Early Retirement Extreme Forums

I am loving the blogs on this forum and am finding then hugely inspiring and filled with loads of tips. I have decided to start my own blog. I want to motivate myself to get things together and move on with my dreams and also share tips and receive tips from others.

My story... I am currently living in New Zealand but have long dreamt of going overseas to learn a language in another country and try life there for a while. I am not so much looking for an early retirement yet but rather a sabbatical or mini retirement. My plan is to go to overseas at the beginning of May 2016. I will ask my work for a sabbatical of 4 to 5 months and if they do not agree to that I will resign and go overseas for an uncertain period of time. If I move overseas my income and professional status will collapse and disappear. So I really feel the need to be somewhat secure if I resign to move there.

I am 33 years old and have been practicing increasing frugality for the last 5 years. I have an ok income and have drastically reduced spending. This has helped me pay off some of my student loan debts and increase my savings. The part I have missed out of the equation is proper investing. I now need to get my shit together and focus on investing. This forum is really helping me with that.

My salary has increased quite rapidly in the last couple of years which has helped me to save, as opposed to the piddly little salary I was on prior to that. I still have a student loan of around $21k (down from $60K). However there is no interest in student loans in NZ if you remain in the country without leaving for more than 6 months at any time. So I only pay the minimum requirement until I go (the govt immediately takes 12% out of your salary before you can touch it).

So I have started to take action on sending my money to places other than my bank account. I have put some into a term deposit bank account (4%). I have also put some into a high interest bank account that I cannot touch (4.15%). I am also now arranging to put around $4k into a managed fund. I have also re-jigged my small superannuation account to be 100% high risk growth investments ( I cannot touch what is there unless I turn 65, move overseas for a year, become absolutely financially destitute or I buy my first house in 2.5 years time). So I am willing to loose it for the prospect of high returns. I am also going to also start investing in growth dividend stocks. I am going to try spread my risk with the stocks so that I am buying stocks in NZ, AUS, Canada and USA. Canada and USA seem to operate on a totally separate economic basis - NZ economy seems to correlate more with Australia and Asia.

I live a highly frugal lifestyle. I haven't owned a car in 3 years. I spend almost nothing on transport as I live in a walkscore area of 97%. I buy takeaways maybe once per week. I prepare every other meal, breakfast lunch and dinner. All my clothes I buy from second hand stores or nick nacky market stores. That is except for my professional attire, which requires me to be highly polished. But I only buy one suit every two years and then just buy nice double French cuff shirts and some extra pants, and I already have loads of ties. My annual spending on work attire is around $1100 which is cheap for costly NZ. I never use the clothes dryer and I refill my milk with water to extend the life of it. I make my own fragrnce. I basically own almost no possessions whatsoever as my apartment is furnished and I sold almost all my things last time I went away travelling 2 years ago. All I own is clothing and bedding.

Saving money through being frugal in NZ can be very challenging though with the high cost of living high compared with the average salaries. I get quite envious reading posts from North Americans hearing how much rent you pay. I currently live in a small 1.5 bedroom apartment in the city centre which is $1750 per month. Small as in around 40 square metres or maybe a little less.

In order to achieve my goal to raise sufficient funds I want to make some further frugal changes.

My last flatmate moved out a few weeks ago. So I have advertised for a new flatmate to move in. I am trying to find someone for the good room so that I can move into the cheaper "room" to save money and pay only $750 per month. The cheaper "room" is part of the lounge. It has two partially see through cavity slider doors that close to form a bedroom. So it is an internal room which doesn't completely have proper walls. It also has no natural light or windows. It is also quite small and has a single bed. I have put some curtains in which slide down over the cavity slider doors to make it a bit more private and opaque at least. I am struggling to find a suitable person for the more expensive room for $1000 per month which is large, has proper walls and a proper door and windows which go outside for natural light and air. Because of the high cost of living here compared to income many people cannot afford the more expensive room and it is actually easier for me to find someone for the cheaper shit "room". Because of the discomfort I am not prepared pay any more than $750 for the shit "room". So if I cannot find anyone in a week I will change my advert and get someone into the shit "room" and just pay more for the proper room. In any case I need to move on with getting someone so that I am not carrying all the rent and can save and invest more.

I am also looking at stopping drinking alcohol completely for two months. I am 3 days into that so far. I have a fairly active social life and I find it hard to be around others without drinking. I have done one month before last year. I actually don't like alcohol that much. I often find the health effects outweigh the benefits. So I am going to be strong. Alcohol generally costs me about $200 per month so that will be another welcome saving. Again cost of living in NZ - drinks here are about $10/ $11 each at a bar.

I am going to continue to explore and review ways to reduce spending for my investment focus. If anyone has any tips please let me know.

First of all I have to apologise for my horrendous grammar and spelling in my first post above. I just had a look and it is quite an eyesore. Any future posts will be checked in word first! No more frantic typing.

