I've decided to write a journal on here because I figure it is a good way to track my progress. The problem is that to me this is a fairly long term goal and my goals/ideas may change over time. In saying that all I can do is start listing down actions that I want to take.
I have a fairly frugal wife and 3 kids who aren't so frugal. My oldest kid (a lovely 11 year old daughter) likes to spend money and my 9 year old son is happy to spend as well but probably not as much. My 2 year old son doesn't care at all. My wife is basically frugal but tends to spend on others (predominately the kids) a little more than I think she should at times however she doesn't spend on herself much at all. I can also spend money - predominantly on myself in the form of clothes and drinking alcohol or eating food outside of the house.
At the moment we have the following assets and liabilities:-
Assets:-
Retirement Funds:- I think about 150k but I will update when I get my statement.
House Value:- I think about 800k of which we own 75% and my in-laws 25%. We don't pay rent to them at all.
Liabilities:-
Mortgage:- $211k.
I am not going to include any household furniture or cars in our assets. We have 2 cars at the moment and the house has enough stuff in it although I would not state that we have too much stuff - it is just reasonable.
Our income consists of my wage of $120k and my wife's wage of about $40k. I think this adds up to about $100k all up post taxes and child care fees. We pay off $2000 towards the mortgage each fortnight so I figure our saving rate is about 50%.
I'll add what I like to do at the moment within my life. I basically like doing Brazilian Jiu-Jitsu which is a pretty tough martial art in that there is a lot of wrestling predominately on the ground only )this keeps me fit). I also like to read, learn stuff for myself, rest a lot and watch my football team play once per week in season. I like nice food and wine although I don't need anything excessive and get sick of eating out too much or eating too much fancy food. My wife loves going out more than me - she likes us doing something at least every week and likes to watch some TV every night.
I'm turning 40 in a weeks time and my wife is 36 turning 37 in about a weeks time as well. The goal is to be FI within 10 years.
FI in 10 years
FI in 10 years
Last edited by steveo73 on Wed Jul 17, 2013 4:23 am, edited 1 time in total.
Re: FI in 10 years
Generally I think to be FI I need to complete the following steps:-
1. Pay off the mortgage.
2. Save $500k in retirement funds. I can withdraw 4% per year at 55. That ends up about $20k per year living expenses which I think is doable.
3. Save up about $200k in non-retirement funds. This to me gives us a buffer plus if I retire at 50 and then have to live for 5 years I can draw on this money.
1. Pay off the mortgage.
2. Save $500k in retirement funds. I can withdraw 4% per year at 55. That ends up about $20k per year living expenses which I think is doable.
3. Save up about $200k in non-retirement funds. This to me gives us a buffer plus if I retire at 50 and then have to live for 5 years I can draw on this money.
Re: FI in 10 years
I think I need to take the following actions to push me towards reaching FI:-
1. Slowly raise the mortgage repayment from $2000 to $3000 per fortnight.
2. Start paying about $50k per year into the retirement funds.
3. Stop spending money on clothes and outside eating. I don't have a lot of clothes but I have enough to get by on. I should limit this. As for eating outside and drinking beer with friends I don't do it a lot but it can really add up so I think I should stop this as well.
4. Gently try and push my wife towards spending less money per week on going out.
5. Drink less alcohol period.
I think that saving at $3000 per fortnight will work out at about a 70% savings rate. When we start adding more to the retirement funds I figure that will be about 80% savings rate. Once the mortgage is paid off then I will consider us actually saving though. So long as we have the mortgage I personally consider that debt reduction.
1. Slowly raise the mortgage repayment from $2000 to $3000 per fortnight.
2. Start paying about $50k per year into the retirement funds.
3. Stop spending money on clothes and outside eating. I don't have a lot of clothes but I have enough to get by on. I should limit this. As for eating outside and drinking beer with friends I don't do it a lot but it can really add up so I think I should stop this as well.
4. Gently try and push my wife towards spending less money per week on going out.
5. Drink less alcohol period.
I think that saving at $3000 per fortnight will work out at about a 70% savings rate. When we start adding more to the retirement funds I figure that will be about 80% savings rate. Once the mortgage is paid off then I will consider us actually saving though. So long as we have the mortgage I personally consider that debt reduction.
Re: FI in 10 years
The last point I'll make is that being FI might not mean ER. I may choose to keep working or work less or whatever to save up for a period of spending more in the form of travel or whatever. I really want to be FI though.
