Jumping into ERE

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AussieGirl
Posts: 22
Joined: Thu Oct 20, 2016 7:32 pm

Jumping into ERE

Post by AussieGirl » Mon Oct 31, 2016 7:52 pm

I absolutely love reading journals about how other people are going and I'm starting today as the 1st November marks the first day of extreme November as I've pitched it to my DH. Comments, encouragement and thoughtful critics are warmly welcomed.

Briefly about me:
Family of 4.
Living in Sydney, Australia.
Currently I don't think there has been a month that we have saved more than we earned! Hence our dire need to reign our spending in.

Aim:
I want to be financially independent from a job within 7 years. So my the end of the year I would like to have a clearly documented plan of how we are going to achieve this and what it means for us. Does anyone have a format that has been particularly useful for them or suggestions on what is really important to include??

Computer died taking my budget with it. However I have an old backup I need to reload the data into, which I will do this week.

We have developed a list of ways to save that we will be actioning this month as a way to get started.

- Energy audit. We used an energy meter on our mains power at already have identified that the outside AC unit (which I can justify later :) ) Uses approx. $150 of power per year by being "ready" so I've turned off that switch. $150 / yr saving banked. Then we identified the standby power on our microwave uses a similar amount, so DH has bought a switch so we can independently switch this off when not using. Identified saving of $150 / yr
- Switch energy suppliers? My Dad seems to be getting a better deal on his power then us through a new supplier. To investigate
- Growing veges on the balcony. Planted some bean and tomato seeds last week, beans are going well. Yesterday planted a tomato plant, cucumbers and tomato seeds. Saving plastic bottles to repurpose as planters following something cool I saw on another ERE thread. Great activity to do with my daughter as well.
- Going to check out bulk rate on toilet paper and tissues.
- Investigate DIY for dishwasher tablets, dishwashing powder, handwash and body wash. My husband buys these at a great price so it will depend on the numbers.
- Close my personal mobile and get a work phone. Potential saving of $360/yr .
- Sell stuff we don't use or need anymore. Cash injection that can go against the mortgage.
- Reduce out eating out budget to $50 per week. This is a saving of around $5,200 / yr. I appreciate I might be inviting some friendly critics here. Make lunches and snacks the night before, have drinks to take out for our daughters, make sure we use leftovers etc.
- Cheaper internets and home phone deal possible?
- Ride to work. Not really a massive saving but good from a fitness perspective.
- Transfer $9 credit from old credit card to our bank account.
- Making baby food. This is a huge saving we already bank.
- Access financial planning money through work. Need to consider the value add here.
- Make homemade jam, some saving and also skill development, potential to make gifts or sell in the future??
- Go to the wholesale fruit and veg market.

What else can I do?? What % savings rate should I be aiming to achieve??

George the original one
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Location: Wettest corner of Orygun

Re: Jumping into ERE

Post by George the original one » Mon Oct 31, 2016 8:05 pm

Find savings for housing, insurance, transportation, food, utilities, tax efficiency. Hmm, I don't see any mention of insurance or tax efficiency? What about batch cooking?

AussieGirl
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Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Mon Oct 31, 2016 8:10 pm

Hi George,
Sure I agree those are big areas. At the moment I don't see too many savings options for housing and insurance as these are pretty low. I have been discussing the idea of going car free with my husband although we use it a lot for our camping holidays and it is LPG which is very cheap relatively to operate. What are you thinking of with tax efficiency?? Batch cooking is already done we do multiple meals in one go (say ten batches) and put in a freezer we bought second hand. Thanks for your thoughts!!

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singvestor
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Joined: Tue Jul 21, 2015 12:48 am

Re: Jumping into ERE

Post by singvestor » Mon Oct 31, 2016 10:30 pm

Interesting journal! Seven years is an ambitious goal. If you start from zero then it would require a savings rate of about 75%.
Small improvements definitely add up and you already have some great ideas. Do you own or rent your house? As Sydney's housing market seems to be in somewhat of a bubble this is an interesting dimension.

AussieGirl
Posts: 22
Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Mon Oct 31, 2016 10:56 pm

Hi Singvestor,

We own a modest 2 bed apartment in Sydney. Mortgage is about $250K on a property value I would estimate at the moment in the high $600K's. I was told when the property price was $400k that I should sell out as the bubble would crash soon. I just don't see it happening anytime soon but interested in your thoughts on this.

Thanks.

Did
Posts: 562
Joined: Mon Apr 01, 2013 7:50 am

Re: Jumping into ERE

Post by Did » Tue Nov 01, 2016 12:40 am

So you've got 400k really but it's all in the unit? Could you relocate somewhere cheaper than Sydney?