One thing I have noticed from other ERE posters is that there seems to be a common theme about having dissatisfaction with their jobs. I actually am really happy with my current job. I don't feel the need to retire from it soon. However I don't want it to get in the way of other projects. Like living in another country for a while to learn a new language. Then something else could arise after that. Who knows. I don't believe I will get a sabbatical next year so I think that I will end up having to resign to move overseas for a while. I will therefore end up being forced into a retirement or temporary retirement. I can't work in my job overseas very easily so not sure what else I could do.

I have previously however had an extremely stressful job and I think that is what caused me to focus on extreme frugality in the first place. I think it was that stress that made me want to focus on an escape route to get away. At my current job I am so much more at peace. I also have hilarious and awesome co-workers and nice clients as well. But I think it was the need to escape that got me focussed on FI in the first place. I wonder how many others have had this same feeling driving their ERE diligence.

thrifty++ wrote:First of all I have to apologise for my horrendous grammar and spelling in my first post above. I just had a look and it is quite an eyesore. Any future posts will be checked in word first! No more frantic typing.

Don't worry about that kind of stuff. Seriously. This isn't a test. Half of us are typing on our phones and don't bother with punctuation or checking over our posts anyway.

Post away.

Ah, no, seriously, please do bother somewhat. It's not a test, but I'd like to keep some standards or at least not encourage lowering them. That said, the top post meets them

haha yes I think I will bother with a decent level of grammar and spelling. I find it quite ugly to look at bad grammar in posts and this forum seems to have quite a high standard which is nice to see. So I will follow suit.

thrifty++ wrote: However there is no interest in student loans in NZ if you remain in the country without leaving for more than 6 months at any time. So I only pay the minimum requirement until I go (the govt immediately takes 12% out of your salary before you can touch it).

That's interesting. So, in exchange for zero interest rate the government deducts an automatic amount from your paycheck?

I think you've got the frugality thing down, that's very important. Now you just have to figure out the best investing vehicles that fit your personality and risk profile. I feel very fortunate to have fallen in love with dividend growth investing. I have never had a shred of doubt or ambivalence about my investing style, so that has given me an advantage in achieving FI when I did. But of course, the best investing vehicle is the one you're comfortable with. I do hope that DGI works out for you.

thrifty++ wrote:But I think it was the need to escape that got me focussed on FI in the first place. I wonder how many others have had this same feeling driving their ERE diligence.

This was definitely a factor in my finding/pursuing ERE, but it wasn't really workplace stress, it was commuting stress. I just couldn't handle the daily commute through traffic and was really pursuing a way to eliminate it as fast as possible. The quickest way was trying public transit.

Eliminating that stress, however, hasn't changed my ERE ambitions, but it has reduced the rush I used to feel to get away. Now I feel I am slowly meandering toward ERE and it will happen when it happens.

I am glad you found a low stress workplace and can totally relate to the great feeling that lowering stress gives you.

@spoonman – yes the government deducts a minimum of 12% of your income for student loan. There is no option to pay any less.
I read your entire post and you inspired me to get into action with investing! I have read other posts on here about dividend growth investing too and I think I will make it a big part of my plan to come. I like all aspects of it. I am also going to direct some funds to managed funds. My reasons for this decision is that I dont know enough about stocks to be comfortable to pick and choose yet and also that managed funds make it easy to invest in global stockmarkets. If I am to invest in stocks myself there are high transaction cost if I buy stocks which are outside of NZ and Australia. So I will balance out my primarily NZ and AUS dividend growth stocks with global managed funds. I am organising a small sum currently to go to a global managed fund as a start to get me going. I will gradually increase my investing piece by piece as I get more comfortable and learn more about investing.

@cmonkey – I read your blog and it is great you managed to get away from the traffic anxiety. I am sure public transit must also be cheaper for you too and align with your ERE. I totally agree with you, my ERE/Frugality focus was initially an escape plan but now it is more positive being about opportunities.

@indre – I hope your job stress decreases or you manage to find a new job which eliminates that stress. Im so glad I changed jobs. I have only had my current job 6 months but it is so much nicer. If I was still in my old job I would definitely have left my job to go overseas by now, but not in as financially secure a position as I would like to be.

I am a little bit frustrated at the moment paying $1750 a month for my 1.5 bedroom apartment. I actually get a bit jealous hearing the rent payments of North Americans. So much cheaper. I am very anxious to get on with finding a flatmate. I am having no luck finding anyone for the nicer bigger more expensive room. I have been looking for three weeks. No one can afford it I guess. I am therefore going to put the shitty “room” in the advert instead. I wont get to reduce rent as much as I would like, but I will get to reduce it to about $950/$1000 per month.

I seriously love being as frugal as possible. I feel like it improves life in multiple ways. As a result of my frugal habits I think I am leaner, healthier, fitter, wealthier, more relaxed, and have less impact on the environment. On so many levels its great!

