ChickenCoop's Scraps

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ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

ChickenCoop's Scraps

Post by ChickenCoop » Mon Nov 26, 2018 4:28 am

I've been on this ride for about two years after coming to it later in life. At 46 years old, i'm not so much going for ER but motivated to get off the wheel and be a master of my own destiny.

I have spent the last 12 months finding ways to cut back on outgoings to boost my savings rate. Mostly the usual things like shopping around for better deals on utilities, phone plans, insurances etc.

My favorite thing has been to plan for future cost cutting and sustainability endeavours.
I've been building a thermal store and making flat panel solar collectors to put on the roof of our very basic house(that needs a lot of work). I've also been drawing up some plans to make a wood gasification boiler.

As of last week I have also found a good firewood supply from a local Arborist. He has been tipping off 3mts3 of hard wood every second day for two weeks, and has said there is heaps more. All free of charge so I hope this continues for some time!

Ive set my FI date for December 2026. Im worried about staying the course, as I tend to give 110% in effort but only usually for 6 months at a time. I'm hoping making a journal in this forum will help me stay on track. So feel free to get out the stick if you think i'm going off track!

My financial position is probably fairly healthy but want to have 2 Mil in assets outside the home before Calling myself FI. I understand this sounds like a big number, but have a family and are concerned about the world economy being very weak in the future, and want my boys to be sheltered as well.

My current financial position is:

NOV 2018

Cash-$44k
Super-$360k(invested in cash)
Shares-$78k
Property-$360k
Total-$842k

I'm saving $2400/Fn and puting it into cash and $400/Fn into Super + employers contribution of $400/Fn
Totals savings is $3200/Fn
I hope this is sustainable for the next 9 years!
Last edited by ChickenCoop on Sat Dec 29, 2018 8:08 am, edited 1 time in total.

Gilberto de Piento
Posts: 1313
Joined: Tue Nov 12, 2013 10:23 pm

Re: ChickenCoop's Scraps

Post by Gilberto de Piento » Mon Nov 26, 2018 9:34 am

As of last week I have also found a good firewood supply from a local Arborist. He has been tipping off 3mts3 of hard wood every second day for two weeks, and has said there is heaps more. All free of charge so I hope this continues for some time!
Wow, good deal!
Im worried about staying the course, as I tend to give 110% in effort but only usually for 6 months at a time.
I have a similar problem. It is not uncommon around here. I don't have any advice though.

fell-like-rain
Posts: 54
Joined: Fri Jun 15, 2018 12:19 pm

Re: ChickenCoop's Scraps

Post by fell-like-rain » Tue Nov 27, 2018 3:13 pm

Hello, and welcome! Do you have any information about your spending? It might be helpful to have a second (3rd,4th...nth) set of eyes to spot areas for savings.

Also, have you considered investing any of your super money? Even putting it into government bonds or something would at least protect you from inflation.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Tue Nov 27, 2018 4:41 pm

@Gilberto, yeah, I’m very lucky regarding the free wood! The best thing about a wood fire is the wood warms you up 3 times. Once when you cut it, again when you stack it and at last when you burn it!

Here’s a question regarding wood. Does wood lose some of its heating quality if it’s stored for too long? I may not be getting to the bottom of this pile for years!

@Fell like Rain, thanks for the questions. They make me stop and think.
Re Super, I have had it all invested in Stocks and bonds until about 6 months ago. I’ve had some advice from a young retired friend that warned me about the global leveraging that has been prolific over the last decade or more and talks about the enevitable de leveragin over the next few years. I understand I’m basing my decision on one opinion, but I don’t know anyone with more experience that’s independent.

I do like the idea of just bonds though. I’ll look into the possibility.

Regarding spending, I’m not too bad, but very open to suggestions!

We own our run down house outright, but the holding costs are still significant. $2200 water rates,$2000 council rates, $700. Insurances(just renegotiated),$1500 yearly gas,$1500 yearly elec. I’m wanting to disconnect the gas and go to solar/wood heating and DHW. I’ve done the math on solar for elec and found it’s better to invest the cost of panels and use the returns to offset the bills(no deprecating asset either). We cook basic meals at home and rarely eat out as a family, but I do buy lunches and dinner at work a bit! I’ve neen riding my old bike to work since I started this two years ago and don’t drive the second car as much now. I spend very little on clothes and have cut my own hair for years.<br
Last year we kept a tally on every cent we spent as a family, the annual food bill was the stand out at $16500!! That includes take away dinner every Sunday, meals at work and alcohol. We currently have three cars, the third being a 4x4 that we bought about 5 months ago for a family trip around the country. We are back now and are in the process of selling it. Bother the other cars are older and can’t do much more depreciating. I have renegotiated the insurances in both of these. The food one is a place where I can do better but open to suggestions on anything and everything!
Last edited by ChickenCoop on Sat Dec 29, 2018 8:38 pm, edited 1 time in total.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Sat Dec 29, 2018 8:06 am

