I also heard the increase Wass rejected/reverted, but it’s just hearsay.
I don’t see any situation where paying 3M for a house is sensible, even with a decent income.
If you’re really keen, I have a single family home in Zurich I will be happy to sell you for half your budget.
Yearly Status Update
2023 Yearly Salary Income: (including bonuses, RSUs, pension, and benefits): CHF375,000
2023 Yearly Expenses (Including Taxes): CHF250,000
Net Worth Growth: 12%
Estimated 2024 Salary Income: CHF400,000 (160% combined employment rate)
Positive Aspects:
- Still paying CHF5,300 per month for the house (Our landlord hasn’t increased rent and doesn’t plan to increase it in the foreseeable future)
Areas of Improvement:
- Still struggling to build a monthly budget (per category) with my wife. It feels like we’re trying to decide if an expense is worth it, but we’ve never actually set any limits.
- We are making a conscious effort (very hard) not to increase our standard of living, even though our income is increasing. (Usually, this goes for services rather than products.)
Goals for 2024:
- Any new money will be invested in VT
- Allocate 3% of net worth towards alternative investments (mainly cryptocurrency)
- Explore real estate opportunities in Switzerland (thinking about new development)
- More charity and donation
- Replace our 11-year-old car with a Premium SUV (Tesla X or similar)
Tips for Others:
- Find what gives you passion and energy to continue this race also in the short term. For me, it’s waiting for the next vacation (we really like to go to 5-star hotels and weekend getaways in luxury hotels).
- Before you make an expensive purchase, wait a couple of weeks. There’s a good chance you will realize that it’s not as important or valuable as you thought it was.
Seeking tips from others on reducing the following expenses:
- Dining out (restaurants/convenience stores)
- Personal care/hygiene, cosmetics, drugs, and pharmaceuticals
- Clothing, shoes, and accessories
- Tips to locate a cost-effective Premium SUV
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Hard to work on for me when dealing with stress/few time out of work:
→ manage my life equilibrium to be balanced so that I enjoy time at work and out of work (fitness, cooking and sleeping enough help).
→ batch cooking helps me a lot (but I do enjoy cooking so your mileage may vary). I like Chef Jack Ovens for ideas: https://www.youtube.com/@ChefJackOvens
Set a limit based on #of items rather than a monetary budget. Outside of mandatory 1:1 replacements, I can (actually must, I have the opposite problem of not buying enough) buy one piece of equipment every 6 months (there again, your mileage may vary).
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With your combined income it should not be a problem, but for sure you could reduced this expenses by cooking at home and have left side food for the next day for lunch. However, it will also depend on how much you like cooking. If it is painful, you should try to dedicate some time to improve your skill. Of course, if your jobs and responsabilities to your children don’t allow you to find time for this, it will be complicated.
But yeah, the only way to reduce this expenses it’s by cooking yourself and make enough food to take it the next day for lunch or have a lunch recipe that you eat every day. For instance, I have the exact same breakfast and lunch every day.
I’m not sure about these expenses, why do you need a lot of drugs or phamaceuticals? Health problem? For personal hygiene, what are you talking precisely?
Personaly, once I have my basics clothes for casual and working day (basicaly they are the same as I don’t need to wear a costume). I don’t buy anything that else and I keep it for more than 3-5 years. Pro tips: luxury clothes are really bad qualities and not worth the price. Take an H&M white T-Shirt, put a fancy “Dior” logo and Tadaaaaaaa 800 CHF… If you want to try some really good quality clothes, I recommend this website: Asphalte - Des bonnes fringues. Point.
Pass, I don’t have tips on this as I don’t have any car and don’t need it for my personal use (no kids and public transport are really efficient where I live).
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- Dining out: stop dining out. there you go 100% saving.
- Personal hygiene, drugs, and pharmaceuticals: barring some major medical issue, these costs should be so trivial it is not worth worrying about.
- Clothing, shoes, and accessories: don’t buy any more. there you go 100% saving.