Re: FI in 10 years
I'm making some changes to my goals right now because I can see myself retiring earlier however there are some caveats.
The goals now are pretty simple:-
1. Pay off the mortgage.
2. Save $500k in non-retirement funds. We really have a goal of having about 625k in assets outside owning my house and we already have 200k in retirement funds so maybe 500 is a stretch.
We (the wife and me) might continue to work because this would leave us with 25k to spend per year and although this is achievable it isn't possible right now predominantly due to having 3 kids. As soon as we reach that point though we could work less or at least reassess what we are going to do.
I have I think a couple of interests in my life:-
1. Brazilian Jiu-Jitsu. I love this but at 40 I wonder how long I can continue this for.
2. Playing chess. I've always loved this but the chess thread on this board got me back into playing. Its a great sport (I call it a sport) and I figure I can continue this for years.
3. Reading. This is something again that I can continue for years.
4. This is less of an interest but I do love financial markets and analysing and trading markets. I predominantly trade foreign currencies at this point because it is really easy to do (not making money). I don't though want to rely on this at all for income.
I really want to maximise the interests above that I love within my life. At some point I may have to minimise Brazilian Jiu-Jitsu but at that point I would do something else physical such as surfing or less BJJ or whatever. The key point is though that I want to get to a state where I am financially stable and set-up so that work becomes less of a critical part of my life.
The goals now are pretty simple:-
1. Pay off the mortgage.
2. Save $500k in non-retirement funds. We really have a goal of having about 625k in assets outside owning my house and we already have 200k in retirement funds so maybe 500 is a stretch.
We (the wife and me) might continue to work because this would leave us with 25k to spend per year and although this is achievable it isn't possible right now predominantly due to having 3 kids. As soon as we reach that point though we could work less or at least reassess what we are going to do.
I have I think a couple of interests in my life:-
1. Brazilian Jiu-Jitsu. I love this but at 40 I wonder how long I can continue this for.
2. Playing chess. I've always loved this but the chess thread on this board got me back into playing. Its a great sport (I call it a sport) and I figure I can continue this for years.
3. Reading. This is something again that I can continue for years.
4. This is less of an interest but I do love financial markets and analysing and trading markets. I predominantly trade foreign currencies at this point because it is really easy to do (not making money). I don't though want to rely on this at all for income.
I really want to maximise the interests above that I love within my life. At some point I may have to minimise Brazilian Jiu-Jitsu but at that point I would do something else physical such as surfing or less BJJ or whatever. The key point is though that I want to get to a state where I am financially stable and set-up so that work becomes less of a critical part of my life.
Re: FI in 10 years
I really don't have much factual stuff to update right now. Things are kicking along as per the current plan.
I am though having some problems at work (I am currently managing a difficult person on a project and I also went out and got drunk with some work mates and some of them I don't even like (plus I don't like getting that drunk)) and it makes me realise how much I want to say "fuck you" to work. The drain of having to turn up for another 7-8 years (possibly 10) sucks.
Still - I suppose the only choice I have is to keep going and at least my wife and myself are on the same page with regards to where we want to get too and it is a realistic option.
I am though having some problems at work (I am currently managing a difficult person on a project and I also went out and got drunk with some work mates and some of them I don't even like (plus I don't like getting that drunk)) and it makes me realise how much I want to say "fuck you" to work. The drain of having to turn up for another 7-8 years (possibly 10) sucks.
Still - I suppose the only choice I have is to keep going and at least my wife and myself are on the same page with regards to where we want to get too and it is a realistic option.
Re: FI in 10 years
Quick update.
Work is great at the moment. I've been working about 20-30 hours per week and I'm enjoying my job.
The mortgage is down to 150k and super is about 200k. I'd be happy if I could keep working like this and slowly move towards retirement however it won't be that simple.
Our savings rate is about 66% excluding bonus payments however I'm just going to ignore that and save it anyway. My goal is to get the 66% up to 70%. The mortgage payment is now at $2,700 per fortnight so its closer to my initial goal of $3,000 per fortnight.
Work is great at the moment. I've been working about 20-30 hours per week and I'm enjoying my job.
The mortgage is down to 150k and super is about 200k. I'd be happy if I could keep working like this and slowly move towards retirement however it won't be that simple.
