Here we go with the first Team MP's story. Please welcome a long time reader, also known as the famous MP forum member 1000000CHF!
I hope you get inspiration from his journey.
1000000CHF: I was born to poverty in the late 80s in communist Poland. This is not an unusual statement because most people who were born at this time in Poland were living in poverty. Communism was bankrupting and the situation was so bad that communists voluntary gave power to the democratic opposition in a contract that guaranteed party officials that nobody will go to jail for communist crimes.
Economic transformation that followed in the 90s was very tough. Most factories bankrupted and were closed. New companies were opened but the process of adaptation was slow. Inflation was very high and unemployment even higher. A lot of people had to change their profession or even go abroad to make a living. My dad had to go as well.
When the government applied some special measures to combat inflation, my dad's salary was lower than the monthly rent. That meant that every month we're living from borrowed money. The choice was either moving back to slams were I was born and my parents lived before the 90s or going abroad to earn and save. This made a huge impact on my dad's psyche — he was ultra frugal all his life. My dad worked as a painter of wooden houses for 2 years in Sweden. In the meantime, the economic situation in Poland has stabilized. Incomes started growing, inflation was normal, unemployment was still high, but not in Warsaw. Big cities were enclaves of prosperity in a sea of misery. My mother did some additional training and she managed to get a good job as an accountant in Warsaw. From that time we've become part of Poland's new middle class.
Most of my childhood memories relate to these times. We were a financially average family. Neither poor nor rich. By Western standards that would be still poor, but by Polish standards it was okay. My parents slowly accumulated their wealth year after year, and because they didn't know how to invest (and besides, even if they knew, investing in stocks was crazy expensive and run by actively managed funds in big banks — it's still often 3.5% TER), so they built a house instead. It took many years and they finished just when I was going to study at the university in another city (by the way, I was the second person in my extended family who went to university and none of my neighborhood friends got into a university).
I started studying computer science in one of the poorest Polish cities, in one of the worst public universities. At that time marvelous luck happened to me that changed my life forever. I met my future wife. She fixed me in so many ways I can't even explain. First, her love cured me of mild depression that I was suffering from my entire childhood and adolescence. Second, she made me stop drinking and smoking. Third, she motivated me to study. After a year of computer science, I decided to take another major in parallel — business management. The university level was not very high (especially on English-held majors that I took). I became an average student and eventually finished these two majors with decent grades.
During those years I was getting a monthly bank transfer from my parents for rent and living. I was terrible at managing it. Often, I'd overspend on stupid stuff (like fast food) and then I had to borrow money to pay the rent or buy food. Or I would call my parents and figure out some silly excuse to ask for more money. This happened all the time, almost every month. It took me so many years to change my spending habits, it's incredible.
After I graduated I moved to Warsaw and started working while finishing my IT master's degree in weekend studies at an expensive private university. My first salary negotiation was a joke. I was so stressed that I asked for any money. So obviously they gave me the lowest possible salary (CHF 500). After two or three years I realized I was screwed over and decided to negotiate a raise. It didn't work very well, so I decide to change jobs — I more than doubled my salary. Since then I'm changing jobs at least every two years. I still believe it's the easiest way to get the best salary raise possible.
After a year, another opportunity opened. I was visiting a friend in Geneva who was working at CERN as a physicist. He suggested that I should apply there as System Engineer as they had tons of servers to manage and there were open short-term job positions practically every year. I decided to give it a shot and landed in CERN Control Center — managing the servers that run among many others Large Hadron Collider. At CERN I was getting 4kCHF net a month and it was an enormous amount of money for me. I was saving about +1kCHF a month.
From CERN, I moved to Zug to work for a FinTech bank and later on I continued working in the FinTech industry in Zurich. In Zug, I doubled my CERN salary — when I first heard about Swiss salaries from a recruiter I couldn't believe it. And I thought I was earning tons of money already at CERN...
That's around this time that I learned about the MP blog while researching 3rd pillars options.
I got hooked.
And since then I started saving 50% of my salary (~4kCHF a month). It was in the same period that my son was born, but because I was so disciplined (should I say "obsessed" ^^) with saving, it didn't change anything in my financial situation. Additionally, because I had two dependents, Zug canton lowered my income tax rate to 2%, which was lower than the family allowance (CHF 300). So basically, I was getting the taxes paid.
After a few years, I again changed job to work in the same field and industry in Zürich, and I switched to 80% while keeping the same salary. In the meantime, my wife started working and our son began to attend kindergarten. We then chilled a little bit more with savings and our savings rate dropped to 40% (that's still ~4kCHF of our combined salaries).
MP: Wow, kinda inspiring for the first story of our series! Thanks for sharing your life so openly with us 1000000CHF.
But let's step back a little bit. Could you detail a bit more what was your financial mindset and life before stumbling upon Mustachianism and FIRE on the MP blog?
1000000CHF: Well, I used to spend everything I earned. The change in my behavior was initiated when I opened a savings account where I automatically transferred part of my salary every month around 2011 (when I started my first serious job).
Back then my net worth was still null. After 4 years we managed to accumulate with my wife about 40kPLN (~10kCHF) and decided to focus on saving for a mortgage downpayment.
