You got kids, or thinking of having some, but love adventure? Just go for both!

Boat at Seebruck harbour.

Boat moored at Seebruck harbour.

Having two little boys around like Woodpecker’s definitely changes they way you live.

Kids are no machines and do not function like machines. However hard modern society seems to try to force them into the tact of modern economy, they very often happily resist these attempts. Kids show us in a refreshing way that the natural state of living is not about looking at the watch and reaping “profit” as efficiently and as quickly as possible, but about taking your time, concentrating on the here and now, enjoying your body, nature, the beauty of the world and let yourself not be hasted by calendars, clocks or duties.

In fact, there is no such thing as a “duty” to a small kid, except enjoying themselves. What a good life!

Needless to say that downshifting – however much recommended to anyone – is absolutely mandatory once you have kids.

It is a real and shameful waste of some of the potentially best years of your adult live when you just continue your race in the thread-mill once your kids arrived to this beautiful world. And it would be something you very likely will heavily regret on your deathbed – as millions have done already: “Spending much more time with family and friends” and “much less time working on a career”, is one of the most frequent statements of dying people throughout the world when asked what they would like to change in hindsight.
What a tragedy to recognise this only in your last hour!

However, for many people the thought of kids is very much connected to abdication of control and freedom.

Although some of that is true (some things will not be possible to you for some time – though for some limited time only), Woodpecker, as a outdoor and travel-maniac is very glad to have found out that one thing still is possible:

Doing adventures, thrilling traveling and varying endeavours are possible with kids as well as without!

There is absolutely no need to stay at home, to spend all your free time at grandparents only or in one of this awful and non-frugally overpriced family hotels with full-time care for the little ones (so that again you don’t have to spend time together).

Only ingredients you need to experience something special are:

Lunchbreak at Frauenchiemsee (an island).

Lunchbreak at Frauenchiemsee (an island).

  • Faith in your kids,
  • Understanding of their needs, and
  • Time, time, time!

Recent proof from the Woodpecker’s tribe was a two days overnight sailing trip on a small rental yacht on lake Chiemsee.

A fantastic lake next to the towering mountains, big enough to have some sailing fun, but small enough to offer a secure and save “testing-ground” before going something more sportive.

And what fun it was!

The kids were quite fascinated about the different way the world looks from a boat, they loved to sleep all together in its cave like cabin and the elder one found some fun in taking the ruder as well (which was way larger than he is) – although any cop would have taken us for drunkards when looking at our sailing path then ;).

I was not so sure if all would work out that well, because only two adults on board plus two kids means scarce resources to do all the stuff that has to be done on a boat. But again I was proven wrong, and chances are that Woodpecker can continue his beloved hobby also in the circle of his beloved family! Hurray to that!

You are not a sailor and don’t care a damn about Woodpecker’s little lake adventures?

Well, no problem, here is the good news:

The above holds true for about any other of your hobbies and fondness as well!

  • Small kids can climb mountains with you (you might have to carry them on your back though).
  • Small kids can be taken on a bicycle trip from Paris to Istanbul (although you might have to carry them in a trailer).
  • Small kids can join you on a trek trough Africa in a Unimog (and enjoy it!).
  • Kids can go uphill ski-tours with you (from maybe the age on 12 on).
  • You can to a “mens/women only” weekend city trip with your 3-year-old (see Woodpeckers father and son trip to Vienna).
  • You can take your kids to surfing, riding, kayaking, cooking, museums (or boy loves museums), theater (well not at age 3 though) and so on.
  • You can drive by car to the end of turkey or Sicily or you can take them to a backpacking trip through Mexico.

These all are real examples I have seen or done and all of them worked well!

The thing is:

You need TIME, you have to adjust the pace of all the above needs to the kids rhythm, and you have to build in kids specific features.
E.g. on a sailing trip you sail 4-5 hours per day instead of 8, you make a lot of stops for swimming, you construct funny things to tow behind the boat, you tell tales of pirates and discoverers, you do a water-fight on deck and frequent land excursions.
In other words you simply do what you loved your father/mother to do when you were a kid.

And then you can do everything. Kids are quite robust, they lived in caves and rode on horses with our ancestors, they seem to stand heat or humidity better than I do (because I am the guy who has to carry the rucksack…), they have no problem with a lack of luxury or strange foreign people.

It is never the kids who are the limiting factor. It is the parents.

