Interview with Monika


I’ve known Monika for a while already through our financial meetups and our common blog She’s 49 years old and has been financially free for four years. Since we already know each other quite well, I was able to ask some of my questions more in my role as a coach and that allowed me to dig a bit deeper. I’m always on the lookout for preconceptions and hidden blockages. And I’m very grateful to Monika for being so open during this interview.

Monika, I’m really happy to be visiting you here in your beautiful home. Tell us a bit about yourself. Can you describe to us how you live?

Well, you can already see that to some extent. I live with my husband in a relatively modest terraced house with a garden. The garden is really important to me because I love gardening and spending time outdoors. A good friend lives next door and we normally get on really well. She has three children and they’re always in and out of here. It’s great.

In 2015 you published the book “Finanziell frei” (financially free) in which you described your path to financial freedom. Can you summarize that path for us again now?

Well, I actually did things exactly the way you’re supposed to. Only I didn’t know at the time that that was what you’re supposed to do! When I was 18 I worked out how much money I’d need to earn and save so that by the time I was 40 I wouldn’t have to work for money anymore. Back then it was more of a game, but it turned out to be doable. I don’t think many people believe that, so they don’t try to achieve financial freedom. Even for me it wasn’t my personal dogma. Still, I lived very frugally and was always on the lookout for projects that would earn me extra money. When it came to investing the money I saved, I chose some good investments and some not so good ones. The most important investment was half an apartment house that I bought when I was 28. It was an exciting, possibly also reckless investment. It’s caused me a lot of stress. But it’s also made me rich. Today my husband and I can more than cover our basic living costs from the rental income it brings in. That’s what I call financial freedom.

Did you have role models?

No, not really. The women in my family tended to be negative role models. They all had very little interest in money and left everything to their husbands. I decided very early on that I wanted to be able to support myself financially. Later on I could also imagine myself being the breadwinner of a family. And that’s what I’ve become for me and my husband.

Back to your apartment house. What exactly made it so stressful?

Unlike when you invest in sterile financial products, investing in apartments means you have to deal with people. The tenants, sometimes the property management company and other owners. Tenants in particular have fundamentally different interests to landlords. You can try to be fair, but if you want to protect your own interests, sometimes you have to be a bit tougher and prepare yourself for the fact that the other side has different ideas. More specifically, in the 20 years I’ve had the apartment house I’ve had to deal with one tenant who didn’t pay her rent, several instances of water damage, incompetent workmen and some tedious arguments about statements of operating expenses.

Do you regret buying it?

Not anymore. But there have been times in the last 20 years when I did regret it. Back when I was 28 I sort of stumbled into buying it and I was too proud to back out once the purchase process was underway. To be honest, at the time I was totally overwhelmed by it. Each time something went wrong or someone tried to pick a fight with me these feelings of being overwhelmed came over me and I’d have loved to have sold all five of my apartments at a single stroke. But real estate isn’t suited to impulsive financial decisions. If I sold all the apartments at the same time I’d have to pay tax on the profits. Ultimately it’s been a good idea to keep the apartments for so long. Last year for the first time I sold an apartment purely to make a profit. The sale price was just too tempting and the tenants were annoying me. Although I have to admit that the ROI from the ETFs and stocks I bought with the money from the sale isn’t better – in fact it’s worse. I see this as a teething problem. When I bought the apartment house its value went down at first. It took time for it to become a good deal.

Your apartments are paid off. How did you manage to do that within 20 years?

By saving, saving, and more saving! No, that’s not the whole story. Back then I split the mortgage into three batches: for 5, 10 and 15 years. 20 years ago the interest rates were much higher, so with each new round of financing the more short-term mortgages became cheaper. I also raised the rents – within the legal regulations for existing tenants and in slightly larger steps when new tenants moved in. While I was still working as an employee I was able to invest all my extra money and when the due dates came around I could put all my invested money towards repaying the mortgages. The extra money was not only the surplus from the rents. I also saved a lot. I lived in a relatively small apartment, didn’t own a car and really enjoyed living frugally. In fact I haven’t significantly raised my standard of living since I was in college. But I was paid as a head of department. I saved the difference.

How did you invest your money besides in real estate?