AussieGirl
Posts: 22
Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Tue Nov 01, 2016 1:06 am

Hi Did,
Its a good option and one that is on the potential list for in 7 years when we don't need to work. The style of work I do is easy to get in cities but harder in more regional areas. Also we have a great supportive network of friends and family nearby, which is really helpful with our children being so young. I think though I will factor in this as an option (that is potentially selling in 7 years to buy elsewhere). The other option is to finish paying off the mortgage. The rent return on say $650,000 will be at $450 per week around 3.6% return on our money, plus the option of further capital growth, which isn't bad is it???

Did
Posts: 562
Joined: Mon Apr 01, 2013 7:50 am

Re: Jumping into ERE

Post by Did » Mon Nov 07, 2016 4:54 am

If the Sydney market keeps growing you'll be laughing. I have a house in Oz which I rent for 550 a week (paid off). We traded modest equity in my wife's home for a whole Irish cottage, for which we paid 61K EURO. We now live there, using the rent as a base income, but topping things up if need be with remote internet work. I haven't been in an office for over 3 years. I'm 41. DW is a few years my junior.

But yes we moved to Ireland. We could have moved anywhere though, including a van by the beach someone in Oz. Sydney is the least ERE friendly city around, but it's great for wealth accumulation if you are in the right job or have an investment like you do. Trick is to not get pissed every weekend and blow everything.

Asia is another option.

Good luck!

steveo73
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Joined: Sat Jul 06, 2013 6:52 pm

Re: Jumping into ERE

Post by steveo73 » Tue Nov 08, 2016 2:24 am

Hi AussieGirl,

I'm also from Sydney. I think you need to focus on getting your spending down. I'm not sure how much you are spending though. We spend about $40k per year for a family of 5 not including the mortgage. If you are at the level that we are at I personally think you are fine.

We have our spending at that level by having one car, shopping at Aldi and not really spending much money outside on extra stuff. So we don't buy coffee or eat lunches out etc.

If you get that right I suggest paying off the mortgage and then investing into index funds outside of super. I would also check your Super expenses. Just check that you have a good deal there.

Did's advice on moving elsewhere is really the fast track to FI. We live in a $1.5 million house. I say we sell and relocate and we are FI. We've paid off the mortgage. My wife wants to stay where we are now and truthfully it's a nice area. For the non-Australians reading this $1.5 million for a 4 bedroom house is honestly nothing special. We live in a nice eco friendly area in a 4 bedroom house but compared to American houses it's tiny although it's definitely not a tiny house.

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Forskaren
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Re: Jumping into ERE

Post by Forskaren » Tue Nov 08, 2016 3:36 pm

I found that keeping track of expenses helped me a lot. If you at the end of the month can account for every single dollar, then you can sit down and think about every purchase. Was that good value for the money? Why did I do that purchase?

It can be a pain to keep track of months with many purchases, but that also motivates me to avoid making that many purchases in the first place.

AussieGirl
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Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Wed Nov 09, 2016 5:56 am

Okay.

So I have a bit to say in this update! But first some responses to the kind comments and questions.

@ Did. Completely agree with the idea of relocating. I think for us it will be Australia but somewhere outside of Sydney! For now its great because we are close to family and able to access well paid work.

@steveo73. Great to get your perspective. I jumped over a read some of your journal (completely agree about the internal reporting in big companies sometimes!), $40k is great for expenses is Sydney I think. I couldn't see a breakdown of your expenses though. Is this something that you have available or could share with me?? I think ex Mortgage our expenses would be up around $60k. We do only have one car and my husband is a great shopper in terms of getting things at a good price. In terms of investing I think we will be pursuing an investment property and probably also index share as you suggest. With the Super expenses what would you classify as a "good deal"? Keep positive thanks and look forward to more input from you.

@Forskaren. Completely agree I was getting really regular and on top of this and the computer died. Couldn't believe it. That is a task for this week to fix. I need to work out a solution that work for my and my DH as he does a lot of our buying.

Okay so my update.

I couldn't sleep a few nights ago. not because I had something on my mind or my daughter was keeping me awake but because I had an excruciating pain in my chest. It was really up there in the discomfort stakes (and I've had two natural births relatively recently). I did everything to calm it down, Panadol, warm bath, icing it etc. Just to clarify I knew it wasn't to do with my heart because I've had this pain in the past, spend a bunch of time and money tracking down the root cause which is that my pelvis shifts in two axis, putting pressure down my left side (apparently this is common about 1 in 3 women experience this). The next morning I woke up and though - that's it. I've been given exercises to help fix the problem that helped a lot in the past and since that evening I've done them everyday. So I thought rather than just having money goals on here I wanted to bulk out my aims to be a bit more holistic. I also want to update my actions but in a way that isn't insanely long for people reading. I might put a table somewhere else or something and just add commentary to this thread - Has anyone done something like this and has any suggestions?