- Tips to locate a cost-effective Premium SUV: you guessed it: don’t bother getting a new car! you save money and this hassle!
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Everyone works differently when it comes to this. What worked for me was separate savings accounts and standing orders. Standing orders to remove cash to broker and never transfer back, for recurring purchases. Sold RSUs go one way only - to the broker to be invested, never to bank account. Other orders into designated savings accounts and use money from them (holiday, fashion, other) only from a surplus. Earn it, basically.
When it comes to the expense reduction, contrary to a frugal mindset, there is nothing wrong in my opinion with expensive but high quality clothing. I have easily a dozen++ pairs of shoes/boots which will last 20 years. Ammortizided over 10-20 years, that yearly Kiton or Brunello jacket or JL boots is good investment if they are standout pieces. Add yearly 2-3 but that’s it. In other words, limit quantity to very high quality and add ‘cheap’ fillers. Accumulate quality over time. Again, earn it by treating oneself after savings rate etc is taken care of, but only once a quarter or semester. Far hard to liimt quantity if female, however, in that spending area.
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For a small fee, I can visit you and help plan anything.
I’m half joking. Sometimes you need a stranger that tell you what to do and you need to pay it to feel it’s worth it. Even if I might say everything you can read here.
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Yearly Status Update: H1 24’
Yearly Expected Salary (including bonuses, RSUs, pension, and benefits): CHF 450,000 (160% combined employment rate)
Yearly Expected Expenses (Including Taxes): CHF 238,000
Saving Rate: ~50%
Positive Aspects:
- Still paying CHF 5,300 per month for the house (Our landlord hasn’t increased the rent and doesn’t plan to in the foreseeable future).
- We set a budget, which helps to regulate our expenses. Sometimes we break the budget for different categories, but we manage to offset that with savings in other categories.
Active:
We submitted an offer to buy a property on the silver coast (prime location according to the UBS evaluation) and within a 5-minute walk from our home.
The offer is CHF 950,000 + renovation with a cost of at least CHF 100,000 is needed.
Based on a rough estimate, yield is between 2.5% to 3%, not including mortgage benefits, tax deductions, and potential value appreciation.
Tasks:
- Hope to secure the purchase of the property.
- Plan a budget and renovation strategy for tax efficiency with our accountant.
- Finalize the renovation structure with our architect (a friend).
- Choose the right mortgage (100% SARON or 100% Fixed) and try to get the best offer with mortgage brokers.
- Build a detailed renovation plan.
The idea behind this investment is to diversify our portfolio beyond a 100% VT strategy (For new money) and gain experience in the Swiss real estate market.
Looking for Tips:
Any tips for complete renovations or tax deductions would be greatly appreciated.
Tip for Others:
I have mentioned this before, but it seems worth repeating:
If you want to buy an expensive item/service, even if you truly desire it and believe it’s the best thing for you right now, wait a bit (couple of weeks/months?). You would be surprised how quickly your “needs” can change in our dynamic life.
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$1M is far more sensible. On the renovation, if you don’t mind spreading the work over multiple tax years, you can reduce tax at better marginal rates.
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Thank you. I will indeed check it.
If it is necessary to invest 100k to just return the apartment to its basic condition (not for value appreciation), what is the advantage of spreading it over a number of years?
You can deduct it in different tax years.
Tax reduction of 2x 50k is better than tax reduction of 1x 100k (due to the exponential nature of the tax rate)
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For example, if you start the work now and it concludes next year, some of it could potentially be invoiced in this tax year and some the next. Or if you can live with delaying, say, the bathroom renovation for an additional year, then that can be done the year after that, for example.
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Could that be your total tax rate?
I put your approx salary and wealth into comparis and got a marginal tax rate ~40%
(mine is higher, in Geneva…)
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You are right, the marginal tax rate I mentioned was for last official (2022), when our income was at least 100k lower. Beside that, I have significant deductions related to my family/children, my wife’s business, and living in a tax-friendly municipality.