In 2015, I moved from Warsaw to a small town in France next to Geneva, and I started working as a contractor at CERN (earning 4kCHF net). This allowed us to pump up our savings. I was living in France for a year in the crappiest apartment I could find (it wasn't a problem for me at the time, as I only slept there). I wasn't living frugally but still managed to save a bit.
In May 2016, I moved from France to Zug and my savings were equal to 188kPLN (~47kCHF). In Zug, I've got an even better salary (8.5kCHF per month gross) and I was lucky to find a cheap apartment (1.5kCHF per month).
Zug, a famous tax haven, also gave me an incredibly low tax rate — as far as I remember ~2.5% (which dropped to 2% after my son was born). Over another year, I managed to accumulate 280kPLN (~70kCHF). At this point, we were close to buying a small apartment outside of Warsaw for cash. We decided to stay in Switzerland a bit longer and save up for a better apartment (and closer to Warsaw). That would require at least another 100kPLN (~25kCHF).
For quite a long time I was thinking about investing but I just couldn't find any reliable source of information in Polish. In Poland, the investing offers are very limited and knowledge about investing is even more limited. So I was basically sticking to time-deposits. In Switzerland, I learned about 3rd pillar and I realized that I needed to start investing for my retirement.
I went to my bank (UBS) and asked for an offer.
I decided to google a bit to compare it with other banks. This is how I discovered "Mustachian Post" and the mustachian's philosophy.
MP: Gosh so actually I should thank UBS for doing a bad job :D
So, tell us what happened afterwards, and how your Mustache started to grow.
The second step was to get serious about saving and investing. I started budgeting fanatically and opened a Cornèrtrader account and started investing in iShares Core MSCI World UCITS ETF (SWDA) ETF listed on SIX in USD. Thanks to @hedgehog I realized that Cornèrtrader (aka CT) rates for currency exchange are nonsense and I switched to VT ETF at Interactive Brokers. Since then I've added KBA ETF to cover China domestic market and I continue to invest in these two funds. Later on, I switched from LUKB to VIAC and I closed CT as they introduced new fees.
Mustachianism also accelerated my passion for learning finance.
Since then I've read dozens of books (my favourites being: "A Random Walk Down Wall Street" by Burton Malkiel and "A Wealth of Common Sense" by Ben Carlson) and started following and reading hundreds of blogs about FIRE, personal finance, and investing (my favourites: "The Shockingly Simple Math Behind Early Retirement" by MMM and "Stock series" by J. L. Collins).
And I stay the course — as Saint of Wall Street, John C. Bogle, has taught us.
I think the best way to illustrate the changes before/after discovering your blog is to show how my savings rates changed during the year 2017:
- January: -74% (I bought a car)
- February: 22%
- March: 28%
- April: 33% (I learned about your blog)
- May: 50%
- June: 58%
- July: 55%
- August: 58%
- September: 47%
- October: 53%
- November: 47%
- December: 64%
In other words, your blog made me rethink my lifestyle and in effect doubled my monthly savings.
MP: Wow! If I need a boost of motivation to keep up with the blog at some point, this list above is the first thing I'm gonna get to!
In other words, your blog made me rethink my lifestyle and, in effect, doubled my monthly savings.1000000CHF
1000000CHF: When I told you that you impacted my life, it was no joke bro! Actually, if I didn't stumble upon your blog, I'd have stick to the UBS crappy 3rd pillar and slowly saved up (~20-25%) for my apartment in Warsaw. What would I do after that? Who knows, maybe I'd learn about traditional investing options (like buying an apartment for rent) after that. It's hard to say — but one thing is sure, I'd save much less than I could, and I'd continue to be scared and uninformed about stock market investing.
MP: And so, what are your next steps? FIRE? Remaining in Switzerland for the rest of your life, or going back to Varsaw?
1000000CHF: We're not sure about this yet. At this point, we want to continue saving and investing until my son will approach school years (that's still 4 years to go). After that, we will have to decide whether we want to stay in Switzerland for the next 15+ years or go back to Poland, as we don't want to move back in the middle of my son's education and his teenage years. I've personally experienced how growing up can be dramatically difficult and that stability in these difficult years pays off.
It also depends on how well we will integrate with Switzerland. I'm personally very happy with my job and I enjoy spending time with my Swiss friends but my wife is just at the beginning of her journey — she's currently working at a terrible place (due to government bureaucratic obstacles to immigrants with medical degrees), and she hasn't made any Swiss friends even though she's fluent in German and a very open-minded person. If her situation won't change, we will move back sooner rather than later.
We'll definitely FIRE outside of Switzerland — mostly due to prohibitively high costs of living. Most likely in Poland — as my wife would like to return to Warsaw in the future, but I hope I'll manage to convince her to at least spend the autumn and winter months somewhere in the Mediterranean region. At this point, our kids should be grown-ups and we will "work" for fun and social connection, not for money anymore.
That idea keeps me going and motivates me to continue saving and investing.
MP: Thanks again 1000000CHF for sharing your journey, and I hope your future will be as bright as what you achieved so far!
If you too are interested in sharing your inspirational journey with Team MP members, please email me at contact [at] mustachianpost.com