Spending money to save money is often a futile endeavor. After mentioning in my first entry that buying solar panels doesn't stack up, It works out that it should(if I get a big enough system). My current annual elec costs are $1500 and with the solar I should be getting an annual credit of $500-$1000. It's an initial outlay of $19,500, so the payback will be between 8-10 years. its a 13 KW system that will generate 4+ times more than we use. I'm using the proceeds of the sale of our third car(if it sells in time) and some banked overtime to pay for this, so it shouldn't effect my savings balance.

I've also been working on building the six flat panel solar hot water collectors for the DIY hot water project 3 done, 3 more to finish.

Hopefully by the end of 2019, I can have the town gas disconnected and no electricity costs going forward. That's two more bills I wont have to find money for.

I'm still eating too many bought meals at work!

After speaking to my financial counsellor, he even has me fearful of Bonds in the short term! So most of my savings will stay in cash for now. Shares are down a touch again, but savings has grown the expected amount for the month. I've rolled my super over to a lower cost fund that will save me about $500 per year in fees. I might do an itemized money outgoing list incase someone can see some other cost savings.

December 2018
(edit)
Expenses:
Housing-$377.33(water rates)
Internet-$60
Phones x2-$92
Electricity-$186.67 (2 months)
Gas-$154.74(2 months)
Food/personal care-$983.19
Transport:
Fuel-$193.27
Insurance-$101(average)
Rego's-$170(average)
Total:$2318.20


Assets:
Cash-$48k
Super-$363k(invested in cash)
Shares-$77k
Property equity-$360k, $198k still owing
Total-$848k

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Sat Feb 02, 2019 6:57 am

January 2019

Income:

Job-$7,200
Side hustle-$350
Selling Stuff-$730 (stuff from shed)
Sale of 3rd car-$14,000
Interest -$165

Total-$22,445


Expenses:

Housing-$115 (a maintenance cost)
Internet-$67
Phones x2-$82
Electricity-$84.77
Gas-$30.12
Food/personal care-$987.45
Health-$25
Transport:
Fuel-$311
Insurance-$32(average)
Rego's-$108(average)
Maintenance-$330

Entertainment-$401
Alcohol-$251
Job Costs-$105
Chook Food-$22
Presents-$155
Kids Costs-$523

Total:$3628


Assets:

Cash-Emerg Fund -$7,264.
Cash-Kids Future fund -$14,717
Cash-Investing -$77,089
Super-$367,460(invested in cash)
Shares-$80,955
Inv Property equity-$360k, $197,926 still owing
Home-$0 (as far as FI assets are concerned)

Total-$907,485

This month I've been more detailed, showing Income as well as a more detailed and complete expenses column. I also had forgotten to include the emergency fund and the Kids future fund.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Sun Feb 03, 2019 7:54 pm

Hi all, I just want to take this opportunity to thank every one for their journals. I left school fairly young to start a trade and could never articulate my thoughts and process things like most of you seem to be able to do. I read the Journals every day and often read some to my wife while in bed and we both get a lot of inspiration and laughs from them!

I'm probably more of a dot point kind of guy that focuses on numbers and technical stuff in my journal. There is more going on in my life and head than what I've posted, but putting it here and making it sound interesting would be hard work for me. I'm definitely not an INTJ.

Thanks again

2Birds1Stone
Posts: 765
Joined: Thu Nov 19, 2015 11:20 am

Re: ChickenCoop's Scraps

Post by 2Birds1Stone » Sun Feb 03, 2019 11:41 pm

These journals are the best part of this community. I've been enjoying following yours so far.

_bb_
Posts: 15
Joined: Thu Nov 22, 2018 7:58 pm

Re: ChickenCoop's Scraps

Post by _bb_ » Sun Feb 17, 2019 12:45 pm

Awesome start to your Journal!

What kind of Investment property do you own - commercial or residential? Does it generate cash flow you can count in your Income statement?

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Wed Feb 20, 2019 4:45 am

Thanks 2B1S!

@bb, Its a residential investment property. I bought it when I was 25 in 1997 for my home, and lived there for 13 years. I just kept it when I moved towns just incase I wanted to move back later. It has been a rental since 2010.

I did have a commercial place in the same town, but sold it to contribute to paying out the mortgage of our family home.

I didn't include the rent in my income as the property is about cost neutral and left it off for simplicity. Maybe I should include it for completeness.