Update on previous actions:

Completed Actions
- Transfer $9 credit from old credit card to our bank account.
- Making baby food. This is a huge saving we already bank.
- Energy audit. We used an energy meter on our mains power at already have identified that the outside AC unit (which I can justify later :) ) Uses approx. $150 of power per year by being "ready" so I've turned off that switch. $150 / yr saving banked.

In Progress
- Energy. We identified the standby power on our microwave uses a similar amount, so DH has bought a switch so we can independently switch this off when not using. Identified saving of $150 / yr
- Growing veges on the balcony.
- Investigate DIY for dishwasher tablets, dishwashing powder, handwash and body wash. My husband buys these at a great price so it will depend on the numbers. (Got some soap in water to try a first pass at making handwash as I type)
- Close my personal mobile and get a work phone. Potential saving of $360/yr .(Picking up the new phone soon)
- Sell stuff we don't use or need anymore. Cash injection that can go against the mortgage. (Got some pictures taken need to post items)
- Reduce out eating out budget to $50 per week. This is a saving of around $5,200 / yr. I appreciate I might be inviting some friendly critics here. Make lunches and snacks the night before, have drinks to take out for our daughters, make sure we use leftovers etc.

To be done
- Switch energy suppliers? My Dad seems to be getting a better deal on his power then us through a new supplier. To investigate
- Going to check out bulk rate on toilet paper and tissues.
- Cheaper internets and home phone deal possible?
- Ride to work. Not really a massive saving but good from a fitness perspective.
- Access financial planning money through work. Need to consider the value add here.
- Make homemade jam, some saving and also skill development, potential to make gifts or sell in the future??
- Go to the wholesale fruit and veg market.

New Ideas
- thinking about making a lounge for our home. It would be a big project, but I'd love something newer and was thinking making it would be awesome - just need to find the time...
- Property investing. Might be some action in this space shortly!
- Share Trading - I've done a bunch of research about this area. I just need to pull the trigger and start practicing and finalising my sell triggers.
- Find out what I can do in the tax efficiency space.
- Focus on supporting my husband to find a job that he enjoys. He is re-entering the workforce after taking a bit of a break to look after our young children, and I need to be 100% supportive.
- Check super expenses, need to consider what I'm looking for here.
- Set up trust funds for our children. Got a great book "How to Give your kids $1 Million Each! and it won't cost you a cent... Ashley Ormond
- Resurrect budget and track expenses at a detailed for one month.

For my more holistic goals. I've borrowed from Chapter 4 of the ERE book to start getting some ideas in order.

Physiological.
- Do daily stretching and exercising to keep my known alignment issues in check.
- Do another triathlon by March 2017, with my husband this time.
- Exercise once a week with my husband.

Intellectual
- Do a minimum of one hour of study each week towards the Diploma I am currently doing.
- Do some more research on models and organisational learning and how people learn, which will also help my work.

Economic
- These are mostly covered in previous ideas and actions.

Emotional
- Work on my people skills and developing more in all my professional and personal roles.
- Focus on supporting key people in my life
- Form and build new friendships
- Be a stronger supporter of my husband as his aspirations. Also stop hassling him about drinking coffee.

Social
- With limited time I am going to link this to Emotional goals above for the time being

Technical
- Honestly no ideas on this one at the moment.

Ecological
- Keep growing our balcony garden. Its looking great and its something really fun to do with my daughter.

Note on a renaissance education - I'm seriously considering the merits of home schooling my children - Recently read "Dumbing Us Down - The Hidden Curriculum of Compulsory Schooling" John Taylor Gatto. Very interesting and engaging book.

Sorry for the insane length of this post I felt like I had a lot to say... If you've read this far thank you.

steveo73
Posts: 1125
Joined: Sat Jul 06, 2013 6:52 pm

Re: Jumping into ERE

Post by steveo73 » Wed Nov 09, 2016 4:39 pm

AussieGirl wrote:@steveo73. Great to get your perspective. I jumped over a read some of your journal (completely agree about the internal reporting in big companies sometimes!), $40k is great for expenses is Sydney I think. I couldn't see a breakdown of your expenses though. Is this something that you have available or could share with me?? I think ex Mortgage our expenses would be up around $60k. We do only have one car and my husband is a great shopper in terms of getting things at a good price. In terms of investing I think we will be pursuing an investment property and probably also index share as you suggest. With the Super expenses what would you classify as a "good deal"? Keep positive thanks and look forward to more input from you.
I don't break down our spending. I just do income - savings = expenses. We live cheaply though - no cable, movies, books etc costs, no coffee outside, no lunches, no dinners etc. We still buy stuff that is needed and probably above that as well. My take is just determine what is important to you and spend on that. I don't see huge differences in our lifestyles compared to our middle class neighbours. They go on overseas holidays and send their kids to private schools and have morning coffees whereas we don't. I think you could lower your spending if you just were a little more conscious of where you were spending money rather than for instance growing your own food. I think growing your own food is great but I don't see that as a big step towards lowering your expenses

I wouldn't touch an investment property if I was you. The yield is terrible and it's a massive amount of money to throw into one investment especially if you already own your own house/unit.