It is parent’s stress, their lack of time and faith, their impatience that is limiting your family!
Downshift, overcome these factors and you will have a great time. And your kids will have a fantastic childhood!

Cheers,

Woodpecker

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Deciding against Career – Reloaded.

Come on you temptations of the rat race! I'll shoot you all... (Photo: Bretagne, France)

Come on you temptations of the rat race! I’ll shoot you all…!! (Photo: Bretagne, France)

Exactly one year ago, Woodpecker had a fair chance to take over a leadership position and decided against it (see here).

Two weeks ago now, another almost similar opportunity arose in Woodpecker’s job (Fate seems to have decided to deal out these dangerous career temptations to me in an annual rhythm 😉 ).

Again, after some thoughts, Woodpecker decided not to go for the promotion.

No why is that? I mean getting promoted, climb the ladder as quick as possible, maximizing income, status and POWER are the main goals of our lives, are they not?!

Well, not quite in my humble opinion…

Let me explain:

Obviously all the thoughts in the post last year are still valid.
But this time I digged a bit deeper and tried to find out if there is another reason that makes me back away from this kind of promotion in an almost intuitive way. I asked myself:

Are my intuition and my reasoning really reliable?

Or is there another reason that makes me so indifferent against “climbing up”? Maybe I only avoid the responsibility, or am I too coward to take the job?

So I took some hours out on the bike to ponder on that question (the bike seems to be the best place to think for Woodpecker).

And I came to the following:

I very much like my company.
They are a great employer.
They (in general) care for their employees, they pay well, they offer at least some flexibility and above average holidays and social benefits.
Business there is done with high ethical standards towards business partners, towards society and towards the environment.
As every company they are looking for profit, but fortunately not in a too greedy and short-sighted way. I really bow to some board members who stood their ground on various occasions where outside pressure was high to get “more efficient”, “more modern”, “more ambitious”, “more hungry”. They did right to stay stubborn, as many competitors virtually broke their necks while getting ambitious, modern and hungry going forward.

I like all of that very much about my company and it played an important part why I decided to join them and will probably stay loyal to them for quite some time to come.

But then unfortunately there is the other side of modern work life:

While being above average attractive, my company still is a 21st century corporate with most of the CRAZY stuff going on that you will see in any larger companies.
They have most of the usual dull bullshit bingo and internal propaganda crap going on, all the stupid slogans, the “corporate mindset”.
Many people (and the higher up you go the more) are somehow narrow-minded and take themselves, the company, their business and their little games far to serious.
Loads of political energy is wasted in small and big battles over POWER every day. Some decisions (although fortunately much less than I have seen in other firms) seem hectic, aloof, inconsequent or driven by consultant style theoretical insights far away from real practical relevance.

All of this being very much normal things in a bigger company, and luckily easy to ignore if you are working at an operative level.

All of you working in a similar company know:
You take all this crap as some kind of force of nature, you make your jokes about it, you mock and laugh, or you let it pass by behind you.
And often enough, you, along with almost all other colleagues, simply ignore all the fancy new, groundbreaking orders, swings and flavours of the month that are dripping down to your level as soon as a new big guy comes in and wants to leave his divine footprint.

You simply continue to do your work in a professional way, generate some income for the firm (hopefully enough to make you valuable), and apart from that you can enjoy your salary and family and max out your free time. Truth be told, in the end no one really expects that you wholeheartedly and 120% sign up to the newest company slogans. Because only some ambitious strange nerds in the strategy department or other ivory tower levels do.

And as long as results are fine and you don’t switch to open rebellion, no one will care what you think.

But all of this changes when you go into management:

If you get a manager, I’d expect that you DO sign up more or less fully to your companies values. You DO have to live them and to stand up for them. And you DO have to promote them inside and outside the company.

Nothing as pathetic as a boss who behaves as if he was still a normal employee.

Yes, I DO want that my boss explains me the new slogan and crazy strategy of my company such that I can have a fight with him if I don’t like what I hear. I DO want that he takes my complains and carries them upward, but also I would consider him weak if he continues to mock about company decisions as if he was one of the common pack. Because a manager is part of the company (…yes, yes, yes, don’t bully me, I know, I know, we are ALL part of the company (slogan 4211). But there IS a difference in committment, or at least there should be).

When signing up to a leadership position, you DO change side (only a slight switch on lower management level of course, but a switch anyway).

And I would expect a manager to make company business a clear top priority in his life, and not continue to focus on his private stuff (as I do).