Our savings rate is about 66% excluding bonus payments however I'm just going to ignore that and save it anyway. My goal is to get the 66% up to 70%. The mortgage payment is now at $2,700 per fortnight so its closer to my initial goal of $3,000 per fortnight.
Re: FI in 10 years
Nice, so the mortgage went down by $60k in 10 months or so, while the super went up by $50k or so... That's an amazing amount of money.
And I'm glad to read that work is better again.
I think it's ok that plans change over time. You're working towards a better future. If you find yourself FI and you still want to work: why not? If you find yourself FI and want to go to Brazil to study Jiu-Jitsu some more, you can. If you find yourself FI and want to buy a bigger house (that would be weird, but yeah), you can... Who knows what life will be like 5 years from now, let alone ten?
And I'm glad to read that work is better again.
I think it's ok that plans change over time. You're working towards a better future. If you find yourself FI and you still want to work: why not? If you find yourself FI and want to go to Brazil to study Jiu-Jitsu some more, you can. If you find yourself FI and want to buy a bigger house (that would be weird, but yeah), you can... Who knows what life will be like 5 years from now, let alone ten?
Re: FI in 10 years
I found your statement about: "3 kids who aren't so frugal. My oldest kid (a lovely 11 year old daughter) likes to spend money and my 9 year old son is happy to spend as well but probably not as much." rather weird, you don't put any limits or set an allowance or some kind of budget?
Re: FI in 10 years
Ah yes, I saw that too. I though it was the typical spending behaviour of young children. But Steveo73, I hope that you can also be an example to your kids on how to be smart with money. And perhaps indeed you are still able to teach them some better methods to handle money, so that they can later say: "My dad was FI at age 50, but I beat him: I was FI at age 45!" or something like that...
Re: FI in 10 years
Sorry I didn't see these responses. The kids get strictly managed with regards to expenses. They might want to spend however we don't allow them to go spend like they would like too. We have just started our daughter on a $20 per fortnight allowance. She can do what she wants with that however interestingly she doesn't appear to be going crazy with the money.
As for guiding them I think it is really hard. All I think you can do is try and show them the right way to approach life. They are 12 & 10. They don't really understand that money is important.
As for guiding them I think it is really hard. All I think you can do is try and show them the right way to approach life. They are 12 & 10. They don't really understand that money is important.
Re: FI in 10 years
It is really good. It will be interesting to see how long it takes us to become FI. We are what I would consider a typical middle class type family in a first world country however Australia has ridiculous housing costs.DutchGirl wrote:Nice, so the mortgage went down by $60k in 10 months or so, while the super went up by $50k or so... That's an amazing amount of money.
I agree. I don't see myself as rushing to retire however FI is to me a really important goal. FI means that we have choices and I would call it a good defence system. If we lose our jobs or some other problem arises we should be okay.DutchGirl wrote:And I'm glad to read that work is better again.
I think it's ok that plans change over time. You're working towards a better future. If you find yourself FI and you still want to work: why not? If you find yourself FI and want to go to Brazil to study Jiu-Jitsu some more, you can. If you find yourself FI and want to buy a bigger house (that would be weird, but yeah), you can... Who knows what life will be like 5 years from now, let alone ten?
Work is actually fun at the moment. I still can't see myself doing the same job for another 10 years however I doubt that will occur.
My current financial goals are pretty simple - get the savings rate to 70% and have no debt. These are 2 realistic goals within the next couple of years and will provide a good base for FI.
Re: FI in 10 years
I'll add some more points of interest.
I was reading some of the other journals and there were some comments regarding aiming for ERE rather than trying to create a happy life. I definitely believe in creating a happy life and FI and retirement are part of that life. So I view the stuff that I do now as being important for when I retire as well. Currently my main interests outside of work and not including family and friends are jiu-jitsu, chess and reading. I view retirement as being very similar although the interests may change a little. So jiu-jitsu becomes exercise, chess becomes using my brain on some activity and reading stays the same.
I've also been reading a lot on happiness and I am really enjoying the stuff I am reading about Stoicism. I remember watching a Alain De Botton show on Epicureanism and I loved that. I think both of these practices feed right into FI.
Basically I should make it clear that my health both being happy and positive (although this isn't like the pop psychology version of positivity) and my physical health are really important to me now and in the future.
When it comes to FI I also think at this point that I won't go for a bare bones approach. I could save for instance something like $600k and probably be fine however I think I am more likely to save up to about $1 million. Both of these figures do not include the house we live in. Once there we can continue to optimise our life and make it more efficient. Myself and my wife may move into a smaller place for instance or instead of having 2 cars just have 1 car.
