Alice_AU journal

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Alice_AU
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Location: Sydney Australia

Re: Alice_AU journal

Post by Alice_AU »

Finished with the Christmas-related spend today, A$2500 on top of the regular living expenses. This is $500 above the target of A$2000 that I originally had and includes presents, entertainment, extra food for 2 more adults for 4 weeks (in-laws are visiting us this year), $400 of unexpected medical expenses, and various festive treats. December's saving rate ended up at only 28%.

It just seems that I may be able to control my own consumerist urges but can't bear to disappoint the family, especially the kids. They are used to getting nice presents and twice a year (Christmas and Birthdays) I'm ok with it. At least I managed to restrain myself from buying them brand new gaming laptops this year which I ALMOST did amongst all of the pre-holiday craze, with sweaty crowds in the shops and brain-zombifying "jingle bells" blaring everywhere. Instead, I got electric guitar for the son, and a decent quality sewing machine for the daughter - expensive but useful things. Small presents for in-laws and hobby supplies for my husband. And told everyone not to get anything for me - there's really nothing I need or want right now. Maybe except for a house... but that's too much to ask Santa, isn't it? :P

flying_pan
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Re: Alice_AU journal

Post by flying_pan »

Hey @Alice, this sounds extremely similar to my situation! I ask to gift me nothing and can't really disappoint other people. Spoiler: they will get you something.

What worked for me is just when you need something, don't get it, explicitly ask for it (my family is fine with it). This solves the problem with their gifts to me (they would get something anyway). Regarding gifts for them – I always try to aim for more "thoughtful" gifts for them, which shows that I care about them. Also, when you ask for relatively small items, it also helps to tone the whole gift thing down a bit... but just a bit. It is a battle, but I feel we are improving slowly.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Yes, improvement is what counts. I haven’t done great ($2500 is still a lot), but better than last year.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

After a few months of faffing about, my lawyer finally managed to produce a draft BFA. 13 pages in length, which makes it $250 and around a week for each page :roll: Now it has been forwarded to my husband's lawyer and she once again plays the same game. "Leave it with me, I'll call you on Monday"... Then Monday comes and goes, Tuesday and Wednesday and still nothing. Oh, well... If I could make one wish, I wish to never having to deal with lawyers ever again!

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Phew, our lawyers have finally managed to get themselves organised and got the process moving. Husband signed the BFA yesterday, and I’m meeting with my lawyer to sign tomorrow. Overall effort - 4 months, $4200 AUD, and a lot of phone calls, emails, chasing and reminding. Glad the end is in sight.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Now I should feel relieved, and somewhat I do. Relieved about myself, that my financial situation has started to improve little by little. Happy that I finally started thinking about it a year ago, started saving instead of spending, started reading and looking on the internet, found ERE and MMM, completely changed my habits and way of thinking.

Now when I got the taste of how life feels with having this still small but “healthy” savings balance, I NEVER want to go back to how it was before. What felt initially as “sacrifice”, things like giving up expensive skincare, daily sushi sets for lunch, buying new clothes every month at least... now seems so small in return for gaining that feeling of security and hope.

However at the same time I worry about my husband. He’s still spending every cent he earns (mostly on cigarettes, beer, and lottery tickets!), contributes nothing to his Super on top of the 9.5% that his employer pays, and has to rely on credit cards for anything unexpected, even small things like a speeding fine that he got last month.

I still didn’t have “the talk” with him, attempted several times but he seemed defensive and I didn’t want to push. I know I have to be brave and try again...

flying_pan
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Re: Alice_AU journal

Post by flying_pan »

Alice_AU wrote:
Tue Feb 11, 2020 7:49 pm
Now when I got the taste of how life feels with having this still small but “healthy” savings balance, I NEVER want to go back to how it was before. What felt initially as “sacrifice”, things like giving up expensive skincare, daily sushi sets for lunch, buying new clothes every month at least... now seems so small in return for gaining that feeling of security and hope.
Congratulations, I think it is the most important mindset shift. Now you will probably consider it as an emergency if you don't have enough money to live for some time. I had a similar shift last year – I spent everything before on travelling, gadgets, etc, just "because". If I did not stumble at ERE, I probably would have a nice new car already...