This is the math on the rental:

$740/Fn rent.
Less-
$60/Fn management fee
$570/Fn loan payment
$84/Fn council rates(averaged out)
$35/Fn Water Rates(averaged out)
$25/Fn Insurance(averaged out)

$774 total costs

So we are going backwards about $30 per fortnight currently.

This is my constant dilemma! Do I sell the place, pay capital gains tax and invest the $360K (after paying out loan) into shares. Or keep it for some diversification, knowing that rents keep up with inflation and if I have to sell it after I retire, the gains tax will be less.

I wouldn't want to still be paying a mortgage after I retire, so would have to increase my repayments now or sell some other investments on retirement to pay out the loan.

Edit, There are tax advantages of not paying extra payments before retirement but to invest the extra payments into Australian shares or superannuation.

ItsALongStory
Posts: 27
Joined: Sun Jan 13, 2019 9:50 am

Re: ChickenCoop's Scraps

Post by ItsALongStory » Fri Feb 22, 2019 12:07 am

Not sure how things work there but could you move back in for 2 years and offload the property without owing cap gains tax? That is how it would work here in the US.

George the original one
Posts: 4778
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: ChickenCoop's Scraps

Post by George the original one » Fri Feb 22, 2019 1:58 pm

Flashback to an older posted question!
ChickenCoop wrote:
Tue Nov 27, 2018 4:41 pm
Here’s a question regarding wood. Does wood lose some of its heating quality if it’s stored for too long?
Generally speaking, no. If the condition of the wood was poor to begin with or fungus has taken root, then it will slowly decay even if kept dry. Let the firewood get wet before/after storage or the insects get to it and then all bets are off.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Mon Mar 11, 2019 6:16 am

@George, Thanks, That all makes sense.

@ItsALongStory, That's a great suggestion, I think the rules could be somewhat similar here as well. Maybe a question for my accountant.



Feb 2019

Income:

Job-$7,200
Side hustle-$650
Selling Stuff-$905 (stuff from shed)
Interest -$198

Total-$8,953.

Expenses:

Housing-$512.90 (Council rates)
Internet-$0
Phones x2-$92.20
Electricity-$0
Gas-$0
Food/personal care-$926.67
Health-$17
Transport:
Fuel-$162.49
Insurance-$32(average)
Rego's-$108(average)
Maintenance-$0

Entertainment-$215
Alcohol-$404.50(lots of bars and clubs while on holiday!!)

Clothes-$89.95
Travel- $514.95 (Flights and accom)
Job Costs-$117
Chook Food-$0
Presents-$289
Kids Costs-$200

Total:$3175.81


Assets:

Cash-Emerg Fund -$8079.73.
Cash-Kids Future fund -$15,148.03
Cash-Investing -$82,464
Super-$368,786(invested in cash)
Shares-$82,103
Inv Property equity-$361k, $196,855 still owing
Home-$0 (as far as FI assets are concerned)

Total-$917,580.76

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Fri Jul 12, 2019 12:11 am

It's been a couple of months between entries.

I've made a few changes in the way I do things regarding this journey.
One is that I no longer record every dollar that I spend. I was finding that it was getting me down, justifying every dollar I spent to myself. One of the biggest satisfactions I used to get before recording everything was building projects to cut expenses going forward(like the solar hot water collectors). but once I started recording every dollar going out, I felt torn between the short term gain of seeing my savings build faster, and building projects that give me the satisfaction of DIY but know the cost savings from such projects would take time to show up on the balance sheets.
So instead, ive slightly increased my savings from my wages, but use the money from my side hustle for my DIY projects.

No more electricity accounts.
The Solar PV is up and running now. I got my first Electricity account in the mail this week showing a $836 Credit! Much better than the $200 bill I used to get. I just hope the system lasts a long time as it is not something I can repair.

No more Heating bills soon.(town natural gas to be disconnected)
I've picked up a second hand wood burning heater, fixed it up and installed it in the house last week. I thought I may as well start burning some of this free wood that has been getting delivered. Its winter here and the house has never been so warm. DW is very happy too. I'm building an 18 Tube heat exchanger to fit to the back of the heater that the flue gasses will pass through to heat water for showers etc when the solar PV and Solar thermal collectors are struggling in the middle of winter.

Still riding the bike to work and walking every day. Buying a lot less meals at work now as well.


I've missed a couple of months but here is where I'm at re FI. The solar cost was $25,000 and this came out of the Cash-Investing acc.