So FI for me personally is not about racing to the finish line. Its about creating a positive environment now and in the future in which I (and my wife) can lead a great life.
I was reading some of the other journals and there were some comments regarding aiming for ERE rather than trying to create a happy life. I definitely believe in creating a happy life and FI and retirement are part of that life. So I view the stuff that I do now as being important for when I retire as well. Currently my main interests outside of work and not including family and friends are jiu-jitsu, chess and reading. I view retirement as being very similar although the interests may change a little. So jiu-jitsu becomes exercise, chess becomes using my brain on some activity and reading stays the same.
I've also been reading a lot on happiness and I am really enjoying the stuff I am reading about Stoicism. I remember watching a Alain De Botton show on Epicureanism and I loved that. I think both of these practices feed right into FI.
Basically I should make it clear that my health both being happy and positive (although this isn't like the pop psychology version of positivity) and my physical health are really important to me now and in the future.
When it comes to FI I also think at this point that I won't go for a bare bones approach. I could save for instance something like $600k and probably be fine however I think I am more likely to save up to about $1 million. Both of these figures do not include the house we live in. Once there we can continue to optimise our life and make it more efficient. Myself and my wife may move into a smaller place for instance or instead of having 2 cars just have 1 car.
So FI for me personally is not about racing to the finish line. Its about creating a positive environment now and in the future in which I (and my wife) can lead a great life.
Re: FI in 10 years
We just increased the mortgage payment to $2,800 per fortnight which is pretty good. This means we are saving pretty close to 70% of our income.
Work is actually good at the moment however I'd still like to retire early which for me simply isn't going to happen. So at this point its still keep plodding along and see where it takes us.
Work is actually good at the moment however I'd still like to retire early which for me simply isn't going to happen. So at this point its still keep plodding along and see where it takes us.
Re: FI in 10 years
I've been running a bunch of figures through R. Its a great piece of software. To me its heaps better than Excel or any spreadsheet based software. Plus its free.
The good thing is that I get metrics now to work towards. So I have a bunch of goals that I can track such as:-
Current Goals which are pretty stable:-
goal1 = "no debt"
goal2 = "savings rate 70%"
goal3 = "savings 100k per year"
We will reach the savings rate goal this year but we the other 2 are a way off yet.
I now also though have a bunch of other metrics to track that will come more into focus later on.
Things like my fuck you level asset level (to me a WR of about 10%), my FI level (5% WR) and buffer FI level (4%).
Everything is going well albeit slowly. Its not like our saving rate is poor. The main thing holding us back is having a massive mortgage.
The good thing is that I get metrics now to work towards. So I have a bunch of goals that I can track such as:-
Current Goals which are pretty stable:-
goal1 = "no debt"
goal2 = "savings rate 70%"
goal3 = "savings 100k per year"
We will reach the savings rate goal this year but we the other 2 are a way off yet.
I now also though have a bunch of other metrics to track that will come more into focus later on.
Things like my fuck you level asset level (to me a WR of about 10%), my FI level (5% WR) and buffer FI level (4%).
Everything is going well albeit slowly. Its not like our saving rate is poor. The main thing holding us back is having a massive mortgage.
Re: FI in 10 years
Your savings rate is excellent and admirable.
Just a question: That mortgage... You say that Australia is expensive, but I suspect $800k still means it's a massive house that you've got. Is there a way to downsize now? Or would there be a way to downsize once you don't have to live close to work anymore, or once the children are out of the house? It seems to me like you have roughly $450k of assets locked up in that house ($600k minus $150k mortgage). Those 450,000 dollars might be of better use somewhere else. Freeing them up by selling the house and moving might bring you a big step closer to being FI...
Just a question: That mortgage... You say that Australia is expensive, but I suspect $800k still means it's a massive house that you've got. Is there a way to downsize now? Or would there be a way to downsize once you don't have to live close to work anymore, or once the children are out of the house? It seems to me like you have roughly $450k of assets locked up in that house ($600k minus $150k mortgage). Those 450,000 dollars might be of better use somewhere else. Freeing them up by selling the house and moving might bring you a big step closer to being FI...
