benecia's journal

Where are you and where are you going?
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benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

benecia's journal

Post by benecia » Sun Aug 06, 2017 1:01 am

I love the byline on the journal section in the board index, “Where are you and where are you going?”

So ... where am I? I mostly enjoy my job, it’s challenging and the people I work with combined with the problems I get to solve and think about all make for an environment I enjoy. So why the FI focus now? Simple … I recently got every single payment summary and added up everything I’ve earned since I started working and compared it to my net worth and it was depressing.

The purpose of this journal isn’t to drive me towards an ERE, it's too late for that anyway, the main aim is so that I am able to track my progress towards FI in a way where I can’t just sweep any slips in fiscal restraint under the carpet. I'm Australian so apologies for any terms or acronyms specific to Australia.

I have spent 127.67% of my after tax income so far this year. 44.89% of that extravagance has been on getting my house ready to sell.
Everything else staying the same, if I hadn’t started the renovation then savings this year would have been 33.19% of my net income so far, not very good at all. The breakdown is as follows:

Food 2.49%
Bills 25.71%
Dog 1.29%
Debt Reduction 35.98%
(inc. Student loan and Mortgage)
Renovation/Maintenance 44.89%
Books, Social inc. Presents 1.34%
Savings 15.97%

My current ratio is 1.76, which is ordinary to say the least.

Ignoring my superannuation and assuming I was living in a property I owned, ignoring investment income or growth, at my current savings rate it would take me 35 years to save up enough money to cover the basics with some buffer. A very sobering thought which is why things have to change.

Zanka
Posts: 20
Joined: Tue Aug 01, 2017 2:33 am

Re: benecia's journal

Post by Zanka » Sun Aug 06, 2017 1:49 am

Good luck!

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Eureka
Posts: 276
Joined: Fri Jun 10, 2016 11:03 am
Location: Copenhagen, Denmark

Re: benecia's journal

Post by Eureka » Sun Aug 06, 2017 3:08 am

Welcome to!
I think it looks pretty well once the house is sold and the loans are paid off. How would that budget look?

MDFIRE2024
Posts: 278
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: benecia's journal

Post by MDFIRE2024 » Sun Aug 06, 2017 3:17 am

benecia wrote:
Sun Aug 06, 2017 1:01 am
My current ratio is 1.76, which is ordinary to say the least.

Ignoring my superannuation and assuming I was living in a property I owned, ignoring investment income or growth, at my current savings rate it would take me 35 years to save up enough money to cover the basics with some buffer. A very sobering thought which is why things have to change.
Hi Benecia, welcome!

Don't be depressed by "35 years to save up enough...". If you learn and implement ERE-principles, it could go faster maybe. There may be "small miracles" along the journey as well. First step, as you mentioned, is your intention to change things. That's energizing and motivating!

One question: What do you mean by "current ratio"? Is that Income vs. Expenses or Networth vs. Expenses?

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Sun Aug 06, 2017 6:05 am

Hi, Thank you Zanka.

Hi, Eureka, once the house is sold I'll pay off the student loans and mortgage, but will borrow again to buy a property that will cost 10 - 16% of my after tax income.

Hi MDFIRE2024, my current ratio calculation is pretty crude, I use total assets/total liabilities. So I am almost at the point where my assets are double my liabilities, this will probably go backwards with the next purchase but my current plan is to buy a place to live in as well as rent out so should accelerate the debt repayment. Not that impressive, there are people on this forum with a current ratio greater then 25.

Noedig
Posts: 169
Joined: Tue Aug 26, 2014 10:15 pm

Re: benecia's journal

Post by Noedig » Sun Aug 06, 2017 9:40 am

Hey Benecia - Plenty of us here in our fifties so you are likely early to the party, not late.

At a savings rate of " 33.19%" - almost exactly 1/3, you'd be retired in 25 years https://networthify.com/calculator/earl ... awalRate=4

But you have taken steps, acted with agency and unswerving dedication to getting your house in order, in your case quite literally. That "Debt Reduction 35.98%" will reduce to "10-16%" which means another 20% at a minimum free for FIRE. Feed that 16% figure into the calculator and it gives 14.9 years

https://networthify.com/calculator/earl ... awalRate=4

or if you can make it 10% then 12.4 years. "Wake up and smell the eucalyptus, FIRE I am coming for you" you might well sing.

https://networthify.com/calculator/earl ... awalRate=4

... and all that's *without* factoring in your super, or any other changes in your lifestyle at all, or any pay rises, and assuming a pretty modest 5% growth/4% withdrawal (you can tweak those in the link)

Not saying it's all roses. But me old antipodean battler you, you are off to a flying start, as in journey of thousand miles starts with single step, the best time may have been then but the second best time is now, and all that stuff. Best of luck with it all. Once you have wrassled that to the ground for now you can work on the next biggie "Who am I and what do I want?"