I put most of it in fixed-rate investments. Back then that was still worthwhile. I remember when you could get a five-year certificate of deposit at 5% interest. I thought that wasn’t bad. I also let myself be talked into investing in funds. That was never really a success. But since I knew I’d need the money again in three to five years, I mostly chose certificates of deposit and then used the money to pay off my mortgages. My father also helped me with the last big mortgage because he’d made a lot of money on a stock trade and wanted to pass it on. With his €80,000 and my own money, I managed to pay off the last big mortgage about four years ago. That meant I could keep the rental income and think about how to redesign my life.

Enviable – congratulations Monika! Let’s talk about envy. Do lots of people envy you?

Well, only a few people show it openly. But not many people know about my situation either. Only a few people know the details. Other people know that we must have savings. They notice that I only work from time to time and that my husband practically never works. But in Germany talking about money is a big taboo. That’s why people rarely ask about it. Sometimes people ask me how we’ve provided for our old age. Depending on how open I’m feeling I tell people that not much will actually change when we’re old. We already have enough money now. Interestingly enough, people rarely ask any more questions. I always find it interesting how inhibited people are when it comes to money. As if it was somehow obscene to talk about it.

You’ve already told us a bit about how you live. Can you go into more detail? How should we picture your financially free life?

I can’t give you a definitive description. It’s constantly changing. Before I was financially free I worked for a company and then I went freelance as a sustainability consultant. Now and then I still work for a few of my favorite clients who sometimes contact me wanting a paper, some advice or a workshop. Since I do practically no acquisition at all, demand is limited. So I mostly meet this demand. And in small doses I enjoy it.

Roughly how many hours a week do you spend on sustainability consulting?

If I’m just working from my desk at home, not more than around ten hours a week. Sometimes only five and sometimes none at all. If I’m giving a workshop, that takes up one or two days and I also have to prepare it. But on average I only hold about one workshop a month. That’s ok. I also give yoga classes twice a week in the evening and once in the morning. That’s exactly enough to keep me fit as well.

What do you do with the rest of your time?

Sometimes it seems to just fly by. We don’t rush in the mornings. We sit at the breakfast table for ages talking or each reading a book. If the weather’s good I like to go out in the garden. My husband is happy to help me with the heavy work but otherwise the garden is definitely my territory. In the afternoons my friend’s children often come over. She works later and I make sure the kids do their homework or take the little one to her music lesson. I also spend time on our blog Klunkerchen, which I really enjoy writing for. And apart from that I spend a lot of time online. Planning holidays in particular can take up a lot of time if you have it.

A good buzzword: holidays. That’s always the cliché, right? Financially free people like to lie on the beach in the sun. Is that the case with you too?

No. But we’re away a lot, although never for more than four weeks at a time. That’s because of our parents; especially my mother-in-law who’s over 90. My husband just doesn’t want to be away from her for too long. On average we have one long holiday a year and apart from that we’ll spend a week at the Baltic Sea coast or in Venice or somewhere like that. Having said that, we’re only slowly getting used to a greater level of luxury. A simple hotel is enough for us. We’re only slowly working our way up the hotel stars. It’s an interesting learning process, to allow luxury into your life.

Why is it difficult? Isn’t it a good thing?

I suppose so. But my husband and I have been very frugal our whole lives. We’re used to it. It was ok – actually, it was exactly the right thing to do and it felt good.

Now something’s changing. We’re in uncharted territory. On the one hand we know we have enough money to be able to afford a bit of luxury. On the other hand we also know that essentially we exchange time for money and not luxury for money. If we mostly went for the latter option, we’d both have to keep working to be able to afford it. The exchange of time for money is key. At the moment we’re still not completely sure how much luxury we can allow ourselves while still being sure we’ll have enough money to last us the rest of our lives. Ultimately we need to find the right balance and give ourselves permission for the odd luxury.

Why permission?

I don’t know really. Probably it’s not just habit. Maybe it comes from our parents’ ideas or something. A need for security that makes us feel like we have to keep piling up money. Or we don’t give ourselves permission to afford luxury because our parents couldn’t. I can’t tell you exactly.

Is this permission also a reason why emigrating isn’t an option for you?

No, I at least enjoy living in Germany and I don’t feel the need to move to another country. It’s an incredible privilege to be able to go south for the winter, but just the same I don’t want to spend my whole life in the south. Especially because I also enjoy a good crisp winter in Germany, not to mention the other seasons. What’s more, I don’t live in a country just because of the weather. I like my friends, my family and ultimately my familiar surroundings. Of course on every holiday we think about what it would be like to just stay on in particularly beautiful places. So far we’ve always decided against it. I have no idea whether that will ever change. I don’t think so. But I don’t know for certain either.