I don't know what my Super expenses are off the top of my head but most Industry super funds just follow a low cost indexing approach. You often though pay for life and disability insurance as well. We were paying for that up until recently as well but we just stopped that.

AussieGirl
Posts: 22
Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Fri Dec 02, 2016 5:03 am

This is a quick update to keep myself accountable for doing this journal and staying on the path to FI.

I've been reading Your Money or Your Life, which is widely recommended on this forum. I can see why. I am really enjoying it.

I've been working on some pretty graphs to show people my projected path to FI. I think 7 years is definitely possible. I also really want to enjoy my job as much as possible, which I generally do but I've decided I really need to focus on the positives. I also want to potentially build up a side business that I can do completely remotely.

I've applied for a paper run to do with my daughter. You don't get paid much - I estimate it will work out to about $2.5 per hour, but I've decided I'm going to do it with my daughter (under 5) and put 75% in a trust fund for her and give her the remaining 25% to spend (sound familiar??). Then over time I'll be able to show her how using her brain, with investing, compares to using brawn, like doing a paper run. In the meantime it will be an "obligation" to get me out of the house with her and getting moving.

I'm also thinking going to put how long until my current FI date. http://www.howlongagogo.com/date/2023/december/31 Or at the moment 2585 days. Seems closer just by typing that.

Key items for next month today is to track dollars in detail and support my husband more!!

AussieGirl
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Joined: Thu Oct 20, 2016 7:32 pm

New Year Update

Post by AussieGirl » Mon Jan 09, 2017 6:39 am

I've finally crunched some detailed budget numbers for the last 12 months. Phew very revealing. I'm not going to go in to detail here. More to say that I've broken everything down into appropriate categories for our spending and my feel that we were spending everything we were earning was right. Also there was a lot of unknown spending in the budget. I've put all the data in a table with action items against each category and notes where I know areas will go up (such as known utility bill increases) and potentially down where we have started to negotiate better deals in some categories.

I've also started to forecast forward 7 years of income, expenses, savings etc. The numbers are not yet enough to get to FI in 7 years so need some more thinking in this area.

So some key activities going forward:

1. Continue with investing plans. Forecast for Property investment coming on-line in 2017.
2. Increase earning through jobs.
3. Trim up the budget and also capture where cash spending is going, this took up a big portion of the budget.
4. Maybe create a side business?? Thoughts on this?? Is this more trouble than it is worth?? Love to here from anyone who has done this successfully.

Only 2547 days until my proposed FI date. :)

Felipe
Posts: 143
Joined: Sun Jan 11, 2015 10:06 pm

Re: Jumping into ERE

Post by Felipe » Tue Jan 10, 2017 4:58 pm

Congrats on the decision AussieGirl.

What worked well for me want using mint to track every single dollar that left my pocket. The first year I did this I spent over $3000 on eating out/groceries, around $482 the next year, and this last year I spent around $360. I had a similar situation with gas and sold a car I had to buy one of the same value with much better mpg. I've found that in most people's lives, there are some spots for big leverage. If you can track every dollar spent, it'll be more obvious what takes more money than expected. Plus, you'll make hitting your 75% savings requirement easier.

Have you created a narrative to get your whole family onboard and brainstorming ways to build your freedom together?

Good luck!

AussieGirl
Posts: 22
Joined: Thu Oct 20, 2016 7:32 pm

Re: Jumping into ERE

Post by AussieGirl » Thu Apr 20, 2017 9:09 pm

Its been a while since I last updated. But that's okay. I've been up and down with what I want to do. But I'm still keen for FI as an option.

So an update on what I last stated were my key activities going forward:

1. Continue with investing plans. Forecast for Property investment coming on-line in 2017. - Happening very exciting, at the very least this will result in enforced decrease in spending.
2. Increase earning through jobs. - In progress
3. Trim up the budget and also capture where cash spending is going, this took up a big portion of the budget. - Need to revisit!! I've definitely let this slide.
4. Maybe create a side business?? Thoughts on this?? Is this more trouble than it is worth?? Love to here from anyone who has done this successfully. - I'm not sure that this is worth it give the other time demands I have on at the moment.

Now only 2445 days until my proposed FI date.

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