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Mon Aug 07, 2017 1:34 am

Hi Noedig, thank you for the links, great resource.

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Thu Sep 07, 2017 3:11 am

A month goes so quickly, firstly the numbers:

Food 4.55%
Bills 28.8%
Debt Reduction 40.18%
(inc. Student loan and Mortgage)
Books, Social inc. Presents 3.64%
Savings 23.22%

Not having a functioning kitchen is expensive. Spending in the Food and Social categories was above average in August as I ate out and bought food that didn’t need much preparation. Who knew the importance of fire and running water ☺

The car battery died so I had the unexpected expense of call out fee plus replacement battery.

In terms of renovations, the bulk of invoices have now been paid. Renovations are being funded by money accumulated specifically for them so don’t impact long-term savings but in income terms I spend 170% of my monthly income on renovations in August.

Still to be completed:
Painting
Splashback
Window dressings.

So nearly there. I have optimistically booked the agent to give me an evaluation next week, plus advise if there is anything else that I should really get the builder to look at.

Where am I going? In the short term the plan is to complete the renovations and sell for a good price and buy something that I can live in and pay down during my accumulation phase over the next 10 years. Mid-term plan is to just stick to the accumulation plan.

Sounds simple, right? And it is fundamentally, the difficulty/messiness is always in the property search as where you live is so important as your environment shapes your thoughts, your actions and ultimately your life. You can always shape and change your environment but the right starting point always helps. I will be moving cities for work as part of this move so the property search/research phase may take me a little longer then it usually does.

Jason
Posts: 514
Joined: Mon Jan 30, 2017 8:37 am

Re: benecia's journal

Post by Jason » Thu Sep 07, 2017 7:57 am

Don't let age get to you. Keep at it. Don't let your own mind be your enemy. God knows, we all have enough of those already.

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Fri Sep 08, 2017 2:54 am

Hey Jason thank you for the encouragement. I do appreciate it. I've probably given the wrong impression, sorry I should explain myself more.
I'm almost middle aged, which isn't old or young. It's just the site is called early retirement extreme and my retirement won't be early and I'm not taking any extreme measures compared to others on this forum. I'm actually quite excited about the next phase, just impatient to get through all of the gear changes till I can start just methodically following a plan and my net worth and savings graphs go back to straight line trajectories instead of lots of peaks and troughs due to the renovation spending and debt reduction.

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Thu Oct 12, 2017 4:22 am

I have to say that there are a lot of active journals on this site, which is awesome. I had to go 3 pages in to the journal section to find my journal :D

September Summary
Food 2.86%
Bills 28.77%
Debt Reduction 43.9%
(inc. Student loan and Mortgage)
Books, Social inc. Presents 3.29%
Savings 31.94%

Ignoring renovation spending, September spending has room for improvement in the Social area and food. Bills included work travel expenses (reimbursed in October and will be counted in October income), new running shoes, foundation (I know frivolity) as well insurance etc.

The Renovation was finished a week and half ago and all of the invoices are paid. Overall the renovation costs came in at less then 10% of the value of the house which I'm happy with. The house is now listed for sale and I have had to spend a little bit on staging the house, plus marketing costs which will mean savings in October will be down, which is OK.

This is the transition phase and I'm quietly excited about the change and impatient just to have sold the house, bought the new one and moved and have settled into my next phase.

A lot of people on this site seem to have a regular trajectory, whereas my journey seems to have been slope of increasing savings/investment then flat line or dip as I change lanes/strategy (i.e. sell down property, pay down debt, move capital) and then it settles back into a regular upward trajectory. I'm OK with that as each step change seems to bring acceleration to an area. By that I mean increased achievement or ability, e.g. increased earning capacity, net worth, knowledge or skill or something similar. Anyway this is why I'm excited about this next step change and what it will bring.

MDFIRE2024
Posts: 278
Joined: Fri Jan 06, 2017 5:09 pm
Location: Germany

Re: benecia's journal

Post by MDFIRE2024 » Thu Oct 12, 2017 11:24 am

44% + 32% = GREAT TOTAL SAVING RATE. Do you also count debt reduction as SR? Keep on going!

benecia
Posts: 7
Joined: Fri Aug 04, 2017 10:05 pm

Re: benecia's journal

Post by benecia » Fri Oct 13, 2017 4:42 am

Hi MDFIRE2024, No I don't count debt reduction as saving rate, I use it as motivation telling myself that "the sooner I pay down debt the quicker I can increase my savings rate" and also it makes me think very carefully about any debt I take on. I only have student debt and housing debt

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