A manager has to be reachable by blackberry, he cannot be away on Sabbatical all the time, he does have to attend the important exec-meeting at 6 p.m. (poor him).

Because that’s his job. That’s the deal:
He does not have to do the dirty tasks anymore, he can delegate and order, he is entitled to the bigger bonus and salary, a larger desk and a more shiny business card. But in return he has to take the responsibility, he has to show passion, he has to go the extra mile while we unimportant employees enjoy some time off loafing in the afternoon sunshine at the local lake.
And he does have to sign up to corporate identity and at least has to try to believe the flavour of the month.
That’s what good managers have to do – simply as this.

But then, personally, I really do not want that deal, I do not want to switch sides.

I love the mental independence of the side I’m on.
I love to have the freedom to say: “Sorry, but that is not my task as a simple employee, we need some management fire power here”. I am happy with the income I can generate from my expert role, I am happy with my tasks and the level of control I already have now and I love to put full weight on private things like travelling, maximizing holidays, having a good time with family and friends and keeping work second priority most of the time.

So I either would make a poor manager or I’d have to sell out part of my identity to become a good one (see my interview with a board member).

And I don’t want to sell out anything of my identity and my life – because, guess what – I came to like it over the years!

Plan is to downshift, and much of this is fighting back the role the job plays in life, instead of boosting it!

So, goodbye shiny business card and large desk – may you serve someone else and fill him/her with pride and POWER – I would not have appraised you sufficiently anyway…

Probably to be continued in one year… 😉 😉

Cheers,
Woodpecker

Housing – Buy or Rent?

3.000 EUR rent equivalent per month might be ok for this house. But for an ordinary row house in a suburb of Munich?! (Photo: Provence, France)

3.000 EUR rent equivalent per month might be ok for this house. But for an ordinary row house in a suburb of Munich?! (Photo: Provence, France)

One of the biggest financial decisions in your life will be the potential buying of a house.

Actually, this is a really  severe decision, especially in big cities or other expensive places; a decision than will determine your cash flows, your freedom and even your way of life for decades to come.

Thus it is amazing how blue-eyed most people approach this decisions. At least in Munich, Germany, where Woodpecker’s live, and where real estate prices are sky rocketing currently, the only thought people seem to have is:

How can I quickly get in the market before prices rise even higher?!

Woodpecker kept on observing this for a while now and I speak to as many people as possible who are currently buying houses or are looking for some, and virtually nobody ever put forward real economic arguments, like return on investment, opportunity costs etc.

Instead it is always:
Prices will continue to rise, so we have to join now.
Plus the inevitable:
Real estate is the only asset that will protect me from the coming hyper-inflation.

Real estate markets in Germany have not been booming for a long time, thus Woodpecker has limited experience, but I strongly belief these are signs of a bubble formation.

However, let’s get away from speculating and let’s look at the economics:

Does it pay to buy a house?!

I will not go into deep details of the economics (there an endless tools in the internet for those interested), but start with a more general quick-scan approach – some questions, that, although basic, most potential buyers seem not to consider (at least in Germany today).

First question is your motivation to buy a house.
This question will determine the value the good “living in an own house” has to you.

  1. Is your motivation purely economical on the optimal provision of the good “living in a house”? I.e. your decision is only driven by efficiency: Will you pay more by renting over decades or by buying?
  2. Does your motivation include a speculative element? I.e. apart from receiving the good “living in a house”, you want to speculate on the price changes of your asset “house” (You do that automatically, when you assume “prices will continue to rise”, “my city will continue to boom” etc.!).
  3. Do emotional values play a role for buying a house? Like feeling better or more secure when owning. Do you value very much the freedom to change things at your house, that would be difficult in rental homes? How much is this emotional part worth to you?

Next question is your investment alteratives. This will define your opportunity costs, i.e. the the chances you are forgoing as your money will be tied up in the house.

  1. Do you have an idea where to invest your principal in, if not in a house?
  2. What is the return you’d expect from such an investment?
  3. Does investing and caring for your money (e.g. buying stocks) is fun for you? Or is it a bore and secretly you’d be happy to put all your money in your house, so you don’t have to care about it anymore?

The third question is your expectations of the future. This tells you how the price of your house will develop. (I’d not overrate this bullet though – as the future tends to be a difficult beast to predict 😉 ).