You just mentioned luxury in connection with travelling. Are there other areas of your life in which you tend to spend more money?

I can’t think of any off the top of my head. No, wait – last year we got a new kitchen. Friends recommended an independent carpenter and we got him to do our kitchen. It wasn’t cheap, but it’s turned out beautifully. Now sometimes I sit in the kitchen and enjoy this luxury. And talking of the kitchen, we also spend a lot of money on organic food. Especially when it comes to meat I prefer to buy organic. It means we eat it less often, maybe once a week. But it also means that when we do eat it, it’s really good. Otherwise I actually like being frugal. By that I mean always asking myself before I buy something whether I actually need whatever it is at the moment. I have so much already!

Let’s get back to financial freedom. Was there a particular day on which you became financially free?

Yes, there was. I remember the phone call with my father when he told me he’d like to give me money so I could pay off my mortgages. After the phone call I took my folder off the shelf and ran the numbers. With my own savings as well I’d be able to fully pay off one large mortgage. Then I’d only have smaller ones left and I knew I’d have about €1500 a month in rental income – enough to live on.

At that point I was already self-employed, but I was still working at the hectic pace of insecure self-employed people the world over. I accepted pretty much every job, even ones I didn’t really enjoy. It actually took me a few days to realize that from now on I we free to accept only the jobs I wanted to do. Even so, it still took me months to get rid of some of my old customers. I still remember clearly how a potential customer explained a prospective job to me in great detail and was then deeply insulted when I turned it down even though the amount he’d offered to pay me was exceedingly generous. But I knew that the only interesting thing about the job would have been the money and I just didn’t want to accept jobs like that anymore. All the same, at first I thought I sounded very arrogant even to myself.

But you didn’t immediately give up working completely?

No, at first that wasn’t an option. I just thought much more carefully about what I enjoyed and what was worthwhile. I don’t subscribe to the theory that everything about work always has to be fun. But it has to be worthwhile! What’s more, at first I couldn’t imagine what I’d do with my life if I didn’t work for money.

You say at first, has something changed?

Yes, it has. I’ve come to think about working for money more and more critically. Today I find it much easier to imagine a life without paid work. That doesn’t mean I don’t still want to create something. My intelligence, my creativity and my knowledge should be put to use. But I don’t have to provide these things in exchange for money. The exchange can be broader, so to say. I allow myself to spend more time on activities that aren’t really worth it from a financial point of view. For example, in the evenings I give yoga classes to girls from a comprehensive school. Lots of them have practically no money at all, so they pay me 50 cents per lesson. Of course that money doesn’t even pay for the room. But we all have a lot of fun, so why shouldn’t I keep on giving the classes? I’ve spent many years of my life asking, “Is it worth it?” You could say the question has become part of my personal system of values. It’s not easy to introduce new values to this system, but I think I’m on the right path.

This year I’ve also rediscovered my garden. I’ve already been working in it for 11 years, but this year I worked on it a bit harder. The work has paid off. We’ve been getting all our vegetables from the garden since May. Now it’s the middle of September and I’m still picking tomatoes and zucchinis. Everything else has been harvested and either frozen or preserved. I know that doesn’t save me a lot of money, but it’s a great feeling to go out to the garden before dinner and pick the vegetables fresh. I’d like to do more of that sort of thing.

Do you have any idea where your path in life will lead you?

At times I was so exhausted that I thought I’d spend the rest of my life on the couch. I’m better now but I’ve also learned that a certain type of exhaustion is related to the menopause, and I’m on that rollercoaster ride at the moment anyway. I was very relieved to find out that this exhaustion can be a temporary symptom of the menopause. To me, the idea of spending the rest of my life on the couch is horrible. At the moment I picture myself continuing to lead an active life – sometimes for money and sometimes not, but always with a purpose. There could also be some years when I don’t earn any money at all and just live off my capital.

Why from your capital? Don’t you live off your interest?