Anyway, the best part is that your situation will only improve from now on.
Alice_AU wrote:
Tue Feb 11, 2020 7:49 pm
However at the same time I worry about my husband. He’s still spending every cent he earns (mostly on cigarettes, beer, and lottery tickets!), contributes nothing to his Super on top of the 9.5% that his employer pays, and has to rely on credit cards for anything unexpected, even small things like a speeding fine that he got last month.

I still didn’t have “the talk” with him, attempted several times but he seemed defensive and I didn’t want to push. I know I have to be brave and try again...
Unfortunately, nothing I can really recommend here... People will listen only when they are ready to consider it. Probably he will at some point, just looking at your financial position compared to his, but it might cause some troubles. Good luck with that, the only thing I can advise is not to rush to actual retirement discussions (and concept of ERE), rather general topics like what do you spend money on, what is the "ROI" in terms of fun, when do you have the most fun (is it movies? time at home? just a day in the park? etc), maybe propose to try something different just to "feel" it. Maybe it will help.

horsewoman
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Re: Alice_AU journal

Post by horsewoman »

I'm not sure it's a good idea to force "a talk" on your husband. It's no wonder he gets defensive, you developed in a direction that feels threatening to him.
My husband is not so much a spendthrift, rather he hates to talk/think about money and got annoyed with me a lot when I got serious about saving and stuff, and trying to get him involved.
Since he is happy to leave most money matters in my hands I simply stopped discussing it with him and started doing. I informed him in passing of my successes, without making a big deal of it. After a while he got interested after all, and these days we talk a lot about finances in a good way.

He needs to grow himself, you cannot do that for him. He has it easier since he can copy what you do, but the will to change must come from him to be sustainable.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

I think so too. Everything that requires effort should really come from within. Saving money is one of these things. Other examples are exercise, dieting, quitting smoking, studying, waking up early, and any hard work in general. When the person is doing it because of own motivation, everything is fine. When forced - it would feel horrible, like deprivation or downright abuse.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

An obvious benefit from becoming FIRE adept is gaining better clarity about money matters. Before I started tracking, I had no idea what was my total debt, net worth, etc. I didn’t even know how much was in my old UK private pension account and how to log on and check the balance!

Now I know what are my assets and liabilities, and also have a preliminary plan in mind. It’s raw, simplistic and might change, but anyway here it is:

1) Pay off all personal unsecured debts, and avoid taking on any more ever again
2) Housing. Do not want to be a renter in retirement!
3) Regular retirement (60+) - max out Super contributions and it will take care of itself
4) Early retirement. Likely not to be “early” for me, but 55 is better than 60, and 50-52 is better than 55. However, will start focusing on this only after taking care of items 1, 2 and 3 above.
Last edited by Alice_AU on Thu Feb 20, 2020 2:09 am, edited 1 time in total.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Now I have a plan, I can start tracking progress - very exciting!

Target - all figures in AUD
1. Unsecured Debt: 0
2. Housing: $750K of equity. This is very modest - house we rent now is $1.8m (3 bed, 1 bath, small yard, main road, but very conveniently located and close to everything including schools and jobs)
3. Pension and Super: $750K balance - for $30K pa at 4% swr after reaching 60
4. Early Retirement: not sure but let’s say $300K


Start- Early 2019, first interest towards personal finance
1. Unsecured Debt: $24700 - 0% of target
2. Housing: $0 equity - 0% of target, started saving $900-$1100 per fortnight for deposit
3. Pension and Super: $140K combined balance - 18.7% of target, no additional contributions from me yet, only 9.5% from employer
4. Early Retirement: can only include $5800 in shares from previous employment - 1.9% of target, no additional contributions from me yet


Progress - Mid-2019, discovered FIRE
1. Unsecured Debt: $24700 - 0% of target
2. Housing: $13000 saved for deposit - 1.7% of target, aiming to save around $1100 per fortnight
3. Pension and Super: $160K combined balance - 21.3% of target, started contributing 3% of gross pay
4. Early Retirement: same $5800 - 1.9% of target, sold employer shares, bought Vanguard, started adding $100 per fortnight


Progress - Feb-2020
1. Unsecured Debt: $11700 - 53% of target
2. Housing: $37700 saved for deposit - 5% of target, aiming to save around $1300 per fortnight
3. Pension and Super: $194K combined balance - 25.8% of target, increased own contributions to 6% of gross pay
4. Early Retirement: $10700 - 3.6% of target, still saving only $100 per fortnight + any small side hustles I managed so far

...long way to go...

horsewoman
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Re: Alice_AU journal

Post by horsewoman »

You are making great progress! I'm in awe of how you turned your ship around, saving so much for you house while getting rid of half of your debt is remarkable.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Thank you @horsewoman! I don't remember exact day and exactly how (searching for something online?) I discovered ERE, MMM and FIRE concepts and forums, but I'm so lucky that I did!