  1. Do you really think the price of your house will always go up? Why should it? And why hasn’t prices always gone up in the past? Why do markets crash here or elsewhere? Are you sure you can judge the market and all factors better than those poor guys that messed up in the past or elsewhere?
  2. Do you really know how inflation works and that it will sky-rocket in the future? Do you have arguments for that or are you simply repeating statements that are circulated by others? Could it be the majority is wrong here?

The last question is very important for a downshifter, as it targets at your freedom.

  1. How long will you have to pay down mortgage on your house? How heavy will this burden be? Will it significantly reduce your dimensions of freedom (e.g. rates are so high, you will not be able to reduce working hours or take sabbaticals for the next 20 years or so).
  2. Are you prepared for a shock-event? Are you flexible to handle such an event even with a lot of debt on your shoulders? Shock events could be: You lose your job, you get somehow disabled, you get divorced. Etc. All that things tha can severely distort your mortgage plans and force you to very costly decisions.
  3. Are you ready to settle down here? Or do you want to keep flexibility to move around or experience new areas in your city later?
  4. Do you belief you will be able to sell the house later to consume the proceeds of the sale? If not, you will simply save for your kids – this is noble, but would certainly cut you off from much of the potential returns the house would generate.
    Typical example here: Woodpeckers elderly neighbours.
    They have no kids, but live on a huge ground, that I’d estimate 1.000.000 EUR worth, in a ridiculously huge (but run-down) house of 200+ sqm.At the same time they have to live like poor people because their retirement rents seem low and they are not willing to let go of the house. They could have it all: Travelling, great vacations, services, fantastic food, entertainment or charity for the rest of their lifes, instead they cling to this very run down house and the huge garden, while complaining about all the work it implies. A very irrational decision, but very common too. The price they pay for this “emotional aspect” of their house is virtually 1.000.000 EUR! Are you sure you will not end up like this?

     

In Woodpeckers case, the decision (at current market prices) goes as follows:

  • The decision on buying a house is to a great extend driven by economics.
  • We do not want to speculate on house prices. Real estate is not an asset class that we know well and I think most of my ideas on its development will be pure speculation or linear extrapolation of the status quo. Thus I’ll assume prices to rise along with general  inflation (2,5% p.a.) only, but not outperforming it. Same assumption on development of house rental prices.
  • My asset class is stock trading. I am confident to generate a minimum return of 5% p.a. after taxes. This is confirmed by past trading success and by market statistics, showing that stock markets over the long run yield even around 7% p.a.
  • Thus, I’ll expect a return of 5% p.a. for a house as well. Consequently I’ll take 20 times annual renting costs as a proxy for a “fair” house price. This is a good rule of thumb, there are some deviations to both sides as inflation, interests and change in rental fee, or renovations in the case of owning, but in general this factor has proven to work fine.
    The renting cost to be applied is the “cold rent”, as it is called in Germany, thus the rent before additional costs (insurance, utilities, taxes, heating), as the latter will have to be paid even if you own the house.
  • Woodpecker family’s current “cold rent” is 1.650 EUR p.month or 19.800 EUR per year for a 150 sqm house + garage + small garden.
  • If buying we want something similar or larger, thus a fair price for a similar house would be 19.800*20 = 396.000 EUR. Subtract around 10% of broker, tax, moving costs, this yields a house price before costs of 356.400 EUR.
  • Emotional value is existent, I’d value it at 2.000 EUR a year (…or even less, if you think about it in this way…), so let’s add 2.000*20 to the fair house price: 396.400 EUR.
  • For shock events, I’d like to subtract 10%, as cash or a liquid stock portfolio will be more flexible in those cases. And I’ll subtract another 10% as freedom and flexibility (e.g. to reduce working hours, or to take sabbaticals, or to move somewhere else) are very important to us, and much easier achieved if you have a fair amount of liquidity.
  • On the other side, I’ll add +20% to the fair price for potential security in an inflation scenario (although stocks should do ok in this case as well) and for securing against rental fee increases and potential hassles from having to leave the rental house.
  • Over all, fair price comes in at roughly 400.000 EUR (before tax and broker).

4-5 years ago, this would indeed have been an somehow achievable price in Munich for Woodpeckers type of used house.

Today, prices unfortunately are way off, probably around 500.000 EUR for our size and location of a 20-year-old house and around 650.000 EUR for a similar new built house in the neighbourhood sold to a colleague 3 months ago (and his was a row house only).

