiday as well so that we could do activities together as a family.

    Regarding Real Estate:
    Like Liz already mentioned, RE requires more work attention than stocks, so you should try it out small scale first before going deep. But it’s also more concrete, and I quite enjoy it, so I’m actually planning the management and purchasing of properties to be the majority of my post-fire activities, together with freelance IT projects that I could participate every now and then.
    We live in Helsinki, and I don’t have renovations skills, so I’m focusing on apartments that are within 1,5 hour driving distance from us.

    For Finnish RE material I recommend you look up Harri Huru’s “Ostan asuntoja” (I buy apartments) podcasts. He interviews RE people from different background, so it’s good for motivation and learning. Then for purchasing units, you can sign up for developers (YIT, Lehto, Peab, Bonava…) marketing lists to get informed when they start taking bookings to new apartments. Couple other companies are sijoitusasunnot.com and asuntoneuvoja.fi, who are purely focused on selling apartments/row housed to investors.
    Instagram has an active scene also. Look up eg. joonatanvoltti (Airbnb), sisujasijoitus (renovations), taloushaukka, suviph, sijoituspomot…
    You can also look me up from FB, Twitter or Instagram and send me a DM if you want to chat more. My name is Lauri Larjo.
    I hope you all the best in your RE and FIRE adventure!

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