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Oops, spoke too early... have to correct February figures for Coronavirus:

Progress - Feb-2020
1. Unsecured Debt: $11700 - 53% of target
2. Housing: $37700 saved for deposit - 5% of target, saving $1300 per fortnight
3. Pension and Super: $186K combined balance - 24.8% of target, own contributions at 6% of gross pay
4. Early Retirement: $10600 - 3.6% of target, saving $100 per fortnight

steveo73
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Re: Alice_AU journal

Post by steveo73 »

Alice_AU wrote:
Thu Feb 20, 2020 2:07 am
2. Housing: $750K of equity. This is very modest - house we rent now is $1.8m (3 bed, 1 bath, small yard, main road, but very conveniently located and close to everything including schools and jobs)
How is this going to work ? I assume you will therefore have 1 million in debt that you have to service in retirement. Is that your intention ?

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

I won't be able to live in Sydney in retirement, so 1.8m-house is out of the question. I have to be here now for the job, but in retirement will have to go somewhere rural, just don't know where yet.

steveo73
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Re: Alice_AU journal

Post by steveo73 »

@Alice - the housing makes sense assuming you are willing to live somewhere rural.

I think you are under-estimating significantly how much you spend when you are retired as well. The pension for 2 people at 67 is something like $38k. You can withdraw a shit load more at 60 off $750k once you get to that point. You could spend more like double that amount no problems so long as you can spend just $38k at 67.

The way I'm planning my retirement is the pension is a back-up but that is the absolute minimum spend and I'm good with that.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

@steveo73, I presume you mean state pension at 67? It is so far away I prefer to not think about it at all, like it doesn't exist. If I'm 5-7 years away and it's still going, then great! :-)

steveo73
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Re: Alice_AU journal

Post by steveo73 »

Alice_AU wrote:
Fri Feb 28, 2020 11:32 pm
@steveo73, I presume you mean state pension at 67? It is so far away I prefer to not think about it at all, like it doesn't exist. If I'm 5-7 years away and it's still going, then great! :-)
It's in my plans. It's a back-up option. Worst case I run out of money and I live off the pension with my house paid off. I don't think this will happen but it's a fail safe. Worst case would be fine for myself and my wife.

The thing is in Australia Super kicks in at 60. If you work and earn a reasonable income you should have a decent super. It's a 10% savings rate over the course of your career. The pension kicks in at 67 and therefore to me if you are reasonably frugal and own your own home you should be pretty safe from 60 on. So then the early retirement part of your money has to get you to 60. It works out for me the same level I'd have to get to if we didn't have the pension but that back-up to me makes things even safer.

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Alice_AU
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Re: Alice_AU journal

Post by Alice_AU »

Yes, this is more or less how I try to imagine pre-planning things in my head. True planning is very difficult now - no idea if the state pension is still there in 28 years, no idea what my family is doing, health, availability of jobs, state of markets etc...

But the key I think is to take care of housing and old age (superannuation) first. This two are must-have. Our superannuation will not “take care of itself”, we immigrated in 2016 at the age of 35-37 and missed out on 15 years of contributions, and the crucial first 15 year too. This is why I’m so keen to convince my husband to start voluntary salary sacrifice, and started doing it myself. Initially tried with 3%, then increased to 6%, and hope to continue increasing till meeting the cap.

And with housing, the situation might be different in other countries but here I have a gut feeling that not having a paid off house in retirement is a complete disaster. Too late for us to buy in Sydney unfortunately, so the plan is buy-to-let somewhere else asap, not for profit but as insurance against house prices running away even further in the future.

Early retirement goals come last on my list, will not be able to work on this until the first priorities are sorted. Getting rid of debt, investment property or two, maxing out super contributions come first. Then and only then can start dreaming of freedom and glorious days in the garden instead of the office :-)

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