Translating this example of a new built house back to monthly cold rent, we would end at (650.000+10% broker+tax)/20/12= 2.980 EUR per month!!!

And would you pay an equivalent of nearly 3.000 EUR per month for a 150 sqm row house in a Munich suburb?

Well thanks, we would rather not, so we will continue to rent our house and maybe recalculate in case prices come down…

Cheers,

Woodpecker

Film review: “Speed – In Search of Lost time”. A clever film on deceleration.

Film review on "Speed - On Search of Lost Time"

Film review on “Speed – In Search of Lost Time”

Do you often feel stressed and having no time?

That – despite of all the efficient methods you use – available time seems to diminish, rather than to increase?

You don’t remember the last time you really idled (and enjoyed it) or when you read a book for two hours without interruption?

You are often thinking: “Tomorrow, or the day after tomorrow, after I finished this and that, I will take more time for friends, family and kids”?

You cannot remember the last day (or even the last half day) you spent entirely without internet or cell-phone?

If the answer to some of the above is YES, then you are not alone.
In fact you belong to the majority in western society.

You are suffering from uncontrolled acceleration.

In my opinion the main disease of our modern times.

Actually, yesterday I had a planned internet and phone free evening (at work it is hard to avoid), so I digged out from our library a nice little documentary film on the phenomena of the “accelerated society”:

“Speed – In Search of Lost Time” (link here, unfortunately German only).

A highly recommended film, where the author tries to find out why he is always stressed and tensed, what are the reasons for society’s acceleration and what are potential alternatives.

The film is available in German only, but I’ll try to extract some highlights:

  • An interview with a man of Sueddeutsche Zeitung (a very well-respected German newspaper) who did live without internet, computer and cell-phone for 1/2 year, and his experiences while looking for fax-machines or public phone booths.
  • Meeting with Douglas Tompkins, who is planting trees that need 1000 years to grow up. This guy founded the cloth labels Esprit and Northface, but then left the business and bought a huge piece of land in Chile to “deprive it of acceleration”.
  • Interviewing one of the most celebrated business consultant lady (OMG, what a cold and dead person she is) on her “mission to make the world a better place by accelerating it”.
  • Staying with mountain farmers that live entirely without watches, have no holidays and stuff thus seem very relaxed (the secret seems to be living by a rhythm instead of a tact. A tact (like the tact of the clock or the machine) is merciless and ever pressing. A rhythm instead is repeating as well, but it adapts to the nature or the body and allows for deviations.
  • An interview with the Minister of Happiness in the state of Bhutan, where the growth of the country is measured by “Gross National Happiness” instead of GNP. This guy made the most clever comment in the film:“The key to happiness and deceleration is to forget about the notion of ‘time is money’ and replace it by the notion that ‘time is life’ “.Woodpecker couldn’t agree more.
  • Meeting with the German Sociologist Prof. Hartmut Rosa (link in German) .
    His core theory on the subject can be summarized as below:
  1. Stress is caused by having too many options in today’s world, thus being forced to make decisions all the time (and forgo millions of other opportunities at the same time)
  2. Acceleration is caused by the use of competitive logic to not only economics, but to all areas of modern life, e.g. to social contacts, friends, hobbies, family, religion. People fear very much to be “left behind” and thus do all to “stay in the game”. From a historical point of you this focus on competition was never the case before.
  3. A vicious circle is started:
    “People feel stressed by the high tact of modern life” -> “They have little time” -> “They get inpatient” -> “They expect others to act quicker (e.g. the phone hotline, the computer startup, the teller in the supermarket, colleagues at work etc.) -> “Demand is generated for more accelerated technical or organisational solutions” -> “People feel even more stressed by the high tact of modern life”-> etc.

Unfortunately, the film does not really provide a more general solution, except for small tips (like testing out your internet/iPhone/blackberry addiction by internet-free days, saying “no” more often, follow a rhythm instead of a tact, stop spinning around yourself etc.) and a vague “everybody has to find out for himself”.

And actually it misses any hint at all at Downshifting!

Where downshifting at its core (at least in Woodpeckers definition) is a lot about deceleration and living in the here and now.
As well as it is a lot about breaking out from the vicious cycle of “staying in the game” and finding ways to organise life outside the competition postulate.

But apart from this little aspects missing (maybe they are saved for part two 😉 ), the film is a must-see for any German-speaking downshifting candidate!
Go to your local library and find out!

And please let me know any similar films you know in English or German!

Cheers,

Woodpecker