Hoi hoi! Today we have an awesome guest from the Netherlands! Mr Cheesy reached FI this year in April, so we discuss how he did this in Holland, what he really does all day and what saving €€ is really all about.
What we talk about:
- Mr Cheesy’s intro to FI
- What he does all day
- The Cheesy Index and the Dutch tax system
- Saving 100k€
- His awesome Europe trip
(we apologise for the sound quality of the interview – Mr Cheesy has a pretty old laptop and so it had to be done through his landline instead! #frugal)
Mr Cheesy the Dutchman
Mr Cheesy did not like his job in 2014. He was living in Canada with his wife and after reading a cool FI interview, he decided it was time to FIRE and buy some freedom. They completely changed their lifestyles, flipped pension funds and really got into saving and investing. Now their wealth is 90% invested and 10% ‘other stuff’. They also have a 5 year old daughter, and Mr Cheesy is indeed a kind of stay at home Dad while his wife continues working (doing something she loves!).
Mr Cheesy says life is good – he is no longer stressed, he is relaxed and he knows he can work on what he truly wants. You can hear a hint of jealousy in Mathias’ voice 😉
He tells us his days are filled with taking care of his daughter, renovating the house, running the blog and his side-hustle helping other people reach FI. As he says it, he’s currently living a ‘luxury situation’. Pretty impressive.
The Cheesy index
The Cheesy Index is described as this:
Actual Net Worth/Target Net Worth
Target Net Worth being the net worth you need to achieve FI. Mr Cheesy uses this index to help people see how far along they are on their FI journey specifically in Holland, where people are taxed on their wealth instead of capital gains.
Alvar and Mr Cheesy have a discussion on the Dutch tax system; In the NL you are taxed once you have a wealth of over 30,000€. After that, it goes like this:
30,000 – 100,000€ -> taxed at 0.58%
100,000 – 1,000,000€ -> taxed at 1.48%
Over 1,000,000€ -> taxed at 1.6%
It really depends on every person’s situation, but sometimes the Dutch system could be more beneficial (if you’re selling a lot, for example).
Because of this, someone in the NL trying to reach FI has to also account for the wealth tax when calculating their withdrawal rate. It might not be 4%!
You can save 100K in 3 years
In this sarcastic post, Mr Cheesy tells us that it’s easy to save 100k if you earn a lot of money. This raises a very interesting point; there are a lot of bloggers out there that go around boasting how much money they managed to save in a year. That’s great, but it’s also important to remember that the more you earn the more you can save. The Cheesy family had an amazing savings rate of 60-65% – because they were earning a lot of money and knew how to keep their expenses low.
So as Mr Cheesy says, reaching FI is much easier if you earn a lot of money. If you manage to stay away from lifestyle inflation – FI is yours.
He then tells us that realistically, FIRE isn’t for everyone. Someone who’s earning 25,000€ a year can’t really save enough money to retire early. And although true, that doesn’t mean that person should not be careful with their expenses so they have a cushion when things go bad.
What do you think? Do you agree?
Although it’s true that it would be much harder to reach FI on a 25,000€/year income, I do believe that person can work other ways to reach their number. This could be by taking up a side hustle to make more money or by deciding to retire early somewhere like Thailand, where the very cheap living conditions mean a lower FI number. As always, it’s all about the mindset.
It’s an interesting discussion. Mr Cheesy also tells us there are no hidden tricks when it comes to saving. The most important is to continuously stay vigilant and only spend money on what is worth it. We can see he practices what he preaches – his laptop is so old we had to call through his landline telephone number instead #lol.
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- Blog: Cheesy Finance
- FIRE in Thailand
- How we saved 100k in 3 years
- The Cheesy Index
- Early Retirement Extreme