Yes and no. Actually you’re right. We cover our day-to-day living costs from rental, interest and dividend income. But sometimes I don’t make a clear distinction. For example, I invested some money in energy plants. The income from that is partly interest and partly repayments. But it appears in my account as one amount. If we need it, we spend it. If there’s some money left over, I reinvest it. But if there’s nothing left over, that means I’ve eaten into my savings. Which isn’t a big deal. I could define my financial freedom differently. Not in terms of capital gains but in terms of spending my capital. I currently have over a million to my name, and no children who would stand to inherit it later on. I’m 50 years old. If I assume I’ll live to 95, my money would need to last me for another 45 years. That’s about €25,000 a year. I know there are a lot of potential catches with a calculation like that. It doesn’t take account of inflation, but it doesn’t include income from interest either. These should cancel each other out at least. Of course there are lots of other things I could also take into account. In any case, I had a kind of epiphany when I realized that I don’t have to calculate just with capital gains but that I’m also allowed to spend my capital. Of course not so radically that it would be gone by the time I was 95. It would be annoying if I ended up living to over 100 and ended up with nothing left for the last few years – especially because that’s when life can get really expensive.

I can well understand why that scares you. At such an advanced age you wouldn’t go out and look for a job.

Yes, it does scare me a bit in fact. When I’m 95 I don’t want to find myself sitting in a cheap care home thinking about how if I’d just worked for a few more years when I was in my 50s I wouldn’t be in such a miserable situation now. I console myself with a few pension plans that will pay out as long as I live. They should make everything ok. It’s probably also this fear that prevents me from making my life too luxurious today.

Why is that? In a coaching session I would ask you who tells you that in real life.

Good question. Probably my mother and also my father to some extent. Both of them work a lot; even now they’re retired their calendar is much fuller than mine. I want to take things easier, but old preconceptions and ideas from previous generations still influence me a bit. I have to work on that some more.

We all live our lives according to a set of basic values. What would you say are the main values you live by?

I think the most important value I consciously decide to live by is freedom. I’ve always hated the idea of sitting in an office as an employee selling my time for money. I did that for a good long while, but I was never particularly enthusiastic about the idea. That’s why I made my plan to become financially free as soon as possible.

Another value that I don’t like very much but that certainly drives me unconsciously is a need for security. Sometimes I wish I didn’t take things so seriously, but my inner security guard keeps a close watch over me. My need for security also has something to do with the fear that I won’t have enough money in the end. I’ve already made countless Excel sheets and run the numbers over and over. Whenever I’m feeling insecure I open them and move the interest rates up or down a bit.

Did you have any major problems or obstacles on the way to financial freedom?

It sounds silly, but not really. Of course sometimes I had problems with my rental properties, and I made mistakes with my other investments. But my biggest problem, a tenant who didn’t pay her rent for a whole year, taught me my most important lesson.

Why was that?

Well, she lived in my apartment for a year and of course I reminded her regularly by mail and especially by phone about the outstanding rent. She always assured me that she’d pay in the next few days. I used to check my online banking almost manically, but unfortunately there was never any money from her. At the beginning I lost sleep over it and I was often in a really bad mood. And then at some point I realized that it was only an investment after all. I knew that I could cover the mortgage payments with the income from my other apartments and actually her rent was already going straight into my savings. That meant that the missing rent didn’t affect my standard of living but was just a dent in my investment income. This new way of thinking – separating personal conflict from making a loss on an investment – served me better as time went on. So the lesson was very valuable, if not exactly cheap.

How much work is involved in managing your assets?

It varies a lot. With the real estate it depends on whether anyone wants anything from me. If everything goes smoothly I go to the owners’ meeting once a year and pass on the statement of operating expenses from the property management company to the tenants. But there can always be extra work involved with the apartments, for example if tenants move out or repairs need to be made. The most stressful thing for me is arguing with tenants. Sometimes that happens with the statements of operating expenses. Especially because it’s actually the property management company that prepares them and I’m caught in the middle as the messenger.

As for my stocks and ETFs, I check my portfolio every day – sometimes several times a day. Having said that, I tend to hold most of my assets long-term. For a long time I also used to let my stop-loss orders expire. Now I’ve reinstated them. After the Brexit vote in the UK I set lower stop-loss rates across the board. That means that in some cases my loss could be just into three figures, but with individual stocks I don’t want to keep going down and down with no limit. When the stock market starts going up again, I’ll have to readjust the stop-loss values.

Do you enjoy managing your assets?