June 2019
Assets:

Cash-Emerg Fund -$11,279.
Cash-Kids Future fund -$16,800.
Cash-Investing -$78,530.(reduction due to $25K solar purchase)
Super-$379,984(invested in cash)
Shares-$93,207
Inv Property equity-$363k, $194,900 still owing
Home-$0 (as far as FI assets are concerned)

Total-$942,800.
$6305 average increase each month since the end of Feb.
Last edited by ChickenCoop on Fri Jul 12, 2019 12:40 am, edited 1 time in total.

steveo73
Posts: 1191
Joined: Sat Jul 06, 2013 6:52 pm

Re: ChickenCoop's Scraps

Post by steveo73 » Fri Jul 12, 2019 12:27 am

Mate - have you really thought this one through Super-$379,984(invested in cash).

That money has an expected return of probably less than inflation. I have my Super 100% in shares. I have the majority in International shares and some in Aussie shares. I am about your age and I think you are taking on a massive risk here. No one can predict the market. Sure it will crash in the future but it might go up for the next 10 years. Last year the market returned 10%+. That is $30k minimum extra in your account. If it drops you are still just buying into it bit by bit when it is lower and you won't touch in at best until you are 60.

I have yet to see anyone come up with a better portfolio than something that is at least 50% stocks and invested into low cost diversified index funds.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Fri Jul 12, 2019 1:02 am

@Steveo73, I totally understand where you are coming from re keeping up with inflation. I don't think that really comes into the equation until after I stop working. While i'm working my wages are rising with inflation and too my savings. As well as taking into consideration my deflating costs of living(reducing costs). I think I don't need to take risks at this point of time to achieve my target number by my target date. Because I don't need to take risks to achieve this, I should be I a good position to take advantage of any corrections that may happen.

That's my strategy

bigato
Posts: 2126
Joined: Sat Mar 05, 2011 12:43 pm

Re: ChickenCoop's Scraps

Post by bigato » Fri Jul 12, 2019 3:34 pm

actually putting such a big percentage in a single asset class is one of the most risky strategies that you can choose

steveo73
Posts: 1191
Joined: Sat Jul 06, 2013 6:52 pm

Re: ChickenCoop's Scraps

Post by steveo73 » Fri Jul 12, 2019 7:48 pm

ChickenCoop wrote:
Fri Jul 12, 2019 1:02 am
@Steveo73, I totally understand where you are coming from re keeping up with inflation. I don't think that really comes into the equation until after I stop working. While i'm working my wages are rising with inflation and too my savings. As well as taking into consideration my deflating costs of living(reducing costs). I think I don't need to take risks at this point of time to achieve my target number by my target date. Because I don't need to take risks to achieve this, I should be I a good position to take advantage of any corrections that may happen.

That's my strategy
You can't touch super for a number of years. So the expected value of your portfolio can be tested.

Just state that you get a 1% real return which probably is way too high on the upside for your expected return in cash. After 12 years you will end up with 428,194.
http://networthify.com/calculator/early ... awalRate=7

Just state that you get a 5% real return which is a conservative estimate on a 100% stock portfolio. After 12 years you will end up with 682,427.
http://networthify.com/calculator/early ... awalRate=7

So basically your portfolio option should be viewed as having a fairly reasonable expectation of leaving you with 260k less in your hand come the time you can access it.

Honestly I think you are being risk-averse in the short term and all that will do is expose you to negative returns over the longer term.

I would do some reading on investing. William Bernstein has written some really good books.

This is just a blog site but it's really good:- https://jlcollinsnh.com/stock-series/.

Putting your money into cash in my opinion is the riskiest possible long term strategy.

ChickenCoop
Posts: 25
Joined: Thu Jun 21, 2018 3:45 pm
Location: Australia

Re: ChickenCoop's Scraps

Post by ChickenCoop » Fri Jul 12, 2019 8:19 pm

@bigato and @steveo , thanks for the links and your thoughts. I am fairly new to investing and stillhave a lot to learn.
As above I am currently:
51% Cash
38% Property
10% Shares

My thinking is that currently asset prices are high and people/businesses/governments are highly leveraged. I am prepared to miss out on short term (2-5 years) upside possibilities. This leaves me in a position to take advantage of a correction to the downside should it occur, ie, I do intend to get a much higher percentage into Shares(LIC’s and index funds) over the next 8 years. With such a large sum in cash(for me), I’d feel more comfortable doing it a bit at a time and with some method to the process.

I only have 8 years till my FI date I want to minimise the risks of not meeting my FI target.

Thanks again for the links, I’ll check them out.

bigato
Posts: 2126
Joined: Sat Mar 05, 2011 12:43 pm

Re: ChickenCoop's Scraps

Post by bigato » Fri Jul 12, 2019 9:50 pm

Yours is a common view for those starting to learn about investing. Just make sure you read a lot about it because knowledge about how the economy works is the most valuable investment you can do at this point, and the sooner you acquire it, the biggest the dividends will be over time.

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