Re: FI in 10 years
Jenny - with regards to the house it isn't really a large house. So it is a 4 bedroom house but it is a small 4 bedroom house. We have 3 kids as well so it just means everyone gets a bedroom. It has one combined living/kitchen/TV area and a small backyard. I suppose the point is is it excessive and the answer is yes and no. It is excessive to buy a house that costs that much money. Its crazy. In saying that Sydney prices are crazy. I should add that the house is now probably worth $1 million.DutchGirl wrote:Your savings rate is excellent and admirable.
Just a question: That mortgage... You say that Australia is expensive, but I suspect $800k still means it's a massive house that you've got. Is there a way to downsize now? Or would there be a way to downsize once you don't have to live close to work anymore, or once the children are out of the house? It seems to me like you have roughly $450k of assets locked up in that house ($600k minus $150k mortgage). Those 450,000 dollars might be of better use somewhere else. Freeing them up by selling the house and moving might bring you a big step closer to being FI...
Our kids are also young 13 & soon to be 11 as well as a 3 soon to be 4 year old. Moving now to me makes no sense because the kids would have to move schools and I would have to travel a lot further to get to work plus I doubt we would gain that much once buying and selling costs including buying a new house were all taken into account. It could be a couple of hundred grand but to me the trade off wouldn't be worth it.
If we moved to a different country such as America it would work however I don't see us making that big a move.
We may though move when we are closer to retirement assuming we choose to move to an area that is at least a biggish drive to Sydney. Again though house prices will be expensive wherever we move too. The difference though may work out to be beneficial because we may move somewhere for instance closer to the beach or for other lifestyle reasons.
I'll add that I get where you are coming from but at this point I don't see how to change the situation based on our current lifestyle.
Last edited by steveo73 on Tue Sep 09, 2014 4:14 am, edited 1 time in total.
Re: FI in 10 years
I just received my yearly bonus which pre-tax is just over $20k. To me that is a huge amount of money. The question will be how much is it after-tax. I am aiming to save all of it and put it straight into the mortgage.
I was mentioning R previously and I keep using it to calculate various simple FI metrics.
The key metric to me is my withdrawal rate which at this point I put at 41%. I should make it clear that I am not including my house in this figure but I am counting the mortgage as a debt. So total assets excluding my house is a net figure of $89k. I figure that this is the best figure to focus on and although it sounds really bad as I am not including the house value its not as bad as it seems.
My goals remain the same:-
goal1 = "no debt"
goal2 = "savings rate 70%"
goal3 = "savings 100k per year"
I will adjust these as time goes on but these are good targets to aim for at this point. Getting rid of debt will be huge.
I was mentioning R previously and I keep using it to calculate various simple FI metrics.
The key metric to me is my withdrawal rate which at this point I put at 41%. I should make it clear that I am not including my house in this figure but I am counting the mortgage as a debt. So total assets excluding my house is a net figure of $89k. I figure that this is the best figure to focus on and although it sounds really bad as I am not including the house value its not as bad as it seems.
My goals remain the same:-
goal1 = "no debt"
goal2 = "savings rate 70%"
goal3 = "savings 100k per year"
I will adjust these as time goes on but these are good targets to aim for at this point. Getting rid of debt will be huge.
Re: FI in 10 years
Lastly work is actually great at the moment. I am managing large interesting projects and a stream of work that comes into my team. My bosses are great and the staff I work with are great.
At the same time I don't think that I will want to continue working and not retire. I do though have some trepidation regarding retirement and there are times I think about trying to climb the ladder. If I am thinking rationally though this isn't what I want. I want to spend my time reading, playing chess, talking shit on the Internet, doing jiu-jitsu and exercising, maybe surfing and simply whatever I feel like.
At the same time I don't think that I will want to continue working and not retire. I do though have some trepidation regarding retirement and there are times I think about trying to climb the ladder. If I am thinking rationally though this isn't what I want. I want to spend my time reading, playing chess, talking shit on the Internet, doing jiu-jitsu and exercising, maybe surfing and simply whatever I feel like.
Re: FI in 10 years
I just checked my bonus amount less taxes - its 14,600. Based on this we will reach two of my goals or targets this year - saving 100k and 70% of our income. When I run the figures through though the extra savings make a big difference over the long term assuming I keep it up which is a little unrealistic as this was a good bonus year.
Still the mortgage is a freaken drag. It feels like until it is paid off you are swimming with a dead weight.
Still the mortgage is a freaken drag. It feels like until it is paid off you are swimming with a dead weight.