If you ever decide to buy a dividend focused ETF, I would suggest you look into SCHD. David van Knapp wrote a nice article about it. It's not as flexible as investing in individual stocks, but it does have its upsides:

http://seekingalpha.com/article/3081726 ... investment

I haven't put money in that fund, or any ETF fund, but this one is probably the best dividend focused ETF.

Thanks Spoonman. I have read the article. I might have a look and see how easy it is for me to purchase some of those managed funds from NZ. Management fees of 0.07% is tiny!
What sort of risk do you focus on for your stocks? Low risk blue chip? Or do you go for riskier profiles too?

thrifty++ wrote:I am sure public transit must also be cheaper for you too and align with your ERE..

It is far cheaper. I had budgeted about 1800 for the year in transit, but now I think I will stay at about 700 to 800 for the year which is amazing. The DW works from home and I ride the metro so the car just sits....and sits...and sits. We take it out a max of 1 time per week now, sometimes even longer. I have filled up twice since March, most of which was the DW going to wind band practice on Sundays. She is done with that now so I am excited to see how long we can go until the next fillup.

Not to mention the maintenance savings.

I have seen several people post that they are INTJ. What is it about that personality type and ERE?

I am an INTJ and for me it all about optimizing,efficiency and the ability to see the truth through the fog that is the world of money/careers these days. The past year or so I have nearly become obsessed with it, but not to the detriment of comfort.

I mostly stick to blue chip companies and "best of breed". But I am also not afraid to invest in companies that don't necessarily have a long track record of paying dividends but have excellent prospects going forward, such as Apple.

Having a bit of a dilemma with my current exorbitant rent for my 1.5 bedroom apartment at $1750 per month rent.

I am wanting to shift into the 0.5 bedroom so I can drop my rent to $750 per month. However I am getting hardly any applicants. An alternative option is to keep paying rent for the whole place and keep looking for a room mate for the bigger more expensive room until I find one. Bear in mind I am getting hardly any applicants. I have been looking for 4 weeks now. Another option is for me to stay in the nicer big room with proper walls and a door, pay higher rent and rent out the shit 0.5 room. I will get loads of applicants because of the lower price and it will be easier to pick someone. But then I don't save as much due to paying $1000 per month.

1750 a month is outrageous IMO. I'm not sure how average that is in NZ, but where I am that is a lot! The most I paid in a nice neighborhood of Des Moines was 750 a month.

I would go with your gut instinct on it, if it feels like a girl would be awkward it most likely would. Maybe try going with 950/975 for rent instead of 1000? 3 digits looks better than 4

Thanks for your input Cmonkey. Yes it is very expensive here. And salaries are not high to keep up. Its really a struggle to save here. Even on higher professional salaries. Median rent for a 1 bedroom apartment is $1530. And median rent for a two bedroom is $1850 per month. So I am in between those two with my 1.5 bedroom. As I have said before I really am quite jealous of North Americans. I think your rent and food costs vs income is so much more affordable.

I think she would love you to not hang out and to do your own thing.

That's the definition of a good flatmate.

As I have said before I really am quite jealous of North Americans. I think your rent and food costs vs income is so much more affordable.

I'm not sure that the majority of Mexicans would agree with that statement...

.

I have decided to put a new ad up for the shit 0.5 room and to stay in the nicer big proper room with natural light, doors and a door. I was just panicking to reduce costs too obsessively and quickly I think because I just joined this website.

That brings me to the thought - to what extent do you make sacrifices in the pursuit of ERE? Its a bit of a balance between making your life miserable for the next 4 years in order to have a basic level of wealth to retire on v cutting costs to the level of reasonable comfort. In this case I think I made the wrong decision to be too obsessed with cutting costs and thank god it did not come to fruition. From now on I am requiring a proper bedroom and a flatmate I am totally comfortable with.

I think it depends on your situation. Often here people encourage you to reduce costs to the bare minimum and then work towards FI. I think it's actually easier to reduce costs post FI. It's hard to live in a caravan on the edge of town for example when you are working in the city. That doesn't mean go crazy. But I think having a room for yourself isn't going too far, even if you can squeeze it when you quit your job. Since I quit my job I sold my place, lived in a van for 8 months, rented in Asia and now live in a small cottage in Ireland. None of those things would have been possible when I was working. Nor, as it turns out, was it necessary.

Ego also plays a part. It is easier to be 'extreme' when it's part of a grand adventure. Having a grand adventure under the bridge down by the river in your home town is very difficult: you need a special sort of brain to enjoy that. But if you can get a passive income that would let you live cheaply elsewhere, and you do (eg on a big road trip in another country), then the seemingly impossible becomes the eminently possible, and even - gasp - hugely enjoyable. There is no deprivation if you do it that way.