Yes, actually I do – at least when things are going well. But I also find it interesting to think about what I’m spending money on, and I can easily spend hours with my Excel sheets calculating the ROI, the annual capital gains and so on.

What would you say to people who want to become financially free?

To reach the goal, the advice is simple: save money and invest it properly. Think about whether you really want to achieve the goal. It’s also important to think a bit about what you want to do with your “preretirement”. When I talk to people about financial freedom, they always imagine it being like a holiday. “Oh yes, if I never had to work again I’d live on an island and go travelling a lot. Yes, that’s what I’d do.” Living on an island enjoying cold drinks on the beach. I’m sure that’s lots of fun for four weeks. But for four months? Four years? Or even longer? For lots of people that turns out not to be the answer after all. The answer will be different for each person. It will definitely be different to most people’s lifestyles. The structure your life had when you were an employee is no longer there. Even self-employed people and entrepreneurs normally have more structure. Financially free people have to structure their days themselves. Every morning when I get up, I get to – and indeed have to – think about what I want to do that day and how to give purpose to my life. Of course I could start by surfing extensively on social networks then play a computer game before flopping down on the couch to read a good book. That’s great if you want to rest. After three days it’s boring and after five days it’s awful. At least in my opinion. I need worthwhile activities. For lots of people merely the promise of a paycheck gives purpose to normal work. That’s no longer the case for me. So I need other success indicators. A good interview with you? The clicks and comments we get on Klunkerchen? Our society is very focused on providing services for money. If this source of recognition disappears, we have to search for new ones. In doing so, we’re pretty much on our own because most other people see the challenges we face as real luxury problems. I listen to people complaining about work – more on Mondays, less on Fridays. I also listen to people talking about the fact, or rather the observation, that money is always tight. My friends can also be a bit jealous when I tell them about my many holidays. And the less well I know them, the more I let them see me as an active sustainability consultant. That creates a sense of belonging, because after all I work too. I just don’t tell them that this week all I have is a single two-hour appointment on Wednesday. And that brings me to my next point, which I could possibly find a different solution to as well. But I believe it’s an issue for financially free people. You lead a kind of double life. When I meet new people, they inevitably ask what I do for a living. What should I say? I live off my assets? I’m a woman of independent means? I don’t do anything? The few times I did that it didn’t feel good at all. It doesn’t spark people’s interest – it just tends to confuse them. The person I’m talking to seems to have great difficulty in categorizing me. There’s no pigeon hole for financially free people. It’s definitely more normal to say that I’m a sustainability consultant. Then people ask me interesting questions and I have a lot to say in response. I just don’t mention the fact that at the moment I hardly have any customers anymore. I also don’t mention that I blog and write books about financial freedom. That I have a second identity. If I didn’t feel so uncomfortable telling people the truth about my life, I wouldn’t have a second identity in the first place.

That sounds almost like a warning against financial freedom. Should people give up on it?

No, I didn’t mean it like that. Maybe it’s just a reaction to all the jealous comments. People should keep working towards financial freedom. Especially because nothing is forever. Financially free people can make themselves financially dependent again at any time. All they have to do is raise their standard of living. Then they’ll need more money and they’ll have to rejoin the ranks of the employed.

And what about you? Are you happy you’ve reached financial freedom or do you sometimes think about going back to a life of paid work?

Yes, I really enjoy being financially free and I’m grateful for it every day. It’s a different way of life and you have to be aware of that. Or just experience it to understand it. But the freedom it gives you over your time is a real gift. Nevertheless I keep experiencing emotional roller coasters that come out of nowhere and quickly take over my head. I have fewer limits on my time and my thoughts aren’t restricted by my circumstances. And then my thoughts really get going. Sometimes they lead me to very dark places but often also to wonderful ideas. Both are possible and I’m fine with that. I find that especially when I have negative thoughts and mental blocks, I learn a huge amount while I’m searching for a way out. And I assume we all have experiences like that. I have the luxury of being able to consider them in peace and find solutions with relatively few constraints. These solutions don’t have to be permanent – sometimes they even turn out to be wrong turns. But then I can just turn back. Sometimes I even feel drawn to life as a traditional employee. I mostly enjoyed working and sometimes I’ll even read a job advert with a sense of longing. But there are always enough restrictions such as time and commuting distance and so on that keep me from applying. It turns out that my time and my freedom are more important to me after all.