Financing: What interest rate lock? What goes into the budget?

But these are two completely different things. One is a short-term available liquidity reserve, which is recommended to be kept at 2-3 months' worth of expenses, and the other is long-term saved money, which until use can be invested in fixed deposits, funds, gold, or similar.

Those are two completely different things though.

I interpreted it differently in the context of the thread ("saving"). But you might be right ...

Ok, if you read the rest of the text, that could indeed be the case. Although the question is, to which stage of life the respective statement refers.

For us, at least the "life" after building the house is somewhat different than before. Before building the house, money automatically increased for us and had to be invested in an interest-bearing way somehow. (analogous to the saved equity capital of Alex). After building the house, I try to keep the liquidity reserve (2-3 months' income + reserves for new car purchase) low and put remaining money into special repayments. At some point, the reserve for the house will also be added.

From my point of view, these are already two interesting opposing poles. With my monthly salary, you certainly don’t get far if you only have three of them .

I would not call myself stingy, not by a long shot.

I don’t know how far is with his house construction. My situation is described before the house construction. That means, compared to the later monthly repayment and interest payments, the current rent is a few hundred euros lower, my wife worked until not too long ago, now and after the house construction, for the time being, she does not. Therefore, I will no longer be able to save such a large amount of money as I have so far. Although, that’s not entirely true, because the repayment is not gone; it is embedded in the house. Hoping that this investment is somewhat value-stable (one should and must not expect more, in my opinion. Owner-occupied real estate should not be evaluated in terms of yield in the form of money).

By the way, also a good point why one should not freeze in fear of repairs coming in 20 years. The house is worth something. After 20 years of repayment, even with 100% financing, you have paid off a significant part of the property yourself. That can be liquidated at any time, without having to dispose of the property immediately. Instead of financing, say, €150,000 remaining debt after 20 years, you simply finance €180,000 further. Then you have withdrawn €30,000 cash from the house again, buy your new gas boiler and the new carport from it. Or whatever else comes up and cannot be paid from liquid funds. For me, therefore, it is essential to bring in high equity or to repay quickly if you have a high loan-to-value ratio. In case of emergency, you would lose the house (or better: could re-mortgage it and withdraw money), but would still stand firmly on the ground.

Whether 3 monthly salaries as a liquid buffer are enough, everyone must decide for themselves. For some it is not even feasible, as the income is simply too low, and accordingly only a low savings rate is possible. It makes no sense to eat nothing but noodles with ketchup for 2 years to forcibly build up this buffer. That’s not realistic. Others have a different risk perception or simply don’t want to have too much “lying around.” My equity was only about 10% liquid and safe (daily allowance, etc.), mostly invested in stocks and therefore subject to corresponding risk. Naturally, this was changed as the house construction plan took shape – because the money is needed, the previously bearable risk in the form of price fluctuations was no longer bearable. You have to adjust your own strategy to the life circumstances. Look at , who has a whole annual income – which apparently is not exactly low – as a buffer. But he might also have no orders tomorrow and the house currently being built is a bit more expensive and accordingly generates monthly liabilities that need to be served. I was in similar professional circumstances and can fully understand his need for security. After the house construction, I will try to quickly build up a low five-figure cushion. That is currently my comfort zone. It used to be less, but in the meantime I am responsible not only for myself but also for other people. In financial blogs, they like to talk about “fuck you money.” That is the amount of money you need to be able to say “fuck you” to anything at any time if you want to. Enough money to stay “flexible” and get back on your feet on your own.

In the future, the question will arise every year: how much to put into special repayments, how much into vacations and the like, how much maybe into another type of investment (diversification, greetings, and even with a paid-off house you need monthly cash flow in retirement). Although today, for the last aspect, I tend to put more into special repayments than into other forms of investment. Debt reduction means guaranteed return. You rarely find that (these days).

I would really sleep poorly if I lived in Wolfsburg and worked at VW. In good years, you can certainly get by well at the German carmakers. But if something goes wrong, it really hits hard. Company sick, (both) jobs lost, house value halved (who would move to Wolfsburg without VW?), pension concept broken, at the same time massive flood of similarly qualified workers in an otherwise structurally poor region. Put all eggs in one basket, you can’t get more cluster risk than that. I decided from the start against a professional career in a corporation. It probably wouldn’t suit my type anyway, I think. But I digress

The "Fuck you money" idea is new to me..but very likeable I’d say..a good million would be my Fuck you money amount. 500,000 for the outstanding loans and 500,000 would remain. You can certainly do something good with that..

Regards, Steffen

1.5 million. If invested securely, I would expect 4% after taxes, which is 5000 net per month. Oh, the health insurance is still missing. So better 1.8 million. Before that, I won't be able to say Fuck you ...